Exhibit 3.6
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
K-SEA GENERAL PARTNER L.P.
DATED AS OF JANUARY 14, 2004
THE SECURITIES ISSUED BY K-SEA GENERAL PARTNER L.P. (INCLUDING, WITHOUT
LIMITATION, THE SECURITIES DISTRIBUTED BY NEW K-SEA TRANSPORTATION LLC TO ITS
MEMBERS) IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAWS AND, AS SUCH THEY MAY NOT BE OFFERED FOR SALE, SOLD,
DELIVERED AFTER SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS THE
SECURITIES HAVE BEEN QUALIFIED AND REGISTERED UNDER APPLICABLE STATE AND FEDERAL
SECURITIES LAWS OR UNLESS SUCH QUALIFICATION AND REGISTRATION IS NOT LEGALLY
REQUIRED. TRANSFER OF THE SECURITIES REPRESENTED BY THIS AGREEMENT MAY BE
FURTHER SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS SET FORTH HEREIN.
TABLE OF CONTENTS
ARTICLE I DEFINITIONS......................................................................... 2
1.1. Definitions......................................................................... 2
1.2. Terms Generally.................................................................... 11
ARTICLE II ORGANIZATION; PURPOSE AND POWERS.................................................. 11
2.1. Formation.......................................................................... 11
2.2. Name .............................................................................. 11
2.3. Registered Office; Registered Agent; Principal Office; Other Offices............... 12
2.4. Purpose and Business............................................................... 12
2.5. Powers............................................................................. 12
2.6. Term .............................................................................. 12
2.7. Title to Partnership Assets........................................................ 12
ARTICLE III PARTNERS......................................................................... 13
3.1. Limitation of Liability............................................................ 13
3.2. Management of Business............................................................. 13
3.3. Partners .......................................................................... 13
3.4. Admission of New Partners.......................................................... 13
3.5. Withdrawals or Resignations........................................................ 14
3.6. Termination of Percentage Interest................................................. 14
3.7. Representations and Warranties of Limited Partners................................. 14
3.8. Successors and Substitute Partners................................................. 15
3.9. Business Opportunities of K-Sea Investors L.P...................................... 15
ARTICLE IV CAPITAL CONTRIBUTIONS............................................................. 16
4.1. Initial Partner Capital Contributions.............................................. 16
4.2. Additional Capital Contributions................................................... 16
ARTICLE V DISTRIBUTIONS...................................................................... 16
5.1. Distributions...................................................................... 16
5.2. Tax Distributions.................................................................. 16
5.3. Distribution in Kind............................................................... 17
ARTICLE VI ALLOCATIONS AND CAPITAL ACCOUNTS.................................................. 17
6.1. Capital Accounts................................................................... 17
6.2. Allocations........................................................................ 17
6.3. Limitations on Losses and Special Rules............................................ 18
6.4. Tax Allocations.................................................................... 20
6.5. Curative Allocations............................................................... 20
ARTICLE VII MANAGEMENT....................................................................... 20
7.1. Management......................................................................... 20
7.2. Certificate of Limited Partnership................................................. 21
7.3. Citizenship Requirements........................................................... 21
ARTICLE VIII TRANSFERS OF PERCENTAGE INTERESTS............................................... 21
8.1. General ........................................................................... 21
8.2. Permitted Transfers................................................................ 23
8.3. Legend............................................................................. 24
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ARTICLE IX OTHER COVENANTS AND REPRESENTATIONS............................................... 24
9.1. Approved Sales..................................................................... 24
9.2. Tag-Along.......................................................................... 25
9.3. Management Investment.............................................................. 27
9.4. Purchaser Representative........................................................... 28
ARTICLE X DISSOLUTION AND LIQUIDATION........................................................ 29
10.1. Duration.......................................................................... 29
10.2. Liquidation of Percentage Interests............................................... 29
10.3. Termination....................................................................... 30
ARTICLE XI BOOKS AND RECORDS................................................................. 31
11.1. Books............................................................................. 31
11.2. Tax Allocations and Reports....................................................... 31
ARTICLE XII EXCULPATION AND INDEMNIFICATION.................................................. 31
12.1. Indemnification................................................................... 31
12.2. Liability of Indemnitees.......................................................... 33
12.3. Indemnification and Reimbursement for Payments on Behalf of a Partner............. 33
ARTICLE XIII MISCELLANEOUS................................................................... 34
13.1. Confidentiality................................................................... 34
13.2. Waiver of Jury Trial.............................................................. 35
13.3. Governing Law..................................................................... 35
13.4. Descriptive Headings.............................................................. 35
13.5. Severability...................................................................... 35
13.6. Amendments........................................................................ 35
13.7. Gender and Number................................................................. 36
13.8. Notice............................................................................ 36
13.9. Counterparts...................................................................... 37
13.10. Entire Agreement................................................................. 37
13.11. No Waiver of Remedies............................................................ 37
13.12. Remedies Cumulative.............................................................. 37
13.13. Binding Effect................................................................... 37
13.14. Determinations of Fair Market Value.............................................. 37
SCHEDULE A - LIST OF PARTNERS AND CAPITALIZATION
EXHIBIT A - FORM OF JOINDER
- ii -
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
K-SEA GENERAL PARTNER L.P.
THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of K-Sea
General Partner L.P., a
Delaware limited partnership (the "PARTNERSHIP"), dated
as of January 14, 2004, is adopted, executed and agreed to, for good and
valuable consideration, by K-Sea General Partner GP LLC, a
Delaware limited
liability company and sole general partner of the Partnership (the "GENERAL
PARTNER"), and New K-Sea Transportation LLC, a
Delaware limited liability
company and sole limited partner of the Partnership ("NEW K-SEA LLC").
Capitalized terms used herein but not otherwise defined shall have the meanings
set forth in Article I below.
WHEREAS, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇") formed K-Sea General Partner LLC, a
Delaware limited liability company ("GENERAL PARTNER LLC"), on July 8, 2003 and
a Certificate of Formation was filed with the Secretary of State of the State of
Delaware on such date; and
WHEREAS, ▇▇▇▇▇, as the sole member of General Partner LLC, adopted,
executed and agreed to enter into a Limited Liability Company Agreement relating
to General Partner LLC on July 8, 2003; and
WHEREAS, ▇▇▇▇▇ assigned 0.01% of his membership interest in General Partner
LLC to the General Partner on August 29, 2003; and
WHEREAS, General Partner LLC converted from a
Delaware limited liability
company to a
Delaware limited partnership on August 29, 2003 and a Certificate
of Conversion and a Certificate of Limited Partnership of the Partnership was
filed with the Secretary of State of the State of
Delaware on such date; and
WHEREAS, pursuant to the Agreement of Limited Partnership of the
Partnership dated as of August 29, 2003 (the "PRIOR AGREEMENT"), (i) Casey's
99.99% membership interest in General Partner LLC became a 99.99% Percentage
Interest (as such term is defined in the Prior Agreement) in the Partnership (a
"PRIOR PERCENTAGE INTEREST") and ▇▇▇▇▇ became the sole limited partner of the
Partnership and (ii) the General Partner's 0.01% membership interest in General
Partner LLC became a 0.01% Prior Percentage Interest and the General Partner
became the sole general partner of the Partnership; and
WHEREAS, ▇▇▇▇▇ assigned his 99.99% Prior Percentage Interest to K-Sea
Transportation LLC, a
Delaware limited liability company ("K-SEA LLC"), on
August 29, 2003; and
WHEREAS, K-Sea LLC merged with and into K-Sea LP1, L.P., a Texas limited
partnership ("K-SEA LP1"), with LP#1 as the surviving entity of the merger; and
WHEREAS, LP#1 and K-Sea LP2, L.P., a Texas limited partnership, merged with
both entities surviving the merger; and
WHEREAS, LP#1 and K-Sea GP1, LLC, a
Delaware limited liability company
("K-SEA GP1"), merged with and into New K-Sea LLC, with New K-Sea LLC as the
surviving entity of the merger whereby New K-Sea LLC became the sole limited
partner of the Partnership; and
WHEREAS, New K-Sea LLC intends to distribute all of its limited partner
interest in the Partnership pro rata to its members; and
WHEREAS, in contemplation of the distribution of all of its limited partner
interest in the Partnership pro rata to its members New K-Sea LLC desires to
amend and restate in its entirety the Prior Agreement; and
WHEREAS, the General Partner also desires to amend and restate in its
entirety the Prior Agreement;
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements contained herein, the General Partner, as the sole general partner of
the Partnership, and New K-Sea LLC, as the sole limited partner of the
Partnership, hereby amend the Prior Agreement and, as so amended, restate it in
its entirety as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. When used in this Agreement, the following terms shall
have the meanings set forth below (all terms used in this Agreement that are not
defined in this Article I shall have the meanings set forth elsewhere in this
Agreement):
"ACQUISITION DATE" means, with respect to a given Percentage Interest, the
date such Percentage Interest was purchased by its initial Partner; provided
that in the case of a Percentage Interest distributed to the members of New
K-Sea LLC, the Acquisition Date of such Percentage Interest means the date the
corresponding New K-Sea Unit was deemed to be initially purchased by such
Partner. The Acquisition Dates for the Percentage Interests issued as of the
date of the distribution of all of New K-Sea LLC's Prior Percentage Interest to
its members are set forth in SCHEDULE A hereto.
"ACT" means the Delaware Revised Uniform Limited Partnership Act, Delaware
Code, Title 6, Sections 17-101, et. seq., as in effect from time to time.
"AFFILIATE" means, as to any Person, any Person directly or indirectly,
through one or more intermediaries, controlling, controlled by, or under common
control with such Person; PROVIDED, the term "control," as used in this
definition, shall mean with respect to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management
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or policies of the controlled entity (whether through ownership of voting
securities, by contract or otherwise).
"AGREEMENT" means this Agreement of Limited Partnership, as amended,
restated or modified from time to time, including any exhibits and schedules
hereto.
"APPLICABLE LAW" means, with respect to any Person, any statute, law,
regulation, ordinance, rule, injunction, order, decree, Governmental Approval,
directive, requirement, or other governmental restriction or any similar form of
decision of, or determination by, or any interpretation or administration of any
of the foregoing by, any Governmental Authority, applicable to such Person or
its subsidiaries or their respective assets.
"APPROVED SALE" has the meaning specified in Section 9.1.
"AVAILABLE CASH" means, at any time, the net amount of cash of the
Partnership which the General Partner determines it may distribute to the
Partners after due consideration of (i) operating expenses of the Partnership,
(ii) outstanding and unpaid obligations of the Partnership, (iii) payment of any
excess cash required to be made to any creditor and (iv) such other reserves as
the General Partner determines.
"BANKRUPTCY EVENT" means, with respect to any Person: (i) the filing of a
petition by or against a Person as "debtor" under Title 11 of the United States
Code (the "Bankruptcy Code") seeking the adjudication of such Person as bankrupt
or the appointment of a trustee, receiver, or custodian of such Person's assets
and in case of a petition filed against such Person, such filing not having been
withdrawn or dismissed within thirty (30) days after the date of such filing;
(ii) the making by such Person of a general assignment for the benefit of
creditors; (iii) the entry of an order, judgment, or decree by any court of
competent jurisdiction appointing a trustee, receiver, or custodian to take
possession of or control over the assets of such Person unless such proceedings
and the person appointed are dismissed within thirty (30) days of the date upon
which the court issued its order, judgment, or decree; or (iv) the determination
by the Bankruptcy Court or the written admission of such Person that such Person
is generally unable to pay his or her debts as they become due within the
meaning of Section 303(h)(l) of the Bankruptcy Code.
"BASE RATE" means on any date of determination, a variable rate per annum
equal to the rate of interest published, from time to time, by THE WALL STREET
JOURNAL as the "prime rate" at large U.S. money center banks.
"CAPITAL ACCOUNT" means, for each Partner, the Capital Account established
for each Partner pursuant to Article VI as maintained for each Partner as
follows:
(A) to each Partner's Capital Account there shall be credited (a)
such Partner's Capital Contributions, if any, when and as received and (b) the
Profit, Gross Income and other items of Partnership income and gain allocated to
such Partner pursuant to Article VI;
(B) to each Partner's Capital Account there shall be debited (a)
the aggregate amount of cash distributed to such Partner, (b) the Loss and other
items of Partnership loss and deduction allocated to such Partner pursuant to
Article VI (other than Section 6.3), and (c) the Gross Asset Value of any
Partnership assets (other than cash) distributed to such Partner in kind
3
(net of any liabilities secured by such distributed property that the Partner is
considered to assume or take under Code Section 752);
(C) Capital Accounts shall be otherwise adjusted in accordance with
Treasury Regulations Section 1.704-1(b); and
(D) if a Partner's Percentage Interest is Transferred in accordance
with the terms of this Agreement, the Transferee shall succeed to the Capital
Account of the Transferor to the extent it relates to the Transferred Percentage
Interest.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Treasury
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Treasury Regulations.
"CAPITAL CONTRIBUTION" means for each Partner the total amount of cash and
the Gross Asset Value of property contributed to the Partnership by such Partner
pursuant to Section 4.1 or 4.2 or otherwise, net of any liabilities associated
with such contributed property that the Partnership is considered to assume or
"take subject to" under Section 752 of the Code, which Capital Contribution
shall be reflected on Schedule A hereto as amended from time to time in
accordance with the terms of this Agreement.
"▇▇▇▇▇" has the meaning set forth in the recitals hereto.
"CAUSE" means with respect to a Management Limited Partner that such
Management Limited Partner has (i) been convicted of, or has plead guilty or
NOLO CONTENDERE to any felony or to any crime involving moral turpitude; (ii)
willfully or intentionally failed to perform the Management Limited Partner's
duties and responsibilities or failed to follow a lawful written directive of
the board of directors or equivalent body or supervisor of the K-Sea Group
member that employs such Management Limited Partner (other than any such failure
resulting from the Management Limited Partner's Incapacity); (iii) committed any
fraud, embezzlement, misappropriation of funds, or breached any of the
Management Limited Partner's material obligations under any non-competition,
confidentiality or non-solicitation agreements to which such Management Limited
Partner is a party, or (iv) committed any other act or omitted to take any other
action that gives any member of the K-Sea Group the right to terminate such
Management Limited Partner for cause under any employment agreement to which the
Management Limited Partner is a party or any company-wide policy applicable to
all employees of the K-Sea Group member that employs such Management Limited
Partner; PROVIDED, HOWEVER, if a Management Limited Partner has a written
employment agreement with any member of the K-Sea Group containing a definition
of "Cause," "CAUSE" shall have the meaning given such term in such written
employment agreement.
"C CORPORATION" means a corporation subject to taxation under Section 11 of
the Code.
"CERTIFICATE" means the Certificate of Limited Partnership for the
Partnership originally filed with the Secretary of State of the State of
Delaware and as amended or restated from time to time.
4
"CHANGE OF CONTROL" means the occurrence of any of the following events:
(a) the sale or transfer of all or substantially all of the
consolidated assets of the Partnership as an entirety to any Person or
related group of Persons other than an Affiliate or Affiliates of the
Partnership;
(b) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other
than the Partners as of the date of this Agreement and their Permitted
Transferees, including, without limitation, the members of New K-Sea LLC
who receive a Percentage Interest as part of the distribution of all of New
K-Sea LLC's Prior Percentage Interest to its members, becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, as amended), directly or indirectly, of more than 50%
of the Percentage Interests;
(c) the Partnership engages in any merger, consolidation, sale of
Percentage Interests held by Partners, or any other transaction with any
other Person, with the effect that the Partners immediately prior thereto
own, directly or indirectly, in the aggregate, less than 50% of (i) the
Percentage Interests if the Partnership is the surviving entity or (ii) the
voting common stock (or the equivalent) of the surviving or resulting
entity if the Partnership is not the surviving entity, in each such case
immediately after such transaction;
provided, however, that the consummation of the transactions contemplated
by or referred to in the Contribution, Conveyance and Assumption Agreement shall
not singly or in the aggregate constitute a Change of Control.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"CONTRIBUTION, CONVEYANCE AND ASSUMPTION AGREEMENT" means the Contribution,
Conveyance and Assumption Agreement effective as of January 14, 2004 by and
among K-Sea Investors L.P., K-Sea LLC, MLP, EW Holding Corp., a New York
corporation, K-Sea Transportation Corp., a New York corporation, and K-Sea
Operating Partnership L.P., a Delaware limited partnership.
"CORPORATION" means a corporation organized under the Delaware General
Corporation Law.
"DEFICIT CAPITAL ACCOUNT" shall mean with respect to any Partner, the
deficit balance, if any, in such Partner's Capital Account as of end of the
Taxable Year, after giving effect to the following adjustments:
(a) credit to such Capital Account any amount which such Partner is
obligated to restore under Treas. Reg. Section 1.704-l(b)(2)(ii)(c), as
well as any addition thereto pursuant to the next to last sentence of
Treas. Reg. Section l.704-2(g)(1) and (i)(5), after taking into account
thereunder any changes during such year in partnership minimum gain (as
determined in accordance with Treas. Reg. Section 1.704-2(d)) and in the
minimum gain
5
attributable to any partner nonrecourse debt (as determined under Treas.
Reg. Section 1.704-2(i)(3)); and
(b) debit to such Capital Account the items described in Treas.
Reg. Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
This definition of Deficit Capital Account is intended to comply with the
provision of Treas. Reg. Sections 1.704-1 (b)(2)(ii)(d) and 1.704-2, and will be
interpreted consistently with those provisions.
"DEPRECIATION" means, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such Fiscal Year, except that if the Gross Asset Value
of an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such Fiscal Year, Depreciation shall be an amount which bears
the same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization, or other cost recovery deduction for such Fiscal
Year bears to such beginning adjusted tax basis; PROVIDED, that if the adjusted
basis for federal income tax purposes of an asset at the beginning of such
Fiscal Year is zero and the Gross Asset Value of the asset is positive,
Depreciation shall be determined with reference to such beginning Gross Asset
Value using any permitted method selected by the General Partner.
"DERIVATIVES" means, with respect to any Percentage Interest, derivative
securities whose value or other economic features is based on the value or such
other economic features of such Percentage Interest.
"ESCROW AMOUNT" has the meaning specified in Section 9.2.
"ESCROW NOTICE" has the meaning specified in Section 9.2.
"FAIR MARKET VALUE" means, as of any date, the fair market value on such
date as determined pursuant to Section 13.14. For this purpose, securities that
are restricted by law, contract, market conditions (including trading volume
relative to the Partnership's holding) or otherwise as to saleability or
transferability may be valued at an appropriate discount, based on the nature
and term of such restrictions.
"FISCAL YEAR" means (i) the taxable year of the Partnership, which shall be
determined by the General Partner consistent with Section 706(b) of the Code,
and (ii) for purposes of Article VI, the portion of any Fiscal Year for which
the Partnership is required to (or does) allocate Gross Income, Profit, Loss, or
other items pursuant to Article VI.
"▇▇▇▇▇▇ ▇▇▇▇ GROUP" means ▇▇▇▇▇▇ ▇▇▇▇ Investors II L.P., FS Employee
Investors LLC, FS Parallel Fund L.P., FS Private Investments LLC, ▇▇▇▇▇▇ ▇▇▇▇
Investments II LLC and any present or former managing director, partner, general
partner, limited partner, member, officer, employee or shareholder of any of the
foregoing.
"GENERAL PARTNER" means K-Sea General Partner GP LLC, a Delaware limited
liability company, in its capacity as the general partner of the Partnership,
and any successor to K-Sea General Partner GP LLC, as general partner.
6
"GENERAL PARTNER LLC" has the meaning set forth in the recitals hereto.
"GOOD REASON" means the resignation of an employee after the location of
the principal office of the Partnership is moved outside of a 75 mile radius of
the current location of the Partnership unless such successor location is
mutually agreed upon by the employee and the Partnership.
"GOVERNMENTAL APPROVAL" means any action, order, authorization, consent,
approval, license, ruling, permit, tariff, rate, certification, exemption,
filing or registration by or with any Governmental Authority.
"GOVERNMENTAL AUTHORITY" means any government or political subdivision
thereof, governmental department, commission, board, bureau, agency, regulatory
authority, instrumentality, judicial or administrative body having jurisdiction
oven the matter or matters in question.
"GROSS ASSET VALUE" means, with respect to any Partnership asset, the
adjusted basis of such asset for Federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any Partnership asset
contributed by a Partner to the Partnership shall be the gross Fair Market
Value of such Partnership asset as of the date of such contribution;
(b) The Gross Asset Value of each Partnership asset may, at the
discretion of the Tax Matters Partner, be adjusted to equal its respective
gross Fair Market Value, as of the following times: (i) the acquisition of
an Additional Interest in the Partnership by any new or existing Partner in
exchange for more than a DE MINIMUS Capital Contribution; (ii) the
distribution by the Partnership to a Partner of more than a DE MINIMUS
amount of Partnership assets (other than cash) as consideration for all or
part of its Percentage Interest unless the General Partner reasonably
determines that such adjustment is not necessary to reflect the relative
economic interests of the Partners in the Partnership; and (iii) the
liquidation of the Partnership within the meaning of Treasury Regulations
Section Section 1.704-l(b)(2)(ii)(g);
(c) The Gross Asset Value of a Partnership asset distributed to any
Partner shall be the Fair Market Value of such Partnership asset as of the
date of distribution thereof;
(d) The Gross Asset Value of each Partnership asset shall be
increased or decreased, as the case may be, to reflect any adjustments to
the adjusted basis of such Partnership asset pursuant to Section 734(b) or
Section 743(b) of the Code, but only to the extent that such adjustments
are taken into account in determining Capital Account balances pursuant to
Treasury Regulations Section Section 1.704-1(b)(2)(iv)(m); provided, that
Gross Asset Values shall not be adjusted pursuant to this subparagraph (d)
to the extent that an adjustment pursuant to subparagraph (b) above is made
in conjunction with a transaction that would otherwise result in an
adjustment pursuant to this subparagraph (d); and
7
(e) If the Gross Asset Value of a Partnership asset has been
determined or adjusted pursuant to subparagraphs (a), (b) or (d) above,
such Gross Asset Value shall thereafter be adjusted to reflect the
Depreciation taken into account with respect to such Partnership asset for
purposes of computing Profits and Losses.
"GROSS INCOME" means for each Fiscal Year, all items of income and gain
recognized by the Partnership.
"HOLD" means direct or indirect possession and/or beneficial or record
ownership.
"INCAPACITY" means, as to any Person, the death or the adjudication of
incompetence or insanity of such Person.
"INDEMNITEE" means each and every Limited Partner or direct or indirect
officer, director, stockholder, member or partner of a Partner.
"INITIAL CAPITAL CONTRIBUTION" has the meaning specified in Section 4.1(a).
"K-SEA GP1" has the meaning set forth in the recitals hereto.
"K-SEA GROUP" means the Partnership and its Affiliates and the MLP and its
Affiliates.
"K-SEA INVESTORS L.P." has the meaning specified in Section 3.11.
"K-SEA LLC" has the meaning set forth in the recitals hereto.
"K-SEA LP1" has the meaning set forth in the recitals hereto.
"LIQUIDATOR" means the Person responsible for winding up the Partnership
pursuant to Section 10.2 hereof.
"MAJORITY APPROVAL" means the approval of Partners owning a majority of the
Percentage Interests.
"MANAGEMENT LIMITED PARTNER" has the meaning specified in Section 9.3.
"MANAGEMENT PERCENTAGE INTEREST" has the meaning specified in Section 9.3.
"MLP" means K-Sea Transportation Partners L.P., a Delaware limited
partnership.
"NEW K-SEA LLC" has the meaning set forth in the recitals hereto.
"NEW K-SEA UNIT" means a "Unit" of New K-Sea LLC as such term is defined in
the Limited Liability Company Agreement of New K-Sea LLC dated as of January 8,
2004.
"OTHER PARTNER" means, with respect to a Partner, all Partners other than
such Partner.
"PARTNER" means the General Partner or any Limited Partner.
8
"PARTNER NONRECOURSE DEBT" has the same meaning as "partner nonrecourse
debt," as defined in Treasury Regulations Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" means an amount, with respect to
each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a nonrecourse liability,
determined in accordance with Treasury Regulations Section 1.704-2(i)(3).
"PARTNERSHIP" has the meaning set forth in the recitals hereto.
"PARTNERSHIP MINIMUM GAIN" has the same meaning as "partnership minimum
gain" in Treasury Regulations Section 1.704-2(b)(2) and 1.704-2(d). A Partner's
share of Minimum Gain shall be computed in accordance with the provisions of
Treasury Regulations Section 1.704-2(g).
"PERCENTAGE INTEREST" means a Partner's entire interest in the Partnership,
including such Partner's economic interest and the right to receive information
concerning the business and affairs of the Partnership, in each case, to the
extent expressly provided in this Agreement or required by the Act. The amount
of Percentage Interests allocated to each Partner following the distribution of
New K-Sea LLC's Prior Percentage Interests to its members is listed on SCHEDULE
A attached hereto, subject to adjustment pursuant to this Agreement.
"PERMITTED TRANSFER" means all Transfers permitted under Section 8.2.
"PERMITTED TRANSFEREES" means all Transferees permitted under Section 8.2.
"PERSON" means an individual, a partnership, a corporation, an association,
a joint stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
"PRIOR AGREEMENT" has the meaning set forth in the recitals hereto.
"PRIOR PERCENTAGE INTEREST" has the meaning set forth in the recitals
hereto.
"PROFIT" and "LOSS" mean, for each Fiscal Year, an amount equal to the
Partnership's taxable income or loss for such Fiscal Year, determined in
accordance with Code Section 703(a) (including for this purpose, all items of
income, gain, loss or deduction required to be separately stated pursuant to
Code Section 703(a)(1)), with the following adjustments:
(a) Any income of the Partnership that is exempt from Federal
income tax and not otherwise taken into account in computing Profit or Loss
pursuant to this definition shall be added to such taxable income or loss;
(b) Any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code
expenditures pursuant to Treasury Regulations Section 1.704-l(b)(2)(iv)(i)
(other than expenses in respect of which an election is properly made under
Section 709 of the Code), and not otherwise taken into account in computing
Profit or Loss pursuant to this definition shall be subtracted from such
taxable income or loss;
9
(c) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (b) or (c) of the definition of Gross
Asset Value, the amount of such adjustment shall be taken into account as
gain (if the adjustment increases the Gross Asset Value of an asset) or
loss (if the adjustment decreases the Gross Asset Value of an asset) from
the disposition of such Partnership asset for purposes of computing Profit
or Loss;
(d) Gain or loss resulting from any disposition of any Partnership
asset with respect to which gain or loss is recognized for Federal income
tax purposes shall be computed by reference to the Gross Asset Value of the
Partnership asset disposed of, notwithstanding that the adjusted tax basis
of such Partnership asset may differ from its Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such Fiscal Year,
computed in accordance with the definition of Depreciation;
(f) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) is required, pursuant to
Treasury Regulation Section 1 704-1(b)(2)(iv)(m)(4), to be taken into
account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's interest in the Partnership, the amount
of such adjustment 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) from the disposition of such asset and shall be taken into account
for purposes of computing Profit or Loss; and
(g) Any items of income, gain, loss or deduction specially
allocated under Section 6.3(b) through and including 6.3(h) shall be
excluded.
"REPURCHASE FAIR MARKET VALUE" has the meaning specified in Section 9.3.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar Federal statute then in effect, and any reference to a particular
section thereof shall include a reference to the comparable section, if any, of
any such similar Federal statute, and the rules and regulations promulgated
thereunder.
"SELLER'S NOTICE" has the meaning specified in Section 9.2.
"SHIPPING ACT" means the Shipping ▇▇▇, ▇▇▇▇, as amended from time to time.
"SUBSIDIARY" of any Person (with respect to such Subsidiary, the "PARENT")
means any other Person whose (a) securities having ordinary voting power to
elect a majority of its board of directors or managing or general partners (or
other persons having similar functions) or (b) other ownership interests
(including partnership and membership interests) ordinarily constituting a
majority interest in the capital, profits or cash flow of such Person, are at
the time, directly or indirectly, owned or controlled by such parent, or by one
or more other Subsidiaries of such parent, or by such parent and one or more of
its other Subsidiaries.
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"TAG-ALONG NOTICE" has the meaning specified in Section 9.2.
"TAX MATTERS PARTNER" has the meaning specified in Section 11.2.
"TERMINATION NOTICE" has the meaning specified in Section 9.3.
"TRANSFER" means any sale, transfer, assignment, pledge, or other disposal
of a Percentage Interest, and the terms "Transferee," "Transferor,"
"Transferring," and "Transferred" shall have correlative meanings.
"TRANSFERRING PARTNER" means any Partner making a Transfer of its
Percentage Interest pursuant to the provisions of Article VIII.
"TREASURY REGULATIONS" means the final or temporary regulations that have
been issued by the U.S. Department of Treasury pursuant to its authority under
the Code, and any successor regulations.
"UNRETURNED CAPITAL CONTRIBUTION" means, as to any Partner, the Partner's
Capital Contribution, reduced by the total distributions to such Partner made
pursuant to Section 5.1(a)(ii) and 5.2.
1.2. TERMS GENERALLY. Throughout this Agreement:
The definitions in Article I shall apply equally to both the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
"include," "includes" and "including" shall be deemed to be followed by the
phrase "without limitation." Each reference to a Person shall include the
successors thereto by merger, reorganization or other similar transaction.
ARTICLE II
ORGANIZATION; PURPOSE AND POWERS
2.1. FORMATION. The Partnership was formed as a limited partnership
pursuant to the Act upon the conversion of General Partner LLC into the
Partnership on August 29, 2003. The General Partner and New K-Sea LLC hereby
amend and restate the Prior Agreement in its entirety. This amendment and
restatement shall become effective on the date of this Agreement. Except as
expressly provided to the contrary in this Agreement, the rights, duties
(including fiduciary duties), liabilities and obligations of the Partners and
the administration, dissolution and termination of the Partnership shall be
governed by the Act. All Percentage Interests shall constitute personal property
of the owner thereof for all purposes and a Partner has no interest in specific
Partnership property.
2.2. NAME. The name of the Partnership shall be "K-Sea General Partner
L.P." The Partnership's business may be conducted under any other name or names
deemed necessary or appropriate by the General Partner in its sole discretion,
including the name of the General Partner. The words "Limited Partnership,"
"L.P.," "Ltd." or similar words or letters shall be included in the
Partnership's name where necessary for the purpose of complying with the laws of
any jurisdiction that so requires.
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2.3. REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE; OTHER
OFFICES. Unless and until changed by the General Partner, the registered office
of the Partnership in the State of Delaware shall be located at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the registered agent for service of
process on the Partnership in the State of Delaware at such registered office
shall be The Corporation Trust Company. The principal office of the Partnership
shall be located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or such
other place as the 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
necessary or appropriate. The address of the General Partner shall be ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or such other place as the
General Partner may from time to time designate by notice to the Limited
Partners.
2.4. PURPOSE AND BUSINESS. The purpose and nature of the business to be
conducted by the Partnership shall be to (a) serve as general partner of the MLP
and, in connection therewith, to exercise all the rights and powers conferred
upon the Partnership as the general partner of the MLP pursuant to the Second
Amended and Restated Agreement of Limited Partnership of the MLP dated as of
January 14, 2004, or otherwise, and (b) engage directly in, or enter into or
form any corporation, partnership, joint venture, limited liability company or
other arrangement to engage indirectly in, any business activity that is
approved by the General Partner and which lawfully may be conducted by a limited
partnership organized pursuant to the Act and, in connection therewith, to
exercise all of the rights and powers conferred upon the Partnership pursuant to
the agreements relating to such business activity; provided, however, that the
General Partner reasonably determines, as of the date of the acquisition or
commencement of such activity, that such activity does not affect the
Partnership's treatment as a partnership for Federal income tax purposes. The
General Partner has no obligation or duty to the Partnership, the Limited
Partners or the Transferees to propose or approve, and in its discretion may
decline to propose or approve, the conduct by the Partnership of any business.
2.5. POWERS. The Partnership shall be empowered to do any and all acts
and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described in Section 2.4 and for the protection and benefit of the Partnership.
2.6. TERM. The term of the Partnership commenced upon the formation of
General Partner LLC and shall continue in existence until the dissolution of the
Partnership in accordance with the provisions of Article XI. The existence of
the Partnership as a separate legal entity shall continue until the cancellation
of the Certificate of Limited Partnership as provided in the Act.
2.7. 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 Transferee,
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, one or more of its Affiliates 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 or one or more of its Affiliates or one or more nominees shall be held
by the General Partner or such Affiliate or nominee for the use and benefit of
the Partnership in
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accordance with the provisions of this Agreement; provided, however, that the
General Partner shall use 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; provided, further, that, prior to the
withdrawal or removal of the General Partner or as soon thereafter as
practicable, the General Partner shall use reasonable efforts to effect the
transfer of record title to the Partnership and, prior to any such transfer,
will provide for the use of such assets in a manner satisfactory to the General
Partner. All Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which record
title to such Partnership assets is held.
ARTICLE III
PARTNERS
3.1. LIMITATION OF LIABILITY. The Limited Partners and the Transferees
shall have no liability under this Agreement except as expressly provided in
this Agreement or the Act.
3.2. MANAGEMENT OF BUSINESS. No Limited Partner or Transferee, in its
capacity as such, shall participate in the operation, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. Any action taken by any Affiliate of the General
Partner or any officer, director, employee, manager, member, general partner,
agent or trustee of the General Partner or any of its Affiliates, shall not be
deemed to be participation in the control of the business of the Partnership by
a limited partner of the Partnership (within the meaning of Section 17-303(a) of
the Act) and shall not affect, impair or eliminate the limitations on the
liability of the Limited Partners or Transferees under this Agreement.
3.3. PARTNERS. The names of the Partners, the Percentage Interest held by
each Partner and the amount of the Capital Contribution of each Partner are as
set forth opposite its name on SCHEDULE A hereto, which Schedule may be amended
from time to time to reflect any change in the identity or Capital Contribution
of the Partners and any changes in the Percentage Interest held by each of the
Partners. Each such Person shall be deemed to have been admitted as a Partner
upon the date that this Agreement becomes effective without the need for any
further action or consent by any Person, whereupon each such Person shall be
issued its Percentage Interest (including, without limitation, the respective
Percentage Interests indicated on SCHEDULE A attached hereto); PROVIDED, HOWEVER
that the members of New K-Sea LLC who receive a portion of New K-Sea LLC's Prior
Percentage Interest upon the distribution of all of New K-Sea's Prior Percentage
Interest shall be deemed to have been admitted as a Partner upon the
consummation of the distribution, whereupon each such member shall be issued the
Percentage Interest set forth opposite its name on SCHEDULE A attached hereto.
3.4. ADMISSION OF NEW PARTNERS. In order for a Permitted Transferee to be
admitted as a Partner, such Permitted Transferee shall have delivered to the
Partnership a written undertaking in the form of EXHIBIT A attached hereto to be
bound by the terms and conditions of this Agreement and shall have delivered
such documents and instruments as the General Partner determines to be necessary
or appropriate to effect such Person's admission as a Partner; thereafter, the
General Partner shall amend SCHEDULE A without the further vote, act or consent
of
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any other Person to reflect such new Person as a Partner and shall make
available for review a copy of such amended SCHEDULE A to each Partner. Upon the
delivery of such documents and instruments, such Person shall be admitted as a
Partner and deemed listed as such on the books and records of the Partnership
and thereupon shall be issued such Person's Percentage Interest. If additional
Percentage Interests are issued to an existing Partner in accordance with the
terms hereof; the General Partner shall amend SCHEDULE A without the further
vote, act or consent of any other Person to reflect the issuance of such
Percentage Interest, shall make available for review a copy of such amended
SCHEDULE A to each Partner, and, upon the amendment of such SCHEDULE A, such
Partner shall be issued such Partner's additional Percentage Interest.
3.5. WITHDRAWALS OR RESIGNATIONS. Except as otherwise provided by this
Agreement, no Partner may withdraw, retire, or resign from the Partnership.
3.6. TERMINATION OF PERCENTAGE INTEREST. A Partner shall cease to be a
Partner at such time that such Partner transfers all of its Percentage Interest
in accordance with this Agreement.
3.7. REPRESENTATIONS AND WARRANTIES OF LIMITED PARTNERS. In connection
with the acquisition by the Limited Partners of Percentage Interest pursuant to
the terms and conditions of this Agreement, each Limited Partner represents and
warrants to the Partnership that:
(a) The Percentage Interest will be acquired for the Partner's own
account and not with a view to, or intention of, distribution thereof in
violation of the Securities Act, or any applicable state securities laws, and
the Percentage Interest will not be disposed of in contravention of the
Securities Act or any applicable state securities laws;
(b) No commission, fee or other remuneration is to be paid or given
directly or indirectly, to any Person for soliciting the Partner to acquire the
Percentage Interest;
(c) The Partner is sophisticated in financial matters and is able
to evaluate the risks and benefits of making the Capital Contribution
contemplated hereunder with respect to the Percentage Interest and has
determined that such investment is suitable for the Partner, based upon the
Partner's financial situation and needs, as well as the Partner's other
securities holdings;
(d) The Partner is not subject to any state's administrative
enforcement order or judgment which prohibits, denies or revokes the use of any
exemption from registration in connection with the offer, purchase or sale of
securities;
(e) The Partner is able to bear the economic risk of its investment
in the Partnership for an indefinite period of time and the Partner understands
that the Percentage Interest has not been registered under the Securities Act
and cannot be sold unless subsequently registered under the Securities Act or
unless an exemption therefrom is available;
(f) The Partner has had an opportunity to ask questions and receive
answers concerning the terms and conditions of its investment in the Partnership
and has had full access to such other information concerning the Partnership and
the MLP as the Partner has requested;
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(g) This Agreement constitutes the legal, valid and binding
obligation of the Partner, enforceable in accordance with its terms (subject to
principles of equity, the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium, and other similar laws), and the execution, delivery
and performance of this Agreement by the Partner (or the admission to the
Partnership as a Partner for each member of New K-Sea LLC who receives a portion
of New K-Sea LLC's Prior Percentage Interest upon the distribution of all of New
K-Sea's Prior Percentage Interest to its members) does not and will not, in any
material respect, conflict with, violate or cause a breach of any Applicable
Law, material agreement, contract or instrument to which the Partner is a party
or any judgment, order or decree to which the Partner is subject; and
(h) Except as indicated on SCHEDULE A hereto, the Partner is a
citizen of the United States within the meaning of Section 2 of the Shipping
Act, for the purpose of the operation of vessels in the United States coastwise
trade.
3.8. SUCCESSORS AND SUBSTITUTE PARTNERS. Upon the Bankruptcy Event,
termination, liquidation or dissolution of a Partner which is a partnership,
trust, corporation, limited liability company or other entity or the Bankruptcy
Event, death or Incapacity of a Partner who is an individual, the estate or
successor in interest of such Partner shall thereupon succeed to the rights of
such Partner as a Partner only to receive allocations and distributions
hereunder and may become a substitute Partner only upon the terms and conditions
set forth in Section 3.4 hereof.
3.9. BUSINESS OPPORTUNITIES OF K-SEA INVESTORS L.P. The Partners hereby
acknowledge that the interest of K-Sea Investors L.P., a Delaware limited
partnership ("K-Sea Investors L.P."), in the Partnership is that of an investor
providing capital for the Partnership in accordance with the terms hereof; and
the very nature of the business of K-Sea Investors L.P. and the ▇▇▇▇▇▇ ▇▇▇▇
Group and their respective Affiliates is to provide capital and financing in a
wide variety of forms to, and to make investments with respect to, a vast and
expanding number of diverse Persons, businesses and enterprises. Accordingly,
the Partners hereby agree that K-Sea Investors L.P., the ▇▇▇▇▇▇ ▇▇▇▇ Group and
their respective Affiliates may engage, provide financing, invest or possess an
interest in other businesses and enterprises of any kind, nature or description,
independently or with others, whether (i) such ventures are competitive with any
member of the K-Sea Group or (ii) the operations or property of such businesses
and enterprises are transacted or located in the vicinity of or adjacent to any
member of the K-Sea Group or any area in which any member of the K-Sea Group
engages in business; and, to the extent permitted by the Act, K-Sea Investors
L.P., the ▇▇▇▇▇▇ ▇▇▇▇ Group and their respective Affiliates shall not have any
duties or responsibilities to any member of the K-Sea Group that they might
otherwise have under the Act. The fact that K-Sea Investors L.P., the ▇▇▇▇▇▇
▇▇▇▇ Group or any of their respective Affiliates may take advantage of such
opportunities and not offer such opportunities, or disclose information
pertaining thereto, to any member of the K-Sea Group or to the other Partners,
shall not subject K-Sea Investors L.P., the ▇▇▇▇▇▇ ▇▇▇▇ Group or any of their
respective Affiliates to any liability to any member of the K-Sea Group or to
the other Partners whatsoever. Neither the Partnership, nor any other member of
the K-Sea Group nor any other Partner shall have the right by virtue of this
Agreement, or the relationship created hereby, in or to such ventures,
investments or other opportunities, or to the income or profits derived
therefrom by K-Sea Investors L.P., the ▇▇▇▇▇▇ ▇▇▇▇ Group or any of their
respective Affiliates; and the pursuit of, and nondisclosure of information to
the members of the K-Sea Group pertaining to, such ventures, investments or
other opportunities even though competitive with the business of the
15
members of the K-Sea Group, shall not be deemed wrongful or improper or in
violation of this Agreement or any rights of the members of the K-Sea Group or
the Partners under the Act or other Applicable Law.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1. INITIAL PARTNER CAPITAL CONTRIBUTIONS.
(a) In connection with the formation of General Partner LLC, ▇▇▇▇▇
made an initial Capital Contribution of $1,000 (the "INITIAL CAPITAL
CONTRIBUTION").
(b) SCHEDULE A sets forth the Capital Contributions attributed to
the members of New K-Sea LLC who will receive a portion of New K-Sea LLC's Prior
Percentage Interest upon the pro rata distribution of all of New K-Sea LLC's
Prior Percentage Interest to its members. Upon the distribution of all of New
K-Sea LLC's Prior Percentage Interest to its members, each such member shall be
admitted as a Partner and shall be deemed to own the Percentage Interest set
forth opposite such Partner's name on SCHEDULE A. The Partnership may in its
discretion issue certificates to the Limited Partners representing the
Percentage Interest held by each Limited Partner. The Capital Account of each
Partner described above shall include the amount of the Initial Capital
Contribution allocated to such Partner as shown on SCHEDULE A.
4.2. ADDITIONAL CAPITAL CONTRIBUTIONS. Except for the Capital
Contributions of the Partners made pursuant to Section 4.1, the Partners shall
not be required to make any additional Capital Contributions. If any Partner has
a deficit balance in his Capital Account (after giving effect to all Capital
Contributions made pursuant to Article IV or otherwise, distributions pursuant
to Article V or Article X, and allocations of items of Profit or Loss pursuant
to Article VI for all taxable years, including the taxable year during which the
liquidation described in Article X occurs), such Partner shall have no
obligation to make any Capital Contribution to the Partnership with respect to
such deficit, and such deficit shall not be considered a debt owed to the
Partnership or to any other Person for any purpose whatsoever.
ARTICLE V
DISTRIBUTIONS
5.1. DISTRIBUTIONS. Distributions, including, without limitation,
distributions of Available Cash, shall be made to the Partners only when and if,
and in the amounts, the General Partner shall determine. All distributions shall
be made pro rata in accordance with the Percentage Interest held by each
Partner.
5.2. TAX DISTRIBUTIONS. Notwithstanding Section 5.1, if the Tax Matters
Partner determines that the Partners may incur a tax liability arising from the
allocation of Profits to them from this Partnership pursuant to Article VI
(after taking into account any Losses allocated to them pursuant to Article VI
in prior years) then, in the Tax Matters Partner's discretion, the Partnership
may distribute among the Partners an amount equal to such anticipated tax
liability, such amount to be determined by the Tax Matters Partner. Any amounts
so distributed shall be taken into account in determining subsequent
distributions under Section 5.1.
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5.3. DISTRIBUTION IN KIND. The General Partner may make distributions in
cash or in kind. In the event a distribution of property other than cash is
made, such property shall be valued by the General Partner at its Fair Market
Value for purposes of making distributions pursuant to Section 5.1. If different
types of property (such as different classes of a security) are to be
distributed simultaneously, such different types of property shall be
distributed in the same proportion to each Partner. The General Partner may
cause certificates evidencing any security to be distributed to be imprinted
with legends as to such restrictions on Transfer that it may deem necessary or
appropriate, including legends as to applicable federal or state securities laws
or other legal or contractual restrictions, and may require any Partner to which
securities are to be distributed to agree in writing (a) that such securities
will not be Transferred except in compliance with such restrictions and (b) to
such other matters as the General Partner may deem necessary or appropriate.
ARTICLE VI
ALLOCATIONS AND CAPITAL ACCOUNTS
6.1. CAPITAL ACCOUNTS. A "CAPITAL ACCOUNT" shall be established for each
Partner on the books of the Partnership and shall be maintained as provided in
the definition of Capital Account.
6.2. ALLOCATIONS. After giving effect to the required allocations
pursuant to Section 6.3 hereof or otherwise required by this Article VI or
Section 10.2(b) hereof, items of Profit and Loss shall be allocated among the
Partners with respect to each Fiscal Year as follows:
(a) Items of Profit shall be allocated:
(i) First, to those Partners who have received cumulative
allocations of Loss in excess of their respective cumulative allocations of
Profit, in the amount of such excess, in reverse chronological order to that in
which such excess arose, in proportion to the amount of such excess attributable
to each such Partner for each prior Fiscal Year; and
(ii) Second, to each Partner, to the extent of and in
proportion to, the amount by which the amount distributed to such Partner
pursuant to Section 5.1 exceeds the amount of such Partner's Capital Account
immediately preceding the allocation.
(b) Items of Loss shall be allocated:
(i) First, to those Partners who have received cumulative
allocations of Profit in excess of their respective cumulative allocations of
Loss, in the amount of such excess, in reverse chronological order to that in
which such excess arose, in proportion to the amount of such excess attributable
to each such Partner for each prior Fiscal Year;
(ii) Second, to those Partners with positive Capital Account
balances immediately prior to this allocation, in an amount equal to the sum of
and in proportion to the amounts of such positive balances; and
(iii) Thereafter, to all Partners in proportion to the
Percentage Interest held by each of them.
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6.3. LIMITATIONS ON LOSSES AND SPECIAL RULES.
(a) LIMITATIONS ON LOSSES. The Losses or deductions allocated to
any Partner pursuant to Section 6.2 hereof shall not exceed the maximum amount
of Losses or deductions that can be so allocated without causing such Person to
have a Deficit Capital Account at the end of any Fiscal Year. In the event that
some, but not all, of the Partners would have Deficit Capital Accounts as a
consequence of an allocation of Losses or deductions pursuant to Section 6.2,
the limitation set forth in this Section 6.3(a) shall be applied on a
Partner-by-Partner basis so as to allocate the maximum permissible Losses or
deductions to each Partner under Treasury Regulations Section 1.704-I
(b)(2)(ii)(d).
(b) GROSS INCOME ALLOCATION. In the event any Partner has a Deficit
Capital Account at the end of any Fiscal Year, each such Partner shall be
specially allocated items of Partnership income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this
Section 6.3(b) shall be made if and only 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 6.3 have been tentatively made as if this Section
6.3(b) were not in this Agreement.
(c) QUALIFIED INCOME OFFSET. In the event any Partner unexpectedly
receives any adjustments, allocations, or distributions described in Treasury
Regulations Sections 1.704-l(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-l(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to each such Partner in an amount and manner sufficient to eliminate,
to the extent required by the Treasury Regulations, the Deficit Capital Account
of such Partner as quickly as possible, provided that an allocation pursuant to
this Section 6.3(c) shall be made if and only to the extent that such Partner
would have a Deficit Capital Account after all other allocations provided for in
this Article VI have been tentatively made as if this Section 6.3(c) were not in
this Agreement.
(d) PARTNERSHIP MINIMUM GAIN CHARGEBACK. Except as otherwise
provided in Treasury Regulations Section 1.704-2(f), and notwithstanding any
other provision of this Article VI, if there is a net decrease in Partnership
Minimum Gain during any Fiscal Year, each Partner shall be specially allocated
items of Partnership income and gain for such Fiscal Year (and, if necessary,
subsequent Fiscal Years) in an amount equal to such Partner's share of the net
decrease in Partnership Minimum Gain, determined in accordance with Treasury
Regulations Section 1.704-2(g). The items to be so allocated shall be determined
in accordance with Treasury Regulations Sections 1.704-2(f)(6) and
1.704-2(j)(2). This Section 6.3(d) is intended to comply with the minimum gain
chargeback requirement in Treasury Regulations Section 1.704-2(f) and shall be
interpreted consistently therewith.
(e) NONRECOURSE DEDUCTIONS. Nonrecourse deductions, within the
meaning of Treasury Regulations Section 1.704-2(c) shall be allocated pro rata
among the Partners.
(f) NONRECOURSE LIABILITIES. That portion of nonrecourse
liabilities of the Partnership allocable pursuant to Treasury Regulations
Section 1.752-3(a)(3) shall be allocated pro rata among the Partners.
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(g) PARTNER NONRECOURSE DEBT AND MINIMUM GAIN CHARGEBACK.
Deductions and losses attributable to Partner Nonrecourse Debt (as defined in
Treas. Reg. Section 1.704-2(b)(4)) shall be allocated in the manner required by
Treas. Reg. Section 1.704-2(i). Except as otherwise provided in Section
1.704.-2(i)(4) of the Regulations and notwithstanding any other provision of
this Article VI, if there is a net decrease in Partner Nonrecourse Debt Minimum
Gain attributable to a Partner Nonrecourse Debt during any Fiscal Year, each
Person who has a share of the Partner Nonrecourse Debt Minimum Gain attributable
to such Partner Nonrecourse Debt, determined in accordance with Section
1.704-2(i)(5) of the Regulations, shall be specially allocated items of
Partnership income and gain for such Fiscal Year (and, if necessary, subsequent
Fiscal Years) in an amount equal to such Person's share of the net decrease in
Partner Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Reg. Section 1.704-2(i)(4). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Partner pursuant thereto. The items to
be so allocated shall be determined in accordance with Section 1.704-2(i)(4) and
Section 1.704-2(j)(2) of the Regulations. This Section 6.3(g) is intended to
comply with the minimum gain chargeback requirement in Section 1.704-2(i)(4) of
the Regulations and shall be interpreted consistently therewith.
(h) COMPLIANCE WITH SECTION 704(b) REGULATIONS. The provisions of
this Article VI (other than subsections (g) and (h) hereunder) are intended to
comply with Treasury Regulation Sections 1.704-1(b) and 1.704-2, as amended, and
shall be interpreted and applied in a manner consistent with such Regulations.
(i) TRANSFER OF PERCENTAGE INTEREST. If all or any portion of any
Partner's Percentage Interest are transferred during any Fiscal Year, items of
Profit and Loss attributable to the transferred Percentage Interest for such
Fiscal Year shall be allocated between the transferor and the transferee by
closing the books with respect to such transferred Percentage Interest as of the
date of transfer, as permitted by Code Sections 706(c) and (d).
(j) RELATED PARTY TRANSACTIONS. If, and to the extent that any
Partner is deemed to recognize any item of income, gain, loss, deduction or
credit as a result of any transaction between such Partner and the Partnership
pursuant to Code Sections 1272-1274, 7872, 483, 482 or any similar provision now
or hereafter in effect and the General Partner determines that any corresponding
income, gain, loss or deduction of the Partnership should be allocated to the
Partner who recognized such item in order to reflect the Partner's economic
interests in the Partnership, then such income, gain, loss or deduction shall be
so allocated.
(k) INCOME CHARACTERIZATION. For purposes of determining the
character (as ordinary income or capital gain) of any Profits allocated to the
Partners pursuant to Section 6.2, such portion of the taxable income of the
Partnership allocated pursuant to Section 6.2 that is treated as ordinary income
attributable to the recapture of depreciation shall, to the extent possible, be
allocated among the Partners in the proportion that (i) the amount of
depreciation previously allocated to each Partner bears to (ii) the total of
such depreciation allocated to all Partners. This Section 6.3(k) shall not alter
the amount of allocation among the Partners pursuant to Section 6.2 but merely
the character of income so allocated.
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6.4. TAX ALLOCATIONS.
(a) The income, gains, losses, deductions and credits of the
Partnership will be allocated, for federal, state and local income tax purposes,
among the Partners in accordance with the allocation of such income, gains,
losses, deductions and credits among the Partners for computing their Capital
Accounts, except that if any such allocation is not permitted by the Code or
other Applicable Law, the Partnership's subsequent income, gains, losses,
deductions and credit will be allocated among the Partners so as to reflect as
nearly as possible the allocation set forth herein in computing their Capital
Accounts.
(b) Items of the Partnership's taxable income, gain, loss and
deduction with respect to any property contributed to the capital of the
Partnership shall be allocated among the Partners in accordance with Code
Section 704(c) so as to take account of any variation between the adjusted basis
of such property to the Partnership for federal income tax purposes and its
Gross Asset Value using the traditional method of Treas. Reg. Section
1.704-1(b)(2).
(c) If the Gross Asset Value of any Partnership asset is adjusted,
subsequent allocations of items of taxable income, gain, loss and deduction with
respect to such asset shall take account of any variation between the adjusted
basis of such asset for federal income tax purposes and its Gross Asset Value in
the same manner as under Code Section 704(c).
(d) Allocations of tax credits, tax credit recapture, and any items
related thereto shall be allocated to the Partners according to their interests
in such items as determined by the General Partner taking into account the
principles of Treas. Reg. Section 1.704-1(b)(4)(ii).
(e) Allocations pursuant to this Section 6.4 are solely for
purposes of federal, state and local taxes and shall not affect, or in any way
be taken into account in computing, any Partner's Capital Account or share of
income, gains, losses, deductions, Distributions or other Partnership items
pursuant to any provision of this Agreement.
6.5. CURATIVE ALLOCATIONS. If the General Partner determines, after
consultation with counsel experienced in income tax matters, that the allocation
of any item of Partnership income, gain, loss, deduction or credit is not
specified in this Article VI (an "unallocated item"), or that the allocation of
any item of Partnership income, gain, loss, deduction or credit hereunder is
clearly inconsistent with the Partners' economic interests in the Partnership
(determined by reference to the general principles of Treas. Reg. Section
1.704-1(b) and the factors set forth in Treas. Reg. Section 1.704-1(b)(3)(ii))
(a "misallocated item"), then the General Partner may allocate such unallocated
items, or reallocate such misallocated items, to reflect such economic
interests; PROVIDED, that no such allocation will be made without the prior
consent of each Partner which would be affected thereby (which consent no such
Partner may unreasonably withhold). Any such Partner's consent which is
unreasonably withheld in the good faith judgment of the General Partner shall be
deemed given for purposes of the immediately preceding sentence.
ARTICLE VII
MANAGEMENT
7.1. MANAGEMENT. The General Partner shall conduct, direct and manage all
activities of the Partnership. Except as otherwise expressly provided in this
Agreement, all management
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powers over the business and affairs of the Partnership shall be exclusively
vested in the General Partner, and no Limited Partner or Transferee shall have
any management power over the business and affairs of the Partnership. In
addition to the powers now or hereafter granted a general partner of a limited
partnership under Applicable Law or which are granted to the General Partner
under any other provision of this Agreement, the General Partner shall have full
power and authority to do all things and on such terms as it, in its sole
discretion, may deem necessary or appropriate to conduct the business of the
Partnership.
7.2. 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 Act. The General Partner shall use
all reasonable efforts to cause to be filed such other certificates or documents
as may be determined by the General Partner in its sole discretion to be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Delaware or any
other state in which the Partnership may elect to do business or own property.
To the extent 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 or other entity in which the limited partners have
limited liability) under the laws of the State of Delaware or of any other state
in which the Partnership may elect to do business or own property. 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.
7.3. CITIZENSHIP REQUIREMENTS. The General Partner must be a citizen of
the United States.
ARTICLE VIII
TRANSFERS OF PERCENTAGE INTERESTS
8.1. GENERAL.
(a) RESTRICTIONS ON TRANSFER. No Partner shall Transfer its
Percentage Interest (or any portion thereof) without Majority Approval other
than a Transfer to a Permitted Transferee as defined in Section 8.2 and
otherwise in accordance with the terms and conditions of this Article VIII and
IX and the other provisions of this Agreement provided that so long as K-Sea
Investors L.P. and its Affiliates and their respective Permitted Transferees own
a majority of the Percentage Interests any Transfers by K-Sea Investors L.P. and
its Affiliates and their respective Permitted Transferees shall be deemed
approved. Notwithstanding anything to the contrary contained herein, no Partner
shall Transfer any Percentage Interest or any Derivatives (or create any
Derivatives) if such Transfer or creation would cause (i) the Partnership to be
taxed as a C Corporation, (ii) a termination of the Partnership for purposes of
Section 708 of the Code (a "708 TERMINATION"), unless the Transferring Partner
indemnities and reimburses the Other Partners for any taxes (including interest
and penalties) incurred by the Other Partners that would not have been incurred
but for such 708 Termination, (iii) the Partnership to be treated as a
publicly-traded partnership for purposes of Section 7704 of the Code or (iv) the
Partnership to cease to be a United States citizen within the meaning of Section
2 of the Shipping Act (if at
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such time the Partnership and its Subsidiaries are then engaged in the operation
of vessels in the United States coastwise trade within the meaning of the
Shipping Act), unless in the case of each of clauses (i), (ii) and (iii), such
Transfer or creation receives Majority Approval.
(b) VOID TRANSFERS. Any Transfer or attempted Transfer of any
Percentage Interest or Derivatives in violation of any provision of this
Agreement shall be null and void, and the Partnership shall not record such
Transfer on its books or treat any purported Transferee of such Percentage
Interest as the owner thereof for any purpose.
(c) TRANSFER MECHANICS. In connection with any proposed Transfer of
Percentage Interest, including a Transfer to a Permitted Transferee, the holder
of the Percentage Interest proposed to be Transferred shall (a) provide the
Partnership with at least five (5) days prior written notice of a Transfer of
any Percentage Interest to a person who is not a United States citizen within
the meaning of Section 2 of the Shipping Act, and (b) deliver to the Partnership
(if required by the General Partner) at least five (5) days (and no more than
sixty (60) days) prior to any such Transfer an opinion of counsel reasonably
acceptable to the Partnership to the effect that such proposed Transfer may be
effected in compliance with the Securities Act and the Shipping Act; provided
that no such notices or opinions shall be necessary in connection with the
transfer by K-Sea Investors L.P. of Percentage Interest to entities the general
partner of which or the managing member of which is Park Avenue Transportation
Inc. or another member of the ▇▇▇▇▇▇ ▇▇▇▇ Group. In addition, if the Partner
holding the Percentage Interest proposed to be Transferred delivers to the
General Partner an opinion of counsel reasonably acceptable to the General
Partner to the effect that no subsequent Transfer of such Percentage Interests
shall require registration under the Securities Act, the Partnership shall
promptly upon consummation of such Transfer deliver to such holder new
certificates (if any) for such Percentage Interest that do not bear the legend
set forth in Section 8.3. If the Partnership is not required to deliver new
certificates for such Percentage Interest (if certificates were previously
issued for such Percentage Interest) not bearing such legend, the holder thereof
shall not consummate a Transfer of the same until the prospective Transferee has
confirmed to the Partnership in writing its agreement to be bound by the
conditions contained herein, as provided in Section 8.1(f).
(d) INFORMATION REQUESTS. Upon the request of a Partner, the
Partnership shall promptly supply to such Person or its prospective Transferees
all information regarding the Partnership required to be delivered in connection
with a Transfer pursuant to Rule 144A under the Securities Act (or any similar
rule or rules then in effect).
(e) REMOVAL OF LEGEND. Upon the request of any Partner, the
Partnership shall remove the legend set forth in Section 8.3 below from the
certificates for such Partner's Percentage Interest; PROVIDED, that such
Percentage Interest is eligible for sale pursuant to Rule 144(k) under the
Securities Act (or any similar rule or rules then in effect) and such Partner
delivers to the General Partner, if required by the General Partner, an opinion
of counsel reasonably acceptable to the General Partner to the effect that such
Percentage Interests are so eligible.
(f) SURVIVAL OF RESTRICTIONS. All Transferees of Percentage
Interests under this Article VIII who are not parties to this Agreement shall
agree in writing to be bound by the provisions of this Agreement by executing a
joinder substantially in the form attached hereto as
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EXHIBIT A and, other than Permitted Transferees, each such Transferee shall not
be deemed to be a Partner until such Transferee has been admitted as a Partner
pursuant to the provisions of Section 3.2.
8.2. PERMITTED TRANSFERS. For purposes of this Agreement, a Permitted
Transfer shall mean:
(a) a Transfer by any Partner or Permitted Transferee pursuant to
Article IX of this Agreement;
(b) a Transfer by any Partner or Permitted Transferee to any
Permitted Transferee. As used herein, "PERMITTED TRANSFEREE" shall mean:
(i) in the case of K-Sea Investors L.P. or its Permitted
Transferees, (A) any member of the ▇▇▇▇▇▇ ▇▇▇▇ Group and (B) any Affiliate of
K-Sea Investors L.P., including any partnership or limited liability company the
general partner or managing member of which is Park Avenue Transportation Inc.
or a member of the ▇▇▇▇▇▇ ▇▇▇▇ Group;
(ii) in the case of any Partner or Permitted Transferee who
is a natural person, such Partner's or Permitted Transferee's spouse or children
or grandchildren (in each case, natural or adopted), any trust for the exclusive
benefit of such Partner or Permitted Transferee or such Partner's or Permitted
Transferee's spouse or children or grandchildren (in each case, natural or
adopted), or any corporation or partnership in which the direct and beneficial
owner of all of the equity interest is such individual Partner or Permitted
Transferee or such Partner's or Permitted Transferee's spouse or children or
grandchildren (in each case, natural or adopted) (or any trust for the exclusive
benefit of such persons);
(iii) in the case of any Partner or Permitted Transferee who
is, in each case, a natural person, the heirs, executors, administrators or
personal representatives upon the death of such Partner or Permitted Transferee
or upon the incompetency or disability of such Partner or Permitted Transferee
for purposes of the protection and management of such Partner's or Permitted
Transferee's assets;
(iv) in the case of any Partner or Permitted Transferee that
is a trust, the grantor of such trust, any beneficiary of such trust who is a
spouse or child or grandchild (in each case, natural or adopted) of the grantor
of such trust, or any corporation, partnership, limited liability company, trust
or other entity in which all direct and beneficial ownership interests are owned
by the grantor of such trust, the spouse of the grantor of such trust or one or
more children or grandchildren (in each case, natural or adopted) of the grantor
of such trust; or
(v) in the case of any Partner or Permitted Transferee who
is not a natural person, any Affiliate of such Partner or Permitted Transferee;
provided, however, that in no event shall any Person be a Permitted Transferee
if as a result of such Transfer the Partnership would cease to be a United
States citizen within the meaning of Section 2 of the Shipping Act, if at the
time of such proposed Transfer the Partnership and its subsidiaries are then
engaged in the operation of vessels in the United States coastwise trade within
the meaning of the Shipping Act.
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8.3. LEGEND. The Percentage Interests have not been registered under the
Securities Act and, therefore, in addition to the other restrictions on Transfer
contained in this Agreement, cannot be sold unless subsequently registered under
the Securities Act or an exemption from such registration is then available. To
the extent such Percentage Interests have been certificated, each certificate
evidencing Percentage Interests and each certificate issued in exchange for or
upon the Transfer of any Percentage Interests shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED ON [INSERT DATE] AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
IN THE ABSENCE OF AN EXEMPTION FROM REGISTRATION THEREUNDER. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER SPECIFIED IN THE FIRST AMENDED
AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, DATED AS OF JANUARY
14, 2004, AS AMENDED AND MODIFIED FROM TIME TO TIME. THE PARTNERSHIP
RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL
SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A
COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE PARTNERSHIP TO THE
HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE."
The Partnership shall imprint such legend on certificates (if any) evidencing
Percentage Interest. The legend set forth above shall be removed from the
certificates (if any) evidencing any Percentage Interest which cease to be
Percentage Interest in accordance with the definition thereof. Notwithstanding
the foregoing, to the extent Percentage Interest is not certificated, this
Agreement will contain a legend in substantially the form stated above.
ARTICLE IX
OTHER COVENANTS AND REPRESENTATIONS
9.1. APPROVED SALES.
(a) If the General Partner approves the sale of the Partnership to
a Person (whether by merger, consolidation, sale of all or substantially all of
its assets or sale of all of the outstanding Percentage Interests) (an "APPROVED
SALE"), each Partner and Permitted Transferee will consent to, vote for, and
raise no objections against, and waive dissenters and appraisal rights (if any)
with respect to, the Approved Sale, and if the Approved Sale is structured as a
sale of Percentage Interest, each Partner and Permitted Transferee will agree to
sell and will be
24
permitted to sell all of such Partner's and Permitted Transferee's Percentage
Interest on the terms and conditions approved by the General Partner. Each
Partner and Permitted Transferee will take all necessary and desirable actions
in connection with the consummation of an Approved Sale.
(b) Each Partner and Permitted Transferee shall, in connection with
a sale of its Percentage Interest pursuant to this Section 9.1, at the request
of the Partnership and without further cost and expense to the Partnership,
execute and deliver such other instruments of conveyance and transfer and take
such other actions as may reasonably be requested in order to consummate the
Approved Sale.
(c) The obligations of each of the Partners with respect to an
Approved Sale are subject to the satisfaction of the conditions that: (i) upon
the consummation of the Approved Sale all of the Partners and Permitted
Transferees will receive the consideration per one percent of Percentage
Interest that such Partner or Permitted Transferee would have received if a
distribution had then been made to the Partners of the aggregate net proceeds
from such Approved Sale in accordance with Article V; and (ii) the terms of sale
shall not include any indemnification, guaranty or similar undertaking of the
Partner (other than voluntary undertakings of Management Limited Partners in
respect of continued employment) that (A) is not made or given pro rata with
other Partners on the basis of share of the aggregate consideration to be
received by each Partner in the Approved Sale or (B) could result in liability
to such Partner that is in excess of the fair market value of the consideration
to be received by such Partner in the Approved Sale.
9.2. TAG-ALONG.
(a) Subject to Section 9.2(c) no Partner who holds more than 10% of
the Percentage Interests (each a "SELLER") shall sell any Percentage Interest in
any transaction or series of related transactions unless all Remaining Holders
(as hereinafter defined) are offered an equal opportunity to participate in such
transaction or transactions on a pro-rata basis and on identical terms
(including price and type of consideration paid) based on priority in a
distribution as determined pursuant to Article V. As used in this Section 9.2,
"REMAINING HOLDERS" shall mean the Partners (other than the Sellers) and their
Permitted Transferees.
(b) Prior to any sale of Percentage Interest subject to these
provisions, the Seller shall notify the General Partner in writing of the
proposed sale. Such notice (the "SELLER'S NOTICE") shall set forth: (A) the
Percentage Interest subject to the proposed sale; (B) the name and address of
the proposed purchaser; and (C) the proposed amount of consideration and terms
and conditions of payment offered by such proposed purchaser. The Partnership
shall promptly, and in any event within 15 days, mail or cause to be mailed the
Seller's Notice to each Remaining Holder. A Remaining Holder may exercise the
tag-along right by delivery of a written notice (the "TAG-ALONG NOTICE") to the
Seller within 15 days of the date the Partnership mailed or caused to be mailed
the Seller's Notice. The Tag-Along Notice shall state the Percentage Interest
that the Remaining Holder proposes to include in the proposed sale. If no
Tag-Along Notice is received during the 15-day period referred to above, the
Seller shall have the right for a 120-day period to effect the proposed sale of
Percentage Interest on terms and conditions no more favorable than those stated
in the notice and in accordance with the provisions of this Section 9.2.
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(c) Notwithstanding anything herein to the contrary, a Seller may
make any of the following sales without offering the Remaining Holders the
opportunity to participate: (a) sales by a Seller to any Permitted Transferee,
PROVIDED that the proposed purchaser agrees in writing to be bound by the
provisions of this Agreement; (b) sales pursuant to an effective registration
statement under the Securities Act; (c) sales pursuant to an Approved Sale; and
(d) sales other than those specified in the foregoing (a) through (c) which in
the aggregate on a cumulative basis do not exceed five percent of the Percentage
Interests.
(d) Each Partner acknowledges for itself and its transferees that
the Partnership and the other Partners may grant in the future tag-along rights
to other holders of Percentage Interest and such holders will (a) have
substantially the same opportunity to participate as provided to the parties
hereto, and (b) be included in the calculation of the pro rata basis upon which
the Remaining Holders may participate in a sale.
(e) The tag-along obligations of the Sellers and the rights of the
Remaining Holders with respect thereto provided under this Section 9.2 shall
terminate upon a public offering of the Percentage Interests.
(f) Notwithstanding the requirements of this Section 9.2 a Seller
may sell Percentage Interests at any time without complying with such
requirements so long as the Seller deposits into escrow with an independent
third party at the time of sale that amount of the consideration received in the
sale equal to the Escrow Amount. The "ESCROW AMOUNT" shall equal that amount of
consideration as all the Remaining Holders would have been entitled to receive
if they had the opportunity to participate in the sale on a pro rata basis,
determined as if each Remaining Holder (A) delivered a Tag-Along Notice to the
Seller in the time period set forth in Section 9.2(b) and (B) proposed to
include all of its Percentage Interest in the sale.
No later than five (5) business days after the date of the sale, the Seller
shall notify the General Partner in writing of the sale. Such notice (the
"ESCROW NOTICE") shall set forth the information required in the Seller's
Notice, and in addition, such notice shall state the name of the escrow agent
and, if the consideration (in whole or in part) for the sale was cash, then the
account number of the escrow account. The Partnership shall promptly, and in any
event within 10 days, mail or cause to be mailed the Escrow Notice to each
Remaining Holder.
A Remaining Holder may exercise the tag-along right by delivery to the
Seller, within 15 days of the date the Partnership mailed or caused to be mailed
the Escrow Notice, of (i) a written notice specifying the Percentage Interest it
proposes to sell, and (ii) the certificates for such Percentage Interest, with
stock powers duly endorsed in blank.
Promptly after the expiration of the 15th day after the Partnership has
mailed or caused to be mailed the Escrow Notice, (A) the Seller shall purchase
that amount of Percentage Interest as Seller would have been required to include
in the sale had Seller complied with the provisions of Section 9.2(b), (B) all
Percentage Interests not required to be purchased by Seller shall be returned to
the Remaining Holders thereof, and (C) all remaining funds and other
consideration held in escrow shall be released to Seller. If Seller received
consideration other than cash in its sale, Seller shall purchase the Percentage
Interests tendered by paying to the
26
Remaining Holders non-cash consideration and cash in the same proportion as
received by Seller in the sale.
(g) Each Remaining Holder that exercises its tag-along rights
pursuant to this Section 9.2 shall, at the request of Seller and without further
cost and expense to Seller, execute and deliver such other instruments of
conveyance and transfer and take such other actions as may reasonably be
requested in order to consummate the proposed sale of Percentage Interest by
Seller and the Remaining Holders which have exercised their tag-along rights
pursuant to this Section 9.2.
9.3. MANAGEMENT INVESTMENT.
(a) GENERAL. Each of the individuals designated on SCHEDULE A
hereto as a "Management Limited Partner" (individually, a "MANAGEMENT LIMITED
PARTNER" and collectively, the "MANAGEMENT LIMITED PARTNERS") has acquired the
Percentage Interest (the "MANAGEMENT PERCENTAGE INTEREST") set forth opposite
such Management Limited Partner's name on SCHEDULE A attached hereto. A
Management Limited Partner's Management Percentage Interest shall vest 20% on
each of the first through fifth anniversaries of the Acquisition Date of such
Percentage Interest. The Management Percentage Interests shall vest in full upon
a Change of Control of the Partnership.
(b) RE-PURCHASE RIGHT OF THE PARTNERSHIP.
(i) GENERAL. Should any of the Management Limited Partners
cease to be employed by the Partnership or another member of the K-Sea Group for
any reason, including, without limitation, death and temporary or permanent
disability, or for no reason, the Partnership (or its designees) shall have the
right to repurchase the unvested Management Percentage Interest held by such
Management Limited Partner.
(ii) PURCHASE PRICE. The purchase price for such unvested
Management Percentage Interest shall be such Management Limited Partner's
original cost for such Management Percentage Interest (or, if such Management
Percentage Interest was distributed to such Management Limited Partner by New
K-Sea LLC, the original cost of the corresponding New K-Sea Unit) if the
Management Limited Partner resigns without Good Reason or is terminated for
Cause, and the Repurchase Fair Market Value of such Percentage Interest if the
Management Limited Partner is terminated for no reason or for any reason other
than for Cause or his resignation without Good Reason including, without
limitation, death and temporary or permanent disability, in both cases less any
distributions received by such Management Limited Partner in respect of such
Management Percentage Interest pursuant to Article V.
"REPURCHASE FAIR MARKET VALUE" means with respect to a
particular Management Percentage Interest, the fair market value as determined
jointly by the General Partner and the Management Limited Partner owning such
Management Percentage Interest; provided that if such parties are unable to
reach agreement within 30 days following the receipt by the Partnership of the
Termination Notice, such Repurchase Fair Market Value shall be determined by an
independent appraiser jointly selected by the General Partner and such
Management Limited Partner. In the event that such parties are unable to reach
agreement with
27
respect to such independent appraiser within 5 days following the conclusion of
the 30-day period described above, each of the General Partner and the
Management Limited Partner shall promptly (and in any event within 5 days
therefrom) select an appraiser, and the two appraisers so selected shall, as
promptly as possible (and in any event within 10 days therefrom), jointly select
a third independent appraiser. The independent appraiser hereunder shall
determine the Repurchase Fair Market Value for such Management Percentage
Interest within 75 days following the receipt by the Partnership of the
Termination Notice. The independent appraiser determining Repurchase Fair Market
Value hereunder shall use one or more valuation methods that such independent
appraiser, in its best professional judgment, determines to be most appropriate
under the circumstances. The determination of such appraiser shall be final and
binding on the Partnership and the Management Limited Partner. The fees and
expenses of all appraisers shall be borne equally by the Partnership and the
Management Limited Partner.
(iii) RE-PURCHASE PROCEDURE. At such time that a Management
Limited Partner shall cease to be employed by the Partnership or another member
of the K-Sea Group, such Management Limited Partner (or in the case of death,
his estate) shall give prompt notice of such termination to the Partnership (the
"TERMINATION NOTICE"). The Partnership (or its designees) shall have the right
and option, (i) exercisable at any time within 30 days after its receipt of the
Termination Notice (if the Management Limited Partner resigns without Good
Reason or is terminated for Cause and the purchase price for such Percentage
Interest is their original cost) or (ii) exercisable at any time within 30 days
after a determination (either by agreement of the parties or, in the event they
cannot agree, by the independent appraiser) of the Repurchase Fair Market Value
of the Management Percentage Interest has been made (if the Management Limited
Partner is terminated for no reason or for any reason other than for Cause or
his resignation without Good Reason and the purchase price for such Percentage
Interest is the Repurchase Fair Market Value), to purchase all or part of the
unvested Management Percentage Interest owned by such Management Limited
Partner. Each exercise by the Partnership (or its designees) shall be effected
by the giving of written notice to the Management Limited Partner in question by
the Partnership, on its own behalf and/or on behalf of its designees, as the
case may be, signed by an officer of the General Partner, prior to the end of
the 30-day period (and such notice shall be effective when given). Such notice
shall indicate the Management Percentage Interest desired to be purchased and
the purchase price and shall set forth a time and place of closing for each full
or partial exercise of the re-purchase option by the Partnership (or its
designees), which closing shall be no earlier than ten days and no later than 30
days after the date of such notice.
9.4. PURCHASER REPRESENTATIVE. In the event that the Partnership or any
Limited Partner enters into any negotiation or transaction (including any
transaction pursuant to Section 9.1 and 9.2 of this Agreement) for which Rule
506 (or any similar rule then in effect) promulgated by the Securities and
Exchange Commission under the Securities Act may be available (including a
merger, consolidation or other reorganization), each Limited Partner will, at
the request of Partnership, appoint a purchaser representative (as such term is
defined in Rule 501(h) promulgated by the Securities and Exchange Commission
under the Securities Act) reasonably acceptable to the Partnership. Each Limited
Partner will be responsible for the fees of the purchaser representative so
appointed.
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ARTICLE X
DISSOLUTION AND LIQUIDATION
10.1. DURATION. The Partnership shall terminate upon (i) the sale or other
disposition by the Partnership of all or substantially all of the assets,
properties or businesses the Partnership then owns, (ii) the dissolution of the
Partnership by action of the General Partner, or (iii) any other event that
would cause the dissolution of a limited partnership under the Act (each of the
foregoing events, a "DISSOLUTION EVENT").
10.2. LIQUIDATION OF PERCENTAGE INTERESTS.
(a) Upon dissolution of the Partnership, the General Partner shall
appoint one Limited Partner (or any other Person) to serve as the "Liquidator"
who shall act at the direction of the General Partner, unless and until a
successor Liquidator is appointed as provided herein. The Liquidator shall agree
not to resign at any time without 30 days' prior written notice. The Liquidator
may be removed at any time, with or without cause, by notice of removal and
appointment of a successor Liquidator approved by the General Partner. Within 30
days following the occurrence of any such removal, a successor Liquidator may be
elected by the General Partner. The successor Liquidator shall succeed to all
rights, powers and duties of the former Liquidator. The right to appoint a
successor or substitute Liquidator in the manner provided herein shall be
recurring and continuing for so long as the functions and services of the
Liquidator are authorized to continue under the provisions hereof, and every
reference herein to the Liquidator shall be deemed to refer also to any such
successor or substitute Liquidator appointed in the manner herein provided.
Except as expressly provided in this Article X, the Liquidator appointed 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 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
receive as compensation for its services (i) no additional compensation, if the
Liquidator is an employee of the Partnership or any of its Subsidiaries, or (ii)
if the Liquidator is not such an employee, out-of-pocket costs and expenses plus
such other compensation as the General Partner may otherwise approve.
(b) 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:
(i) First, to the payment of the Partnership's debts and
obligations to its creditors, including sales commissions and other expenses
incident to any sale of the assets of the Partnership.
(ii) Second, to the establishment of and additions to such
reserves as the Liquidator may deem necessary or appropriate.
29
(iii) Third, to the Partners in proportion to, and to the
extent of, each Partner's positive Capital Account balance, if any, as such
account has been adjusted to reflect allocations under Article VI, earlier
distributions under Article V, and any further adjustments made pursuant to this
Section 10.2(b).
The reserves established pursuant to subparagraph (ii) of this Section 10.2(b)
shall be paid over by the Liquidator to a bank or other financial institution,
to be held in escrow for the purpose of paying any such contingent or unforeseen
liabilities or obligations and, at the expiration of such period as the
Liquidator deems advisable, such reserves shall be distributed to the Partners
in the priorities set forth in this Section 10.2(b). The allocations and
distributions provided for in this Agreement are intended to result in the
Capital Account of each Partner immediately prior to the distribution of the
Partnership's assets pursuant to this Section 10.2(b) being equal to the amount
that would be distributable to such Partner pursuant to Section 5.1. The
Partnership is authorized to make appropriate adjustments in the allocation of
and items of income, gain, loss and deduction as necessary to cause the amount
of each Partner's Capital Account immediately prior to the distribution of the
Partnership's assets pursuant to this Section 10.2(b) to equal the amount that
would be distributable to such Partner pursuant to Section 5.1.
(c) Notwithstanding the provisions of Section 10.2(b) which require
the liquidation of the assets of the Partnership, but subject to the order of
priorities set forth in Section 10.2(b), if upon dissolution of the Partnership
the General Partner determines that an immediate sale of part or all of the
Partnership's assets would be impractical or could cause undue harm to the
Partners, then the General Partner may, in its discretion, defer the liquidation
of any assets except those necessary to satisfy Partnership liabilities and
reserves, and may, in its discretion and in accordance with the provisions of
Section 10.2(b), (i) distribute such assets in kind to the Partners or (ii)
distribute to such Partners, as tenants in common, undivided interests in such
Partnership assets as the Liquidator deems reasonable and equitable and subject
to any agreements governing the operating of such properties at such time. For
purposes of any such distribution, the General Partner will determine the Fair
Market Value of any property to be distributed.
(d) A reasonable time will be allowed for the orderly winding up of
the business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 10.2(b) in order to minimize any losses otherwise attendant
upon such winding up. Distributions upon liquidation of the Partnership (or any
Partner's interest in the Partnership) and related adjustments will be made by
the end of the Fiscal Year of the liquidation (or, if later, within 90 days
after the date of such liquidation) or as otherwise permitted by Treasury
Regulation Section 1.704-1(b)(2)(ii)(b).
10.3. TERMINATION. Upon completion of the orderly winding-up of the
business and affairs of the Partnership and the liquidation of the assets as
provided in this Article X, the Partnership shall be terminated, and the
Liquidator shall cause the filing of the Certificate of Cancellation with the
Recording Office pursuant to Section 17-203 of the Act and shall take all such
other actions as may be necessary to terminate the Partnership. During the
period of winding up and liquidation of the Partnership, all of the provisions
of this Agreement shall continue in effect.
30
ARTICLE XI
BOOKS AND RECORDS
11.1. BOOKS. The Partnership shall maintain complete and accurate books of
account of the Partnership's affairs at the Partnership's principal office,
which books shall be open to inspection by any Limited Partner (or its
authorized representative) to the extent required by the Act.
11.2. TAX ALLOCATIONS AND REPORTS.
(a) Not later than three calendar months after the end of each
Fiscal Year, the General Partner shall cause the Partnership to furnish each
Partner an Internal Revenue Service Schedule K-I and any similar form required
for the filing of state or local income tax returns for such Partner for such
Fiscal Year; Upon the written request of any such Partner and at the expense of
such Partner, the Partnership will use reasonable efforts to deliver or cause to
be delivered any additional information necessary for the preparation of any
state, local and foreign income tax return which must be filed by such Partner.
(b) The Tax Matters Partner will determine whether to make or
revoke any available election pursuant to the Code. Each Partner will, upon
request, supply the information necessary to give proper effect to any such
election.
(c) The Partnership hereby designates K-Sea Investors L.P. to act
as the "TAX MATTERS PARTNER" (as defined in Section 6231(a)(7) of the Code) in
accordance with Sections 6221 through 6233 of the Code. The Tax Matters Partner
is authorized and required to represent the Partnership (at the Partnership's
expense) in connection with all examinations of the Partnership's affairs by tax
authorities, including resulting administrative and judicial proceedings, and to
expend Partnership funds for professional services and costs associated
therewith; PROVIDED, that the Tax Matters Partner may be removed and replaced
by, and shall act in such capacity at the direction of, the General Partner.
Each Partner agrees to cooperate with the Tax Matters Partner and to do or
refrain from doing any or all things reasonably requested by the Tax Matters
Partner with respect to the conduct of such proceedings. Subject to the
foregoing proviso, the Tax Matters Partner will have reasonable discretion to
determine whether the Partnership (either on its own behalf or on behalf of the
Partners) will contest or continue to contest any tax deficiencies assessed or
proposed to be assessed by any taxing authority. Any deficiency for taxes
imposed on any Partner (including penalties, additions to tax or interest
imposed with respect to such taxes) will be paid by such Partner, and if paid by
the Partnership, will be recoverable from such Partner (including by offset
against distributions otherwise payable to such Partner).
ARTICLE XII
EXCULPATION AND INDEMNIFICATION
12.1. INDEMNIFICATION.
(a) To the fullest extent permitted by Applicable Law but subject
to the limitations expressly provided in this Agreement, all Indemnitees shall
be indemnified and held harmless by the Partnership from and against any and all
losses, claims, damages, liabilities, joint
31
or several, expenses (including legal fees and expenses), judgments, fines,
penalties, interest, settlements or other amounts arising from any and all
claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise, by reason of its status as
an Indemnitee; provided, that in each case the Indemnitee acted in good faith
and in a manner that such Indemnitee reasonably believed to be in, or 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 12.1 shall be
made only out of the assets of the Partnership, it being agreed that the Limited
Partners shall not be personally liable for such indemnification and shall have
no obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including
legal fees and expenses) incurred by an Indemnitee who is indemnified pursuant
to Section 12.1(a) in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Partnership prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Partnership of any undertaking by or on behalf of the Indemnitee to repay
such amount if it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 12.1.
(c) The indemnification provided by this Section 12.1 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, as a matter of law or otherwise, both as to actions in the
Indemnitee's capacity as an Indemnitee and as to actions in any other capacity,
and shall continue as to an Indemnitee who has ceased to serve in such capacity
and shall inure to the benefit of the heirs, successors, assigns and
administrators of the Indemnitee.
(d) The Partnership may purchase and maintain insurance, on behalf
of the Indemnitees, against any liability that may be asserted against or
expense that may be incurred by an Indemnitee in connection with the
Partnership's activities or such Indemnitee's activities on behalf of the
Partnership, regardless of whether the Partnership would have the power to
indemnify such Indemnitee against such liability under the provisions of this
Agreement.
(e) For purposes of this Section 12.1, 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
(including in its capacity as general partner of the MLP) 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 12.1(a); and action taken or omitted by it with
respect to any employee benefit plan in the performance of its duties for a
purpose reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is in, or
not opposed to, the best interests of the Partnership.
32
(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 12.1 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 12.1 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 12.1 or
any provision hereof shall in any manner terminate, reduce or impair the right
of any past, present or future Indemnitee to be indemnified by the Partnership,
nor the obligations of the Partnership to indemnify any such Indemnitee under
and in accordance with the provisions of this Section 12.1 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.
12.2. 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 or any other Persons who have acquired
Percentage Interests, for losses sustained or liabilities incurred as a result
of any act or omission if such Indemnitee acted in good faith.
(b) To the extent that, at law or in equity, an Indemnitee has
duties (including fiduciary duties) and liabilities relating thereto to the
Partnership or to the Partners and any other Indemnitee acting in connection
with the Partnership's business or affairs shall not be liable to the
Partnership or to any Partner for its good faith reliance on the provisions of
this Agreement. The provisions of this Agreement, to the extent that they
restrict or otherwise modify the duties and liabilities of an Indemnitee
otherwise existing at law or in equity, are agreed by the Partners to replace
such other duties and liabilities of such Indemnitee.
(c) Any amendment, modification or repeal of this Section 12.2 or
any provision hereof shall be prospective only and shall not in any way affect
the limitations on the liability to the Partnership, the Limited Partners, the
managers, the officers and employees of the General Partner under this Section
12.2 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.
12.3. INDEMNIFICATION AND REIMBURSEMENT FOR PAYMENTS ON BEHALF OF A
PARTNER.
(a) If the Partnership is obligated to pay any amount to a
Governmental Authority or to any other Person (and makes such payment or will
make such a payment within 30 days of charging the Capital Account of the
Partner pursuant to the following sentences and
33
either providing notification of an obligation to indemnify under (i) below or
offsetting a distribution pursuant to (ii) below) on behalf of (or in respect of
an obligation of) a Partner, then such Partner (the "CHARGED PARTNER") shall
indemnify the Partnership in full for the entire amount paid (including, without
limitation, any interest, penalties and expenses associated with such payment).
The amount to be indemnified shall be charged against the Capital Account of the
Charged Partner, and, at the option of the General Partner, either:
(i) promptly upon notification of an obligation to
indemnify the Partnership, the Charged Partner shall make a cash payment to
the Partnership equal to the full amount to be indemnified (and the amount
paid shall be added to the Charged Partner's Capital Account but shall not
be deemed to be a Capital Contribution hereunder); or
(ii) the Partnership shall reduce current or subsequent
distributions that would otherwise be made to the Charged Partner until the
Partnership has recovered the amount to be indemnified (PROVIDED that the
amount of such reduction shall be deemed to have been distributed for all
purposes of this Agreement, but such deemed distribution shall not further
reduce the Charged Partner's Capital Account).
(b) A Charged Partner's obligation to make contributions to the
Partnership under this Section 12.3 shall survive the termination, dissolution,
liquidation and winding up of the Partnership, and for purposes of this Section
12.3, the Partnership shall be treated as continuing in existence. The
Partnership may pursue and enforce all rights and remedies it may have against
each Charged Partner under this Section 12.3, including instituting a lawsuit to
collect such contribution with interest calculated at a rate equal to the Base
Rate plus six percentage points per annum (but not in excess of the highest rate
per annum permitted by law).
ARTICLE XIII
MISCELLANEOUS
13.1. CONFIDENTIALITY. By executing this Agreement, each Partner expressly
agrees, at all times during the term of the Partnership and thereafter and
whether or not at that time it is a Partner of the Partnership, (unless the
prior written consent of the General Partner is obtained, which prior consent
shall not be unreasonably withheld) to maintain the confidentiality of, and not
to disclose to any Person other than the Partnership, another Partner, any
Person who beneficially owns, whether directly or indirectly, shares of voting
stock or equity interests of any Partner that is not a natural person or a
person designated by the Partnership, any information obtained from the
Partnership or its representatives that is not generally available or known to
the public and which has not been previously disclosed by any Partner without a
confidentiality agreement relating to the identity of any Partner, the business,
financial structure, financial position or financial results, clients or affairs
of the Partnership; PROVIDED, that each Partner may deliver or disclose
confidential information to (i) its directors, officers, employees, agents,
attorneys and Affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by its interest in the
Partnership and such Persons agree to comply with the terms of this Section),
(ii) its financial advisors and other professional advisors who agree to comply
with the terms of this Section, (iii) any Person to which it sells or offers to
sell its interest in the Partnership or any part thereof or any participation
therein in accordance with
34
the transfer restrictions contained in this Agreement (if such Person has agreed
in writing prior to its receipt of such confidential information to be bound by
the provisions of this Section), or (iv) any Governmental Authority or other
regulatory or self regulatory authority having jurisdiction over a Partner or
any nationally recognized rating agency that requires access to information
about a Partner's investment portfolio, (a) to effect compliance with any law,
rule, regulation or order applicable to a Partner, including the requirements of
any stock exchange, (b) in response to any subpoena or other legal process, or
(c) in connection with any litigation to which a Partner is a party.
13.2. WAIVER OF JURY TRIAL. The Partnership and each Partner hereby waives
to the fullest extent permitted by law any right it may have to trial by jury in
respect of any claim, demand, action or cause of action based on, or arising out
of, under or in connection with this Agreement, or any course of conduct, course
of dealing, verbal or written statement or action of any party hereto, in each
case whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise. The Partnership and each Partner hereby agrees that any
such claim, demand, action or cause of action shall be decided by court trial
without a jury and that the parties to this Agreement may file an original
counterpart or a copy of this Agreement with any court as evidence of the
consent of the parties hereto to the waiver of their right to trial by jury.
13.3. GOVERNING LAW. All issues and questions concerning the application,
construction, validity, interpretation and enforcement of this Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware and the Delaware Revised Uniform Limited Partnership Act, Delaware
Code, Title 6, Sections 17-101, ET SEQ. as in effect from time to time, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
13.4. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
13.5. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein. The Partners
shall negotiate in good faith to replace any provision so held to be invalid or
unenforceable so as to implement most effectively the transactions contemplated
by such provision in accordance with the original intent of the Partners
signatory hereto.
13.6. AMENDMENTS. The parties hereto may at any time amend this Agreement
by Majority Approval; PROVIDED, that the provisions of Articles V and VI and
Sections 9.2 and 9.3 may not be amended without the consent of a majority of the
Partners affected by any such proposed amendment.
35
13.7. GENDER AND NUMBER. Whenever required by the context, the singular
number shall include the plural number, the plural number shall include the
singular number, the masculine gender shall include the neuter and feminine
genders and vice versa.
13.8. NOTICE. Any Notice or Notices required or permitted under the
provisions of this Agreement shall be sent to the addresses set forth below, or
as otherwise notified to the other party in writing:
if to the Partnership, to:
K-Sea General Partner L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
with copies to (which shall not constitute constructive notice to the
Partnership):
Dechert LLP
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to K-Sea Investors L.P., to:
c/o FS Private Investments LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to (which shall not constitute constructive notice to the
Partnership):
Dechert LLP
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
36
if to any Management Limited Partner, to such Limited Partner's
address as set forth in the records of the Partnership
with copies to:
▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any Notice sent as set forth above shall be deemed to have been given only upon
actual delivery to the intended recipient thereof or upon the date of rejection
of such notice, as evidenced by the return receipt therefor.
13.9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which when executed and delivered shall be an original,
and all of which when executed shall constitute one and the same instrument.
13.10. ENTIRE AGREEMENT. Except as otherwise expressly set forth herein,
this document embodies the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
13.11. NO WAIVER OF REMEDIES. The failure of a Partner to insist on the
strict performance of any covenant or duty required by this Agreement, or to
pursue any remedy under this Agreement, shall not constitute a waiver of the
breach or the remedy.
13.12. REMEDIES CUMULATIVE. The remedies of the Partners under this
Agreement are cumulative and shall not exclude any other remedies to which the
Partner may be lawfully entitled. Each of the parties confirms that damages at
law may be an inadequate remedy for a breach or threatened breach of any
provision hereof The respective rights and obligations hereunder shall be
enforceable by specific performance, injunction or other suitable remedy, but
nothing herein contained is intended to or shall limit or affect any rights at
law or by statute or otherwise of any party aggrieved as against the other
parties for a breach or threatened breach of any provision hereof, it being the
intention by this Section to make clear the agreement of the parties that the
respective rights and obligations of the parties hereunder shall be enforceable
in equity as well as at law or otherwise.
13.13. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of all of the Partners and their permitted successors, legal
representatives, and assigns.
13.14. DETERMINATIONS OF FAIR MARKET VALUE. The General Partner shall
reasonably determine Fair Market Values hereunder.
37
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
effective as of the date first written above.
GENERAL PARTNER:
K-SEA GENERAL PARTNER GP LLC
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer and President
LIMITED PARTNER:
NEW K-SEA TRANSPORTATION LLC
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer and President
38
SCHEDULE A
K-SEA GENERAL PARTNER L.P.
LIST OF PARTNERS AND CAPITALIZATION
DATED AS OF JANUARY 14, 2004
ALLOCATED CAPITAL PERCENTAGE ACQUISITION
PARTNER CONTRIBUTION INTEREST DATE
------- ----------------- --------- -----------
K-Sea Investors L.P. $ 459.954 459.954 4/30/99
$ 27.497 27.497 5/20/99
$ 54.994 54.994 10/12/99
$ 357.464 357.464 12/21/99
▇▇▇▇▇▇▇ ▇▇▇▇▇* $ 26.997 26.997 4/30/99
$ 22.998 22.998 12/21/99
$ 4.999 4.999 9/30/02
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇* $ 5.399 5.399 4/30/99
$ 4.600 4.600 12/21/99
$ 2.500 2.500 9/30/02
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇* $ 5.399 5.399 4/30/99
$ 4.600 4.600 12/21/99
$ 2.500 2.500 9/30/02
▇▇▇▇ ▇▇▇▇▇▇* $ 9.999 9.999 9/20/00
$ 2.500 2.500 9/30/02
▇▇▇▇▇ ▇▇▇▇* $ 2.500 2.500 7/31/00
▇▇▇▇ ▇▇▇▇▇▇▇▇▇* $ 2.900 2.900 9/30/02
▇▇▇▇▇ ▇▇▇▇* $ 1.100 1.100 9/30/02
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇* $ 0.500 0.500 9/30/02
▇▇▇▇ ▇▇▇▇▇* $ 0.500 0.500 9/30/02
K-Sea General Partner GP LLC $ 0.100 0.100 8/29/03
(General Partner)
Total $ 1,000.000 1,000.000
----------
*Designates a Management Limited Partner
39
EXHIBIT A
FORM OF JOINDER
TO
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
THIS JOINDER to the First Amended and Restated Agreement of Limited
Partnership, dated as of January 14, 2004, by and among the Partners (the
"AGREEMENT"), is made and entered into as of _________ by and between K-Sea
General Partner L.P., a Delaware limited partnership (the "Partnership"), and
_________________ ("HOLDER"). Capitalized terms used herein but not otherwise
defined shall have the meanings set forth in the Agreement.
WHEREAS, Holder has acquired a Percentage Interest and the Partnership
requires Holder, as a holder of a Percentage Interest, to become bound by and/or
a party to the Agreement, and Holder agrees to do so in accordance with the
terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Joinder hereby agree as follows:
1. AGREEMENT TO BE BOUND. Holder hereby agrees that upon execution
of this Joinder, it shall become bound by and/or a party to the Agreement and
shall be fully bound by, and subject to, all of the covenants, terms and
conditions of the Agreement as though an original party thereto and shall be
deemed a Partner for the purposes of being bound thereby. In addition, Holder
hereby agrees that the Percentage Interest held by Holder shall be deemed a
Percentage Interest for the purposes of being bound thereby and shall have the
rights only as provided in the Agreement.
2. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this
Joinder shall bind and inure to the benefit of and be enforceable by the
Partnership and its successors and assigns and Holder (only as provided in the
Agreement) and any subsequent holders of a Percentage Interest and the
respective successors and assigns of each of them, so long as they hold a
Percentage Interest.
3. COUNTERPARTS. This Joinder may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
4. NOTICES. For purposes of Section 13.8 of the Agreement, all
notices, demands or other communications to the Holder shall be directed to:
A-1
[Name]
[Address]
[Facsimile Number]
5. GOVERNING LAW. All issues and questions concerning the
application, construction, validity, interpretation and enforcement of this
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware and the Delaware Revised Uniform Limited Partnership Act,
Delaware Code, Title 6, Sections 17-101, ET SEQ. as in effect from time to time,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware.
6. DESCRIPTIVE HEADINGS. The descriptive headings of this Joinder
are inserted for convenience only and do not constitute a part of this Joinder.
IN WITNESS WHEREOF, the parties hereto have executed this Joinder as of the
date first above written.
[HOLDER]
By:
-----------------------------
Name:
Title:
A-2
