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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 21, 1998
COMMISSION FILE NO. 1-10403
TEPPCO PARTNERS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 76-0291058
(STATE OF INCORPORATION (I.R.S. EMPLOYER
OR ORGANIZATION) IDENTIFICATION NUMBER)
2929 ALLEN PARKWAY
P.O. BOX 2521
HOUSTON, TEXAS 77252-2521
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(713) 759-3636
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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ITEM 5. OTHER EVENTS
On July 21, 1998, TEPPCO Partners, L.P., a Delaware limited partnership
(the "Partnership"), announced a two-for-one split of the Partnership's
outstanding Units. The Units split will entitle Unitholders of record at the
close of business on August 10, 1998 to receive one additional Unit for each
Unit held. Certificates for the additional Units will be issued and mailed on or
about August 21, 1998.
Texas Eastern Products Pipeline Company, the general partner of the
Partnership, has executed an Amended and Restated Agreement of Limited
Partnership of the Partnership effective July 21, 1998 (the "Restated
Partnership Agreement"). The Restated Partnership Agreement eliminates or
updates obsolete provisions of the prior partnership agreement and makes certain
other changes, none of which adversely affect any Unitholder of the Partnership.
Corresponding changes were made in the partnership agreement of TE Products
Pipeline Company, Limited Partnership, the Partnership's subsidiary operating
partnership (the "Subsidiary Operating Partnership"), through the execution by
the General Partner of an Amended and Restated Agreement of Limited Partnership
of the Subsidiary Operating Partnership effective July 21, 1998. Copies of the
partnership agreements of the Partnership and the Subsidiary Operating
Partnership, as so amended, are attached as exhibits to this report.
ITEM 7. STATEMENTS AND EXHIBITS
(c) EXHIBITS:
Exhibit
Number Description
------- -----------
3.1 Amended and Restated Agreement of
Limited Partnership of TEPPCO
Partners, L.P. dated as of
July 21, 1998.
3.2 Amended and Restated Agreement of
Limited Partnership of TE Products
Pipeline Company, Limited
Partnership dated as of
July 21, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TEPPCO Partners, L.P.
(Registrant)
By: Texas Eastern Products Pipeline
Company, General Partner
CHARLES H. LEONARD
------------------------------------
Charles H. Leonard
Sr. Vice President,
Chief Financial Officer
and Treasurer
Date: July 23, 1998
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INDEX TO EXHIBITS
Exhibit
Number Description
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3.1 Amended and Restated Agreement of Limited Partnership of TEPPCO
Partners, L.P. dated as of July 21, 1998.
3.2 Amended and Restated Agreement of Limited Partnership of TE
Products Pipeline Company, Limited Partnership dated as of
July 21, 1998.
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EXHIBIT 3.1
Conformed Copy
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TEPPCO PARTNERS, L.P.
July 21, 1998
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TABLE OF CONTENTS
Page
ARTICLE 1 - ORGANIZATIONAL MATTERS................................................................................1
1.1 Continuation....................................................................................1
1.2 Name............................................................................................2
1.3 Registered Office; Principal Office.............................................................2
1.4 Power of Attorney...............................................................................2
1.5 Term............................................................................................3
1.6 Possible Restrictions on Transfer...............................................................3
ARTICLE 2 - DEFINITIONS...........................................................................................4
"Additional Limited Partner".............................................................................4
"Adjusted Capital Account"...............................................................................4
"Adjusted Property"......................................................................................4
"Affiliate"..............................................................................................4
"Agreed Allocation"......................................................................................5
"Agreed Value"...........................................................................................5
"Agreement"..............................................................................................5
"Assignee"...............................................................................................5
"Available Cash".........................................................................................5
"Book-Tax Disparity".....................................................................................5
"Business Day"...........................................................................................5
"Capital Account"........................................................................................5
"Capital Contribution"...................................................................................5
"Carrying Value".........................................................................................6
"Cash from Interim Capital Transactions".................................................................6
"Cash from Operations"...................................................................................6
"Cause" ................................................................................................6
"Certificate of Limited Partnership".....................................................................6
"Citizenship Certification"..............................................................................6
"Code" ................................................................................................6
"Combined Interest"......................................................................................6
"Contributed Property"...................................................................................6
"Contributing Partner"...................................................................................6
"Curative Allocation"....................................................................................6
"Current Market Price"...................................................................................6
"Delaware Act"...........................................................................................7
"Departing Partner"......................................................................................7
"Duke" ................................................................................................7
"Economic Risk of Loss"..................................................................................7
"Eligible Citizen".......................................................................................7
"Event of Withdrawal"....................................................................................7
"Exchange Act"...........................................................................................7
"First Liquidation Target Amount"........................................................................7
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"First Target Distribution"..............................................................................7
"General Partner"........................................................................................7
"General Partner Equity Value"...........................................................................7
"Indemnitee".............................................................................................7
"Initial Offering".......................................................................................7
"Initial Unit Price".....................................................................................8
"Interim Capital Transactions"...........................................................................8
"Issue Price"............................................................................................8
"Limited Partner"........................................................................................8
"Limited Partner Equity Value"...........................................................................8
"Liquidator".............................................................................................8
"Merger Agreement".......................................................................................8
"Minimum Gain Attributable to Partner Nonrecourse Debt"..................................................8
"Minimum Quarterly Distribution".........................................................................8
"National Securities Exchange"...........................................................................8
"Net Agreed Value".......................................................................................8
"Net Income".............................................................................................8
"Net Loss"...............................................................................................9
"Net Termination Gain"...................................................................................9
"Net Termination Loss"...................................................................................9
"New Entity".............................................................................................9
"Non-citizen Assignee"...................................................................................9
"Nonrecourse Built-in Gain"..............................................................................9
"Nonrecourse Deductions".................................................................................9
"Nonrecourse Liability"..................................................................................9
"Notice of Election to Purchase".........................................................................9
"Operating Partnership"..................................................................................9
"Operating Partnership Agreement"........................................................................9
"Opinion of Counsel"....................................................................................10
"Outstanding"...........................................................................................10
"Partner"...............................................................................................10
"Partner Nonrecourse Debt"..............................................................................10
"Partner Nonrecourse Deductions"........................................................................10
"Partnership"...........................................................................................10
"Partnership Inception".................................................................................10
"Partnership Interest"..................................................................................10
"Partnership Minimum Gain"..............................................................................10
"Partnership Securities"................................................................................10
"Partnership Year"......................................................................................10
"PEC" ...............................................................................................10
"Per Unit Capital Amount"...............................................................................10
"Percentage Interest"...................................................................................10
"Person" ...............................................................................................11
"Purchase Date".........................................................................................11
"Recapture Income"......................................................................................11
"Record Date"...........................................................................................11
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"Record Holder".........................................................................................11
"Redeemable Units"......................................................................................11
"Registration Statement"................................................................................11
"Required Allocations"..................................................................................11
"Residual Gain" or "Residual Loss"......................................................................11
"Second Liquidation Target Amount"......................................................................11
"Second Target Distribution"............................................................................11
"Securities Act"........................................................................................12
"Subsidiary"............................................................................................12
"Substituted Limited Partner"...........................................................................12
"Surviving Business Entity".............................................................................12
"Termination Capital Transaction".......................................................................12
"Trading Day"...........................................................................................12
"Transfer Agent"........................................................................................12
"Transfer Application"..................................................................................12
"Unit" ...............................................................................................12
"Unit Certificate"......................................................................................12
"Unitholder"............................................................................................12
"Unrealized Gain".......................................................................................12
"Unrealized Loss".......................................................................................12
"Unrecovered Capital"...................................................................................12
"Unrecovered Initial Unit Price"........................................................................13
ARTICLE 3 - PURPOSE..............................................................................................13
3.1 Purpose and Business...........................................................................13
3.2 Powers.........................................................................................13
ARTICLE 4 - CAPITAL CONTRIBUTIONS................................................................................13
4.1 Issuances of Units and Other Securities.......................................................13
4.2 Limited Preemptive Rights......................................................................14
4.3 Capital Accounts...............................................................................15
4.4 Interest.......................................................................................17
4.5 No Withdrawal..................................................................................17
4.6 Loans from Partners............................................................................17
4.7 No Fractional Units............................................................................18
4.8 Splits and Combinations........................................................................18
ARTICLE 5 - ALLOCATIONS AND DISTRIBUTIONS........................................................................18
5.1 Allocations for Capital Account Purposes.......................................................18
5.2 Allocations for Tax Purposes...................................................................24
5.3 Requirement and Characterization of Distributions..............................................26
5.4 Allocations of Distributions...................................................................26
5.5 Distributions of Cash from Interim Capital Transactions........................................27
5.6 Definitions....................................................................................27
5.7 Adjustment of Minimum Quarterly Distribution, Target Distribution Levels
and Unrecovered Initial Unit Price.............................................................29
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ARTICLE 6 - MANAGEMENT AND OPERATION OF BUSINESS.................................................................30
6.1 Management.....................................................................................30
6.2 Certificate of Limited Partnership.............................................................31
6.3 Restrictions on General Partner's Authority....................................................32
6.4 Reimbursement of the General Partner...........................................................33
6.5 Outside Activities.............................................................................33
6.6 Loans to and from the General Partner; Contracts with Affiliates...............................33
6.7 Indemnification................................................................................34
6.8 Liability of Indemnitees.......................................................................36
6.9 Resolution of Conflicts of Interest............................................................36
6.10 Other Matters Concerning the General Partner...................................................38
6.11 Title to Partnership Assets....................................................................38
6.12 Purchase or Sale of Units......................................................................38
6.13 Reliance by Third Parties......................................................................39
6.14 Registration Rights of Duke and its Affiliates.................................................39
ARTICLE 7 - RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS...........................................................41
7.1 Limitation of Liability........................................................................41
7.2 Management of Business.........................................................................41
7.3 Outside Activities.............................................................................41
7.4 Return of Capital..............................................................................41
7.5 Rights of Limited Partners Relating to the Partnership.........................................41
ARTICLE 8 - BOOKS, RECORDS, ACCOUNTING AND REPORTS...............................................................42
8.1 Records and Accounting.........................................................................42
8.2 Fiscal Year....................................................................................43
8.3 Reports........................................................................................43
ARTICLE 9 - TAX MATTERS..........................................................................................43
9.1 Preparation of Tax Returns.....................................................................43
9.2 Tax Elections..................................................................................43
9.3 Tax Controversies..............................................................................43
9.4 Organizational Expenses........................................................................44
9.5 Withholding....................................................................................44
9.6 Entity-Level Taxation..........................................................................44
9.7 Entity-Level Arrearage Collections.............................................................44
9.8 Opinions of Counsel............................................................................45
ARTICLE 10 - UNIT CERTIFICATES...................................................................................45
10.1 Unit Certificates..............................................................................45
10.2 Registration, Registration of Transfer and Exchange............................................45
10.3 Mutilated, Destroyed, Lost or Stolen Unit Certificates.........................................46
10.4 Record Holder..................................................................................46
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ARTICLE 11 - TRANSFER OF INTERESTS...............................................................................47
11.1 Transfer.......................................................................................47
11.2 Transfer of General Partner's Partnership Interest.............................................47
11.3 Transfer of Units..............................................................................48
11.4 Restrictions on Transfers......................................................................48
11.5 Citizenship Certificates; Non-citizen Assignees................................................48
11.6 Redemption of Interests........................................................................49
ARTICLE 12 - ADMISSION OF PARTNERS...............................................................................51
12.1 Admission of Substituted Limited Partners......................................................51
12.2 Admission of Successor General Partner.........................................................51
12.3 Admission of Additional Limited Partners.......................................................51
12.4 Amendment of Agreement and Certificate of Limited Partnership..................................52
ARTICLE 13 - WITHDRAWAL OR REMOVAL OF PARTNERS...................................................................52
13.1 Withdrawal of the General Partner.............................................................52
13.2 Removal of the General Partner.................................................................53
13.3 Interest of Departing Partner and Successor General Partner....................................54
13.4 Withdrawal of Limited Partners.................................................................55
ARTICLE 14 - DISSOLUTION AND LIQUIDATION.........................................................................55
14.1 Dissolution....................................................................................55
14.2 Liquidation....................................................................................56
14.3 Distributions in Kind..........................................................................57
14.4 Cancellation of Certificate of Limited Partnership.............................................57
14.5 Reasonable Time for Winding Up.................................................................57
14.6 Return of Capital..............................................................................57
14.7 No Capital Account Restoration.................................................................57
14.8 Waiver of Partition............................................................................57
ARTICLE 15 - AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE...........................................57
15.1 Amendment to be Adopted Solely by General Partner..............................................57
15.2 Amendment Procedures...........................................................................58
15.3 Amendment Requirements.........................................................................59
15.4 Meetings.......................................................................................59
15.5 Notice of a Meeting............................................................................60
15.6 Record Date....................................................................................60
15.7 Adjournment....................................................................................60
15.8 Waiver of Notice; Approval of Meeting; Approval of Minutes.....................................60
15.9 Quorum.........................................................................................61
15.10 Conduct of Meeting.............................................................................61
15.11 Action Without a Meeting.......................................................................61
15.12 Voting and Other Rights........................................................................62
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ARTICLE 16 - MERGER..............................................................................................62
16.1 Authority......................................................................................62
16.2 Procedure for Merger or Consolidation..........................................................62
16.3 Approval by Limited Partners of Merger or Consolidation........................................63
16.4 Certificate of Merger..........................................................................64
16.5 Effect of Merger...............................................................................64
ARTICLE 17 - RIGHT TO ACQUIRE UNITS..............................................................................64
17.1 Right to Acquire Units.........................................................................64
ARTICLE 18 - GENERAL PROVISIONS..................................................................................66
18.1 Addresses and Notices..........................................................................66
18.2 Titles and Captions............................................................................67
18.3 Pronouns and Plurals...........................................................................67
18.4 Further Action.................................................................................67
18.5 Binding Effect.................................................................................67
18.6 Integration....................................................................................67
18.7 Creditors......................................................................................67
18.8 Waiver.........................................................................................67
18.9 Counterparts...................................................................................67
18.10 Applicable Law.................................................................................67
18.11 Invalidity of Provisions.......................................................................67
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TEPPCO PARTNERS, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
TEPPCO PARTNERS, L.P., dated as of July 21, 1998, is entered into by and among
Texas Eastern Products Pipeline Company, a Delaware corporation (the "Company"),
as the General Partner, and the Limited Partners of the Partnership, as
hereinafter provided.
WHEREAS, the General Partner and the other parties thereto entered into
that certain Agreement of Limited Partnership of the Partnership dated as of
March 7, 1990 (the "1990 Agreement"); and
WHEREAS, the 1990 Agreement provided for a class of Partnership
Interests designated "Deferred Participation Interests", which Deferred
Participation Interests were subsequently converted into Units pursuant to the
terms of the 1990 Agreement; and
WHEREAS, the 1990 Agreement included special provisions for the
distribution of Available Cash during the Support Period (as defined in the 1990
Agreement), which Support Period has ended pursuant to the terms of the 1990
Agreement; and
WHEREAS, the General Partner desires to reduce the percentage of the
Outstanding Units that must approve removal of the General Partner from 80% to
66 2/3% (exclusive of Outstanding Units owned by the General Partner and its
Affiliates) so that inclusion of the Partnership for financial reporting
purposes in the General Partner's consolidated group will no longer be required;
and
WHEREAS, Section 15.1 of the 1990 Agreement permits the General
Partner, without the approval of any Limited Partner or Assignee, to amend any
provision of the 1990 Agreement to reflect a change that, in the sole discretion
of the General Partner, does not adversely affect the Limited Partners in any
material respects; and
WHEREAS, the General Partner has determined that none of the changes
effected hereby adversely affects the Limited Partners in any material respect;
NOW, THEREFORE, the General Partner does hereby amend and restate the
Agreement of Limited Partnership of the Partnership to provide, in its entirety,
as follows:
ARTICLE 1 - ORGANIZATIONAL MATTERS
1.1 Continuation. The General Partner and the Limited Partners hereby
continue the Partnership as a limited partnership pursuant to the provisions of
the Delaware Act. Except as expressly provided to the contrary in this
Agreement, the rights and obligations of the Partners and the administration,
dissolution and termination of the Partnership shall be governed by the Delaware
Act. The Partnership Interest of each Partner shall be personal property for all
purposes.
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1.2 Name. The name of the Partnership shall be "TEPPCO Partners, L.P."
The Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the General Partner, including, without limitation,
the name of the General Partner or any Affiliate thereof. The words "Limited
Partnership," "L.P.," "Ltd." or similar words or letters shall be included in
the Partnership's name where necessary for the purposes of complying with the
laws of any jurisdiction that so requires. The General Partner in its sole
discretion may change the name of the Partnership at any time and from time to
time and shall notify the Limited Partners of such change in the next regular
communication to Limited Partners. Notwithstanding the foregoing, unless
otherwise permitted by PEC and Duke, the Partnership shall change its name to a
name not including "TEPPCO," "Texas Eastern", "PanEnergy" or "Duke" and shall
cease using the name TEPPCO," "Texas Eastern," "PanEnergy", "Duke" or other
names or symbols associated therewith at such time as neither Texas Eastern
Products Pipeline Company nor another Affiliate of PanEnergy or Duke is the
general partner of the Partnership.
1.3 Registered Office; Principal Office. Unless and until changed by
the General Partner, the registered office of the Partnership in the State of
Delaware shall be located at The Corporation Trust Center, 1209 Orange Street,
New Castle County, Wilmington, Delaware 19801 and the registered agent for
service of process on the Partnership in the State of Delaware at such
registered office shall be The Corporation Trust Company. The principal office
of the Partnership and the address of the General Partner shall be 2929 Allen
Parkway, Houston, Texas 77019-2119, or such other place as the General Partner
may from time to time designate by notice to the Limited Partners. The
Partnership may maintain offices at such other place or places within or outside
the State of Delaware as the General Partner deems advisable.
1.4 Power of Attorney. (a) Each Limited Partner and each Assignee
hereby constitutes and appoints each of the General Partner and, if a Liquidator
shall have been selected pursuant to Section 14.2, the Liquidator severally (and
any successor to either thereof by merger, transfer, assignment, election or
otherwise) and each of their authorized officers and attorneys-in-fact, with
full power of substitution, as his true and lawful agent and attorney-in-fact,
with full power and authority in his name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and record in
the appropriate public offices (A) all certificates, documents and
other instruments (including, without limitation, this Agreement and
the Certificate of Limited Partnership and all amendments or
restatements thereof) that the General Partner or the Liquidator deems
necessary or appropriate to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) in
the State of Delaware and in all other jurisdictions in which the
Partnership may conduct business or own property; (B) all certificates,
documents and other instruments that the General Partner or the
Liquidator deems necessary or appropriate to reflect, in accordance
with its terms, any amendment, change, modification or restatement of
this Agreement; (C) all certificates, documents and other instruments
(including, without limitation, conveyances and a certificate of
cancellation) that the General Partner or the Liquidator deems
necessary or appropriate to reflect the dissolution and liquidation of
the Partnership pursuant to the terms of this Agreement; (D) all
certificates, documents and other instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant
to, or other events
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described in, Article 11, 12, 13 or 14 or the Capital Contribution of
any Partner; (E) all certificates, documents and other instruments
relating to the determination of the rights preferences and privileges
of any class or series of Units or other securities issued pursuant to
Section 4.1; and (F) all certificates, documents and other instruments
(including, without limitation, agreements and a certificate of merger)
relating to a merger or consolidation of the Partnership pursuant to
Article 16; and
(ii) execute, swear to, acknowledge, deliver, file and record
all ballots, consents, approvals, waivers, certificates and other
instruments necessary or appropriate, in the sole discretion of the
General Partner or the Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or other action that is
made or given by the Partners hereunder or is consistent with the terms
of this Agreement or is necessary or appropriate, in the sole
discretion of the General Partner or the Liquidator, to effectuate the
terms or intent of this Agreement; provided, that when required by
Section 15.3 or any other provision of this Agreement that establishes
a percentage of the Limited Partners or of the Limited Partners of any
class or series required to take any action, the General Partner or the
Liquidator may exercise the power of attorney made in this Section
1.4(a)(ii) only after the necessary vote, consent or approval of the
Limited Partners or of the Limited Partners of such class or series.
Nothing contained in this Section 1.4 shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article 15, or
as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and not
be affected by the subsequent death, incompetency, disability, incapacity,
dissolution, bankruptcy or termination of any Limited Partner or Assignee and
the transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Interest and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or the Liquidator acting in good faith pursuant to such power of
attorney; and each such Limited Partner or Assignee hereby waives any and all
defenses that may be available to contest, negate or disaffirm the action of the
General Partner or the Liquidator taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within fifteen days after receipt of the
General Partner's or the Liquidator's request therefor, such further
designation, powers of attorney and other instruments as the General Partner or
the Liquidator deems necessary to effectuate this Agreement and the purposes of
the Partnership.
1.5 Term. The Partnership commenced upon the filing of the Certificate
of Limited Partnership in accordance with the Delaware Act and shall continue in
existence until the close of Partnership business on December 31, 2084, or until
the earlier termination of the Partnership in accordance with the provisions of
Article 14.
1.6 Possible Restrictions on Transfer. Notwithstanding anything to the
contrary contained in this Agreement, in the event of (i) the enactment (or
imminent enactment) of any
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legislation, (ii) the publication of any temporary or final regulation by the
Treasury Department ("Treasury Regulation"), (iii) any ruling by the Internal
Revenue Service or (iv) any judicial decision, that, in any such case, in the
Opinion of Counsel, would result in the taxation of the Partnership for federal
income tax purposes as a corporation or would otherwise subject the Partnership
to being taxed as an entity for federal income tax purposes, then, either (a)
the General Partner may impose such restrictions on the transfer of Units of
Partnership Interests as may be required, in the Opinion of Counsel, to prevent
the Partnership from being taxed as a corporation or otherwise as an entity for
federal income tax purposes, including, without limitation, making any
amendments to this Agreement as the General Partner in its sole discretion may
determine to be necessary or appropriate to impose such restrictions, provided,
that any such amendment to this Agreement that would result in the delisting or
suspension of trading of the Units on any National Securities Exchange on which
the Units are then traded must be approved by the holders of at least 662/3% of
the Outstanding Units or (b) upon the recommendation of the General Partner and
the approval of the holders of at least 662/3% of the Outstanding Units, the
Partnership may be converted into and reconstituted as a trust or any other type
of legal entity (the "New Entity") in the manner and on other terms so
recommended and approved. In such event, the business of the Partnership shall
be continued by the New Entity and the Units shall be converted into equity
interests of the New Entity in the manner and on the terms so recommended and
approved. Notwithstanding the foregoing, no such reconstitution shall take place
unless the Partnership shall have received an Opinion of Counsel to the effect
that the liability of the Limited Partners for the debts and obligations of the
New Entity shall not, unless such Limited Partners take part in the control of
the business of the New Entity, exceed that which otherwise had been applicable
to such Limited Partners as limited partners of the Partnership under the
Delaware Act.
ARTICLE 2 - DEFINITIONS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Additional Limited Partner" means a Person admitted to the Partnership
as a Limited Partner pursuant to Section 12.3 and who is shown as such on the
books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each fiscal year of the Partnership, (a) increased
by any amounts that such Partner is obligated to restore under the standards set
by Treasury Regulation Section 1.704-2(g)(i) and 1.701-2(i)(5) to be allocated
to such Partner in subsequent years under items described in Treasury Regulation
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-2(b)(2)(ii)(d)(6). The foregoing definition of Adjusted Capital Account is
intended to comply with the provisions of Treasury Regulation Section
1.704-(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Section 4.3(d)(i) or 4.3(d)(ii).
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with, the Person in question. As used herein,
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the term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise.
"Agreed Allocation" means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant to the
provisions of Section 5.1 including, without limitation, a Curative Allocation
(if appropriate to the context in which the term "Agreed Allocation" is used).
"Agreed Value" of any Contributed Property means the fair market value
of such property or other consideration at the time of contribution as
determined by the General Partner using such reasonable method of valuation as
it may adopt; and the General Partner shall, in its sole discretion, use such
method as it deems reasonable and appropriate to allocate the aggregate Agreed
Value of Contributed Properties conveyed to the Partnership in a single or
integrated transaction among each separate property on a basis proportional to
the fair market value of each Contributed Property.
"Agreement" means this Agreement of Limited Partnership of TEPPCO
Partners, L.P., as it may be amended, supplemented or restated from time to
time.
"Assignee" means a Non-citizen Assignee or a Person to whom one or more
Units have been transferred in a manner permitted under this Agreement and who
has executed and delivered a Transfer Application as required by this Agreement,
but who has not become a Substituted Limited Partner.
"Available Cash" has the meaning assigned to such term in Section
5.6(a).
"Book-Tax Disparity" means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Section 4.3 and the hypothetical balance of such Partner's Capital account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"Business Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States or the
States of Texas or New York shall not be regarded as a Business Day.
"Capital Account" means the capital account maintained for a Partner or
Assignee pursuant to Section 4.3.
"Capital Contribution" means any cash, cash equivalents or the Net
Agreed Value of Contributed Property that a Partner has contributed or may
contribute to the Partnership pursuant to Section 4.1 or 13.3(c).
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"Carrying Value" means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' and
Assignees' Capital Accounts, and (b) with respect to any other Partnership
property, the adjusted basis of such property for federal income tax purposes,
all as of the time of determination. The Carrying Value of any property shall be
adjusted from time to time in accordance with Sections 4.3(d)(i) and 4.3(d)(ii)
and to reflect changes, additions or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed appropriate
by the General Partner.
"Cash from Interim Capital Transactions" has the meaning assigned to
such term in Section 5.6(b).
"Cash from Operations" has the meaning assigned to such term in Section
5.6(c).
"Cause" means a court of competent jurisdiction has entered a final,
non-appealable judgment finding the General Partner liable for actual fraud,
gross negligence or willful or wanton misconduct in its capacity as general
partner of the Partnership.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership filed with the Secretary of State of the State of Delaware as
referenced in Section 6.2 hereof, as such Certificate may be amended and/or
restated from time to time.
"Citizenship Certification" means a properly completed certificate in
such form as may be specified by the General Partner by which an Assignee or a
Limited Partner certifies that he (and if he is a nominee holding for the
account of another Person, that to the best of his knowledge such other Person)
is an Eligible Citizen.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Combined Interest" has the meaning assigned to such term in Section
13.3(a)13.3(a).
"Contributed Property" means each property or other asset, in such form
as may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership. Once the Carrying Value of a Contributed Property is adjusted
pursuant to Section 4.3(d)(i), such property shall no longer constitute a
Contributed Property, but shall be deemed an Adjusted Property.
"Contributing Partner" means each Partner contributing a Contributed
Property.
"Curative Allocation" means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 5.1(d)(ix).
"Current Market Price" has the meaning assigned to such term in Section
17.1(a).
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"Delaware Act" means the Delaware Revised Uniform Limited Partnership
Act, 6 Del. C. ss. 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 13.1 or Section 13.2.
"Duke" means Duke Energy Corporation, a Delaware corporation.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.704- 2(i)(1).
"Eligible Citizen" means a Person qualified to own interests in real
property in jurisdictions in which the Partnership or any Subsidiary does
business or proposes to do business from time to time, and whose status as a
Limited Partner or Assignee does not or would not subject the Partnership or any
Subsidiary to a substantial risk of cancellation or forfeiture of any of its
properties or any interest therein.
"Event of Withdrawal" has the meaning assigned to such term in Section
13.1(a).
"Exchange Act" means the Securities Exchange Act of 1934 as amended,
supplemented or restated from time to time, and any successor to such statute.
"First Liquidation Target Amount" has the meaning assigned to such term
in Section 5.1(c)(i)(D).
"First Target Distribution" has the meaning assigned to such term in
Section 5.6(d).
"General Partner" means Texas Eastern Products Pipeline Company, a
Delaware corporation, and its successors as general partner of the Partnership.
"General Partner Equity Value" means, as of any date of determination,
the fair market value of the General Partner's Partnership Interest, as
determined by the General Partner using whatever reasonable method of valuation
it may adopt; provided, however, if any such valuation occurs at a time that the
General Partner holds Units, such Units must be taken into account in
determining the General Partner Equity Value.
"Indemnitee" means the General Partner, any Departing Partner, any
Person who is or was an Affiliate of the General Partner or any Departing
Partner, any Person who is or was an officer, director, employee, partner, agent
or trustee of the General Partner or any Departing Partner or any such
Affiliate, or any Person who is or was serving at the request of the General
Partner or any Departing Partner or any such Affiliate as a director, officer,
employee, partner, agent or trustee of another Person.
"Initial Offering" means the initial offering of Units to the public,
as described in the Registration Statement.
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"Initial Unit Price" means $20 per Unit.
"Interim Capital Transactions" has the meaning assigned to such term in
Section 5.6(e).
"Issue Price" means $18.62 per Unit.
"Limited Partner" means each initial Limited Partner, each Substituted
Limited Partner, each Additional Limited Partner and any Departing Partner upon
the change of its status from General Partner to Limited Partner pursuant to
Section 13.3 and, solely for purposes of Articles 4, 5 and 6 and Sections 14.3
and 14.4, shall include an Assignee.
"Limited Partner Equity Value" means, as of any date of determination,
the amount equal to the product obtained by multiplying (a) the total number of
Units Outstanding (immediately prior to an issuance of Units or distribution of
cash or Partnership property), other than Units held by the General Partner by
(b)(i) in the case of a valuation required by Section 4.3(d)(i) (other than
valuations caused by sales of a de minimis quantity of Units), the Issue Price
of the additional Units referred to in Section 4.3(d)(i) or (ii) in the case of
a valuation required by Section 4.3(d)(ii) (or a valuation required by Section
4.3(d)(i) caused by sales of a de minimis quantity of Units), the Closing Price.
"Liquidator" means the General Partner or other Person approved
pursuant to Section 14.3 who performs the functions described therein.
"Merger Agreement" has the meaning assigned to such term in Section
16.1.
"Minimum Gain Attributable to Partner Nonrecourse Debt" means that
amount determined in accordance with the principles of Treasury Regulation
Section 1.704-2(i)(3).
"Minimum Quarterly Distribution" has the meaning assigned to such term
in Section 5.6(f).
"National Securities Exchange" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Exchange Act.
"Net Agreed Value" means, (a) in the case of any Contributed Property,
the Agreed Value of such property reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
(as adjusted pursuant to Section 4.3(d)(ii)) at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner or
Assignee upon such distribution or to which such property is subject at the time
of distribution, in either case, as determined under Section 752 of the Code.
"Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain (other than those items attributable to
dispositions constituting Termination Capital Transactions) for such taxable
period over the Partnership's items of loss and deduction (other than those
items attributable to dispositions constituting Termination Capital
Transactions) for such
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taxable period. The items included in the calculation of Net Income
shall be determined in accordance with Section 4.3(b) and shall not include any
items specially allocated under Section 5.1(d). Once an item of income, gain,
loss or deduction that has been included in the initial computation of Net
Income is subjected to a Required Allocation or a Curative Allocation, the
applicable Net Income or Net Loss shall be recomputed without regard to such
item.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction (other than those items attributable
to dispositions constituting Termination Capital Transactions) for such taxable
period over the Partnership's items of income and gain (other than those items
attributable to dispositions constituting Termination Capital Transactions) for
such taxable period. The items included in the calculation of Net Loss shall be
determined in accordance with Section 4.3(b) and shall not include any items
specifically allocated under Section 5.1(d). Once an item of income, gain, loss
or deduction that has been included in the initial computation of Net Loss is
subjected to a Required Allocation or a Curative Allocation, the applicable Net
Income or Net Loss shall be recomputed without regard to such item.
"Net Termination Gain" has the meaning assigned to such term in Section
5.6(g).
"Net Termination Loss" has the meaning assigned to such term in Section
5.6(h).
"New Entity" has the meaning assigned to such term in Section 1.6.
"Non-citizen Assignee" means a Person who the General Partner has
determined in its sole discretion does not constitute an Eligible Citizen and as
to whose Partnership Interest the General Partner has become the Substituted
Limited Partner, pursuant to Section 11.5.
"Nonrecourse Built-in Gain" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Non-recourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Sections 5.2(b)(i)(A),
5.2(b)(ii)(A) or 5.2(b)(iv) if such properties were disposed of in a taxable
transaction in full satisfaction of such liabilities and for no other
consideration.
"Nonrecourse Deductions" means any and all items of loss, deduction or
expenditure (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Treasury Regulation Sections 1.704-2(b)(1) and
1.704-2(c), are attributable to a Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulation Section 1.704- 2(b)(3).
"Notice of Election to Purchase" has the meaning assigned to such term
in Section 17.1(b).
"Operating Partnership" means TE Products Pipeline Company, Limited
Partnership, a Delaware limited partnership established pursuant to the
Operating Partnership Agreement.
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"Operating Partnership Agreement" means the Agreement of Limited
Partnership of TE Products Pipeline Company, Limited Partnership, as it may be
amended, supplemented or restated from time to time.
"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to the Partnership or the General Partner) acceptable to the
General Partner.
"Outstanding" means all Units or other Partnership Securities that are
issued by the Partnership and reflected as outstanding on the Partnership's
books and records as of the date of determination.
"Partner" means a General Partner or a Limited Partner and, solely for
purposes of Articles 4, 5 and 6 and Sections 14.3 and 14.4, shall include an
Assignee.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704- 2(b)(4).
"Partner Nonrecourse Deductions" means any and all items of loss,
deduction or expenditure (including any expenditure described in Section
705(a)(2)(B) of the Code) that, in accordance with the principles of Treasury
Regulation Sections 1.704-2(i)(1) and 1.704-2(i)(2), are attributable to a
Partner Nonrecourse Debt.
"Partnership" means TEPPCO Partners, L.P., a Delaware limited
partnership established pursuant to this Partnership Agreement, and any
successor thereto.
"Partnership Inception" means March 7, 1990.
"Partnership Interest" means the interest of a Partner in the
Partnership, which, in the case of a Limited Partner or an Assignee, shall be
expressed in terms of Units.
"Partnership Minimum Gain" means the amount determined in accordance
with the principles of Treasury Regulation Sections 1.704-2(b)(2) and
1.704-2(d).
"Partnership Securities" has the meaning assigned to such term in
Section 4.1(b).
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"PEC" means PanEnergy Corp., a Delaware corporation.
"Per Unit Capital Amount" means, as of any date of determination, the
Capital Account, stated on a per Unit basis, underlying any Unit held by a
Unitholder.
"Percentage Interest" means as of the date of such determination (a) as
to the General Partner, 1% and (b) as to any Limited Partner or Assignee holding
Units, the product of (i) 99% multiplied by (ii) the quotient of (x) the number
of Units held by such Limited Partner or Assignee divided by (y) the total
number of all Units then Outstanding; provided, however, that following any
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issuance of additional Units by the Partnership in accordance with Section 4.1
hereof, proper adjustment shall be made to the Percentage Interest represented
by each Unit to reflect such issuance.
"Person" means an individual or a corporation, partnership, limited
liability company, trust, unincorporated organization, association or other
entity.
"Purchase Date" means the date determined by the General Partner as the
date for purchase of all Outstanding Units (other than Units owned by the
General Partner and its Affiliates) pursuant to Article 17.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Sections 734 or 743 of
the Code) upon the disposition of any property or asset of the Partnership,
which gain is characterized as ordinary income because it represents the
recapture of deductions previously taken with respect to such property or asset.
"Record Date" means the date established by the General Partner for
determining (a) the identity of Limited Partners (or Assignees if applicable)
entitled income to notice of, or to vote at, any meeting of Limited Partners or
entitled to vote by ballot or give approval of Partnership action in writing
without a meeting or entitled to exercise rights in respect of any lawful action
of Limited Partners, or (b) the identity of Record Holders entitled to receive
any report or distribution.
"Record Holder" means the Person in whose name a Unit is registered on
the books of the Transfer Agent as of the opening of business on a particular
Business Day.
"Redeemable Units" means any Units for which a redemption notice has
been given, and has not been withdrawn, under Section 11.6.
"Registration Statement" means the Registration Statement on Form S-1
(Registration No. 33-32203), as it may have been amended or supplemented from
time to time, filed by the Partnership with the Securities and Exchange
Commission under the Securities Act to register the offering and sale of the
Units in the Initial Offering.
"Required Allocations" means any allocation (or limitation imposed on
any allocation) of an item of income, gain, deduction or loss pursuant to (a)
the proviso clause of Section 5.1(b)(ii) or (b) Sections 5.1(d)(i), 5.1(d)(ii),
5.1(d)(iii), 5.1(d)(iv), 5.1(d)(v), 5.1(d)(vi) and 5.1(d)(viii), such
allocations (or limitations thereon) being directly or indirectly required by
the Treasury Regulations promulgated under Section 704(b) of the Code.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Sections 5.2(b)(i)(A) or 5.2(b)(ii)(A), respectively, to eliminate
Book-Tax Disparities.
"Second Liquidation Target Amount" has the meaning assigned to such
term in Section 5.1(c)(i)(E).
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"Second Target Distribution" has the meaning assigned to such term in
Section 5.6(i).
"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such statute.
"Subsidiary" means a Person controlled by the Partnership directly, or
indirectly though one or more intermediaries, including without limitation the
Operating Partnership.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 12.1 in place of and with
all the rights of a Limited Partner and who is shown as a Limited Partner on the
books and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such term in
Section 16.2(b).
"Termination Capital Transaction" has the meaning assigned to such term
in Section 5.6(j).
"Trading Day" has the meaning assigned to such term in Section 17.1(a).
"Transfer Agent" means such bank, trust company or other Person
(including, without limitation, the General Partner or one of its Affiliates) as
shall be appointed from time to time by the Partnership to act as registrar and
transfer agent for the Units.
"Transfer Application" means an application and agreement for transfer
of Units in the form set forth on the back of a Unit Certificate or in a form
substantially to the same effect in a separate instrument.
"Unit" means a Partnership Interest of a Limited Partner or Assignee in
the Partnership representing a fractional part of the Partnership Interests of
all Limited Partners and Assignees.
"Unit Certificate" means a certificate in such form as may be adopted
from time to time by the General Partner in its sole discretion, issued by the
Partnership evidencing ownership of one or more Units.
"Unitholder" means a Person who holds Units.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the fair
market value of such property as of such date (as determined under Section
4.3(d)) over (b) the Carrying Value of such property as of such date (prior to
any adjustment to be made pursuant to Section 4.3(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the Carrying
Value of such property as of such date (prior to any adjustment to be made
pursuant to Section 4.3(d) as of such date) over (b) the fair market value of
such property as of such date (as determined under Section 4.3(d)).
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"Unrecovered Capital" means, at any time, with respect to a Unit, the
Unrecovered Initial Unit Price.
"Unrecovered Initial Unit Price" means, at any time, with respect to a
Unit (whether such Unit was issued in the Initial Offering or thereafter), the
Initial Unit Price, less the sum of all distributions theretofore made in
respect of a Unit issued in the Initial Offering constituting, and which for
purposes of determining the priority of such distribution is treated as
constituting, Cash from Interim Capital Transactions and of any distributions of
cash (or the Net Agreed Value of any distributions in kind) in connection with
the dissolution and liquidation of the Partnership theretofore made in respect
of a Unit issued in the Initial Offering.
ARTICLE 3 - PURPOSE
3.1 Purpose and Business. The purpose and nature of the business to be
conducted by the Partnership shall be (i) to serve as a partner in the Operating
Partnership and, in connection therewith, to exercise all of the rights and
powers conferred upon the Partnership as a partner in the Operating Partnership
pursuant to the Operating Partnership Agreement or otherwise, (ii) to engage
directly in, or to enter into any partnership, joint venture or similar
arrangement to engage in, any business activity that may be lawfully conducted
by a limited partnership organized pursuant to the Delaware Act and, in
connection therewith, to exercise all of the rights and powers conferred upon
the Partnership pursuant to the agreements relating to such business activity,
(iii) to do anything necessary or appropriate to the foregoing (including,
without limitation, the making of capital contributions or loans to the any
Subsidiary or in connection with its involvement in the activities referred to
in clause (ii) of this sentence), and (iv) to engage in any other business
activity as permitted under Delaware law.
3.2 Powers. The Partnership shall be empowered to do any and all acts
and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described in Section 3.1 and for the protection and benefit of the Partnership.
ARTICLE 4 - CAPITAL CONTRIBUTIONS
4.1 Issuances of Units and Other Securities. (a) The initial Capital
Contributions of the General Partner in the initial Limited Partners were made
in accordance with Section 4.3 of the 1990 Agreement.
(b) The General Partner is hereby authorized to cause the Partnership
to issue, in addition to the Units heretofore issued by the Partnership, such
additional Units, or classes or series thereof, or options, rights, warrants or
appreciation rights relating thereto, or any other type of equity security that
the Partnership may lawfully issue, any unsecured or secured debt obligations of
the Partnership or debt obligations of the Partnership convertible into any
class or series of equity securities of the Partnership (collectively,
"Partnership Securities"), for any Partnership purpose, at any time or from time
to time, to the Partners or to other Persons for such consideration and on such
terms and conditions as shall be established by the General Partner in its sole
discretion, all without the approval of any Limited Partners. The General
Partner shall have sole discretion, subject to the
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guidelines set forth in this Section 4.1 and the requirements of the Delaware
Act, in determining the consideration and terms and conditions with respect to
any future issuance of Partnership Securities.
(c) Notwithstanding any provision of this Agreement to the contrary,
additional Partnership Securities to be issued by the Partnership pursuant to
this Section 4.1 shall be issuable from time to time in one or more classes, or
one or more series of any of such classes, with such designations, preferences
and relative, participating, optional or other special rights, powers and
duties, including, without limitation, rights, powers and duties senior to
existing classes and series of Partnership Securities, all as shall be fixed by
the General Partner in the exercise of its sole and complete discretion,
including, without limitation, (i) the allocations of items of Partnership
income, gain, loss, deduction and credit to each such class or series of
Partnership Securities; (ii) the right of each such class or series of
Partnership Securities to share in Partnership distributions; (iii) the rights
of each such class or series of Partnership Securities upon dissolution and
liquidation of the Partnership; (iv) whether such class or series of additional
Partnership Securities is redeemable by the Partnership and, if so, the price at
which, and the terms and conditions upon which, such class or series of
additional Partnership Securities may be redeemed by the Partnership; (v)
whether such class or series of additional Partnership Securities is issued with
the privilege of conversion and, if so, the rate at which, and the terms and
conditions upon which, such class or series of Partnership Securities may be
converted into any other class or series of Partnership Securities; (vi) the
terms and conditions upon which each such class or series of Partnership
Securities will be issued, evidenced by Unit Certificates and assigned or
transferred; and (vii) the right, if any, of each such class or series of
Partnership Securities to vote on Partnership matters, including, without
limitation, matters relating to the relative rights, preferences and privileges
of each such class or series.
(d) Upon the issuance of any Units by the Partnership, the General
Partner shall be required to make additional Capital Contributions to the
Partnership such that the General Partner shall at all times have a balance in
its Capital Account equal to l % of the total positive Capital Account balances
of all Partners.
(e) The General Partner is hereby authorized and directed to take all
actions that it deems necessary or appropriate in connection with each issuance
of Units or other Partnership Securities pursuant to Section 4.1(b) and to amend
this Agreement in any manner that it deems necessary or appropriate to provide
for each such issuance, to admit Additional Limited Partners in connection
therewith and to specify the relative rights, powers and duties of the holders
of the Units or other Partnership Securities being so issued.
(f) The General Partner is authorized to cause the issuance of
Partnership Securities pursuant to any employee benefit plan for the benefit of
employees responsible for the operations of the Partnership or any Subsidiary
maintained or sponsored by the General Partner, the Partnership, any Subsidiary
or any Affiliate of any of them.
(g) The General Partner shall do all things necessary to comply with
the Delaware Act and is authorized and directed to do all things it deems to be
necessary or advisable in connection with any future issuance of Partnership
Securities, including, without limitation, compliance with any statute, rule,
regulation or guideline of any federal, state or other governmental agency or
any
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National Securities Exchange on which the Units or other Partnership
Securities are listed for trading.
4.2 Limited Preemptive Rights. No Person shall have any preemptive,
preferential or other similar right with respect to (a) additional Capital
Contributions; (b) issuance or sale of any class or series of or other
Partnership Securities, whether unissued, held in the treasury or hereafter
created; (c) issuance of any obligations, evidences of indebtedness or other
securities of the Partnership convertible into or exchangeable for, or carrying
or accompanied by any rights to receive, purchase or subscribe to, any such or
other Partnership Securities; (d) issuance of any right of subscription to or
right to receive, or any warrant or option for the purchase of any such Units or
other Partnership Securities; or (e) issuance or sale of any other securities
that may be issued or sold by the Partnership.
4.3 Capital Accounts. (a) The Partnership shall maintain for each
Partner (or a beneficial owner of Units held by a nominee in any case in which
the nominee has furnished the identity of such owner to the Partnership in
accordance with Section 6031(c) of the Code or any other method acceptable to
the General Partner in its sole discretion) owning Units a separate Capital
Account with respect to such Units in accordance with the rules of Treasury
Regulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by
(i) the amount of all Capital Contributions made to the Partnership with respect
to such Units pursuant to this Agreement and (ii) all items of Partnership
income and gain (including, without limitation, income and gain exempt from tax)
computed in accordance with Section 4.3(b) and allocated with respect to such
Units pursuant to Section 5.1 and decreased by (x) the amount of cash or Net
Agreed Value of all actual and deemed distributions of cash or property made
with respect to such Units pursuant to this Agreement and (y) all items of
Partnership deduction and loss computed in accordance with Section 4.3(b) and
allocated with respect to such Units pursuant to Section 5.1.
The Partnership shall maintain for the General Partner a separate
Capital Account with respect to its Partnership Interest, held in its capacity
as a general partner, in accordance with the rules of Treasury Regulation
Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the
amount of all Capital Contributions made to the Partnership with respect to such
Partnership Interest pursuant to this Agreement and (ii) all items of
Partnership income and gain (including, without limitation, income and gain
exempt from tax) computed in accordance with Section 4.3(b) and allocated with
respect to such Partnership Interest pursuant to Section 5.1, and decreased by
(x) the cash amount or the Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such Partnership Interest
pursuant to this Agreement and (y) all items of Partnership deduction and loss
computed in accordance with Section 4.3(b) and allocated with respect to such
Partnership Interest pursuant to Section 5.1.
(b) For purposes of computing the amount of any item of income, gain,
loss or deduction to be reflected in the Partners' Capital Accounts, the
determination, recognition and classification of any such item shall be the same
as its determination, recognition and classification for federal income tax
purposes (including, without limitation, any method of depreciation, cost
recovery or amortization used for that purpose), provided, that:
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(i) Solely for purposes of this Section 4.3, the Partnership
shall be treated as owning directly its proportionate share (as
determined by the General Partner) of all property owned by any
Subsidiary.
(ii) All fees and other expenses incurred by the Partnership
to promote the sale of (or to sell) a Partnership Interest that can
neither be deducted nor amortized under Section 709 of the Code, if
any, shall, for purposes of Capital Account maintenance, be treated as
an item of deduction at the time such fees and other expenses are
incurred and shall be allocated among the Partners pursuant to Section
5.1.
(iii) Except as otherwise provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any election
under Section 754 of the Code which may be made by the Partnership and,
as to those items described in Section 705(a)(l)(B) or 705(a)(2)(B) of
the Code, without regard to the fact that such items are not includable
in gross income or are neither currently deductible nor capitalized for
federal income tax purposes.
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition were
equal in amount to the Partnership's Carrying Value with respect to
such property as of such date.
(v) In accordance with the requirements of Section 704(b) of
the Code, any deductions for depreciation, cost recovery or
amortization attributable to any Contributed Property shall be
determined as if the adjusted basis of such property on the date it was
acquired by the Partnership were equal to the Agreed Value of such
property. Upon an adjustment pursuant to Section 4.3(d) to the Carrying
Value of any Partnership property subject to depreciation, cost
recovery or amortization, any further deductions for such depreciation,
cost recovery or amortization attributable to such property shall be
determined (A) as if the adjusted basis of such property were equal to
the Carrying Value of such property immediately following such
adjustment and (B) using a rate of depreciation, cost recovery or
amortization derived from the same method and useful life (or, if
applicable, the remaining useful life) as is applied for federal income
tax purposes; provided, however, that, if the asset has a zero adjusted
basis for federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable method
that the General Partner may adopt.
(vi) If the Partnership's adjusted basis in depreciable or
cost recovery property is reduced for federal income tax purposes
pursuant to Section 48(q)(l) or 48(q)(3) of the Code, the amount of
such reduction shall, solely for purposes hereof, be deemed to be an
additional depreciation or cost recovery deduction in the year such
property is placed in service and shall be allocated among the Partners
pursuant to Section 5.1. Any restoration of such basis pursuant to
Section 48(q)(2) of the Code shall, to the extent possible, be
allocated in the same manner to the Partners to whom such deemed
deduction was allocated.
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(c) A transferee of a Partnership Interest shall succeed to a
pro rata portion of the Capital Account of the transferor relating to
the Partnership Interest so transferred.
(d)(i) Consistent with the provisions of Treasury Regulation
Section 1.704- 1(b)(2)(iv)(f), on an issuance of additional Units for
cash or Contributed Property or the conversion of the General Partner's
Partnership Interest to Units pursuant to Section 13.3(b), the Capital
Account of all Partners and the Carrying Value of each Partnership
property immediately prior to such issuance shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable
to such Partnership property, as if such Unrealized Gain or Unrealized
Loss had been recognized on an actual sale of each such property
immediately prior to such issuance and had been allocated to the
Partners at such time pursuant to Section 5.1. In determining such
Unrealized Gain or Unrealized Loss, the aggregate cash amount and fair
market value of all Partnership assets (including, without limitation,
cash or cash equivalents) immediately prior to the issuance of
Partnership Interests shall be determined by the General Partner using
such reasonable method of valuation as it may adopt; provided, however,
the General Partner, in arriving at such valuation, must take into
account the Limited Partner Equity Value and the General Partner Equity
Value at such time. The General Partner shall allocate such aggregate
value among the assets of the Partnership (in such manner as it
determines in its sole discretion to be reasonable) to arrive at a fair
market value for individual properties.
(ii) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed
distribution to a Partner of any Partnership property (other than a
distribution of cash that is not in redemption or retirement of a
Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of each Partnership property shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable
to such Partnership property, as if such Unrealized Gain or Unrealized
Loss had been recognized in a sale of such property immediately prior
to such distribution for an amount equal to its fair market value, and
had been allocated to the Partners, at such time, pursuant to Section
5.1. Any Unrealized Gain or Unrealized Loss attributable to such
property shall be allocated in the same manner as Net Termination Gain
or Net Termination Loss pursuant to Section 5.1(c); provided, however,
that, in making any such allocation, Net Termination Gain or Net
Termination Loss actually realized shall be allocated first. In
determining such Unrealized Gain or Unrealized Loss, the aggregate cash
amount and fair market value of all Partnership assets (including,
without limitation, cash or cash equivalents) immediately prior to a
distribution shall be determined and allocated by the Liquidator using
such reasonable methods of valuation as it may adopt.
4.4 Interest. No interest shall be paid by the Partnership on Capital
Contributions or on balances in Partners' Capital Accounts.
4.5 No Withdrawal. No Partner shall be entitled to withdraw any part of
its Capital Contributions or its Capital Account or to receive any distribution
from the Partnership, except as provided herein.
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4.6 Loans from Partners. Loans by a Partner to the Partnership shall
not constitute Capital Contributions. If any Partner shall advance funds to the
Partnership in excess of the amounts required hereunder to be contributed by it
to the capital of the Partnership, the making of such excess advances shall not
result in any increase in the amount of the Capital Account of such Partner. The
amount of any such excess advances shall be a debt obligation of the Partnership
to such Partner and shall be payable or collectible only out of the Partnership
assets in accordance with the terms and conditions upon which such advances are
made.
4.7 No Fractional Units. No fractional Units shall be issued by the
Partnership.
4.8 Splits and Combinations. (a) Subject to Section 4.8(d), the General
Partner may make a pro rata distribution of Units or other Partnership
Securities to all Record Holders or may effect a subdivision or combination of
Units or other Partnership Securities; provided, however, that after any such
distribution, subdivision or combination, each Partner shall have the same
Percentage Interest in the Partnership as before such distribution, subdivision
or combination.
(b) Whenever such a distribution, subdivision or combination of Units
or other Partnership Securities is declared, the General Partner shall select a
Record Date as of which the distribution, subdivision or combination shall be
effective and shall send notice of the distribution, subdivision or combination
at least twenty days prior to such Record Date to each Record Holder as of the
date not less than ten days prior to the date of such notice. The General
Partner also may cause a firm of independent public accountants selected by it
to calculate the number of Units to be held by each Record Holder after giving
effect to such distribution, subdivision or combination. The General Partner
shall be entitled to rely on any certificate provided by such firm as conclusive
evidence of the accuracy of such calculation.
(c) Promptly following any such distribution, subdivision or
combination, the General Partner may cause Unit Certificates to be issued to the
Record Holders of Units as of the applicable Record Date representing the new
number of Units held by such Record Holders, or the General Partner may adopt
such other procedures as it may deem appropriate to reflect such distribution,
subdivision or combination; provided, however, if any such distribution,
subdivision or combination results in a smaller total number of Units
Outstanding, the General Partner shall require, as a condition to the delivery
to a Record Holder of such new Unit Certificate, the surrender of any Unit
Certificate held by such Record Holder immediately prior to such Record Date.
(d) The Partnership shall not issue fractional Units upon any
distribution, subdivision or combination of Units. If a distribution,
subdivision or combination of Units would result in the issuance of fractional
Units but for the provision of Section 4.7 and this Section 4.8(d), each
fractional Unit shall be rounded to the nearest whole Unit (and a 0.5 Unit shall
be rounded to the next higher Unit).
ARTICLE 5 - ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocations for Capital Account Purposes. For purposes of
maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnership's items
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of income, gain, loss and deduction (computed in accordance with Section 4.3(b))
shall be allocated among the Partners in each taxable year (or portion thereof)
as provided hereinbelow.
(a) Net Income. After giving effect to the special allocations set
forth in Section 5.1(d), Net Income for each taxable period and all items of
income, gain, loss and deduction taken into account in computing Net Income for
such taxable period shall be allocated as follows:
(i) First, 100% to the General Partner until the
aggregate Net Income allocated to the General Partner pursuant to this
Section 5.1(a)(i) for the current taxable year
and all previous taxable years is equal to the aggregate Net Losses
allocated to the General Partner pursuant to Section 5.1(b)(iii) for
all previous taxable years;
(ii) Second, 100% to the General Partner and the
Limited Partners, in accordance with their respective Percentage
Interests, until the aggregate Net Income allocated to such Partners
pursuant to this Section 5.1(a)(ii) for the current taxable year and
all previous taxable years is equal to the aggregate Net Losses
allocated to such Limited Partners and the General Partner pursuant to
Section 5.1(b)(ii) for all previous taxable years; and
(iii) Third, the balance, if any, shall be allocated
between the General Partner, in its capacity as general partner, and
the Limited Partners in each taxable year in the same proportion as
Available Cash for such taxable year (including, for this purpose,
distributions of Available Cash made in a subsequent taxable year with
respect to the last quarter of the Partnership year for which the item
of income, gain, loss, deduction or credit as the case may be, is being
allocated) was distributed to the General Partner and the Limited
Partners. If the Partnership does not distribute any Available Cash in
respect of a taxable year, Net Income (computed in accordance with
Section 4.3(b)) shall be allocated among the Partners in accordance
with their respective Percentage Interests. Except as otherwise
provided in this Section 5.1, each item of income, gain, loss,
deduction or credit (computed in accordance with Section 4.3(b))
allocated to the Limited Partners, in the aggregate, shall be allocated
to each Limited Partner pro rata in accordance with the number of Units
held by such Limited Partner.
(b) Net Losses. After giving effect to the special allocations set
forth in Section 5.1(d), Net Losses for each taxable period and all items of
income, gain, loss and deduction taken into account in computing Net Losses for
such taxable period shall be allocated as follows:
(i) First, 100% to the General Partner and the
Limited Partners until the aggregate Net Losses allocated pursuant to
this Section 5.1(b)(i) for the current taxable year and all previous
taxable years is equal to the aggregate Net Income allocated to such
Partners pursuant to Section 5.1(a)(iii) for all previous taxable
years. For purposes of this Section 5.1(b)(i), Net Losses for any
taxable year shall be allocated to the General Partner and the Limited
Partners in the same proportion as any Net Income was allocated to such
Partners pursuant to Section 5.1(a)(iii) in any previous taxable years
(beginning with the first such taxable year in which Net Income was
allocated to the Partners pursuant to
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Section 5.1(a)(iii) up to an amount equal to the amount of Net Income
allocated to the Partners in any such taxable year);
(ii) Second, 100% to the General Partner and the
Limited Partners, in accordance with their respective Percentage
Interests, provided, that Net Losses shall not be allocated pursuant to
this Section 5.1(b)(ii) to the extent that such allocation would cause
any Limited Partner to have a deficit balance in its Adjusted Capital
Account at the end of such taxable year (or increase any existing
deficit balance in its Adjusted Capital Account);
(iii) Third, the balance, if any, 100% to the General
Partner.
(c) Net Termination Gains and Losses. After giving effect to the
special allocations set forth in Section 5.1(d), all items of gain and loss
taken into account in computing Net Termination Gain or Net Termination Loss for
such taxable period shall be allocated in the same manner as such Net
Termination Gain or Net Termination Loss is allocated hereunder. All allocations
under this Section 5.1(c) shall be made after Capital Account balances have been
adjusted by all other allocations provided under this Section 5.1 and after all
distributions of Available Cash provided under Section 5.4 have been made with
respect to the taxable period ending on the date of the Partnership's
liquidation pursuant to Section 14.3. References in this Section to the Minimum
Quarterly Distribution and the Target Distributions are to such items as
adjusted from time to time.
(i) If a Net Termination Gain is recognized (or deemed
recognized pursuant to Section 4.3(d)) from Termination Capital
Transactions, such Net Termination Gain shall be allocated between the
General Partner and the Limited Partners in the following manner (and
the Capital Accounts of the Partners shall be increased by the amount
so allocated in each of the following subclauses, in the order listed,
before an allocation is made pursuant to the next succeeding
subclause):
(A) First, to each Partner having a deficit balance
in its Capital Account, in the proportion that such deficit balance
bears to the total deficit balances in the Capital Accounts of all
Partners, until each such Partner has been allocated Net Termination
Gain equal to any such deficit balance in its Capital Account;
(B) Second, 100% to the General Partner and the
Limited Partners, in accordance with their respective Percentage
Interests, until the Capital Account in respect of each Unit then
Outstanding is equal to the Unrecovered Initial Unit Price attributable
to such Unit;
(C) Third, 100% to the General Partner and the
Limited Partners, in accordance with their respective Percentage
Interests, until each Limited Partner's Capital Account (determined on
a per Unit basis) in respect of each Unit is equal to the sum of (l)
the Unrecovered Initial Unit Price attributable to each such Unit plus
(2) any cumulative arrearages in the payment of the Minimum Quarterly
Distribution in respect of such Unit for any quarter following December
31, 1994.
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(D) Fourth, 85.87% to all Limited Partners, in
accordance with their respective Percentage Interests, and 14.13% to
the General Partner until each such Limited Partner's Capital Account
in respect of its Units (determined on a per Unit basis) is equal to
the sum of (l) its Unrecovered Capital, plus (2) any cumulative
arrearages in the payment of the Minimum Quarterly Distribution in
respect of such Unit for any quarter following December 31, 1994, plus
(3) the excess of the First Target Distribution over the Minimum
Quarterly Distribution for each quarter of the Partnership's existence,
less (4) the amount of any distributions of Cash from Operations that
was distributed pursuant to Section 5.4(b) (the sum of (2) plus (3)
less (4) is hereinafter defined as the "First Liquidation Target
Amount");
(E) Fifth, 75.77% to all Limited Partners, in
accordance with their respective Percentage Interests, and 24.23% to
the General Partner until each such Limited Partner's Capital Account
in respect of its Units (determined on a per Unit basis) is equal to
the sum of ( l) its Unrecovered Capital, plus (2) the First Liquidation
Target Amount, plus (3) the excess of the Second Target Distribution
over the First Target Distribution for each quarter of the
Partnership's existence less (4) the amount of any distributions of
Cash from Operations distributed pursuant to Section 5.4(c) (the sum of
(2) plus (3) less (4) is hereinafter defined as the "Second Liquidation
Target Amount"); and
(F) Sixth, the balance, if any, 50.51% to all Limited
Partners, in accordance with their respective Percentage Interests, and
49.49% to the General Partner.
(ii) If a Net Termination Loss is recognized (or deemed recognized
pursuant to Section 4.3(d)) from Termination Capital Transactions, such Net
Termination Loss shall be allocated to the Partners in the following manner:
(A) First, 100% to the General Partner and the
limited Partners in proportion to, and to the extent of, the positive
balances in their respective Capital Accounts until all such balances
are reduced to zero;
(B) Second, the balance, if any, 100% to the General
Partner.
(d) Special Allocations. Notwithstanding any other provision
of this Section 5.1, the following special allocations shall be made
for such taxable period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any
other provision of this Section 5.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period, each
Partner shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in proportion to,
and to the extent of, an amount equal to the greater of (A) the portion
of such Partner's share of the net decrease in Partnership Minimum Gain
during such taxable period that is allocable (in accordance with the
principles set forth in Treasury Regulation Section 1.704-2(g)) to the
disposition of Partnership property subject to one or more Nonrecourse
Liabilities of the Partnership, or (B) the deficit balance in such
Partner's Adjusted Capital Account at the end of such taxable period
(modified, as appropriate, by Treasury Regulation Section 1.704-2(g)).
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The items to be so allocated shall be determined in accordance with
Treasury Regulation Sections 1.704-2(f)(6) and 1.704-2(j)(2) and, for
purposes of this Section 5.1(d), each Partner's Adjusted Capital
Account balance shall be determined, and the allocation of income or
gain required hereunder shall be effected, prior to the application of
any other allocations pursuant to this Section 5.1(d) with respect to
such taxable period. This Section 5.1(d)(i) is intended to comply with
the Partnership Minimum Gain chargeback requirement in Treasury
Regulation Section 1.704-2(f) and shall be interpreted consistently
therewith.
(ii) Chargeback of Minimum Gain Attributable to Partner
Nonrecourse Debt. Notwithstanding the other provisions of this Section
5.1 (other than Section 5.1(d)(i)), if there is a net decrease in
Minimum Gain Attributable to Partner Nonrecourse Debt during any
Partnership taxable period, any Partner with a share of Minimum Gain
Attributable to Partner Nonrecourse Debt at the beginning of such
taxable period shall be allocated items of Partnership income and gain
for such period (and, if necessary, subsequent periods) in proportion
to, and to the extent of, an amount equal to the greater of (A) the
portion of such Partner's share of the net decrease in the Minimum Gain
Attributable to Partner Nonrecourse Debt that is allocable (in
accordance with the principles set forth in Treasury Regulation Section
1.704-2(i)(4)) to the disposition of Partnership property subject to
such Partner Nonrecourse Debt or (B) the deficit balance in such
Partner's Adjusted Capital Account at the end of such taxable period
(modified, as appropriate, by Treasury Regulation Section 1.704-
2(i)(4)). The items to be so allocated shall be determined in a manner
consistent with the principles of Treasury Regulation Sections
1.704-2(i)(4) and 1.704-2(j)(2) and, for purposes of this Section
5.1(d), each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder
shall be effected, prior to the application of any other allocations
pursuant to this Section 5.1(d), other than Section 5.1(d)(i), with
respect to such taxable period. This Section 5.1(d)(ii) is intended to
comply with the chargeback of items of income and gain requirement in
Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(iii) Qualified Income Offset. Except as provided in Sections
5.1(d)(i) and 5.1(d)(ii), in the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in
Treasury Regulation Section 1.704-1 (b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of
Partnership income and gain shall be specifically allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations, the deficit balance, if any, in
its Adjusted Capital Account created by such adjustments, allocations
or distributions as quickly as possible; provided, that an allocation
pursuant to this Section 5.1(d)(iii) shall be made only if and to the
extent that such Partner would have a deficit balance in its Adjusted
Capital Account after all other allocations provided in this Section
5.1 have been tentatively made as if this Section 5.1(d)(iii) were not
in this Agreement.
(iv) Gross Income Allocations. In the event any Partner has a
deficit balance in its Capital Account at the end of any Partnership
taxable period that is in excess of the sum of (A) the amount such
Partner is obligated to restore pursuant to any provision of this
Agreement and (B) the amount such Partner is deemed to be obligated to
restore pursuant to the penultimate sentences of Treasury Regulation
Section 1.704-2(g)(1) and 1.704-2(i)(5),
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such Partner shall be specially allocated items of Partnership gross
income and gain in the amount of such excess as quickly as possible;
provided, that an allocation pursuant to this Section 5.1(d)(iv) shall
be made only if and to the extent that such Partner would have a
deficit Capital Account in excess of such sum after all other
allocations provided for in this Section 5.1 have been tentatively made
as if Section 5.1(d)(iii) and this Section 5.1(d)(iv) were not in this
Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in the same ratios
that Net income or Net Losses, as the case may be, is allocated for the
taxable year. if the General Partner determines in its good faith
discretion that the Partnership's Nonrecourse Deductions must be
allocated in a different ratio to satisfy the safe harbor requirements
of the Treasury Regulations promulgated under Section 704(b) of the
Code, the General Partner is authorized, upon notice to the Limited
Partners, to revise the prescribed ratio to the numerically closest
ratio that does satisfy such requirements.
(vi) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the
Partner that bears the Economic Risk of Loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable in accordance with Treasury Regulation Section
1.704-2(i)(1). If more than one Partner bears the Economic Risk of Loss
with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse
Deductions attributable thereto shall be allocated between or among
such Partners in accordance with the ratios in which they share such
Economic Risk of Loss.
(vii) Nonrecourse Liabilities. The Partners agree that
Nonrecourse Liabilities of the Partnership in excess of the sum of (A)
the amount of Partnership Minimum Gain and (B) the total amount of
Nonrecourse Built-in Gain shall be allocated among the Partners in
accordance with their respective Percentage interests.
(viii) Code Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant
to Section 734(b) or 743(b) of the Code is required, pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into
account in determining Capital Accounts, the amount of such adjustment
to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to
such Section of the Treasury regulations.
(ix) Curative Allocation. (A) Notwithstanding any other
provision of this Section 5.1, other than the Required Allocations
provisions, the Required Allocations shall be taken into account in
making the Agreed Allocations so that, to the extent possible, the net
amount of items of income, gain, loss and deduction allocated to each
Partner pursuant to the Required Allocations and the Agreed
Allocations, together, shall be equal to the net amount of such items
that would have been allocated to each such Partner under the Agreed
Allocations had the Required Allocations and this Curative Allocation
not otherwise been
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provided in this Section 5.1. Notwithstanding the preceding sentence,
Required Allocations relating to (l) Nonrecourse Deductions shall not
be taken into account except to the extent that there has been a
decrease in Partnership Minimum Gain and (2) Partner Nonrecourse
Deductions shall not be taken into account except to the extent that
there has been a decrease in Minimum Gain Attributable to Partner
Nonrecourse Debt. Allocations pursuant to this Section 5.1(d)(ix)(A)
shall only be made with respect to Required Allocations to the extent
the General Partner reasonably determines that such allocations will
otherwise be inconsistent with the economic agreement among the
Partners. Further, allocations pursuant to this Section 5.1(d)(ix)(A)
shall be deferred with respect to allocations pursuant to clauses (1)
and (2) hereof to the extent the General Partner reasonably determines
that such allocations are likely to be offset by subsequent Required
Allocations.
(B) The General Partner shall have reasonable discretion, with
respect to each taxable period, to (l) apply the provisions of Section
5.1(d)(ix)(A) in whatever order is most likely to minimize the economic
distortions that might otherwise result from the Required Allocations,
and (2) divide all allocations pursuant to Section 5.1(d)(ix)(A) among
the Partners in a manner that is likely to minimize such economic
distortions.
5.2 Allocations for Tax Purposes. (a) Except as otherwise provided
herein, for federal income tax purposes, each item of income, gain, loss and
deduction shall be allocated among the Partners in the same manner as its
correlative item of "book" income, gain, loss or deduction is allocated pursuant
to Section 5.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follow:
(i)(A) In the case of a Contributed Property, such
items attributable thereto shall be allocated among the Partners in the
manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property and its
adjusted basis at the time of contribution; and (B) except as otherwise
provided in Section 5.2(b)(iv), any item of Residual Gain or Residual
Loss attributable to a Contributed Property shall be allocated among
the Partners in the same manner as its correlative item of "book" gain
or loss is allocated pursuant to Section 5.1.
(ii)(A) In the case of an Adjusted Property, such
items shall (l) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code to take
into account the Unrealized Gain or Unrealized Loss attributable to
such property and the allocations thereof pursuant to Section 4.3(d)(i)
or (ii), and (2) second, in the event such property was originally a
Contributed Property, be allocated among the Partners in a manner
consistent with Section 5.2(b)(i)(A); and (B) except as otherwise
provided in Section 5.2(b)(iv), any item of Residual Gain or Residual
Loss attributable to an Adjusted Property shall be allocated among the
Partners in the same manner as its correlative item of "book" gain or
loss is allocated pursuant to Section 5.1.
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(iii) Except as otherwise provided in Section
5.2(b)(iv), all other items of income, gain, loss and deduction shall
be allocated among the Partners in the same manner as their correlative
item of "book" gain or loss is allocated pursuant to Section 5.1.
(iv) Any items of income, gain, loss or deduction
otherwise allocable under Section 5.2(b)(i)(B), 5.2(b)(ii)(B) or
5.2(b)(iii) shall be subject to allocation by the General Partner in a
manner designed to eliminate, to the maximum extent possible, Book-Tax
Disparities in a Contributed Property or Adjusted Property otherwise
resulting from the application of the "ceiling" limitation (under
Section 704(c) of the Code or Section 704(c) principles) to the
allocations provided under Section 5.2(b)(i)(A) or 5.2(b)(ii)(A).
(c) For the proper administration of the Partnership and for the
preservation of uniformity of the Units (or any class or classes thereof), the
General Partner shall have sole discretion to (i) adopt such conventions as it
deems appropriate in determining the amount of depreciation, amortization and
cost recovery deductions; (ii) make special allocations for federal income tax
purposes of income (including, without limitation, gross income) or deductions;
and (iii) amend the provisions of this Agreement as appropriate (x) to reflect
the proposal or promulgation of Treasury regulations under Section 704(b) or
Section 704(c) of the Code or (y) otherwise to preserve or achieve uniformity of
the Units (or any class or classes thereof). The General Partner may adopt such
conventions, make such allocations and make such amendments to this Agreement as
provided in this Section 5.2(c) only if such conventions, allocations or
amendments would not have a material adverse effect on the Partners, the holders
of any class or classes of Units issued and Outstanding or the Partnership, and
if such allocations are consistent with the principles of Section 704 of the
Code.
(d) The General Partner in its sole discretion may determine to
depreciate the portion of an adjustment under Section 743(b) of the Code
attributable to unrealized appreciation in any Adjusted Property (to the extent
of the unamortized Book-Tax Disparity) using a predetermined rate derived from
the depreciation method and useful life applied to the Partnership's common
basis of such property, despite the inconsistency of such approach with Proposed
Treasury Regulation Section 1.168-2(n) and Treasury Regulation Section
1.167(c)-1(a)(6). If the General Partner determines that such reporting position
cannot reasonably be taken, the General Partner may adopt a depreciation
convention under which all purchasers acquiring Units in the same month would
receive depreciation, based upon the same applicable rate as if they had
purchased a direct interest in the Partnership's property. If the General
Partner chooses not to utilize such aggregate method, the General Partner may
use any other reasonable depreciation convention to preserve the uniformity of
the intrinsic tax characteristics of any Units that would not have a material
adverse effect on the Limited Partners or the Record Holders of any class or
classes of Units.
(e) Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to this Section 5.2 be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
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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) Each item of Partnership income, gain, loss and deduction
attributable to a transferred Partnership Interest of the General Partner or to
transferred Units shall, for federal income tax purposes, be determined on an
annual basis and prorated on a monthly basis and shall be allocated to the
Partners as of the close of the New York Stock Exchange on the last day of the
preceding month; provided, however, that gain or loss on a sale or other
disposition of any assets of the Partnership other than in the ordinary course
of business shall be allocated to the Partners as of the opening of the New York
Stock Exchange on the first Business Day of the month in which such gain or loss
is recognized for federal income tax purposes. The General Partner may revise,
alter or otherwise modify such methods of allocation as it determines necessary,
to the extent permitted or required by Section 706 of the Code and the
regulations or rulings promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited Partner under
the provisions of this Article 5 shall instead be made to the beneficial owner
of Units held by a nominee in any case in which the nominee has furnished the
identity of such owner to the Partnership in accordance with Section 6031(c) of
the Code or any other method acceptable to the General Partner in its sole
discretion.
5.3 Requirement and Characterization of Distributions. Within fifty
days following the end of each calendar quarter, an amount equal to 100% of
Available Cash with respect to such quarter (or period) shall be distributed in
accordance with this Article 5 by the Partnership to the Partners, as of the
Record Date selected by the General Partner in its reasonable discretion. All
amounts of Available Cash distributed by the Partnership on any date from any
source shall be deemed to be Cash from Operations until the sum of all amounts
of Available Cash theretofore distributed by the Partnership to Partners
pursuant to Section 5.4 equals the aggregate amount of all Cash from Operations
of the Partnership from the Partnership Inception through the end of he calendar
quarter prior to such distribution. Any remaining amounts of Available Cash
distributed by the Partnership on such date shall, except as otherwise provided
in Section 5.5, be deemed to be Cash from Interim Capital Transactions.
5.4 Allocations of Distributions. Available Cash that is deemed to be
Cash from Operations pursuant to the provisions of Section 5.3 or 5.5 shall be
distributed as follows:
(a) First, 99% to all Limited Partners, in accordance with
their respective Percentage Interest, and 1.0% to the General Partner
until there has been distributed in respect of each Unit then
Outstanding an amount equal to the Minimum Quarterly Distribution;
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(b) Second, 85.87% to all Limited Partners, in accordance with
their respective Percentage Interest, and 14.13% to the General Partner
until there has been distributed in respect of each Unit then
Outstanding an amount equal to the First Target Distribution;
(c) Third, 75.77% to all Limited Partners, in accordance with
their respective Percentage Interests, and 24.33% to the General
Partner until there has been distributed in respect of each Unit then
Outstanding an amount equal to the Second Target Distribution; and
(d) Fourth, 50.51% to all Limited Partners, in accordance with
their respective Percentage Interest, and 49.49% to the General
Partner.
Provided, however, if the Minimum Quarterly Distribution, the First
Target Distribution and the Second Target Distribution have been reduced to zero
pursuant to Section 5.7(a)(ii), then distributions of Available Cash
constituting Cash from Operations with respect to any quarter will be made 99%
to all Limited Partners in accordance with their respective Percentage Interest
and l% to the General Partner until there has been distributed in respect of
each Unit then outstanding Cash from Operations since Partnership Inception
equal to the Minimum Quarterly Distribution (as from time to time adjusted) for
all periods since Partnership Inception, and thereafter in accordance with
Section 5.4(d) above.
5.5 Distributions of Cash from Interim Capital Transactions. Available
Cash that constitutes Cash from Interim Capital Transactions shall be
distributed, unless the provisions of Section 5.3 require otherwise, 99% to all
Limited Partners, in accordance with their respective Percentage Interests, and
1.0% to the General Partner until a hypothetical holder of a Unit acquired at
the time of the Initial Offering has received with respect to each Unit, from
Partnership Inception through such date, distributions of Available Cash that
are deemed to be Cash from Interim Capital Transactions in an aggregate amount
per Unit equal to the Initial Unit Price. Thereafter, all Available Cash shall
be distributed as if it were Cash from Operations and shall be distributed in
accordance with Section 5.4.
5.6 Definitions. As used herein,
(a) "Available Cash" means, with respect to any calendar quarter, (i)
the sum of (A) all cash receipts of the Partnership during such quarter from all
sources (including, distributions of cash received from any Subsidiary) and (B)
any reduction in reserves established in prior quarters, less (ii) the sum of
(aa) all cash disbursements of the Partnership during such quarter (including
disbursements for taxes of the Partnership as an entity, debt service and
capital expenditures) and (bb) any reserves established in such quarter in such
amounts as the General Partner determines to be necessary or appropriate in its
reasonable discretion (x) to provide for the proper conduct of the business of
the Partnership or any Subsidiary (including reserves for future rate refunds or
capital expenditures) or (y) to provide funds for distributions with respect to
any of the next four calendar quarters and (cc) any other reserves established
in such quarter in such amounts as the General Partner determines in its
reasonable discretion to be necessary because the distribution of such amounts
would be prohibited by applicable law or by any loan agreement, security
agreement, mortgage, debt instrument or other agreement or obligation to which
the Partnership or any
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Subsidiary is a party or by which it is bound or its assets are subject. Taxes
paid by the Partnership on behalf of, or amounts withheld with respect to, all
or less than all of the Partners shall not be considered cash disbursements of
the Partnership which reduce "Available Cash," but the payment or withholding
thereof shall be deemed to be a distribution of Available Cash to such Partners.
Alternatively, in the discretion of the General Partner, such taxes (if
pertaining to all Partners) may be considered to be cash disbursements of the
Partnership which reduce "Available Cash," but the payment or withholding
thereof shall not be deemed to be a distribution of Available Cash to Partners.
Notwithstanding the foregoing, "Available Cash" shall not include any cash
receipts or reductions in reserves or take into account any disbursements made
or reserves established after commencement of the dissolution and liquidation of
the Partnership.
(b) "Cash from Interim Capital Transactions" means, at any date, such
amounts of Available Cash as are deemed to be Cash from Interim Capital
Transactions pursuant to Section 5.3.
(c) "Cash from Operations" means, at any date but prior to commencement
of the dissolution and liquidation of the Partnership, on a cumulative basis,
$20 million plus all cash receipts of the Partnership or any Subsidiary from
their operations (excluding any cash proceeds from an Interim Capital
Transactions or Termination Capital Transactions) during the period since the
Partnership Inception through such date less the sum of (i) all cash operating
expenditures of the Partnership or any Subsidiary during such period, including,
without limitation, taxes imposed on the Partnership or any Subsidiary as an
entity, (ii) all cash debt service payments of the Partnership or any Subsidiary
during such period (other than payments or prepayments of principal and premium
required by reason of loan agreements (including, covenants and default
provisions therein) or by lenders, in each case in connection with sales or
other dispositions of assets or made in connection with refinancings or
refundings of indebtedness provided, that any payment or prepayment of
principal, whether or not then due, shall be determined at the election and in
the discretion of the General Partner, to be refunded or refinanced by any
indebtedness incurred or to be incurred by the Partnership or any Subsidiary
simultaneously with or within 180 days prior to or after such payment or
prepayment to the extent of the principal amount of such indebtedness so
incurred), (iii) all cash capital expenditures of the Partnership or any
Subsidiary during such period (other than (A) all cash capital expenditures made
to increase the throughput or deliverable capacity or terminaling or storage
capacity (assuming normal operating conditions, including down-time and
maintenance) of the assets of the Partnership or any Subsidiary taken as a
whole, from the throughput or deliverable capacity or terminaling or storage
capacity (assuming normal operating conditions, including down-time and
maintenance) existing immediately prior to such capital expenditures and (B)
cash expenditures made in payment of transaction expenses relating to Interim
Capital Transactions), (iv) an amount equal to the incremental revenues
collected pursuant to a rate increase that are, at such date, subject to
possible refund, (v) any reserves outstanding as of such date which the General
Partner determines in its reasonable discretion to be necessary or appropriate
to provide for the future cash payment of items of the type referred to in
clauses (i) through (iii) of this sentence and (vi) any reserves outstanding as
of such date that the General Partner determines to be necessary or appropriate
in its reasonable discretion to provide funds for distributions with respect to
any one or more of the next four calendar quarters, all as determined on a
consolidated basis and after elimination of' intercompany items and the
Company's general partner interest in the Subsidiaries. Taxes paid by the
Partnership on behalf of, or amounts withheld with respect to, all or less than
all of the Partners shall not be considered cash operating expenditures of the
Partnership which reduce "Cash from
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Operations," but the payment or withholding thereof shall be deemed to be a
distribution of Available Cash constituting Cash From Operations to such
Partners. Alternatively, in the discretion of the General Partner, such taxes
(if pertaining to all Partners) may be considered to be cash disbursements of
the Partnership which reduce "Cash from Operations," but the payment or
withholding thereof shall not be deemed to be a distribution to Partners.
For purposes of the foregoing, reserves do not include reserves
outstanding at Partnership Inception. Cash from Operations shall be deemed to
have been reduced as of January l, 1994, by the amount of the initial $20
million cash balance that shall not have been expended by such date on expansive
capital expenditures. In determining the amount of the $20 million used for
expansive capital expenditures, any increase in Partnership consolidated
indebtedness after the Closing Date (other than working capital borrowings)
shall be deemed to have been used for expansive capital expenditures prior to
the expenditure of such $20 million. Therefore, the $20 million will be deemed
to have been used for expansive capital expenditures only to the extent such
expenditures exceed such increase in indebtedness.
(d) "First Target Distribution" means $0.65 per Unit, subject to
adjustment in accordance with Sections 5.7 and 9.6.
(e) "Interim Capital Transactions" means (i) borrowings and sales of
debt securities (other than for working capital purposes and for items purchased
on open account in the ordinary course of business) by the Partnership or any
Subsidiaries (ii) sales of equity interests by the Partnership or any
Subsidiaries and (iii) sales or other voluntary or involuntary dispositions of
any assets of the Partnership or any Subsidiaries (other than (x) sales or other
dispositions of inventory in the ordinary course of business, (y) sales or other
dispositions of other current assets including accounts receivable or (z) sales
or other dispositions of assets as a part of normal retirements or
replacements), in each case prior to the commencement of the dissolution and
liquidation of the Partnership.
(f) "Minimum Quarterly Distribution" means $0.55 per calendar quarter,
subject to adjustment in accordance with Sections 5.7 and 9.6;
(g) "Net Termination Gain" means, for any taxable period, the sum, if
positive, of all items of income, gain or loss recognized by the Partnership
(including, without limitation, such amounts recognized through a Subsidiary)
from Termination Capital Transactions occurring in such taxable period. The
items included in the determination of Net Termination Gain shall be determined
in accordance with Section 4.3(b) and shall not include any items of income,
gain or loss specifically allocated under Section 5.1(d). Once an item of
income, gain or loss that has been included in the initial computation of Net
Termination Gain is subjected to a Required Allocation or a Curative Allocation,
the applicable Net Termination Gain or Net Termination Loss shall be recomputed
without regard to such item.
(h) "Net Termination Loss" means, for any taxable period, the sum, if
negative, of all items of income, gain or loss recognized by the Partnership
(including, without limitation, such amounts recognized through a Subsidiary)
from Termination Capital Transactions occurring in such taxable period. The
items included in the determination of Net Termination Loss shall be determined
in accordance with Section 4.3(b) and shall not include any items of income,
gain or loss specifically
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allocated under Section 5.1(d). Once an item of gain or loss that has been
included in the initial computation of Net Termination Loss is subjected to a
Required Allocation or a Curative Allocation, the applicable Net Termination
Gain or Net Termination Loss shall be recomputed without regard to such item.
(i) "Second Target Distribution" means $0.90 per Unit, subject to
adjustment in accordance with Sections 5.7 and 9.6.
(j) "Termination Capital Transactions" means any sale, transfer or
other disposition of property of the Partnership or the Operating Partnership
occurring upon or incident to the liquidation and winding up of the Partnership
and the Operating Partnership pursuant to Article 14.
5.7 Adjustment of Minimum Quarterly Distribution, Target Distribution
Levels and Unrecovered Initial Unit Price. (a)(i) The Minimum Quarterly
Distribution, First Target Distribution Second Target Distribution and
Unrecovered Initial Unit Price shall be proportionately adjusted in the event of
any distribution, combination or subdivision (whether effected by a distribution
payable in Units or otherwise) of Units or other Partnership Securities in
accordance with Section 4.8.
(ii) In the event of a distribution of Available Cash that is deemed to
be Cash from Interim Capital Transactions, the Minimum Quarterly Distribution,
First Target Distribution and Second Target Distribution shall be adjusted
proportionately downward to equal the product obtained by multiplying the
otherwise applicable Minimum Quarterly Distribution, First Target Distribution
and Second Target Distribution, as the case may be, by a fraction of which the
numerator is the Unrecovered Initial Unit Price immediately after giving effect
to such distribution and of which the denominator is the Unrecovered Initial
Unit Price immediately prior to giving effect to such distribution.
(b) The Minimum Quarterly Distribution and First and Second Target
Distributions may also be adjusted if legislation is enacted which causes the
Partnership to become taxable as a corporation or otherwise taxable as an entity
for federal income tax purposes. In such event, the Minimum Quarterly
Distribution and First and Second Target Distributions for each quarter
thereafter would be reduced to an amount equal to the product of (i) each of the
Minimum Quarterly Distribution and First and Second Target Distributions
multiplied by (ii) l minus the sum of (x) the maximum marginal federal income
tax rate to which the Partnership is subject as an entity (expressed as a
fraction) plus (y) any increase that results from such legislation in the
effective overall state and local income tax rate to which the Partnership is
subject as an entity (expressed as a fraction) for the taxable year in which
such quarter occurs (after taking into account the benefit of any deduction
allowable for federal income tax purposes with respect to the payment of state
and local income taxes).
ARTICLE 6 - MANAGEMENT AND OPERATION OF BUSINESS
6.1 Management. (a) The General Partner shall conduct, direct and
exercise full control over all activities of the Partnership. Except as
otherwise expressly provided in this Agreement, all management powers over the
business and affairs of the Partnership shall be exclusively vested in
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the General Partner, and no Limited Partner or Assignee shall have any right of
control or management power over the business and affairs of the Partnership. In
addition to the powers now or hereafter granted a general partner of a limited
partnership under applicable law or which are granted to the General Partner
under any other provision of this Agreement, the General Partner, subject to
Section 6.3, shall have full power and authority to do all things and on such
terms as it, in its sole discretion, may deem necessary or desirable (i) to
conduct the business of the Partnership, to exercise all powers set forth in
Section 3.2 and to effectuate the purposes set forth in Section 3.1, including,
without limitation, (A) the making of any expenditures, the lending or borrowing
of money, the assumption or guarantee of, or other contracting for, indebtedness
and other liabilities, the issuance of evidences of indebtedness and the
incurring of any other obligations and the securing of same by mortgage, deed of
trust or other lien or encumbrance; (B) the making of tax, regulatory and other
filings, or rendering of periodic or other reports to governmental or other
agencies having jurisdiction over the business or assets of the Partnership, (C)
the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or
exchange of any or all of the assets of the Partnership or the merger or other
combination of the Partnership with or into another Person (the matters
described in this clause (C) being subject, however, to any prior approval that
may be required by Section 6.3); (D) the use of the assets of the Partnership
(including, without limitation, cash on hand) for any purpose consistent with
the terms of this Agreement, including, without limitation, the financing of the
conduct of the operations of the Partnership or any Subsidiary, the lending of
funds to other Persons (including, without limitation, any Subsidiary) and the
repayment of obligations of the Partnership and any Subsidiary and the making of
capital contributions to any Subsidiary; (E) the negotiation, execution and
performance of any contracts, conveyances or other instruments (including,
without limitation, instruments that limit the liability of the Partnership
under contractual arrangements to all or particular assets of the Partnership,
with the other party to the contract to have no recourse against the General
Partner or its assets other than its interest in the Partnership, even if same
results in the terms of the transaction being less favorable to the Partnership
than would otherwise be the case); (F) the distribution of Partnership cash; (G)
the selection and dismissal of employees and agents (including, without
limitation, employees having titles such as "president," "vice president,"
"secretary" and "treasurer") and agents, outside attorneys, accountants,
consultants and contractors and the determination of their compensation and
other terms of employment or hiring; (H) the maintenance of such insurance for
the benefit of the Partnership and the Partners as it deems necessary or
appropriate; (I) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general partnerships,
limited liability companies, joint ventures or other relationships (including,
without limitation, the acquisition of interests in, and the contributions of
property to, any Subsidiary from time to time); (J) the control of any matters
affecting the rights and obligations of the Partnership, including, without
limitation, the bringing and defending of actions at law or in equity and
otherwise engaging in the conduct of litigation and the incurring of legal
expense and the settlement of claims and litigation; (K) the indemnification of
any person against liabilities and contingencies to the extent permitted by law;
(L) the entering into of listing agreements with the New York Stock Exchange and
any other securities exchange and the delisting of some or all of the Units of
other Partnership Securities from, or requesting that trading be suspended on,
any such exchange (subject to any prior approval that may be required under
Section 1.6); and (M) the purchase, sale or other acquisition or disposition of
Units or other Partnership Securities; and (ii) the undertaking of any action in
connection with the Partnership's interest in any Subsidiary (including, without
limitation, contributions or loans of funds by the Partnership to a Subsidiary).
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(b) For so long as the Company or any Affiliate of Duke is the General
Partner of the Partnership, the General Partner shall provide insurance to the
Partnership covering its assets and operations on terms and conditions as it
shall deem appropriate in its sole discretion.
6.2 Certificate of Limited Partnership. The General Partner has caused
the Certificate of Limited Partnership to be filed with the Secretary of State
of the State of Delaware as required by the Delaware Act and shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be determined by the General Partner in its sole discretion to be reasonable
and necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the extent
that such action is determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws
of the State of Delaware or of any other state in which the Partnership may
elect to do business or own property. Subject to the terms of Section 7.5(a),
the General Partner shall not be required, before or after filing, to deliver or
mail a copy of the Certificate of Limited Partnership, any qualification
document or any amendment thereto to any Limited Partner or Assignee.
6.3 Restrictions on General Partner's Authority. (a) The General
Partner may not, without written approval of the specific act by all of the
Limited Partners or by other written instrument executed and delivered by all of
the Limited Partners subsequent to the date of this Agreement, take any action
in contravention of this Agreement, including, without limitation, (i) any act
that would make it impossible to carry on the ordinary business of the
Partnership, except as otherwise provided in this Agreement; (ii) possess
Partnership property, or assign any rights in specific Partnership property, for
other than a Partnership purpose; (iii) admit a Person as a Partner, except as
otherwise provided in this Agreement; (iv) amend this Agreement in any manner,
except as otherwise provided in this Agreement; or (v) transfer its interest as
general partner of the Partnership, except as otherwise provided in this
Agreement.
(b) Except as provided in Article 14, the General Partner may not sell,
exchange or otherwise dispose of all or substantially all of the Partnership's
assets in a single transaction or a series of related transactions (including by
way of merger, consolidation or other combination with any other Person) or
approve on behalf of the Partnership the sale, exchange or other disposition of
all or substantially all of the assets of the Operating Partnership, without the
approval of at least a majority of the Outstanding Units; provided, however,
that this provision shall not preclude or limit the General Partner's ability to
mortgage, pledge, hypothecate or grant a security interest in all or
substantially all of the Partnership's assets or the assets of any Subsidiary
and shall not apply to any forced sale of any or all of the Partnership's assets
or the assets of any Subsidiary pursuant to the foreclosure of, or other
realization upon, any such encumbrance. Without the approval of at least 66 2/3%
of the Outstanding Units, the General Partner shall not, on behalf of the
Partnership, (i) consent to any amendment to the Operating Partnership Agreement
or, except as expressly permitted by Section 6.9(d), take any action permitted
to be taken by the limited partner of the Operating Partnership, in either case,
that would adversely affect the Partnership as the limited partner of the
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Operating Partnership or (ii) except as permitted under Sections 11.2 and 13.1,
elect or cause the Partnership to elect a successor general partner of the
Operating Partnership.
(c) Unless approved by the affirmative vote of at least 66 2/3% of the
Outstanding Units, the General Partner shall not take any action or refuse to
take any reasonable action the effect of which, if taken or not taken, as the
case may be, would be to cause the Partnership or the Operating Partnership to
be taxable as a corporation or otherwise taxed as an entity for federal income
tax purposes.
(d) At all times while serving as the general partner of the
Partnership, the General Partner shall not make any dividend or distribution on,
or repurchase any shares of, its stock or take any other action within its
control if the effect of such dividend, distribution, repurchase or other action
would be to reduce its net worth below an amount necessary to receive an Opinion
of Counsel that the Partnership will be treated as a partnership for federal
income tax purposes.
6.4 Reimbursement of the General Partner. (a) Except as provided in
this Section 6.4 and elsewhere in this Agreement or in the Operating Partnership
Agreement, the General Partner shall not be compensated for its services as
general partner of the Partnership or any Subsidiary.
(b) The General Partner shall be reimbursed on a monthly basis, or such
other basis as the General Partner may determine in its sole discretion, for (i)
all direct and indirect expenses it incurs or payments it makes on behalf of the
Partnership (including, without limitation, amounts paid to any Person to
perform services for the Partnership) and (ii) that portion of the General
Partner's or its Affiliates' legal, accounting, investor communications,
utilities, telephone, secretarial, travel, entertainment, bookkeeping,
reporting, data processing, office rent and other office expenses (including,
without limitation, overhead charges), salaries, fees and other compensation and
benefit expenses of employees, officers and directors, insurance, other
administrative or overhead expenses and all other expenses, in each such case,
necessary or appropriate to the conduct of the Partnership's business and
allocable to the Partnership or otherwise incurred by the General Partner in
connection with operating the Partnership's business (including, without
limitation, expenses allocated to the General Partner by its Affiliates). The
General Partner shall determine the fees and expenses that are allocable to the
Partnership in any reasonable manner determined by the General Partner in its
sole discretion. Such reimbursements shall be in addition to any reimbursement
to the General Partner as a result of indemnification pursuant to Section 6.7.
(c) The General Partner in its sole discretion and without the approval
of the Limited Partners may propose and adopt on behalf of the Partnership
employee benefit plans (including, without limitation, plans involving the
issuance of Units), for the benefit of employees of the General Partner, the
Partnership, any Subsidiary or any Affiliate of any of them in respect of
services performed, directly or indirectly, for the benefit of the Partnership
or any Subsidiary.
6.5 Outside Activities. (a) After the Closing Date, the General Partner
shall limit its activities to those required or authorized by the Operating
Partnership Agreement or this Agreement.
(b) Except as provided in Section 6.5(a), each Indemnitee is free to
engage in any business, including any business that is in competition with the
business of the Partnership. The
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General Partner and any other Persons affiliated with the General Partner may
acquire Units or other Partnership Securities and shall be entitled to exercise
all rights of an Assignee or Limited Partner, as applicable, relating to such
Units or Partnership Securities, as the case may be.
(c) Without limiting Sections 6.5(a) and 6.5(b), but notwithstanding
anything to the contrary in this Agreement, the competitive activities of
Indemnitees described in the Registration Statement are hereby approved by all
Partners, and it shall not be deemed to be a breach of the General Partner's
fiduciary duty for the General Partner to permit an Indemnitee to engage in a
business opportunity in preference to or to the exclusion of the Partnership.
6.6 Loans to and from the General Partner; Contracts with Affiliates.
(a) The General Partner or any Affiliate thereof may lend to the Partnership or
any Subsidiary, and the Partnership and any Subsidiary may borrow, funds needed
or desired by the Partnership and any Subsidiary for such periods of time as the
General Partner may determine; provided, however, that the General Partner or
any of its Affiliates may not charge the Partnership or any Subsidiary interest
at a rate greater than the rate that would be charged the Partnership or any
Subsidiary, as the case may be (without reference to the General Partner's
financial abilities or guarantees) by unrelated lenders on comparable loans. The
Partnership or the Subsidiary, as the case may be, shall reimburse the General
Partner or any of its Affiliates, as the case may be, for any costs (other than
any additional interest costs) incurred by it in connection with the borrowing
of funds obtained by the General Partner or any of its Affiliates and loaned to
the Partnership or the Subsidiary.
(b) The Partnership may lend or contribute to any Subsidiary, and any
Subsidiary may borrow, funds on terms and conditions established in the sole
discretion of the General Partner. The foregoing authority shall be exercised by
the General Partner in its sole discretion and shall not create any right or
benefit in favor of any Subsidiary or any other Person. The Partnership may not
lend funds to the General Partner or any of its Affiliates, otherwise than for
short-term funds management purposes.
(c) The General Partner may itself, or may enter into an agreement with
any of its Affiliates to, render services to the Partnership. Any service
rendered to the Partnership by the General Partner or any of its Affiliates
shall be on terms that are fair and reasonable to the Partnership; provided,
however, that the requirements of this Section 6.6(c) shall be deemed satisfied
as to any transaction the terms of which are no less favorable to the
Partnership than those generally being provided to or available from unrelated
third parties. The provisions of Section 6.4 shall apply to the rendering of
services described in this Section 6.6(c).
(d) The Partnership may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(e) Neither the General Partner nor any of its Affiliates shall sell,
transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the requirements
of this Section 6.6(e) shall be deemed to be satisfied as to any transaction the
terms of
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which are no less favorable to the Partnership than those generally
being provided to or available from unrelated third parties.
(f) The General Partner and its Affiliates will have no obligation to
permit the Partnership or any Subsidiary to use any facilities of the General
Partner and its Affiliates, except as may be provided in contracts entered into
from time to time specifically dealing wish such use, nor shall there be any
obligation on the General Partner or its Affiliates to enter into such
contracts.
(g) Without limitation of Sections 6.6(a) through 6.6(f), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement under the caption
"Conflicts of Interest and Fiduciary Responsibility" are hereby approved by all
Partners.
6.7 Indemnification. (a) To the fullest extent permitted by law but
subject to the limitations expressly provided in this Agreement, each Indemnitee
shall be indemnified and held harmless by the Partnership from and against any
and all losses, claims, damages, liabilities (joint or several), expenses
(including, without limitation, legal fees and expenses), judgments, fines,
settlements and other amounts arising from any and all claims, demands, actions,
suits or proceedings, whether civil, criminal, administrative or investigative,
in which any Indemnitee may be involved, or is threatened to be involved, as a
party or otherwise, by reason of its status as (i) the General Partner, a
Departing Partner or any of their Affiliates, (ii) an officer, director,
employee, partner, agent or trustee of the General Partner, any Departing
Partner or any of their Affiliates or (iii) a Person serving at the request of
the Partnership in another entity in a similar capacity, provided, that in each
case the Indemnitee acted in good faith, in a manner which such Indemnitee
believed to be in, or not opposed to, the best interests of the Partnership and,
with respect to any criminal proceeding, had no reasonable cause to believe its
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that the Indemnitee acted in a
manner contrary to that specified above. Any indemnification pursuant to this
Section 6.7 shall be made only out of the assets of the Partnership.
(b) To the fullest extent permitted by law, expenses (including,
without limitation, legal fees and expenses) incurred by an Indemnitee in
defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Partnership prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Partnership of an
undertaking by or on behalf of the Indemnitee to repay such amount if it shall
be determined that the Indemnitee is not entitled to be indemnified as
authorized in this Section 6.7.
(c) The indemnification provided by this Section 6.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, both as to actions in the Indemnitees' capacity as (i) the General
Partner, a Departing Partner or an Affiliate thereof, (ii) an officer, director,
employee, partner, agent or trustee of the General Partner, any Departing
Partner or an Affiliate thereof or (iii) a Person serving at the request of the
Partnership in another entity in a similar capacity, and shall continue as to an
Indemnitee who has ceased to serve in such capacity and as to actions in any
other capacity.
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(d) The Partnership may purchase and maintain (or reimburse the General
Partner or its Affiliates for the cost of) insurance, on behalf of the General
Partner and such other Persons as the General Partner shall determine, against
any liability that may be asserted against or expense that may be incurred by
such Person in connection with the Partnership's activities, whether or not the
Partnership would have the power to indemnify such Person against such
liabilities under the provisions of this Agreement.
(e) For purposes of this Section 6.7, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by it of its duties to the Partnership also
imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of Section 6.7(a); and action taken
or omitted by it with respect to an employee benefit plan in the performance of
its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 6.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 6.7 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Partnership, nor
the obligation of the Partnership to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 6.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
6.8 Liability of Indemnitees. (a) Notwithstanding anything to the
contrary set forth in this Agreement, no Indemnitee shall be liable for monetary
damages to the Partnership, the Limited Partners, the Assignees or any other
Persons who have acquired interests in the Units or other Partnership
Securities, for losses sustained or liabilities incurred as a result of any act
or omission if such Indemnitee acted in good faith.
(b) Subject to its obligations and duties as General Partner set forth
in Section 6.1(a), the General Partner may exercise any of the powers granted to
it by this Agreement and perform any of the duties imposed upon it hereunder
either directly or by or through its agents, and the General
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Partner shall not be responsible for any misconduct or negligence on the part of
any such agent appointed by the General Partner in good faith.
(c) Any amendment, modification or repeal of this Section 6.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Partnership and the Limited Partners of the
General Partner, its directors, officers and employees under this Section 6.8 as
in effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
6.9 Resolution of Conflicts of Interest. (a) Unless otherwise expressly
provided in this Agreement or the Operating Partnership Agreement whenever a
potential conflict of interest exists or arises between the General Partner or
any of its Affiliates, on the one hand, and the Partnership or any Subsidiary,
any Partner or any Assignee, on the other hand, any resolution or course of
action in respect of such conflict of interest shall be permitted and deemed
approved by all Partners, and shall not constitute a breach of this Agreement,
of the Operating Partnership 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 General Partner shall be authorized in
connection with its resolution of any conflict of interest to consider (i) the
relative interests of any party to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interest; (ii) any
customary or accepted industry practices and any customary or historical
dealings with a particular Person; (iii) any applicable generally accepted
accounting or engineering practices or principles; and (iv) such additional
factors as the General Partner determines in its sole discretion to be relevant,
reasonable or appropriate under the circumstances. Nothing contained in this
Agreement, however, is intended to nor shall it be construed to require the
General Partner to consider the interests of any Person other than the
Partnership. In the absence of bad faith by the General Partner, the resolution,
action or terms so made, taken or provided by the General Partner with respect
to such matter shall not constitute a breach of this Agreement or any other
agreement contemplated herein or a breach of any standard of care or duty
imposed herein or therein or under the Delaware Act or any other law, rule or
regulation.
(b) Whenever this Agreement or any other agreement contemplated hereby
provides that a General Partner or any of its Affiliates is permitted or
required to make a decision (i) in its "sole discretion" or "discretion," that
it deems "necessary or appropriate" or under a grant of similar authority or
latitude, the General Partner or such Affiliate shall be entitled to consider
only such interests and factors as it desires and shall have no duty or
obligation to give any consideration to any interest of, or factors affecting,
the Partnership or any Subsidiary, any Limited Partner or any Assignee, or (ii)
in "good faith" or under another express standard, the General Partner or such
Affiliate shall act under such express standard and shall not be subject to any
other or different standards imposed by this Agreement, the Operating
Partnership 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 General Partner consistent with the standards of "reasonable
discretion" set forth in the definitions of Available Cash or Cash from
Operations shall not constitute a breach of any duty of the General Partner to
the Partnership or the Limited Partners. The General Partner shall have no duty,
express or implied, to sell or otherwise dispose of any asset of any Subsidiary
or of the
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Partnership, other than in the ordinary course of business. No borrowing by the
Partnership or any Subsidiary or the approval thereof by the General Partner
shall be deemed to constitute a breach of any duty of the General Partner to the
Partnership or the Limited Partners by reason of the fact that the purpose or
effect of such borrowing is directly or indirectly to enable the General Partner
to receive incentive distributions.
(c) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
(d) The Limited Partners hereby authorize the General Partner, on
behalf of the Partnership as limited partner of the Operating Partnership, to
approve of actions by the general partner of the Operating Partnership similar
to those actions permitted to be taken by the General Partner pursuant to this
Section 6.9.
6.10 Other Matters Concerning the General Partner. (a) The General
Partner may rely and shall be protected in acting or refraining from acting upon
any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, or other paper or document believed by
it to be genuine and to have been signed or presented by the proper party or
parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted in reliance upon the
opinion (including, without limitation, an Opinion of Counsel) of such Persons
as to matters that such General Partner reasonably believes to be within such
Person's professional or expert competence shall be conclusively presumed to
have been done or omitted in good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform each and every act and duty that
is permitted or required to be done by the General Partner hereunder.
(d) Any standard of care and duty imposed by this Agreement or under
the Delaware Act or any applicable law, rule or regulation shall be modified,
waived or limited as required to permit the General Partner to act under this
Agreement or any other agreement contemplated by this Agreement and to make any
decision pursuant to the authority prescribed in this Agreement so long as such
action is reasonably believed by the General Partner to be in the best interests
of the Partnership.
6.11 Title to Partnership Assets. Title to Partnership assets, whether
real, personal or mixed and whether tangible or intangible, shall be deemed to
be owned by the Partnership as an entity, and no Partner or Assignee,
individually or collectively, shall have any ownership interest in such
Partnership assets or any portion thereof. Title to any or all of the
Partnership assets may be
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held in the name of the Partnership, the General Partner or one or more
nominees, as the General Partner may determine. The General Partner hereby
declares and warrants that any Partnership assets for which record title is held
in the name of the General Partner shall be held by the General Partner for the
use and benefit of the Partnership in accordance with the provisions of this
Agreement; provided, however, that the General Partner shall use its reasonable
efforts to cause record title to such assets (other than those assets in respect
of which the General Partner determines that the expense and difficulty of
conveyancing makes transfer of record title to the Partnership impracticable) to
be vested in the Partnership as soon as reasonably practicable. All Partnership
assets shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which record title to such Partnership
assets are held.
6.12 Purchase or Sale of Units. The General Partner may cause the
Partnership to purchase or otherwise acquire Units or other Partnership
Securities. As long as Units are held by the Partnership or any Subsidiary, such
Units shall not be considered Outstanding for any purpose, except as otherwise
provided herein. The General Partner or any Affiliate of the General Partner may
also purchase or otherwise acquire and sell or otherwise dispose of Units or
other Partnership Securities for its own account, subject to the provisions of
Articles 11 and 12.
6.13 Reliance by Third Parties. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any contracts on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if it were the
Partnership's sole party in interest, both legally and beneficially. Each
Limited Partner hereby waives any and all defenses or other remedies that may be
available against such Person to contest, negate or disaffirm any action of the
General Partner in connection with any such dealing. In no event shall any
Person dealing with the General Partner or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
its representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (a) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (b) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (c) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
6.14 Registration Rights of Duke and its Affiliates. (a) If (i) Duke or
any of its Affiliates (including, for purposes of this Section 6.14, Persons
that are Affiliates at the date hereof notwithstanding that they may later cease
to be Affiliates) hold Units which it desires to sell and (ii) Rule 144 of the
Securities Act (or any successor rule or regulation to Rule 144) is not
available to enable Duke or such Affiliates to dispose of the number of Units it
desires to sell at the time it desires to do so, then upon the request of Duke
or any of its Affiliates, the Partnership shall file with the Securities and
Exchange Commission as promptly as practicable after receiving such request, and
use all reasonable efforts to cause to become effective and remain effective for
a reasonable period following its effective date, a registration statement under
the Securities Act registering the offering
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and sale of the number of Units specified by Duke or any of its Affiliates;
provided, however, that if the General Partner or, if at the time a request
pursuant to this Section 6.14 is submitted to the Partnership, Duke or its
Affiliate requesting registration is an Affiliate of the General Partner, a
majority of the independent directors of the General Partner determines in its
good faith judgment that a postponement of the requested registration for up to
six months would be in the best interests of the Partnership and its Partners
due to a pending transaction, investigation or other event, the filing of such
registration statement of the effectiveness thereof may be deferred for up to
six months, but not thereafter. In connection with any registration pursuant to
the preceding sentence, the Partnership shall promptly prepare and file (x) such
documents as may be necessary to register or qualify the securities subject to
such registration under the securities laws of such states as Duke or any of its
Affiliates shall reasonably request; provided, however, that no such
qualification shall be required in any jurisdiction where, as a result thereof,
the Partnership would become subject to general service of process or to
taxation or qualification to do business as a foreign corporation doing business
in such jurisdiction, and (y) such documents as may be necessary to apply for
listing or to list the securities subject to such registration on such National
Securities Exchange as Duke or such Affiliates shall reasonably request, and do
any and all other acts and things that may reasonably be necessary or advisable
to enable Duke or any of its Affiliates to consummate a public sale of such
Units in such states. Except as set forth in subsection (c) below, all costs and
expenses of any such registration and offering shall be paid by Duke or any of
its Affiliates, without reimbursement by the Partnership.
(b) If the Partnership shall at any time propose to file a registration
statement under the Securities Act for an offering of Units of the Partnership
for cash (other than an offering relating solely to an employee benefit plan);
the Partnership shall use its best efforts to include such number or amount of
Units held by Duke and any of its Affiliates in such registration statement as
Duke or any of such Affiliates shall request. If the proposed offering pursuant
to this Section 6.14(b) shall be an underwritten offering, then, in the event
that the managing underwriter of such offering advises the General Partner and
Duke or any of such Affiliates in writing that in its opinion the inclusion of
all or some of Duke's or any of its Affiliates' Units would adversely and
materially affect the success of the offering, the Partnership shall include in
such offering only that number or amount, if any, of securities held by Duke or
any of its Affiliates which, in the opinion of the managing underwriter, will
not so adversely and materially affect the offering. In connection with any
registration pursuant to this Section 6.14(b), Duke or any of its Affiliates
shall bear the expense of all underwriting discounts and commissions
attributable to the Units sold for its own account and shall reimburse the
Partnership for all incremental costs incurred by the Partnership in connection
with such registration resulting from the inclusion of Units held by Duke or any
of its Affiliates.
(c) If underwriters are engaged in connection with any registration
referred to in this Section 6.14, the Partnership shall provide indemnification,
representations, covenants, opinions and other assurance to the underwriters in
form and substance reasonably satisfactory to such underwriters. Further, in
addition to and not in limitation of the Partnership's obligation under Section
6.7 hereof, the Partnership shall, to the fullest extent permitted by law,
indemnify and hold harmless Duke or such other holder, its officers, directors
and each Person who controls Duke or such other holder (within the meaning of
the Securities Act) and any agent thereof (collectively, "Indemnified Persons")
against any losses, claims, demands, actions, causes of action, assessments,
damages, liabilities (joint or several), costs and expenses (including without
limitation, interest,
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penalties and reasonable attorneys' fees and disbursements), resulting to,
imposed upon, or incurred by an Indemnified Person, directly or indirectly,
under the Securities Act or otherwise (hereinafter referred to in this Section
6.14(c) as a "claim" and in the plural as "claims"), based upon, arising out of,
or resulting from any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which any Units were
registered under the Securities Act or any state securities or Blue Sky laws, in
any preliminary prospectus (if used prior to the effective date of such
registration statement), or in any summary or final prospectus or in any
amendment or supplement thereto (if used during the period the Partnership is
required to keep the registration statement current), or arising out of, based
upon or resulting from the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
made therein not misleading; provided, however, that the Partnership shall not
be liable to the extent that any such claim arises out of, is based upon or
results from an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, such preliminary, summary
or final prospectus or such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Partnership by or on behalf
of such Indemnified Person specifically for use in the preparation thereof.
(d) The provisions of Sections 6.14(a) and 6.14(b) hereof shall
continue to be applicable with respect to Duke and its Affiliates after any
affiliate of Duke ceases to be a general partner of the Partnership, during a
period of two years subsequent to the effective date of such cessation and for
so long thereafter as is required for Duke (or its Affiliates) to sell all of
the Units of the Partnership with respect to which it has requested during such
two-year period that a registration statement be filed; provided, however, that
the Partnership shall not be required to file successive registration statements
covering the same securities for which registration was demanded during such
two-year period. The provisions of Section 6.14(c) hereof shall continue in
effect thereafter.
ARTICLE 7 - RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
7.1 Limitation of Liability. The Limited Partners and the Assignees
shall have no liability under this Agreement except as expressly provided in
this Agreement or the Delaware Act.
7.2 Management of Business. No Limited Partner or Assignee (other than
the General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner or any of its Affiliates, in
its capacity as such, if such Person shall also be a Limited Partner or
Assignee) shall take part in the operation, management or control (within the
meaning of the Delaware Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner or any of its Affiliates, in
its capacity as such, shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners or Assignees under this Agreement.
7.3 Outside Activities. Subject to the provisions of Section 6.5, which
shall continue to be applicable to the Persons referred to therein, regardless
of whether such Persons shall also be Limited Partners or Assignees, any Limited
Partner or Assignee shall be entitled to and may have business interests and
engage in business activities in addition to those relating to the Partnership,
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including, without limitation, business interests and activities in direct
competition with the Partnership or a Subsidiary. Neither the Partnership nor
any of the other Partners or Assignees shall have any rights by virtue of this
Agreement in any business ventures of any Limited Partner or Assignee.
7.4 Return of Capital. No Limited Partner shall be entitled to the
withdrawal or return of his Capital Contribution, except to the extent, if any,
that distributions made pursuant to this Agreement or upon termination of the
Partnership may be considered as such by law and then only to the extent
provided for in this Agreement. Except to the extent provided by Article 5 or as
otherwise expressly provided in this Agreement, no Limited Partner or Assignee
shall have priority over any other Limited Partner or Assignee either as to the
return of Capital Contributions or as to profits, losses or distributions. Any
such return shall be a compromise to which all Partners and Assignees agree
within the meaning of Section 17.502(b) of the Delaware Act.
7.5 Rights of Limited Partners Relating to the Partnership. (a) In
addition to other rights provided by this Agreement or by applicable law, and
except as limited by Section 7.5(b), each Limited Partner shall have the right,
for a purpose reasonably related to such Limited Partner's interest as a limited
partner in the Partnership, upon reasonable demand and at such Limited Partner's
own expense:
(i) to obtain true and full information regarding the status
of the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of
the Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to him, upon notification to the
General Partner, a current list of the name and last known business,
residence or mailing address of each Partner;
(iv) to have furnished to him, upon notification to the
General Partner, a copy of this Agreement and the Certificate of
Limited Partnership and all amendments thereto;
(v) to obtain true and full information regarding the amount
of cash and description and statement of the Agreed Value of any other
Capital Contribution by each Partner and which each Partner has agreed
to contribute in the future, and the date on which each became a
Partner; and
(vi) to obtain such other information regarding the affairs of
the Partnership as is just and reasonable.
(b) Notwithstanding any other provision of this Agreement, the General
Partner may keep confidential from the Limited Partners and Assignees for such
period of time as the General Partner deems reasonable, any information that the
General Partner reasonably believes to be in the nature of trade secrets or
other information the disclosure of which the General Partner in good faith
believes is not in the best interest of the Partnership or could damage the
Partnership or any
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Subsidiary or that the Partnership or a Subsidiary is required by law or by
agreements with third parties to keep confidential.
ARTICLE 8 - BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 Records and Accounting. The General Partner shall keep or cause to
be kept at the principal office of the Partnership appropriate books and records
with respect to the Partnership's business including, without limitation, all
books and records necessary to provide to the Limited Partners any information,
lists and copies of documents required to be provided pursuant to Section
7.5(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including, without limitation, the record of
the Record Holders and Assignees of Units or other Partnership Securities, books
of account and records of Partnership proceedings, may be kept on, or be in the
form of, computer disks, hard disks, punch cards, magnetic tape, photographs,
micrographics or any other information storage device, provided, that the books
and records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial reporting purposes, on an accrual basis in accordance
with generally accepted accounting principles.
8.2 Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
8.3 Reports. (a) As soon as practicable, but in no event later than 120
days after the close of each Partnership Year, the General Partner shall cause
to be mailed to each Record Holder of a Unit as of a date selected by the
General Partner in its sole discretion, an annual report containing financial
statements of the Partnership for such Partnership Year, presented in accordance
with generally accepted accounting principles, including a balance sheet and
statements of operations, Partners' equity and cash flows, such statements to be
audited by a firm of independent public accountants selected by the General
Partner.
(b) As soon as practicable, but in no event later than ninety days
after the close of each calendar quarter except the last calendar quarter of
each year, the General Partner shall cause to be mailed to each Record Holder of
a Unit, as of a date selected by the General Partner in its sole discretion, a
report containing unaudited financial statements of the Partnership and such
other information as may be required by applicable law, regulation or rule of
any National Securities Exchange on which the Units are listed for trading, or
as the General Partner determines to be necessary or appropriate.
ARTICLE 9 - TAX MATTERS
9.1 Preparation of Tax Returns. The General Partner shall arrange for
the preparation and timely filing of all returns of Partnership income, gains,
deductions, losses and other items required of the Partnership for federal and
state income tax purposes and shall use all reasonable efforts to furnish,
within ninety days of the close of each taxable year of the Partnership, the tax
information reasonably required by Unitholders for federal and state income tax
reporting purposes. The classification, realization and recognition of income,
gain, losses and deductions and other items shall be on the accrual method of
accounting for federal income tax purposes. The taxable year of the Partnership
shall be the calendar year.
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9.2 Tax Elections. Except as otherwise provided herein, the General
Partner shall in its sole discretion, determine whether to make any available
election pursuant to the Code; provided, however, that the General Partner shall
make the election under Section 754 of the Code in accordance with applicable
regulations thereunder. The General Partner shall have the right to seek to
revoke any such election (including, without limitation, the election under
Section 754 of the Code) upon the General Partner's determination in its sole
discretion that such revocation is in the best interests of the Limited Partners
and Assignees. For purposes of computing the adjustments under Section 743(b) of
the Code, the General Partner shall be authorized (but not required) to adopt a
convention whereby the price paid by a transferee of Units will be deemed to be
the lowest quoted trading price of the Units on any National Securities Exchange
on which such Units are traded during the calendar month in which such transfer
is deemed to occur pursuant to Section 5.2(g) without regard to the actual price
paid by such transferee.
9.3 Tax Controversies. Subject to the provisions hereof, the General
Partner is designated the Tax Matters Partner (as defined in Section 6231 of the
Code), and is authorized and required to represent the Partnership (at the
Partnership's expense) in connection with all examinations of the Partnership's
affairs by tax authorities, including, without limitation, resulting
administrative and judicial proceedings, and to expend Partnership funds for
professional services and costs associated therewith. Each Partner and Assignee
agrees to cooperate with the General Partner and to do or refrain from doing any
or all things reasonably required by the General Partner to conduct such
proceedings.
9.4 Organizational Expenses. The Partnership shall elect to deduct
expenses, if any, incurred by it in organizing the Partnership ratably over a
sixty-month period as provided in Section 709 of the Code.
9.5 Withholding. Notwithstanding any other provision of this Agreement,
the General Partner is authorized to take any action that it determines in its
sole discretion to be necessary or appropriate to cause the Partnership and its
Subsidiaries to comply with any withholding requirements established under the
Code or any other federal, state or local law including, without limitation,
pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that
the Partnership is required to withhold and pay over to any taxing authority any
amount resulting from the allocation or distribution of income to any Partner or
Assignee (including, without limitation, by reason of Section 1446 of the Code),
the amount withheld shall be treated as a distribution of cash pursuant to
Section 5.3 in the amount of such withholding from such Partner.
9.6 Entity-Level Taxation. If legislation is enacted that causes the
Partnership to become treated as an association taxable as a corporation for
federal income tax purposes or otherwise subjects the Partnership to
entity-level taxation for federal income tax purposes, the Minimum Quarterly
Distribution, First Target Distribution or Second Target Distribution, as the
case may be, shall be equal to the product obtained by multiplying (a) the
amount thereof by (b) l minus the sum of (x) the highest marginal federal
corporate (or other entity, as applicable) income tax rate for the Partnership
Year in which such quarter occurs (expressed as a percentage) plus (y) any
increase that results from such legislation in the effective overall state and
local income tax rate (expressed as a percentage) applicable to the Partnership
for the calendar year next preceding the calendar year in which such quarter
occurs (after taking into account the benefit of any deduction allowable for
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federal income tax purposes with respect to the payment of state and local
income taxes). Such effective overall state and local income tax rate shall be
determined for the calendar year next preceding the first calendar year during
which the Partnership is taxable for federal income tax purposes as a
corporation or otherwise taxed as an entity by determining such rate as if the
Partnership had been subject to such state and local taxes during such preceding
calendar year.
9.7 Entity-Level Arrearage Collections. If the Partnership is required
by applicable law to pay any federal, state or local income tax on behalf of, or
withhold such amount with respect to, any Partner or Assignee or any former
Partner or Assignee (a) the General Partner shall cause the Partnership to pay
such tax on behalf of such Partner or Assignee or former Partner or Assignee
from the funds of the Partnership; (b) any amount so paid on behalf of, or
withheld with respect to, any Partner or Assignee shall constitute a
distribution out of Available Cash to such Partner or Assignee pursuant to
Section 5.3 (except as otherwise provided in Section 5.6(a)); and (c) to the
extent any such Partner or Assignee (but not a former Partner or Assignee) is
not then entitled to such distribution under this Agreement, the General Partner
shall be authorized, without the approval of any Partner or Assignee, to amend
this Agreement insofar as is necessary to maintain the uniformity of intrinsic
tax characteristics as to all Units and to make subsequent adjustments to
distributions in a manner which, in the reasonable judgment of the General
Partner, will make as little alteration as practicable in the priority and
amount of distributions otherwise applicable under this Agreement, and will not
otherwise alter the distributions to which Partners and Assignees are entitled
under this Agreement. If the Partnership is permitted (but not required) by
applicable law to pay any such tax on behalf of any Partner or Assignee or
former Partner or Assignee, the General Partner shall be authorized (but not
required) to cause the Partnership to pay such tax from the funds of the
Partnership and to take any action consistent with this Section 9.7. The General
Partner shall be authorized (but not required) to take all necessary or
appropriate actions to collect all or any portion of a deficiency in the payment
of any such tax that relates to prior periods and that is attributable to
Persons who were Limited Partners or Assignees when such deficiencies arose,
from such Persons.
9.8 Opinions of Counsel. Notwithstanding any other provision of this
Agreement, if the Partnership is taxable for federal income tax purposes as a
corporation or otherwise taxed for federal income tax purposes as an entity at
any time and, pursuant to the provisions of this Agreement, an Opinion of
Counsel would otherwise be required to the effect that an action will not cause
the Partnership to become so taxable as a corporation or other entity or to be
treated as an association taxable as a corporation, such requirement for an
Opinion of Counsel shall be deemed automatically waived.
ARTICLE 10 - UNIT CERTIFICATES
10.1 Unit Certificates. Upon the Partnership's issuance of Units to any
Person, the Partnership shall issue one or more Unit Certificates in the name of
such Person evidencing the number of such Units being so issued. Unit
Certificates shall be executed on behalf of the Partnership by the General
Partner. No Unit Certificate shall be valid for any purpose until it has been
countersigned by the Transfer Agent.
10.2 Registration, Registration of Transfer and Exchange. (a) The
General Partner shall cause to be kept on behalf of the Partnership a register
(the "Unit Register") in which, subject to such
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reasonable regulations as it may prescribe and subject to the provisions of
Section 10.2(b), the General Partner will provide for the registration and the
transfer of such Units. The Transfer Agent is hereby appointed registrar and
transfer agent for the purpose of registering and transferring of such Units as
herein provided. The Partnership shall not recognize transfers of Unit
Certificates representing Units unless same are effected in the manner described
in this Section 10.2. Upon surrender for registration of transfer of any Units
evidenced by a Unit Certificate and subject to the provisions of Section
10.2(b), the General Partner on behalf of the Partnership will execute, and the
Transfer Agent will countersign and deliver, in the name of the holder or the
designated transferee or transferees, as required pursuant to the holder's
instructions, one or more new Unit Certificates evidencing the same aggregate
number of Units as was evidenced by the Unit Certificate so surrendered.
(b) Except as otherwise provided in Section 11.5, the Partnership shall
not recognize any transfer of Units until the Unit Certificates evidencing such
Units are surrendered for registration of transfer and such Unit Certificates
are accompanied by a Transfer Application duly executed by the transferee (or
the transferee's attorney-in-fact duly authorized in writing). No charge shall
be imposed by the Partnership for such transfer, provided, that, as a condition
to the issuance of any new Unit Certificate under this Section 10.2, the General
Partner may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed with respect thereto.
10.3 Mutilated, Destroyed, Lost or Stolen Unit Certificates. (a) If any
mutilated Unit Certificate is surrendered to the Transfer Agent, the General
Partner on behalf of the Partnership shall execute, and, upon its request, the
Transfer Agent shall countersign and deliver in exchange therefor, a new Unit
Certificate evidencing the same number of Units as the Unit certificate so
surrendered.
(b) The General Partner on behalf of the Partnership shall execute,
and, upon its request, the Transfer Agent shall countersign and deliver a new
Unit Certificate in place of any Unit Certificate previously issued if the
Record Holder of the Unit Certificate:
(i) makes proof by affidavit, in form and substance
satisfactory to the General Partner, that a previously issued Unit
Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Unit Certificate before
the Partnership has noticed that the Unit Certificate has been acquired
by a purchaser for value in good faith and without notice of an adverse
claim;
(iii) if requested by the General Partner, delivers to the
Partnership such security or indemnity as may be required by the
General Partner, in form and substance satisfactory to the General
Partner, with surety or sureties and with fixed or open penalty as the
General Partner may direct, in its sole discretion, to indemnify the
Partnership, the General Partner and the Transfer Agent against any
claim that may be made on account of the alleged loss, destruction or
theft of the Unit Certificate; and
(iv) satisfies any other reasonable requirements imposed by
the General Partner.
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If a Limited Partner or Assignee fails to notify the Partnership within a
reasonable time after he has notice of the loss, destruction or theft of a Unit
Certificate, and a transfer of the Units represented by the Unit Certificate is
registered before the Partnership, the General Partner or the Transfer Agent
receives such notification, the Limited Partner or Assignee shall be precluded
from making any claim against the Partnership, the General Partner or the
Transfer Agent for such transfer or for a new Unit Certificate.
(c) As a condition to the issuance of any Unit Certificate under this
Section 10.3, the General Partner may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including, without limitation, the fees and
expenses of the Transfer Agent) connected therewith.
10.4 Record Holder. In accordance with Section 10.2(b), the Partnership
shall be entitled to recognize the Record Holder as the Limited Partner or
Assignee with respect to any Units and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such Units on the part
of any other Person, whether or not the Partnership shall have actual or other
notice thereof, except as otherwise provided by law or any applicable rule,
regulation, guideline or requirement of any National Securities Exchange on
which the Units are listed for trading. Without limiting the foregoing, when a
Person (such as a broker, dealer, bank, trust company or clearing corporation or
an agent of any of the foregoing) is acting as nominee, agent or in some other
representative capacity for another Person in acquiring and/or holding Units, as
between the Partnership on the one hand and such other Persons on the other
hand, such representative Person (a) shall be the Limited Partner or Assignee
(as the case may be) of record and beneficially, (b) must execute and deliver a
Transfer Application and (c) shall be bound by this Agreement and shall have the
rights and obligations of a Limited Partner or Assignee (as the case may be)
hereunder and as provided for herein.
ARTICLE 11 - TRANSFER OF INTERESTS
11.1 Transfer. (a) The term "transfer," when used in this Article 11
with respect to a Partnership Interest, shall be deemed to refer to an
appropriate transaction by which the General Partner assigns its Partnership
Interest as General Partner to another Person or by which the holder of a Unit
assigns such Unit to another Person who is or becomes an Assignee and includes a
sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange
or any other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article 11.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article 11 shall be null and void.
11.2 Transfer of General Partner's Partnership Interest. (a) The
General Partner may transfer all, but not less than all, of its Partnership
Interest as the General Partner to a single transferee if, but only if, (i) at
least 66 2/3% of the Outstanding Units approve of such transfer and of the
admission of such transferee as General Partner, (ii) the transferee agrees to
assume the rights and duties of the General Partner and be bound by the
provisions of this Agreement and the Operating Partnership Agreement and (iii)
the Partnership receives an Opinion of Counsel that such
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transfer would not result in the loss of limited liability of any Limited
Partner or of any limited partner of any Operating Partnership or cause the
Partnership or the Operating Partnership to be taxable as a corporation or
otherwise taxed as an entity for federal income tax purposes.
(b) Neither Section 11.2(a) nor any other provision of this Agreement
shall be construed to prevent (and all Partners do hereby consent to) (i) the
transfer by the General Partner of all of its Partnership interest to an
Affiliate or (ii) the transfer by the General Partner of all its Partnership
Interest upon its merger, consolidation or other combination into any other
Person or the transfer by it of all or substantially all of its assets to
another Person if, in the case of a transfer described in either clause (i) or
(ii) of this sentence, the rights and duties of the General Partner with respect
to the Partnership Interest so transferred are assumed by the transferee and the
transferee agrees to be bound by the provisions of this Agreement and the
Operating Partnership Agreement; provided, that in either such case, that such
transferee furnishes to the Partnership an Opinion of Counsel that such merger,
consolidation, combination, transfer or assumption will not result in a loss of
limited liability of any Limited Partner or of any limited partner of the
Operating Partnership or cause the Partnership or the Operating Partnership to
be taxable as a corporation or otherwise taxed as an entity for federal income
tax purposes. In the case of a transfer pursuant to this Section 11.2(b), the
transferee or successor (as the case may be) shall be admitted to the
Partnership as the General Partner immediately prior to the transfer of the
Partnership Interest, and the business of the Partnership shall continue without
dissolution.
11.3 Transfer of Units. (a) Units may be transferred only in the manner
described in Section 10.2. The transfer of any Units and the admission of any
new Partner shall not constitute an amendment to this Agreement.
(b) Until admitted as a Substituted Limited Partner pursuant to Article
12, the Record Holder of a Unit shall be an Assignee in respect of such Unit.
Limited Partners may include custodians, nominees or any other individual or
entity in its own or any representative capacity
(c) Each distribution in respect of Units shall be paid by the
Partnership, directly or through the Transfer Agent or through any other Person
or agent, only to the Record Holders thereof as of the Record Date set for the
distribution. Such payment shall constitute full payment and satisfaction of the
Partnership's liability in respect of such payment, regardless of any claim of
any Person who may have an interest in such payment by reason of an assignment
or otherwise.
(d) A transferee who has completed and delivered a Transfer Application
shall be deemed to have (i) requested admission as a Substituted Limited
Partner, (ii) agreed to comply with and be bound by and to have executed this
Agreement, (iii) represented and warranted that such transferee has the capacity
and authority to enter into this Agreement, (iv) made the powers of attorney set
forth in this Agreement and (v) given the consents and made the waivers
contained in this Agreement.
11.4 Restrictions on Transfers. Notwithstanding the other provisions of
this Article 11, no transfer of any Unit or interest therein of any Limited
Partner or Assignee shall be made if such transfer would (a) violate the then
applicable federal or state securities laws or rules and regulations of the
Securities and Exchange Commission, any state securities commission or any other
governmental authorities with jurisdiction over such transfer, (b) result in the
taxation of the
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Partnership as a corporation or otherwise taxed as an entity for federal income
tax purposes or (c) affect the Partnership's existence or qualification as a
limited partnership under the Delaware Act.
11.5 Citizenship Certificates; Non-citizen Assignees. (a) If the
Partnership or a Subsidiary is or becomes subject to any federal, state or local
law or regulation which, in the reasonable determination of the General Partner,
provides for the cancellation or forfeiture of any property in which the
Partnership or a Subsidiary has an interest based on the nationality,
citizenship or other status of a Limited Partner or Assignee, the General
Partner may request any Limited Partner or Assignee to furnish to the General
Partner, within thirty days after receipt of such request, an executed
Citizenship Certification or such other information concerning his nationality,
citizenship or other status (or, if the Limited Partner or Assignee is a nominee
holding for the account of another Person, the nationality, citizenship or other
status of such Person) as the General Partner may request. If a Limited Partner
or Assignee fails to furnish to the General Partner within the aforementioned
thirty-day period such Citizenship Certification or other requested information
or if upon receipt of such Citizenship Certification or other requested
information the General Partner determines, with the advice of counsel, that a
Limited Partner or Assignee is not an Eligible Citizen, the Units owned by such
Limited Partner or Assignee shall be subject to redemption in accordance with
the provisions of Section 11.6. In addition, the General Partner may require
that the status of any such Limited Partner or Assignee be changed to that of a
Non-citizen Assignee, and, thereupon, the General Partner shall be substituted
for such Non-citizen Assignee as the Limited Partner in respect of his Units.
(b) The General Partner shall, in exercising voting rights in respect
of Units held by it on behalf of Non-citizen Assignees, distribute the votes in
the same ratios as the votes of Limited Partners in respect of Units other than
those of Non-citizen Assignees are cast, either foil against or abstaining as to
the matter.
(c) Upon dissolution of the Partnership, a Non-citizen Assignee shall
have no right to receive a distribution in kind pursuant to Section 14.4 but
shall be entitled to the cash equivalent thereof, and the General Partner shall
provide cash in exchange for an assignment of the Non-citizen Assignee's share
of the distribution in kind. Such payment and assignment shall be treated for
Partnership purposes as a purchase by the General Partner from the Non-citizen
Assignee of his Partnership Interest (representing his right to receive his
share of such distribution in kind).
(d) At any time after he can and does certify that he has become an
Eligible Citizen, a Non-citizen Assignee may, upon application to the General
Partner, request admission as a Substituted Limited Partner with respect to any
Units of such Non-citizen Assignee not redeemed pursuant to Section 11.6, and
upon his admission pursuant to Section 12.2 the General Partner shall cease to
be deemed to be the Limited Partner in respect of the Non-citizen Assignee's
Units.
11.6 Redemption of Interests. (a) If at any time a Limited Partner or
Assignee fails to furnish a Citizenship Certification or other information
requested within the thirty-day period specified in Section 11.5(a), or if upon
receipt of such Citizenship Certification or other information the General
Partner determines, with the advice of counsel, that a Limited Partner or
Assignee is not an Eligible Citizen, the Partnership may, unless the Limited
Partner or Assignee establishes to the satisfaction of the General Partner that
such Limited Partner or Assignee is an Eligible Citizen or has
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transferred his Units to a Person who furnishes a Citizenship Certification to
the General Partner prior to the date fixed for redemption as provided below,
redeem the Partnership Interest of such Limited Partner or Assignee as follows:
(i) The General Partner shall, not later than the thirtieth
day before the date fixed for redemption, give notice of redemption to
the Limited Partner or Assignee, at his last address designated on the
records of the Partnership or the Transfer Agent, by registered or
certified mail, postage prepaid. The notice shall be deemed to have
been given when so mailed. The notice shall specify the Redeemable
Units, the date fixed for redemption, the place of payment, that
payment of the redemption price will be made upon surrender of the Unit
Certificate evidencing the Redeemable Units and that on and after date
fixed for redemption no further allocations or distributions to which
the Limited Partner or Assignee would otherwise be entitled in respect
of the Redeemable Units will accrue or be made.
(ii) The aggregate redemption price for Redeemable Units shall
be an amount equal to the Current Market Price (the date of
determination of which shall be the date fixed for redemption) of Units
of the class to be so redeemed multiplied by the number of Units of
each such class included among the Redeemable Units. The redemption
price shall be paid, in the sole discretion of the General Partner, in
cash or by delivery of a promissory note of the Partnership in the
principal amount of the redemption price, bearing interest at the rate
of 10% annually and payable in three equal annual installments of
principal together with accrued interest, commencing one year after the
redemption date.
(iii) Upon surrender by or on behalf of the Limited Partner or
Assignee, at the place specified in the notice of redemption, of the
Unit Certificate evidencing the Redeemable Units, duly endorsed in
blank or accompanied by an assignment duly executed in blank, the
Limited Partner or Assignee or his duly authorized representative shall
be entitled to receive the payment therefor.
(iv) After the redemption date, Redeemable Units shall no
longer constitute issued and Outstanding Units.
(b) The provisions of this Section 11.6 shall also be applicable to
Units held by a Limited Partner or Assignee as nominee of a Person determined to
be other than an Eligible Citizen.
(c) Nothing in this Section 11.6 shall prevent the recipient of a
notice of redemption from transferring his Units before the redemption date if
such transfer is otherwise permitted under this Agreement. Upon receipt of
notice of such a transfer, the General Partner shall withdraw the notice of
redemption, provided, the transferee of such Units certifies in the Transfer
Application that he is an Eligible Citizen. If the transferee fails to make such
certification, such redemption shall be effected from the transferee on the
original redemption date.
(d) If the Partnership is or becomes subject to any federal, state or
local law or regulation which, in the reasonable determination of the General
Partner, provides for the cancellation or forfeiture of any property in which
the Partnership or a Subsidiary has an interest, based on the nationality (or
other status) of the General Partner, whether or not in its capacity as such,
the
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Partnership may, unless the General Partner has furnished a Citizenship
Certification or transferred its Partnership Interest or Units to a Person who
furnishes a Citizenship Certification prior to the date fixed for redemption,
redeem the Partnership Interest or Interests of the General Partner in the
Partnership as provided in Section 11.7(a), which redemption shall also
constitute redemption of the general partner interest of the general partner of
the Operating Partnership. If such redemption includes a redemption of the
Combined Interest, the redemption price thereof shall be equal to the aggregate
sum of the Current Market Price (the date of determination for which shall be
the date fixed for redemption) of each class of Units then Outstanding, in each
such case multiplied by the number of Units of such class into which the
Combined Interest would then be convertible under the terms of Section 13.3(b)
if the General Partner were to withdraw or be removed as the General Partner
(the date of determination for which shall be the date fixed for redemption).
The redemption price shall be paid in cash or by delivery of a promissory note
of the Partnership in the principal amount of the redemption price, bearing
interest at the rate of 10% annually and payable in three equal annual
installments of principal, together with accrued interest, commencing one year
after the redemption date.
ARTICLE 12 - ADMISSION OF PARTNERS
12.1 Admission of Substituted Limited Partners. By transfer of a Unit
in accordance with Article 11, the transferor shall be deemed to have given the
transferee the right to seek admission as a Substituted Limited Partner subject
to the conditions of, and in the manner permitted under, this Agreement. A
transferor of a Unit Certificate shall, however, only have the authority to
convey to a purchaser or other transferee who does not execute and deliver a
Transfer Application (i) the right to negotiate such Unit Certificate to a
purchaser or other transferee and (ii) the right to transfer the right to
request admission as a Substituted Limited Partner to such purchaser or other
transferee in respect of the transferred Units. Each transferee of a Unit
(including, without limitation, any nominee holder or an agent acquiring such
Unit for the account of another Person) who executes and delivers a Transfer
Application shall, by virtue of such execution and delivery, be an Assignee and
be deemed to have applied to become a Substituted Limited Partner with respect
to the Units so transferred to such Person. Such Assignee shall become a
Substituted Limited Partner (i) at such time as the General Partner consents
thereto, which consent may be given or withheld in the General Partner's sole
discretion, and (ii) when any such admission is shown on the books and records
of the Partnership. If such consent is withheld, such transferee shall be an
Assignee. An Assignee shall have an interest in the Partnership equivalent to
that of a Limited Partner with respect to allocations and distributions,
including, without limitation, liquidating distributions, of the Partnership.
With respect to voting rights attributable to Units that are held by Assignees,
the General Partner shall be deemed to be the Limited Partner with respect
thereto and shall, in exercising the voting rights in respect of such Units on
any matter, vote such Units at the written discretion of the Assignee who is the
Record Holder of such Units. If no such written direction is received, such
Units will not be voted. An Assignee shall have no other rights of a Limited
Partner.
12.2 Admission of Successor General Partner. A successor General
Partner approved pursuant to Section 13.1 or the transferee of or successor to
all of the General Partner's Partnership Interest pursuant to Section 11.2 who
is proposed to be admitted as a successor General Partner shall be admitted to
the Partnership as the General Partner, effective immediately prior to the
withdrawal or removal of the General Partner pursuant to Section 13.1 or the
transfer of the General Partner's Partnership Interest pursuant to Section 11.2;
provided, however, that no such successor shall be
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admitted to the Partnership until the terms of Section 11.2 have been complied
with. Any such successor shall carry on the business of the Partnership without
dissolution. In each case, the admission shall be subject to the successor
General Partner executing and delivering to the Partnership an acceptance of all
of the terms and conditions of this Agreement and such other documents or
instruments as may be required to effect the admission.
12.3 Admission of Additional Limited Partners. (a) A person (other than
a Substituted Limited Partner) who makes a Capital Contribution to the
Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 1.4 and (ii) such other
documents or instruments as may be required in the discretion of the General
Partner to effect such Person's admission as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 12.3, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such Person is
recorded on the books and records of the Partnership, following the consent of
the General Partner to such admission.
12.4 Amendment of Agreement and Certificate of Limited Partnership. To
effect the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Delaware Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement and, if required by law, to prepare and
file an amendment to the Certificate of Limited Partnership and may for this
purpose, among others, exercise the power of attorney granted pursuant to
Section 1.4.
ARTICLE 13 - WITHDRAWAL OR REMOVAL OF PARTNERS
13.1 Withdrawal of the General Partner. (a) The General Partner shall
be deemed to have withdrawn from the Partnership upon the occurrence of any one
of the following events (each such event herein referred to as an "Event of
Withdrawal");
(i) the General Partner voluntarily withdraws from
the Partnership by giving written notice to the other Partners;
(ii) the General Partner transfers all of its rights
as General Partner pursuant to Section 11.2:
(iii) the General Partner is removed pursuant to
Section 13.2;
(iv) the General Partner (A) makes a general
assignment for the benefit of creditors; (B) files a voluntary
bankruptcy petition; (C) files a petition or answer seeking for itself
a reorganization, arrangement, composition, readjustment, liquidation,
dissolution or
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similar relief under any law; (D) files an answer or other pleading
admitting or failing to contest the material allegations of a petition
filed against the General Partner in a proceeding of the type described
in clauses (A)-(C) of this sentence; or (E) seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator of
the General Partner or of all or any substantial part of its
properties;
(v) a final and non-appealable judgment is entered by
a court with appropriate jurisdiction ruling that the General Partner
is bankrupt or insolvent, or a final and non-appealable order for
relief is entered by a court with appropriate jurisdiction against the
General Partner, in each case under any federal or state bankruptcy or
insolvency laws as now or hereafter in effect; or
(vi) a certificate of dissolution or its equivalent
is filed for the General Partner, or ninety days expire after the date
of notice to the General Partner of revocation of its charter without a
reinstatement of its charter, under the laws of its state of
incorporation.
If an Event of Withdrawal specified in this Section 13.1(a)(iv), (v) or (vi)
occurs, the withdrawing General Partner shall give written notice to the Limited
Partners within thirty days after such occurrence. The Partners hereby agree
that only the Events of Withdrawal described in this Section 13.1 shall result
in the withdrawal of the General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal will not constitute a breach of this
Agreement under the following circumstances: (i) at any time during the period
prior to January 1, 2000 the General Partner voluntarily withdraws by giving at
least ninety days' advance notice of its intention to withdraw to the Limited
Partners, provided, that prior to the effective date of such withdrawal the
withdrawal is approved by at least 66 2/3% of the Outstanding Units (including
for this purpose Units held by the General Partner and its Affiliates); (ii) at
any time after December 31, 1999, the General Partner voluntarily withdraws by
giving at least ninety days' advance notice to the Limited Partners, such
withdrawal to take effect on the date specified in such notice; (iii) at any
time that the General Partner ceases to be a General Partner pursuant to Section
13.1(a)(i) or is removed pursuant to Section 13.2; or (iv) notwithstanding
clause (i) of this sentence, at any time that the General Partner voluntarily
withdraws by giving at least ninety days' advance notice of its intention to
withdraw to the Limited Partners, such withdrawal to take effect on the date
specified in the notice, if at that time such notice is given more than 50% of
the Outstanding Units that are held by Persons other than by the General Partner
and its Affiliates are owned beneficially or of record or controlled at any time
by one Person or its Affiliates. The withdrawal of the General Partner from the
Partnership upon the occurrence of an Event of Withdrawal shall also constitute
the withdrawal of the general partner from the Operating Partnership. If the
General Partner gives a notice of withdrawal pursuant to Section 13.1(a)(i) or
if the General Partner is removed pursuant to Section 13.2, holders of at least
a majority of the Outstanding Units (excluding for purposes of such
determination Units owned by the General Partner and its Affiliates) may, prior
to the effective date of such withdrawal, elect a successor General Partner. The
Person so elected shall automatically become the successor General Partner of
the Operating Partnership, as provided in the Operating Partnership Agreement.
If, prior to the effective date of the General Partner's withdrawal, a successor
is not selected by the Limited Partners as provided herein or the Partnership
does not receive an Opinion of Counsel that such withdrawal
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(following the selection of the successor General Partner) would not result in
the loss of the limited liability of any Limited Partner or of the limited
partner of the Operating Partnership or cause the Partnership or the Operating
Partnership to be taxable as a corporation or otherwise taxed as an entity for
federal income tax purposes, the Partnership shall be dissolved in accordance
with Section 14.1. If a successor General Partner is elected and the Opinion of
Counsel is rendered as provided in the immediately preceding sentence, such
successor shall be admitted (subject to Section 12.2) immediately prior to the
effective time of the withdrawal or removal of the Departing Partner and shall
continue the business of the Partnership and the Operating Partnership without
dissolution.
13.2 Removal of the General Partner. The General Partner may be removed
if such removal is approved by at least 66 2/3% of the Outstanding Units held by
Persons other than the General Partner and its Affiliates. Any such action by
the Limited Partners for removal of the General Partner must also provide for
the election and succession of a new General Partner. Such removal shall be
effective immediately following the admission of the successor General Partner
pursuant to Article 12. The removal of the General Partner shall also
automatically constitute the removal of the general partner of the Operating
Partnership, as provided in the Operating Partnership Agreement. The Person
elected as successor General Partner shall automatically become the successor
general partner of the Operating Partnership. The right of the Limited Partners
to remove the General Partner shall not exist or be exercised unless the
Partnership has received an Opinion of Counsel that the removal of the General
Partner and the selection of a successor General Partner will not result in the
loss of limited liability of any Limited Partner or of the limited partner of
the Operating Partnership or the taxation of the Partnership or the Operating
Partnership as a corporation or otherwise taxed as an entity for federal income
tax purposes
13.3 Interest of Departing Partner and Successor General Partner. (a)
In the event of (i) withdrawal of the General Partner under circumstances where
such withdrawal does not violate this Agreement or (ii) removal of the General
Partner by the Limited Partners under circumstances where Cause does not exist,
the Departing Partner shall, at its option exercisable prior to the effective
date of the departure of such Departing Partner, promptly receive from its
successor in exchange for its Partnership Interest as General Partner an amount
in cash equal to the fair market value of the Departing Partner's Partnership
Interest as General Partner, such amount to be determined and payable as of the
effective date of its departure. If the General Partner is removed by the
Limited Partners under circumstances where Causes exists or if the General
Partner withdraws under circumstances where such withdrawal violates this
Agreement or the Operating Partnership Agreement, its successor shall have the
option described in the immediately preceding sentence, and the Departing
Partner shall not have such option. In either case, if the successor acquires
the Departing Partner's Partnership Interest as the general partner, such
successor General Partner must also acquire at such time each general partner
interest of such Departing Partner or its Affiliate as general partner of the
Operating Partnership, for an amount in cash equal to the fair market value of
such interest, determined as of the effective date of its departure. In either
event, the Departing Partner shall be entitled to receive all reimbursements due
such Departing Partner pursuant to Section 6.4, including, without limitation,
any employee-related liabilities (including, without limitation, severance
liabilities), incurred in connection with the termination of any employees
employed by the General Partner for the benefit of the Partnership or any
Subsidiary. Subject to Section 13.3(b), the Departing Partner shall, as of the
effective date of its departure, cease to share in any allocations or
distributions with respect to its Partnership Interest as the General Partner
and
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Partnership income, gain, loss, deduction and credit will be prorated and
allocated as set forth in Section 5.2(g).
For purposes of this Section 13.3(a), the fair market value of the
Departing Partner's Partnership Interest as the general partner of the
Partnership herein and the partnership interest of such Departing Partner or its
Affiliate as the general partner of any Subsidiary (collectively, the "Combined
Interest") shall be determined by agreement between the Departing Partner its
successor or, failing agreement within thirty days after the effective date of
such Departing Partner's departure, by an independent investment banking firm or
other independent expert selected by the Departing Partner and its successor,
which, in turn, may rely on other experts and the determination of which shall
be conclusive as to such matter. If such parties cannot agree upon one
independent investment banking firm or other independent expert within
forty-five days after the effective date or such departure, then the Departing
Partner shall designate an independent investment banking firm or other
independent expert, the Departing Partner's successor shall designate an
independent investment banking firm or other independent expert, and such firms
or experts shall mutually select a third independent investment banking firm or
independent expert, which shall determine the fair market value of the Combined
Interest. In making its determination, such independent investment banking firm
or other independent expert shall consider the then current trading price of
Units on any National Securities Exchange on which Units are then listed, the
value of the Partnership's assets, the rights and obligations of the General
Partner and other factors it may deem relevant.
(b) If the Combined Interest is not acquired in the manner set forth in
Section 13.3(a) the Departing Partner and its Affiliate shall become a Limited
Partner and their Combined Interest shall be converted into Units pursuant to a
valuation made by an investment banking firm or other independent expert
selected pursuant to Section 13.3(a), without reduction in such Partnership
Interest (but subject to proportionate dilution by reason of the admission of
its successor). Any successor General Partner shall indemnify the Departing
Partner as to all debts and liabilities of the Partnership arising on or after
the date on which the Departing Partner becomes a Limited Partner. For purposes
of this Agreement, conversion of the General Partner's Partnership Interest to
Units will be characterized as if the General Partner contributed its
Partnership Interest to the Partnership in exchange for the newly-issued Units.
(c) If the option described in Section 13.3(a) is not exercised by the
party entitled to do so, the successor General Partner shall, at the effective
date of its admission to the Partnership, contribute to the capital of the
Partnership cash in an amount such that its Capital Account, after giving effect
to such contribution and any adjustments made to the Capital Accounts of all
Partners pursuant to Section 4.3(d)(i), shall be equal to that percentage of the
Capital Accounts of all Partners that is equal to its Percentage Interest as the
General Partner. In such event, each successor General Partner shall, subject to
the following sentence, be entitled to such Percentage Interest of all
Partnership allocations and distributions and any other allocations and
distributions to which the Departing Partner was entitled. In addition, such
successor General Partner shall cause this Agreement to be amended to reflect
that, from and after the date of such successor General Partner's admission, the
successor General Partner's interest in all Partnership distributions and
allocations shall be 1.0%, and that of the Unitholders shall be 99%.
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13.4 Withdrawal of Limited Partners. No Limited Partner shall have any
right to withdraw from the Partnership; provided, however, that when a
transferee of a Limited Partner's Units becomes a Record Holder, such
transferring Limited Partner shall cease to be a Limited Partner with respect to
the Units so transferred.
ARTICLE 14 - DISSOLUTION AND LIQUIDATION
14.1 Dissolution. The Partnership shall not be dissolved by the
admission of Substituted Limited Partners or Additional Limited Partners or by
the admission of a successor General Partner in accordance with the terms of
this Agreement. Upon the removal or withdrawal of the General Partner any
successor General Partner shall continue the business of the Partnership. The
Partnership shall dissolve, and its affairs should be wound up, upon:
(a) the expiration of its term as provided in Section 1.5;
(b) an Event of Withdrawal of the General Partner as provided in
Section 13.1(a), unless a successor is named as provided in Section 13.1(b) and
the continuation of the business of the Partnership is approved by at least
66 2/3% of the Outstanding Units (and all Limited Partners hereby expressly
consent that such approval may be effected upon written consent of at least
66 2/3% of the Outstanding Units);
(c) an election to dissolve the Partnership by the General Partner that
is approved by at least 66 2/3% of the Outstanding Units (and all Limited
Partners hereby expressly consent that such approval may be effected upon
written consent of at least 66 2/3% of the Outstanding Units);
(d) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act; or
(e) the sale of all or substantially all of the assets and properties
of the Partnership and its Subsidiaries, taken as a whole.
14.2 Liquidation. Upon dissolution of the Partnership, the General
Partner, or in the event the General Partner has been dissolved or removed,
become bankrupt as set forth in Section 13.1 or withdrawn from the Partnership,
a liquidator or liquidating committee approved by at least 66 2/3% of the
Outstanding Units, shall be the Liquidator. The Liquidator (if other than the
General Partner) shall be entitled to receive such compensation for its services
as may be approved by at least 66 2/3% of the Outstanding Units. The Liquidator
shall agree not to resign at any time without fifteen days' prior written notice
and (if other than the General Partner) may be removed at any time, with or
without cause by notice of removal approved by at least 66 2/3% of the
Outstanding Units. Upon dissolution, removal or resignation of the Liquidator, a
successor and substitute Liquidator (who shall have and succeed to all rights,
powers and duties of the original Liquidator) shall within thirty days
thereafter be approved by at least 66 2/3% of the Outstanding Units. The right
to approve a successor or substitute Liquidator in the manner provided herein
shall be deemed to refer also to any such successor or substitute Liquidator
approved in the manner herein provided. Except as expressly provided in this
Article 14, the Liquidator approved in the manner provided herein shall have and
may exercise, without further authorization or consent of any of the parties
hereto, all of the powers
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conferred upon the General Partner under the terms of this Agreement (but
subject to all of the applicable limitations, contractual and otherwise, upon
the exercise of such powers, other than the limitation on sale set forth in
Section 6.3(b)) to the extent necessary or desirable in the good faith judgment
of the Liquidator to carry out the duties and functions of the Liquidator
hereunder for and during such period of time as shall be reasonably required in
the good faith judgment of the Liquidator to complete the winding-up and
liquidation of the Partnership as provided for herein. The Liquidator shall
liquidate the assets of the Partnership, and apply and distribute the proceeds
of such liquidation in the following order of priority, unless otherwise
required by mandatory provisions of applicable law:
(a) the payment to creditors of the Partnership, including, without
limitation, Partners who are creditors, in the order of priority provided by
law; and the creation of a reserve of cash or other assets of the Partnership
for contingent liabilities in an amount, if any, determined by the Liquidator to
be appropriate for such purposes;
(b) to all Partners in accordance with the positive balances in their
respective Capital Accounts after taking into account adjustments to such
Capital Accounts pursuant to Section 5.1(c).
14.3 Distributions in Kind. Notwithstanding the provisions of Section
14.3, which require the liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its absolute discretion,
defer for a reasonable time the liquidation of any assets except those necessary
to satisfy liabilities of the Partnership (including, without limitation, those
to Partners as creditors) and/or distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 14.3,
undivided interests in such Partnership assets as the Liquidator deems not
suitable for liquidation. Any such distributions in kind shall be made only if,
in the good faith judgment of the Liquidator, such distributions in kind are in
the best interest of the Limited Partners, and shall be subject to such
conditions relating to the disposition and management of such properties as the
Liquidator deems reasonable and equitable and to any agreement governing the
operation of such properties at such time. The Liquidator shall determine the
fair market value of any property distributed in kind using such reasonable
method of valuation as it may adopt.
14.4 Cancellation of Certificate of Limited Partnership. Upon the
completion of the distribution of Partnership cash and property as provided in
Sections 14.3 and 14.4, the Partnership shall be terminated and the Certificate
of Limited Partnership and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Delaware shall be
canceled and such other actions as may be necessary to terminate the Partnership
shall be taken.
14.5 Reasonable Time for Winding Up. A reasonable time shall be allowed
for the orderly winding up of business and affairs of the Partnership and the
liquidation of its assets pursuant to Section 14.3 in order to minimize any
losses otherwise attendant upon such winding up, and the provisions of this
Agreement shall remain in effect between the Partners during the period of
liquidation.
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14.6 Return of Capital. The General Partner shall not be personally
liable for the return of the Capital Contributions of the Limited Partners, or
any portion thereof, it being expressly understood that any such return shall be
made solely from Partnership assets.
14.7 No Capital Account Restoration. No Partner shall have any
obligation to restore any negative balance in its Capital Account upon
liquidation of the Partnership.
14.8 Waiver of Partition. Each Partner hereby waives any right to
partition of the Partnership property.
ARTICLE 15 - AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS; RECORD DATE
15.1 Amendment to be Adopted Solely by General Partner. Each Limited
Partner agrees that the General Partner (pursuant to its powers of attorney from
the Limited Partners and Assignees), without the approval of any Limited Partner
or Assignee, may amend any provision of this Agreement, and execute, swear to,
acknowledge, deliver, file and record whatever documents may be required in
connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the sole discretion of the General Partner, is
reasonable and necessary or appropriate to qualify or continue the qualification
of the Partnership as a limited partnership or a partnership in which the
limited partners have limited liability under the laws of any state or that is
necessary or advisable in the opinion of the General Partner to ensure that the
Partnership will not be taxable as a corporation or otherwise taxed as an entity
for federal income tax purposes;
(d) a change (i) that, in the sole discretion of the General Partner,
does not adversely affect the Limited Partners in any material respect, (ii)
that is necessary or appropriate to satisfy any requirements, conditions or
guidelines contained in any opinion, directive, order, ruling or regulation of
any federal or state agency or judicial authority or contained in any federal or
state agency, or judicial authority or contained in any federal or state statute
(including, without limitation, the Delaware Act) or that is necessary or
appropriate to facilitate the trading of the Units (including, without
limitation, the division of Outstanding Units into different classes to
facilitate uniformity of tax consequences within such classes (of Units) or
comply with any rule, regulation, guideline or requirement of any National
Securities Exchange on which the Units are or will be listed for trading,
compliance with any of which the General Partner determines in its sole
discretion to be in the best interests of the Partnership and the Limited
Partners or (iii) that is required to effect the intent of the provisions of
this Agreement or is otherwise contemplated by this Agreement;
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(e) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership or the General Partner or its directors or officers from
in any manner being subjected to the provisions of the Investment Company Act of
1940, as amended, the Investment Advisors Act of 1940, as amended, or "plan
asset" regulations adopted under the Employee Retirement Income Security Act of
1974, as amended, whether or not substantially similar to plan asset regulations
currently applied or proposed by the United States Department of Labor;
(f) subject to the terms of Section 4.1, an amendment that the General
Partner determines in its sole discretion to be necessary or appropriate in
connection with the authorization for issuance of any class or series of Units
pursuant to Section 4.1;
(g) any amendment expressly permitted in this Agreement to be made by
the General Partner acting alone;
(h) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 16.3; or
(i) any other amendments similar to the foregoing.
15.2 Amendment Procedures. Except as provided in Sections 15.1 and
15.3, all amendments to this Agreement shall be made in accordance with the
following requirements. Amendments to this Agreement may be proposed solely by
the General Partner. Each such proposal shall contain the text of the proposed
amendment. If an amendment is proposed, the General Partner shall seek the
written approval of the requisite percentage of Outstanding Units or call a
meeting of the Limited Partners to consider and vote on such proposed amendment.
A proposed amendment shall be effective upon its approval by the holders of at
least 662/3% of the Outstanding Units unless a greater or different percentage
is required under this Agreement. The General Partner shall notify all Record
Holders upon final adoption of any proposed amendment.
15.3 Amendment Requirements. (a) Notwithstanding the provisions of
Sections 15.1 and 15.2, no provision of this Agreement that establishes a
percentage of Outstanding Units required to take any action shall be amended,
altered, changed, repealed or rescinded in any respect that would have the
effect of reducing such voting requirement unless such amendment is approved by
the written consent or the affirmative vote of Unitholders whose aggregate
percentage of Outstanding Units constitute not less than the voting requirement
sought to be reduced.
(b) Notwithstanding the provisions of Sections 15.1 and 15.2, no
amendment to this Agreement may (i) enlarge the obligations of any Limited
Partner or, without its consent, which may be given or withheld in its sole
discretion, of the General Partner, (ii) modify the compensation payable to the
General Partner or any of its Affiliates by the Partnership or any Subsidiary,
(iii) change Section 14.1(a) or (c), (iv) restrict in any way any action by or
rights of the General Partner as set forth in this Agreement, (v) change the
term of the Partnership or, except as set forth in Section 14.1(c), give any
Person the right to dissolve the Partnership or (vi) modify the last sentence of
Section 1.2.
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(c) Except as otherwise provided, the General Partner may amend the
Partnership Agreement without the approval of Unitholders, except that any
amendment that would have a material adverse effect on the holders of any class
of Outstanding Units must be approved by the holders of not less than 66 2/3% of
the Outstanding Units of such class.
(d) Notwithstanding any other provision of this Agreement, except for
amendments pursuant to Section 6.3 or 15.1, no amendments shall become effective
without the approval of the Record Holders of 95% of the Units unless the
Partnership obtains an Opinion of Counsel to the effect that (a) such amendment
will not cause the Partnership or the Operating Partnership to be taxable as a
corporation or otherwise taxed as an entity for federal income tax purposes and
(b) such amendment will not affect the limited liability of any Limited Partner
or any limited partner of the Operating Partnership under applicable law.
(e) This Section 15.3 shall only be amended with the approval of not
less than 95% of the Outstanding Units.
15.4 Meetings. All acts of Limited Partners to be taken hereunder shall
be taken in the manner provided in this Article 15. Meetings of the Limited
Partners may be called by the General Partner or by Limited Partners owning 20%
or more of the Outstanding Units of the class for which a meeting is proposed.
Limited Partners shall call a meeting by delivering to the General Partner one
or more requests in writing stating that the signing Limited Partners wish to
call a meeting and indicating the general or specific purposes for which the
meeting is to be called. Within sixty days after receipt of such a call from
Limited Partners or within such greater time as may be reasonably necessary for
the Partnership to comply with any statutes, rules, regulations, listing
agreements or similar requirements governing the holding of a meeting or the
solicitation of proxies for use at such a meeting, the General Partner shall
send a notice of the meeting to the Limited Partners either directly or
indirectly through the Transfer Agent. A meeting shall be held at a time and
place determined by the General Partner on a date not more than sixty days after
the mailing of notice of the meeting. Limited Partners shall not vote on matters
that would cause the Limited Partners to be deemed to be taking part in the
management and control of the business and affairs of the Partnership so as to
jeopardize the Limited Partners' limited liability under the Delaware Act or the
law of any other state in which the Partnership is qualified to do business.
15.5 Notice of a Meeting. Notice of a meeting called pursuant to
Section 15.4 shall be given to the Record Holders in writing by mail or other
means of written communication in accordance with Section 17.1. The notice shall
be deemed to have been given at the time when deposited in the mail or sent by
other means of written communication.
15.6 Record Date. For purposes of determining the Limited Partners
entitled to notice of or to vote at a meeting of the Limited Partners or to give
approvals without a meeting as provided in Section 15.11, the General Partner
may set a Record Date, which shall not be less than ten nor more than sixty days
before (a) the date of the meeting (unless such requirement conflicts with any
rule, regulation, guideline or requirement of any National Securities Exchange
on which the Units are listed for trading, in which case the rule, regulation,
guideline or requirement of such exchange shall govern) or (b) in the event that
approvals are sought without a meeting, the date by which Limited Partners are
requested in writing by the General Partner to give such approvals.
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15.7 Adjournment. When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting and a new Record Date need not
be fixed, if the time and place thereof are announced at the meeting at which
the adjournment is taken, unless such adjournment shall be for more than
forty-five days. At the adjourned meeting, the Partnership may transact any
business which might have been transacted at the original meeting. If the
adjournment is for more than forty-five days or if a new Record Date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given in
accordance with this Article 15.
15.8 Waiver of Notice; Approval of Meeting; Approval of Minutes. The
transactions of any meeting of Limited Partners, however called and noticed, and
whenever held, shall be as valid as if had at a meeting duly held after regular
call and notice, if a quorum is present either in person or by proxy, and if,
either before or after the meeting, each of the Limited Partners entitled to
vote, present in person or by proxy, signs a written waiver of notice or an
approval of the holding of the meeting or an approval of the minutes thereof.
All waivers and approvals shall be filed with the Partnership records or made a
part of the minutes of the meeting. Attendance of a Limited Partner at a meeting
shall constitute a waiver of notice of the meeting, except when the Limited
Partner disapproves, at the beginning of the meeting, the transaction of any
business because the meeting is not lawfully called or convened, and except that
attendance at a meeting is not a waiver of any right to disapprove the
consideration of matters required to be included in the notice of the meeting,
but not so included, in either case if the disapproval is expressly made at the
meeting.
15.9 Quorum. The holders of 66 2/3% of the Outstanding Units of the
class for which a meeting has been called represented in person or by proxy
shall constitute a quorum at a meeting of Limited Partners of such class unless
any such action by the Limited Partners requires approval by holders of a
majority in interest of such Units, in which case the quorum shall be a
majority. At any meeting of the Limited Partners duly called and held in
accordance with this Agreement at which a quorum is present, the act of Limited
Partners holding Outstanding Units that in the aggregate represent at least
66 2/3% of the Outstanding Units entitled to vote and be present in person or by
proxy at such meeting shall be deemed to constitute the act of all Limited
Partners, unless a greater or different percentage is required with respect to
such action under the provisions of this Agreement, in which case the act of the
Limited Partners holding Outstanding Units that in the aggregate represent at
least such greater or different percentage shall be required. The Limited
Partners present at a duly called or held meeting at which a quorum is present
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough Limited Partners to leave less than a quorum, if any action
taken (other than adjournment) is approved by the required percentage of
Outstanding Units specified in this Agreement. In the absence of a quorum, any
meeting of Limited Partners may be adjourned from time to time by the
affirmative vote of a majority of the Outstanding Units represented either in
person or by proxy, but no other business may be transacted, except as provided
in Section 15.7.
15.10 Conduct of Meeting. The General Partner shall have full power and
authority concerning the manner of conducting any meeting of the Limited
Partners or solicitation of approvals in writing, including, without limitation,
the determination of Persons entitled to vote, the existence of a quorum, the
satisfaction of the requirements of Section 15.4, the conduct of voting, the
validity and effect of any proxies and the determination of any controversies,
votes or challenges arising in connection with or during the meeting or voting.
The General Partner shall designate a Person to
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serve as chairman of any meeting and shall further designate a Person to take
the minutes of any meeting, in either case including, without limitation, a
Partner or a director or officer of the General Partner. All minutes shall be
kept with the records of the Partnership maintained by the General Partner. The
General Partner may make such other regulations consistent with applicable law
and this Agreement as it may deem advisable concerning the conduct of any
meeting of the Limited Partners or solicitation of approvals in writing,
including, without limitation, regulations in regard to the appointment of
proxies, the appointment and duties of inspectors of votes and approvals, the
submission and examination of proxies and other evidence of the right to vote,
and the revocation of approvals in writing.
15.11 Action Without a Meeting. Any action that may be taken at a
meeting of the Limited Partners may be taken without a meeting if an approval in
writing setting forth the action so taken is signed by Limited Partners owning
not less than the minimum percentage of the Outstanding Units that would be
necessary to authorize to take such action at a meeting at which all the Limited
Partners were present and voted. Prompt notice of the taking of action without a
meeting shall be given to the Limited Partners who have not approved in writing.
The General Partner may specify that any written ballot submitted to Limited
Partners for the purpose of taking any action without a meeting shall be
returned to the Partnership within the time period, which shall be not less than
twenty days, specified by the General Partner. If a ballot returned to the
Partnership does not vote all of the Units held by the Limited Partner, the
Partnership shall be deemed to have failed to receive a ballot for the Units
that were not voted. If approval of the taking of any action by the Limited
Partners is solicited by any Person other than by or on behalf of the General
Partner, the written approvals shall have no force and effect unless and until
(a) they are deposited with the Partnership in care of the General Partner, (b)
approvals sufficient to take the action proposed are dated as of a date not more
than ninety days prior to the date sufficient approvals are deposited with the
Partnership and (c) an Opinion of Counsel is delivered to the General Partner to
the effect that the exercise of such right and the action proposed to be taken
with respect to any particular matter (i) will not cause the Limited Partners to
be deemed to be taking part in the management and control of the business and
affairs of the Partnership so as to jeopardize the Limited Partners' limited
liability, (ii) will not jeopardize the status of the Partnership as a
partnership under applicable tax laws and regulations and (iii) is otherwise
permissible under the state statutes then governing the rights, duties and
liabilities of the Partnership and the Partners.
15.12 Voting and Other Rights. (a) Only those Record Holders of Units
on the Record Date set pursuant to Section 15.6 shall be entitled to notice of,
and to vote at, a meeting of Limited Partners or to act with respect to matters
as to which holders of the Outstanding Units have the right to vote or to act.
All references in this Agreement to votes of, or other acts that may be taken
by, the Outstanding Units shall be deemed to be references to the votes or acts
of the Record Holders of such Outstanding Units.
(b) With respect to Units that are held for a Person's account by
another Person (such as a broker, dealer, bank, trust company or clearing
corporation, or an agent of any of the foregoing), in whose name such Units are
registered, such broker, dealer or other agent shall, in exercising the voting
rights in respect of such Units on any matter, and unless the arrangement
between such Persons provides otherwise, vote such Units in favor of, and at the
direction of, the Person who is the beneficial owner, and the Partnership shall
be entitled to assume it is so acting without further
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inquiry. The provisions of this Section 15.12(b) (as well as all other
provisions of this Agreement) are subject to the provisions of Section 10.4.
ARTICLE 16 - MERGER
16.1 Authority. The Partnership may merge or consolidate with one or
more corporations, business trusts or associations, real estate investment
trusts, common law trusts, limited liability companies or unincorporated
businesses, including, without limitation, a general partnership or limited
partnership, formed under the laws of the State of Delaware or any other state
of the United States of America, pursuant to a written agreement of merger or
consolidation ("Merger Agreement") in accordance with this Article.
16.2 Procedure for Merger or Consolidation. Merger or consolidation of
the Partnership pursuant to this Article requires the prior approval of the
General Partner. If the General Partner shall determine, in the exercise of its
sole discretion, to consent to the merger or consolidation, the General Partner
shall approve the Merger Agreement, which shall set forth:
(a) The name and jurisdiction of formation or organization of each of
the business entities proposing to merge or consolidate;
(b) The name and jurisdictions of formation or organization of the
business entity that is to survive the proposed merger or consolidation
(hereafter designated as the "Surviving Business Entity");
(c) The terms and conditions of the proposed merger or consolidation;
(d) The manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash, property or
general or limited partnership interests, rights, securities or obligations of
the Surviving Business Entity; and (i) if any general or limited partnership
interests, securities or rights of any constituent business entity are not to be
exchanged or converted solely for, or into, cash, property or general or limited
partnership interests, rights, securities or obligations of the Surviving
Business Entity, the cash, property or general or limited partnership interests,
rights, securities or obligations of any limited partnership, corporation, trust
or other entity (other than the Surviving Business Entity) which the holders of
such general or limited partnership interest are to receive in exchange for, or
upon conversion of, their securities or rights, and (ii) in the case of
securities represented by certificates, upon the surrender of such certificates,
which cash, property or general or limited partnership interests, rights,
securities or obligations of the Surviving Business Entity or any limited
partnership, corporation, trust or other entity (other than the Surviving
Business Entity), or evidences thereof, are to be delivered;
(e) A statement of any changes in the constituent documents (the
articles or certificate of incorporation, articles of trust, declaration of
trust, certificate or agreement of limited partnership or other similar charter
or governing document) of the Surviving Business Entity to be effected by such
merger or consolidation;
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(f) The effective time of the merger, which may be the date of the
filing of the certificate of merger pursuant to Section 16.4 or a later date
specified in or determinable in accordance with the Merger Agreement (provided,
that if the effective time of the merger is to be later than the date of the
filing of the certificate of merger, it shall be fixed no later than the time of
the filing of the certificate of merger and stated therein); and
(g) Any amendment to this Agreement or the adoption, if any, of a new
limited partnership agreement for any limited partnership that is the Surviving
Business Entity, as permitted by Section 211(g) of the Delaware Act.
(h) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the General Partner.
16.3 Approval by Limited Partners of Merger or Consolidation. (a) The
General Partner of the Partnership, upon its approval of the Merger Agreement,
shall direct that the Merger Agreement be submitted to a vote of Limited
Partners whether at a meeting or by written consent, in either case in
accordance with the requirements of Article 15. A copy or a summary of the
Merger Agreement shall be included in or enclosed with the notice of a meeting
or the written consent.
(b) The Merger Agreement shall be approved upon receiving the
affirmative vote or consent of the holders of at least 662/3% of the Outstanding
Units, unless the Merger Agreement contains any provision which, if contained in
an amendment to this Agreement, the provisions of this Agreement or the Delaware
Act would require the vote or consent of a greater percentage of the Outstanding
Units of the Limited Partners or of any class of Limited Partners, in which case
such greater percentage vote or consent shall be required for approval of the
Merger Agreement.
(c) After such approval by vote or consent of the Limited Partners, and
at any time prior to the filing of the certificate of merger pursuant to Section
16.4, the merger or consolidation may be abandoned pursuant to provisions
therefor, if any, set forth in the Merger Agreement.
16.4 Certificate of Merger. Upon the required approval by the General
Partner and Limited Partners of a Merger Agreement, a certificate of merger
shall be executed and filed with the Secretary of State of the State of Delaware
in conformity with the requirements of the Delaware Act.
16.5 Effect of Merger. (a) Upon the effective date of the certificate
of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all property,
real, personal and mixed, and all debts due to any of those business
entities and all other things and causes of action belonging to each of
those business entities shall be vested in the Surviving Business
Entity and after the merger or consolidation shall be the property of
the Surviving Business Entity to the extent they were of each
constituent business entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not
revert and shall not be in any way impaired because of the merger or
consolidation;
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(iii) all rights of creditors and all liens on or security
interest in property of any of those constituent business entities
shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity, and
may be enforced against it to the same extent as if the debts,
liabilities and duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article shall
not be deemed to result in a transfer or assignment of assets or liabilities
from one entity to another having occurred.
ARTICLE 17 - RIGHT TO ACQUIRE UNITS
17.1 Right to Acquire Units. (a) Notwithstanding any provision of this
Agreement, if at any time less than 15% of the total Units then issued and
Outstanding are held by Persons other than the General Partner and its
Affiliates, the General Partner shall then have the right which right it may
assign and transfer to the Partnership or any Affiliate of the General Partner,
exercisable in its sole discretion, to purchase all, but not less than all, of
the Units then Outstanding held by Persons other than the General Partner and
its Affiliates, at the higher of (a) the highest cash price paid by the General
Partner or any of its Affiliates for any Unit purchased during the ninety-day
period preceding the date that the notice described in Section 17.1(c) is mailed
and (b) the Current Market Price (as defined below) as of the date the General
Partner (or any of its assignees) mails the notice described in Section 17.1(b)
of its election to purchase such Units. As used in this Agreement, (i) "Current
Market Price" of a Unit listed or admitted to trading on any National Securities
Exchange means the average of the daily Closing Prices (as hereinafter defined)
per Unit of such class for the twenty consecutive Trading Days (as hereinafter
defined) immediately prior to, but not including, such date; (ii) "Closing
Price" for any day means the last sale price on such day, regular way, or in
case no such sale takes place on such day, the average of the closing bid and
asked prices on such day, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Units of
a class are not listed or admitted to trading on the New York Stock Exchange as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal National Securities Exchange on which the
Units of such class are listed or admitted to trading or, if the Units of a
class are not listed or admitted to trading on any National Securities Exchange,
the last quoted price on such day or, if not so quoted, the average of the high
bid and low asked prices on such day in the over-the counter market, as reported
by the National Association of Securities Dealers, Inc. Automated Quotation
System or such other system then in use, or if on any such day the Units of a
class are not quoted by any such organization, the average of the closing bid
and asked priced on such day as furnished by a professional market maker making
a market in the Units of such class selected by the Board of Directors of the
General Partner, or if on any such day no market maker is making a market in the
Units of such class, the fair value of such Units on such day as determined
reasonably and in good faith by the Board of Directors of the General Partner;
and (iii) "Trading Day" means a day on which the principal National Securities
Exchange on which the Units of any class are listed or admitted to trading is
open for the transaction of business or, if Units of a class are not listed or
admitted to trading on any National Securities Exchange, a day on which banking
institutions in New York City generally are open.
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(b) If the General Partner, any Affiliate of the General Partner or the
Partnership elects to exercise the right to purchase Units granted pursuant to
Section 17.1(a), the General Partner shall deliver to the Transfer Agent written
notice of such election to purchase (the "Notice of Election to Purchase") and
shall cause the Transfer Agent to mail a copy of such Notice of Election to
Purchase to the Record Holders of Units (as of a Record Date selected by the
General Partner) at least ten, but not more than sixty days prior to the
Purchase Date. Such Notice of Election to Purchase shall also be published in
daily newspapers of general circulation printed in the English language and
published in the Borough of Manhattan, New York. The Notice of Election to
Purchase shall specify the Purchase Date and the price (determined in accordance
with Section 17.1(a) at which Units will be purchased and state that the General
Partner, its Affiliate or the Partnership, as the case may be, elects to
purchase such Units, upon surrender of Unit Certificates representing such Units
in exchange for payment, at such office or offices of the Transfer Agent as the
Transfer Agent may specify, or as may be required by any National Securities
Exchange on which the Units are listed or admitted to trading. Any such Notice
of Election to Purchase mailed to a Record Holder of Units at his address as
reflected in the records of the Transfer Agent shall be conclusively presumed to
have been given whether or not the owner receives such notice. On or prior to
the Purchase Date, the General Partner, its Affiliate or the Partnership, as the
case may be, shall deposit with the Transfer Agent cash in an amount sufficient
to pay the aggregate purchase price of all of the Units to be purchased in
accordance with this Section 17.1. If the Notice of Election to Purchase shall
have been duly given as aforesaid at least ten days prior to the Purchase Date,
and if on or prior to the Purchase Date the deposit described in the preceding
sentence has been made for the benefit of the holders of Units subject to
purchase as provided herein, then from and after the Purchase Date,
notwithstanding that any Unit Certificate shall not have been surrendered for
purchase, all rights of the holders of such Units (including, without
limitation, any rights pursuant to Articles 4, 5 and 14) shall thereupon cease,
except the right to receive the purchase price (determined in accordance with
Section 17.1(a)) for the Units therefor, without interest, upon surrender to the
Transfer Agent of the Unit Certificates representing such Units, and such Units
shall thereupon be deemed to be transferred to the General Partner, its
Affiliate or the Partnership, as the case may be, on the record books of the
Transfer Agent and the Partnership, and the General Partner or any Affiliate of
the General Partner, or the Partnership, as the case may be, shall be deemed to
be the owner of all such Units from and after the Purchase Date and shall have
all rights as the owner of such Units (including, without limitations, all
rights as owner pursuant to Articles 4, 5 and 14).
(c) At any time from and after the Purchase Date, a holder of an
Outstanding Unit subject to purchase as provided in this Section 17.1 may
surrender his Unit Certificate, as the case may be, evidencing such Unit to the
Transfer Agent in exchange for payment of the amount described in Section
17.1(a), therefor without interest thereon.
ARTICLE 18 - GENERAL PROVISIONS
18.1 Addresses and Notices. Any notice, demand, request or report
required or permitted to be given or made to a Partner or Assignee under this
Agreement shall be in writing and shall be deemed given or made when delivered
in person or when sent by first-class United States mail or by other means of
written communication to the Partner or Assignee at the address described below.
Any notice, payment or report to be given or made to a Partner or Assignee
hereunder shall be deemed conclusively to have been given or made, and the
obligation to give such notice or report
66
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or to make such payment shall be deemed conclusively to have been fully
satisfied, upon sending of such notice, payment or report to the Record Holder
of such Unit at his address as shown on the records of the Transfer Agent or as
otherwise shown on the records of the Partnership, regardless of any claim of
any Person who may have an interest in such Unit or the Partnership Interest of
a General Partner by reason of any assignment or otherwise. An affidavit or
certificate of making of any notice, payment or report in accordance with the
provisions of this Section 18.1 executed by the General Partner, the Transfer
Agent or the mailing organization shall be prima facie evidence of the giving or
making of such notice, payment or report. If any notice, payment or report
addressed to a Record Holder at the address of such Record Holder appearing on
the books and records of the Transfer Agent or the Partnership is returned by
the United States Post Office marked to indicate that the United States Postal
Service is unable to deliver it, such notice, payment or report and any
subsequent notices, payments and reports shall be deemed to have been duly given
or made without further mailing (until such time as such Record Holder or
another Person notifies the Transfer Agent or the Partnership of a change in his
address) if they are available for the Partner or Assignee at the principal
office of the Partnership for a period of one year from the date of the giving
or making of such notice, payment or report to the other Partners and Assignees.
Any notice to the Partnership shall be deemed given if received by the General
Partner at the principal office of the Partnership designated pursuant to
Section 1.3. The General Partner may rely and shall be protected in relying on
any notice or other document from a Partner, Assignee or other Person if
believed by it to be genuine.
18.2 Titles and Captions. All article or Section titles or captions in
this Agreement are for convenience only. They shall not be deemed part of this
Agreement and in no way define, limit, extend or describe the scope or intent of
any provisions hereof. Except as specifically provided otherwise, references to
"Articles" and "Sections" are to Articles and Sections of this Agreement.
18.3 Pronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall including the plural and vice-versa.
18.4 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
18.5 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
18.6 Integration. This Agreement constitutes the entire agreement among
the parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.
18.7 Creditors. None of the provisions of this Agreement shall be for
the benefit of, or shall be enforceable by, any creditor of the Partnership.
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75
18.8 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
18.9 Counterparts. This Agreement may be executed in counterparts, all
of which together shall constitute an agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or, in the case of a
Person acquiring a Unit, upon executing and delivering a Transfer Application as
herein described, independently of the signature of any other party.
18.10 Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
18.11 Invalidity of Provisions. If any provision of this Agreement is
or becomes invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
TEXAS EASTERN PRODUCTS PIPELINE
COMPANY
By: W. L. THACKER
Name: W. L. Thacker
Title: President and Chief Executive Officer
LIMITED PARTNERS:
All Limited Partners now and hereafter admitted as
limited partners of the Partnership, pursuant to
Powers of Attorney now and hereafter executed in
favor of, and granted and delivered to, the General
Partner.
By: Texas Eastern Products Pipeline
Company, General Partner, as
attorney-in-fact for all Limited
Partners pursuant to the Powers of
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Attorney granted pursuant to
Section 1.4.
By: W. L. THACKER
Name: W. L. Thacker
Title: President and Chief Executive Officer
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EXHIBIT A
No transfer of the Units evidenced hereby will be registered on the
books of TEPPCO Partners, L.P. (the "Partnership"), unless the Unit Certificates
evidencing the Units to be transferred are surrendered for registration or
transfer and an Application for Transfer of Units has been executed by a
transferee either (a) on the form set forth below or (b) on a separate
application that the Partnership will furnish on request without charge. A
transferor of the Units shall have no duty to the transferee with respect to
execution of the transfer application in order for such transferee to obtain
registration of the transfer of the Units.
APPLICATION FOR TRANSFER OF UNITS
The undersigned ("Assignee") hereby applies for transfer to the name of
the Assignee of the Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited Partner
and agrees to comply with and be bound by, and hereby executes, the Agreement of
Limited Partnership of TEPPCO Partners, L.P. (the "Partnership"), as amended or
restated to the date hereof (the "Partnership Agreement"), (b) represents and
warrants that the Assignee has all right, power and authority and, if an
individual, the capacity necessary to enter into the Partnership Agreement, (c)
appoints the General Partner and the liquidator if one is appointed his attorney
to execute, swear to, acknowledge and file any document, including, without
limitation, the Partnership Agreement, any amendment to the Partnership
Agreement and the Certificate of Limited Partnership of the Partnership,
necessary or appropriate for the Assignee's admission as a Substituted Limited
Partner and as a party to the Partnership Agreement, (d) gives the powers of
attorney provided for in the Partnership Agreement and (e) makes the consents
and waivers and gives the approvals contained in the Partnership Agreement.
Capitalized terms not defined herein have the meanings assigned to such terms in
the Partnership Agreement.
Date:
----------------------------- -----------------------------------
Signature of Assignee
- ---------------------------------- -----------------------------------
Social Security or other Name and Address of Assignee
identifying number of
Assignee
- ----------------------------------
Purchase Price
(including commissions, if any)
A-1
78
TYPE OF ENTITY (CHECK ONE):
Individual Partnership Corporation
- ------------ ------------ ------------
Trust Other (specify):
- ------------ ------------ ------------
Note: If the Assignee is a broker, dealer, bank, trust company,
clearing corporation, other nominee holder or an agent of any of the foregoing,
and is holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or, in the case of any other nominee holder, a person performing a similar
function. If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee owner or an agent of any of the foregoing, the above
certification as to any Person for whom the Assignee will hold the Units shall
be made to the best of the Assignee's knowledge.
A-2
1
Exhibit 3.2
Conformed Copy
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
July 21, 1998
2
TABLE OF CONTENTS
ARTICLE I - ORGANIZATIONAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Registered Office: Principal Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Adjusted Capital Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Adjusted Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Agreed Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Agreed Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Available Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Book-Tax Disparity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Capital Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Capital Contributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Carrying Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Certificate of Limited Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Contributed Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Contributing Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Curative Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Delaware Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Departing Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Economic Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Event of Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Exchange Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
General Partner Equity Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Indemnitee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Initial Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Investor Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Investor Partnership Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Limited Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Limited Partner Equity Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Liquidator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Minimum Gain Attributable to Partner Nonrecourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
National Securities Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Net Agreed Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-i-
3
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Net Termination Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Net Termination Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Nonrecourse Built-in Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Nonrecourse Deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Nonrecourse Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Partner Nonrecourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Partner Nonrecourse Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Partnership Inception . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Partnership Minimum Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Partnership Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Percentage Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Recapture Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Record Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Required Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Residual Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Residual Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Substituted Limited Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Surviving Business Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Termination Capital Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Unitholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Unrealized Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Unrealized Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III - PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Purpose and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV - CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1 Initial Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Additional Capital Contribution by the Investor
Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.5 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.6 No Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.7 Loans from Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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ARTICLE V - ALLOCATIONS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.1 Allocations for Capital Account Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2. Allocations for Tax Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 Requirement of Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VI - MANAGEMENT AND OPERATION OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2 Certificate of Limited Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.3 Restrictions on General Partner's Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 Reimbursement of the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 Outside Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.6 Loans to and from the General Partner; Contracts with
Affiliates . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.8 Liability of Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.9 Resolution of Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.10 Other Matters Concerning the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.11 Title to Partnership Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.12 Reliance by Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII - RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.1 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2 Management of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.3 Return of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.4 Rights of the Limited Partner Relating to the Partnership . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VIII - BOOKS, RECORDS, ACCOUNTING AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.1 Records and Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.2 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE IX - TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.1 Preparation of Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.2 Tax Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.3 Tax Controversies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.4 Organizational Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.5 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.6 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE X - TRANSFER OF INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.1 Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.2 Transfer of General Partner's Partnership Interest . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.3 Transfer of the Limited Partner's Partnership Interest . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XI - ADMISSION OF PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.1 Admission of Substituted Limited Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.2 Admission of Successor or General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.3 Amendment of Agreement and Certificate of Limited
Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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ARTICLE XII - WITHDRAWAL OR REMOVAL OF PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.1 Withdrawal of the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.2 Removal of the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.3 Interest of Departing Partner and Successor General Partner . . . . . . . . . . . . . . . . . . . . 34
12.4 Reimbursement of Departing Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.5 Withdrawal of the Limited Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE XIII - DISSOLUTION AND LIQUIDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.1 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.2 Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.3 Distributions in Kind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.4 Cancellation of Certificate of Limited Partnership . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.5 Reasonable Time for Winding Up. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.6 Return of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.7 No Capital Account Restoration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.8 Waiver of Partition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE XIV - AMENDMENT OF PARTNERSHIP AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
14.1 Amendment to be Adopted Solely by General Partner . . . . . . . . . . . . . . . . . . . . . . . . . 36
14.2 Amendment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE XI - MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
15.1 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
15.2 Procedure for Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
15.3 Approval by Limited Partner of Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . . . 39
15.4 Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
15.5 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE XVI - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
16.1 Addresses and Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
16.2 Titles and Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
16.3 Pronouns and Plurals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
16.4 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
16.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
16.6 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
16.7 Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
16.8 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
16.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
16.10 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
16.11 Invalidity of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF TE
PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP, dated as of July 21, 1998 is
entered into by and among Texas Eastern Products Pipeline Company, a Delaware
corporation (the "Company"), as the General Partner and TEPPCO Partners, L.P.,
a Delaware limited partnership, as the Limited Partner. In consideration of
the covenants, conditions and agreements contained herein, the parties hereto
hereby agree as follows:
WHEREAS, the General Partner and Limited Partner entered into that
certain Agreement of Limited Partnership of the Partnership dated as of March
7, 1990 (the "1990 Agreement"); and
WHEREAS, Section 14.1 of the 1990 Agreement permits the General
Partner, without the approval of any Limited Partner or Assignee, to amend any
provision of the 1990 Agreement to reflect a change that, in the sole
discretion of the General Partner, does not adversely affect the Limited
Partners in any material respects; and
WHEREAS, the General Partner has determined that none of the changes
effected hereby adversely affects the Limited Partners in any material respect;
NOW, THEREFORE, the General Partner does hereby amend and restate the
Agreement of Limited Partnership of the Partnership to provide, in its
entirety, as follows:
ARTICLE I - ORGANIZATIONAL MATTERS
1.1 Formation. The General Partner and the Limited Partner hereby
continue the Partnership as a limited partnership pursuant to the provisions of
the Delaware Act, and hereby amend and restate the original Agreement of
Limited Partnership in its entirety. Except as expressly provided to the
contrary in this Agreement, the rights and obligations of the Partners and the
administration, dissolution and termination of the Partnership shall be
governed by the Delaware Act. The Partnership Interest of each Partner shall
be personal property for all purposes.
1.2 Name. The name of the Partnership shall be "TE Products
Pipeline Company, Limited Partnership." The Partnership's business may be
conducted under any other name or names deemed necessary or appropriate by the
General Partner, including, without limitation, the name of the General Partner
or any Affiliate thereof. The words "Limited Partnership, "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole discretion may change the name of
the Partnership at any time and from time to time and shall notify the Limited
Partner of such change in the next regular communication to the Limited
Partner.
7
Notwithstanding the foregoing, unless otherwise permitted by PEC and Duke, the
Partnership shall change its name to a name not including "TE," "TEPPCO,"
"Texas Eastern", "PanEnergy" or "Duke" and shall cease using the name "TE,"
"TEPPCO," "Texas Eastern," "PanEnergy" or Duke or other names or symbols
associated therewith at such time as neither Texas Eastern Products Pipeline
Company nor another Affiliate of PanEnergy or Duke is the general partner of
the Partnership.
1.3 Registered Office: Principal Office. Unless and until changed
by the General Partner, the registered office of the Partnership in the State
of Delaware shall be located at The Corporation Trust Center, 1209 Orange
Street, New Castle County, Wilmington, Delaware 19801 and the registered agent
for service of process on the Partnership in the State of Delaware at such
registered office shall be The Corporation Trust Company. The principal office
of the Partnership and the address of the General Partner shall be 2929 Allen
Parkway, Houston, Texas 77019-2119, or such other place as the General Partner
may from time to time designate by notice to the Limited Partner. The
Partnership may maintain offices at such other place or places within or
outside the State of Delaware as the General Partner deems advisable.
1.4 Power of Attorney.
(a) The Limited Partner hereby constitutes and appoints each of
the General Partner and, if a Liquidator shall have been selected pursuant to
Section 13.2, the Liquidator severally (and any successor to either thereof by
merger, transfer, assignment, election or otherwise) and each of their
authorized officers and attorneys-in-fact, with full power of substitution, as
his true and lawful agent and attorney-in-fact, with full power and authority
in his name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (A) all certificates,
documents and other instruments (including, without limitation, this
Agreement and the Certificate of Limited Partnership and all
amendments or restatements thereof) that the General Partner or the
Liquidator deems necessary or appropriate to form, qualify or continue
the existence or qualification of the Partnership as a limited
partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other
jurisdictions in which the Partnership may conduct business or own
property; (B) all certificates, documents and other instruments that
the General Partner or the Liquidator deems necessary or appropriate
to reflect, in accordance with its terms, any amendment, change,
modification or restatement of this Agreement; (C) all certificates,
documents and other instruments (including, without limitation,
conveyances and a certificate of cancellation) that the General
Partner or the Liquidator deems necessary or appropriate to reflect
the dissolution and liquidation of the Partnership pursuant to the
terms of this Agreement; (D) all certificates, documents and other
instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other events described in,
Article X, XI, XII or XIII or the Capital Contribution of any Partner;
(E) all certificates, documents and other instruments (including,
without limitation, agreements and a certificate of merger) relating
to a merger or consolidation of the Partnership pursuant to Article
XV; and
2
8
(ii) execute, swear to, acknowledge, deliver, file and
record all ballots, consents, approvals, waivers, certificates and
other instruments necessary or appropriate, in the sole discretion of
the General Partner or the Liquidator, to make, evidence, give,
confirm or ratify any vote, consent, approval, agreement or other
action that is made or given by the Partners hereunder or is
consistent with the terms of this Agreement or is necessary or
appropriate, in the sole discretion of the General Partner or the
Liquidator, to effectuate the terms or intent of this Agreement;
provided, that when the consent or approval of the Limited Partner is
required by any provision of this Agreement, the General Partner or
the Liquidator may exercise the power of attorney made in this Section
1.4(a) (ii) only after the necessary consent or approval of the
Limited Partner.
Nothing contained in this Section 1.4 shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article XIV,
or as may be otherwise expressly provided for in this Agreement
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and not
be affected by the subsequent death, incompetency, disability, incapacity,
dissolution, bankruptcy or termination of the Limited Partner and the transfer
of all or any portion of such Limited Partner's Partnership Interest and shall
extend to such Limited Partner's heirs, successors, assigns and personal
representatives. The Limited Partner hereby agrees to be bound by any
representation made by the General Partner or the Liquidator acting in good
faith pursuant to such power of attorney; and the Limited Partner hereby waives
any and all defenses that may be available to contest, negate or disaffirm the
action of the General Partner or the Liquidator taken in good faith under such
power of attorney. The Limited Partner shall execute and deliver to the
General Partner or the Liquidator, within fifteen days after receipt of the
General Partner's or the Liquidator's request therefor, such further
designation, powers of attorney and other instruments as the General Partner or
the Liquidator deems necessary to effectuate this Agreement and the purposes of
the Partnership.
1.5 Term. The Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware Act and
shall continue in existence until the close of Partnership business on December
31, 2084, or until the earlier termination of the Partnership in accordance
with the provisions of Article XIII.
ARTICLE II - DEFINITIONS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each fiscal year of the Partnership, (a)
increased by any amounts that such Partner is obligated to restore under the
standards set by Treasury Regulation Section 1.704-(2)(g)(i) and 1.701-2(i)(5)
to be allocated to such Partner in subsequent years under items described in
Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5)
and 1.704- 2(b)(2)(ii)(d)(6). The foregoing definition of Adjusted Capital
Account is intended to comply with the provisions of Treasury Regulation
Section 1.704-(b)(2)(ii)(d) and shall be interpreted consistently therewith.
3
9
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Section 4.4(d).
"Affiliate" means, with respect to any Person, any Other Person that
directly or indirectly controls, is controlled by or is under common control
with, the Person in question. As used herein, the term control means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Agreed Allocation" means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant to the
provisions of Section 5.1 including, without limitation, a Curative Allocation
(if appropriate to the context in which the term "Agreed Allocation" is used).
"Agreed Value" of any Contributed Property means the fair market value
of such property or other consideration at the time of contribution as
determined by the General Partner using such reasonable method of valuation as
it may adopt; and the General Partner shall, in its sole discretion, use such
method as it deems reasonable and appropriate to allocate the aggregate Agreed
Value of Contributed Properties conveyed to the Partnership in a single or
integrated transaction among each separate property on a basis proportional to
the fair market value of each Contributed Property.
"Agreement" means this Agreement of Limited Partnership of TE Products
Pipeline Company, Limited Partnership, as it may be amended, supplemented or
restated from time to time.
"Available Cash" means, with respect to any calendar quarter, (i) the
sum of (A) all cash receipts of the Partnership during such quarter from all
sources and (B) any reduction in reserves established in prior quarters, less
(ii) the sum of (aa) all cash disbursements of the Partnership during such
quarter (excluding cash distributions to Partners, but including disbursements
for taxes of the Partnership as an entity, debt service and capital
expenditures) and (bb) any reserves established in such quarter in such amounts
as the General Partner determines to be necessary or appropriate in its
reasonable discretion (x) to provide for the proper conduct of the business of
the Partnership (including reserves for future rate refunds or capital
expenditures) or (y) to provide funds for distributions with respect to any of
the next four calendar quarters and (cc) any other reserves established in such
quarter in such amounts as the General Partner determines in its reasonable
discretion to be necessary because the distribution of such amounts would be
prohibited by applicable law or by any loan agreement, security agreement,
mortgage, debt instrument or other agreement or obligation to which the
Partnership is a party or by which it is bound or its assets are subject.
Taxes paid by the Partnership on behalf of, or amounts withheld with respect
to, all or less than all of the Partners shall not be considered cash
disbursements of the Partnership which reduce "Available Cash," but the payment
or withholding thereof shall be deemed to be a distribution of Available Cash
to Partners. Alternatively, in the discretion of the General Partner, such
taxes (if pertaining to all partners) may be considered to be cash
disbursements of the Partnership which reduce "Available Cash", but the payment
or withholding thereof shall not be deemed to be a distribution of Available
Cash to Partners. Notwithstanding the foregoing, "Available Cash" shall not
include any cash receipts or reductions in reserves or take into account any
disbursements made or reserves established after commencement of the
dissolution and liquidation of the Partnership.
4
10
"Book-Tax Disparity" means with respect to any item of Contributed
Property o: Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all
of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained
pursuant to Section 4.4 and the hypothetical balance of such Partner's Capital
Account computed as if it had been maintained strictly ire accordance with
federal income tax accounting principles.
"Capital Account" means the capital account maintained for a Partner
pursuant to Section 4.4.
"Capital Contributor" means any cash, cash equivalents or the Net
Agreed Value of Contributed Property that a Partner has contributed or may
contribute to the Partnership pursuant to Section 4.1, 4.2 or 4.4(c)(i).
"Carrying Value" means (a) with respect to a Contributed Property the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' Capital
Accounts, and (b) with respect to any other Partnership property, the adjusted
basis of such property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted from time
to time in accordance with Sections 4.4(d)(i) and 4.4(d)(ii) and to reflect
changes, additions or other adjustments to the Carrying Value for dispositions
and acquisitions of Partnership properties, as deemed appropriate by the
General Partner.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership tiled with the Secretary of State of the State of Delaware as
referenced in Section 6.2 hereof, as such Certificate may be amended and/or
restated from time to time.
"Closing Date" means the date on which the "First Time of Delivery"
occurs as such term is defined in the Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Contributed Property" means each property or other asset, in such
form as may be permitted by the Delaware Act, but excluding cash contributed to
the Partnership (or deemed contributed to the Partnership on termination and
reconstitution thereof pursuant to Section 708 of the Code or otherwise). Once
the Carrying Value of a Contributed Property is adjusted pursuant to Section
4.4(d)(i), such property shall no longer constitute a Contributed Property, but
shall be deemed an Adjusted Property.
5
11
"Contributing Partner" means each Partner contributing (or deemed to
have contributed on termination and reconstitution of the Partnership pursuant
to Section 708 of the Code or otherwise) a Contributed Property.
"Curative Allocation" means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 5.1(d) (ix).
"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 12.1 or Section 12.2.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.704-2(i)(1).
"Event of Withdrawal" has the meaning assigned to such term in Section
12.1(a).
"Exchange Act" means the Securities Exchange Act of 1934 as amended,
supplemented or restated from time to time, and any successor to such statute.
"General Partner" means Texas Eastern Products Pipeline Company, a
Delaware corporation, and its successors as general partner of the Partnership.
"General Partner Equity Value" means, as of any date of determination,
the fair market value of the General Partner's Partnership Interest, as
determined by the General Partner using whatever reasonable method of valuation
it may adopt.
"Indemnitee" means the General Partner, any Departing Partner, any
Person who is or was an Affiliate of the General Partner or any Departing
Partner, any Person who is or was an officer, director, employee, partner,
agent or trustee of the General Partner or any Departing Partner or any such
Affiliate, or any Person who is or was serving at the request of the General
Partner or any Departing Partner or any such Affiliate as a director, officer,
employee, partner, agent or trustee of another Person.
"Initial Offering" means the initial offering of Units to the public,
as described in the Registration Statement.
"Investor Partnership" means TEPPCO Partners, L.P. a Delaware limited
partnership.
"Investor Partnership Agreement" means the Agreement of Limited
Partnership of the Investor Partnership, dated March 7, 1990.
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"Limited Partner" means the Limited Partner, each Substituted Limited
Partner, if any, and each other Person, if any, that is admitted to the
Partnership as a limited partner pursuant to Section 11.1 and that is shown as
a limited partner on the books and records of the Partnership.
"Limited Partner Equity Value" means, as of any date of determination,
the fair market value of the Limited Partner's Partnership Interest, as
determined by the General Partner using whatever reasonable method of valuation
it may adopt.
"Liquidator" means the General Partner or other Person approved
pursuant to Section 13.2 who performs the functions described therein.
"Merger Agreement" has the meaning assigned to such term in Section
15.1.
"Minimum Gain Attributable to Partner Nonrecourse" means that amount
determined in accordance with the principles of Treasury Regulation Section
1.704-2(i)(3).
"National Securities Exchange" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Exchange Act.
"Net Agreed Value" means, (a) in the case of any Contributed Property,
the Agreed Value of such property reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property is subject
when contributed, and (b) in the case of any property distributed to a Partner
by the Partnership, the Partnership's Carrying Value of such property (as
adjusted pursuant to Section 4.4(d) (ii)) at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution, in either case, as determined under Section 752 of the Code.
"Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain (other than those items attributable to
dispositions constituting Termination Capital Transactions) for such taxable
period over the Partnership's items of loss and deduction (other than those
items attributable to dispositions constituting Termination Capital
Transactions) for such taxable period. The items included in the calculation
of Net Income shall be determined in accordance with Section 4.4(b) and shall
not include any items specially allocated under Section 5.1(d). Once an item
of income, gain, loss or deduction that has been included in the initial
computation of Net Income is subjected to a Required Allocation or a Curative
Allocation, the applicable Net Income or Net Loss shall be recomputed without
regard to such item.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction (other than those items attributable
to dispositions constituting Termination Capital Transactions) for such taxable
period over the Partnership's items of income and gain (other than those items
attributable to dispositions constituting Termination Capital Transactions) for
such taxable period. The items included in the calculation of Net Loss shall
be determined in accordance with Section 4.4(b) and shall not include any items
specifically allocated under Section 5.1(d). Once an item of income, gain,
loss or deduction that has been included in the initial computation of Net Loss
is subjected to a Required Allocation or a Curative Allocation, the applicable
Net Income or Net Loss shall be recomputed without regard to such item.
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"Net Termination Gain" means, for any taxable period, the sum, if
positive, of all items of income, gain or loss recognized by the Partnership
from Termination Capital Transactions occurring in such taxable period. The
items included in the determination of Net Termination Gain shall be determined
in accordance with Section 4.4(b) and shall not include any items of income,
gain or loss specifically allocated under Section 5.1(d). Once an item of
income, gain or loss that has been included in the initial computation of Net
Termination Gain is subjected to a Required Allocation or a Curative
Allocation, the applicable Net Termination Gain or Net Termination Loss shall
be recomputed without regard to such item;
"Net Termination Loss" means, for any taxable period, the sum, if
negative, of any items of income, gain or loss recognized by the Partnership
from Termination Capital Transactions occurring in such taxable period. The
items included in the determination of Net Termination Loss shall be determined
in accordance with Section 4.4(b) and shall not include any items or income,
gain or loss specifically allocated under section 5.1(d). Once an item of gain
or loss that has been included in the initial computation of Net Termination
Loss is subjected to a Required Allocation or a Curative Allocation, the
applicable Net Termination Gain or Net Termination Loss shall be recomputed
without regard to such item;
"Nonrecourse Built-in Gain" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Sections 5.2(b) (i) (A), 5.2(b)
(ii) (A) or 5.2(b) (iv) if such properties were disposed of in a taxable
transaction in full satisfaction of such liabilities and for no other
consideration.
"Nonrecourse Deduction" means any and all items of loss, deduction or
expenditure (described in Section 705(a) (2) (B) of the Code) that, in
accordance with the principles of Treasury Regulation Section 1.704-2(b)(1) and
1.704- 2(c), are attributable to a Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulation Section 1.704-2(b).
"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to the Partnership or the General Partner) acceptable to the
General Partner.
"Outstanding" means all Partnership Interests of the Limited Partner
that are issued by the Partnership and reflected as outstanding on the
Partnership's books and records as of the date of determination.
"Partner" means the General Partner and the Limited Partner.
"Partner Nonrecourse" has the meaning set forth in Treasury Regulation
Section 1.704-2(b).
"Partner Nonrecourse Deductions" means any and all items of loss,
deduction or expenditure (including any expenditure described in Section 705(a)
(2) (B) of the Code) that, in accordance with the principles of Treasury
Regulation Section 1.704-2(i)(1) and 1.704-2(i)(2), are attributable to a
Partner Nonrecourse Debt.
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"Partnership" means TE Products Pipeline Company, Limited Partnership,
a Delaware limited partnership established pursuant to this Partnership
Agreement, and any successor thereto.
"Partnership Inception" means the March 7, 1990.
"Partnership Interests" means the interest of a Partner in the
Partnership.
"Partnership Minimum Gain" means the amount determined in accordance
with thin principles of Treasury Regulation Sections 1.704-2(b)(2) and
1.704-2(d).
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"PEC" means PanEnergy Corp., a Delaware corporation.
"Percentage Interest" means as of the date of such determination (a)
as to the General Partner, 1.0101% and (b) as to the Limited Partner, 98.9899%.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Sections 734 or 743 of
the Code) upon the disposition of any property or asset of the Partnership,
which gain is characterized as ordinary income because it represents the
recapture of deductions previously taken with respect to such property or
assets.
"Record Holder" has the meaning assigned to such term in the Investor
Partnership Agreement.
"Registration Statement" means the Registration Statement on Form S-1
(Registration No. 33-32203), as it may have been amended or supplemented from
time to time, filed by the Investor Partnership with the Securities and
Exchange Commission under the Securities Act to register the offering and sale
of the Units in the Initial Offering.
"Required Allocations" means any allocation (or limitation imposed on
any allocation) of an item of income, gain, deduction or loss pursuant to (a)
the proviso- clause of Sections 5.1(b)(i) or (b) Sections 5.1(d)(i), 5.1(d)
(ii), 5.1(d) (iii), 5.1(d)(iv) 5.1(d)(v), 5.1(d) (vi) and 5.1(d) (viii), such
allocations (or limitations thereon) being directly or indirectly required by
the Treasury Regulations promulgated under Section 704(b) of the Code.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Sections 5.2(b)(i)(A) or 5.2(b) (ii) (A), respectively, to
eliminate Book-Tax Disparities.
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"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such statute.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.2 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 15.2(b).
"Termination Capital Transactions" means any sale, transfer or other
disposition of property of the Partnership occurring upon or incident to the
liquidation and winding up of the Partnership pursuant to Article XIII.
"Unit" has the meaning assigned to such term in the Investor
Partnership Agreement.
"Unitholder" means a Person who holds Units.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the fair
market value of such property as of such date (as determined under Section
4.4(d)) over (b) the Carrying Value of such property as of such date (prior to
any adjustment to be made pursuant to Section 4.4(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination the excess, if any, of (a) the (Carrying
Value of such property as of such date (prior to any adjustment to be made
pursuant to Section 4.4(d) as of such date) over (b) the fair market value of
such property as of such date (as determined under Section 4.4(d)).
ARTICLE III - PURPOSE
3.1 Purpose and Business. The purpose and nature of the business
to be conducted by the Partnership shall be (i) to engage in the common carrier
transportation of refined petroleum products and liquefied petroleum gases and
related products and related terminaling, storage and other activities through
ownership of the Pipeline System,, (ii) to engage directly in, or to enter into
any partnership, joint venture or similar arrangement to engage in, any
business activity that may be lawfully conducted by a limited partnership
organized pursuant to the Delaware Act and, in connection therewith, to
exercise all of the rights and powers conferred upon the Partnership pursuant
to the agreements relating to such business activity, (iii) to do anything
necessary or appropriate to the foregoing, and (iv) to engage in any other
business activity as permitted under Delaware law. The General Partner has no
obligation or duty to the Partnership or the Limited Partner to propose or
approve, and in its sole discretion may decline to propose or approve, the
conduct by the Partnership pursuant to such clauses (ii) and (iv) above of any
business other than as contemplated by clause (i) above.
3.2 Powers. The Partnership shall be Empowered to do any and all
acts and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and
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accomplishment of the purposes and business described in Section 3.1 and for
the protection and benefit of the Partnership.
ARTICLE IV - CAPITAL CONTRIBUTIONS
4.1 Initial Contributions. The initial Capital Contributions of
the General Partner in the initial Limited Partners were made in accordance
with Article IV of the 1990 Agreement.
4.2 Additional Capital Contribution by the Investor Partnership.
The Investor Partnership, with the consent of the General Partner, may, but
shall not be obligated to, make additional Capital Contributions to the
Partnership.
4.3 Preemptive Rights. The Limited Partner shall have preemptive
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.
4.4 Capital Accounts.
(a) The Partnership shall maintain for each Partner a
separate Capital Account in accordance with the rules of Treasury Regulation
Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the
amount of all Capital Contributions made to the Partnership pursuant to this
Agreement and (ii) all items of Partnership income and gain (including, without
limitation, income and gain exempt from tax) computed in accordance with
Section 4.4(b) and allocated pursuant to Section 5.1 and decreased by (x) the
amount of cash or Net Agreed Value of all actual and deemed distributions of
cash or property made to such Partner pursuant to this Agreement and (y) all
items of Partnership deduction and loss computed in accordance with Section
4.4(b) and allocated to such Partner pursuant to Section 5.1.
(b) For purposes of computing the amount of any item of
income, gain, loss or deduction to be reflected in the Partners' Capital
Accounts, the determination, recognition and classification of any such item
shall be the same as its determination, recognition and classification for
federal income tax purposes (including, without limitation, any method of
depreciation, cost recovery or amortization used for that purpose), provided
that:
(i) All fees and other expenses incurred by the
Partnership to promote the sale of (or to sell) a Partnership Interest
that can neither be deducted nor amortized under Section 709 of the
Code, if any, shall, for purposes of Capital Account maintenance, be
treated as an item of deduction at the time such fees and other
expenses are incurred and shall be allocated among the Partners
pursuant to Section 5.1.
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(ii) Except as otherwise provided in Treasury Regulation
Section 1.704-1(b) (2) (iv) (m), the computation of all items of
income, gain, loss and deduction shall be made without regard to any
election under Section 754 of the Code which may be made by the
Partnership and, as to those items described in Section 705(a)(l)(B)
or 705(a) (2) (B) of the Code, without regard to the fact that such
items are not includable in gross income or are neither currently
deductible nor capitalized for federal income tax purposes.
(iii) 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.
(iv) In accordance with the requirements of Section 704(b)
of the Code, any deductions for depreciation, cost recovery or
amortization attributable to any Contributed Property shall be
determined as if the adjusted basis of such property on the date it
was acquired by the Partnership were equal to the Agreed Value of such
property. Upon an adjustment pursuant to Section 4.4(d) to the
Carrying Value of any Partnership property subject to depreciation,
cost recovery or amortization, any further deductions for such
depreciation, cost recovery or amortization attributable to such
property shall be determined (A) as if the adjusted basis of such
property were equal to the Carrying Value of such property immediately
following such adjustment and (B) using a rate of depreciation, cost
recovery or amortization derived from the same method and useful life
(or, if applicable, the remaining useful life) as is applied for
federal income tax purposes; provided, however, that, if the asset has
a zero adjusted basis for federal income tax purposes, depreciation,
cost recovery or amortization deductions shall be determined using any
reasonable method that the General Partner may adopt.
(v) If the Partnership's adjusted basis in depreciable or
cost recovery property is reduced for federal income tax purposes
pursuant to Section 48(q) (1) or 48(q)(3) of the Code, the amount of
such reduction shall, solely for purposes hereof, be deemed to be an
additional depreciation or cost recovery deduction in the year such
property is placed in service and shall be allocated among the
Partners pursuant to Section 5.1. Any restoration of such basis
pursuant to Section 48(q) (2) of the Code shall, to the extent
possible, be allocated in the same manner to the Partners to whom such
deemed deduction was allocated.
(c) A transferee of a Partnership Interest shall succeed to a pro
rata portion of the Capital Account of the transferor relating to the
Partnership Interest so transferred.
(d) (i) Consistent with the provisions of Treasury Regulation
Section 1.704-1(b)(2)iv)(f), on an issuance of additional Partnership Interests
for cash or Contributed Property, the Capital Accounts of all Partners and the
Carrying Value of each Partnership property immediately prior to such issuance
shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership Property, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual sale of
each such Property immediately prior to such issuance and had been allocated to
the Partners at such time pursuant to Section 5.1. In determining such
Unrealized Gain or Unrealized Loss, the aggregate cash amount and fair market
value of all Partnership assets
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(including, without limitation, cash or cash equivalents) immediately prior to
the issuance of Partnership interests shall be determined by the General
Partner using such reasonable method of valuation as it may adopt; provided
however, the General Partner, in arriving at such valuation must take into
account the Limited Partner Equity Value and the General Partner Equity Value,
at such time. The General Partner shall allocate such aggregate value among
the assets of the Partnership (in such manner as it determines in its sole
discretion to be reasonable) to arrive at a fair market value for individual
properties.
(ii) In accordance with Treasury Regulation Section 1.704-1(b) (2)
(iv) (f), immediately prior to any actual or deemed distribution to a Partner
of any Partnership property (other than a distribution of cash that is not in
redemption or retirement of a Partnership Interest), the Capital Accounts of
all Partners and the Carrying Value of each Partnership property shall be
adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized Gain or
Unrealized Loss had been recognized in a sale of such property immediately
prior to such distribution for an amount equal to its fair market value, and
had been allocated to the Partners, at such time, pursuant to Section 5.1. Any
Unrealized Gain or Unrealized Loss attributable to such property shall be
allocated in the same manner as Net Termination Gain or Net Termination Loss
pursuant to Section 5.1(c); provided, however, that, in making any such
allocation, Net Termination Gain or Net Termination Loss actually realized
shall be allocated first. In determining such Unrealized Gain or Unrealized
Loss, the aggregate cash amount and fair market value of all Partnership assets
(including, without limitation, cash or cash equivalents) immediately prior to
a distribution shall be determined and allocated by the Liquidator using such
reasonable methods of valuation as it may adopt.
4.5 Interest. No interest shall be paid by the Partnership on
Capital Contributions or on balances in Partners' Capital Accounts.
4.6 No Withdrawal. No Partner shall be entitled to withdraw any
part of its Capital Contributions or its Capital Account or to receive any
distribution from the Partnership, except as provided herein.
4.7 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.
ARTICLE V - ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocations for Capital Account Purposes. For purposes of
maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnership's items of income, gain, loss and deduction
(computed in accordance with Section 4.4(b)) shall be allocated among the
Partners in each taxable year (or portion thereof) as provided hereinbelow.
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(a) Net Income. After giving effect to the special allocations
set forth in Section 5.1(d), Net Income for each taxable period and all items
of income, gain, loss and deduction taken into account in computing Net Income
for such taxable period shall be allocated as follows:
(i) First, 100% to the General Partner until the
aggregate Net Income allocated to the General Partner pursuant to this
Section 5.1(a) (i) for the current taxable year and all previous
taxable years is equal to the aggregate Net Losses allocated to the
General Partner pursuant to Section 5.1(b) (ii) for all previous
taxable years; and
(ii) Second, the balance, if any, 100% to the General
Partner and the Limited Partner in accordance with their respective
Percentage Interests.
(b) Net Losses. After giving effect to the special allocations
set forth in Section 5.1(d), Net Losses for each taxable period and all items
of income, gain, loss and deduction taken into account in computing Net Losses
for such taxable period shall be allocated as follows:
(i) First, 100% to the General Partner and the Limited
Partner in accordance with their respective Percentage Interests,
provided, that Net Losses shall not be allocated pursuant to this
Section 5.1(b) (ii) to the extent that such allocation would cause any
Limited Partner to have a deficit balance in its Adjusted Capital
Account at the end of such taxable year (or increase any existing
deficit balance in its Adjusted Capital Account); and
(ii) Second, the balance, if any, 100% to the General
Partner.
(c) Net Termination Gains and Losses. After giving effect to the
special allocations set forth in Section 5.1(d), all items of gain and loss
taken into account in computing Net Termination Gain or Net Termination Loss
for such taxable period shall be allocated in the same manner as such Net
Termination Gain or Net Termination Loss is allocated hereunder. All
allocations under this Section 5.1(c) shall be made after Capital Account
balances have been adjusted by all other allocations provided under this
Section 5.1 and after all distributions of Available Cash have been made with
respect to the taxable period ending on the date of the Partnership's
liquidation pursuant to Section 13.2.
(i) If a Net Termination Gain is recognized (or deemed
recognized pursuant to Section 4.4(d)) from Termination Capital
Transactions, such Net Termination Gain shall be allocated between the
General Partner and the Limited Partner in the following manner:
(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, 100% to the General Partner and the
Limited Partner, in accordance with their respective
Percentage Interests.
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(ii) If a Net Termination Loss is recognized (or deemed
recognized pursuant to Section 4.4(d)) from Termination Capital
Transactions, such Net Termination Loss shall be allocated to the
Partners in the following manner:
(A) First, 100% to the General Partner and the
Limited Partner 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 Partner.
(d) Special Allocation. Notwithstanding any other provision of
this Section 5.1, the following special allocations shall be made for such
taxable period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding
any other provision of this Section 5.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period, each
Partner shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in proportion to,
and to the extent of, an amount equal to the greater of (A) the
portion of such Partner's share of the net decrease in Partnership
Minimum Gain during such taxable period that is allocable (in
accordance with the principles set forth in Treasury Regulation
Section 1.704-(2)(g)) to the disposition of Partnership property
subject to one or more Nonrecourse Liabilities of the Partnership, or
(B) the deficit balance in such Partner's Adjusted Capital Account at
the end of such taxable period (modified, as appropriate, by Treasury
Regulation Section 1.704-2(g)). The items to be so allocated shall be
determined in accordance with Treasury Regulation Section
1.704-(2)(f)(6) and 1.704-2(j)(2) and, for purposes of this Section
5.1(d), each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder
shall be effected, prior to the application of any other allocations
pursuant to this Section 5.1(d) with respect to such taxable period.
This Section 5.1(d)(i) is intended to comply with the Partnership
Minimum Gain chargeback requirement in Treasury Regulation Section
1.704-2(f) and shall be interpreted consistently therewith.
(ii) Chargeback of Minimum Gain Attributable to Partner
Nonrecourse Debt. Notwithstanding the other provisions of this
Section 5.1 (other than Section 5.1(d)(i)), if there is a net decrease
in Minimum Gain Attributable to Partner Nonrecourse Debt during any
Partnership taxable period, any Partner with a share of Minimum Gain
Attributable to Partner Nonrecourse Debt at the beginning of such
taxable period shall be allocated items of Partnership income and gain
for such period (and, if necessary, subsequent periods) in proportion
to, and to the extent of, an amount equal to the greater of (A) the
portion of such Partner's share of the net decrease in the Minimum
Gain Attributable to Partner Nonrecourse Debt that is allocable (in
accordance with the principles set forth in Treasury Regulation
Section 1.704-2(i)) to the disposition of Partnership property subject
to such Partner Nonrecourse Debt or (B) the deficit balance in such
Partner's Adjusted Capital Account at the end of such taxable period
(modified, as appropriate, by Treasury Regulation Section 1.704-2(i)).
The items to be so allocated shall be determined in a manner
consistent with the principles of Treasury Regulation Sections
1.704-2(i)(4) and 1.704-2(j)(2) and, for purposes of this Section
5.1(d), each Partner's Adjusted Capital Account balance shall be
determined,
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and the allocation of income or gain required hereunder shall be
effected, prior to the application of any other allocations pursuant
to this Section 5.1(d), other than Section 5.1(d)(i), with respect to
such taxable period. This Section 5.1(d) (ii) is intended to comply
with the chargeback of items of income and gain requirement in
Treasury Regulation Section 1.704-2(i) and shall be interpreted
consistently therewith.
(iii) Qualified Income Offset. Except as provided in
Sections 5.1(d)(i) and 5.1(d) (ii), in the event any Partner
unexpectedly receives any adjustments, allocation or distributions
described in Treasury Regulation Section 1.704-1(b) (2) (ii) (d) (4),
1.704-1(b) (2) (ii) (d) (5), or 1.704-1(b) (2) (ii) (d) (6), items of
Partnership income and gain shall be specifically allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations, the deficit balance, if any, in
its Adjusted Capital Account created by such adjustments, allocations
or distributions as quickly as possible; provided, that an allocation
pursuant to this Section 5.1(d) (iii) shall be made only if and to the
extent that such partner would have a deficit balance in its Adjusted
Capital Account after all other allocations provided in this Section
5.1 have been tentatively made as if this Section 5.1(d) (iii) were
not in this Agreement.
(iv) Gross Income Allocations. In the event any Partner
has a deficit balance in its Capital Account at the end of any
Partnership taxable Period that is in excess of the sum of (A) the
amount such Partner is obligated to restore pursuant to any provision
of this Agreement and (B) the amount such Partner is deemed to be
obligated to restore pursuant to the penultimate sentences of Treasury
Regulation Sections 1.704- 2(g)(i) and 1.704-2(i)(5), such Partner
shall be specially allocated items of Partnership gross income and
gain in the amount of such excess as quickly as possible; provided,
that an allocation pursuant to this Section 5.1(d) (iv) shall be made
only if and to the extent that such Partner would have a deficit
Capital Account in excess of such sum after all other allocations
provided for in this Section 5.1 have been tentatively made as if
Section 5.1(d) (iii) and this Section 5.1(d)(iv) were not in this
Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in the same ratios
that Net Income or Net Losses, as the case may be, is allocated for
the taxable year. If the General Partner determines in its good faith
discretion that the Partnership's Nonrecourse Deductions must be
allocated in a different ratio to satisfy the safe harbor requirements
of the Treasury Regulations promulgated under Section 704(b) of the
Code, the General Partner is authorized, upon notice to the Limited
Partners, to revise the prescribed ratio to the numerically closest
ratio that does satisfy such requirements.
(vi) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the
Partner that bears the Economic Risk of Loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable in accordance with Treasury Regulation Section
1.704-1T(b)(4)(iv)(h). 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
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allocated between or among such Partners in accordance with the ratios
in which they share such Economic Risk of Loss.
(vii) Nonrecourse Liabilities. The Partners agree that
Nonrecourse Liabilities of the Partnership in excess of the sum of (A)
the amount of Partnership Minimum Gain and (B) the total amount of
Nonrecourse Built- in Gain shall be allocated among the Partners in
accordance with their respective Percentage Interests.
(viii) Code Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant
to Section 734(b) or 743(b) of the Code is required, pursuant to
Treasury Regulation Section 1.704-1(b) (2) (iv) (m), to be taken into
account in determining Capital Accounts, the amount of such adjustment
to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis), and such item of gain or loss shall
be specially allocated to the Partners in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted
pursuant to such Section of the Treasury Regulations.
(ix) Curative Allocation. (A) Notwithstanding any other
provision of this Section 5.1, other than the Required Allocation
provisions, the Required Allocations shall be taken into account in
making the Agreed Allocations so that, to the extent possible, the net
amount of items of income, gain, loss and deduction allocated to each
Partner pursuant to the Required Allocations and the Agreed
Allocations, together, shall be equal to the net amount of such items
that would have been allocated to each such Partner under the Agreed
Allocations had the Required Allocations and this Curative Allocation
not otherwise been provided in this Section 5.1. Notwithstanding the
preceding sentence, Required Allocations relating to (l) Nonrecourse
Deductions shall not be taken into account except to the extent that
there has been a decrease in Partnership Minimum Gain and (2) Partner
Nonrecourse Deductions shall not be taken into account except to the
extent that there has been a decrease in Minimum Gain Attributable to
Partner Nonrecourse Debt. Allocations pursuant to this Section 5.1(d)
(ix) (A) shall only be made with respect to Required Allocations to
the extent the General Partner reasonably determines that such
allocations will otherwise be inconsistent with the economic agreement
among the Partners. Further, allocations pursuant to this Section
5.1(d) (ix) (A) shall be deferred with respect to allocations pursuant
to clauses (l) and (2) hereof to the extent the General Partner
reasonably determines that such allocations are likely to be offset by
subsequent Required Allocations.
(B) The General Partner shall have reasonable discretion,
with respect to each taxable period, to (1) apply the provisions of
Section 5.1(d) (ix) (A) in whatever order is most likely to minimize
the economic distortions that might otherwise result from the Required
Allocations, and (2) divide all allocations pursuant to Section 5 1(d)
(ix) (A) among the Partners in a manner that is likely to minimize
such economic distortions.
5.2. Allocations for Tax Purposes.
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(a) Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated
among the Partners in the same manner as its correlative item of "book" income,
gain, loss or deduction is allocated pursuant to Section 5.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the
manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property and
its adjusted basis at the time of contribution; and (B) except as
otherwise provided in Section 5.2(b) (iv), any item of Residual Gain
or Residual Loss attributable to a Contributed Property shall be
allocated among the Partners in the same manners as its correlative
items of "book" gain or loss is allocated pursuant to Section 5.1.
(ii) (A) In the case of an Adjusted Property, such items
shall (1) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code to take
into account the Unrealized Gain or Unrealized Loss attributable to
such property and the allocators thereof pursuant to Section 4.4(d)(i)
or (ii), and (2) second, in the event such property was originally a
Contributed Property, be allocated among the Partners in a manner
consistent with Section 5.2(b) (i) (A); and (B) except as otherwise
provided in Section 5.2(b) (iv), any item of Residual Gain or Residual
Loss attributable to an Adjusted Property shall be allocated among the
Partners in the same manner as its correlative item of "book" gain or
loss is allocated pursuant to Section 5.1.
(iii) Except as otherwise provided in Section 5.2(b)
(iv), all other items of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as their correlative
item of "book" gain or loss is allocated pursuant to Section 5.1.
(iv) Any items of income, gain, loss or deduction otherwise
allocable under Section 5.2(b)(i)(B), 5.2(b) (ii) (B) or 5.2(b) (iii)
shall be subject to allocation by the General Partner in a manner
designed to eliminate, to the maximum extent possible, Book-Tax
Disparities in a Contributed Property or Adjusted Property otherwise
resulting from the application of the "ceiling" limitation (under
Section 704(c) of the Code or Section 704(c) principles) to the
allocations provided under Section 5.2(b) (i) (A) or 5.2(b) (ii) (A)
(c) For the proper administration of the Partnership and for
the preservation of uniformity of the Units of the Investor Partnership (or any
class or classes thereof), the General Partner shall have sole discretion to
(i) adopt such conventions as it deems appropriate in determining the amount of
depreciation, amortization and cost recovery deductions; (ii) make special
allocations for federal income tax purposes of income (including, without
limitation, gross income) or deductions; and (iii) amend the provisions of this
Agreement as appropriate (x) to reflect the proposal or promulgation of
Treasury Regulations under Section 704(b) or Section 704(c) of the Code or (y)
otherwise to preserve or achieve uniformity of the Units of the Investor
Partnership (or any class or classes thereof). The General Partner may adopt
such conventions, make such
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allocations and make such amendments to this Agreement as provided in this
Section 5.2(c) only if such conventions, allocations or amendments would not
have a material adverse effect on the Partners, the holders of any class or
classes of Units of the Investor Partnership issued and outstanding or the
Partnership, and if such allocations are consistent with the principles of
Section 704 of the Code.
(d) The General Partner in its sole discretion may
determine to depreciate the portion of an adjustment under Section 743(b) of
the Code attributable to unrealized appreciation in any Adjusted Property (to
the extent of the unamortized Book-Tax Disparity) using a predetermined rate
derived from the depreciation method and useful life applied to the
Partnership's common basis of such property, despite the inconsistency of such
approach with Proposed Treasury Regulation Section 1.168-2(n) and Treasury
Regulation Section 1.167(c)-1(a) (6). If the General Partner determines that
such reporting position cannot reasonably be taken, the General Partner may
adopt a depreciation convention under which all purchasers acquiring Units of
the Investor Partnership in the same month would receive depreciation, based
upon the same applicable rate as if they had purchased a direct interest in the
Partnership's property. If the General Partner chooses not to utilize such
aggregate method, the General Partner may use any other reasonable depreciation
convention to preserve the uniformity of the intrinsic tax characteristics of
any Units of the Investor Partnership that would not have a material adverse
effect on the Limited Partners or the Record Holders of any class or classes of
Units of the Investor Partnership.
(e) Any gain allocated to the Partners upon the sale or
other taxable disposition of any Partnership asset shall, to the extent
possible, after taking into account other required allocations of gain pursuant
to this Section 5.2 be characterized as Recapture Income in the same
proportions and to the same extent as such Partners (or their predecessors in
interest) have been allocated any deductions directly or indirectly giving rise
to the treatment of such gains as Recapture Income.
(f) All items of income, gain, loss, deduction and credit
recognized by the Partnership for federal income tax purposes and allocated to
the Partners in accordance with the provisions hereof shall be determined
without regard to any election under Section 754 of the Code which may be made
by the Partnership; provided, however, that such allocations, once made, shall
be adjusted as necessary or appropriate to take into account those adjustments
permitted or required by Sections 734 and 743 of the Code.
(g) The 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.
5.3 Requirement of Distributions. Within fifty days
following the end of each calendar quarter, an amount equal to 100% of
Available Cash with respect to much quarter (or period) shall be distributed 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
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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.
ARTICLE VI - MANAGEMENT AND OPERATION OF BUSINESS
6.1 Management. The General Partner shall conduct, direct and
exercise full control over all activities of the Partnership. Except as
otherwise expressly provided in this Agreement, all management powers over the
business and affairs of the Partnership shall be exclusively vested in the
General Partner, and the Limited Partner shall have no right of control or
management power over the business and affairs of the Partnership. In addition
to the powers now or hereafter granted a general partner of a limited
partnership under applicable law or which are granted to the General Partner
under any other provision of this Agreement, the General Partner, subject to
Section 6.3, shall have full power and authority to do all things and on such
terms as it, in its sole discretion, may deem necessary or desirable (i) to
conduct the business of the Partnership, to exercise all powers set forth in
Section 3.2 and to effectuate the purposes set forth in Section 3.1, including,
without limitation, (A) the making of any expenditures, the lending or
borrowing of money, the assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidences of indebtedness
and the incurring of any other obligations and the securing of same by
mortgage, deed of trust or other lien or encumbrance; (B) the making of tax,
regulatory and other filings., or rendering of periodic or other reports to
governmental or other agencies having jurisdiction over the business or assets
of the Partnership, (C) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of the
Partnership or the merger or other combination of the Partnership with or into
another Person (the matters described in this clause (C) being subject,
however, to any prior approval that may be required by Section 6.3); (D) the
use of the assets of the Partnership (including, without limitation, cash on
hand) for any purpose consistent with the terms of this Agreement, including,
without limitation, the financing of the conduct of the operations of the
Partnership, the lending of funds to other Persons and the repayment of
obligations of the Partnership; (E) the negotiation, execution and performance
of any contracts, conveyances or other instruments (including, without
limitation, instruments that limit the liability of the Partnership under
contractual arrangements to all or particular assets of the Partnership, with
the other party to the contract to have no recourse against the General Partner
or its assets other than its interest in the Partnership, even if same results
in the terms of the transaction being less favorable to the Partnership than
would otherwise be the case); (F) the distribution of Partnership cash; (G) the
selection and dismissal of employees and agents (including without limitation,
employees having titles such as "president," "vice president," "secretary" and
"treasurer") and agents, outside attorneys, accountants, consultants and
contractors and the determination of their compensation and other terms of
employment or hiring; (H) the maintenance of such insurance for the benefit of
the Partnership and the Partners as it deems necessary or appropriate; (I) the
formation of, or acquisition of an interest in, and the contribution of
property to, any further limited or general partnerships, joint ventures or
other relationships; (J) the control of any matters affecting the rights and
obligations of the Partnership, including, without limitation, the bringing and
defending of actions at law or in equity and otherwise engaging in the conduct
of litigation and the incurring of legal expense and the settlement of claims
and litigation; (K) the indemnification of any person against liabilities and
contingencies to the extent permitted by law; and (L) the undertaking of any
action in connection with the Partnership's participation in the business
activities that may be made available to it
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(including, without limitation, contributions or loans of funds by the
Partnership in connection with its participation in such business activities).
6.2 Certificate of Limited Partnership. The General Partner has
caused the Certificate of Limited Partnership to be filed with the Secretary of
State of the State of Delaware as required by the Delaware Act and shall use
all reasonable efforts to cause to be filed such other certificates or
documents as may be determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the Limited Partner has limited liability) in the State of Delaware or any
other state in which the Partnership may elect to do business or own property.
To the extent that such action is determined by the General Partner in its sole
discretion to be reasonable and necessary or appropriate, the General Partner
shall file amendments to and restatements of the Certificate of Limited
Partnership and do all things to maintain the Partnership as a limited
partnership (or a partnership in which the Limited Partner has limited
liability) under the laws of the State of Delaware or of any other state in
which the Partnership may elect to do business or own property. Subject to the
terms of Section 7.4(a), the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate of Limited
Partnership, any qualification document or any amendment thereto to the Limited
Partner.
6.3 Restrictions on General Partner's Authority.
(a) The General Partner may not, without written approval of the
specific act by the Limited Partner or by other written instrument executed and
delivered by the Limited Partner subsequent to the date of this Agreement, take
any action in contravention of this Agreement, including, without limitation,
(i) any act that would make it impossible to carry on the ordinary business of
the Partnership, except as otherwise provided in this Agreement; (ii) possess
Partnership property, Or assign any rights in specific Partnership property,
for other than a Partnership purpose; (iii) admit a Person as a Partner, except
as otherwise provided in this Agreement; (iv) amend this Agreement in any
manner, except as otherwise provided in this Agreement; or (v) transfer its
interest as general partner of the Partnership, except as otherwise provided in
this Agreement.
(b) Except as provided in Article XIII, the General Partner may
not sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related
transactions (including by way of merger, consolidation or other combination
with any other Person) without the approval of the Limited Partner; provided,
however, that this provision shall not preclude or limit the General Partner's
ability to mortgage, pledge, hypothecate or grant a security interest in all or
substantially all of the Partnership's assets and shall not apply to any forced
sale of any or all of the Partnership's assets pursuant to the foreclosure of,
or other realization upon, any such encumbrance.
(c) At all times while serving as the general partner of the
Partnership, the General Partner shall not make any dividend or distribution
on, or repurchase any shares of, its stock or take any other action within its
control if the effect of such dividend, distribution, repurchase or other
action would be to reduce its net worth below an amount necessary to receive an
Opinion of Counsel that the Partnership will be treated as a partnership for
federal income tax purposes.
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6.4 Reimbursement of the General Partner.
(a) Except as provided in this Section 6.4 and elsewhere in this
Agreement, the General Partner shall not be compensated for its serviced as
general partner of the Partnership
(b) The General Partner shall be reimbursed on a monthly basis, or
such other basis as the General Partner may determine in its sole discretion,
for (i) all direct and indirect expenses it incurs or payments it makes on
behalf of the Partnership (including, without limitation, amounts paid to any
Person to perform services for the Partnership) and (ii) that portion of the
General Partner's or its Affiliates' legal, accounting, investor
communications, utilities, telephone, secretarial, travel, entertainment,
bookkeeping, reporting, data processing, office rent and other office expenses
(including, without limitation, overhead charges), salaries, fees and other
compensation and benefit expenses of employees, officers and directors, other
administrative or overhead expenses and all other expenses, in each such case,
necessary or appropriate to the conduct of the Partnership's business and
allocable to the Partnership or otherwise incurred by the General Partner in
connection with operating the Partnership's business (including, without
limitation, expenses allocated to the General Partner by its Affiliates). The
General Partner shall determine the fees and expenses that are allocable to the
Partnership in any reasonable manner determined by the General Partner in its
sole discretion. Such reimbursements shall be in addition to any reimbursement
to the General Partner as a result of indemnification pursuant to Section 6.7.
Notwithstanding the foregoing grant of authority, expenses for administrative
services and overhead allocated to the Partnership, the Investor Partnership
and the General Partner, considered together, by PEC or its Affiliates
(excluding the General Partner) shall not exceed $5 million in 1990 and $4
million in each year thereafter during the Support Period (as defined in the
Investor Partnership Agreement), subject to a reasonable adjustment for
inflation beginning in 1992.
(c) The General Partner in its sole discretion and without the
approval of the Limited Partner may propose and adopt on behalf of the
Partnership employee benefit plans (including, without limitation, plans
involving the issuance of Units), for the benefit of employees of the General
Partner, the Partnership or any Affiliate of any of them in respect of services
performed, directly or indirectly, for the benefit of the Partnership.
6.5 Outside Activities.
(a) After the Closing Date, the General Partner shall limit its
activities to those required or authorized by the Investor Partnership
Agreement or this Agreement.
(b) Except as provided in Section 6.5(a), each Indemnitee is free
to engage in any business, including any business that is in competition with
the business of the Partnership. The General Partner and any other Persons
affiliated with the General Partner may acquire Units or other partnership
securities of the Investor Partnership and shall be entitled to exercise all
rights of an Assignee or limited partner, as applicable, relating to such Units
or partnership securities, as the case may be.
(c) Without limiting Sections 6.5(a) and 6.5(b), but
notwithstanding anything to the contrary in this Agreement, the competitive
activities of Indemnitees described in the Registration
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Statement are hereby approved by all Partners, and it shall not be deemed to be
a breach of the General Partner's fiduciary duty for the General Partner to
permit an Indemnitee to engage in a business opportunity in preference to or to
the exclusion of the Partnership.
6.6 Loans to and from the General Partner; Contracts with
Affiliates.
(a) The General Partner, the Limited Partner or any Affiliates
thereof may lend to the Partnership, and the Partnership may borrow, funds
needed or desired by the Partnership for such periods of time as the General
Partner may determine; provided, however, that neither the General Partner, the
Limited Partner or any of their Affiliates may charge the Partnership interest
at a rate greater than the rate that would be charged the Partnership (without
reference to the General Partner's financial abilities or guarantees) by
unrelated lenders on comparable loans. The Partnership shall reimburse the
General Partner, the Limited Partner or any of their Affiliates, as the case
may be, for any costs (other than any additional interest costs) incurred by it
in connection with the borrowing of funds obtained by the General Partner, the
Limited Partner or any of their Affiliates and loaned to the Partnership.
(b) The Investor Partnership may lend or contribute to the
Partnership, and the Partnership may borrow, funds on terms and conditions
established in the sole discretion of the General Partner. The foregoing
authority shall be exercised by the General Partner in its sole discretion and
shall not create any right or benefit in favor of the Investor Partnership or
any other Person. The Partnership may not lend funds to the General Partner or
any of its Affiliates, otherwise than for short-term funds management purposes.
(c) The General Partner may itself, or may enter into an agreement
with any of its Affiliates to, render services to the Partnership. Any service
rendered to the Partnership by the General Partner or any of its Affiliates
shall be on terms that are fair and reasonable to the Partnership; provided,
however, that the requirements of this Section 6.6(c) shall be deemed satisfied
as to any transaction the terms of which are no less favorable to the
Partnership than those generally being provided to or available from unrelated
third parties. The provisions of Section 6.4 shall apply to the rendering of
services described in this Section 6.6(c).
(d) The Partnership may transfer assets to joint ventures, other
Partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(e) Neither the General Partner nor any of its Affiliates shall
sell, transfer or convey any property to, or purchase any property from the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the
requirements of this Section 6.6(e) shall be deemed to be satisfied as to any
transaction the terms of which are no less favorable to the Partnership than
those generally being provided to or available from unrelated third parties.
(f) The General Partner and its Affiliates will have no obligation
to permit the Partnership or the Investor Partnership to use any facilities of
the General Partner and its Affiliates,
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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
General Partner or its Affiliates to enter into such contracts.
(g) Without limitation of Sections 6.6(a) through 6.6(f), and
notwithstanding anything to the contrary in this Agreement, the existence of
the conflicts of interest described in the Registration Statement under the
caption "Conflicts of Interest and Fiduciary Responsibility" are hereby
approved by all Partners.
6.7 Indemnification.
(a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, each Indemnitee shall be
indemnified and held harmless by the Partnership from and against any and all
losses, claims, damages, liabilities (joint or several), expenses (including,
without limitation, legal fees and expenses), judgments, fines, settlements and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
any Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as (i) the General Partner, a Departing
Partner or any of their Affiliates, (ii) an officer, director, employee,
partner, agent or trustee of the General Partner, any Departing Partner or any
of their Affiliates or (iii) a Person serving at the request of the Partnership
in another entity in a similar capacity, provided, that in each case the
Indemnitee acted in good faith, in a manner which such Indemnitee believed to
be in, or not opposed to, the best interests of the Partnership and, with
respect to any criminal proceeding, had no reasonable cause to believe its
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere, or
its equivalent, shall not create a Presumption that the Indemnitee acted in a
manner contrary to that specified above. Any indemnification pursuant to this
Section 6.7 shall be made only out of the assets of the Partnership.
(b) To the fullest extent permitted by law, expenses (including,
without limitation, legal fees and expenses) incurred by an Indemnitee in
defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Partnership prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Partnership of an
undertaking by or on behalf of the Indemnitee to repay such amount if it shall
be determined that the Indemnitee is not entitled to be indemnified as
authorized in this Section 6.7.
(c) The indemnification provided by this Section 6.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, both as to actions in the Indemnitees' capacity as (i) the General
Partner, a Departing Partner or an Affiliate thereof, (ii) an officer,
director, employee, partner, agent or Departing Partner or an Affiliate thereof
or (iii) a Person serving at the request of the Partnership in another entity
in a similar capacity, and shall continue as to an Indemnitee who has ceased to
serve in such capacity and as to actions in any other capacity.
(d) The Partnership may purchase and maintain (or reimburse the
General Partner or its Affiliates for the cost of) insurance, on behalf of the
General Partner and such other Person as the
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General Partner shall determine, against any liability that may be asserted
against or expense that may be incurred by such Person in connection with the
Partnership's activities, whether or not the Partnership would have the power
to indemnify such Person against such liabilities under the provisions of this
Agreement.
(e) For purposes of this Section 6.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of Section 6.7(a); and action taken
or omitted by it with respect to an employee benefit plan in the performance of
its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partner to
personal liability by reason of the indemnification provisions set forth in
this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or
in Part under this Section 6.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.7 are for the benefit of the
Indemnitees their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 6.7 or
any provision hereof shall in any manner terminate, reduce or impair the right
of any past, present or future Indemnitee to be indemnified by the Partnership,
nor the obligation of the Partnership to indemnify any such Indemnitee under
and in accordance with the provisions of this Section 6.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
6.8 Liability of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partner, or any other Persons who have acquired
interests in the Partnerships, for losses sustained or liabilities incurred as
a result of any act or omission if such Indemnitee acted in good faith.
(b) Subject to its obligations and duties as General Partner set
forth in Section 6.1(a), the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents, and the General Partner
shall not be responsible for any misconduct or negligence on the part of any
such agent appointed by the General Partner in good faith.
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(c) Any amendment, modification or repeal of this Section 6.8 or
any provision hereof shall be prospective only and shall not in any way affect
the limitations on the liability to the Partnership and the Limited Partner of
the General Partner, its directors, officers and employees under this Section
6.8 as in effect immediately prior to such amendment, modification or repeal
with respect to claims arising from or relating to matters occurring, in whole
or in part, prior to such amendment, modification or repeal, regardless of when
such claims may arise or be asserted.
6.9 Resolution of Conflicts of Interest.
(a) Unless otherwise expressly provided in this Agreement or the
Investor Partnership Agreement, whenever a potential conflict of interest
exists or arises between the General Partner or any of its Affiliates, on the
one hand, and the Partnership, or the Investor Partnership, on the other hand,
any resolution or course of action in respect of such conflict of interest
shall be permitted and deemed approved by the Limited Partner, and shall not
constitute a breach of this Agreement, of the Investor Partnership 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 General Partner shall be authorized in connection with its
resolution of any conflict of interest to consider (i) the relative interests
of any party to such conflict, agreement, transaction or situation and the
benefits and burdens relating to such interests (ii) any customary or accepted
industry practices and any customary or historical dealings with a Particular
Person; (iii) any applicable generally accepted accounting or engineering
practices or Principles; and (iv) such additional factors as the General
Partner determines in its sole discretion to be relevant, reasonable or
appropriate under the circumstances. Nothing contained in this Agreement,
however, is intended to nor shall it be construed to require the General
Partner to consider the interests of any Person other than the Partnership. In
the absence of bad faith by the General Partner, the resolution, action or
terms so made, taken or provided by the General Partner with respect to such
matter shall not constitute a breach of this Agreement or any other agreement
contemplated herein or a breach of any standard of care or duty imposed herein
or therein or under the Delaware Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated
hereby provides that the General Partner or any of its Affiliates is permitted
or required to make a decision (i) in its "sole discretion" or "discretion,"
that it deems necessary or appropriate" or under a grant of similar authority
or latitude, the General Partner or such Affiliate shall be entitled to
consider only such interests and factors as it desires and shall have no duty
or obligation to give any consideration to any interest of, or factors
affecting, the Partnership, the Investor Partnership, the Limited Partner or
any holder of Units, or (ii) in "good faith" or under another express standard,
the General Partner or such Affiliate shall act under such express standard and
shall not be subject to any other or different standards imposed by this
Agreement, the Investor Partnership 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 General Partner 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 General Partner to the
Partnership or the Limited Partner. The General Partner shall have no duty,
express or implied, to sell or otherwise dispose of any asset of the
Partnership, other than in the ordinary course of business. No borrowing by
the Partnership or the approval thereof by the General Partner shall be deemed
to constitute a breach of any duty of the General Partner to the Partnership or
the Limited Partner by reason of the fact that the purpose or effect of such
borrowing is directly or indirectly to
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enable the General Partner to receive incentive distributions pursuant to the
Investor Partnership Agreement.
(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.
6.10 Other Matters Concerning the General Partner.
(a) The General Partner may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture,
or other paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any act taken or omitted in
reliance upon the opinion (including, without limitation, an Opinion of
Counsel) of such Persons as to matters that such General Partner reasonably
believes to be within such Person's professional or expert competence shall be
conclusively presumed to have been done or committed in good faith and in
accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform each and every act and duty
that is permitted or required to be done by the General Partner hereunder.
(d) Any standard of care and duty imposed by this Agreement or
under the Delaware Act or any applicable law, rule or regulation shall be
modified, waived or limited as required to permit the General Partner to act
under this Agreement or any other agreement contemplated by this Agreement and
to make any decision pursuant to the authority prescribed in this Agreement so
long as such action is reasonably believed by the General Partner to be in the
best interests of the Partnership.
6.11 Title to Partnership Assets. Title to Partnership Assets,
whether real, personal or mixed and whether tangible or intangible, shall be
deemed to be owned by the Partnership as an entity, and no Partner,
individually or collectively, shall have any Ownership interest in such
Partnership Assets or any portion thereof. Title to any or all of the
Partnership Assets may be held in the name of the Partnership, the General
Partner or one or more nominees, as the General Partner may determine. The
General Partner hereby declares and warrants that any Partnership Assets for
which record title is held in the name of the General Partner shall be held by
the General Partner for the use and benefit of the Partnership in accordance
with the provisions of this Agreement; provided, however, that the General
Partner shall use its reasonable efforts to cause record title to such assets
(other than those assets in respect of which the General Partner determines
that the expense and difficulty of conveyancing makes transfer of record title
to the Partnership impracticable) to be
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vested in the Partnership as soon as reasonably practicable. All Partnership
Assets shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which record title to such Partnership
Assets are held.
6.12 Reliance by Third Parties. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any contracts on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if it were
the Partnership's sole party in interest, both legally and beneficially. The
Limited Partner hereby waives any and all defenses or other remedies that may
be available against such Person to contest, negate or disaffirm any action of
the General Partner in connection with any such dealing. In no event shall any
Person dealing with the General Partner or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to
inquire into the necessity or expedience of any act or action of the General
Partner or its representatives. Each and every certificate, document or other
instrument executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (a) at the time of the execution
and delivery of such certificate, document or instrument, this Agreement was in
full force and effect, (b) the Person executing and delivering such
certificate, document or instrument was duly authorized and empowered to do so
for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
ARTICLE VII - RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER
7.1 Limitation of Liability. The Limited Partner shall have no
liability under this Agreement except as expressly provided in this Agreement
or the Delaware Act.
7.2 Management of Business. The Limited Partner shall not take
part in the operation, management or control (within the meaning of the
Delaware Act) of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise bind
the Partnership. The transaction of any such business by the General Partner,
any of its Affiliates or any officer, director, employee, partner, agent or
trustee of the General Partner or any of its Affiliates, in its capacity as
such, shall not affect, impair or eliminate the limitations on the liability of
the Limited Partner under this Agreement.
7.3 Return of Capital. The Limited Partner shall not be entitled
to the withdrawal or return of his Capital Contribution, except to the extent,
if any, that distributions made pursuant to this Agreement or upon termination
of the Partnership may be considered as such by law and then only to the extent
provided for in this Agreement.
7.4 Rights of the Limited Partner Relating to the Partnership.
(a) In addition to other rights provided by this Agreement or by
applicable law and except as limited by Section 7.4(b), the Limited Partner
shall have the right, for a purpose reasonably related
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to the Limited Partner's interest as a limited partner to the Partnership, upon
reasonable demand and at the Limited Partner's own expense:
(i) to obtain true and full information regarding the
status of the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy
of the Partnership's federal, state and local tax returns for each
year;
(iii) to have furnished to him, upon notification to the
General Partner, a current list of the name and last known business,
residence or mailing address of each Partner;
(iv) to have furnished to him, upon notification to the
General Partner, a copy of this Agreement and the Certificate of
Limited Partnership and all amendments thereto;
(v) to obtain true and full information regarding the
amount of cash and description and statement of the Agreed Value of
any other Capital Contribution by each Partner and which each Partner
has agreed to contribute in the future, and the date on which each
became a Partner; and
(vi) to obtain such other information regarding the affairs of
the Partnership as is just and reasonable.
(b) Notwithstanding any other provision of this Agreement, the
General Partner may keep confidential from the Limited Partner for such period
of time as the General Partner deems reasonable, any information that the
General Partner reasonably believes to be in the nature of trade secrets or
other information the disclosure of which the General Partner in good faith
believes is not in the best interests of the Partnership or could damage the
partnership or the Investor Partnership or that the Partnership or the Investor
Partnership is required by law or by agreements with third parties to keep
confidential.
ARTICLE VIII - BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 Records and Accounting. The General Partner shall keep or
cause to be kept at the principal office of the Partnership appropriate books
and records with respect to the Partnership business including, without
limitation, all books and records necessary to provide to the Limited Partner
any information, lists and copies of documents required to be provided pursuant
to Section 7.4(a). Any books and records maintained by or on behalf of the
Partnership in the regular course of its business, including, without
limitation, books of account and records of Partnership proceedings, may be
kept on, or be in the form of, computer disks, hard disks, punch cards,
magnetic tape, photographs, micrographics or any other information storage
device, provided, that the books and records so maintained are convertible into
clearly legible written form within a reasonable period of time. The books of
the Partnership shall be maintained, for financial reporting purposes, on an
accrual basis in accordance with generally accepted accounting principles.
8.2 Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
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ARTICLE IX - TAX MATTERS
9.1 Preparation of Tax Returns. The General Partner shall arrange
for the preparation and timely filing of all returns of Partnership income,
gains, deductions, losses and other items required of the Partnership for
federal and state income tax purposes and shall use all reasonable efforts to
furnish, within ninety days of the close of each taxable year of the
Partnership, the tax information reasonably required by the Limited Partner for
federal and state income tax reporting purposes. The classification,
realization and recognition of income, gain, losses and deductions and other
items shall be on the accrual method of accounting for federal income tax
purposes. The taxable year of the Partnership shall be the calendar year.
9.2 Tax Elections. Except as otherwise provided herein, the
General Partner shall in its sole discretion, determine whether to make any
available election pursuant to the Code; provided, however, that the General
Partner shall make the election under Section 754 of the Code in accordance
with applicable regulations thereunder. The General Partner shall have the
right to seek to revoke any such election (including, without limitation, the
election under Section 754 of the Code) upon the General Partner's
determination in its sole discretion that such revocation is in the best
interests of the Limited Partner.
9.3 Tax Controversies. Subject to the provisions hereof, the
General Partner is designated the Tax Matters Partner (as defined in Section
6231 of the Code), and is authorized and required to represent the Partnership
(at the Partnership's expense) in connection with all examinations of the
Partnership's affairs by tax authorities, including, without limitation,
resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. The Limited
Partner agrees to cooperate with the General Partner and to do or refrain from
doing any or all things reasonably required by the General Partner to conduct
such proceedings.
9.4 Organizational Expenses. The Partnership shall elect to
deduct expenses, if any, incurred by it in organizing the Partnership ratably
over a sixty-month period as provided in Section 709 of the Code.
9.5 Withholding. Notwithstanding any other provision of this
Agreement, the General Partner is authorized to take any action that it
determines in its sole discretion to be necessary or appropriate to cause the
Partnership to comply with any withholding requirements established under the
Code or any other federal, state or local law including, without limitation,
pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that
the Partnership is required to withhold and pay over to any taxing authority
any amount resulting from the allocation or distribution of income to any
Partner (including, without limitation, by reason of Section 1446 of the Code),
the amount withheld shall be treated as a distribution of cash pursuant to
Section 5.3 in the amount of such withholding from such Partner.
9.6 Opinions of Counsel. Notwithstanding any other provision of
this Agreement, if the Partnership is taxable for federal income tax purposes
as a corporation or otherwise taxed for federal income tax purposes as an
entity at any time and, pursuant to the provisions of this Agreement, an
Opinion of Counsel could otherwise be required to the effect that an action
will not cause the Partnership to become so taxable as a corporation or other
entity or to be treated as an association
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taxable as a corporation, such requirement for an Opinion of Counsel shall be
deemed automatically waived.
ARTICLE X - TRANSFER OF INTERESTS
10.1 Transfer.
(a) The term "transfer," when used in this Article X with respect
to a Partnership Interest, shall be deemed to refer to an appropriate
transaction by which a Partner disposes of its Partnership Interest to another
Person 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 X. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article X shall be null and void.
10.2 Transfer of General Partner's Partnership Interest.
(a) If the general partner of the Investor Partnership transfers
its partnership interest as a general partner therein to any Person in
accordance with the provisions of the Investor Partnership Agreement, the
General Partner shall contemporaneously therewith transfer its Partnership
Interest as the General Partner of the Partnership to such Person, and the
Limited Partner hereby expressly consents to such transfer. Except as set
forth in the immediately preceding sentence and in Section 10.2(b), the General
Partner may not transfer all or any part of its Partnership Interest.
(b) Neither Section 10.2(a) nor any other provision of this
Agreement shall, be construed to prevent (and the Limited Partner does hereby
expressly consent to) (i) the transfer by the General Partner of all of its
Partnership Interest to an Affiliate or (ii) the transfer by the General
Partner of all its Partnership Interest upon its merger, consolidation or other
combination into any other Person or the transfer by it of all or substantially
all of its assets to another Person if, in the case of a transfer described in
either clause (i) or (ii) of this sentence, the rights and duties of the
General Partner with respect to the Partnership Interest so transferred are
assumed by the transferee and the transferee agrees to be bound by the
provisions of this Agreement and the Investor Partnership Agreement; provided,
that in either such case, such transferee furnishes to the Partnership an
Opinion of Counsel that such merger, consolidation, combination, transfer or
assumption will not result in a loss of limited liability of the Limited
Partner or cause the Partnership to be taxable as a corporation or otherwise
taxed as an entity for federal income tax purposes. In the case of a transfer
pursuant to this Section 10.2(b), the transferee or successor (as the case may
be) shall be admitted to the Partnership as the General Partner immediately
prior to the transfer of the Partnership Interest, and the business of the
Partnership shall continue without dissolution.
10.3 Transfer of the Limited Partner's Partnership Interest. If
the Limited Partner merges, consolidates or otherwise combines into any other
Person or transfers all or substantially all of its assets to another Person,
such Person may become a substituted Limited Partner pursuant to Article XI.
Except as set forth in the immediately preceding sentence, the Limited Partner
may not transfer all or any part of its Partnership Interest or withdraw from
the Partnership.
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ARTICLE XI - ADMISSION OF PARTNERS
11.1 Admission of Substituted Limited Partner. Any Person that is
the successor in interest to the Limited Partner as described in Section 10.3
shall be admitted to the Partnership as a limited partner upon (a) furnishing
to the General Partner (i) acceptance in form satisfactory to the General
Partner of all of the terms and conditions of this Agreement and (ii) such
other documents or instruments as may be required to effect its admission as a
limited partner in the Partnership and (b) obtaining the consent of the General
Partner, which consent may be withheld or granted in the sole discretion of the
General Partner. Such Person shall be admitted to the Partnership as a Limited
Partner immediately prior to the transfer of the Partnership Interest, and the
business of the Partnership shall continue without dissolution.
11.2 Admission of Successor or General Partner. A successor
General Partner approved pursuant to Section 12.1 or the transferee of or
successor to all of the General Partner's Partnership Interest Pursuant to
Section 10.2 who is proposed to be admitted as a successor General Partner
shall be admitted to the Partnership as the General Partner, effective
immediately prior to the withdrawal or removal of the General Partner pursuant
to Section 12.1 or the transfer of the General Partner's Partnership Interest
Pursuant to Section 10.2; provided, however, that no such successor shall be
admitted to the Partnership until the terms of Section 10.2 have been complied
with. Any such successor shall carry on the business of the Partnership
without dissolution. In each case, the admission shall be subject to the
successor General Partner executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission.
11.3 Amendment of Agreement and Certificate of Limited Partnership.
To effect the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Delaware Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement and, if required by law, to prepare
and file an amendment to the Certificate of Limited Partnership and may for
this purpose, among others, exercise the power of attorney granted pursuant to
Section 1.4.
ARTICLE XII - WITHDRAWAL OR REMOVAL OF PARTNERS
12.1 Withdrawal of the General Partner.
(a) The General Partner shall be deemed to have withdrawn from the
Partnership upon the occurrence of any one of the following events (each such
event herein referred to as an "Event of Withdrawal");
(i) the General Partner voluntarily withdraws from the
Partnership by giving written notice to the Limited Partner;
(ii) the General Partner transfers all of its rights as
General Partner pursuant to Section 10.2;
(iii) the General Partner is removed pursuant to Section
12.2;
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(iv) the general partner of the Investor Partnership
withdraws from, or is removed as the general partner of, the Investor
Partnership;
(v) the General Partner (A) makes a general assignment
for the benefit of creditors; (B) files a voluntary bankruptcy
petition; (C) files a petition or answer seeking for itself a
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any law; (D) files an answer or
other pleading admitting or failing to contest the material
allegations of a petition filed against the General Partner in a
proceeding of the type described in clauses (A)-(C) of this sentence;
or (E) seeks, consents to or acquiesces in the appointment of a
trustee receiver or liquidator of the General Partner or of all or any
substantial part of its properties;
(vi) a final and non-appealable judgment is entered by a court
with appropriate jurisdiction ruling that the General Partner is
bankrupt or insolvent, or a final and non-appealable order for relief
is entered by a court with appropriate jurisdiction against the
General Partner, in each case under any federal or state bankruptcy or
insolvency laws as now or hereafter in effect; or
(vii) a certificate of dissolution or its equivalent is filed
for the General Partner, or ninety days expire after the date of
notice to the General Partner of revocation of its charter without a
reinstatement of its charter, under the laws of its state of
incorporation.
If an Event of Withdrawal specified in this Section 12.1(a)(v), (vi) or (vii)
occurs, the withdrawing General Partner shall give written notice to the
Limited Partner within thirty days after such occurrence. The Partners hereby
agree that only the Events of Withdrawal described in this Section 12.1 shall
result in the withdrawal of the General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon
the occurrence of an Event of Withdrawal will not constitute a breach of this
Agreement under the following circumstances: (i) at any time that the General
Partner ceases to be a General Partner pursuant to Section 12.1(a) (ii) or is
removed pursuant to Section 12.2; or (ii) at any time that the General Partner
is removed as provided in Section 12.1(a) (iii). If the General Partner gives
a notice of withdrawal pursuant to Section 12.1(a) (i) or if the General
Partner is removed pursuant to Section 12.2 or withdraws pursuant to Section
12.1(a) (ii), the Limited Partner may, prior to the effective date of such
withdrawal, elect a successor General Partner, provided, that such successor
shall be the same Person, if any, that is elected by the Unitholders pursuant
to Section 13.1(b) of the Investor Partnership Agreement, as applicable, as the
successor to the General Partner in its capacity as general partner of the
Investor Partnership. If, prior to the effective date of the General Partner's
withdrawal or removal, a successor is not selected by the Limited Partner as
provided herein or the Partnership does not receive an Opinion of Counsel that
such withdrawal (following the selection of the successor General Partner)
would not result in the loss of the limited liability of the Limited Partner or
cause the Partnership to be taxable as a corporation or otherwise taxed as an
entity for federal income tax purposes, the Partnership shall be dissolved in
accordance with Section 13.1. If a successor General Partner is elected and
the Opinion of Counsel is rendered as provided in the immediately preceding
sentence, such successor shall be admitted (subject to Section 11.2)
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immediately prior to the effective time of the withdrawal or removal of the
Departing Partner and shall continue the business of the Partnership without
dissolution.
12.2 Removal of the General Partner. The General Partner may be
removed if such removal is approved by the Limited Partner. Any such action by
the Limited Partner for removal of the General Partner must also provide for
the election and succession of a new General Partner. Such removal shall be
effective immediately following the admission of the successor General Partner
pursuant to Article XI. The right of the Limited Partner to remove the General
Partner shall not exist or be exercised unless the Partnership has received an
Opinion of Counsel that the removal of the General Partner and the selection of
a successor General Partner will not result in the loss of limited liability of
the Limited Partner or the taxation of the Partnership as a corporation or
otherwise result in the Partnership being taxed as an entity for federal income
tax purposes.
12.3 Interest of Departing Partner and Successor General Partner.
The Partnership Interest of a Departing Partner departing as a result
of withdrawal or removal Pursuant to Section 12.1 or 12.2 shall (unless it is
otherwise required to be converted into Units pursuant to Section 13.2(b) of
the Investor Partnership Agreement) be Purchased by the successor to the
Departing Partner for cash in amount equal to the fair market value of the
Departing Partner's Partnership Interest, determined as of the effective date
of its departure in the manner specified in the Investor Partnership Agreement.
Such purchase (or conversion into Units, as applicable) shall be a condition to
the admission to the Partnership of the Successor as the General Partner.
12.4 Reimbursement of Departing Partner. The Departing Partner
shall be entitled to receive all reimbursements due such Departing Partner
pursuant to Section 6.4, including, without limitation, any employee-related
liabilities (including, without limitation, severance liabilities), incurred in
connection with the termination of any employees employed by the General
Partner for the benefit of the Partnership.
12.5 Withdrawal of the Limited Partner. The Limited Partner shall
not have any right to withdraw from the Partnership without the prior consent
of the General Partner.
ARTICLE XIII - DISSOLUTION AND LIQUIDATION
13.1 Dissolution. The Partnership shall not be dissolved by the
admission of a Substituted Limited Partner or by the admission of a successor
General Partner in accordance with the terms of this Agreement. Upon the
removal or withdrawal of the General Partner any successor General Partner
shall continue the business of the Partnership. The Partnership shall
dissolve, and its affairs should be wound up, upon:
(a) the expiration of its term as provided in Section 1.5;
(b) an Event of Withdrawal of the General Partner as provided in
Section 12.1(a), unless a successor is named as provided in Section 12.1(b) and
the continuation of the business of the Partnership is approved by the Limited
Partner;
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(c) an election to dissolve the Partnership by the General Partner
that is approved by the Limited Partner hereby;
(d) 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; or
(f) the dissolution of the Investor Partnership.
13.2 Liquidation. Upon dissolution of the Partnership, the General
Partner, or in the event the General Partner has been dissolved or removed,
become bankrupt as set forth in Section 12.1 or withdrawn from the Partnership,
a liquidator or liquidating committee approved by the Limited Partner, shall be
the Liquidator. The Liquidator (if other than the General Partner) shall be
entitled to receive such compensation for its services as may be approved by
the Limited Partner. The Liquidator shall agree not to resign at any time
without fifteen days' prior written notice and (if other than the General
Partner) may be removed at any time, with or without cause by notice of removal
approved by the Limited Partner. Upon dissolution, removal or resignation of
the Liquidator, a successor and substitute Liquidator (who shall have and
succeed to all rights, powers and duties of the original Liquidator) shall
within thirty days thereafter be approved by the Limited Partner. 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 XIII, the Liquidator approved in the manner Provided herein shall have
and may exercise, without further authorization or consent of any of the
parties hereto, all of the powers conferred upon the General Partner under the
terms of this Agreement (but subject to all of the applicable limitations,
contractual and otherwise, upon the exercise of such powers, other than the
limitation on sale set forth in Section 6.3(b)) to the extent necessary or
desirable in the good faith judgment of the Liquidator to carry out the duties
and functions of the Liquidator hereunder for and during such period of time as
shall be reasonably required in the good faith judgment of the Liquidator to
complete the winding up and liquidation of the Partnership as provided for
herein. The Liquidator shall liquidate the assets of the Partnership, and
apply and distribute the proceeds of such liquidation in the following order of
priority, unless otherwise required by mandatory provisions of applicable law:
(a) the payment to creditors of the Partnership, including,
without limitation, Partners who are creditors, in the order of priority
provided by law; and the creation of a reserve of cash or other assets of the
Partnership for contingent liabilities in an amount, if any, determined by the
Liquidator to be appropriate for such purposes; and
(b) to all Partners in accordance with the positive balances in
their respective Capital Accounts after taking into account adjustments to such
Capital Accounts pursuant to Section 5.1(c).
13.3 Distributions in Kind. Notwithstanding the provisions of
Section 13.2, which require the liquidation of the assets of the Partnership,
but subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the
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Partners, the Liquidator may, in its absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including, without limitation, those to
Partners as creditors) and/or distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 13.2,
undivided interests in such Partnership assets as the Liquidator deems not
suitable for liquidation. Any such distributions in kind shall be made only
if, in the good faith judgment of the Liquidator, such distributions in kind
are in the best interest of the Limited Partner, and shall be subject to such
conditions relating to the disposition and management of such properties as the
Liquidator deems reasonable and equitable and to any agreement governing the
operation of such properties at such time. The Liquidator shall determine the
fair market value of any property distributed in kind using such reasonable
method of valuation as it may adopt.
13.4 Cancellation of Certificate of Limited Partnership. Upon the
completion of the distribution of Partnership cash and property as provided in
Sections 13.2 and 13.3, 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.
13.5 Reasonable Time for Winding Up. A reasonable time shall be
allowed for the orderly winding up of business and affairs of the Partnership
and the liquidation of its assets pursuant to Section 13.2 in order to minimize
any losses otherwise attendant upon such winding up, and the provisions of this
Agreement shall remain in effect between the Partners during the period of
liquidation.
13.6 Return of Capital. The General Partner shall not be
personally liable for the return of the Capital Contributions of the Limited
Partners, or any portion thereof, it being expressly understood that any such
return shall be made solely from Partnership assets.
13.7 No Capital Account Restoration. No Partner shall have any
obligation to restore any negative balance in its Capital Account upon
liquidation of the Partnership.
13.8 Waiver of Partition. Each Partner hereby waives any right to
partition of the Partnership property.
ARTICLE XIV - AMENDMENT OF PARTNERSHIP AGREEMENT
14.1 Amendment to be Adopted Solely by General Partner. The
Limited Partner agrees that the General Partner (pursuant to its powers of
attorney from the Limited Partner), without the approval of the Limited
Partner, 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;
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(b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the sole discretion of the General Partner,
is reasonable and necessary or appropriate to qualify or continue the
qualification of the Partnership as a limited partnership or a partnership in
which the limited partners have limited liability under the laws of any state
or that is necessary or advisable in the opinion of the General Partner to
ensure that the Partnership will not be taxable as a corporation or otherwise
taxed as an entity for federal income tax purposes;
(d) a change (i) that, in the sole discretion of the General
Partner, does not adversely affect the Limited Partner in any material respect,
(ii) that is necessary or appropriate to satisfy any requirements, conditions
or guidelines contained in any opinion, directive, order, ruling or regulation
of any federal or state agency or judicial authority or contained in any
federal or state statute (including, without limitation, the Delaware Act) or
that is necessary or appropriate to facilitate the trading of the Units
(including, without limitation, the division of Outstanding Units into
different classes to facilitate uniformity of tax consequences within such
classes of Units) or comply with any rule, regulation, guideline or requirement
of any National Securities Exchange on which the Units are or will be listed
for trading, compliance with any of which the General Partner determines in its
sole discretion to be in the best interests of the Partnership and the Limited
Partner or (iii) that is required to effect the intent of the provisions of
this Agreement or is otherwise contemplated by this Agreement;
(e) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership or the General Partner or its directors or officers
from in any manner being subjected to the provisions of the Investment Company
Act of 1940, as amended, the Investment Advisors Act of 1940, as amended, or
"plan asset" regulations adopted under the Employee Retirement Income Security
Act of 1974, as amended, whether or not substantially similar to plan asset
regulations currently applied or proposed by the United States Department of
Labor;
(f) any amendment expressly permitted in this Agreement to be made
by the General Partner acting alone;
(g) an amendment effected, necessitated or contemplated by a
Merger Agreement approved in accordance with Section 15.3; or
(h) any other amendments similar to the foregoing.
14.2 Amendment Procedures. (a) Except as provided in Section 14.1
all amendments to this Agreement shall be made in accordance with the following
requirements. Amendments to this Agreement may be proposed solely by the
General Partner. Each such proposal shall contain the text of the proposed
amendment. A proposed amendment shall be effective upon its approval by the
Limited Partner.
(b) Notwithstanding the provisions of Sections 14.1 and 14.2, no
amendment to this Agreement may (i) enlarge the obligations of any Limited
Partner, or without its consent, which may
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be given or withheld in its sole discretion, of the General Partner, (ii)
modify the compensation payable to the General Partner or any of its Affiliates
by the Partnership or the Operating Partnership, (iii) change Section 13.1(a)
or (c), (iv) restrict in any way any action by or rights of the General Partner
as set forth in this Agreement, (v) charge the term of the Partnership or,
except as set forth in Section 13.1(c), give any Person the right to dissolve
the Partnership or (vi) modify the last sentence of Section 1.2.
ARTICLE XI - MERGER
15.1 Authority. The Partnership may merge or consolidate with one
or more corporations, business trusts, limited liability companies or
associations, real estate investment trusts, common law trusts or
unincorporated businesses, including, without limitation, a general partnership
or limited partnership, formed under the laws of the State of Delaware or any
other state of the United States of America, pursuant to a written agreement of
merger or consolidation ("Merger Agreement") in accordance with this Article.
15.2 Procedure for Merger or Consolidation. Merger or consolidation
of the Partnership pursuant to this Article requires the prior approval of the
General Partner. If the General Partner shall determine, in the exercise of its
sole discretion, to consent to the merger or consolidation, the General Partner
shall approve the Merger Agreement, which shall set forth:
(a) The name and jurisdiction of formation or organization of each
of the business entities proposing to merge or consolidate;
(b) The name and jurisdictions of formation or organization of the
business entity that is to survive the proposed merger or consolidation
(hereafter designated as the "Surviving Business Entity");
(c) The terms and conditions of the proposed merger or
consolidation;
(d) The manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash, property or
general or limited partnership interests, rights, securities or obligations of
the Surviving Business Entity; and (i) if any general or limited partnership
interests, securities or rights of any constituent business entity are not to
be exchanged or converted solely for, or into, cash, property or general or
limited partnership interests, rights, securities or obligations of the
Surviving Business Entity, the cash, property or general or limited partnership
interests, rights, securities or obligations of any limited partnership,
corporation, trust or other entity (other than the Surviving Business Entity)
which the holders of such general or limited partnership Interest are to
receive in exchange for, or upon conversion of, their securities or rights, and
(ii) in the case of securities represented by certificates, upon the surrender
of such certificates, which cash, property or general or limited partnership
interests, rights, securities or obligations of the Surviving Business Entity
or any limited partnership, corporation, trust or other entity (other than the
Surviving Business Entity), or evidences thereof, are to be delivered;
(e) A statement of any changes in the constituent documents (the
articles or certificate of incorporation, articles of trust, declaration of
trust, certificate or agreement of limited partnership
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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 15.4 or a later date
specified in or determinable in accordance with the Merger Agreement (provided,
that if the effective time of the merger is to be later than the date of the
filing of the certificate of merger, it shall be fixed no later than the time
of the filing of the certificate of merger and stated therein); and
(g) Any amendment to this Agreement or the adoption, if any, of a
new limited partnership agreement for any limited partnership that is the
Surviving Business Entity, as permitted by Section 211(g) of the Delaware Act.
(h) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the General Partner.
15.3 Approval by Limited Partner of Merger or Consolidation.
(a) The General Partner of the Partnership, upon its approval of
the Merger Agreement, shall submit a copy or summary of the Merger Agreement to
the Limited Partner for its approval.
(b) The Merger Agreement shall be approved upon receiving the
consent of the Limited Partner. After such approval by the Limited Partner,
and at any time prior to the filing of the certificate of merger pursuant to
Section 15.4, the merger or consolidation may be abandoned pursuant to
provisions therefor, if any, set forth in the Merger Agreement.
15.4 Certificate of Merger. Upon the required approval by the
General Partner and the Limited Partner 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.
15.5 Effect of Merger.
(a) Upon the effective date of the certificate of merger:
(i) all of the rights, privileges and powers of each of
the business entities that has merged or consolidated, and all
property, real, personal and mixed, and all debts due to any of those
business entities and all other things and cause of action belonging
to each of those business entities shall be vested in the Surviving
Business Entity and after the merger or consolidation shall be the
property of the Surviving Business Entity to the extent they were of
each constituent business entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not
revert and shall not be in any way impaired because of the merger or
consolidation;
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(iii) all rights of creditors and all liens on or security
interest in property of any of those constituent business entities
shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity, and
may be enforced against it to the same extent as if the debts,
liabilities and duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article
shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another having occurred.
ARTICLE XVI - GENERAL PROVISIONS
16.1 Addresses and Notice. Any notice, demand, request or report
required or permitted to be given or made to a Partner under this Agreement
shall be in writing and shall be deemed given or made where received by it at
the principal office of the Partnership referred to in Section 1.3.
16.2 Titles and Captions. All article or section titles or
captions in this Agreement are for convenience only. They shall not be deemed
part of this Agreement and in no way define, limit, extend or describe the
scope or intent of any provisions hereof. Except as specifically provided
otherwise, references to "Articles" and "Sections" are to Articles and Sections
of this Agreement.
16.3 Pronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice-versa.
16.4 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as
may be necessary or appropriate to achieve the purposes of this Agreement.
16.5 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
16.6 Integration. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter hereof and supersedes
all prior agreements and understandings pertaining thereto.
16.7 Creditors. None of the provisions of this Agreement shall be
for the benefit of, or shall be enforceable by, any creditor of the
Partnership.
16.8 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
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16.9 Counterparts. This Agreement may be executed in counterparts,
all of which together shall constitute an agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart.
16.10 Applicable Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware, without
regard to the principles of conflicts of law.
16.11 Invalidity of Provisions. If any provision of this Agreement
is or becomes invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
GENERAL PARTNER:
TEXAS EASTERN PRODUCTS PIPELINE COMPANY
By: W.L. THACKER
Name: W.L. Thacker
Title: President and Chief Executive Officer
LIMITED PARTNER:
TEPPCO PARTNERS, L.P.
By: Texas Eastern Products Pipeline
Company, General Partner
By: W.L. THACKER
Name: W.L. Thacker
Title: President and Chief Executive Officer
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