1
EXHIBIT 3.2
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ALLIANCE RESOURCE OPERATING PARTNERS, L.P.
Alliance Resource Operating Partners, L.P.
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE II
ORGANIZATION
SECTION 2.1 Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.3 Registered Office; Registered Agent; Principal Office; Other Offices . . . . . . . . . . . . . . . . . 13
SECTION 2.4 Purpose and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.5 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.6 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.7 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.8 Title to Partnership Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III
RIGHTS OF LIMITED PARTNERS
SECTION 3.1 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.2 Management of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.3 Outside Activities of the Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.4 Rights of Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV
TRANSFERS OF PARTNERSHIP INTERESTS
SECTION 4.1 Transfer Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.2 Transfer of General Partner's Partnership Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.3 Transfer of a Limited Partner's Partnership Interest . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.4 Restrictions on Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
SECTION 5.1 Initial Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.2 Contributions Pursuant to the Contribution and Conveyance
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.3 Additional Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.4 Interest and Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.5 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.6 Loans from Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.7 Limited Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.8 Fully Paid and Non-Assessable Nature of Partnership Interests . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
SECTION 6.1 Allocations for Capital Account Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.2 Allocations for Tax Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.3 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
SECTION 7.1 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.2 Certificate of Limited Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 7.3 Restrictions on General Partners' Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 7.4 Reimbursement of the General Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.5 Outside Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.6 Loans from the General Partners; Loans or Contributions from the
Partnership; Contracts with Affiliates; Certain Restrictions on the General
Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.8 Liability of Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.9 Resolution of Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.10 Other Matters Concerning the General Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.11 Reliance by Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 8.1 Records and Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.2 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE IX
TAX MATTERS
SECTION 9.1 Tax Returns and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.2 Tax Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.3 Tax Controversies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.4 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE X
ADMISSION OF PARTNERS
SECTION 10.1 Admission of Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.2 Admission of Substituted Limited Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.3 Admission of Additional Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.4 Admission of Successor or Transferee General Partners . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.5 Amendment of Agreement and Certificate of Limited Partnership . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
SECTION 11.1 Withdrawal of the Managing General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 11.2 Removal of the Managing General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.3 Interest of Departing Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.4 Withdrawal or Removal of Special General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.5 Withdrawal of a Limited Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE XII
DISSOLUTION AND LIQUIDATION
SECTION 12.1 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 12.2 Continuation of the Business of the Partnership After Dissolution . . . . . . . . . . . . . . . . . . 52
SECTION 12.3 Liquidator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 12.4 Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 12.5 Cancellation of Certificate of Limited Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 12.6 Return of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 12.7 Waiver of Partition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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SECTION 12.8 Capital Account Restoration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT
SECTION 13.1 Amendment to be Adopted Solely by the Managing General Partner . . . . . . . . . . . . . . . . . . . . 56
SECTION 13.2 Amendment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE XIV
MERGER
SECTION 14.1 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 14.2 Procedure for Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 14.3 Approval by Limited Partners of Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 14.4 Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 14.5 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XV
GENERAL PROVISIONS
SECTION 15.1 Addresses and Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 15.2 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 15.3 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 15.4 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 15.5 Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 15.6 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 15.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 15.8 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 15.9 Invalidity of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 15.10 Consent of Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ALLIANCE RESOURCE OPERATING PARTNERS, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of ALLIANCE
RESOURCE OPERATING PARTNERS, L.P., dated as of August ___, 1999 is entered into
by and between Alliance Resource Management GP, LLC, a Delaware limited
liability company, as the Managing General Partner, Alliance Resource GP, LLC,
a Delaware limited liability company, as the Special General Partner and
Alliance Resource Partners, L.P., a Delaware limited partnership, as the
Limited Partner, together with any other Persons who hereafter become Partners
in the Partnership or parties hereto as provided herein.
R E C I T A L S:
WHEREAS, Alliance Resource GP, LLC and Alliance Resource Partners,
L.P. formed the Partnership pursuant to the Agreement of Limited Partnership of
Alliance Resource Operating Partners, L.P. dated as of June 14, 1999 (the
"Prior Agreement") and a Certificate of Limited Partnership filed with the
Secretary of State of the State of Delaware on such date; and
WHEREAS, the Partners of the Partnership now desire to amend the Prior
Agreement to reflect additional contributions by the Partners and certain other
matters.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements contained herein, the parties hereto hereby amend the Prior
Agreement and, as so amended, restate it in its entirety as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
Capitalized terms used herein but not otherwise defined shall have the meaning
assigned to such term in the MLP Agreement.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 10.4 and who is
shown as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account
maintained for each Partner as of the end of each fiscal year of the
Partnership, (a) increased by any amounts that such
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Partner is obligated to restore under the standards set by Treasury
Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-2(g) and
1.704-2(i)(5)) and (b) decreased by (i) the amount of all losses and
deductions that, as of the end of such fiscal year, are reasonably
expected to be allocated to such Partner in subsequent years under
Sections 704(e)(2) and 706(d) of the Code and Treasury Regulation
Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions
that, as of the end of such fiscal year, are reasonably expected to be
made to such Partner in subsequent years in accordance with the terms
of this Agreement or otherwise to the extent they exceed offsetting
increases to such Partner's Capital Account that are reasonably
expected to occur during (or prior to) the year in which such
distributions are reasonably expected to be made (other than increases
as a result of a minimum gain chargeback pursuant to Section 6.1(d)(i)
or 6.1(d)(ii)). The foregoing definition of Adjusted Capital Account
is intended to comply with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith. The "Adjusted Capital Account" of a Partner in respect of
a General Partner Interest or any other specified interest in the
Partnership shall be the amount which such Adjusted Capital Account
would be if such General Partner Interest or other interest in the
Partnership were the only interest in the Partnership held by a
Partner from and after the date on which such general partner interest
or other interest was first issued.
"Adjusted Property" means any property the Carrying Value of
which has been adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii).
Once an Adjusted Property is deemed contributed to a new partnership
in exchange for an interest in the new partnership, followed by a
deemed liquidation of the Partnership for federal income tax purposes
upon a termination of the Partnership pursuant to Treasury Regulation
Section 1.708-(b)(1)(iv), such property shall thereafter constitute a
Contributed Property until the Carrying Value of such property is
subsequently adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii).
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly through one or more intermediaries
controls, is controlled by or is under common control with, the Person
in question. As used herein, the term "control" means the possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through ownership of
voting securities, by contract or otherwise.
"Agreed Allocation" means any allocation, other than a
Required Allocation, of an item of income, gain, loss or deduction
pursuant to the provisions of Section 6.1, including, without
limitation, a Curative Allocation (if appropriate to the context in
which the term "Agreed Allocation" is used).
"Agreed Value" of any Contributed Property means the fair
market value of such property or other consideration at the time of
contribution as determined by the Managing General Partner using such
reasonable method of valuation as it may adopt. The Managing
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General Partner shall, in its discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate Agreed Value of
Contributed Properties contributed to the Partnership in a single or
integrated transaction among each separate property on a basis
proportional to the fair market value of each Contributed Property.
"Agreement" means this Amended and Restated Agreement of
Limited Partnership of Alliance Resource Operating Partners, L.P., as
it may be amended, supplemented or restated from time to time.
"Assets" means the assets being conveyed to the Partnership on
the Closing Date pursuant to Section 5.2 and the Contribution and
Conveyance Agreement.
"Assignee" means a Person to whom one or more Partnership
Interests have been transferred in a manner permitted under this
Agreement, but who has not been admitted as a Substituted Limited
Partner.
"Associate" means, when used to indicate a relationship with
any Person, (a) any corporation or organization of which such Person
is a director, officer or partner or is, directly or indirectly, the
owner of 20% or more of any class of voting stock or other voting
interest; (b) any trust or other estate in which such Person has at
least a 20% beneficial interest or as to which such Person serves as
trustee or in a similar fiduciary capacity; and (c) any relative or
spouse of such Person, or any relative of such spouse, who has the
same principal residence as such Person.
"Assumed Liabilities" means the liabilities that the
Partnership is either assuming or taking subject to in connection with
the conveyance of the Assets pursuant to Section 5.2 and the
Contribution and Conveyance Agreement.
"Available Cash" means, with respect to any Quarter ending
prior to the Liquidation Date,
(a) the sum of (i) all cash and cash equivalents
of the Partnership on hand at the end of such Quarter, and (ii) all
additional cash and cash equivalents of the Partnership on hand on the
date of determination of Available Cash with respect to such Quarter
resulting from Working Capital Borrowings made subsequent to the end
of such Quarter, less
(b) the amount of any cash reserves that is
necessary or appropriate in the reasonable discretion of the Managing
General Partner to (i) provide for the proper conduct of the business
of the Partnership (including reserves for future capital expenditures
and for anticipated future credit needs of the Partnership Group)
subsequent to such Quarter, (ii) comply with applicable law or any
loan agreement, security agreement, mortgage, debt instrument or other
agreement or obligation to which any Group Member is a party or by
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which it is bound or its assets are subject or (iii) provide funds for
distributions under Section 6.4 or 6.5 of the MLP Agreement in respect
of any one or more of the next four Quarters; provided, however, that
the Managing General Partner may not establish cash reserves pursuant
to (iii) above if the effect of such reserves would be that the MLP is
unable to distribute the Minimum Quarterly Distribution on all Common
Units, plus any Cumulative Common Unit Arrearage on all Common Units,
with respect to such Quarter; and provided further, that disbursements
made by a Group Member or cash reserves established, increased or
reduced after the end of such Quarter but on or before the date of
determination of Available Cash with respect to such Quarter shall be
deemed to have been made, established, increased or reduced, for
purposes of determining Available Cash, within such Quarter if the
Managing General Partner so determines.
Notwithstanding the foregoing, "Available Cash" with
respect to the Quarter in which the Liquidation Date occurs and any
subsequent Quarter shall equal zero.
"Book-Tax Disparity" means with respect to any item of
Contributed Property or Adjusted Property, as of the date of any
determination, the difference between the Carrying Value of such
Contributed Property or Adjusted Property and the adjusted basis
thereof for federal income tax purposes as of such date. A Partner's
share of the Partnership's Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as
maintained pursuant to Section 5.5 and the hypothetical balance of
such Partner's Capital Account computed as if it had been maintained
strictly in accordance with federal income tax accounting principles.
"Business Day" means Monday through Friday of each week,
except that a legal holiday recognized as such by the government of
the United States of America or the states of New York or Texas shall
not be regarded as a Business Day.
"Capital Account" means the capital account maintained for a
Partner pursuant to Section 5.5. The "Capital Account" of a Partner in
respect of a General Partner Interest or any other specified interest
in the Partnership shall be the amount which such Capital Account
would be if such General Partner Interest or other specified interest
in the Partnership were the only interest in the Partnership held by a
Partner from and after the date on which such General Partner Interest
or other specified interest in the Partnership was first issued.
"Capital Contribution" means any cash, cash equivalents or the
Net Agreed Value of Contributed Property that a Partner contributes to
the Partnership pursuant to this Agreement or the Contribution and
Conveyance Agreement.
"Carrying Value" means (a) with respect to a Contributed
Property, the Agreed Value of such property reduced (but not below
zero) by all depreciation, amortization and
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cost recovery deductions charged to the Partners' and Assignees'
Capital Accounts in respect of such Contributed Property, and (b) with
respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted
from time to time in accordance with Sections 5.5(d)(i) and 5.5(d)(ii)
and to reflect changes, additions or other adjustments to the Carrying
Value for dispositions and acquisitions of Partnership properties, as
deemed appropriate by the Managing General Partner.
"Certificate of Limited Partnership" means the Certificate of
Limited Partnership of the Partnership filed with the Secretary of
State of the State of Delaware as referenced in Section 2.1, as such
Certificate of Limited Partnership may be amended, supplemented or
restated from time to time.
"Closing Date" means the first date on which Common Units are
sold by the MLP to the Underwriters pursuant to the provisions of the
Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time. Any reference herein to a specific
section or sections of the Code shall be deemed to include a reference
to any corresponding provision of successor law.
"Commission" means the United States Securities and Exchange
Commission.
"Common Unit" has the meaning assigned to such term in the MLP
Agreement.
"Contributed Property" means each property or other asset, in
such form as may be permitted by the Delaware Act, but excluding cash,
contributed to the Partnership (or deemed contributed to a new
partnership on termination of the Partnership pursuant to Section 708
of the Code. Once the Carrying Value of a Contributed Property is
adjusted pursuant to Section 5.5(d), such property shall no longer
constitute a Contributed Property, but shall be deemed an Adjusted
Property.
"Contribution and Conveyance Agreement" means that certain
Contribution, Conveyance and Assumption Agreement, dated as of the
Closing Date, among the Managing General Partner, the Special General
Partner, the MLP, the Partnership and certain other parties, together
with the additional conveyance documents and instruments contemplated
or referenced thereunder.
"Curative Allocation" means any allocation of an item of
income, gain, deduction, loss or credit pursuant to the provisions of
Section 6.1(d)(ix).
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"Delaware Act" means the Delaware Revised Uniform Limited
Partnership Act, 6 Del. C. Section 17-101, et seq., as amended,
supplemented or restated from time to time, and any successor to such
statute.
"Departing Partner" means a former General Partner from and
after the effective date of any withdrawal or removal of such former
General Partner pursuant to Section 11.1, 11.2 or 11.4.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"Event of Withdrawal" has the meaning assigned to such term in
Section 11.1(a).
"General Partners" means the Managing General Partner and the
Special General Partner and their successors and permitted assigns as
managing general partner and special general partner, respectively, of
the Partnership.
"General Partner Interest" means the ownership interest of a
General Partner in the Partnership (in its capacity as a general
partner) and includes any and all benefits to which a General Partner
is entitled as provided in this Agreement, together with all
obligations of a General Partner to comply with the terms and
provisions of this Agreement.
"Group" means a Person that with or through any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting (except
voting pursuant to a revocable proxy or consent given to such Person
in response to a proxy or consent solicitation made to 10 or more
Persons) or disposing of any MLP Securities with any other Person that
beneficially owns, or whose Affiliates or Associates beneficially own,
directly or indirectly, MLP Securities.
"Group Member" means a member of the Partnership Group.
"Indemnitee" means (a) each General Partner, (b) any Departing
Partner, (c) any Person who is or was an Affiliate of a General
Partner or any Departing Partner, (d) any Person who is or was a
member, partner, officer, director, employee, agent or trustee of any
Group Member, a General Partner or any Departing Partner or any
Affiliate of any Group Member, a General Partner or any Departing
Partner, and (e) any Person who is or was serving at the request of a
General Partner or any Departing Partner or any Affiliate of a General
Partner or any Departing Partner as an officer, director, employee,
member, partner, agent, fiduciary or trustee of another Person;
provided, that a Person shall not be an Indemnitee by reason of
providing, on a fee-for-services basis, trustee, fiduciary or
custodial services.
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"Initial Offering" means the initial offering and sale of
Common Units to the public, as described in the Registration
Statement.
"Limited Partner Interest" means the ownership interest of a
Limited Partner or Assignee in the Partnership and includes any and
all benefits to which such Limited Partner or Assignee is entitled as
provided in this Agreement, together with all obligations of such
Limited Partner or Assignee to comply with the terms and provisions of
this Agreement.
"Liquidation Date" means (a) in the case of an event giving
rise to the dissolution of the Partnership of the type described in
clauses (a) and (b) of the first sentence of Section 12.2, the date on
which the applicable time period during which the Partners have the
right to elect to reconstitute the Partnership and continue its
business has expired without such an election being made, and (b) in
the case of any other event giving rise to the dissolution of the
Partnership, the date on which such event occurs.
"Liquidator" means one or more Persons selected by the
Managing General Partner to perform the functions described in Section
12.3 as liquidating trustee of the Partnership within the meaning of
the Delaware Act.
"Limited Partner" means any Person that is admitted to the
Partnership as a limited partner pursuant to the terms and conditions
of this Agreement; but the term Limited Partner shall not include any
Person from and after the time such Person withdraws as a Limited
Partner from the Partnership.
"Managing General Partner" means Alliance Resource Management
GP, LLC and its successors and permitted assigns as managing general
partner of the Partnership.
"Merger Agreement" has the meaning assigned to such term in
Section 14.1.
"Minimum Quarterly Distribution" has the meaning assigned to
such term in the MLP Agreement.
"MLP" means Alliance Resource Partners, L.P.
"MLP Agreement" means the Amended and Restated Agreement of
Limited Partnership of Alliance Resource Partners, L.P., as it may be
amended, supplemented or restated from time to time.
"MLP Security" has the meaning assigned to the term
"Partnership Security" in the MLP Agreement.
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"Net Agreed Value" means, (a) in the case of any Contributed
Property, the Agreed Value of such property reduced by any liabilities
either assumed by the Partnership upon such contribution or to which
such property is subject when contributed, and (b) in the case of any
property distributed to a Partner or Assignee by the Partnership, the
Partnership's Carrying Value of such property (as adjusted pursuant to
Section 5.5(d)(ii)) at the time such property is distributed, reduced
by any indebtedness either assumed by such Partner or Assignee upon
such distribution or to which such property is subject at the time of
distribution, in either case, as determined under Section 752 of the
Code.
"Net Income" means, for any taxable year, the excess, if any,
of the Partnership's items of income and gain (other than those items
taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year over the Partnership's items
of loss and deduction (other than those items taken into account in
the computation of Net Termination Gain or Net Termination Loss) for
such taxable year. The items included in the calculation of Net Income
shall be determined in accordance with Section 5.5(b) and shall not
include any items specially allocated under Section 6.1(d).
"Net Loss" means, for any taxable year, the excess, if any, of
the Partnership's items of loss and deduction (other than those items
taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year over the Partnership's items
of income and gain (other than those items taken into account in the
computation of Net Termination Gain or Net Termination Loss) for such
taxable year. The items included in the calculation of Net Loss shall
be determined in accordance with Section 5.5(b) and shall not include
any items specially allocated under Section 6.1(d).
"Net Termination Gain" means, for any taxable year, the sum,
if positive, of all items of income, gain, loss or deduction
recognized by the Partnership after the Liquidation Date. The items
included in the determination of Net Termination Gain shall be
determined in accordance with Section 5.5(b) and shall not include any
items of income, gain or loss specially allocated under Section
6.1(d).
"Net Termination Loss" means, for any taxable year, the sum,
if negative, of all items of income, gain, loss or deduction
recognized by the Partnership after the Liquidation Date. The items
included in the determination of Net Termination Loss shall be
determined in accordance with Section 5.5(b) and shall not include any
items of income, gain or loss specially allocated under Section
6.1(d).
"Nonrecourse Built-in Gain" means with respect to any
Contributed Properties or Adjusted Properties that are subject to a
mortgage or pledge securing a Nonrecourse Liability, the amount of any
taxable gain that would be allocated to the Partners pursuant to
Sections 6.2(b)(i)(A), 6.2(b)(ii)(A) and 6.2(b)(iii) if such
properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
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"Nonrecourse Deductions" means any and all items of loss,
deduction or expenditures (described in Section 705(a)(2)(B) of the
Code) that, in accordance with the principles of Treasury Regulation
Section 1.704- 2(b), are attributable to a Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
"Omnibus Agreement" means that Omnibus Agreement, dated as of
the Closing Date, among Alliance Resource Holdings, Inc., the Managing
General Partner, the Special General Partner, the MLP and the
Partnership.
"Operating Subsidiary" means Alliance Coal, LLC, a Delaware
limited liability company and any successor thereto.
"Operating Subsidiary Agreement" means the Limited Liability
Company Agreement of the Operating Subsidiary, as it may be amended,
supplemented or restated from time to time.
"Opinion of Counsel" means a written opinion of counsel (which
may be regular counsel to the Partnership or either of the General
Partners or any of their Affiliates) acceptable to the Managing
General Partner in its reasonable discretion.
"Partner Nonrecourse Debt" has the meaning set forth in
Treasury Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set
forth in Treasury Regulation Section 1.704- 2(i)(2).
"Partner Nonrecourse Deductions" means any and all items of
loss, deduction or expenditure (including, without limitation, any
expenditure described in Section 705(a)(2)(B) of the Code) that, in
accordance with the principles of Treasury Regulation Section
1.704-2(i), are attributable to a Partner Nonrecourse Debt.
"Partners" means General Partners and Limited Partners.
"Partnership" means Alliance Resource Operating Partners,
L.P., a Delaware limited partnership, and any successors thereto.
"Partnership Group" means the Partnership, the Operating
Subsidiary and any Subsidiary of any such entity, treated as a single
consolidated entity.
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"Partnership Interest" means an ownership interest of a
Partner in the Partnership, which shall include the General Partner
Interest(s) and the Limited Partner Interest(s).
"Partnership Minimum Gain" means that amount determined in
accordance with the principles of Treasury Regulation Section
1.704-2(d).
"Percentage Interest" means the percentage interest in the
Partnership held by each Partner upon completion of the transactions
in Section 5.2 and shall mean, (a) as to the Managing General Partner,
1.0001%, (b) as to the Special General Partner, 0.01%, and (c) as to
the MLP, 98.9899%.
"Person" means an individual or a corporation, limited
liability company, partnership, joint venture, trust, unincorporated
organization, association, government agency or political subdivision
thereof or other entity.
"Prior Agreement" is defined in the Recitals.
"Pro Rata" means, when modifying Partners and Assignees,
apportioned among all Partners and Assignees in accordance with their
relative Percentage Interests.
"Quarter" means, unless the context requires otherwise, a
fiscal quarter of the Partnership.
"Recapture Income" means any gain recognized by the
Partnership (computed without regard to any adjustment required by
Section 734 or Section 743 of the Code) upon the disposition of any
property or asset of the Partnership, which gain is characterized as
ordinary income because it represents the recapture of deductions
previously taken with respect to such property or asset.
"Registration Statement" means the Registration Statement on
Form S-1 (Registration No. 333-78845) as it has been or as it may be
amended or supplemented from time to time, filed by the MLP with the
Commission under the Securities Act to register the offering and sale
of the Common Units in the Initial Offering.
"Required Allocations" means (a) any limitation imposed on any
allocation of Net Losses or Net Termination Losses under Section
6.1(b) or 6.1(c)(ii) and (b) any allocation of an item of income,
gain, loss or deduction pursuant to Section 6.1(d)(i), 6.1(d)(ii),
6.1(d)(iv), 6.1(d)(vii) or 6.1(d)(ix).
"Residual Gain" or "Residual Loss" means any item of gain or
loss, as the case may be, of the Partnership recognized for federal
income tax purposes resulting from a sale, exchange or other
disposition of a Contributed Property or Adjusted Property, to the
extent
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such item of gain or loss is not allocated pursuant to Section
6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to eliminate Book-Tax
Disparities.
"Restricted Business" has the meaning assigned to such term in
the Omnibus Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such
statute.
"Special Approval" has the meaning assigned to such term in
the MLP Agreement.
"Special General Partner" means Alliance Resource GP, LLC and
its successors and permitted assigns as special general partner of the
Partnership.
"Subsidiary" means, with respect to any Person, (a) a
corporation of which more than 50% of the voting power of shares
entitled (without regard to the occurrence of any contingency) to vote
in the election of directors or other governing body of such
corporation is owned, directly or indirectly, at the date of
determination, by such Person, by one or more Subsidiaries of such
Person or a combination thereof, (b) a partnership (whether general or
limited) in which such Person or a Subsidiary of such Person is, at
the date of determination, a general or limited partner of such
partnership, but only if more than 50% of the partnership interests of
such partnership (considering all of the partnership interests of the
partnership as a single class) is owned, directly or indirectly, at
the date of determination, by such Person, by one or more Subsidiaries
of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one
or more Subsidiaries of such Person, or a combination thereof,
directly or indirectly, at the date of determination, has (i) at least
a majority ownership interest or (ii) the power to elect or direct the
election of a majority of the directors or other governing body of
such Person.
"Substituted Limited Partner" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 10.2 in
place of and with all the rights of a Limited Partner and who is shown
as a Limited Partner on the books and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such
term in Section 14.2(b).
"Transfer" has the meaning assigned to such term in Section
4.4(a).
"Underwriter" means each Person named as an underwriter in
Schedule I to the Underwriting Agreement who purchases Common Units
pursuant thereto.
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"Underwriting Agreement" means the Underwriting Agreement
dated [August ], 1999 among the Underwriters, the MLP and certain
other parties, providing for the purchase of Common Units by such
Underwriters.
"Unit" has the meaning assigned to such term in the MLP
Agreement.
"Unit Majority" has the meaning assigned to such term in the
MLP Agreement.
"Unrealized Gain" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any,
of (a) the fair market value of such property as of such date (as
determined under Section 5.5(d)) over (b) the Carrying Value of such
property as of such date (prior to any adjustment to be made pursuant
to Section 5.5(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any,
of (a) the Carrying Value of such property as of such date (prior to
any adjustment to be made pursuant to Section 5.5(d) as of such date)
over (b) the fair market value of such property as of such date (as
determined under Section 5.5(d)).
"U.S. GAAP" means United States Generally Accepted Accounting
Principles consistently applied.
"Working Capital Borrowings" means borrowings exclusively for
working capital purposes made pursuant to a credit facility or other
arrangement requiring all such borrowings thereunder to be reduced to
a relatively small amount each year for an economically meaningful
period of time.
SECTION 1.2 Construction.
Unless the context requires otherwise: (a) any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa; (b) references to Articles and Sections refer to Articles and
Sections of this Agreement; and (c) the term "include" or "includes" means
includes, without limitation, and "including" means including, without
limitation.
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ARTICLE II
ORGANIZATION
SECTION 2.1 Formation.
The Partnership was previously formed as a limited partnership
pursuant to the provisions of the Delaware Act. The Partners hereby amend and
restate the Prior Agreement in its entirety. This amendment and restatement
shall become effective on the date of this Agreement. Except as expressly
provided to the contrary in this Agreement, the rights, duties (including
fiduciary duties), liabilities and obligations of the Partners and the
administration, dissolution and termination of the Partnership shall be
governed by the Delaware Act. All Partnership Interests shall constitute
personal property of the owner thereof for all purposes and a Partner has no
interest in specific Partnership property.
SECTION 2.2 Name.
The name of the Partnership shall be "Alliance Resource Operating
Partners, L.P." The Partnership's business may be conducted under any other
name or names deemed necessary or appropriate by the Managing General Partner
in its sole discretion, including the name of the Managing General Partner. The
words "Limited Partnership," "L.P." or "Ltd." or similar words or letters shall
be included in the Partnership's name where necessary for the purpose of
complying with the laws of any jurisdiction that so requires. The Managing
General Partner in its discretion may change the name of the Partnership at any
time and from time to time and shall notify the other Partner(s) of such change
in the next regular communication to the Partners.
SECTION 2.3 Registered Office; Registered Agent; Principal Office; Other
Offices.
Unless and until changed by the Managing General Partner, the
registered office of the Partnership in the State of Delaware shall be located
at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the registered agent for
service of process on the Partnership in the State of Delaware at such
registered office shall be The Corporation Trust Company. The principal office
of the Partnership shall be located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or such other place as the Managing General Partner may from
time to time designate by notice to the Limited Partners. The Partnership may
maintain offices at such other place or places within or outside the State of
Delaware as the Managing General Partner deems necessary or appropriate. The
address of the Managing General Partner shall be ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or such other place as the Managing General Partner may
from time to time designate by notice to the Limited Partners.
SECTION 2.4 Purpose and Business.
The purpose and nature of the business to be conducted by the
Partnership shall be to (a) acquire, manage, operate and sell the Assets and
any similar assets or properties now or hereafter acquired by the Partnership,
(b) to serve as a non-managing member of the Operating Subsidiary and, in
connection therewith, to exercise all the rights and powers conferred upon the
Partnership as a
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19
non-managing member of the Operating Subsidiary pursuant to the Operating
Subsidiary Agreement, (c) engage directly in, or enter into or form any
corporation, partnership, joint venture, limited liability company or other
arrangement to engage indirectly in, any business activity that the Partnership
is permitted to engage in, or any type of business or activity engaged in by
[Alliance Resource Holdings and its Affiliates] prior to the Closing Date and,
in connection therewith, to exercise all of the rights and powers conferred
upon the Partnership pursuant to the agreements relating to such business
activity, (d) engage directly in, or enter into or form any corporation,
partnership, joint venture, limited liability company or other arrangement to
engage indirectly in, any business activity that is approved by the Managing
General Partner and which lawfully may be conducted by a limited partnership
organized pursuant to the Delaware Act and, in connection therewith, to
exercise all of the rights and powers conferred upon the Partnership pursuant
to the agreements relating to such business activity; provided, however, that
the Managing General Partner reasonably determines, as of the date of the
acquisition or commencement of such activity, that such activity (i) generates
"qualifying income" (as such term is defined pursuant to Section 7704 of the
Code) or (ii) enhances the operations of an activity of the Partnership that
generates qualifying income, and (e) do anything necessary or appropriate to
the foregoing, including the making of capital contributions or loans to a
Group Member, the MLP or any Subsidiary of the MLP. The Managing General
Partner has no obligation or duty to the Partnership, the Special General
Partner, the Limited Partners, or the Assignees to propose or approve, and in
its discretion may decline to propose or approve, the conduct by the
Partnership of any business.
SECTION 2.5 Powers.
The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described in
Section 2.4 and for the protection and benefit of the Partnership.
SECTION 2.6 Power of Attorney.
(a) Each Partner and each Assignee hereby constitutes and
appoints the Managing General Partner and, if a Liquidator shall have been
selected pursuant to Section 12.3, the Liquidator (and any successor to the
Liquidator by merger, transfer, assignment, election or otherwise) and each of
their authorized officers and attorneys- in-fact, as the case may be, with full
power of substitution, as its true and lawful agent and attorney-in-fact, with
full power and authority in his name, place and ▇▇▇▇▇, to:
(i) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (A) all certificates,
documents and other instruments (including this Agreement and the
Certificate of Limited Partnership and all amendments or restatements
hereof or thereof) that the Managing General Partner or the Liquidator
deems necessary or appropriate to form, qualify or continue the
existence or qualification of the Partnership as a limited partnership
(or a partnership in which the limited partners have limited
liability) in
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20
the State of Delaware and in all other jurisdictions in which the
Partnership may conduct business or own property; (B) all
certificates, documents and other instruments that the Managing
General Partner or the Liquidator deems necessary or appropriate to
reflect, in accordance with its terms, any amendment, change,
modification or restatement of this Agreement; (C) all certificates,
documents and other instruments (including conveyances and a
certificate of cancellation) that the Managing General Partner or the
Liquidator deems necessary or appropriate to reflect the dissolution
and liquidation of the Partnership pursuant to the terms of this
Agreement; (D) all certificates, documents and other instruments
relating to the admission, withdrawal, removal or substitution of any
Partner pursuant to, or other events described in, Article IV, X, XI
or XII; (E) all certificates, documents and other instruments relating
to the determination of the rights, preferences and privileges of any
class or series of Partnership Interests issued pursuant hereto; and
(F) all certificates, documents and other instruments (including
agreements and a certificate of merger) relating to a merger or
consolidation of the Partnership pursuant to Article XIV; and
(ii) execute, swear to, acknowledge, deliver, file and
record all ballots, consents, approvals, waivers, certificates,
documents and other instruments necessary or appropriate, in the
discretion of the Managing General Partner or the Liquidator, to make,
evidence, give, confirm or ratify any vote, consent, approval,
agreement or other action that is made or given by the Partners
hereunder or is consistent with the terms of this Agreement or is
necessary or appropriate, in the discretion of the Managing General
Partner or the Liquidator, to effectuate the terms or intent of this
Agreement; provided, that when required by any provision of this
Agreement that establishes a percentage of the Limited Partners or of
the Limited Partners of any class or series required to take any
action, the Managing General Partner and the Liquidator may exercise
the power of attorney made in this Section 2.6(a)(ii) only after the
necessary vote, consent or approval of the Limited Partners or of the
Limited Partners of such class or series, as applicable.
Nothing contained in this Section 2.6(a) shall be construed as
authorizing the Managing General Partner to amend this Agreement except in
accordance with Article XIII or as may be otherwise expressly provided for in
this Agreement.
(b) The foregoing power of attorney is hereby declared to
be irrevocable and a power coupled with an interest, and it shall survive and,
to the maximum extent permitted by law, not be affected by the subsequent
death, incompetency, disability, incapacity, dissolution, bankruptcy or
termination of any Limited Partner or Assignee and the transfer of all or any
portion of such Limited Partner's or Assignee's Partnership Interest and shall
extend to such Limited Partner's or Assignee's successors and assigns. Each
such Limited Partner or Assignee hereby agrees to be bound by any
representation made by the Managing General Partner or the Liquidator acting in
good faith pursuant to such power of attorney; and each such Limited Partner or
Assignee, to the maximum extent permitted by law, hereby waives any and all
defenses that may be available to contest, negate or disaffirm the action of
the Managing General Partner or the Liquidator taken in good faith under
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21
such power of attorney. Each Limited Partner or Assignee shall execute and
deliver to the Managing General Partner or the Liquidator, within 15 days after
receipt of the request therefor, such further designation, powers of attorney
and other instruments as the Managing General Partner or the Liquidator deems
necessary to effectuate this Agreement and the purposes of the Partnership.
SECTION 2.7 Term.
The term of the Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware Act and
shall continue in existence until the close of Partnership business on December
31, 2088 or until the earlier dissolution of the Partnership in accordance with
the provisions of Article XII. The existence of the Partnership as a separate
legal entity shall continue until the cancellation of the Certificate of
Limited Partnership as provided in the Delaware Act.
SECTION 2.8 Title to Partnership Assets.
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner or Assignee, individually or collectively, shall
have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the
Partnership, the Managing General Partner, one or more of its Affiliates or one
or more nominees, as the Managing General Partner may determine. The Managing
General Partner hereby declares and warrants that any Partnership assets for
which record title is held in the name of the Managing General Partner or one
or more of its Affiliates or one or more nominees shall be held by the Managing
General Partner or such Affiliate or nominee for the use and benefit of the
Partnership in accordance with the provisions of this Agreement; provided,
however, that the Managing General Partner shall use reasonable efforts to
cause record title to such assets (other than those assets in respect of which
the Managing General Partner determines that the expense and difficulty of
conveyancing makes transfer of record title to the Partnership impracticable)
to be vested in the Partnership as soon as reasonably practicable; provided,
further, that, prior to the withdrawal or removal of the Managing General
Partner or as soon thereafter as practicable, the Managing General Partner
shall use reasonable efforts to effect the transfer of record title to the
Partnership and, prior to any such transfer, will provide for the use of such
assets in a manner satisfactory to the Managing General Partner. All
Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which record title to such
Partnership assets is held.
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ARTICLE III
RIGHTS OF LIMITED PARTNERS
SECTION 3.1 Limitation of Liability.
The Limited Partners and the Assignees shall have no liability under
this Agreement except as expressly provided in this Agreement or in the
Delaware Act.
SECTION 3.2 Management of Business.
No Limited Partner or Assignee, in its capacity as such, shall
participate in the operation, management or control (within the meaning of the
Delaware Act) of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise bind
the Partnership. Any action taken by any Affiliate of a General Partner or any
officer, director, employee, member, general partner, agent or trustee of a
General Partner or any of its Affiliates, or any officer, director, employee,
member, general partner, agent or trustee of a Group Member, in its capacity as
such, shall not be deemed to be participation in the control of the business of
the Partnership by a limited partner of the Partnership (within the meaning of
Section 17-303(a) of the Delaware Act) and shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
SECTION 3.3 Outside Activities of the Limited Partners.
Subject to the provisions of Section 7.5 and the Omnibus Agreement,
which shall continue to be applicable to the Persons referred to therein,
regardless of whether such Persons shall also be Limited Partners or Assignees,
any Limited Partner or Assignee shall be entitled to and may have business
interests and engage in business activities in addition to those relating to
the Partnership, including business interests and activities in direct
competition with the Partnership Group. Neither the Partnership nor any of the
other Partners or Assignees shall have any rights by virtue of this Agreement
in any business ventures of any Limited Partner or Assignee.
SECTION 3.4 Rights of Limited Partners.
(a) In addition to other rights provided by this
Agreement or by applicable law, and except as limited by Section 3.4(b), each
Limited Partner shall have the right, for a purpose reasonably related to such
Limited Partner's interest as a limited partner in the Partnership, upon
reasonable written demand and at such Limited Partner's own expense:
(i) to obtain true and full information regarding the
status of the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy
of the Partnership's federal, state and local income tax returns for
each year;
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23
(iii) to have furnished to him a current list of the name
and last known business, residence or mailing address of each Partner;
(iv) to have furnished to him a copy of this Agreement and
the Certificate of Limited Partnership and all amendments thereto,
together with a copy of the executed copies of all powers of attorney
pursuant to which this Agreement, the Certificate of Limited
Partnership and all amendments thereto have been executed;
(v) to obtain true and full information regarding the
amount of cash and a description and statement of the Net Agreed Value
of any other Capital Contribution by each Partner and which each
Partner has agreed to contribute in the future, and the date on which
each became a Partner; and
(vi) to obtain such other information regarding the
affairs of the Partnership as is just and reasonable.
(b) The Managing General Partner may keep confidential
from the Limited Partners and Assignees, for such period of time as the
Managing General Partner deems reasonable, (i) any information that the
Managing General Partner reasonably believes to be in the nature of trade
secrets or (ii) other information the disclosure of which the Managing General
Partner in good faith believes (A) is not in the best interests of the MLP or
the Partnership Group, (B) could damage the MLP or the Partnership Group or (C)
that any Group Member is required by law or by agreement with any third party
to keep confidential (other than agreements with Affiliates of the Partnership
the primary purpose of which is to circumvent the obligations set forth in this
Section 3.4).
ARTICLE IV
TRANSFERS OF PARTNERSHIP INTERESTS
SECTION 4.1 Transfer Generally.
(a) The term "transfer," when used in this Agreement with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which a General Partner assigns its General Partner Interest to another Person
who becomes a General Partner (or an Assignee) or by which the holder of a
Limited Partner Interest assigns such Limited Partner Interest to another
Person who becomes a Limited Partner (or an Assignee), and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any
other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set forth
in this Article IV. Any transfer or purported transfer of a Partnership
Interest not made in accordance with this Article IV shall be null and void.
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(c) Nothing contained in this Agreement shall be
construed to prevent a disposition by any shareholder of a General Partner of
any or all of the issued and outstanding capital stock of such General Partner.
SECTION 4.2 Transfer of General Partner's Partnership Interest.
If a General Partner transfers its interest as a general
partner of the MLP to any Person in accordance with the provisions of the MLP
Agreement, such General Partner shall contemporaneously therewith transfer all,
but not less than all, of its General Partner Interest herein to such Person,
and the Limited Partners and Assignees, if any, hereby expressly consent to
such transfer. Except as set forth in the immediately preceding sentence and in
Section 5.2, a General Partner may not transfer all or any part of its
Partnership Interest as a General Partner.
SECTION 4.3 Transfer of a Limited Partner's Partnership Interest.
A Limited Partner may transfer all, but not less than all, of
its Partnership Interest as a Limited Partner in connection with the merger,
consolidation or other combination of such Limited Partner with or into any
other Person or the transfer by such Limited Partner of all or substantially
all of its assets to another Person, and following any such transfer such
Person may become a Substituted Limited Partner pursuant to Article X. Except
as set forth in the immediately preceding sentence and in Section 5.2, or in
connection with any pledge of (or any related foreclosure on) a Partnership
Interest as a Limited Partner solely for the purpose of securing, directly or
indirectly, indebtedness of the Partnership or the MLP, and except for the
transfers contemplated by Sections 5.2 and 10.1, a Limited Partner may not
transfer all or any part of its Partnership Interest or withdraw from the
Partnership.
SECTION 4.4 Restrictions on Transfers.
(a) Notwithstanding the other provisions of this Article
IV, no transfer of any Partnership Interest shall be made if such transfer
would (i) violate the then applicable federal or state securities laws or rules
and regulations of the Commission, any state securities commission or any other
governmental authority with jurisdiction over such transfer, (ii) terminate the
existence or qualification of the Partnership or the MLP under the laws of the
jurisdiction of its formation or (iii) cause the Partnership or the MLP to be
treated as an association taxable as a corporation or otherwise to be taxed as
an entity for federal income tax purposes (to the extent not already so treated
or taxed).
(b) The Managing General Partner may impose restrictions
on the transfer of Partnership Interests if a subsequent Opinion of Counsel
determines that such restrictions are necessary to avoid a significant risk of
the Partnership or the MLP becoming taxable as a corporation or otherwise to be
taxed as an entity for federal income tax purposes. The restrictions may be
imposed by making such amendments to this Agreement as the Managing General
Partner may determine to be necessary or appropriate to impose such
restrictions.
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ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
SECTION 5.1 Initial Contributions.
In connection with the formation of the Partnership under the Delaware
Act, the General Partner made an initial Capital Contribution to the
Partnership in the amount of $10.10 in exchange for an interest in the
Partnership and was admitted as General Partner and as a Limited Partner, and
the MLP made an initial Capital Contribution to the Partnership in the amount
of $989.90 in exchange for an interest in the Partnership and was admitted as a
Limited Partner.
SECTION 5.2 Contributions Pursuant to the Contribution and Conveyance
Agreement.
Note: This section to be revised per steps memo and contribution and
conveyance agreement
(a) Pursuant to the Contribution and Conveyance
Agreement, the Special General Partner has contributed to the Partnership, as a
Capital Contribution, a 99.999% interest in each of the Operating Subsidiaries
in exchange for a .01% General Partner Interest, a Limited Partner Interest and
the assumption of certain indebtedness incurred by the Special General Partner.
Immediately following such contribution, the Special General Partner
transferred all of its Partnership Interests except a .01% General Partner
Interest to the MLP in exchange for certain interests therein as more
particularly described in the Registration Statement.
(b) Pursuant to the Contribution and Conveyance
Agreement, the MLP has contributed to the Partnership, as a Capital
Contribution (i) cash in the amount of [$182,300,000] in exchange for its
Limited Partner Interest.
(c) Following the foregoing transactions, the Managing
General Partner shall hold a 1.0001% Partnership Interest as Managing General
Partner, the Special General Partners shall hold a .01% Partnership Interest as
Special General Partner and the MLP shall hold a 98.9899% Partnership Interest
as a Limited Partner.
SECTION 5.3 Additional Capital Contributions.
With the consent of the Managing General Partner, any Limited Partner
may, but shall not be obligated to, make additional Capital Contributions to
the Partnership. Contemporaneously with the making of any Capital
Contributions by a Limited Partner, in addition to those provided in Sections
5.1 and 5.2, the Managing General Partner and the Special General Partner shall
be obligated to make an additional Capital Contribution to the Partnership in
amounts equal to 1.0001 and 0.01, respectively, divided by 98.9899 times the
amount of the additional Capital Contribution then made by such Limited
Partner. Except as set forth in the immediately preceding sentence and
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in Article XII, the General Partners shall not be obligated to make any
additional Capital Contributions to the Partnership.
SECTION 5.4 Interest and Withdrawal.
No interest shall be paid by the Partnership on Capital Contributions.
No Partner or Assignee shall be entitled to the withdrawal or return of its
Capital Contribution, except to the extent, if any, that distributions made
pursuant to this Agreement or upon termination of the Partnership may be
considered as such by law and then only to the extent provided for in this
Agreement. Except to the extent expressly provided in this Agreement, no
Partner or Assignee shall have priority over any other Partner or Assignee
either as to the return of Capital Contributions or as to profits, losses or
distributions. Any such return shall be a compromise to which all Partners and
Assignees agree within the meaning of Section 17-502(b) of the Delaware Act.
SECTION 5.5 Capital Accounts.
(a) The Partnership shall maintain for each Partner (or a
beneficial owner of Partnership Interests held by a nominee in any case in
which the nominee has furnished the identity of such owner to the Partnership
in accordance with Section 6031(c) of the Code or any other method acceptable
to the Managing General Partner in its sole discretion) owning a Partnership
Interest a separate Capital Account with respect to such Partnership Interest
in accordance with the rules of Treasury Regulation Section 1.704-1(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions made to the Partnership with respect to such Partnership Interest
pursuant to this Agreement and (ii) all items of Partnership income and gain
(including, without limitation, income and gain exempt from tax) computed in
accordance with Section 5.5(b) and allocated with respect to such Partnership
Interest pursuant to Section 6.1, and decreased by (x) the amount of cash or
Net Agreed Value of all actual and deemed distributions of cash or property
made with respect to such Partnership Interest pursuant to this Agreement and
(y) all items of Partnership deduction and loss computed in accordance with
Section 5.5(b) and allocated with respect to such Partnership Interest pursuant
to Section 6.1.
(b) For purposes of computing the amount of any item of
income, gain, loss or deduction which is to be allocated pursuant to Article VI
and is to be reflected in the Partners' Capital Accounts, the determination,
recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes
(including, without limitation, any method of depreciation, cost recovery or
amortization used for that purpose), provided, that:
(i) Solely for purposes of this Section 5.5, the
Partnership shall be treated as owning directly its proportionate
share (as determined by the Managing General Partner) of all property
owned by any OLP Subsidiary that is classified as a partnership for
federal income tax purposes.
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(ii) All fees and other expenses incurred by the
Partnership to promote the sale of (or to sell) a Partnership Interest
that can neither be deducted nor amortized under Section 709 of the
Code, if any, shall, for purposes of Capital Account maintenance, be
treated as an item of deduction at the time such fees and other
expenses are incurred and shall be allocated among the Partners
pursuant to Section 6.1.
(iii) Except as otherwise provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), computation of all items of income,
gain, loss and deduction shall be made without regard to any election
under Section 754 of the Code which may be made by the Partnership
and, as to those items described in Section 705(a)(1)(B) or
705(a)(2)(B) of the Code, without regard to the fact that such items
are not includable in gross income or are neither currently deductible
nor capitalized for federal income tax purposes. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant
to Section 734(b) or 743(b) of the Code is required, pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into
account in determining Capital Accounts, the amount of such adjustment
in the Capital Accounts shall be treated as an item of gain or loss.
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition were
equal in amount to the Partnership's Carrying Value with respect to
such property as of such date.
(v) In accordance with the requirements of Section 704(b)
of the Code, any deductions for depreciation, cost recovery or
amortization attributable to any Contributed Property shall be
determined as if the adjusted basis of such property on the date it
was acquired by the Partnership were equal to the Agreed Value of such
property. Upon an adjustment pursuant to Section 5.5(d) to the
Carrying Value of any Partnership property subject to depreciation,
cost recovery or amortization, any further deductions for such
depreciation, cost recovery or amortization attributable to such
property shall be determined (A) as if the adjusted basis of such
property were equal to the Carrying Value of such property immediately
following such adjustment and (B) using a rate of depreciation, cost
recovery or amortization derived from the same method and useful life
(or, if applicable, the remaining useful life) as is applied for
federal income tax purposes; provided, however, that, if the asset has
a zero adjusted basis for federal income tax purposes, depreciation,
cost recovery or amortization derived from the same method and useful
life (or, if applicable, the remaining useful life) as is applied for
federal income tax purposes; provided, however, that, if the asset has
a zero adjusted basis for federal income tax purposes, depreciation,
cost recovery or amortization deductions shall be determined using any
reasonable method that the Managing General Partner may adopt.
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(vi) If the Partnership's adjusted basis in a depreciable
or cost recovery property is reduced for federal income tax purposes
pursuant to Section 48(q)(1) or 48(q)(3) of the Code, the amount of
such reduction shall, solely for purposes hereof, be deemed to be an
additional depreciation or cost recovery deduction in the year such
property is placed in service and shall be allocated among the
Partners pursuant to Section 6.1. Any restoration of such basis
pursuant to Section 48(q)(2) of the Code shall, to the extent
possible, be allocated in the same manner to the Partners to whom such
deemed deduction was allocated.
(c) A transferee of a Partnership Interest shall succeed
to a pro rata portion of the Capital Account of the transferor relating to the
Partnership Interest so transferred.
(d) (i) In accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership
Interests for cash or Contributed Property or the conversion of [a
General Partner's] Partnership Interest to Common Units pursuant to
Section 11.3(a), the Capital Accounts of all Partners and the Carrying
Value of each Partnership property immediately prior to such issuance
shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual
sale of each such property immediately prior to such issuance and had
been allocated to the Partners at such time pursuant to Section 6.1 in
the same manner as any item of gain or loss actually recognized during
such period would have been allocated. In determining such Unrealized
Gain or Unrealized Loss, the aggregate cash amount and fair market
value of all Partnership assets (including, without limitation, cash
or cash equivalents) immediately prior to the issuance of additional
Partnership Interests shall be determined by the Managing General
Partner using such reasonable method of valuation as it may adopt;
provided, however, that the Managing General Partner, in arriving at
such valuation, must take fully into account the fair market value of
the Partnership Interests of all Partners at such time. The Managing
General Partner shall allocate such aggregate value among the assets
of the Partnership (in such manner as it determines in its discretion
to be reasonable) to arrive at a fair market value for individual
properties.
(ii) In accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), immediately prior to any actual or
deemed distribution to a Partner of any Partnership property (other
than a distribution of cash that is not in redemption or retirement of
a Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of all Partnership property shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized Gain
or Unrealized Loss had been recognized in a sale of such property
immediately prior to such distribution for an amount equal to its fair
market value, and had been allocated to the Partners, at such time,
pursuant to Section 6.1 in the same manner as any item of gain or loss
actually recognized during such period would have been allocated. In
determining such Unrealized Gain or Unrealized Loss the aggregate cash
amount and fair market value of all
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Partnership assets (including, without limitation, cash or cash
equivalents) immediately prior to a distribution shall (A) in the case
of an actual distribution which is not made pursuant to Section 12.4
or in the case of a deemed contribution and/or distribution occurring
as a result of a termination of the Partnership pursuant to Section
708 of the Code, be determined and allocated in the same manner as
that provided in Section 5.5(d)(i) or (B) in the case of a liquidating
distribution pursuant to Section 12.4, be determined and allocated by
the Liquidator using such reasonable method of valuation as it may
adopt.
SECTION 5.6 Loans from Partners.
Loans by a Partner to the Partnership shall not constitute Capital
Contributions. If any Partner shall advance funds to the Partnership in excess
of the amounts required hereunder to be contributed by it to the capital of the
Partnership, the making of such excess advances shall not result in any
increase in the amount of the Capital Account of such Partner. The amount of
any such excess advances shall be a debt obligation of the Partnership to such
Partner and shall be payable or collectible only out of the Partnership assets
in accordance with the terms and conditions upon which such advances are made.
SECTION 5.7 Limited Preemptive Rights.
Except as provided in Section 5.3, no Person shall have preemptive,
preferential or other similar rights with respect to (a) additional Capital
Contributions; (b) issuance or sale of any class or series of Partnership
Interests, whether unissued, held in the treasury or hereafter created; (c)
issuance of any obligations, evidences of indebtedness or other securities of
the Partnership convertible into or exchangeable for, or carrying or
accompanied by any rights to receive, purchase or subscribe to, any such
Partnership Interests; (d) issuance of any right of subscription to or right to
receive, or any warrant or option for the purchase of, any such Partnership
Interests; or (e) issuance or sale of any other securities that may be issued
or sold by the Partnership.
SECTION 5.8 Fully Paid and Non-Assessable Nature of Partnership Interests.
All Partnership Interests issued to Limited Partners pursuant to, and
in accordance with the requirements of, this Article V shall be fully paid and
non-assessable Partnership Interests, except as such non-assessability may be
affected by Section 17-607 of the Delaware Act.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
SECTION 6.1 Allocations for Capital Account Purposes.
For purposes of maintaining the Capital Accounts and in determining
the rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed
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in accordance with Section 5.5(b)) shall be allocated among the Partners in
each taxable year (or portion thereof) as provided herein below.
(a) Net Income. After giving effect to the special
allocations set forth in Section 6.1(d), Net Income for each taxable year and
all items of income, gain, loss and deduction taken into account in computing
Net Income for such taxable year shall be allocated among the Partners as
follows:
(i) First, 100% to the General Partners, in proportion to
their respective Percentage Interests, until the aggregate Net Income
allocated to the General Partners pursuant to this Section 6.1(a)(i)
for the current taxable year and all previous taxable years is equal
to the aggregate Net Losses allocated to the General Partners pursuant
to Section 6.1(b)(ii) for all previous taxable years;
(ii) Second, 1.0101% to the General Partners, in
proportion to their respective Percentage Interests, and 98.9899% to
the Limited Partners, in proportion to their respective Percentage
Interests.
(b) Net Losses. After giving effect to the special
allocations set forth in Section 6.1(d), Net Losses for each taxable period and
all items of income, gain, loss and deduction taken into account in computing
Net Losses for such taxable period shall be allocated among the Partners as
follows:
(i) First, 1.0101% to the General Partners, in proportion
to their respective Percentage Interests, and 98.9899% to the Limited
Partners, in accordance with their respective Percentage Interests;
provided, however, that Net Losses shall not be allocated to a Limited
Partner pursuant to this Section 6.1(b)(i) to the extent that such
allocation would cause a Limited Partner to have a deficit balance in
its Adjusted Capital Account at the end of such taxable year (or
increase any existing deficit balance in such Limited Partners's
Adjusted Capital Account);
(ii) Second, the balance, if any, 100% to the General
Partners, in proportion to their respective Percentage Interests.
(c) Net Termination Gains and Losses. After giving
effect to the special allocations set forth in Section 6.1(d), all items of
income, gain, loss and deduction taken into account in computing Net
Termination Gain or Net Termination Loss for such taxable period shall be
allocated in the same manner as such Net Termination Gain or Net Termination
Loss is allocated hereunder. All allocations under this Section 6.1(c) shall
be made after Capital Account balances have been adjusted by all other
allocations provided under this Section 6.1 and after all distributions of
Available Cash provided under Section 6.4 have been made with respect to the
taxable period ending on or before the Liquidation Date; provided, however,
that solely for purposes of this
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Section 6.1(c), Capital Accounts shall not be adjusted for distributions made
pursuant to Section 12.4.
(i) If a Net Termination Gain is recognized (or
deemed recognized pursuant to Section 5.5(d)), such Net Termination
Gain shall be allocated among the Partners in the following manner
(and the Capital Accounts of the Partners shall be increased by the
amount so allocated in each of the following subclauses, in the order
listed, before an allocation is made pursuant to the next succeeding
subclause):
(A) First, to each Partner having a deficit
balance in its Capital Account, in the proportion that such
deficit balance bears to the total deficit balances in the
Capital Accounts of all Partners, until each such Partner has
been allocated Net Termination Gain equal to any such deficit
balance in its Capital Account; and
(B) Second, 1.0101% to the General Partners, in
proportion to their respective Percentage Interests, and
98.9899% to the Limited Partners, in proportion to their
respective Percentage Interests.
(ii) If a Net Termination Loss is recognized (or
deemed recognized pursuant to Section 5.5(d)), such Net Termination
Loss shall be allocated among the Partners in the following manner:
(A) First, to the General Partners and the
Limited Partners in proportion to, and to the extent of, the
positive balances in their respective Capital Accounts; and
(B) Second, the balance, if any, 100% to the
General Partners, in proportion to their respective Percentage
Interests.
(d) Special Allocations. Notwithstanding any other
provision of this Section 6.1, the following special allocations shall be made
for such taxable period:
(i) Partnership Minimum Gain Chargeback.
Notwithstanding any other provision of this Section 6.1, if there is a
net decrease in Partnership Minimum Gain during any Partnership
taxable period, each Partner shall be allocated items of Partnership
income and gain for such period (and, if necessary, subsequent
periods) in the manner and amounts provided in Treasury Regulation
Sections 1.704-2(f)(6), 1.704-2(g)(2) and 1.704- 2(j)(2)(i), or any
successor provision. For purposes of this Section 6.1(d), each
Partner's Adjusted Capital Account balance shall be determined, and
the allocation of income or gain required hereunder shall be effected,
prior to the application of any other allocations pursuant to this
Section 6.1(d) with respect to such taxable period (other than an
allocation pursuant to Sections 6.1(d)(v) and 6.1(d)(vi)). This
Section 6.1(d)(i) is intended to comply with the
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Partnership Minimum Gain chargeback requirement in Treasury Regulation
Section 1.704-2(f) and shall be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain.
Notwithstanding the other provisions of this Section 6.1 (other than
Section 6.1(d)(i)), except as provided in Treasury Regulation Section
1.704- 2(i)(4), if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain during any Partnership taxable period, any Partner with a
share of Partner Nonrecourse Debt Minimum Gain at the beginning of
such taxable period shall be allocated items of Partnership income and
gain for such period (and, if necessary, subsequent periods) in the
manner and amounts provided in Treasury Regulation Sections
1.704-2(i)(4) and 1.704- 2(j)(2)(ii), or any successor provisions. For
purposes of this Section 6.1(d), each Partner's Adjusted Capital
Account balance shall be determined, and the allocation of income or
gain required hereunder shall be effected, prior to the application of
any other allocations pursuant to this Section 6.1(d), other than
Section 6.1(d)(i) and other than an allocation pursuant to Sections
6.1(d)(v) and 6.1(d)(vi), with respect to such taxable period. This
Section 6.1(d)(ii) is intended to comply with the chargeback of items
of income and gain requirement in Treasury Regulation Section
1.704-2(i)(4) and shall be interpreted consistently therewith.
(iii) Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704- 1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of
Partnership income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations promulgated under Section 704(b)
of the Code, the deficit balance, if any, in its Adjusted Capital
Account created by such adjustments, allocations or distributions as
quickly as possible unless such deficit balance is otherwise
eliminated pursuant to Section 6.1(d)(i) or (ii).
(iv) Gross Income Allocations. In the event any Partner
has a deficit balance in its Capital Account at the end of any
Partnership taxable period in excess of the sum of (A) the amount such
Partner is required to restore pursuant to the provisions of this
Agreement and (B) the amount such Partner is deemed obligated to
restore pursuant to Treasury Regulation Sections 1.704-2(g) and
1.704-2(i)(5), such Partner shall be specially allocated items of
Partnership gross income and gain in the amount of such excess as
quickly as possible; provided, that an allocation pursuant to this
Section 6.1(d)(iv) shall be made only if and to the extent that such
Partner would have a deficit balance in its Capital Account as
adjusted after all other allocations provided for in this Section 6.1
have been tentatively made as if this Section 6.1(d)(iv) were not in
this Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for
any taxable period shall be allocated to the Partners in accordance
with their respective Percentage Interests. If the Managing General
Partner determines in its good faith discretion that the Partnership's
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Nonrecourse Deductions must be allocated in a different ratio to
satisfy the safe harbor requirements of the Treasury Regulations
promulgated under Section 704(b) of the Code, the Managing General
Partner is authorized, upon notice to the other Partners, to revise
the prescribed ratio to the numerically closest ratio that does
satisfy such requirements.
(vi) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the
Partner that bears the Economic Risk of Loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable in accordance with Treasury Regulation Section
1.704-2(i). If more than one Partner bears the Economic Risk of Loss
with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse
Deductions attributable thereto shall be allocated between or among
such Partners in accordance with the ratios in which they share such
Economic Risk of Loss.
(vii) Nonrecourse Liabilities. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (A) the amount
of Partnership Minimum Gain and (B) the total amount of Nonrecourse
Built-in Gain shall be allocated among the Partners in accordance with
their respective Percentage Interests.
(viii) Code Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant
to Section 734(b) or 743(c) of the Code is required, pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into
account in determining Capital Accounts, the amount of such adjustment
to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis), and such item of gain or loss shall
be specially allocated to the Partners in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted
pursuant to such Section of the Treasury Regulations.
(ix) Curative Allocation.
(A) Notwithstanding any other provision of this
Section 6.1, other than the Required Allocations, the Required
Allocations shall be taken into account in making the Agreed
Allocations so that, to the extent possible, the net amount of
items of income, gain, loss and deduction allocated to each
Partner pursuant to the Required Allocations and the Agreed
Allocations, together, shall be equal to the net amount of
such items that would have been allocated to each such Partner
under the Agreed Allocations had the Required Allocations and
the related Curative Allocation not otherwise been provided in
this Section 6.1. Notwithstanding the preceding sentence,
Required Allocations relating to (1) Nonrecourse Deductions
shall not be taken into account except to the extent that
there has been a decrease in Partnership Minimum Gain and (2)
Partner Nonrecourse Deductions shall not be taken into account
except
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34
to the extent that there has been a decrease in Partner
Nonrecourse Debt Minimum Gain. Allocations pursuant to this
Section 6.1(d)(ix)(A) shall only be made with respect to
Required Allocations to the extent the Managing General
Partner reasonably determines that such allocations will
otherwise be inconsistent with the economic agreement among
the Partners. Further, allocations pursuant to this Section
6.1(d)(ix)(A) shall be deferred with respect to allocations
pursuant to clauses (1) and (2) hereof to the extent the
Managing General Partner reasonably determines that such
allocations are likely to be offset by subsequent Required
Allocations.
(B) The Managing General Partner shall have
reasonable discretion, with respect to each taxable period, to
(1) apply the provisions of Section 6.1(d)(ix)(A) in whatever
order is most likely to minimize the economic distortions that
might otherwise result from the Required Allocations, and (2)
divide all allocations pursuant to Section 6.1(d)(ix)(A) among
the Partners in a manner that is likely to minimize such
economic distortions.
SECTION 6.2 Allocations for Tax Purposes.
(a) Except as otherwise provided herein, for federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Section 6.1.
(b) In an attempt to eliminate Book-Tax Disparities
attributable to a Contributed Property or Adjusted Property, items of income,
gain, loss, depreciation, amortization and cost recovery deductions shall be
allocated for federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the
manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property and
its adjusted basis at the time of contribution; and (B) any item of
Residual Gain or Residual Loss attributable to a Contributed Property
shall be allocated among the Partners in the same manner as its
correlative item of "book" gain or loss is allocated pursuant to
Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items
shall (1) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code to take
into account the Unrealized Gain or Unrealized Loss attributable to
such property and the allocations thereof pursuant to Section
5.5(d)(i) or 5.5(d)(ii), and (2) second, in the event such property
was originally a Contributed Property, be allocated among the Partners
in a manner consistent with Section 6.2(b)(i)(A); and (B) any item of
Residual Gain or Residual Loss attributable to an Adjusted Property
shall be allocated among the Partners in the same manner as its
correlative item of "book" gain or loss is allocated pursuant to
Section 6.1.
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(iii) The Managing General Partner shall apply the
principles of Treasury Regulation Section 1.704- 3(d) to eliminate
Book-Tax Disparities.
(c) For the proper administration of the Partnership and
for the preservation of uniformity of the Units or other limited partner
interests of the MLP (or any class or classes thereof), the Managing General
Partner shall have sole discretion to (i) adopt such conventions as it deems
appropriate in determining the amount of depreciation, amortization and cost
recovery deductions; (ii) make special allocations for federal income tax
purposes of income (including, without limitation, gross income) or deductions;
and (iii) amend the provisions of this Agreement as appropriate (x) to reflect
the proposal or promulgation of Treasury Regulations under Section 704(b) or
Section 704(c) of the Code or (y) otherwise to preserve or achieve uniformity
of the Units or other limited partner interests of the MLP (or any class or
classes thereof). The Managing General Partner may adopt such conventions, make
such allocations and make such amendments to this Agreement as provided in this
Section 6.2(c) only if such conventions, allocations or amendments would not
have a material adverse effect on the Partners, the holders of any class or
classes of Units or other limited partner interests of the MLP issued and
outstanding or the Partnership and if such allocations are consistent with the
principles of Section 704 of the Code.
(d) The Managing General Partner in its discretion may
determine to depreciate or amortize the portion of an adjustment under Section
743(b) of the Code attributable to unrealized appreciation in any Adjusted
Property (to the extent of the unamortized Book-Tax Disparity) using a
predetermined rate derived from the depreciation or amortization method and
useful life applied to the Partnership's common basis of such property, despite
any inconsistency of such approach with Proposed Treasury Regulation Section
1.168-2(n), Treasury Regulation Section 1.167(c)-l(a)(6) or the legislative
history of Section 197 of the Code. If the Managing General Partner determines
that such reporting position cannot reasonably be taken, the Managing General
Partner may adopt depreciation and amortization conventions under which all
purchasers acquiring limited partner interests of the MLP in the same month
would receive depreciation and amortization deductions, based upon the same
applicable rate as if they had purchased a direct interest in the Partnership's
property. If the Managing General Partner chooses not to utilize such aggregate
method, the Managing General Partner may use any other reasonable depreciation
and amortization conventions to preserve the uniformity of the intrinsic tax
characteristics of any limited partner interests of the MLP that would not have
a material adverse effect on the Partners or the holders of any class or
classes of limited partner interests of the MLP.
(e) Any gain allocated to the Partners upon the sale or
other taxable disposition of any Partnership asset shall, to the extent
possible, after taking into account other required allocations of gain pursuant
to this Section 6.2, be characterized as Recapture Income in the same
proportions and to the same extent as such Partners (or their predecessors in
interest) have been allocated any deductions directly or indirectly giving rise
to the treatment of such gains as Recapture Income.
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(f) All items of income, gain, loss, deduction and credit
recognized by the Partnership for federal income tax purposes and allocated to
the Partners in accordance with the provisions hereof shall be determined
without regard to any election under Section 754 of the Code which may be made
by the Partnership; provided, however, that such allocations, once made, shall
be adjusted as necessary or appropriate to take into account those adjustments
permitted or required by Sections 734 and 743 of the Code.
(g) The Managing General Partner may adopt such methods
of allocation of income, gain, loss or deduction between a transferor and a
transferee of a Partnership Interest as it determines necessary, to the extent
permitted or required by Section 706 of the Code and the regulations or rulings
promulgated thereunder.
(h) Allocations that would otherwise be made to a Partner
under the provisions of this Article VI shall instead be made to the beneficial
owner of Partnership Interests held by a nominee in any case in which the
nominee has furnished the identity of such owner to the Partnership in
accordance with Section 6031(c) of the Code or any other method acceptable to
the Managing General Partner in its sole discretion.
SECTION 6.3 Distributions.
(a) Within 45 days following the end of each Quarter
commencing with the Quarter ending on December 31, 1998, an amount equal to
100% of Available Cash with respect to such Quarter shall, subject to Section
17-607 of the Delaware Act, be distributed in accordance with this Article VI
by the Partnership to the Partners in accordance with their respective
Percentage Interests. The immediately preceding sentence shall not require any
distribution of cash if and to the extent such distribution would be prohibited
by applicable law or by any loan agreement, security agreement, mortgage, debt
instrument or other agreement or obligation to which the Partnership is a party
or by which it is bound or its assets are subject. All distributions required
to be made under this Agreement shall be made subject to Section 17-607 of the
Delaware Act.
(b) In the event of the dissolution and liquidation of
the Partnership, all receipts received during or after the Quarter in which the
Liquidation Date occurs, other than from borrowings described in (a)(ii) of the
definition of Available Cash, shall be applied and distributed solely in
accordance with, and subject to the terms and conditions of, Section 12.4.
(c) The Managing General Partner shall have the
discretion to treat taxes paid by the Partnership on behalf of, or amounts
withheld with respect to, all or less than all of the Partners, as a
distribution of Available Cash to such Partners.
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ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
SECTION 7.1 Management.
(a) The Managing General Partner shall conduct, direct
and manage all activities of the Partnership. Except as otherwise expressly
provided in this Agreement, all management powers over the business and affairs
of the Partnership shall be exclusively vested in the Managing General Partner,
and neither the Special General Partner nor any Limited Partner or Assignee
shall have any management power over the business and affairs of the
Partnership. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which are granted to
the Managing General Partner under any other provision of this Agreement, the
Managing General Partner, subject to Section 7.3, shall have full power and
authority to do all things and on such terms as it, in its sole discretion, may
deem necessary or appropriate to conduct the business of the Partnership, to
exercise all powers set forth in Section 2.5 and to effectuate the purposes set
forth in Section 2.4, including the following:
(i) the making of any expenditures, the lending or
borrowing of money, the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance of
evidences of indebtedness, including indebtedness that is convertible
into a Partnership Interest, and the incurring of any other
obligations;
(ii) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other
agencies having jurisdiction over the business or assets of the
Partnership;
(iii) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of
the Partnership or the merger or other combination of the Partnership
with or into another Person (the matters described in this clause
(iii) being subject, however, to any prior approval that may be
required by Section 7.3);
(iv) the use of the assets of the Partnership (including
cash on hand) for any purpose consistent with the terms of this
Agreement, including the financing of the conduct of the operations of
the Partnership Group, subject to Section 7.6, the lending of funds to
other Persons (including the MLP and any member of the Partnership
Group), the repayment of obligations of the MLP or any member of the
Partnership Group and the making of capital contributions to any
member of the Partnership Group;
(v) the negotiation, execution and performance of any
contracts, conveyances or other instruments (including instruments
that limit the liability of the Partnership under contractual
arrangements to all or particular assets of the Partnership, with the
other party to the contract to have no recourse against the General
Partners or their assets other than their
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interests in the Partnership, even if same results in the terms of the
transaction being less favorable to the Partnership than would
otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including
employees having titles such as "president," "vice president,"
"secretary" and "treasurer") and agents, outside attorneys,
accountants, consultants and contractors and the determination of
their compensation and other terms of employment or hiring;
(viii) the maintenance of such insurance for the benefit of
the Partnership Group and the Partners as it deems necessary or
appropriate;
(ix) the formation of, or acquisition of an interest in,
and the contribution of property and the making of loans to, any
further limited or general partnerships, joint ventures, corporations
or other relationships subject to the restrictions set forth in
Section 2.4;
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the bringing and defending
of actions at law or in equity and otherwise engaging in the conduct
of litigation and the incurring of legal expense and the settlement of
claims and litigation; and
(xi) the indemnification of any Person against liabilities
and contingencies to the extent permitted by law.
(xii) the undertaking of any action in connection with the
Partnership's participation in the Operating Subsidiary as a
non-managing member.
(b) Notwithstanding any other provision of this
Agreement, the MLP Agreement, the Delaware Act or any applicable law, rule or
regulation, each of the Partners and Assignees and each other Person who may
acquire an interest in the Partnership hereby (i) approves, ratifies and
confirms the execution, delivery and performance by the parties thereto of the
Partnership Agreement, the MLP Agreement, the Underwriting Agreement, the
Omnibus Agreement, the Contribution and Conveyance Agreement and the other
agreements and documents described in or filed as exhibits to the Registration
Statement that are related to the transactions contemplated by the Registration
Statement; (ii) agrees that the Managing General Partner (on its own or through
any officer of the Partnership) is authorized to execute, deliver and perform
the agreements referred to in clause (i) of this sentence and the other
agreements, acts, transactions and matters described in or contemplated by the
Registration Statement on behalf of the Partnership without any further act,
approval or vote of the Partners or the Assignees or the other Persons who may
acquire an interest in the Partnership; and (iii) agrees that the execution,
delivery or performance by the General
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Partners, the MLP, any Group Member or any Affiliate of any of them, of this
Agreement or any agreement authorized or permitted under this Agreement
(including the exercise by the Managing General Partner or any Affiliate of the
Managing General Partner of the rights accorded pursuant to Article XV), shall
not constitute a breach by the General Partners of any duty that they may owe
the Partnership or the Limited Partners or any other Persons under this
Agreement (or any other agreements) or of any duty stated or implied by law or
equity.
SECTION 7.2 Certificate of Limited Partnership.
The Managing General Partner has caused the Certificate of Limited
Partnership to be filed with the Secretary of State of the State of Delaware as
required by the Delaware Act and shall use all reasonable efforts to cause to
be filed such other certificates or documents as may be determined by the
Managing General Partner in its sole discretion to be reasonable and necessary
or appropriate for the formation, continuation, qualification and operation of
a limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware or any other state in which the
Partnership may elect to do business or own property. To the extent that such
action is determined by the Managing General Partner in its sole discretion to
be reasonable and necessary or appropriate, the Managing General Partner shall
file amendments to and restatements of the Certificate of Limited Partnership
and do all things to maintain the Partnership as a limited partnership (or a
partnership or other entity in which the limited partners have limited
liability) under the laws of the State of Delaware or of any other state in
which the Partnership may elect to do business or own property. Subject to the
terms of Section 3.4(a), the Managing General Partner shall not be required,
before or after filing, to deliver or mail a copy of the Certificate of Limited
Partnership, any qualification document or any amendment thereto to any Limited
Partner or Assignee.
SECTION 7.3 Restrictions on General Partners' Authority.
(a) The General Partners may not, without written
approval of the specific act by the Limited Partners or by other written
instrument executed and delivered by the Limited Partners subsequent to the
date of this Agreement, take any action in contravention of this Agreement,
including, except as otherwise provided in this Agreement, (i) committing any
act that would make it impossible to carry on the ordinary business of the
Partnership; (ii) possessing Partnership property, or assigning any rights in
specific Partnership property, for other than a Partnership purpose; (iii)
admitting a Person as a Partner; (iv) amending this Agreement in any manner or
(v) transferring either of their respective General Partner Interests.
(b) Except as provided in Articles XII and XIV, no
General Partner may sell, exchange or otherwise dispose of all or substantially
all of the Partnership's assets in a single transaction or a series of related
transactions (including by way of merger, consolidation or other combination)
or approve on behalf of the Partnership the sale, exchange or other disposition
of all or substantially all of the assets of the Partnership, without the
approval of the Limited Partners;
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provided, however, that this provision shall not preclude or limit the Managing
General Partner's ability to mortgage, pledge, hypothecate or grant a security
interest in all or substantially all of the assets of the Partnership and shall
not apply to any forced sale of any or all of the assets of the Partnership
pursuant to the foreclosure of, or other realization upon, any such
encumbrance. Without the approval of at least a Unit Majority, the General
Partners shall not, on behalf of the MLP, (i) consent to any amendment to this
Agreement or, except as expressly permitted by Section 7.9(d) of the MLP
Agreement, take any action permitted to be taken by a Partner, in either case,
that would have a material adverse effect on the MLP as a Partner or (ii)
except as permitted under Sections 4.6, 11.1, 11.2 or 11.4 of the MLP
Agreement, elect or cause the MLP to elect a successor general partner of the
Partnership.
SECTION 7.4 Reimbursement of the General Partners.
(a) Except as provided in this Section 7.4 and elsewhere
in this Agreement or in the MLP Agreement, the General Partners shall not be
compensated for its services as General Partners, general partners of the MLP
or as a general partner or managing member of any Group Member.
(b) Each of the General Partners shall be reimbursed on a
monthly basis, or such other reasonable basis as the Managing General Partner
may determine in its sole discretion, for (i) all direct and indirect expenses
it incurs or payments it makes on behalf of the Partnership (including salary,
bonus, incentive compensation and other amounts paid to any Person including
Affiliates of such General Partner to perform services for the Partnership or
for such General Partner in the discharge of its duties to the Partnership),
and (ii) all other necessary or appropriate expenses allocable to the
Partnership or otherwise reasonably incurred by such General Partner in
connection with operating the Partnership's business (including expenses
allocated to such General Partner by its Affiliates). The Managing General
Partner shall determine the expenses that are allocable to the Partnership in
any reasonable manner determined by the Managing General Partner in its sole
discretion. Reimbursements pursuant to this Section 7.4 shall be in addition to
any reimbursement to the General Partners as a result of indemnification
pursuant to Section 7.7.
(c) Subject to Section 5.7, the Managing General Partner,
in its sole discretion and without the approval of the Limited Partners (who
shall have no right to vote in respect thereof), may propose and adopt on
behalf of the Partnership employee benefit plans, employee programs and
employee practices, or cause the Partnership to issue Partnership Interests, in
connection with, pursuant to any employee benefit plan, employee program or
employee practice maintained or sponsored by either of the General Partners or
any of their Affiliates, in each case for the benefit of employees of either of
the General Partners, any Group Member or any Affiliate, or any of them, in
respect of services performed, directly or indirectly, for the benefit of the
Partnership Group. Expenses incurred by the General Partners in connection with
any such plans, programs and practices shall be reimbursed in accordance with
Section 7.4(b). Any and all obligations of the General Partners under any
employee benefit plans, employee programs or employee practices adopted by
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the Managing General Partner as permitted by this Section 7.4(c) shall
constitute obligations of the General Partners hereunder and shall be assumed
by any successor General Partner approved pursuant to Section 11.1, 11.2 or
11.4 or the transferee of or successor to all of the Managing General Partner's
General Partner Interest or the Special General Partner's General Partner
Interest pursuant to Section 4.2.
SECTION 7.5 Outside Activities.
(a) After the Closing Date, the Managing General Partner,
for so long as it is a General Partner of the Partnership (i) agrees that its
sole business will be to act as the General Partner of the Partnership, a
general partner of the MLP, and a general partner or managing member of any
other partnership or limited liability company of which the Partnership or the
MLP is, directly or indirectly, a partner or member, as the case may be, and to
undertake activities that are ancillary or related thereto (including being a
limited partner in the MLP), (ii) shall not engage in any business or activity
or incur any debts or liabilities except in connection with or incidental to
(A) its performance as general partner or managing member, as the case may be,
of the Partnership, the MLP or one or more Group Members or as described in or
contemplated by the Registration Statement or (B) the acquiring, owning or
disposing of debt or equity securities in any Group Member and (iii) except to
the extent permitted in the Omnibus Agreement, shall not, and shall cause its
Affiliates not to, engage in any Restricted Business.
(b) The Omnibus Agreement, to which the Partnership is a
party, sets forth certain restrictions on the ability of Alliance Resource
Holdings, Inc. to engage in Restricted Businesses.
(c) Except as specifically restricted by Section 7.5(a)
and the Omnibus Agreement, each Indemnitee (other than the Managing General
Partner) shall have the right to engage in businesses of every type and
description and other activities for profit and to engage in and possess an
interest in other business ventures of any and every type or description,
whether in businesses engaged in or anticipated to be engaged in by the MLP or
any Group Member, independently or with others, including business interests
and activities in direct competition with the business and activities of the
MLP or any Group Member, and none of the same shall constitute a breach of this
Agreement or any duty express or implied by law to the MLP or any Group Member
or any Partner or Assignee. Neither the MLP nor any Group Member, any Limited
Partner, nor any other Person shall have any rights by virtue of this
Agreement, the MLP Agreement or the partnership relationship established hereby
or thereby in any business ventures of any Indemnitee.
(d) Subject to the terms of Section 7.5(a), Section
7.5(b), Section 7.5(c) and the Omnibus Agreement, but otherwise notwithstanding
anything to the contrary in this Agreement, (i) the engaging in competitive
activities by any Indemnitees (other than the Managing General Partner) in
accordance with the provisions of this Section 7.5 is hereby approved by the
Partnership and all Partners, (ii) it shall be deemed not to be a breach of the
General Partners' fiduciary duty or any other obligation of any type whatsoever
of the General Partners for the Indemnitees (other than the
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Managing General Partner) to engage in such business interests and activities
in preference to or to the exclusion of the Partnership and (iii) except as set
forth in the Omnibus Agreement, the General Partners and the Indemnities shall
have no obligation to present business opportunities to the Partnership.
(e) The General Partners and any of their Affiliates may
acquire Units or other MLP Securities in addition to those acquired on the
Closing Date and, except as otherwise provided in this Agreement, shall be
entitled to exercise all rights relating to such Units or MLP Securities.
(f) The term "Affiliates" when used in Section 7.5(a) and
Section 7.5(e) with respect to the General Partner shall not include any Group
Member or any Subsidiary of the MLP or any Group Member.
(g) Anything in this Agreement to the contrary
notwithstanding, to the extent that provisions of Sections 7.7, 7.8, 7.9, 7.10
or other Sections of this Agreement purport or are interpreted to have the
effect of restricting the fiduciary duties that might otherwise, as a result of
Delaware or other applicable law, be owed by the General Partners to the
Partnership and its Limited Partners, or to constitute a waiver or consent by
the Limited Partners to any such restriction, such provisions shall be
inapplicable and have no effect in determining whether the General Partners
have complied with their fiduciary duties in connection with determinations
made by them under this Section 7.5.
SECTION 7.6 Loans from the General Partners; Loans or Contributions from the
Partnership; Contracts with Affiliates; Certain Restrictions on
the General Partners.
(a) Each of the General Partners or any of their
Affiliates may lend to the MLP or any Group Member, and the MLP or any Group
Member may borrow from a General Partner or any of its Affiliates, funds needed
or desired by the MLP or the Group Member for such periods of time and in such
amounts as the Managing General Partner may determine; provided, however, that
in any such case the lending party may not charge the borrowing party interest
at a rate greater than the rate that would be charged the borrowing party or
impose terms less favorable to the borrowing party than would be charged or
imposed on the borrowing party by unrelated lenders on comparable loans made on
an arm's- length basis (without reference to the lending party's financial
abilities or guarantees). The borrowing party shall reimburse the lending party
for any costs (other than any additional interest costs) incurred by the
lending party in connection with the borrowing of such funds. For purposes of
this Section 7.6(a) and Section 7.6(b), the term "Group Member" shall include
any Affiliate of a Group Member that is controlled by the Group Member. No
Group Member may lend funds to the General Partner or any of its Affiliates
(other than the MLP, a Subsidiary of the MLP or a Subsidiary of another Group
Member).
(b) The Partnership may lend or contribute to any Group
Member, and any Group Member may borrow from the Partnership, funds on terms
and conditions established in the sole
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discretion of the Managing General Partner; provided, however, that the
Partnership may not charge the Group Member interest at a rate less than the
rate that would be charged to the Group Member (without reference to the
Managing General Partner's financial abilities or guarantees) by unrelated
lenders on comparable loans. The foregoing authority shall be exercised by the
Managing General Partner in its sole discretion and shall not create any right
or benefit in favor of any Group Member or any other Person.
(c) The General Partners may themselves, or may enter
into an agreement with any of their Affiliates to, render services to a Group
Member or to the General Partners in the discharge of their duties as general
partners of the Partnership. Any services rendered to a Group Member by the
General Partners or any of their Affiliates shall be on terms that are fair and
reasonable to the Partnership; provided, however, that the requirements of this
Section 7.6(c) shall be deemed satisfied as to (i) any transaction approved by
Special Approval, (ii) any transaction, the terms of which are no less
favorable to the Partnership Group than those generally being provided to or
available from unrelated third parties or (iii) any transaction that, taking
into account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or
advantageous to the Partnership Group), is equitable to the Partnership Group.
The provisions of Section 7.4 shall apply to the rendering of services
described in this Section 7.6(c).
(d) The Partnership Group may transfer assets to joint
ventures, other partnerships, corporations, limited liability companies or
other business entities in which it is or thereby becomes a participant upon
such terms and subject to such conditions as are consistent with this Agreement
and applicable law.
(e) Neither of the General Partners nor any of their
Affiliates shall sell, transfer or convey any property to, or purchase any
property from, the Partnership, directly or indirectly, except pursuant to
transactions that are fair and reasonable to the Partnership; provided,
however, that the requirements of this Section 7.6(e) shall be deemed to be
satisfied as to (i) the transactions effected pursuant to Sections 5.2 and 5.3,
the Contribution and Conveyance Agreement and any other transactions described
in or contemplated by the Registration Statement, (ii) any transaction approved
by Special Approval, (iii) any transaction, the terms of which are no less
favorable to the Partnership than those generally being provided to or
available from unrelated third parties, or (iv) any transaction that, taking
into account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or
advantageous to the Partnership), is equitable to the Partnership.
(f) The General Partners and their Affiliates will have
no obligation to permit any Group Member to use any facilities or assets of the
General Partners and their Affiliates, except as may be provided in contracts
entered into from time to time specifically dealing with such use, nor shall
there be any obligation on the part of the General Partners or their Affiliates
to enter into such contracts.
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(g) Without limitation of Sections 7.6(a) through 7.6(f),
and notwithstanding anything to the contrary in this Agreement, the existence
of the conflicts of interest described in the Registration Statement are hereby
approved by all Partners.
SECTION 7.7 Indemnification.
(a) To the fullest extent permitted by law but subject to
the limitations expressly provided in this Agreement, all Indemnitees shall be
indemnified and held harmless by the Partnership from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
any Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as an Indemnitee; provided, that in each
case the Indemnitee acted in good faith and in a manner that such Indemnitee
reasonably believed to be in, or (in the case of a Person other than the
General Partners) not opposed to, the best interests of the Partnership and,
with respect to any criminal proceeding, had no reasonable cause to believe its
conduct was unlawful; provided, further, no indemnification pursuant to this
Section 7.7 shall be available to the General Partners with respect to their
obligations incurred pursuant to the Underwriting Agreement or the Contribution
and Conveyance Agreement (other than obligations incurred by the General
Partners on behalf of the MLP, the Partnership or the Operating Subsidiary).
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere, or its equivalent,
shall not create a presumption that the Indemnitee acted in a manner contrary
to that specified above. Any indemnification pursuant to this Section 7.7 shall
be made only out of the assets of the Partnership, it being agreed that the
General Partners shall not be personally liable for such indemnification and
shall have no obligation to contribute or loan any monies or property to the
Partnership to enable it to effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses
(including legal fees and expenses) incurred by an Indemnitee who is
indemnified pursuant to Section 7.7(a) in defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the Partnership
prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Partnership of any undertaking by or on behalf
of the Indemnitee to repay such amount if it shall be determined that the
Indemnitee is not entitled to be indemnified as authorized in this Section 7.7.
(c) The indemnification provided by this Section 7.7
shall be in addition to any other rights to which an Indemnitee may be entitled
under any agreement, pursuant to any vote of the Partners, as a matter of law
or otherwise, both as to actions in the Indemnitee's capacity as an Indemnitee
and as to actions in any other capacity (including any capacity under the
Underwriting Agreement), and shall continue as to an Indemnitee who has ceased
to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee.
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(d) The Partnership may purchase and maintain (or
reimburse the General Partners or their Affiliates for the cost of) insurance,
on behalf of the General Partners, their Affiliates and such other Persons as
the Managing General Partner shall determine, against any liability that may be
asserted against or expense that may be incurred by such Person in connection
with the Partnership's activities or such Person's activities on behalf of the
Partnership, regardless of whether the Partnership would have the power to
indemnify such Person against such liability under the provisions of this
Agreement.
(e) For purposes of this Section 7.7, the Partnership
shall be deemed to have requested an Indemnitee to serve as fiduciary of an
employee benefit plan whenever the performance by it of its duties to the
Partnership also imposes duties on, or otherwise involves services by, it to
the plan or participants or beneficiaries of the plan; excise taxes assessed on
an Indemnitee with respect to an employee benefit plan pursuant to applicable
law shall constitute "fines" within the meaning of Section 7.7(a); and action
taken or omitted by it with respect to any employee benefit plan in the
performance of its duties for a purpose reasonably believed by it to be in the
interest of the participants and beneficiaries of the plan shall be deemed to
be for a purpose which is in, or not opposed to, the best interests of the
Partnership.
(f) In no event may an Indemnitee subject the Limited
Partners to personal liability by reason of the indemnification provisions set
forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in
whole or in part under this Section 7.7 because the Indemnitee had an interest
in the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.7 are for the
benefit of the Indemnitees, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of any other
Persons.
(i) No amendment, modification or repeal of this Section
7.7 or any provision hereof shall in any manner terminate, reduce or impair the
right of any past, present or future Indemnitee to be indemnified by the
Partnership, nor the obligations of the Partnership to indemnify any such
Indemnitee under and in accordance with the provisions of this Section 7.7 as
in effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
SECTION 7.8 Liability of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in
this Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partners, the Assignees or any other Persons who have
acquired interests in the Units or other Partnership
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Securities of the MLP, for losses sustained or liabilities incurred as a result
of any act or omission if such Indemnitee acted in good faith.
(b) Subject to its obligations and duties as Managing
General Partner set forth in Section 7.1(a), the Managing General Partner may
exercise any of the powers granted to it by this Agreement and perform any of
the duties imposed upon it hereunder either directly or by or through its
agents, and the Managing General Partner shall not be responsible for any
misconduct or negligence on the part of any such agent appointed by the
Managing General Partner in good faith.
(c) To the extent that, at law or in equity, an
Indemnitee has duties (including fiduciary duties) and liabilities relating
thereto to the Partnership or to the Limited Partners, the General Partners and
any other Indemnitee acting in connection with the Partnership's business or
affairs shall not be liable to the Partnership or to any Partner for its good
faith reliance on the provisions of this Agreement. The provisions of this
Agreement, to the extent that they restrict or otherwise modify the duties and
liabilities of an Indemnitee otherwise existing at law or in equity, are agreed
by the Partners to replace such other duties and liabilities of such
Indemnitee.
(d) Any amendment, modification or repeal of this Section
7.8 or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the liability to the Partnership, the Limited
Partners, the General Partners, and the Partnership's and General Partners'
directors, officers and employees under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
SECTION 7.9 Resolution of Conflicts of Interest.
(a) Unless otherwise expressly provided in this Agreement
or the MLP Agreement, whenever a potential conflict of interest exists or
arises between a General Partner or any of its Affiliates, on the one hand, and
the Partnership, the MLP, any Partner or any Assignee, on the other, any
resolution or course of action by a General Partner or its Affiliates in
respect of such conflict of interest shall be permitted and deemed approved by
all Partners, and shall not constitute a breach of this Agreement of the MLP
Agreement, of any agreement contemplated herein or therein, or of any duty
stated or implied by law or equity, if the resolution or course of action is,
or by operation of this Agreement is deemed to be, fair and reasonable to the
Partnership. The Managing General Partner shall be authorized but not required
in connection with its resolution of such conflict of interest to seek Special
Approval of such resolution. Any conflict of interest and any resolution of
such conflict of interest shall be conclusively deemed fair and reasonable to
the Partnership if such conflict of interest or resolution is (i) approved by
Special Approval (as long as the material facts known to the Managing General
Partner or any of its Affiliates regarding any proposed transaction were
disclosed to the Conflicts Committee at the time it gave its approval), (ii) on
terms no less favorable to the Partnership than those generally being provided
to or available from unrelated third
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parties or (iii) fair to the Partnership, taking into account the totality of
the relationships between the parties involved (including other transactions
that may be particularly favorable or advantageous to the Partnership). The
Managing General Partner may also adopt a resolution or course of action that
has not received Special Approval. The Managing General Partner (including the
Conflicts Committee in connection with Special Approval) shall be authorized in
connection with its determination of what is "fair and reasonable" to the
Partnership and in connection with its resolution of any conflict of interest
to consider (A) the relative interests of any party to such conflict,
agreement, transaction or situation and the benefits and burdens relating to
such interest; (B) any customary or accepted industry practices and any
customary or historical dealings with a particular Person; (C) any applicable
generally accepted accounting practices or principles; and (D) such additional
factors as the Managing General Partner (including the Conflicts Committee)
determines in its sole discretion to be relevant, reasonable or appropriate
under the circumstances. Nothing contained in this Agreement, however, is
intended to nor shall it be construed to require the Managing General Partner
(including the Conflicts Committee) to consider the interests of any Person
other than the Partnership. In the absence of bad faith by the Managing General
Partner, the resolution, action or terms so made, taken or provided by the
Managing General Partner with respect to such matter shall not constitute a
breach of this Agreement or any other agreement contemplated herein or a breach
of any standard of care or duty imposed herein or therein or, to the extent
permitted by law, under the Delaware Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement
contemplated hereby provides that the Managing General Partner or any of its
Affiliates is permitted or required to make a decision (i) in its "sole
discretion" or "discretion," that it deems "necessary or appropriate" or
"necessary or advisable" or under a grant of similar authority or latitude,
except as otherwise provided herein, the Managing General Partner or such
Affiliate shall be entitled to consider only such interests and factors as it
desires and shall have no duty or obligation to give any consideration to any
interest of, or factors affecting, the Partnership, the MLP, any Limited
Partner or any Assignee, (ii) it may make such decision in its sole discretion
(regardless of whether there is a reference to "sole discretion" or
"discretion") unless another express standard is provided for, or (iii) in
"good faith" or under another express standard, the Managing General Partner or
such Affiliate shall act under such express standard and shall not be subject
to any other or different standards imposed by this Agreement, the MLP
Agreement, the Operating Subsidiary Agreement any other agreement contemplated
hereby or under the Delaware Act or any other law, rule or regulation. In
addition, any actions taken by the Managing General Partner or such Affiliate
consistent with the standards of "reasonable discretion" set forth in the
definition of Available Cash shall not constitute a breach of any duty of the
Managing General Partner to the Partnership or the Limited Partners. The
Managing General Partner shall have no duty, express or implied, to sell or
otherwise dispose of any asset of the Partnership Group other than in the
ordinary course of business. No borrowing by any Group Member or the approval
thereof by the Managing General Partner shall be deemed to constitute a breach
of any duty of the General Partner to the Partnership or the Limited Partners
by reason of the fact that the purpose or effect of such borrowing is directly
or indirectly to (A) enable distributions to the General Partners or their
Affiliates to exceed 1.0101% of the total amount
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distributed to all Partners or (B) hasten the expiration of the Subordination
Period or the conversion of any Subordinated Units into Common Units.
(c) Whenever a particular transaction, arrangement or
resolution of a conflict of interest is required under this Agreement to be
"fair and reasonable" to any Person, the fair and reasonable nature of such
transaction, arrangement or resolution shall be considered in the context of
all similar or related transactions.
(d) The Limited Partner hereby authorizes the Managing
General Partner, on behalf of the Partnership as a partner or member of a Group
Member, to approve of actions by the general partner of such Group Member
similar to those actions permitted to be taken by the Managing General Partner
pursuant to this Section 7.9.
SECTION 7.10 Other Matters Concerning the General Partners.
(a) A General Partner may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture
or other paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties.
(b) A General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any act taken or omitted to be
taken in reliance upon the opinion (including an Opinion of Counsel) of such
Persons as to matters that such General Partner reasonably believes to be
within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.
(c) A General Partner shall have the right, in respect of
any of its powers or obligations hereunder, to act through any of its duly
authorized officers, a duly appointed attorney or attorneys-in-fact or the duly
authorized officers of the Partnership.
(d) Any standard of care and duty imposed by this
Agreement or under the Delaware Act or any applicable law, rule or regulation
shall be modified, waived or limited, to the extent permitted by law, as
required to permit the General Partners to act under this Agreement or any
other agreement contemplated by this Agreement and to make any decision
pursuant to the authority prescribed in this Agreement, so long as such action
is reasonably believed by the Managing General Partner to be in, or not
inconsistent with, the best interests of the Partnership.
SECTION 7.11 Reliance by Third Parties.
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the Managing
General Partner and any officer of the
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Managing General Partner authorized by the Managing General Partner to act on
behalf of and in the name of the Partnership has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any authorized contracts on behalf of the
Partnership, and such Person shall be entitled to deal with the Managing
General Partner or any such officer as if it were the Partnership's sole party
in interest, both legally and beneficially. Each Limited Partner hereby waives
any and all defenses or other remedies that may be available against such
Person to contest, negate or disaffirm any action of the Managing General
Partner or any such officer in connection with any such dealing. In no event
shall any Person dealing with the Managing General Partner or any such officer
or its representatives be obligated to ascertain that the terms of the
Agreement have been complied with or to inquire into the necessity or
expedience of any act or action of the Managing General Partner or any such
officer or its representatives. Each and every certificate, document or other
instrument executed on behalf of the Partnership by the Managing General
Partner or its representatives shall be conclusive evidence in favor of any and
every Person relying thereon or claiming thereunder that (a) at the time of the
execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to
do so for and on behalf of the Partnership and (c) such certificate, document
or instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 8.1 Records and Accounting.
The Managing General Partner shall keep or cause to be kept at the
principal office of the Partnership appropriate books and records with respect
to the Partnership's business, including all books and records necessary to
provide to the Limited Partners any information required to be provided
pursuant to Section 3.4(a). Any books and records maintained by or on behalf of
the Partnership in the regular course of its business, including books of
account and records of Partnership proceedings, may be kept on, or be in the
form of, computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device; provided, that the books
and records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial reporting purposes, on an accrual basis in accordance
with U.S. GAAP.
SECTION 8.2 Fiscal Year.
The fiscal year of the Partnership shall be a fiscal year ending
December 31.
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ARTICLE IX
TAX MATTERS
SECTION 9.1 Tax Returns and Information.
The Partnership shall timely file all returns of the Partnership that
are required for federal, state and local income tax purposes on the basis of
the accrual method and a taxable year ending on December 31. The tax
information reasonably required by the Partners for federal and state income
tax reporting purposes with respect to a taxable year shall be furnished to
them within 90 days of the close of the calendar year in which the
Partnership's taxable year ends. The classification, realization and
recognition of income, gain, losses and deductions and other items shall be on
the accrual method of accounting for federal income tax purposes.
SECTION 9.2 Tax Elections.
(a) The Partnership shall make the election under Section
754 of the Code in accordance with applicable regulations thereunder, subject
to the reservation of the right to seek to revoke any such election upon the
Managing General Partner's determination that such revocation is in the best
interests of the Limited Partners.
(b) The Partnership shall elect to deduct expenses
incurred in organizing the Partnership ratably over a sixty-month period as
provided in Section 709 of the Code.
(c) Except as otherwise provided herein, the Managing
General Partner shall determine whether the Partnership should make any other
elections permitted by the Code.
SECTION 9.3 Tax Controversies.
Subject to the provisions hereof, the Managing General Partner is
designated as the Tax Matters Partner (as defined in the Code) and is
authorized and required to represent the Partnership (at the Partnership's
expense) in connection with all examinations of the Partnership's affairs by
tax authorities, including resulting administrative and judicial proceedings,
and to expend Partnership funds for professional services and costs associated
therewith. Each Partner agrees to cooperate with the Managing General Partner
and to do or refrain from doing any or all things reasonably required by the
Managing General Partner to conduct such proceedings.
SECTION 9.4 Withholding.
Notwithstanding any other provision of this Agreement, the Managing
General Partner is authorized to take any action that it determines in its
discretion to be necessary or appropriate to cause the Partnership to comply
with any withholding requirements established under the Code or any other
federal, state or local law including, without limitation, pursuant to Sections
1441, 1442,
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1445 and 1446 of the Code. To the extent that the Partnership is required or
elects to withhold and pay over to any taxing authority any amount resulting
from the allocation or distribution of income to any Partner or Assignee
(including, without limitation, by reason of Section 1446 of the Code), the
amount withheld may at the discretion of the Managing General Partner be
treated by the Partnership as a distribution of cash pursuant to Section 6.3 in
the amount of such withholding from such Partner.
ARTICLE X
ADMISSION OF PARTNERS
SECTION 10.1 Admission of Partners.
Upon the consummation of the transfers and conveyances described in
Section 5.2, the Managing General Partner and the Special General Partner shall
be the only general partners of the Partnership and the MLP shall be the sole
limited partner of the Partnership.
SECTION 10.2 Admission of Substituted Limited Partner.
By transfer of a Limited Partner Interest in accordance with Article
IV, the transferor shall be deemed to have given the transferee the right to
seek admission as a Substituted Limited Partner subject to the conditions of,
and in the manner permitted under, this Agreement. A transferor of a Limited
Partner Interest shall, however, only have the authority to convey to a
purchaser or other transferee (a) the right to negotiate such Limited Partner
Interest to a purchaser or other transferee and (b) the right to request
admission as a Substituted Limited Partner to such purchaser or other
transferee in respect of the transferred Limited Partner Interests. Each
transferee of a Limited Partner Interest shall be an Assignee and be deemed to
have applied to become a Substituted Limited Partner with respect to the
Limited Partner Interests so transferred to such Person. Such Assignee shall
become a Substituted Limited Partner (x) at such time as the Managing General
Partner consents thereto, which consent may be given or withheld in the
Managing General Partner's discretion, and (y) when any such admission is shown
on the books and records of the Partnership. If such consent is withheld, such
transferee shall remain an Assignee. An Assignee shall have an interest in the
Partnership equivalent to that of a Limited Partner with respect to allocations
and distributions, including liquidating distributions, of the Partnership.
With respect to voting rights attributable to Limited Partner Interests that
are held by Assignees, the Managing General Partner shall be deemed to be the
Limited Partner with respect thereto and shall, in exercising the voting rights
in respect of such Limited Partner Interests on any matter, vote such Limited
Partner Interests at the written direction of the Assignee. If no such written
direction is received, such Partnership Interests will not be voted. An
Assignee shall have no other rights of a Limited Partner.
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SECTION 10.3 Admission of Additional Limited Partners.
(a) A Person (other than the General Partner, the MLP or
a Substituted Limited Partner) who makes a Capital Contribution to the
Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the
Managing General Partner (i) evidence of acceptance in form satisfactory to the
Managing General Partner of all of the terms and conditions of this Agreement,
including the power of attorney granted in Section 2.6, and (ii) such other
documents or instruments as may be required in the discretion of the Managing
General Partner to effect such Person's admission as an Additional Limited
Partner.
(b) Notwithstanding anything to the contrary in this
Section 10.3, no Person shall be admitted as an Additional Limited Partner
without the consent of the Managing General Partner, which consent may be given
or withheld in the Managing General Partner's discretion. The admission of any
Person as an Additional Limited Partner shall become effective on the date upon
which the name of such Person is recorded as such in the books and records of
the Partnership, following the consent of the Managing General Partner to such
admission.
SECTION 10.4 Admission of Successor or Transferee General Partners.
A successor General Partner approved pursuant to Section 11.1, 11.2 or
11.4 or the transferee of or successor to all of such General Partner's
Partnership Interest pursuant to Section 4.2 who is proposed to be admitted as
a successor General Partner shall, subject to compliance with the terms of
Section 11.3, if applicable, be admitted to the Partnership as the Managing
General Partner or the Special General Partner, as the case may be, effective
immediately prior to the withdrawal or removal of the predecessor or
transferring Managing General Partner or the Special General Partner, as the
case may be, pursuant to Section 11.1, 11.2 or 11.4 or the transfer of such
General Partner Interest pursuant to Section 4.2, provided, however, that no
such successor shall be admitted to the Partnership until compliance with the
terms of Section 4.2 has occurred and such successor has executed and delivered
such other documents or instruments as may be required to effect such
admission. Any such successor shall, subject to the terms hereof, carry on the
business of the members of the Partnership Group without dissolution.
SECTION 10.5 Amendment of Agreement and Certificate of Limited Partnership.
To effect the admission to the Partnership of any Partner, the
Managing General Partner shall take all steps necessary and appropriate under
the Delaware Act to amend the records of the Partnership to reflect such
admission and, if necessary, to prepare as soon as practicable an amendment to
this Agreement and, if required by law, the Managing General Partner shall
prepare and file an amendment to the Certificate of Limited Partnership, and
the Managing General Partner may for this purpose, among others, exercise the
power of attorney granted pursuant to Section 2.6.
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ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
SECTION 11.1 Withdrawal of the Managing General Partner.
(a) The Managing General Partner shall be deemed to have
withdrawn from the Partnership upon the occurrence of any one of the following
events (each such event herein referred to as an "Event of Withdrawal");
(i) The Managing General Partner voluntarily withdraws
from the Partnership by giving written notice to the other Partners;
(ii) The Managing General Partner transfers all of its
rights as Managing General Partner pursuant to Section 4.2;
(iii) The Managing General Partner is removed pursuant to
Section 11.2;
(iv) The Managing General Partner withdraws from, or is
removed as the Managing General Partner of, the MLP;
(v) The Managing General Partner (A) makes a general
assignment for the benefit of creditors; (B) files a voluntary
bankruptcy petition for relief under Chapter 7 of the United States
Bankruptcy Code; (C) files a petition or answer seeking for itself a
liquidation, dissolution or similar relief (but not a reorganization)
under any law; (D) files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed
against the Managing General Partner in a proceeding of the type
described in clauses (A)-(C) of this Section 11.1(a)(v); or (E) seeks,
consents to or acquiesces in the appointment of a trustee (but not a
debtor in possession), receiver or liquidator of the Managing General
Partner or of all or any substantial part of its properties;
(vi) A final and non-appealable order of relief under
Chapter 7 of the United States Bankruptcy Code is entered by a court
with appropriate jurisdiction pursuant to a voluntary or involuntary
petition by or against the Managing General Partner; or
(vii) (A) in the event the Managing General Partner is a
corporation, a certificate of dissolution or its equivalent is filed
for the Managing General Partner, or 90 days expire after the date of
notice to the Managing General Partner of revocation of its charter
without a reinstatement of its charter, under the laws of its state of
incorporation; (B) in the event the Managing General Partner is a
partnership or limited liability company, the dissolution and
commencement of winding up of the Managing General Partner; (C) in the
event the Managing General Partner is acting in such capacity by
virtue of being a trustee of a trust,
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the termination of the trust; (D) in the event the Managing General
Partner is a natural person, his death or adjudication of
incompetency; and (E) otherwise in the event of the termination of the
Managing General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv)(with
respect to withdrawal), (v), (vi) or (vii)(A), (B), (C) or (E) occurs, the
withdrawing Managing General Partner shall give notice to the Limited Partners
within 30 days after such occurrence. The Partners hereby agree that only the
Events of Withdrawal described in this Section 11.1 shall result in the
withdrawal of the Managing General Partner from the Partnership.
(b) Withdrawal of the Managing General Partner from the
Partnership upon the occurrence of an Event of Withdrawal shall not constitute
a breach of this Agreement under the following circumstances: (i) at any time
during the period beginning on the Closing Date and ending at 12:00 midnight,
Eastern Standard Time, on December 31, 2008, the Managing General Partner
voluntarily withdraws by giving at least 90 days' advance notice of its
intention to withdraw to the Limited Partners; provided, that prior to the
effective date of such withdrawal, the withdrawal is approved by the Limited
Partners and the Managing General Partner delivers to the Partnership an
Opinion of Counsel ("Withdrawal Opinion of Counsel") that such withdrawal
(following the selection of the successor Managing General Partner) would not
result in the loss of the limited liability of any Limited Partner, of the
limited partners of the MLP or of the non- managing member of the Operating
Subsidiary or cause the Partnership, the MLP or the Operating Subsidiary to be
treated as an association taxable as a corporation or otherwise to be taxed as
an entity for federal income tax purposes (to the extent not previously treated
as such); (ii) at any time after 12:00 midnight, Eastern Standard Time, on June
30, 2009, the Managing General Partner voluntarily withdraws by giving at least
90 days' advance notice to the Limited Partners, such withdrawal to take effect
on the date specified in such notice; (iii) at any time that the Managing
General Partner ceases to be the Managing General Partner pursuant to Section
11.1(a)(ii), (iii) or (iv). If the Managing General Partner gives a notice of
withdrawal pursuant to Section 11.1(a)(i) hereof or Section 11.1(a)(i) of the
MLP Agreement, the Limited Partners may, prior to the effective date of such
withdrawal, elect a successor Managing General Partner; provided, however, that
such successor shall be the same person, if any, that is elected by the limited
partners of the MLP pursuant to Section 11.1 of the MLP Agreement as the
successor to the general partner of the MLP. If, prior to the effective date
of the Managing General Partner's withdrawal, a successor is not selected by
the Limited Partners as provided herein or the Partnership does not receive a
Withdrawal Opinion of Counsel, the Partnership shall be dissolved in accordance
with Section 12.1. Any successor Managing General Partner elected in accordance
with the terms of this Section 11.1 shall be subject to the provisions of
Section 10.3.
SECTION 11.2 Removal of the Managing General Partner.
The Managing General Partner shall be removed if the Managing General
Partner is removed as the managing general partner of the MLP pursuant to
Section 11.2 of the MLP Agreement. Such
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removal shall be effective concurrently with the effectiveness of the removal
of the Managing General Partner as the managing general partner of the MLP
pursuant to the terms of the MLP Agreement. If a successor managing general
partner for the MLP is elected in connection with the removal of the Managing
General Partner, such successor managing general partner for the MLP shall,
upon admission pursuant to Article X, automatically become the successor
Managing General Partner of the Partnership. The admission of any such
successor Managing General Partner to the Partnership shall be subject to the
provisions of Section 10.4.
SECTION 11.3 Interest of Departing Partner.
(a) The Partnership Interest of the Departing Partner
departing as a result of withdrawal or removal pursuant to Section 11.1 or 11.2
shall (unless it is otherwise required to be converted into Common Units
pursuant to Section 11.3(b) of the MLP Agreement) be purchased by the successor
to the Departing Partner for cash in the manner specified in the MLP Agreement.
Such purchase (or conversion into Common Units, as applicable) shall be a
condition to the admission to the Partnership of the successor as the Managing
General Partner. Any successor Managing General Partner shall indemnify the
Departing Partner as to all debts and liabilities of the Partnership arising on
or after the effective date of the withdrawal or removal of the Departing
Partner.
(b) The Departing Partner shall be entitled to receive
all reimbursements due such Departing Partner pursuant to Section 7.4,
including any employee-related liabilities (including severance liabilities),
incurred in connection with the termination of any employees employed by such
Departing Partner for the benefit of the Partnership.
SECTION 11.4 Withdrawal or Removal of Special General Partner.
(a) The Special General Partner may withdraw from the
Partnership in the capacity of Special General Partner (i) upon 90 days'
advance written notice to the Managing General Partner or (ii) by transferring
its General Partner Interest in the Partnership pursuant to Section 4.2 hereof.
Such withdrawal shall take effect on the date specified in such notice. Upon
receiving such notice, the Managing General Partner shall select a successor
Special General Partner within such 90-day period. Any withdrawal of the
Special General Partner shall not become effective unless the Partnership has
received by the end of such 90-day period a Withdrawal Opinion of Counsel that
such withdrawal will not result in the loss of limited liability of any Limited
Partner, of a limited partner of the MLP or of a non-managing member of the
Operating Subsidiary or cause the Partnership or the MLP or the Operating
Subsidiary to be treated as a corporation or as an association taxable as a
corporation for federal income tax purposes. Following any withdrawal of the
Special General Partner, the business and operations of the Partnership shall
be continued by the Managing General Partner.
(b) In addition to the voluntary withdrawal described
above, the Special General Partner shall be deemed to have withdrawn (i) when
and if, the Special General Partner (A) makes
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a general assignment for the benefit of creditors, (B) files a voluntary
bankruptcy petition, (C) files a petition or answer seeking for itself a
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any law, (D) files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against the Special General Partner in a proceeding of the type described
in clauses (A)-(C) of this subsection, or (E) seeks, consents to or acquiesces
in the appointment of a trustee, receiver or liquidator of the Special General
Partner or of all or any substantial part of its properties; or (ii) when the
Special General Partner withdraws from or is removed as the special general
partner of the MLP; or (iii) when a final and non-appealable judgment is
entered by a court with appropriate jurisdiction ruling that the Special
General Partner is bankrupt or insolvent, or a final and non-appealable order
for relief is entered by a court with appropriate jurisdiction against the
Special General Partner, in each case under any federal or state bankruptcy or
insolvency laws as now or hereinafter in effect; or (iv) (A) in the event the
Special General Partner is a corporation, when a certificate of dissolution or
its equivalent is filed for the Special General Partner, or 90 days expire
after the date of notice to the Special General Partner of revocation of its
charter without a reinstatement of its charter, under the laws of its state of
incorporation, (B) in the event the Special General Partner is a partnership or
a limited liability company, the dissolution and commencement of winding up of
the Special General Partner, (C) in the event the Special General Partner is
acting in such capacity by virtue of being a trustee of a trust, the
termination of the trust, (D) in the event the Special General Partner is a
natural person, his death or adjudication of incompetency, and (E) otherwise in
the event of the termination of the Special General Partner.
(c) The Special General Partner shall be removed the
Special General Partner shall be removed if the Special General Partner is
removed as the special general partner of the MLP pursuant to Section 11.4 of
the MLP Agreement. Such removal shall be effective concurrently with the
effectiveness of the removal of the Special General Partner as the special
general partner of the MLP pursuant to the terms of the MLP Agreement. If a
successor special general partner for the MLP is elected in connection with the
removal of the Special General Partner, such successor special general partner
for the MLP shall, upon admission pursuant to Article X, automatically become
the successor Special General Partner of the Partnership. The admission of any
such successor Special General Partner to the Partnership shall be subject to
the provisions of Section 10.4.
(d) Notwithstanding the other provisions of this Section
11.4, a successor Special General Partner need not be selected if the
Partnership has received an Opinion of Counsel that the failure to select a
successor would not cause the Partnership or the MLP or the Operating
Subsidiary to be treated as a corporation or as an association taxable as a
corporation for federal income tax purposes.
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SECTION 11.5 Withdrawal of a Limited Partner.
Without the prior written consent of the Managing General Partner,
which may be granted or withheld in its sole discretion, and except as provided
in Section 10.1, no Limited Partner shall have the right to withdraw from the
Partnership.
ARTICLE XII
DISSOLUTION AND LIQUIDATION
SECTION 12.1 Dissolution.
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor Managing General Partner or a successor Special General Partner in
accordance with the terms of this Agreement or by the withdrawal of the Special
General Partner pursuant to Section 11.4. Upon the removal or withdrawal of
the Managing General Partner, if a successor Managing General Partner is
elected pursuant to Section 11.1 or 11.2, the Partnership shall not be
dissolved and such successor Managing General Partner shall continue the
business of the Partnership. The Partnership shall dissolve, and (subject to
Section 12.2) its affairs shall be wound up, upon:
(a) the expiration of its term as provided in Section 2.7;
(b) an Event of Withdrawal of the Managing General
Partner as provided in Section 11.1(a) (other than Section 11.1(a)(ii)), unless
a successor is elected and an Opinion of Counsel is received as provided in
Section 11.1(b) or 11.2 and such successor is admitted to the Partnership
pursuant to Section 10.3;
(c) an election to dissolve the Partnership by the
Managing General Partner that is approved by all of the Limited Partners;
(d) the entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Delaware Act;
(e) the sale of all or substantially all of the assets
and properties of the Partnership Group; or
(f) the dissolution of the MLP.
SECTION 12.2 Continuation of the Business of the Partnership After
Dissolution.
Upon (a) dissolution of the Partnership following an Event of
Withdrawal caused by the withdrawal or removal of the Managing General Partner
as provided in Section 11.1(a)(i) or (iii) and the failure of the Partners to
select a successor to such Departing Partner pursuant to Section 11.1 or 11.2,
then within 90 days thereafter, or (b) dissolution of the Partnership upon an
event
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constituting an Event of Withdrawal as defined in Section 11.1(a)(iv), (v) or
(vi) of the MLP Agreement, then, to the maximum extent permitted by law, within
180 days thereafter, all of the Limited Partners may elect to reconstitute the
Partnership and continue its business on the same terms and conditions set
forth in this Agreement by forming a new limited partnership on terms identical
to those set forth in this Agreement and having as a managing general partner a
Person approved by a majority in interest of the Limited Partners. In
addition, upon dissolution of the Partnership pursuant to Section 12.1(f), if
the MLP is reconstituted pursuant to Section 12.2 of the MLP Agreement, the
reconstituted MLP may, within 180 days after such event of dissolution, acting
alone, regardless of whether there are any other Limited Partners, elect to
reconstitute the Partnership in accordance with the immediately preceding
sentence. Upon any such election by the Limited Partners or the MLP, as the
case may be, all Partners shall be bound thereby and shall be deemed to have
approved same. Unless such an election is made within the applicable time
period as set forth above, the Partnership shall conduct only activities
necessary to wind up its affairs. If such an election is so made, then:
(a) the reconstituted Partnership shall continue until
the end of the term set forth in Section 2.7 unless earlier dissolved in
accordance with this Article XII;
(b) if the successor Managing General Partner is not the
former Managing General Partner, then the interest of the former Managing
General Partner shall be purchased by the successor Managing General Partner or
converted into Common Units as provided in the MLP Agreement; and
(c) all necessary steps shall be taken to cancel this
Agreement and the Certificate of Limited Partnership and to enter into and, as
necessary, to file, a new partnership agreement and certificate of limited
partnership, and the successor Managing General Partner may for this purpose
exercise the power of attorney granted the Managing General Partner pursuant to
Section 2.6; provided, that the right to approve a successor Managing General
Partner and to reconstitute and to continue the business of the Partnership
shall not exist and may not be exercised unless the Partnership has received an
Opinion of Counsel that (x) the exercise of the right would not result in the
loss of limited liability of the Limited Partners or any limited partner of the
MLP and (y) neither the Partnership, the reconstituted limited partnership, the
MLP nor the Operating Subsidiary would be treated as an association taxable as
a corporation or otherwise be taxable as an entity for federal income tax
purposes upon the exercise of such right to continue.
SECTION 12.3 Liquidator.
Upon dissolution of the Partnership, unless the Partnership is
continued under an election to reconstitute and continue the Partnership
pursuant to Section 12.2, the Managing General Partner shall select one or more
Persons to act as Liquidator. The Liquidator (if other than the Managing
General Partner) shall be entitled to receive such compensation for its
services as may be approved by a majority of the Limited Partners. The
Liquidator (if other than the Managing General Partner) shall agree not to
resign at any time without 15 days' prior notice and may be removed at any
time,
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with or without cause, by notice of removal approved by a majority in interest
of the Limited Partners. Upon dissolution, removal or resignation of the
Liquidator, a successor and substitute Liquidator (who shall have and succeed
to all rights, powers and duties of the original Liquidator) shall within 30
days thereafter be approved by at least a majority in interest of the Limited
Partners. The right to approve a successor or substitute Liquidator in the
manner provided herein shall be deemed to refer also to any such successor or
substitute Liquidator approved in the manner herein provided. Except as
expressly provided in this Article XII, the Liquidator approved in the manner
provided herein shall have and may exercise, without further authorization or
consent of any of the parties hereto, all of the powers conferred upon the
Managing General Partner under the terms of this Agreement (but subject to all
of the applicable limitations, contractual and otherwise, upon the exercise of
such powers, other than the limitation on sale set forth in Section 7.3(b)) to
the extent necessary or desirable in the good faith judgment of the Liquidator
to carry out the duties and functions of the Liquidator hereunder for and
during such period of time as shall be reasonably required in the good faith
judgment of the Liquidator to complete the winding up and liquidation of the
Partnership as provided for herein.
SECTION 12.4 Liquidation.
The Liquidator shall proceed to dispose of the assets of the
Partnership, discharge its liabilities, and otherwise wind up its affairs in
such manner and over such period as the Liquidator determines to be in the best
interest of the Partners, subject to Section 17-804 of the Delaware Act and the
following:
(a) Disposition of Assets. The assets may be disposed
of by public or private sale or by distribution in kind to one or more Partners
on such terms as the Liquidator and such Partner or Partners may agree. If any
property is distributed in kind, the Partner receiving the property shall be
deemed for purposes of Section 12.4(c) to have received cash equal to its fair
market value; and contemporaneously therewith, appropriate cash distributions
must be made to the other Partners. The Liquidator may, in its absolute
discretion, defer liquidation or distribution of the Partnership's assets for a
reasonable time if it determines that an immediate sale or distribution of all
or some of the Partnership's assets would be impractical or would cause undue
loss to the Partners. The Liquidator may, in its absolute discretion,
distribute the Partnership's assets, in whole or in part, in kind if it
determines that a sale would be impractical or would cause undue loss to the
Partners.
(b) Discharge of Liabilities. Liabilities of the
Partnership include amounts owed to Partners otherwise than in respect of their
distribution rights under Article VI. With respect to any liability that is
contingent, conditional or unmatured or is otherwise not yet due and payable,
the Liquidator shall either settle such claim for such amount as it thinks
appropriate or establish a reserve of cash or other assets to provide for its
payment. When paid, any unused portion of the reserve shall be distributed as
additional liquidation proceeds.
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(c) Liquidation Distributions. All property and all
cash in excess of that required to discharge liabilities as provided in Section
12.4(b) shall be distributed to the Partners in accordance with, and to the
extent of, the positive balances in their respective Capital Accounts, as
determined after taking into account all Capital Account adjustments (other
than those made by reason of distributions pursuant to this Section 12.4(c))
for the taxable year of the Partnership during which the liquidation of the
Partnership occurs (with such date of occurrence being determined pursuant to
Treasury Regulation Section 1.704-1(b)(2)(ii)(g)), and such distribution shall
be made by the end of such taxable year (or, if later, within 90 days after
said date of such occurrence).
SECTION 12.5 Cancellation of Certificate of Limited Partnership.
Upon the completion of the distribution of Partnership cash and
property as provided in Section 12.4 in connection with the liquidation of the
Partnership, the Partnership shall be terminated and the Certificate of Limited
Partnership, and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware, shall be
canceled and such other actions as may be necessary to terminate the
Partnership shall be taken.
SECTION 12.6 Return of Contributions.
No General Partner shall be personally liable for, and shall have no
obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate, the return of the Capital Contributions of the Limited
Partners, or any portion thereof, it being expressly understood that any such
return shall be made solely from Partnership assets.
SECTION 12.7 Waiver of Partition.
To the maximum extent permitted by law, each Partner hereby waives any
right to partition of the Partnership property.
SECTION 12.8 Capital Account Restoration.
No Limited Partner shall have any obligation to restore any negative
balance in its Capital Account upon liquidation of the Partnership. Each
General Partner shall be obligated to restore any negative balance in its
Capital Account upon liquidation of its interest in the Partnership by the end
of the taxable year of the Partnership during which such liquidation occurs,
or, if later, within 90 days after the date of such liquidation.
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ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT
SECTION 13.1 Amendment to be Adopted Solely by the Managing General Partner.
Each Partner agrees that the Managing General Partner, without the
approval of any Partner or Assignee, may amend any provision of this Agreement
and execute, swear to, acknowledge, deliver, file and record whatever documents
may be required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location
of the principal place of business of the Partnership, the registered agent of
the Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of
Partners in accordance with this Agreement;
(c) a change that, in the sole discretion of the Managing
General Partner, is necessary or advisable to qualify or continue the
qualification of the Partnership as a limited partnership or a partnership in
which the Limited Partners have limited liability under the laws of any state
or to ensure that no Group Member will be treated as an association taxable as
a corporation or otherwise taxed as an entity for federal income tax purposes;
(d) a change that, in the discretion of the Managing
General Partner, (i) does not adversely affect the Limited Partners in any
material respect, (ii) is necessary or advisable to (A) satisfy any
requirements, conditions or guidelines contained in any opinion, directive,
order, ruling or regulation of any federal or state agency or judicial
authority or contained in any federal or state statute (including the Delaware
Act) or (B) facilitate the trading of limited partner interests of the MLP
(including the division of any class or classes of outstanding limited partner
interests of the MLP into different classes to facilitate uniformity of tax
consequences within such classes of limited partner interests of the MLP) or
comply with any rule, regulation, guideline or requirement of any National
Securities Exchange on which such limited partner interests are or will be
listed for trading, compliance with any of which the Managing General Partner
determines in its discretion to be in the best interests of the MLP and the
limited partners of the MLP, (iii) is required to effect the intent expressed
in the Registration Statement or the intent of the provisions of this Agreement
or is otherwise contemplated by this Agreement or (iv) is required to conform
the provisions of this Agreement with the provisions of the MLP Agreement as
the provisions of the MLP Agreement may be amended, supplemented or restated
from time to time;
(e) a change in the fiscal year or taxable year of the
Partnership and any changes that, in the discretion of the Managing General
Partner, are necessary or advisable as a result of a change in the fiscal year
or taxable year of the Partnership including, if the Managing General Partner
shall so determine, a change in the definition of "Quarter" and the dates on
which distributions are to be made by the Partnership;
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(f) an amendment that is necessary, in the Opinion of
Counsel, to prevent the Partnership, or either of the General Partners or
their directors, officers, trustees or agents from in any manner being
subjected to the provisions of the Investment Company Act of 1940, as amended,
the Investment Advisers Act of 1940, as amended, or "plan asset" regulations
adopted under the Employee Retirement Income Security Act of 1974, as amended,
regardless of whether such are substantially similar to plan asset regulations
currently applied or proposed by the United States Department of Labor;
(g) any amendment expressly permitted in this Agreement
to be made by the Managing General Partner acting alone;
(h) an amendment effected, necessitated or contemplated
by a Merger Agreement approved in accordance with Section 14.3;
(i) an amendment that, in the discretion of the Managing
General Partner, is necessary or advisable to reflect, account for and deal
with appropriately the formation by the Partnership of, or investment by the
Partnership in, any corporation, partnership, joint venture, limited liability
company or other entity, in connection with the conduct by the Partnership of
activities permitted by the terms of Section 2.4;
(j) a merger or conveyance pursuant to Section 14.3(d);
or
(k) any other amendments substantially similar to the
foregoing.
SECTION 13.2 Amendment Procedures.
Except with respect to amendments of the type described in Section
13.1, all amendments to this Agreement shall be made in accordance with the
following requirements: Amendments to this Agreement may be proposed only by
or with the consent of the Managing General Partner which consent may be given
or withheld in its sole discretion. A proposed amendment shall be effective
upon its approval by the Limited Partner.
ARTICLE XIV
MERGER
SECTION 14.1 Authority.
The Partnership may merge or consolidate with one or more
corporations, limited liability companies, business trusts or associations,
real estate investment trusts, common law trusts or unincorporated businesses,
including a general partnership or limited partnership, formed under the laws
of the State of Delaware or any other state of the United States of America,
pursuant to a
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written agreement of merger or consolidation ("Merger Agreement") in accordance
with this Article XIV.
SECTION 14.2 Procedure for Merger or Consolidation.
Merger or consolidation of the Partnership pursuant to this Article
XIV requires the prior approval of the Managing General Partner. If the
Managing General Partner shall determine, in the exercise of its discretion, to
consent to the merger or consolidation, the Managing General Partner shall
approve the Merger Agreement, which shall set forth:
(a) The names and jurisdictions of formation or
organization of each of the business entities proposing to merge or
consolidate;
(b) The name and jurisdiction of formation or
organization of the business entity that is to survive the proposed merger or
consolidation (the "Surviving Business Entity");
(c) The terms and conditions of the proposed merger or
consolidation;
(d) The manner and basis of exchanging or converting the
equity securities of each constituent business entity for, or into, cash,
property or general or limited partner interests, rights, securities or
obligations of the Surviving Business Entity; and (i) if any general or limited
partner interests, securities or rights of any constituent business entity are
not to be exchanged or converted solely for, or into, cash, property or general
or limited partner interests, rights, securities or obligations of the
Surviving Business Entity, the cash, property or general or limited partner
interests, rights, securities or obligations of any limited partnership,
corporation, trust or other entity (other than the Surviving Business Entity)
which the holders of such general or limited partner interests, securities or
rights are to receive in exchange for, or upon conversion of their general or
limited partner interests, securities or rights, and (ii) in the case of
securities represented by certificates, upon the surrender of such
certificates, which cash, property or general or limited partner interests,
rights, securities or obligations of the Surviving Business Entity or any
general or limited partnership, corporation, trust or other entity (other than
the Surviving Business Entity), or evidences thereof, are to be delivered;
(e) A statement of any changes in the constituent
documents or the adoption of new constituent documents (the articles or
certificate of incorporation, articles of trust, declaration of trust,
certificate or agreement of limited partnership or other similar charter or
governing document) of the Surviving Business Entity to be effected by such
merger or consolidation;
(f) The effective time of the merger, which may be the
date of the filing of the certificate of merger pursuant to Section 14.4 or a
later date specified in or determinable in accordance with the Merger Agreement
(provided, that if the effective time of the merger is to be
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later than the date of the filing of the certificate of merger, the effective
time shall be fixed no later than the time of the filing of the certificate of
merger and stated therein); and
(g) Such other provisions with respect to the proposed
merger or consolidation as are deemed necessary or appropriate by the Managing
General Partner.
SECTION 14.3 Approval by Limited Partners of Merger or Consolidation.
(a) Except as provided in Section 14.3(d), the Managing
General Partner, upon its approval of the Merger Agreement, shall direct that
the Merger Agreement be submitted to a vote of the Limited Partners, whether at
a special meeting or by written consent, in either case in accordance with the
requirements of Article XIII. A copy or a summary of the Merger Agreement shall
be included in or enclosed with the notice of a special meeting or the written
consent.
(b) Except as provided in Section 14.3(d), the Merger
Agreement shall be approved upon receiving the affirmative vote or consent of
the Limited Partners.
(c) Except as provided in Section 14.3(d), after such
approval by vote or consent of the Limited Partners, and at any time prior to
the filing of the certificate of merger pursuant to Section 14.4, the merger or
consolidation may be abandoned pursuant to provisions therefor, if any, set
forth in the Merger Agreement.
(d) Notwithstanding anything else contained in this
Article XIV or in this Agreement, the Managing General Partner is permitted, in
its discretion, without Limited Partner approval, to merge the Partnership or
any Group Member into, or convey all of the Partnership's assets to, another
limited liability entity which shall be newly formed and shall have no assets,
liabilities or operations at the time of such Merger other than those it
receives from the Partnership or other Group Member if (i) the Managing General
Partner has received an Opinion of Counsel that the merger or conveyance, as
the case may be, would not result in the loss of the limited liability of any
Limited Partner, any limited partner in the MLP or any non-managing member of
the Operating Subsidiary or cause the Partnership, the MLP or the Operating
Subsidiary to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes (to the
extent not previously treated as such), (ii) the sole purpose of such merger or
conveyance is to effect a mere change in the legal form of the Partnership into
another limited liability entity and (iii) the governing instruments of the new
entity provide the Limited Partners and the General Partner with the same
rights and obligations as are herein contained.
SECTION 14.4 Certificate of Merger.
Upon the required approval by the Managing General Partner and the
Limited Partners of a Merger Agreement, a certificate of merger shall be
executed and filed with the Secretary of State of the State of Delaware in
conformity with the requirements of the Delaware Act.
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SECTION 14.5 Effect of Merger.
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of
the business entities that has merged or consolidated, and all
property, real, personal and mixed, and all debts due to any of those
business entities and all other things and causes of action belonging
to each of those business entities, shall be vested in the Surviving
Business Entity and after the merger or consolidation shall be the
property of the Surviving Business Entity to the extent they were of
each constituent business entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not
revert and is not in any way impaired because of the merger or
consolidation;
(iii) all rights of creditors and all liens on or security
interests in property of any of those constituent business entities
shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those
constituent business entities shall attach to the Surviving Business
Entity and may be enforced against it to the same extent as if the
debts, liabilities and duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this
Article shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another.
ARTICLE XV
GENERAL PROVISIONS
SECTION 15.1 Addresses and Notices.
Any notice, demand, request, report or proxy materials required or
permitted to be given or made to a Partner or Assignee under this Agreement
shall be in writing and shall be deemed given or made when delivered in person
or when sent by first class United States mail or by other means of written
communication to the Partner at the address described below. Any notice to the
Partnership shall be deemed given if received by the Managing General Partner
at the principal office of the Partnership designated pursuant to Section 2.3.
The Managing General Partner may rely and shall be protected in relying on any
notice or other document from a Partner, Assignee or other Person if believed
by it to be genuine.
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SECTION 15.2 Further Action.
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
SECTION 15.3 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
SECTION 15.4 Integration.
This Agreement constitutes the entire agreement among the parties
hereto pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
SECTION 15.5 Creditors.
None of the provisions of this Agreement shall be for the benefit of,
or shall be enforceable by, any creditor of the Partnership.
SECTION 15.6 Waiver.
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach of any other covenant, duty, agreement or condition.
SECTION 15.7 Counterparts.
This Agreement may be executed in counterparts, all of which together
shall constitute an agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or
the same counterpart. Each party shall become bound by this Agreement
immediately upon affixing its signature hereto, independently of the signature
of any other party.
SECTION 15.8 Applicable Law.
This Agreement shall be construed in accordance with and governed by
the laws of the State of Delaware, without regard to the principles of
conflicts of law.
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SECTION 15.9 Invalidity of Provisions.
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
SECTION 15.10 Consent of Partners.
Each Partner hereby expressly consents and agrees that, whenever in
this Agreement it is specified that an action may be taken upon the affirmative
vote or consent of less than all of the Partners, such action may be so taken
upon the concurrence of less than all of the Partners and each Partner shall be
bound by the results of such action.
[Rest of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
MANAGING GENERAL PARTNER:
ALLIANCE RESOURCE MANAGEMENT GP, LLC
By:
-------------------------------------
Name:
Title:
SPECIAL GENERAL PARTNER:
ALLIANCE RESOURCE GP, LLC
By:
-------------------------------------
Name:
Title:
LIMITED PARTNER:
ALLIANCE RESOURCE PARTNERS, L.P.
By: Alliance Resource Management GP, LLC
its Managing General Partner
By:
---------------------------------
Name:
Title:
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