EXHIBIT 10.15
FIRST AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF THE
WEST TEXAS LPG PIPELINE
LIMITED PARTNERSHIP
A Texas Limited Partnership
FIRST AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
WEST TEXAS LPG PIPELINE LIMITED PARTNERSHIP
TABLE OF CONTENTS
1. Definitions
2. Ratification of formation; Creation of Partnership; Name
3. Principal Office
4. Duration of the Partnership
5. Purposes
6. Capital Contributions
6.1 Contribution of Existing Property
6.2 Expansions; Expansion Capital Contributions
6.3. Maintenance Capital Expenditures
6.4 Acceptance of Contributions
7. Partnership Property
8. Warranties of Partners
9. Management
9.1 Partnership Committee
9.2 Officials of the Partnership Committee and Terms of Service Thereon
9.3 General Provisions Regarding the Partnership Committee
9.4 Meetings of the Partnership Committee
9.5 Voting of the Partnership Committee - Supermajority
9.6 Voting of the Partnership Committee - Simple Majority
9.7 Minutes
9.8 No Management by Individual Partners
9.9 Change of Classification of Partnership Interest
10. Book Capital Accounts and Capital Contributions
10.1 Book Capital Accounts of the Partners
10.2 Capital Contributions
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11. Distributions
11.1 Allocation
11.2 Distributions
12. Accounting
13. Audit
14. Limitation on Partner's Liabilities Regarding Partnership Contracts
15. Cross Indemnification
15.1 Indemnity
15.2 Reimbursement
15.3 Sharing of Uncovered Losses
16. Tax Provisions
16.1 Status of Partnership
16.2 Tax Returns, Proceedings and Elections
16.3 Tax Definitions
16.4 Tax Allocations
17. Insurance
18. Disposition of Ownership Interests
18.1 Dispositions
18.2 General Conditions of Transfers
18.3 Limitation on Dispositions to Avoid Termination
18.4 Relative Liabilities of Old and New Partners
18.5 Withdrawal of Partner When Unprofitable
18.6 Disposition of Ownership to Another Party
19. Default by Partners
19.1 Failure to Make Contributions
19.2 Expulsion of Partners
19.3 Treatment of Book Capital Account of Expelled Partner
19.4 Other Obligations of Expelled Partner
20. Dissolution and Winding Up of the Partnership
20.1 Dissolution
20.2 Continuance of Business After Dissolution
20.3 Liquidation of the Partnership
20.4 Winding Up of the Partnership
20.5 No Liability for Return of Capital
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21. Alternative Dispute Resolution Procedures
21.1 Covered Disputes
21.2 Initiation of Procedures
21.3 Negotiation Between Executives
21.4 Mediation
21.5 Arbitration
21.6 Arbitration Procedure
21.7 Arbitration Hearing
21.8 Arbitration Decision and Costs
21.9 Enforcement of Award
21.10 Tolling and Performance
22. Further Assurance
23. Waiver
24. Independent Conduct
25. Applicable Law
26. Subject to Applicable Law
27. Validity
28. Headings
29. Binding Effect
30. Benefits of Agreement Restricted to Parties
31. Counterparts
32. Entire Agreement
33. Exhibits and Schedules
34. Reservation of Rights
35. Principles of Construction and Interpretation
36. Damages
37. Notices
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EXHIBIT A - Ownership Interests
EXHIBIT B - Description and Map of Original Limited Partnership Property
EXHIBIT C Description and Map of MAPL Gathering System and Other Contributions
EXHIBIT D - Financial Responsibility Requirements
EXHIBIT E - Tax Matters
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FIRST AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
WEST TEXAS LPG PIPELINE LIMITED PARTNERSHIP
THIS FIRST AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT,
effective as of May 1, 1999, is entered into by and among WTLPS, Inc., a
Delaware corporation (hereinafter "WTLPS"); DMS LP, Inc., a Delaware corporation
(hereinafter "DMSLP"); Chevron Raven Ridge Pipe Line Company, a Delaware
corporation (hereinafter "CRR"); Chevron Pipe Line Company, a Delaware
corporation (hereinafter "CPL"); Mid-America Pipeline Company, a Delaware
corporation (hereinafter "MAPL"); MAPL Investments, Inc., a Delaware corporation
(hereinafter "MAPLII") . WTLPS, DMSLP, CRR, CPL, MAPLII, and MAPL are
sometimes referred to herein collectively as the "Parties" and individually as a
"Party."
WHEREAS, effective September 1, 1996 (the "Original Limited Partnership
Effective Date"), WTLPS, DMSLP, CRR and CPL entered into that certain Agreement
(the "Original Partnership Agreement") of Partnership of the West Texas LPG
Pipeline Limited Partnership, a Texas limited partnership (the "Original Limited
Partnership"); and
WHEREAS, WTLPS, DMSLP, CRR, CPL, MAPLII, and MAPL now desire to amend the
Original Partnership Agreement to provide for receipt of the contribution of
additional assets and provide for the addition of MAPL as an additional Limited
Partner and General Partner in the Partnership, and other matters related
thereto; and
Whereas, simultaneously with its contribution of assets to the
Partnership, MAPL has assigned its limited partnership Ownership Interest to
MAPLII, its wholly owned subsidiary, who has joined in the execution of this
Agreement.
Whereas, the Partners desire to create a revised Limited Partnership
to own a common carrier pipeline system for the transportation of LPG from
various points in New Mexico and Texas to various points in Texas.
Therefore, the Partners hereby agree as follows:
1. Definitions.
As used in this Agreement the following words and terms
shall have the meanings set forth below.
1.1 "Act" means the Texas Revised Limited Partnership Act, as set
forth in R.C.S., Art. 6132a-1, as amended from time to time.
1.2 "Affiliate" means, of any Person, a Person Controlling, Controlled by
or under common Control with, directly or indirectly, through one or more
intermediaries, such Person.
1.3 "Affirmative Voting Partner" shall have the meaning given to it in
Section 18.5 hereinafter.
1.4 "Agreement" means this First Amended and Restated Limited Partnership
Agreement for West Texas LPG Pipeline Limited Partnership.
1.5 "Amended and Restated Operating Agreement" means the agreement for the
operation of the System.
1.6 "Amended Partnership Effective Date" means the first day of May, 1999.
1.7 "Arbitration Notice" shall have the meaning given to it in Section 21.5
hereinafter.
1.8 "Book Capital Account" means the account described in Section 10.1.
1.9 "Business Day" means a day on which the Federal Reserve Bank in New
York City is open for business.
1.10 "Calendar Year" means a year beginning on the first day of January and
ending on the thirty-first day of December, except that for the first year of
operation, the Calendar Year shall begin on the first day of May, 1999 and end
on December 31, 1999.
1.11 "Construction Cost" means the cost of constructing any facility or
equipment used or useful in the Company's operations, or any expansion thereof;
including, without limitation, materials, labor, equipment, permits, consulting
fees, accounting and legal fees, insurance costs, contractors' fees, land and
easement costs, administrative overhead charges allowed pursuant to the terms of
this Agreement, and all other costs necessary or incidental thereto.
1.12 "Control" of a non-natural Person means (i) the power, directly or
indirectly, to (x) elect, appoint or cause the election or appointment of at
least a majority of the members of the board of directors of such Person (or if
such Person is a non-corporate Person, Persons having similar powers), or (y)
direct or cause the direction of the management and policies of such Person, in
either case through beneficial ownership of the capital stock (or similar
ownership interests) of such Member by contract, agreement or otherwise, (ii)
the acquisition, directly or indirectly, of (x) all or substantially all of the
properties and assets of such Person or (y) a majority (by percentage) of the
total voting power of all classes then outstanding of the voting stock (or other
voting interest) of such Person.
1.13 "CPL" means Chevron Pipe Line Company.
1.14 "CRR" means Chevron Raven Ridge Pipe Line Company.
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1.15 "Current Liabilities" means the current liabilities described in
Section 19.3.
1.16 "Disposition Notice" shall have the meaning given to it in Section
18.1 hereinafter.
1.17 "Dispose" or "Disposition" means a sale, assignment, transfer or
exchange (including, without limitation, by operation of law).
1.18 "Dissolving Partner" or "Dissolving Partners" means the Partner or
Partners who cause a dissolution of the Partnership as described in Section 20.
1.19 "Distributable Cash" means the gross cash proceeds from Partnership
operations (including sales and dispositions of property in the ordinary course
of business) less the portion thereof used to pay or establish reasonable
reserves approved by the Partnership Committee for all Partnership expenses,
Guaranteed Payments, debt payments, capital improvements, replacements and
contingencies, working capital requirements, all as determined by the
Partnership Committee. Distributable Cash shall not be reduced by depreciation,
amortization, cost recovery deductions or similar allowances, but shall be
increased by any reductions of cash reserves previously established.
1.20 "DMSLP" means DMS LP, Inc..
1.21 "Facilities" means the Original Limited Partnership Property and the
MAPL Gathering System.
1.22 "Fiscal Year" means the fiscal year of the Partnership as designated
in Article 12, except that for the first year of operation, the Fiscal Year
shall begin on the Amended Partnership Effective Date and end on December 31,
1999.
1.23 "GAAP" means generally accepted accounting principles.
1.24 "General Partner" means WTLPS, CPL, MAPL, or any Person who hereafter
becomes a General Partner by succession of interest hereunder, or by change of
classification under the provisions of Section 9.9.
1.25 "Indemnifying Partner" means each Partner undertaking the indemnity
obligations described in Sections 15.1 and 15.2.
1.26 "LPG" means a mixture of liquefied petroleum products produced from
gas processing facilities or refineries containing ethane, propane, butanes,
natural gasolines, and nominal amounts of contaminates, as allowed by
specifications set by the Company from time to time.
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1.27 "Limited Partner" means DMSLP, CRR, MAPLII, or any Person who
hereafter becomes a Limited Partner by succession of interest hereunder or by
change of classification under the provisions of Section 9.9.
1.28 "Maintenance Capital Expenditure" shall have the meaning given to it
in Section 6.3 hereinafter.
1.29 "MAPL" means Mid-America Pipeline Company.
1.30 "MAPL Gathering System and Other Contributions" means those assets to
be contributed to the Partnership by MAPL and more fully described in Exhibit C.
1.31 "MAPLII" means MAPL Investments, Inc..
1.32 "Member" means a Partner's designated representative on the
Partnership Committee.
1.33 "Non-Current Liabilities" means the non-current liabilities described
in Section 19.3.
1.34 "Operator" means the Person(s) designated as the physical and/or
commercial Operator of the System in the Amended and Restated Operating
Agreement.
1.35 "Original Limited Partnership" shall have the meaning given to it in
the first Whereas clause on page 1 of this Agreement.
1.36 "Original Limited Partnership Effective Date" shall have the meaning
given to it in the first Whereas clause on page 1 of this Agreement.
1.37 "Original Partnership Agreement" shall have the meaning given to it in
the first Whereas clause on page 1 of this Agreement.
1.38 "Original Limited Partnership Property" means the assets of the
Original Partnership as further identified in Exhibit B.
1.39 "Ownership Interest" means the respective ownership percentage of a
Partner in the Partnership as set forth in Exhibit A hereto, as amended from
time to time.
1.40 "Partner" means any party to this Agreement, including any Person who
may hereafter become a party to this Agreement.
1.41 "Partnership" means the West Texas LPG Pipeline Limited Partnership as
herein amended and restated.
1.42 "Partnership Committee" means the committee designated to manage the
affairs of the Partnership in Section 9.1(a) of this Agreement.
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1.43 "Person" means any individual, partnership, association, trust,
corporation or other entity.
1.44 "Partnership Property" means all property acquired by the Partnership
by contribution, purchase or otherwise.
1.45 "Proposed Transferee" means a Person to whom a Transferring Partner
intends to transfer all or a portion of its Ownership Interest in the
Partnership.
1.46 "Remaining Partners" means all Partners other than a Transferring
Partner.
1.47 "System" means the pipeline system described in Article 5 and depicted
on Exhibits B and C attached hereto, and any additions or modifications made
thereto after this Agreement becomes effective.
1.48 "Transferring Partner" means a Partner who transfers all or a portion
of its Ownership Interest in the Partnership pursuant to Article 18.
1.49 "WTLPS" means WTLPS, Inc..
2. Ratification of formation; Creation of Partnership; Name.
2.1 The Partners confirm that (i) by virtue of the Original
Partnership Agreement, WTLPS, DMSLP, CRR and CPL associated themselves in a
partnership in accordance with the Act, and (ii) the Partnership is continued as
a Texas limited partnership by this Agreement. This Agreement shall constitute
the Partnership Agreement and shall supersede and replace the Original
Partnership Agreement in its entirety. Each of the Partners agrees that, on the
request of any other Partner, it will, and it will cause the Partnership to,
make all necessary filings, execute and deliver any further documents and
perform any further acts on its part necessary or useful (1) to comply with the
Act regarding the formation and operation of a limited partnership; and (2) to
effectuate and evidence the vesting in the Partnership of ownership of all
assets contributed or required by this Agreement or the Original Partnership
Agreement to be contributed by it to the Partnership.
2.2 The Partners hereby amend and restate the Original Partnership
Agreement and continue the Partnership, as a limited partnership under the
provisions of the Act, with CPL, WTLPS, and MAPL being the General Partners, and
DMSLP, CRR and MAPLII being the Limited Partners, and with each Partner
initially owning that percentage of the total Ownership Interests in the
Partnership set forth in Exhibit A attached hereto. Said Ownership Interests
shall be amended from time to time to reflect assignments and transfers of a
Partner's Ownership Interest in the Partnership as provided for herein. At all
times, the sum of all Partners' Ownership Interests shall total 100 percent. The
name of the Partnership shall be West Texas LPG Pipeline Limited Partnership.
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3. Principal Office. The principal office of the Partnership shall be
maintained at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or at such other address as
agreed by the Partnership Committee.
4. Duration of the Partnership. The amended Partnership shall
commence as of the Amended Partnership Effective Date and shall terminate,
unless sooner terminated pursuant to this Agreement or extended by agreement of
the Partners, on December 31, 2049. This Agreement shall terminate when the
Partnership has been wound up and liquidated, all assets of the Partnership have
been distributed or disposed of, and all liabilities and obligations of the
Partnership (and of each Partner as they relate to the Partnership) have been
fully discharged, satisfied or as provided in Article 20.
5. Purposes. The Partnership is created for the purposes of: (a)
owning the System for the common carrier transportation of LPG from various
points in New Mexico and Texas to various points in Texas as depicted on the
attached Exhibits B and C, as it may be amended from time to time; (b) causing
the System to be operated, maintained, repaired and, if appropriate in the
judgment of and directed by the Partnership Committee, expanded, extended,
changed in direction or use, replaced, removed or abandoned in place; (c)
causing any facilities, property or property rights, equipment, or services
related to or required in connection with any of the above described activities
to be procured, constructed, operated, maintained, repaired, replaced, sold,
disposed of, removed, or abandoned in place; and (d) any other purposes related
to and necessary or appropriate in the judgment of the Partnership Committee to
implement any of the foregoing.
6. Capital Contributions.
6.1 Contribution of Existing Property.
(a) The initial capital contributions of each Partner to the
Partnership shall be as follows: (i) WTLPS, DMSLP, CPL and CRR previously
contributed their respective shares of undivided interests in and to the
property owned by the Original Limited Partnership described elsewhere in this
Agreement as the Original Limited Partnership Property which was contributed to
the Partnership at the time the Original Partnership Agreement was entered into;
and (ii) MAPL shall contribute its shares of undivided interests in and to the
property described elsewhere in this Agreement as the MAPL Gathering System and
Other Contributions.
(b) Each of the Partners acknowledges that the value of the assets and
monies, as applicable, contributed to the Partnership by CPL, CRR, WTLPS, DMSLP,
and MAPL represents 0.408%, 40.392%, 0.392%, 38.808%, 20.00%, respectively, of
the value of the Partnership assets.
6.2 Expansions; Expansion Capital Contributions.
(a) Proposals, Approval, and Participation
Any Member on behalf of any Partner may request that the Partnership construct
or otherwise acquire additions to the Facilities, modify existing Facilities, or
incur capital project costs related
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to (i) increasing the volumetric capability of, and/or (ii) physical extensions
to the Facilities (hereinafter referred to as an "Expansion") at any time by
giving notice to all of the other Members. Such notice shall specifically
describe the proposed Expansion, shall contain a reasonable justification for
same, and shall include an estimate of the total Construction Cost to be
incurred in connection therewith.
The Chairman of the Partnership Committee, upon request of the Member making the
proposal, shall call a special meeting of the Partnership Committee to discuss
the proposed Expansion. Within thirty (30) days of such notice by the Member,
the Members shall meet to discuss the proposed Expansion. The Partnership
Committee shall cause the Operator to assist the Partner in completing its
proposal and such Partner will reimburse the Operator, in immediately available
funds by wire transfer, for the Operator's actual, direct costs incurred in
connection therewith, such reimbursement to be paid on or before 10 days after
the date on which such Partner has received an invoice therefor from the
Operator. Within ninety (90) days after the date of the special meeting to
discuss the proposed Expansion, the Partnership Committee must vote on the
Expansion at a regular or special meeting of Members. If two or more of the
General Partners vote to have the Partnership undertake the proposed Expansion
and Partners having together aggregate Ownership Interests greater than 50% vote
to approve the Expansion, such proposed Expansion shall be undertaken by the
Partnership.
The approved Expansion proposal must contain a specific methodology for
calculating the revenue, cost, and income specifically attributable to the
Expansion. Following approval of the Expansion, the Partners must indicate
whether the Ownership Interest that they respectively represent will participate
in contributing to the cost of the Expansion. (the "Expansion Participating
Partners"). In the event that all Partners are not Expansion Participating
Partners, it shall take an affirmative vote of at least two General Partners and
90% of the aggregate Ownership Interest to approve the specific accounting
methodology that will be used to allocate Expansion Income related to such
Expansion. If 90% of the aggregate Ownership Interest does not approve, such
accounting methodology shall be submitted to alternative dispute resolution
procedures as set forth in Section 21. If less than all Partners elect to
participate in contributing to the cost of the Expansion, the costs of
construction thereof (the "Expansion Costs") are to be borne solely by the
Expansion Participating Partners. Unless agreed to otherwise by all of the
Expansion Participating Partners, such Expansion Costs shall be allocated to
each of the Expansion Participating Partners in an amount equal to the product
of (A) the total Expansion Costs multiplied by (B) a fraction (the "Expansion
Sharing Ratio"), the numerator of which is the Ownership Interest of such
Expansion Participating Partner and the denominator of which is the aggregate
Ownership Interest of all of the Expansion Participating Partners. No funds of
the Partnership, other than the Expansion Capital Contributions (as defined
hereinafter) made by the Expansion Participating Partners, shall be used in
connection with any Expansion unless all of the Members are Expansion
Participating Partners.
(b) Expansion Capital Contributions.
If an Expansion is approved in accordance with Section 6.2(a), each Expansion
Participating Partner shall make capital contributions to the Partnership
(Expansion Capital Contributions)
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in one or more payments in an amount equal to such Expansion Participating
Partner's interest in the Expansion, calculated in accordance with Section
6.2(a). Expansion Capital Contributions shall be made by each Expansion
Participating Partner in accordance with such Expansion Participating Partner's
Expansion Sharing Ratio pursuant to a payment schedule approved by the Expansion
Participating Partners and the Operator prior to commencing work on the
Expansion.
(c) Expansion Income.
(i) If an Expansion has occurred and all of the Partners are Expansion
Participating Partners, all incremental revenue attributable to the Expansion,
less any incremental costs incurred in connection with such Expansion and the
operation of same ("Expansion Income"), shall be shared by the Partners
according to their respective Ownership Interest.
(ii) If an Expansion has occurred and not a11 of the Partners are
Expansion Participating Partners, the Partnership Committee shall cause the
Operator to determine, for each calendar month, the Expansion Income. Each
Expansion Participating Partner shall be allocated such Expansion Participating
Partner's Expansion Sharing Ratio of the Expansion Income for each such calendar
month until (and including) the calendar month (the "Expansion Allocation
Period") during which the Expansion Participating Partners have been allocated,
in the aggregate, an amount equal to the Expansion Recovery Percentage of the
aggregate Expansion Costs, as described in Section 6.2 (d) below.
(iii) If an Expansion has occurred and not a11 of the Partners are
Expansion Participating Partners, the Partnership Committee shall cause the
Operator to determine all items of depreciation and cost recovery related to
Expansion Costs and shall specially allocate to the Expansion Participating
Partners such items of depreciation and cost recovery for the duration of the
Expansion Allocation Period.
(d) Expansion Cost Recovery.
(i) If an Expansion has occurred and not all of the Partners are
Expansion Participating Partners, the Partnership Committee shall cause the
Operator to calculate, using the procedure approved by the Partnership Committee
at the time of the Expansion approval, for each calendar month, the Expansion
Income. In consideration for its costs and risks relating to the Expansion,
within thirty days after the end of each such calendar month, each Expansion
Participating Partner shall receive, as a distribution (the "Expansion
Distribution") from the Partnership, an amount equal to (A) such Expansion
Participating Partner's Expansion Sharing Ratio multiplied by (B) the Expansion
Income for such calendar month, until the Expansion Participating Partners have
received, in the aggregate, an amount equal to two hundred-fifty percent (250%)
(the "Expansion Recovery Percentage") of the aggregate Expansion Costs
(ii) If the initial Expansion Recovery Percentage of the Expansion
Costs is not received by the Expansion Participating Partners within sixty (60)
full
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calendar months following the date of commencement of operations of the
Expansion, the initial Expansion Recovery Percentage shall be increased by ten
percent (10%) for each twelve (12) month period thereafter, such increased
Expansion Recovery Percentage not to exceed three hundred percent (300%). Upon
and after the earlier of (A) the Expansion Participating Partners receiving in
the aggregate Expansion Distributions equal to the applicable Expansion Recovery
Percentage of the Expansion Costs or (B) the expiration of 120 calendar months
following the date of commencement of operations of the Expansion, all Expansion
Income shall be shared by the Partners according to their respective Ownership
Interest.
6.3 Maintenance Capital Expenditures. Each Partner shall share and
pay according to their respective Ownership Interests any and all expenditures
incurred by the Partnership which may be categorized for tax or accounting
purposes to be capital expenditures but which are primarily for the purpose of:
(i) maintaining or restoring the System, or any portion thereof, (ii) complying
with regulatory requirements and/or any applicable law, rule, regulation or
order of any other governmental authority, local, state or federal, or (iii)
other non-Expansion purposes ("Maintenance Capital Expenditures"). Generally,
such Maintenance Capital Expenditures create no material incremental revenue as
a result of the work for which the expenditure is made. It is understood and
agreed by the Partners that all such matters shall be included, with adequate
detail, in the Partnership's annual budget prepared by and submitted to the
Partnership Committee by the Operator, if such matters are known at the time of
submission of such budget.
6.4 Acceptance of Contributions. As of the Original Limited Partnership
Effective Date, the Partnership has accepted the assets contributed by WTLPS,
DMSLP, CPL and CRR, and assumed all responsibilities and obligations associated
therewith accruing after such date. As of the Amended Partnership Effective
Date, the Partnership has accepted the MAPL Gathering System and Other
Contributions and assumed all responsibilities and obligations associated
therewith accruing after the Amended Partnership Effective Date.
Notwithstanding the foregoing, nothing herein shall limit, supercede or replace
the obligations by and among the Partners as set forth in contribution
agreements, indemnity agreements or any other written agreements, written
representations and/or warranties between or among the Partners and/or any of
their Affiliates pertaining to any liabilities and the allocation of same
respecting the assets contributed to the Partnership by the Partners hereunder.
7. Title to Partnership Property. The title to all Partnership Property
shall be held in the name of the Partnership unless otherwise approved by the
Partnership Committee; provided, however, licenses, permits, easements and
rights-of-way necessary for the operation of the System may be held in the name
of the Operator who will act as agent on behalf of the Partnership.
8. Warranties of Partners. Each Partner, upon becoming a party to this
Agreement, represents, warrants and agrees that:
(a) It is a corporation duly incorporated, validly existing, and in
good standing under the laws of its jurisdiction of incorporation;
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(b) It has all requisite power and authority to execute, deliver and
perform this Agreement and any other agreements required herein and to
consummate the transactions contemplated hereby or thereby.
(c) It will not voluntarily cause a dissolution or termination of the
Partnership, technical or otherwise by failure to maintain its corporate
existence or by any other act or omission to act;
(d) The execution, delivery and performance of this Agreement have been
duly authorized, and this Agreement, when executed and delivered, will be
valid and binding on it; and
(e) The execution and delivery of this Agreement does not contravene
any provision of, or constitute a default under, any relevant material
indenture, mortgage or other agreement binding on such Partner or any valid
order of any court, commission or governmental agency to which such Partner
is subject.
9. Management.
9.1 Partnership Committee.
9.1(a) Composition of the Committee. The Partnership shall be managed by
a Partnership Committee composed of one Member representing each Partner. Each
Partner shall designate its Member of the Partnership Committee, whose vote
shall be based on that Partner's Ownership Interest. The Members of the
Partnership Committee shall be designated by the Partners by notice to each
other immediately after the Amended Partnership Effective Date, and the Members
shall serve until their successors' designations shall become effective. A
person may be designated by more than one Partner as a Member to represent each
such Partner and such Member shall be regarded as representing more than one
Partner for purposes of a required quorum under Section 9.4.
9.1(b) Replacement of Committee Members. If any Member of the Partnership
Committee dies, resigns, or becomes incapacitated, the Partner which designated
such Member shall designate his or her successor, the term of such successor to
commence immediately, and any Partner may withdraw the designation of the Member
of the Partnership Committee which it designated and designate a replacement
(whose term shall commence immediately) at any time, with or without cause, by
giving written notice of the withdrawal and replacement to the other Members of
the Partnership Committee.
9.1(c) Changes in the Voting Interest of Committee Members Due to Changes in
Ownership. In the event of any changes in the relative Ownership Interests of
the Partners in the Partnership effective during the course of a Calendar Year,
the vote of each Member of the Partnership Committee shall reflect such change
effective upon the receipt of notice by the Partnership that a change in the
Ownership Interests of the Partners has occurred.
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9.1(d) Special Legal and Regulatory Obligations of Member. All Members of
the Partnership Committee are under a special legal obligation to protect
confidential information, including but not limited to shipper information,
against disclosure or against use by the Partner or any other party for any
purpose other than the direct business of the Partnership. Each Partner shall
be obligated to take such steps as are necessary to ensure that such
confidential information is not disclosed or used otherwise than as allowed by
law. No Member shall be allowed to participate in any business of the
Partnership in the event that such participation would compromise the
Partnership's obligation to safeguard such information.
9.2 Officials of the Partnership Committee and Terms of Service Thereon.
9.2(a) Election of-Partnership Officials. The Partnership Committee shall
elect a Chairman and one or more Vice-Chairmen from among those Members
designated by a General Partner and a Secretary and a Treasurer, who need not be
Members, immediately after being created and thereafter at its first meeting
during each Calendar Year. Each Chairman, Vice-Chairman, Secretary and Treasurer
shall serve until his or her successor is elected and qualified or until his or
her earlier resignation, removal by vote of the Partnership Committee, or, in
the case of the Chairman or Vice-Chairman, his or her earlier departure or
removal from membership in the Partnership Committee, or in the event that the
General Partner that designated such Member ceases to be a General Partner
hereunder. An individual may hold more than one office.
9.2(b) Duties of the Chairman. The Chairman shall preside over all meetings
of the Partnership Committee, shall call regular meetings of the Partnership
Committee, may call special meetings of the Partnership Committee and shall have
other duties as specified elsewhere in this Agreement.
9.2(c) Duties of the Vice-Chairman. The Vice-Chairman present with the
longest continuous service as such shall preside over meetings of the
Partnership Committee in the absence of the Chairman, and in the event the
Chairmanship becomes vacant, the Vice Chairman with the longest continuous
service as such shall serve as Chairman until a new Chairman is elected.
9.2(d) Duties of the Secretary. The Secretary shall record minutes of the
Partnership Committee meetings, shall give notice of regular and special
meetings of the Partnership Committee when directed to do so pursuant to Section
9.4 hereof, and shall accept and notify all Partnership Committee Members of any
resignations of Partnership Committee Members or Partnership officials (other
than his own resignation which shall be accepted by the Chairman). The
Secretary shall also cause the Partnership to comply with the requirements under
the Assumed Business or Professional Name Act of the Business and Commerce Code
of the State of Texas.
9.2(e) Duties of the Treasurer. The Treasurer shall have general supervision
of the funds, securities, notes, drafts, acceptances, and other commercial paper
and evidences of indebtedness of the Partnership and shall insure that funds
belonging to the Partnership are kept on deposit in such banking institutions or
invested in securities as the Partnership Committee may from time to time
direct. The Treasurer shall insure that accurate
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accounting records are kept, and shall render statements of income and of
financial position of the Partnership to the Partnership Committee and each
Partner at any time upon reasonable request. The Treasurer shall perform other
duties commonly incident to such office.
9.3 General Provisions Regarding the Partnership Committee.
9.3(a) Additional Authority. The Chairman, Vice-Chairmen, Secretary or
Treasurer and the incumbents of any other similar positions which the
Partnership Committee may elect to create, may be given other duties either of a
general or specific nature by the Partnership Committee, but, in the absence of
any such grant of authority, shall not be deemed to have any inherent authority
to act for the Partnership except as specifically set forth elsewhere in this
Agreement.
9.3(b) Compensation. The officials of the Partnership shall receive no
compensation from the Partnership. All costs of each Member of the Partnership
Committee arising out of his attendance at Partnership Committee meetings or
conduct of Partnership business shall be borne by the Partner he or she
represents. The Partnership shall indemnify and save harmless the Members of
the Partnership Committee and the officials of the Partnership against all
actions, claims, demands, costs and liabilities arising out of the acts (or
failure to act) of any such Members and officials in good faith within the scope
of their authority in the course of the Partnership's business, and such Persons
shall not be liable for any obligations, liabilities or commitments incurred by
or on behalf of the Partnership as a result of any such acts or failure to act.
9.3(c) Insurance. To the extent that such insurance is commercially
available, the Partnership Committee may authorize the Operator to purchase and
maintain insurance on behalf of any Person who is or was a Member of the
Partnership Committee, or an official of the Partnership, or who is or was
serving at the request of the Partnership as agent of the Partnership, against
any liability asserted against or incurred by him in any such capacity, or
arising out of his status as such, whether or not the Partnership would have the
power to indemnify him against such liability under the provisions of the
preceding Section 9.3(b).
9.4 Meetings of the Partnership Committee. The Partnership Committee may
hold meetings either within or without the State of Texas. Regular meetings of
the Partnership Committee shall be held not less frequently than once each
calendar quarter at such times and places as the Partnership Committee
determines. Special meetings of the Partnership Committee may be called by the
Chairman of the Partnership Committee on ten (10) Business Days notice to each
Member of the Partnership Committee and shall be called by the Chairman or
Secretary of the Partnership Committee on like notice upon request of any Member
of the Partnership Committee. Meetings of the Partnership Committee may be held
by conference telephone call on two (2) Business Days notice. Each notice of a
meeting or conference call shall state the time and place of the meeting or the
conference call and the purpose or purposes thereof. Unless otherwise waived in
writing by all Members of the Partnership Committee, only matters included in
the notice of the meeting or conference call can be considered for a vote by the
Partnership Committee. Any requirements of notice will be deemed waived by any
Member of the Partnership Committee who attends a Partnership Committee meeting
or participates in a
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conference call unless such Member attends or participates solely to protest the
lack of proper notice. Any requirement of notice may be waived by any Member in
writing, which waiver or waivers shall be attached by the Secretary of the
Partnership Committee to the minutes of the meeting of the Partnership Committee
for which such waiver is effective. Provided that proper notice is either given
or duly waived by all Members of the Partnership Committee, the presence of at
least two (2) Members of the Partnership Committee representing two of the
General Partners, and representing at least fifty-one percent (51%) of the
Ownership Interests shall be sufficient to constitute a quorum for the
transaction of business. The Partnership Committee may act by the unanimous
written consent of all Members of the Partnership Committee (which may be signed
in counterpart) in lieu of holding a meeting; such unanimous written consent
shall be effective when filed with the Secretary of the Partnership Committee.
Notice to Members of the Partnership Committee shall be as provided in Article
36 hereof.
9.5 Voting of the Partnership Committee - Supermajority
Unless Members representing a minimum of ninety percent (90%) of the Ownership
Interest and a minimum of two General Partners authorize such action, the
Partnership shall not:
(a) Approve single line items greater than $5,000,000 in the operating or
capital budget (except for Expansions);
(b) Enter into any agreement requiring financial commitment or expenditures of
the Partnership of $5,000,000 or more in any twelve-month period (except
for Expansions or any previously approved budget item);
(c) Enter into any agreement which obligates the Partnership to a term of three
years or longer (except for Expansions);
(d) Release, compromise or settlement of any Claim against the Partnership or
commencement of any lawsuit against another Person for amounts in dispute
of $5,000,000 or more;
(e) Acquire or dispose of any Partnership asset, in a single transaction, or a
series of related transactions, with a fair market value of $5,000,000 or
more (except for Expansions);
(f) Accept contributions of property to the Partnership, other than cash or
cash equivalents, having a fair market value of $5,000,000 or more;
(g) Assume environmental liabilities or obligations in connection with the
acquisition of an interest in real property;
(h) Establish, amend and cause the filing of tariffs, provided, however, for
the avoidance of doubt, non-discretionary filings required by regulation
shall not require a vote of the Partnership (Ownership interest
representing MAPL and MAPLII shall be non-voting until such time as MAPL
and MAPLII
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and/or any of their Affiliates own an aggregate interest of less than 50%
of Seminole Pipeline and no longer operate Seminole Pipeline. A 90% vote of
the remaining Ownership Interest shall be required to approve the
establishment of, or an amendment to, a tariff);
(i) Distribute cash in a manner other than as set forth in Section 11;
(j) Select name or names under which the Partnership may conduct business.
(k) Resolve audit disputes with Partners;
(l) Make any claim, disclaimer, surrender, election or consent of a material
nature for tax purposes;
(m) Commingle funds of the Company with the funds of any other Person;
(n) Factor or assign any of the Partnership's accounts;
(o) Borrow money or obtain any advance, or give any security interest in the
Facilities or any portion thereof, to secure any such borrowing, or obtain
credit in any form (other than trade credit) or make a loan or advance or
give credit, other than normal trade credit;
(p) Give any guarantee or indemnity or security in respect of any liabilities
or obligations of any person other than the Partnership and any of its
subsidiaries, if any;
(q) Create or dispose of any subsidiary of the Partnership or any interest
therein;
(r) Establish an investment policy for the Partnership that involves the use of
derivatives or any other futures type contracts;
(s) Remove the Operator as physical and/or commercial Operator for cause
(Ownership Interest representing Operator and its Affiliates shall be non-
voting in this instance, 90% vote of remaining Ownership Interest
required);
(t) Change of classification of a General Partner to a Limited Partner, or of a
Limited Partner to a General Partner or interest thereof;
(u) Posses, or in any manner deal with, any of the Partnership assets or
dispose of the rights of the Partnership in such assets for other than
Partnership purposes;
(v) Use the System for transportation of substances other than LPG; materially
alter the nature and scope of the business of the Partnership or the
ownership of the Facilities, or materially extend the Partnership into
activities that are
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not reasonably related to the purposes of the Partnership as set forth in
Section 5;
(w) Approve the acquisition of the Partnership by, the conversion of the
Partnership to, or the merger or consolidation of the Partnership with or
into, any other Person; or the investment or acquisition by the Partnership
in or of all or substantially all of the assets of any other Person;
(x) Except as otherwise provided herein, do or permit or suffer to be done any
act or thing whereby the Partnership may be wound up, liquidated or
dissolved (whether voluntarily or compulsorily);
(y) Appoint a liquidating trustee;
(z) Dissolve the Partnership; or
(aa) Amend or restate this agreement.
9.6 Voting of the Partnership Committee - Simple Majority
The operation and maintenance of the System shall be performed by the Operator
pursuant to the Operating Agreement to be approved by the Partnership Committee.
The Partnership Committee shall have authority to oversee the operations of
Operator as provided in the Operating Agreement and, except as such authority
may be limited under other terms of this Agreement, the Partnership Committee
shall have full power and authority to manage the entire business and affairs of
the System. Without limiting the generality of the foregoing, all matters not
specifically listed in Section 9.5, or otherwise provided in this Agreement,
shall be decided by a simple majority vote of the Member(s) representing greater
than fifty percent (50%) of the Ownership Interest and a minimum of two General
Partners. A limited list of specific examples of items requiring a simple
majority vote include:
(a) Consider, revise, approve, and reject operating and capital budgets and
AFE's recommended by the Operator as provided in the Amended and Restated
Operating Agreement (except as otherwise provided for in 9.5(a));
(b) Appoint a new physical and/or commercial Operator in the event the physical
and/or commercial Operator resigns or is removed;
(c) Authorize, or refuse to authorize, the Operator to settle claims brought
against the Partnership recommended by the Operator in amounts greater than
$100,000 but less than $5,000,000; or the filing of lawsuits the Operator
proposes the Partnership bring against third parties, other than routine
debt collection actions;
(d) Enter into any material contract or arrangement outside the ordinary course
of business in amounts greater than $100,000 or less than $5,000,000;
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(e) Authorize an independent audit of the Partnership, the cost of which shall
be paid for by the Partnership.
It is understood and agreed that the list of items requiring a simple majority
vote of the Partnership Committee as set forth above shall in no way be
construed as a complete or exclusive listing of all items requiring a simple
majority vote.
9.7 Minutes. The Secretary of the Partnership Committee or other
person designated by the Chairman shall be present at and record the minutes of
all meetings and promptly provide each Member with copies thereof following each
meeting. The original of the minutes as approved by each Member shall be
maintained at the principal office of the Partnership.
9.8 No Management by Individual Partners. All acts of management of
the Partnership shall be taken by the Partnership Committee, acting pursuant to
this Agreement, by agents duly authorized in writing by the Partnership
Committee or by the Operator acting pursuant to the Amended and Restated
Operating Agreement. No individual Partner or Member of the Partnership
Committee shall act or purport to act as an agent of or otherwise on behalf of
the Partnership unless, and then only to the extent, authorized in writing to do
so by the Partnership Committee. Limited Partners shall not participate in the
management or control of the business except as otherwise permitted by the Act.
9.9 Change of Classification of Partnership Interest. No change in
classification hereunder of any Ownership Interest of a General Partner to a
classification of a Limited Partner, nor any change in classification of any
Ownership Interest of a Limited Partner to a classification of a General Partner
shall be effective hereunder unless such change in classification or designation
shall have first been approved by a vote of the Members under Section 9.5 (t)
above and such change complies with the requirements of the Act.
10. Book Capital Accounts and Capital Contributions.
10.1 Book Capital Accounts of the Partners. The Partnership shall
maintain individual Book Capital Accounts for each Partner for financial
accounting purposes. Each Partner's Book Capital Account shall include its
initial capital contributions (a) increased by (i) any additional capital
contributions made by such Partner and (ii) its Ownership Interest in
Partnership income, and (b) decreased by (i) its Ownership Interest in
Partnership losses, (ii) any distributions of Distributable Cash to such Partner
and (iii) the agreed value of any distributions of property made to such Partner
net of any liabilities assumed by such Partner or to which such property is
subject.
10.2 Capital Contributions. Each Partner agrees to contribute any
amount of additional capital specified by the Partnership Committee to fulfill
the purposes, as they may be amended, for which the Partnership is created.
When, subject to the foregoing, the Partnership Committee shall determine
additional capital funds are required from the Partners, it shall specify the
amount to be contributed by each Partner, which amount shall be in proportion to
the Ownership Interest of that Partner in the Partnership, but which shall also
take into account
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relative amounts then in that Partner's Book Capital Account to the end that the
additional amount to be paid, plus the existing balance in that Partner's Book
Capital Account, shall result in a balance in exact proportion to that Partner's
Ownership Interest in the Partnership. Prior to any call for capital
contributions, the aggregate loss of any Partner's profits and losses shall be
deducted from that Partner's Book Capital Account and the aggregate gain of any
Partner's profits and losses shall be added to that Partner's Book Capital
Account before the calculation is made to determine the amount of additional
capital required from each Partner.
11. Distributions of Distributable Cash.
11.1 Allocation. Any costs, profits and/or losses of the Partnership
shall be shared among the Partners in accordance with their Ownership Interests
at the time such costs, profits and/or losses are accrued. Exceptions may be
necessary from time to time, such as for certain types of projects or events
addressed in Section 6.2 above, and for other circumstances approved by the
Partners.
11.2 Distributions. Unless otherwise approved by a vote of the
Partners under Section 9.5(i), the Operator shall distribute to the Partners
Distributable Cash as follows: within thirty days after the end of each calendar
month there shall be distributed in cash to the Partners allocated in accordance
with their Ownership Interest all cash available for distribution, taking into
account the cash account as of the end of the month and any cash activity from
the end of the month to the date of distribution less the reasonable working
capital needs to operate the System.
12. Accounting. The books and records of the Partnership shall be
maintained by the Operator and shall be open to inspection at all reasonable
times to any Partner. Such books shall be maintained in accordance with GAAP
utilizing the principles and practices generally employed in regulated oil
pipeline accounting unless any regulatory agency with jurisdiction over the
System or the Partnership shall rule otherwise. Unaudited financial statements
for the Partnership shall be prepared and distributed to each Partner and to the
Partnership Committee Members not less often than quarterly; however, income
statements shall be provided monthly. Complete financial statements shall be
prepared annually which may be audited and certified by independent certified
public accountants selected by the Partnership Committee or may be jointly
audited by the Partners. The Fiscal Year for the Partnership shall commence
January 1 and end December 31 of each year, except that for the first year of
operation, the Fiscal Year shall begin on the Amended Partnership Effective Date
and end on December 31, 1999.
13. Audit. Any Partner, at its sole expense, may audit the Partnership
books of account by giving thirty (30) Business Days notice to the Partnership
Committee, the Operator and all other Partners, but the Partnership Committee
may decline to permit more than one (1) such audit to be conducted in any six-
month period. Such audit shall be at the reasonable convenience of the Partner,
the Operator and the Partnership Committee, shall be open for participation by
all Partners and shall be restricted to books of account for the preceding two
(2) Fiscal Years. All audit exceptions shall be resolved in a timely manner. Any
audit exception not resolved within ninety (90) days after the release of the
audit report will become an agenda item at the next Partnership Committee
meeting and shall be resolved at that time. Amounts owed as determined by an
audit shall be paid with interest accruing from the date determined by the audit
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at the prime rate quoted in the Wall Street Journal plus two percent, such rate
adjusted as necessary for changes in the prime rate during the effective period.
Should the Partnership Committee fail or be unable to resolve any such audit
disputes, the matter shall be shall be resolved in accordance with the
alternative dispute resolution procedures set forth in Section 20 hereinafter.
14. Limitation on Partner's Liabilities Regarding Partnership Contracts.
Unless approved by the Partnership Committee, the Partnership or its authorized
agents or representatives shall not enter into any contract, lease, sublease,
note, deed of trust or other obligation unless there is contained therein an
appropriate provision limiting the claims of all parties to such instruments and
other beneficiaries thereunder to the assets of the Partnership and expressly
waiving any rights of such parties and other beneficiaries to proceed against
the Partners individually.
15. Cross Indemnification.
15.1 Indemnity. Each Partner (in each case the "Indemnifying Partner")
shall indemnify and hold all other Partners and, in the case of Sections 15.1
and 15.2 hereof, the Partnership, harmless from:
(a) Any losses or claims resulting from any act or omission of such
Indemnifying Partner in breach of this Agreement;
(b) Any claim by any third party arising out of the intentional,
willful, or grossly negligent act of such Indemnifying Partner related directly
or indirectly to the Partnership; and
(c) Any judgment against any other Partner arising solely because of
the Indemnifying Partner's liability for Partnership debts under the laws of the
State of Texas (and not because of any other act of the Partner seeking
indemnity), to the extent that the Partner claiming indemnity has borne greater
than its proportionate share of the judgment actually paid.
15.2 Reimbursement. Except as otherwise specifically provided in this
Agreement, all expense, loss, damage, liability or claims (together with all
costs incurred in connection therewith) shall be borne, shared and paid by the
Partners hereto on the basis of their respective Ownership Interests. In the
event any Partner is required for any reason, other than as specified in this
Agreement, to pay a disproportionate share of any obligations of the
Partnership, all other Partners who have not paid their proportionate share
agree to reimburse that Partner to the extent necessary to place the resulting
loss of each Partner into direct proportion to its Ownership Interest. The
provisions of this Article 15 shall survive termination of this Agreement and of
the Partnership.
15.3 Sharing of Uncovered Losses. Should the Partnership incur losses
which are either greater than the amount of, or not covered by any insurance
coverage carried by the Partnership, and which are the obligation of the
Partnership and not that of individual Partners, the Partners agree to share
such losses in proportion to their Ownership Interests; provided,
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however, nothing herein shall be construed as a waiver of the limitation of
liability to third parties afforded limited partners under the Act.
16. Tax Provisions.
16.1 Status of Partnership. The Partners intend that, pursuant to the
provisions of Subchapter K of Chapter 1 of Subtitle A of the Code, the
Partnership will be treated as a Partnership for federal, state, and local
income tax purposes, and each Partner agrees not to elect to be excluded from
the application of all or any part of Subchapter K of the Code or any
corresponding provisions of state or local law.
16.2 Tax Returns, Proceedings and Elections. Tax returns, proceedings
and elections shall be governed by the provisions of Exhibit E attached. The
provisions of Exhibit E may be amended from time to time by vote of the
Partnership Committee as provided in Section 9.7 (e).
16.3 Tax Definitions.
16.3(a) "Adjusted Federal Income Tax Capital Account Deficit"
(Adjusted FIT Capital Account Deficit) means, with respect to any Partner, the
deficit balance in such Partner's FIT Capital Account as of the end of the
relevant Fiscal Year, after giving effect to the following adjustments:
(i) Credit to such FIT Capital Account any amounts which such Partner
is obligated to restore pursuant to any provision of this Agreement or pursuant
to Regulations Sections 1.704-1(b)(2)(ii)(c) or is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations Sections 1.704-
2(g)(1) or 1.704-2(i)(5); and
(ii) Debit to such FIT Capital Account the items described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-l(b)(2)(ii)(d)(5) and 1.704-
1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted FIT Capital Account Deficit is intended to
comply with the provisions of Regulations Section 1.704-l(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
16.3(b) "Code" means the Internal Revenue Code of 1986, as amended.
16.3(c) "Depreciation" means, for each Fiscal Year or other period, an
amount equal to the depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes, as described in Treasury Regulations Section 1.704-
1(b)(2)(iv)(g), at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization, or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization, or other cost recovery deduction for such year is
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zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the Partners.
16.3(d) "Federal Income Tax Capital Account" (FIT Capital Account)
means, with respect to any and each Partner, the FIT Capital Account maintained
for such Person in accordance with Regulation Section 1.704-l(b)(2)(iv) and the
following provisions:
(i) To each Partner's FIT Capital Account there shall be credited such
Partner's FIT Capital Contributions, such Partner's distributive share of
Profits and any items in the nature of income or gain which are specially
allocated pursuant to Section 16.4(b) or Section 16.4(c) hereof, and the amount
of any Partnership liabilities assumed by such Partner or which are secured by
any Partnership Property distributed to such Partner; and
(ii) To each Partner's FIT Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Partnership Property distributed
to such Partner pursuant to any provision of this Agreement, such Partner's
distributive share of Losses and any items in the nature of expenses or losses
that are specially allocated pursuant to Section 16.4(b) or Section 16.4(c)
hereof, and the amount of any liabilities of such Partner assumed by the
Partnership or which are secured by any property contributed by such Person to
the Partnership.
(iii) In determining the amount of any liability for purposes of
subparagraphs (i) and (ii) hereof, there shall be taken into account Code
Section 752(c) and any other applicable provisions of the Code and Regulations.
16.3(e) "Federal Income Tax Capital Contribution" (FIT Capital
Contribution) means, with respect to any Partner, the amount of money and the
initial Gross Asset Value of any property (other than money) contributed as
capital and not as a project loan to the Partnership by such Partner pursuant to
this Agreement. The principal amount of a promissory note which is not readily
traded on an established securities market and which is contributed to the
Partnership by the maker of the note shall not be included in the FIT Capital
Account of any Partner until the Partnership makes a taxable distribution of the
note or until (and to the extent) principal payments are made on the note, all
in accordance with Regulations Section 1.704-1(b)(2)(iv)(d)(2).
16.3(f) "Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such asset as
determined by the contributing Partner and the Partnership Committee;
(ii) The Gross Asset Value of all Partnership assets shall be adjusted
to equal their respective gross fair market values, as determined by the
Partnership Committee, and in accordance with Regulations Section 1.704-
1(b)(2)(iv)(f) and 1.704-1(b)(2)(iv)(g), as of the following times: (a) the
acquisition of an additional Ownership Interest
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by any new or existing Partner in exchange for more than a de minimis FIT
Capital Contribution; (b) the distribution by the Partnership to a Partner of
more than a de minimis amount of Partnership Property as consideration for an
Ownership Interest; and (c) the liquidation of the Partnership within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g);
(iii) The Gross Asset Value of any Partnership asset distributed to
any Partner shall be the gross fair market value of such asset on the date of
distribution; and
(iv) The Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining FIT Capital Accounts
pursuant to Regulations Section 1.704l(b)(2)(iv)(m) and 16.4(b)(viii) hereof;
provided, however, that Gross Asset Values shall not be adjusted pursuant to
this subparagraph (iv) to the extent the Partnership Committee determines that
an adjustment to subparagraph (ii) hereof is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subparagraph (iv). If the Gross Asset Value of an asset has
been determined or adjusted pursuant to subparagraph (i), (ii) or (iv) hereof,
such Gross Asset Value shall thereafter be adjusted by the Depreciation taken
into account with respect to such asset for purposes of computing Profits and
Losses.
16.3(g) "Guaranteed Payment" means a payment by the Partnership to a
Partner as provided under Regulations Section 1.707-1(c). Such payment is to be
determined without regard to the income of the Partnership and is considered as
made to a Partner who is not acting in its capacity as a Partner.
16.3(h) "Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(b). The amount of Nonrecourse Deductions for a
Partnership Fiscal Year is determined in accordance with Regulations Section
1.704-2(c) and equals the net increase in Partnership Minimum Gain during the
year, reduced (but not below zero) by the aggregate distributions made during
the year of proceeds of a Nonrecourse Liability that are allocable to an
increase in Partnership Minimum Gain; provided that increases in Partnership
Minimum Gain resulting from conversions, refinancing, or other changes to a debt
instrument described in Regulations Section 1.704-2(g)(3) shall not generate
Nonrecourse Deductions.
16.3(i) "Nonrecourse Liabilities" has the meaning set forth in
Regulations Section 1.752-1(a)(2) or 1.704-2(b)(3).
16.3(j) "Partner Nonrecourse Debt" or "Partner Nonrecourse Liability"
as set forth in Regulations Section 1.704-2(b)(4), means any Partnership
liability to the extent that the liability is nonrecourse for purposes of
Regulations Section 1.1001-2, and a Partner (or related person within the
meaning of Regulations Section 1.752-4(b)) bears the economic risk of loss
within the meaning of Regulations Section 1.754-2.
16.3(k) "Partner Nonrecourse Debt Minimum Gain" means an amount, with
respect to each Partner Nonrecourse Debt, determined in accordance with
Regulations Sections 1.704-2(i)(2) and 1.704-2(i)(3).
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16.3(l) "Partner Nonrecourse Deductions", as set forth in Regulations
Section 1.704-2(i)(2) and 1.704-2(i)(3), means for any Partnership taxable year,
the net increase during the year in Partner Nonrecourse Debt Minimum Gain,
reduced (but not below zero) by proceeds of the liability distributed during the
year to the Partner bearing the economic risk of loss for the liability that is
both attributable to the liability and allocable to an increase in the Partner
Nonrecourse Debt Minimum Gain.
16.3(m) "Partnership Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(b)(2) and 1.704-2(d).
16.3(n) "Profits and Losses" means, for each Fiscal Year or other
period, an amount equal to the Partnership's taxable income or loss for such
year or period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(i) Any income described in Code Section 705(a)(1)(B) of the
Partnership that is exempt from federal income tax and not otherwise taken into
account in computing Profits and Losses pursuant to this definition shall be
added to such taxable income or loss;
(ii) Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Profits or Losses pursuant to this definition, shall be subtracted
from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Partnership Property
is adjusted pursuant to subparagraph (ii) or subparagraph (iii) of the
definition of Gross Asset Value, the amount of such adjustments shall be taken
into account as gain or loss from the disposition of such asset for purposes of
computing Profits and Losses;
(iv) Gain or loss resulting from any disposition of Partnership
Property with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the property
disposed of, notwithstanding that the adjusted tax basis of such property may
differ from its Gross Asset Value.
(v) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such Fiscal Year or other period,
computed in accordance with the definition of Depreciation; and
(vi) Notwithstanding any other provisions of this definition, any
items which are specially allocated pursuant to Section 16.4(b) or Section
16.4(c) shall not be taken into account in computing Profits or Losses.
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16.3(o) "Regulations" means the Income Tax Regulations promulgated
under the Code as amended from time to time, including the corresponding
provisions of any succeeding regulations.
16.3(p) "Tax Matters Partner" means the Partner so designated pursuant
to Exhibit E hereof.
16.4 Tax Allocations.
16.4(a) Allocation of Profits and Losses.
(i) Allocation of Profits. After first giving effect to the Regulatory
Allocations set forth in Section 16.4(b), and the Special Allocations in Section
16.4(c), Profits for each Fiscal Year of the Partnership shall be allocated to
the Partners in proportion to their respective Ownership Interests as reflected
in Exhibit A.
(ii) Allocation of Losses. After first giving effect to the Regulatory
Allocations set forth in Section 16.4(b), and the Special Allocations in Section
16.4(c), Losses for each Fiscal Year of the Partnership shall be allocated to
the Partners in proportion to their respective Ownership Interests as reflected
in Exhibit A.
16.4(b) Regulatory Allocations. The following Regulatory allocations
shall be made for the purpose of complying with Code Section 704(b) and the
Regulations thereunder in the following order:
(i) Minimum Gain Charge Back. Except as otherwise provided in
Regulations Section 1.704-2(f), and notwithstanding any other provision of this
Article 16, if there is a net decrease in Partnership Minimum Gain during any
Partnership Fiscal Year, each Partner shall be specially allocated items of
Partnership income and gain for such year (and, if necessary subsequent years)
equal to such Partner's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Regulations Section 1.704-2(g); provided that a
Partner shall not be subject to this Section 16.4(b)(i) to the extent that an
exception is provided by Regulations Sections 1.704-2(f)(2), (3) and (4), and
any Revenue Rulings issued pursuant to those Regulations. Any Partnership
Minimum Gain allocated pursuant to this Section 16.4(b)(i) shall consist of
first, gains recognized from the disposition of Partnership Property subject to
one or more Partnership Nonrecourse Liabilities, and second, if necessary, a pro
rata portion of the Partnership's other items of income or gain for that year.
This Section 16.4(b)(i) is intended to comply with the minimum gain charge back
requirement in Regulations Section 1.704-2(f) and shall be interpreted
consistently therewith The FIT Capital Accounts of the Partners may be restated
pursuant to Regulation Section 1.704-1(b)(2)(iv)(f) in connection with a
termination of the Partnership under Code Section 708(b)(1)(B).
(ii) Partner Nonrecourse Debt Minimum Gain Charge Back. Except as
otherwise provided in Regulations Section 1.704-2(i)(4), and notwithstanding any
other provision of this Article 16 except Section 16.4(b)(i), if there is a net
decrease in Partner Nonrecourse Debt Minimum Gain attributable to a Partner
Nonrecourse Debt during any
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Partnership Fiscal Year, each Partner who has a share of the Partner Nonrecourse
Debt Minimum Gain attributable to such Partner Nonrecourse Debt (determined in
accordance with Regulations Section 1.704-2(i)(5)) as of the beginning of the
year shall be specially allocated items of Partnership income and gain for such
year (and, if necessary, subsequent years) equal to such Partner's share of the
net decrease in Partner Nonrecourse Debt Minimum Gain attributable to such
Partner Nonrecourse Debt determined in accordance with Regulations Section
1.704-2(i). A Partner's share of the net decrease in Partner Nonrecourse Debt
Minimum Gain shall be determined in accordance with Regulations Section 1.704-
2(i)(5); provided that a Partner shall not be subject to this Section
16.4(b)(ii) to the extent that an exception is provided by Regulations Section
1.704-2(i)(4) and any Revenue Rulings issued thereunder. Any Partner Nonrecourse
Debt Minimum Gain allocated pursuant to this Section 16.4(b)(ii) shall consist
of first, gains recognized from the disposition of Partnership Property subject
to the Partner Nonrecourse Debt, and second, if necessary, a pro rata portion of
the Partnership's other items of income or gain for that year. This Section
16.4(b)(ii) is intended to comply with the minimum gain charge back requirement
in Regulations Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(iii) Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations, or distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-l(b)(2)(ii)(d)(5) or 1.704-
1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to each such Partner in an amount and manner sufficient to eliminate,
to the extent required by the Regulations, the Adjusted FIT Capital Account
Deficit of such Partner created by such adjustments, allocations or
distributions as quickly as possible, provided that an allocation pursuant to
this Section 16.4(b)(iii) shall be made if and only to the extent that such
Partner would have an Adjusted FIT Capital Account Deficit after all other
allocations provided for in this Article 16 have been tentatively made as if
this Section 16.4(b)(iii) were not in the Agreement.
(iv) Gross Income Allocation. In the event any Partner has a deficit
FIT Capital Account at the end of any Partnership Fiscal Year that is in excess
of the sum of (A) the amount such Partner is obligated to restore pursuant to
the terms of this Agreement or otherwise, and (B) the amount such Partner is
deemed to be obligated to restore pursuant to the penultimate sentences of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be
specially allocated items of Partnership income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this
Section 16.4(b)(iv) shall be made if, and only to the extent that, such Partner
would have a deficit FIT Capital Account in excess of such sum after all other
allocations provided for in this Article 16 have been tentatively made as if
Section 16.4(b)(iii) and this Section 16.4(b)(iv) were not in the Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal
Year or other period shall be allocated to the Partners in proportion to their
respective Ownership Interests.
(vi) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Fiscal Year shall be specially allocated to the Partner who
bears the economic
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risk of loss with respect to the Partner Nonrecourse Debt to which such Partner
Nonrecourse Deductions are attributable in accordance with Regulations Section
1.704-2(h).
(vii) Section 754 Adjustment. To the extent an adjustment to the
adjusted tax basis of any Partnership Property pursuant to Code Section 734(b)
or Code Section 743(b) is required, pursuant to Regulations Section 1.704-
1(b)(2)(iv)(m), to be taken into account in determining FIT Capital Accounts,
the amount of such adjustment to the FIT 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 gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
FIT Capital Accounts are required to be adjusted pursuant to such section of the
Regulations.
16.4(c) Special Allocations.
(i) Allocation of Inherent Gain. If during the term of the
Partnership, the FIT Capital Accounts of the Partners are not restated pursuant
to Regulations Section 1.704-1(b)(2)(iv)(f), then except as required by the
Regulatory Allocations, gain on disposition of the Partnership's assets as of
the date of this Agreement and their adjusted tax basis as of such date shall be
allocated to the Partners in proportion to their Ownership Interests.
(ii) Curative and Remedial Allocations. The allocations set forth in
Section 16.4(b)(i) to Section 16.4(b)(vi) hereof (the "Regulatory Allocations")
are intended to comply with certain requirements of Regulations Section 1.704-
1(b). It is the intent of the Partners that to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory Allocations
or with special allocations of other items of Partnership income, gain, loss,
and deduction pursuant to this Section 16.4(c)(ii). Therefore, notwithstanding
any other provision of this Article 16 (other than the Regulatory Allocations),
the Partners hereby authorize offsetting special allocations of income, gain,
loss, or deductions either through curative or remedial allocations, as
appropriate, so that, after such offsetting allocations are made, each Partner's
Capital Account balance is, to the extent possible, equal to the Capital Account
balance such Partner would have had if the Regulatory Allocations had not
occurred.
(iii) Deduction or Loss Attributable to FIT Capital Contributions.
Except as required by the Regulatory Allocations, all items of deduction or loss
attributable to a Partner's FIT Capital Contribution to the Partnership shall be
allocated to the contributing Partner in accordance with the Partner's Ownership
Interest.
16.4(d) Other Allocation Rules.
(i) Upon liquidation of the Partnership (or any Partner's Ownership
Interest) liquidating distributions shall be made in all cases in accordance
with the positive FIT Capital Account balances of the Partners, as determined
after taking into account all capital account adjustments for the Partnership
taxable year during which the liquidation occurs, consistent with the rules set
forth in Regulations Section 1.704-l(b)(2).
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(ii) The provisions of this Article 16 are intended to comply with
Code Section 704 and the Regulations thereunder.
(iii) For purposes of determining the profits, losses, or any other
items allocable to any period, profits, losses, and any such other items shall
be determined on a daily, monthly, or other basis, as determined by the
Partnership Committee using any permissible methods under Code Section 706 and
the Regulations thereunder.
(iv) Except as otherwise provided in this Agreement, all items of
Partnership income, gain, loss, deduction, and any other allocations not
otherwise provided for shall be divided among the Partners in the same
proportions as they share profits or losses, as the case may be, for the year.
(v) If any Ownership Interest is sold, assigned or transferred during
any accounting period, Profits, Losses, each item thereof and all other items
attributable to the transferred Ownership Interest for such period shall be
divided and allocated between the transferor and the transferee by taking into
account their varying interests during the period in accordance with Code
Section 706(d), using any conventions permitted by law and selected by the
Partnership Committee. All distributions on or before the date of such transfer
shall be made to the transferor and all distributions thereafter shall be made
to the transferee.
(vi) For purposes of Regulations Section 1.752-3(1)(3), the Partners
agree that nonrecourse liabilities of the Partnership in excess of the sum of
(A) the amount of Partnership Minimum Gain, and (B) the total amount of built-in
gain (as described in Regulations Section 1.752-3(a)(2)), shall be allocated
among the Partners in accordance with their respective ownership Interests.
(vii) Code Section 704(c). In accordance with Code Section 704(c) and
the Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Partnership shall, solely for tax
purposes, be allocated among the Partners so as to take into account any
variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and its initial Gross Asset Value (computed in
accordance with the definition of Gross Asset Value) including, but not limited
to, special allocations to a contributing Partner that are required under Code
Section 704(c) to be made upon distribution of such property to any of the non-
contributing Partners. In the event the Gross Asset Value of any Partnership
Property is adjusted pursuant to subparagraph (ii) of the definition of Gross
Asset Value, subsequent allocations of income, gain, loss and deduction with
respect to such asset shall take account of any variation between the adjusted
basis of such asset for federal income tax purposes and its Gross Asset Value in
the same manner as under Code Section 704(c) and the Regulations thereunder. Any
elections or other decisions relating to such allocations shall be made by the
Partnership Committee in any manner that reasonably reflects the purpose and
intention of the Agreement; provided, however, the Partnership shall select the
remedial method of allocation provided under Section 1.704-3(d) of the
Regulations. Allocations pursuant to this Section 16.4(d)(vii) are solely for
purposes of federal, state and local taxes and shall not affect, or in any way
be taken into account in computing any Partner's Book Capital Account or share
of Profits, Losses, other items, or distributions pursuant to any provision of
this
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Agreement. It is also the intent of the Partners that the foregoing special
allocation provided in this Section 16.4(d)(vii) shall be prospective and shall
not affect allocations on assets contributed prior to the adoption of the
amendment to this Section 16.4(d)(vii). For purposes of applying the remedial
method under Regulations Section 1.704-3(d), the amount by which book basis
exceeds tax basis for the MAPL Gathering System will be recovered over 15 years
using a recovery method of 150% declining balance switching to straight line.
17. Insurance. Except as otherwise agreed by all of the Partners, each
Partner shall maintain its own insurance against its portion of the risks
attendant to its interest in the Partnership. Each Partner shall maintain, at
such Partner's expense, at all times during the term of this Agreement the
insurance coverage set forth below with companies satisfactory to the
Partnership Committee with full policy limits applying, but not less than, as
stated.
(a) Minimum Coverage. The minimum insurance coverage shall be as
follows:
(i) General Liability coverage with minimum limits of
$1,000,000 bodily injury and property damage each
occurrence and in the aggregate to include broad form
property damage coverage;
(ii) Umbrella or Excess Liability coverage with per occurrence
limits of at least $5,000,000; and
(iii) Property loss coverage in an amount equal to a percentage
of the replacement value of the Facilities equal to such
Partner's Membership Interest.
Each Partner may self-insure as to the risks that would otherwise be covered by
the above types of coverage, but shall be obligated in the event of a loss to
pay and contribute to the Partnership amounts that would have been payable under
industry standard form policies for such coverages up to the amounts set forth
above, with respect to each Partner's proportionate share of such loss;
provided, however, no Partner shall be obligated to pay insurance proceeds or
pay to the Partnership any amounts as to property losses within the scope of
this section unless and until the Partnership Committee approves the rebuilding
or repair of the effected portions of the Facilities.
18. Disposition of Ownership Interests.
18.1 Dispositions. Any Partner may Dispose of its Ownership Interest
without the consent of the other Partners. The Partner wishing to make a
Disposition (herein the "Transferring Partner"), shall give written notice (the
"Disposition Notice") to each other Partners hereto (the "Remaining Partners")
not less than forty-five (45) days prior to the effective date of such
Disposition, stating the interest to be sold and identifying the proposed
transferee (herein the "Proposed Transferee").
(a) At the time such written notice is given to each Remaining Partner
of a proposed Disposition, the Transferring Partner shall include with such
notice information
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sufficient to demonstrate to the Remaining Partners that the Proposed Transferee
has adequate financial capability to fulfill the obligations of a Partner
hereunder as set forth in Exhibit D, which such Proposed Transferee will assume
in the event of such transfer. The period of evaluation of the Proposed
Transferee shall run for thirty (30) days. Within thirty (30) days of the notice
of proposed sale, each Remaining Partner shall deliver to the Transferring
Partner its reasonable and good faith opinion as to whether the adequate
financial capability of the Proposed Transferee has been demonstrated. If any
Remaining Partner fails to deliver such an opinion within the required thirty
(30) day period, it shall be deemed that such Remaining Partner has determined
that the adequate financial capability of the Proposed Transferee has been
demonstrated. During such thirty (30) day consideration period, any Remaining
Partner may request of the Transferring Partner, and the Transferring Partner
shall provide, such supplemental information concerning the Proposed Transferee
as may be reasonably necessary for the requesting Remaining Partner to make such
evaluation.
(c) If the transfer of the offered Ownership Interest to the Proposed
Transferee is to be completed and if the Remaining Partners agree, or are deemed
to have agreed that the Proposed Transferee meets the required financial
capability requirement, the Transferring Partner shall have the right to
transfer to the Proposed Transferee the Ownership Interest in the Partnership
specified in the notice referred to above and upon such transfer shall, subject
to this Article 18, be relieved of all its obligations and liabilities under
this Agreement arising after (but not before) the effective date of such
transfer. If a Partner or Partners having an aggregate Ownership Interest in
excess of fifteen percent (15%) give notice under the terms of Section 18.1(a)
that the Proposed Transferee does not meet the requirements of Section 18.1(a),
the Transferring Partner may transfer its Ownership Interest to the Proposed
Transferee but such Transferring Partner shall be liable for all of the
obligations and liabilities of its Proposed Transferee under this Agreement, as
hereafter amended (including any liabilities for breach of this Agreement). Any
dispute regarding the creditworthiness of a Proposed Transferee which the
Transferring Partner and Remaining Partners are unable to resolve to the
satisfaction of all Partners within ten (10) days following expiration of the
thirty (30) day period referenced in Section 18.1(a), shall, at the written
request of any Partner, be submitted to the alternative dispute resolution
procedures set forth in Section 20 for final resolution. If resolved in favor
of the Transferring Partner, such transfer may be completed subject to
provisions of this Section 18. If resolved in favor of the Remaining Partners,
such transfer may be completed subject to provisions of this Section 18 and the
retention of financial responsibility by the Transferring Partner; provided,
however, the Transferring Partner shall be released from such liability at such
time as the Proposed Transferee demonstrates to the Partnership Committee that
it has adequate financial capability to fulfill the obligations of a Partner and
only to the extent that such obligations and liabilities:
(1) arise out of, or are connected with, the Ownership Interest transferred
to such transferee by the Transferring Partner, and
(2) arise under this Agreement as it exists on the date of any such
transfer and as it may thereafter be amended or supplemented, but such
amendments or supplements shall not in any material way increase or adversely
affect any of the obligations or liabilities hereunder of such Transferring
Partner as they exist on the date of such transfer or extend
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the term of this Agreement past December 31, 2049. Any Transferring Partner who
retains liability hereunder shall be given copies of all notices (simultaneously
with its Proposed Transferee) concerning any obligations due and owing hereunder
from its Proposed Transferee. As a condition precedent to any person becoming a
Partner, such Proposed Transferee shall expressly assume the obligations of this
Agreement by executing and delivering one (or, at the request of the
Partnership, more) counterpart of this Agreement to each Partner and shall
execute such other documents as the other Partnership Committee may reasonably
request relating to assumption of the Transferring Partner's obligations and
liabilities concerning the Partnership.
18.2 General Conditions of Transfers. Every transfer, assignment or other
disposition of all or any part of a Partner's Ownership Interest under any
provision of this Agreement shall be conditioned upon its being effective only
when (i) the party receiving that Ownership Interest agrees in writing to be
bound by this Agreement and to assume all obligations, liabilities and duties
with respect to that Ownership Interest to which the prior holder was bound,
mutatis mutandis, and that the transfer, assignment or other disposition shall
not cause or create any right on the part of any Person to cause a winding up or
dissolution of the Partnership that is inconsistent with the provisions of this
Agreement or cause the termination of the Partnership for federal income tax
purposes and (ii) a true copy of the document or instrument evidencing the
transfer of all or any part of such Partner's Ownership Interest, certified as
such by a duly authorized representative of the transferring Partner, is
furnished to the Operator (a copy of which will be furnished to each Partner
upon written request).
18.3 Limitation on Dispositions to Avoid Termination. Notwithstanding
anything in this Agreement to the contrary, a Partner shall not have the right
to effect a Disposition of its Ownership Interest, or any portion thereof, to
any Person or entity, if such Disposition when aggregated with the total of all
other Dispositions of Ownership Interests within the preceding twelve (12)
months results in the Partnership being considered to have terminated within the
meaning of Section 708(b)(1)(B) of the Code. Any Partner transferring all or any
portion of its Ownership Interest shall promptly notify the Tax Matters Partner
of such transfer.
18.4 Relative Liabilities of Old and New Partners. Partners shall be
liable as to other Partners for Partnership debts and obligations in proportion
to their relative Ownership Interests in the Partnership.
18.5 Withdrawal of Partner When Unprofitable. If at any time during the
term of the Partnership any Partner deems the Partnership to be unprofitable
such that the Partner no longer desires to continue its participation in the
Partnership, in addition to any other rights that such Partner may have as
provided herein, such Partner shall have the right to request in writing that
the Operator submit to a vote by the Partnership Committee as to whether the
Partnership should be continued or wound up in accordance with the provisions of
Section 20 hereinafter. Within sixty (60) days of its receipt of such a request
by a Partner, the Operator shall submit these issues to the Partnership for
consideration. If after submitting the matter to a vote of the Partners, any
Partner or Partners owning a combined Ownership Interest of at least eleven
percent (11%) elect to continue the Partnership, (i) the Partner requesting such
vote shall relinquish its Ownership Interest in the Partnership to the other
Partner or Partners that voted to
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continue the Partnership (the "Affirmative Voting Partners") and thereafter be
relieved of any future Partnership liabilities and (ii) the other Partner(s)
that voted not to continue the Partnership shall have the right, but not the
obligation, to relinquish its or their Ownership Interest in the Partnership to
the Affirmative Voting Partners and thereafter, upon relinquishing such
interest, shall be relieved of any future Partnership liabilities. The Ownership
Interest being relinquished by a Partner shall be proportionately allocated
among the Affirmative Voting Partners based on the percentage by which each such
Continuing Partner's Ownership Interest bears to the total Ownership Interest
owned by all Affirmative Voting Partners. Any such transfer of a Partner's
interest in the Partnership SHALL NOT relieve or release such assigning Partner
from any of the Partnership's obligations and/or liabilities arising out of
events that occurred prior to such assignment, including, but not limited to,
environmental and existing financial liabilities and/or obligations.
18.6 Disposition of Ownership Interest to Another Partner. In the
circumstance where the Ownership Interest of one General Partner and its
Affiliates is acquired all or in part by another General Partner and its
Affiliates, the requirements for an affirmative vote of two General Partners as
set forth in Section 6.2 (a), Section 9.5, and Section 9.6, has the effect that
such votes may require unanimous consent. Any Partner and/or its Affiliates
shall be limited to a single General Partner vote. To remedy this situation,
the Partners may agree to restate those sections of the Partnership Agreement on
voting matters, and such restatement shall require mutual consent of all
remaining partners.
19. Default by Partners.
19.1 Failure to Make Contributions. Capital contributions not made when
due shall bear interest at the lower of (i) two percent (2%) above the prime
rate of interest as quoted in The Wall Street Journal at the time the
contribution was due, or (ii) the maximum legal rate of interest. While any
Partner is in material default hereunder in any of its obligations to make
capital contributions, such Partner shall have:
(a) No right to vote as a Partner and its Member on the Partnership
Committee shall have no right to vote (and the requirements for passage or
approval of items and for quorums shall be modified as necessary),
(b) No right to receive any portion of any distributions made by the
Partnership, and
(c) A continuing duty to pay its share of all future capital contributions
called for by the Partnership pursuant to this Agreement.
19.2 Expulsion of Partners. In the event any Partner commits a material
default of its obligations under this Agreement and fails to commence reasonable
steps to remedy the default within sixty (60) days after its receipt of written
notice specifying in reasonable detail the default and the reasonable actions
that must be taken to cure such default, which notice shall be prepared and sent
at the direction of the Partnership Committee, (which, for all determinations
under this Article 18, shall exclude the Ownership Interest of the Partner in
default) or becomes
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bankrupt or otherwise enters into a proceeding for general relief from its
creditors, the Partners not in default may, in addition to any other remedy they
may have by law or in equity, by vote of the Partnership Committee as provided
in Section 9.5(h), expel the defaulting Partner effective as of any future date
they specify.
19.3 Treatment of Book Capital Account of Expelled Partner. Any Partner
so expelled shall, within a reasonable period determined by the Partnership
which may include installment payments over five (5) years after the date the
expulsion becomes effective, be paid the positive balance, if any, in its Book
Capital Account after: (a) closing out its profits and losses (as determined
under GAAP) for Book Capital Account purposes; and (b) further subtracting from
its Book Capital Account the expelled Partner's or its Affiliate's share of any
then existing liabilities of the Partnership, whether or not then due and owing,
and any actual damages suffered by the Partnership and other Partners by reason
of the default. If the balance in the expelled Partner's Book Capital Account is
positive after the closing out of its profits and losses and the subtraction of
its (or its Affiliate's) share of then due and owing liabilities of the
Partnership, as well as the payment of any damages (which subtracted items are
herein referred to as "Current Liabilities"), but such balance is less than the
total of such former Partner's (or its Affiliate's) share of any other potential
existing Partnership liabilities which are not then due and owing (herein "Non-
Current Liabilities"), the Partnership shall retain such part of the expelled
Partner's Book Capital Account as is equal to the amount of the expelled
Partner's share of such Non-Current Liabilities, until all such liabilities are
paid in full. Such retained moneys may be invested and reinvested as the
Partnership deems appropriate and shall constitute a security interest in the
possession of the Partnership to secure the payment of such Non-Current
Liabilities of the expelled Partner, and such expelled Partner agrees that such
security interest in its Book Capital Account shall pass to the Partnership and
the Partnership shall take possession thereof for the purpose of obtaining
perfection of such security interest on the earlier of the date of its expulsion
or the date the expelled Partner enters voluntary bankruptcy proceedings of any
type or becomes bankrupt. The Partnership shall apply all amounts retained from
the expelled Partner's Book Capital Account (including any interest earned
thereon) to the payment of such Non-Current Liabilities to the extent that such
payments would have constituted a proper charge against the Book Capital Account
of such expelled Partner had it not been expelled. At the time that all Non-
Current Liabilities of the Partner shall have been paid in full, the Partnership
shall refund to the expelled Partner any funds remaining on deposit with the
Partnership from such Partner's Book Capital Account.
19.4 Other Obligations of Expelled Partner. From the date of its
expulsion, the expelled Partner shall have no Ownership Interest in the
Partnership and shall not share in its profits and losses. Such expelled Partner
shall, however, be and remain directly liable for payment of (in addition to and
after application of any moneys retained by the Partnership from its Book
Capital Account) its Partnership share of any Current Liabilities and Non-
Current Liabilities that existed as of the date of such Partner's expulsion
until such liabilities are paid in full, and shall remain fully responsible for
any obligations it may have incurred pursuant to Article 16.
20. Dissolution and Winding Up of the Partnership.
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20.1 Dissolution. The dissolution of the Partnership shall be caused only
by the following events:
(a) The written consent of all Partners to dissolve the Partnership or to
dissolve the Partnership under this First Amended and Restated Limited
Partnership Agreement for West Texas LPG Pipeline Limited Partnership and
reinstate the Partnership under the Original Partnership Agreement.
(b) The withdrawal (other than pursuant to a sale or other disposition by a
Partner of its Ownership Interest as authorized herein), expulsion, dissolution
or bankruptcy of any Partner or bankruptcy of the Partnership.
(c) The sale by the Partnership of all or substantially all of its assets.
(d) By any event which makes it unlawful for the business of the
Partnership to be carried on or for the Partners to carry it on in partnership.
(e) By expiration of the Partnership term as provided in Article 4.
(f) By court decree of dissolution as provided by the Act.
Each Partner covenants and agrees that it will not cause a dissolution of
the Partnership, directly or indirectly by (i) bankruptcy, (ii) being expelled
pursuant to Section 19.2 of this Agreement, (iii) withdrawal from the
Partnership, (iv) in the case of a partnership or a corporation, the taking of
any voluntary action or inaction to dissolve itself, or (v) breaching any other
material provision of this Agreement. It is understood that should any Partner
or Partners dissolve the Partnership in contravention of this provision, that
Partner or Partners shall be liable to the other Partners for damages for
wrongful dissolution.
For the purposes of this Section 20.1, a bankruptcy occurs whenever (a) an
entity makes an assignment for the benefit of all or substantially all of its
creditors or applies for the appointment of a trustee, liquidator or receiver of
any substantial part of its assets, or commences any proceeding relating to
itself under any bankruptcy, reorganization or similar laws (including the
Federal Bankruptcy Code of 1978, Title 11 of the United States Code and any
state insolvency act), or any such application is filed or proceeding is
commenced against such entity and such entity indicates its consent thereto; or
(b) an order, judgment or decree is entered by any court of competent
jurisdiction, appointing a trustee, liquidator or receiver for an entity or for
all or a substantial part of such entity's assets and such order, judgment or
decree shall continue unstayed and in effect for any period of one hundred
eighty (180) consecutive days.
20.2 Continuance of Business After Dissolution. In the event the
Partnership is ever dissolved as a result of the withdrawal, bankruptcy,
dissolution, legal incompetency, expulsion or a default or other act in
contravention of this Agreement by one or more (but less than all) of the
Partners (hereinafter referred to as the "Dissolving Partner" or "Dissolving
Partners"), then the remaining Partner or Partners agree to continue the
business of the Partnership and to form a new Partnership under the terms of
this Agreement for the purpose of
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continuing the business. The resulting new Partnership will be owned by all
Partners other than any Dissolving Partner in the same relative proportion as
their previous Ownership Interests. However, such Partners other than any
Dissolving Partner may, by unanimous agreement, accept a new Partner or Partners
to take the place of the Dissolving Partner or Dissolving Partners.
20.3 Liquidation of the Partnership. Upon the dissolution of the
Partnership under circumstances in which the business is not continued as
provided in Section 20.2, no further business shall be conducted by the
Partnership, except for the taking of such action as shall be necessary for the
winding up of its business and affairs, the liquidation of its assets and/or the
distribution of its assets to the Partners. Unless otherwise decided by the
Partnership Committee, the Operator shall be the liquidating trustee for the
Partnership. The winding up and liquidation of the Partnership shall consist of
the sale of the properties of the Partnership, at the conclusion of which the
Partnership shall terminate.
20.4 Winding Up of the Partnership. Upon the dissolution of the
Partnership, the proceeds from the liquidation of the assets of the Partnership
and collection of the receivables of the Partnership together with assets
distributed in kind, to the extent sufficient, shall be applied and distributed
in the following order of priority:
(a) To the payment and discharge of all of the Partnership's debts and
liabilities (other than any loans or advances that may have been made by any of
the Partners to the Partnership) and the expenses of liquidation ;
(b) To the creation of any reserves that the liquidating trustee deems
necessary for any contingent or unforeseen liabilities or obligations, debts or
liabilities of the Partnership not yet payable;
(c) To the payment and discharge of all of the Partnership's debts and
liabilities owing to Partners, but if the amount available for payment is
insufficient, then pro rata in accordance with the amounts of these debts and
liabilities; and
(d) To the Partners with positive F.I.T. Capital Accounts in accordance
with the ratio of their F.I.T. Capital Accounts.
20.5 No Liability for Return of Capital. No Partner shall be personally
liable for the return of all or any part of the contributions of any other
Partner to the Partnership. Any such return shall be made solely from the
property of the partnership.
21. Alternative Dispute Resolution Procedures
21.1 Covered Disputes. Any claims, actions, or disputes arising out of or
relating to this Agreement, including without limitation the meaning of its
provisions, or the proper performance of any of its terms, its breach,
termination or invalidity ("Dispute") will be resolved in accordance with the
procedures specified in this Section, which will be the sole and exclusive
procedure for the resolution of any such Dispute, except that any Party, without
prejudice to the following procedures, may file a complaint to seek preliminary
injunctive or
-33-
other provisional judicial relief, if in its sole judgment, that action is
necessary to avoid irreparable damage or to preserve the status quo. Despite
that action, the Parties will continue to participate in good faith in the
procedures specified in this Article.
21.2 Initiation of Procedures. Any Party wishing to initiate the dispute
resolution procedures set forth in this Article with respect to a Dispute not
resolved in the ordinary course of business must give written notice of the
Dispute to the other Party ("Dispute Notice"). The Dispute Notice will include
(i) a statement of that Party's position and a summary of arguments supporting
that position, and (ii) the name and title of the executive who will represent
that Party and of any other Person who will accompany the executive in the
negotiations under the next Section.
21.3 Negotiation Between Executives. If any Party has given a Dispute
Notice under the preceding Section, the Parties will attempt in good faith to
resolve the Dispute within thirty (30) days of the notice by negotiations
between executives who have authority to settle the Dispute and who are at a
higher level of management than the Members. Within ten (10) days after delivery
of the Dispute Notice, the receiving Party will submit to the other a written
response. The response will include (i) a statement of that Party's position
and a summary of arguments supporting that position, and (ii) the name and title
of the executive who will represent that Party and of any other Person who will
accompany the executive. Within twenty (20) days after delivery of the Dispute
Notice, the executives of the Parties will meet at a mutually acceptable time
and place, and thereafter, as often as they reasonably deem necessary, to
attempt to resolve the Dispute.
21.4 Mediation. If the Dispute has not been resolved by negotiation under
the preceding Section within thirty (30) days of the Dispute Notice, and only in
such event, a Party may initiate the mediation procedure of this Section by
giving written notice to the other Party ("Mediation Notice"). The Parties will
endeavor to settle the Dispute by mediation within sixty (60) days of the
Mediation Notice under the then current Center for Public Resources ("CPR")
Model Mediation Procedure for Business Disputes. If the Parties have not agreed
upon a mediator within seven (7) days after the Mediation Notice, any Party may
request CPR assistance in the selection of a mediator under its guidelines. The
mediator will establish rules for an expedited discovery procedure and will
resolve all disputes with regard to discovery between the Parties. If the
mediator has not already done so during the mediation process, at least seven
(7) days before the end of the sixty (60) day mediation period, the mediator
will provide to each Party a written summary of the mediator's conclusions
regarding the outcome of the Dispute.
21.5 Arbitration. If the Dispute has not been resolved by mediation under
Section 21.4 above within the required sixty (60) Day period or if any Party to
a Dispute fails and/or refuses to participate in such mediation procedures, any
Party may initiate arbitration to resolve the matter by submitting a written
notice (the "Arbitration Notice") to the other Party or Parties. Any arbitration
hereunder shall be governed by the Federal Arbitration Act, 9 U.S.C. (S) 1 et
seq., as amended, to the exclusion of any other arbitration acts, statutes, or
rules of any other jurisdiction, state or federal.
21.6 Arbitration Procedure. Any arbitration hereunder shall be conducted in
-34-
accordance with the then current CPR Rules for Non-Administered Arbitration,
except to the extent terms expressly set forth in this Article are in conflict
with or supplement such Rules, by three independent and impartial arbitrators,
of whom each Party to a Dispute shall appoint one, and the two so appointed by
the Parties shall appoint the third arbitrator. The Arbitration Notice shall
name the noticing Party's arbitrator, and shall contain a statement of the
issue(s) presented for arbitration. Within fifteen (15) Days of receipt of an
Arbitration Notice, the other Party shall name its arbitrator by written notice
to the other and may designate any additional issue(s) for arbitration. The two
named arbitrators shall select the third arbitrator within fifteen (15) Days
after the date on which the second arbitrator was named. Should the two
arbitrators fail to agree on the selection of the third arbitrator, either Party
shall be entitled to request CPR to select the third arbitrator. Should either
Party fail and/or refuse to name its arbitrator within the required fifteen (15)
Day period, the other Party shall be entitled to request CPR to select the
arbitrator for such Party. All arbitrators shall be qualified by education or
experience within the natural gas liquids portion of the energy industry to
decide the issues presented for arbitration. No arbitrator shall be: a current
or former director, officer, or employee of either Party or its Affiliates; an
attorney (or member of a law firm) who has rendered legal services to either
Party or its Affiliates within the preceding three Years; or an owner of any of
the common stock of either Party, or its Affiliates.
21.7 Arbitration Hearing. The three arbitrators shall commence the
arbitration proceedings within twenty-five (25) Days following the appointment
of the third arbitrator. The arbitration proceedings shall be held at a mutually
acceptable site and if the Parties are unable to agree on a site, the
arbitrators shall select the site. The arbitrators shall have the authority to
establish rules and procedures governing the arbitration proceedings, including,
without limitation, rules concerning discovery. Each Party shall have the
opportunity to present its evidence at the hearing. The arbitrators may call for
the submission of pre-hearing statements of position and legal authority, but no
post-hearing briefs shall be submitted. The arbitration panel shall only have
authority to award compensatory damages alone and shall not have the authority
to award incidental, consequential, special, punitive or exemplary damages. In
addition, if an issue under consideration is limited to a determination of an
amount of money owed by one Party to the other, each Party shall submit to the
arbitration panel a final offer of its proposed resolution of the Dispute. The
arbitration panel shall be charged to select from the two proposals the one
which the panel finds to be the most reasonable and consistent with the terms
and conditions of this Agreement, and the arbitration panel shall not average
the Parties' proposals or otherwise craft its own remedy. All evidence submitted
in an arbitration proceeding, transcripts of such proceedings, and all documents
submitted by the Parties in an arbitration proceeding shall be kept confidential
and shall not be disclosed to any third party by either Party hereto.
21.8 Arbitration Decision and Costs. The decision of the arbitrators
or a majority of them, shall be in writing and shall be final and binding upon
the Parties as to the issue(s) submitted. The cost of the hearing shall be
shared equally by the Parties, and each Party shall be responsible for its own
expenses and those of its counsel or other representatives. Each Party hereby
irrevocably waives, to the fullest extent permitted by law, any objection it may
have to the arbitrability of any such Disputes, controversies or claims and
further agrees that a final determination in any such arbitration proceeding
shall be conclusive and binding upon each Party.
-35-
21.9 Enforcement of Award. Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction. The prevailing
Party shall be entitled to reasonable attorneys' fees in any contested court
proceeding brought to enforce or collect any award of judgment rendered by the
arbitrators.
21.10 Tolling and Performance. Except as otherwise provided in this
Article 20, all applicable statutes of limitation and defenses based upon the
passage of time and all contractual limitation periods specified in this
Agreement, if any, will be tolled while the procedures specified in this Article
20 are pending. The Parties will take all actions to effectuate the tolling of
any applicable statute of limitation or contractual limitation periods. All
deadlines specified herein may be extended by mutual written agreement of the
Parties or, if an Arbitration Notice has been sent regarding the Dispute, by
written order of a majority of the arbitrators. Each Party is required to
continue to perform its obligations under this Agreement pending final
resolution of any Dispute, unless to do so would be impossible or impracticable
under the circumstances. Notwithstanding the foregoing, the statute of
limitations of the State of Texas applicable to the commencement of a lawsuit
will apply to the commencement of an arbitration under this Agreement, except
that no defenses will be available based upon the passage of time during any
negotiation or mediation called for by the preceding Sections of this Article.
22. Further Assurance. Each of the Partners agrees to execute and deliver
all such other additional instruments and documents and to do such other acts
and things as may be necessary more fully to effectuate this Agreement and the
Partnership created hereby and to carry on the business of the Partnership in
accordance with this Agreement.
23. Waiver. No waiver by any Partner of the performance of any provision,
condition or requirement herein shall be deemed to be a waiver of, or in any
manner release the other Partners from, performance of any other provision,
condition or requirement herein; nor be deemed to be a waiver of, or in any
manner release the other Partners from future performance of the same provision,
condition, or requirement; nor shall any delay or omission of any Partner to
exercise any right hereunder in any manner impair the exercise of any such right
or any like right accruing to it thereafter.
24. Independent Conduct. Each of the Partners and their respective
Affiliates reserve and retain the right to engage in all businesses and
activities of any kind whatsoever (regardless of whether the same may be in
competition with the business and activities of the Partnership), and to acquire
and own all assets however acquired and wherever situated, and to receive
compensation or profit therefrom, for their own respective accounts and without
in any manner being obligated to disclose such business and activities or assets
or compensation or profit to the other Partners or to the Partnership.
25. Applicable Law. THIS AGREEMENT, OTHER DOCUMENTS EXECUTED AND
DELIVERED PURSUANT HERETO, AND THE LEGAL RELATIONS BETWEEN THE PARTIES WITH
RESPECT TO THIS AGREEMENT, SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH
the LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO RULES CONCERNING CONFLICTS OF
LAW.
-36-
26. Subject to Applicable Law. This Agreement and the obligations of the
Partners hereunder are subject to all applicable laws, rules, court decisions,
orders and regulations of governmental authorities having jurisdiction.
27. Validity. Should any portion of this Agreement be declared invalid
and unenforceable and such declaration of invalidity or unenforceability have a
material and substantial negative impact on the rights, duties or obligations of
any Partner, then the Partners shall meet to determine if such negative impact
can be eliminated or mitigated. If such negative impact can not be eliminated
or mitigated to the satisfaction of the Partner affected thereby, that Partner
shall have the right to terminate this Agreement; provided, however, if any
Partner disputes the terminating Partner's right to terminate this Agreement
pursuant to this Section 26, the issue of the terminating Partner's right to do
so shall be subject to the alternative dispute resolution procedures set forth
in Section 21.
28. Headings. The headings and titles contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
29. Binding Effect. This Agreement and the covenants, obligations,
undertakings, rights and benefits shall be binding on and inure to the benefit
of the respective successors and permitted assigns of the Partners, except to
the extent of any contrary provision in this Agreement.
30. Benefits of Agreement Restricted to Partners. Nothing in this
Agreement, expressed or implied, shall give or be construed to give any Person,
other than the parties hereto and their successors and assigns, any legal or
equitable right, remedy or claim under or in respect to this Agreement or under
any covenant, conditions or provisions contained herein; and all such covenants,
conditions and provisions shall be for the sole benefit of the parties hereto.
31. Counterparts. The Partners may execute this Agreement in two or more
counterparts, which shall, in the aggregate, be signed by all of the Partners;
each counterpart shall be deemed an original instrument as against any Partner
who has signed it.
32. Entire Agreement. This Agreement constitutes the entire agreement
between the Partners concerning the subject matter hereof and the same
supersedes any prior understanding or written or oral agreements relative to
said matter, including, but not limited to, the Original Partnership Agreement.
33. Exhibits and Schedules. All exhibits and schedules or descriptions
referred to in this Agreement are expressly incorporated herein by reference as
if set forth in full, whether or not attached hereto. In the event of any
conflict between the terms and conditions of this Agreement and the terms and
conditions of any exhibit, schedule or other documents referenced herein, the
terms and conditions of this Agreement shall govern and control.
34. Reservation of Rights. Except as otherwise provided herein, each
Partner reserves to itself all rights, set-offs, counterclaims, and other
remedies and/or defenses which such Partner
-37-
is or may be entitled to arising from or out of this Agreement or as otherwise
provided by law.
35. Principles of Construction and Interpretation. In construing this
Agreement, the following principles shall be followed:
(a) no consideration shall be given to the fact or presumption that one
Partner had a greater or lesser hand in drafting this Agreement;
(b) examples shall not be construed to limit, expressly or by implication,
the matter they illustrate;
(c) the word "includes" and its syntactical variants mean "includes, but is
not limited to" and corresponding syntactical variant expressions; and
(d) the plural shall be deemed to include the singular and vice versa, as
applicable.
36. Damages. Notwithstanding anything to the contrary in this Agreement,
a Partner's damages resulting from a breach or violation of any representation,
warranty, covenant or condition contained herein shall be limited to actual
direct damages, and shall not include any other damages, including, without
limitation, indirect, special, consequential, incidental or punitive damages.
In addition, the Partners agree that in no event shall a Partner seek to or
recover from the Partnership indirect, special, consequential, incidental or
punitive damages or any other damages other than actual direct damages.
37. Notices. All notices required or permitted under this Agreement to be
given to any Partner or the Partnership shall be in writing and shall be deemed
given when personally delivered to the individual or individuals designated in
writing by that Partner or, for notices to the Partnership, to the Secretary of
the Partnership Committee; when sent by facsimile or by electronic mail (such as
via internet) with confirmation of receipt; or five (5) days after being mailed,
postage prepaid, certified or registered, return receipt requested and addressed
as specified in writing by that Partner or, for notices to the Partnership, to
the Secretary of the Partnership Committee; provided, that in the case of
notices which are mailed and which require the party or parties being given
notice to take action within a specified time period, the party giving notice
shall make a good faith effort to contact the party or parties being given
notice by telephone during the five (5) day period following mailing to advise
them of the mailing of the notice. The persons initially designated by each
Partner for receipt of notice and the address for such notice is shown on the
execution page of this Agreement next to each Partner's signature. Such
designated person or address may be changed by a Partner by proper notice to all
other Partners and the Secretary of the Partnership Committee.
-38-
ACCEPTED and AGREED to on the date above written.
WTLPS, Inc. DMS LP, Inc.
By: By:
------------------------ -------------------------
Title: Title:
Chevron Pipe Line Company Chevron Raven Ridge Pipe Line Company
By: By:
------------------------ -------------------------
Title: Title:
Mid-America Pipeline Company MAPL Investments, Inc.
By: By:
------------------------ -------------------------
Title: Title:
-39-
WTLPS, Inc.'s Address for Notices:
WTLPS, Inc. with a copy to:
Attention: President WTLPS, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Attention: VP & General Counsel
Suite 5800 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Suite 5800
Phone: ▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
DMS LP, Inc.'s Address for Notices:
WTLPS, Inc. with a copy to:
Attention: President WTLPS, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Attention: VP & General Counsel
Suite 5800 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Suite 5800
Phone: ▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Chevron Pipe Line Company's Address for Notices:
Attention: VP & General Counsel
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Chevron Raven Ridge Pipe Line Company's Address for Notices:
Attention: VP & General Counsel
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
-40-
Mid-America Pipeline Company Address for Notices:
Attention ▇▇▇ ▇▇▇▇▇▇▇, Vice President
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
MAPL Investments, Inc. Address for Notices:
Attention ▇▇▇ ▇▇▇▇▇▇▇, Vice President
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
-41-
EXHIBIT A
OWNERSHIP INTERESTS
Partner Type of Partnership Interest Ownership Interest
-----------------------------------------------------------------------------------------
WTLPS, Inc. General Partner 00.392%
-----------------------------------------------------------------------------------------
Chevron Pipe Line Company General Partner 00.408%
-----------------------------------------------------------------------------------------
Mid-America Pipeline Company General Partner 00.200%
-----------------------------------------------------------------------------------------
DMS LP, INC. Limited Partner 38.808%
-----------------------------------------------------------------------------------------
Chevron Raven Ridge Pipe Line Company Limited Partner 40.392%
-----------------------------------------------------------------------------------------
MAPL Investments, Inc. Limited Partner 19.800%
-----------------------------------------------------------------------------------------
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EXHIBIT B
DESCRIPTION AND MAP OF ORIGINAL LIMITED PARTNERSHIP PROPERTY
I. PIPELINE FACILITIES
(A) PIPELINE: There is about 1,950 miles of various sizes of pipe ranging
from 2" to 14", 0.156 Gr B to 0.365 x 46 w.t., and 1957 - 1992
vintage. The lateral lines are up to 8" and the trunk portion is all
10" and 14".
(B) BOOSTER STATIONS: There are 18 pump stations, 24 pump and electric
motor units and associated electrical switchgear and control
equipment. Total horsepower is 28,200. Pumps are all horizontal
centrifugal type.
(C) COAHOMA FACILITY: There are 2 - 1,000 horsepower pump units with
centrifugal pumps and electric motors. It is an 80 acre site with
three storage ▇▇▇▇▇(nominal 300,000 Bbls), two brine pits (nominal
350,000 Bbls capacity), and all associated piping and electrical
equipment.
** Of the 19 booster stations (including Coahoma), 13 are on separately
identifiable property.
(D) METER STATIONS: There are about 62 receipt, custody transfer meter
stations of which about 54 are at plant sites. There are another 18
check meter locations with a total of 34 meter runs. Each facility
generally includes turbine meter runs, instrumentation, and equipment
buildings.
(E) MISCELLANEOUS:
* Sending and receiving swab trap facilities (22 on the trunk line
alone).
* Portable meter provers
* Spare parts inventory
-▇▇-
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇ GATHERING SYSTEM AND OTHER CONTRIBUTIONS
I. MAPL Gathering System:
A. Pipelines
. 6" Artesia Lateral MP 0.0 to MP 78.9
. 6" Seven Rivers Pipeline MP 0.0 to MP 26.9
. 6" Seven Rivers connection MP 0.0 to MP 1.7
. 3" pipeline to Pecos Diamond MP 0.0 to MP 0.3
. .49 miles of 2" pipeline from Plant 57 to Artesia lateral at MP 78.9
. 4" ▇▇▇▇▇▇▇▇ Artesia Connection MP 0.0- MP 1.9
. 6" ▇▇▇▇▇ Lateral MP 0.0 to MP 7.6
. 4" ▇▇▇▇▇ Lateral MP 7.6 to MP 13.9
. 8" ▇▇▇▇▇▇▇▇▇▇ Lateral MP 0.0 to MP 27.0
. 6" ▇▇▇▇▇▇▇▇▇▇ Lateral MP 27.0 to MP 31.7
. ▇▇▇▇▇▇▇ Ranch Pipeline 3.13 miles
. 6" ▇▇▇▇▇ San ▇▇▇▇▇▇ Jct. MP 0.0 to MP 52.1
. 4" Amoco North ▇▇▇▇▇▇- San ▇▇▇▇▇▇ Jct MP 0.0 to MP 12.7
. Chevron- San ▇▇▇▇▇▇ (▇▇▇▇▇ Jct.) MP 0.0 to MP 0.38
. 8" Lees to ▇▇▇▇▇ lateral MP 0.0 to MP 110.5
. 4" Fullerton Lateral MP 7.4 to Lees to ▇▇▇▇▇ ▇▇ 77.9
. Pipeline from Lees to ▇▇▇▇▇ to Mobil Baden Storage .7 miles
. 6" ▇▇▇▇▇▇▇ to ▇▇▇▇▇▇▇ Lateral MP 0.0 to MP 31.8
. 6" ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ 0.0 to MP 2.16
. 8" ▇▇▇▇▇▇ lateral MP 88.8 to MP 159.4
. 6" ▇▇▇▇▇▇ Lateral MP 159.4 to MP 190
. 6" ▇▇▇▇▇▇ Lateral MP 190 to MP 220 (out of service)
. 6" ▇▇▇▇▇▇▇ lateral MP 0.0 to MP 21.4
. 4" Indian ▇▇▇▇▇ ▇▇▇▇▇▇▇ Injection MP 0.0 to MP .33
. 3" ▇▇▇▇▇▇ Lateral MP 0.0 to MP 6.7
. Indian ▇▇▇▇▇ Lateral .5 miles
. 8" Lees to ▇▇▇▇▇▇ Loop MP 0.0 to MP 60.7
. 4" Rockland SterlingPerkins Lateral MP 0.0 to MP 42.5
. 4" ▇▇▇▇▇▇▇ Lateral MP 0.0 to MP 5.8
. 6" Vealmoor Lateral MP 0.0 to MP 8.1
. 4" General Crude Lateral MP 0.0 to MP 36.4
. 6" North ▇▇▇▇▇▇ Lateral from General Crude MP 0.0 to MP 7.38
. Texaco East Vealmoor Storage MP 0.0 to MP 0.2
. Conoco Sterling MP 0.0 to MP 4.5
. 4" Northern Natural MP0.0 to MP 14.2
-44-
B. Pump Stations
. Maljamar
. ▇▇▇▇▇▇
. ▇▇▇▇▇▇▇
. ▇▇▇▇▇▇▇
. Lees
. ▇▇▇▇▇▇
C. Valve Stations
. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
. ▇▇▇▇▇▇▇
▇. Meter Sites
. Marathon Indian Basin
. ▇▇▇▇▇ Penasco
. Duke Dagger Draw
. Amoco Abo
. Duke Pecos Diamond
. ▇▇▇▇▇ ▇▇▇▇▇▇
. Texaco ▇▇▇▇▇▇
. LG&E Antelope Ridge
. Western Gas ▇▇▇▇▇▇▇
. Western Gas ▇▇▇▇▇▇▇
. ▇▇▇▇▇ ▇▇▇▇▇▇
. Conoco Garden City
. Conoco Sterling
. Range Resources Sterling
. Texaco Vealmoor
. Mobil Salt Creek
. Mobil Baden
. WTP ▇▇▇▇▇
. ▇▇▇▇ Chaparral San ▇▇▇▇▇▇
▇. ▇▇▇▇▇ Terminal Equipment
. Metering Facilities
. Two 500 HP Pumps
. Associated Piping
-45-
II. Other Contributions:
By wire transfer into the Partnership's account on or prior to May 1, 1999,
MAPL shall contribute to the Partnership the sum of $2.067 Million.
-46-
EXHIBIT D
FINANCIAL RESPONSIBILITY REQUIREMENTS
Each potential new Partner in the West Texas LPG Pipeline Limited Partnership
must demonstrate adequate financial responsibility itself or through a Credit
Worthy Affiliate. Such credit worthiness may be demonstrated by satisfying one
of the two methods of meeting financial responsibility described below.
Method I
The Partner or its Affiliate has senior unsecured debt outstanding which is
rated by:
(a) ▇▇▇▇▇'▇ Investors Services Baa3 or better, and
(b) Standard and Poors BBB or better
Method II
If a Partner or its Affiliate fails to meet the above test, then the
following criteria will be applied to the Partner's or its Affiliate's financial
statements:
1. Debt/Capital less than or equal to 55%; or
2. Debt/EBITDA less than or equal to 3.5; or
3. Net worth greater than or equal to $250 million; or
4. Current assets/current liabilities greater than or equal to 1.0.
If the Partner or Affiliate meets any one of the above criteria, then such
Partner or Affiliate shall be deemed to have adequate financial capability to
fulfill the obligations of a Partner.
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EXHIBIT E
TAX MATTERS
1. Tax Returns, Proceedings and Elections. Tax returns, proceedings, and
elections shall be governed by the provisions of this Exhibit E as it may be
amended from time to time by a vote of the Partnership Committee.
(a) Chevron Pipeline Company is designated the tax matters Partner
("TMP") as defined in Section 6231(a)(7) of the Code. The designation of TMP
shall be effective only for operations conducted by the Partners pursuant to
this Agreement.
(b) The TMP shall cause to be prepared all necessary federal, state,
and local Partnership income, excise, and property tax returns and, except for
excise taxes, furnish a copy of the proposed return to the Partners for their
review not later than one month prior to the due date, including extensions, for
filing such returns. The TMP shall timely file such returns and, upon the
written request of a Partner, shall provide the Partners with schedules which
are consistent with the treatment of all items on those returns. The TMP agrees
to use all reasonable efforts in the preparation and filing of such tax returns
but, in doing so, shall incur no liability to any Partner with respect to such
returns or any elections relating thereto. On or before the last day of May
after the end of the taxable year, the TMP will cause each Partner to be
provided with estimates of all information reasonably necessary or appropriate
to file its respective tax returns and reports.
(c) The Partners shall furnish the TMP with such information as it may
reasonably request to aid in the preparation of the Partnership returns and
which will permit it to provide the Internal Revenue Service with sufficient
information so that proper notice can be mailed-to such Partners as provided in
Section 6223 of the Code.
(d) To the extent and in the manner provided by applicable treasury
regulations, the TMP shall keep each Partner informed of all administrative and
judicial proceedings for the adjustment of Partnership items (as defined in
Section 6231(a)(3) of the Code) at the Partnership level.
(e) If an administrative proceeding contemplated under Section 6223 of
the Code has begun, the Partners shall notify the TMP of their treatment of any
Partnership Item on their federal income tax return in a manner which is or may
be inconsistent with the treatment of that item on the Partnership return.
(f) The TMP shall not enter into any extension of the period of
limitations as provided under Section 6229 of the Code without the prior written
consent of the Partners.
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(g) Any Partner who enters into a settlement agreement with the
Secretary of the Treasury with respect to Partnership Items shall promptly
notify the other Partners of such settlement agreement.
(h) The TMP shall not bind the other Partners to a settlement
agreement without obtaining the written concurrence of the Partners who will be
bound by such agreement.
(i) The TMP shall notify all Partners of any intention to file a
petition with a court for a readjustment of any Partnership Items. Such notice
shall be given within a reasonable time so that the Partners may participate in
choosing the forum for the filing of any petition. This provision shall not
apply to any Partner who does not have an interest in the outcome of such
matter. Whether a Partner has an interest in the outcome will be determined
using the standard in Section 6226(d) of the Code. Further, the TMP or other
Partner who had brought the action under Section 6226 of the Code, shall provide
the other Partners with notice of any intention to seek review of a
determination by any court under that Section.
(j) No Partner may file a request for an administrative adjustment of
Partnership Items for any Partnership taxable year pursuant to Section 6227 of
the Code without first notifying all other Partners. If the other Partners agree
with the requested adjustment, the TMP shall file the request for administrative
adjustment on behalf of the Partnership.
(k) If any part of an administrative adjustment request filed by a
Partner is not allowed by the Internal Revenue Service, the Partner filing such
request shall seek the concurrence of other Partners with regard to the filing
of a petition with a court and with regard to seeking review of the
determination by any court in the same manner as provided in Section l(i) of
this Exhibit.
(l) The TMP and other Partners shall use all reasonable efforts to
comply with the responsibilities as outlined herein and in Sections 6222 through
6233 of the Code, but shall incur no liability to any other Partner for failure
to fulfill such responsibilities.
(m) The provisions of this Exhibit E shall survive the termination of
the Partnership or the termination of any Partner's interest in the Partnership
and shall remain binding on the Partners for a period of time necessary to
resolve with the Internal Revenue Service or the Department of the Treasury any
and all matters regarding the federal income taxation of the Tax Partnership and
any applicable state income tax matters.
2. Elections. The Partners agree that the TMP is directed to make the
following elections on behalf of the Partnership in the appropriate returns of
the Partnership prepared pursuant to Section 1 above:
(a) To adopt the accrual method of accounting;
(b) To compute the allowance for depreciation or cost recovery using
the shortest permissible life and most rapid recovery method permitted
permissible life and most rapid recovery method permitted under the Code;
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(c) To elect the Calendar Year as the Fiscal Year of the Partnership;
(d) To elect in a timely manner pursuant to Section 266 of the Code
and the Treasury Regulations thereunder to charge to the capital account with
respect to the property acquired or constructed by the Partners under
this Agreement all taxes and carrying charges including interest on
indebtedness, which may be capitalized thereunder;
(e) To elect to amortize all organization costs of the Partnership
under Section 709 of the Code; and
(f) To make such other elections as the Partnership Committee may
direct.
3. Section 754 Election. Upon the transfer of an interest in the
Partnership, and upon the written request of the transferee, the Partnership
shall make an election at the written request of the transferee Partner pursuant
to Section 754 of the Code to adjust the basis of Partnership Property. Any
Partner or successor in interest, whose basis in Partnership property is
adjusted pursuant to Section 743(b) of the Code, shall assume sole compliance
responsibility to reflect the adjustment to basis of its Partnership property
under Section 743(b) of the Code, to prepare and attach a statement to its
income tax return showing the computation of the adjustment and the Partnership
properties to which the adjustment has been allocated.
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