EXHIBIT 3.1
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CORNERSTONE PROPANE PARTNERS, L.P.
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Construction . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE II
ORGANIZATION
2.1 Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.3 Registered Office; Registered Agent; Principal Office; Other
Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.4 Purpose and Business . . . . . . . . . . . . . . . . . . . . . 24
2.5 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.6 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . 24
2.7 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.8 Title to Partnership Assets . . . . . . . . . . . . . . . . . . 26
ARTICLE III
RIGHTS OF LIMITED PARTNERS
3.1 Limitation of Liability . . . . . . . . . . . . . . . . . . . . 27
3.2 Management of Business . . . . . . . . . . . . . . . . . . . . 27
3.3 Outside Activities of the Limited Partners . . . . . . . . . . 28
3.4 Rights of Limited Partners . . . . . . . . . . . . . . . . . . 28
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF
PARTNERSHIP INTERESTS; REDEMPTION OF
PARTNERSHIP INTERESTS
4.1 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.2 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . 29
4.3 Record Holders . . . . . . . . . . . . . . . . . . . . . . . . 30
4.4 Transfer Generally . . . . . . . . . . . . . . . . . . . . . . 31
4.5 Registration and Transfer of Limited Partner Interests . . . . 31
4.6 Transfer of a General Partner's General Partner Interest . . . 32
4.7 Restriction on Transfer of Special General Partner's General
Partner Interest . . . . . . . . . . . . . . . . . . . . . . . 33
4.8 Transfer of Incentive Distribution Rights . . . . . . . . . . . 33
4.9 Restrictions on Transfers . . . . . . . . . . . . . . . . . . . 34
4.10 Citizenship Certificates; Non-citizen Assignees . . . . . . . . 34
4.11 Redemption of Partnership Interests of Non-citizen Assignees . 36
ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
5.1 Organizational Contributions . . . . . . . . . . . . . . . . . 37
5.2 Contributions by the General Partners and their Affiliates . . 37
5.3 Contributions by Initial Limited Partners . . . . . . . . . . . 38
5.4 Interest and Withdrawal . . . . . . . . . . . . . . . . . . . . 39
5.5 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . 40
5.6 Issuances of Additional Partnership Securities . . . . . . . . 44
5.7 Limitations on Issuance of Additional Partnership Securities . 45
5.8 Conversion of Subordinated Units . . . . . . . . . . . . . . . 47
5.9 Limited Preemptive Right . . . . . . . . . . . . . . . . . . . 48
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5.10 Splits and Combination . . . . . . . . . . . . . . . . . . . . 49
5.11 Fully Paid and Non-Assessable Nature of Limited Partner
Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 Allocations for Capital Account Purposes . . . . . . . . . . . 50
6.2 Allocations for Tax Purposes . . . . . . . . . . . . . . . . . 58
6.3 Requirement and Characterization of Distributions;
Distributions to Record Holders . . . . . . . . . . . . . . . . 61
6.4 Distributions of Available Cash from Operating Surplus . . . . 62
6.5 Distributions of Available Cash from Capital Surplus . . . . . 64
6.6 Adjustment of Minimum Quarterly Distribution and Target
Distribution Levels . . . . . . . . . . . . . . . . . . . . . . 64
6.7 Special Provisions Relating to the Holders of Subordinated
Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.8 Special Provisions Relating to the Holders of Incentive 65
Distribution Rights . . . . . . . . . . . . . . . . . . . . . .
6.9 Entity-Level Taxation . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
7.1 Management . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.2 Certificate of Limited Partnership . . . . . . . . . . . . . . 69
7.3 Restrictions on General Partners' Authority . . . . . . . . . . 69
7.4 Reimbursement of the Managing General Partner . . . . . . . . . 70
7.5 Outside Activities . . . . . . . . . . . . . . . . . . . . . . 71
7.6 Loans from the General Partners; Loans or Contributions from
the Partnership; Contracts with Affiliates; Certain
Restrictions on the General Partners . . . . . . . . . . . . . 73
7.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 75
7.8 Liability of Indemnitees . . . . . . . . . . . . . . . . . . . 77
7.9 Resolution of Conflicts of Interest . . . . . . . . . . . . . . 78
7.10 Other Matters Concerning the Managing General Partner . . . . . 80
7.11 Intentionally Deleted . . . . . . . . . . . . . . . . . . . . . 80
7.12 Purchase or Sale of Partnership Securities . . . . . . . . . . 80
7.13 Registration Rights of the General Partners and their
Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.14 Reliance by Third Parties . . . . . . . . . . . . . . . . . . . 83
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 Records and Accounting . . . . . . . . . . . . . . . . . . . . 84
8.2 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.3 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
ARTICLE IX
TAX MATTERS
9.1 Tax Returns and Information . . . . . . . . . . . . . . . . . . 85
9.2 Tax Elections . . . . . . . . . . . . . . . . . . . . . . . . . 85
9.3 Tax Controversies . . . . . . . . . . . . . . . . . . . . . . . 86
9.4 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . 86
ARTICLE X
ADMISSION OF PARTNERS
10.1 Admission of Initial Limited Partners . . . . . . . . . . . . . 86
10.2 Admission of Substituted Limited Partner . . . . . . . . . . . 87
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10.3 Admission of Successor General Partner . . . . . . . . . . . . 87
10.4 Admission of Additional Limited Partners . . . . . . . . . . . 88
10.5 Amendment of Agreement and Certificate of Limited Partnership . 88
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
11.1 Withdrawal of the General Partners . . . . . . . . . . . . . . 88
11.2 Removal of the Managing General Partner . . . . . . . . . . . . 91
11.3 Interest of Departing Partner and Successor General Partner . . 91
11.4 Termination of Subordination Period, Conversion of Subordinated
Units and Extinguishment of Cumulative Common Unit Arrearages . 93
11.5 Withdrawal of Limited Partners . . . . . . . . . . . . . . . . 93
ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . 94
12.2 Continuation of the Business of the Partnership After
Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . 94
12.3 Liquidator . . . . . . . . . . . . . . . . . . . . . . . . . . 95
12.4 Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . 96
12.5 Cancellation of Certificate of Limited Partnership . . . . . . 97
12.6 Return of Contributions . . . . . . . . . . . . . . . . . . . . 97
12.7 Waiver of Partition . . . . . . . . . . . . . . . . . . . . . . 97
12.8 Capital Account Restoration . . . . . . . . . . . . . . . . . . 97
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
13.1 Amendment to be Adopted Solely by the
Managing General Partner . . . . . . . . . . . . . . . . . 98
13.2 Amendment Procedures . . . . . . . . . . . . . . . . . . . . . 100
13.3 Amendment Requirements . . . . . . . . . . . . . . . . . . . . 100
13.4 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . 101
13.5 Notice of a Meeting . . . . . . . . . . . . . . . . . . . . . . 101
13.6 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . 102
13.7 Adjournment . . . . . . . . . . . . . . . . . . . . . . . . . . 102
13.8 Waiver of Notice; Approval of Meeting; Approval of Minutes . . 102
13.9 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
13.10 Conduct of a Meeting . . . . . . . . . . . . . . . . . . . . . 103
13.11 Action Without a Meeting . . . . . . . . . . . . . . . . . . . 104
13.12 Voting and Other Rights . . . . . . . . . . . . . . . . . . . . 104
ARTICLE XIV
MERGER
14.1 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
14.2 Procedure for Merger or Consolidation . . . . . . . . . . . . . 105
14.3 Approval by Limited Partners of Merger or Consolidation . . . . 106
14.4 Certificate of Merger . . . . . . . . . . . . . . . . . . . . . 107
14.5 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . 108
ARTICLE XV
RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
15.1 Right to Acquire Limited Partner Interests . . . . . . . . . . 108
ARTICLE XVI
GENERAL PROVISIONS
16.1 Addresses and Notices . . . . . . . . . . . . . . . . . . . . . 111
16.2 Further Action . . . . . . . . . . . . . . . . . . . . . . . . 111
16.3 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . 112
16.4 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . 112
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16.5 Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
16.6 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
16.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 112
16.8 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . 112
16.9 Invalidity of Provisions . . . . . . . . . . . . . . . . . . . 112
16.10 Consent of Partners . . . . . . . . . . . . . . . . . . . . . . 113
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AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
CORNERSTONE PROPANE PARTNERS, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
CORNERSTONE PROPANE PARTNERS, L.P. dated as of December 17, 1996, is
entered into by and among Cornerstone Propane GP, Inc., a California
corporation, as the Managing General Partner, SYN Inc., a Delaware
corporation, as Special General Partner and Northwestern Growth
Corporation, a South Dakota corporation, as the Organizational Limited
Partner, together with any other Persons who become Partners in the
Partnership or parties hereto as provided herein. In consideration of
the covenants, conditions and agreements contained herein, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used
in this Agreement.
"Acquisition" means any transaction in which any Group Member
acquires (through an asset acquisition, merger, stock acquisition or
other form of investment) control over all or a portion of the assets,
properties or business of another Person for the purpose of increasing
the operating capacity or revenues of the Partnership Group from the
operating capacity or revenues of the Partnership Group existing
immediately prior to such transaction.
"Additional Book Basis" means the portion of any remaining
Carrying Value of an Adjusted Property that is attributable to
positive adjustments made to such Carrying Value as a result of
Book-Up Events. For purposes of determining the extent that Carrying
Value constitutes Additional Book Basis:
(i) Any negative adjustment made to the Carrying Value of
an Adjusted Property as a result of either a Book-Down Event or a
Book-Up Event shall first be deemed to offset or decrease that
portion of the Carrying Value of such Adjusted Property that is
attributable to any prior positive adjustments made thereto
pursuant to a Book-Up Event or Book-Down Event.
(ii) If Carrying Value that constitutes Additional Book
Basis is reduced as a result of a Book-Down Event and the
Carrying Value of other property is increased as a result of such
Book-Down Event, an allocable portion of any such increase in
Carrying Value shall be treated as Additional Book Basis;
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provided that the amount treated as Additional Book Basis
pursuant hereto as a result of such Book-Down Event shall not
exceed the amount by which the Aggregate Remaining Net Positive
Adjustments after such Book-Down Event exceeds the remaining
Additional Book Basis attributable to all of the Partnership's
Adjusted Property after such Book-Down Event (determined without
regard to the application of this clause (ii) to such Book-Down
Event).
"Additional Book Basis Derivative Items" means any Book Basis
Derivative Items that are computed with reference to Additional Book
Basis. To the extent that the Additional Book Basis attributable to
all of the Partnership's Adjusted Property as of the beginning of any
taxable period exceeds the Aggregate Remaining Net Positive
Adjustments as of the beginning of such period (the "Excess Additional
Book Basis"), the Additional Book Basis Derivative Items for such
period shall be reduced by the amount that bears the same ratio to the
amount of Additional Book Basis Derivative Items determined without
regard to this sentence as the Excess Additional Book Basis bears to
the Additional Book Basis as of the beginning of such period.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 10.4 and who is
shown as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained
for each Partner as of the end of each fiscal year of the Partnership,
(a) increased by any amounts that such Partner is obligated to restore
under the standards set by Treasury Regulation Section
1.704-1(b)(2)(ii)(c) (or is deemed obligated to restore under Treasury
Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b) decreased by
(i) the amount of all losses and deductions that, as of the end of
such fiscal year, are reasonably expected to be allocated to such
Partner in subsequent years under Sections 704(e)(2) and 706(d) of the
Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the
amount of all distributions that, as of the end of such fiscal year,
are reasonably expected to be made to such Partner in subsequent years
in accordance with the terms of this Agreement or otherwise to the
extent they exceed offsetting increases to such Partner's Capital
Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made
(other than increases as a result of a minimum gain chargeback
pursuant to Section 6.1(d)(i) or 6.1(d)(ii)). The foregoing definition
of Adjusted Capital Account is intended to comply with the provisions
of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith. The "Adjusted Capital Account" of
a Partner in respect of a general partner interest, a Common Unit, a
Subordinated Unit or an Incentive Distribution Right or any other
specified interest in the Partnership shall be the amount which such
Adjusted Capital Account would be if such general partner interest,
Common Unit, Subordinated Unit, Incentive Distribution Right or other
interest in the Partnership were the only interest in the Partnership
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held by a Partner from and after the date on which such general
partner interest, Common Unit, Subordinated Unit, Incentive
Distribution Right or other interest was first issued.
"Adjusted Operating Surplus" means, with respect to any period,
Operating Surplus generated during such period (a) less (i) any net
increase in working capital borrowings during such period and (ii) any
net reduction in cash reserves for Operating Expenditures during such
period not relating to an Operating Expenditure made during such
period, and (b) plus (i) any net decrease in working capital
borrowings during such period and (ii) any net increase in cash
reserves for Operating Expenditures during such period required by any
debt instrument for the repayment of principal, interest or premium.
Adjusted Operating Surplus does not include that portion of Operating
Surplus included in clause (a)(i) of the definition of Operating
Surplus.
"Adjusted Property" means any property the Carrying Value of
which has been adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii).
Once an Adjusted Property is deemed distributed by, and recontributed
to, the Partnership for federal income tax purposes upon a termination
of the Partnership pursuant to Treasury Regulation Section 1.708-
(b)(1)(iv), such property shall thereafter constitute a Contributed
Property until the Carrying Value of such property is subsequently
adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii). Upon termination
of the Partnership following the publication of Proposed Treasury
Regulation 1.708-1(b)(1)(iv) as a final regulation, an Adjusted
Property deemed contributed to a new partnership in exchange for an
interest in the new partnership, followed by the deemed liquidation of
the Partnership, shall thereafter constitute a Contributed Property
until the Carrying Value of such property is subsequently adjusted
pursuant to Section 5.5(d)(i) or 5.5(d)(ii).
"Affiliate" means, with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries
controls, is controlled by or is under common control with, the Person
in question. As used herein, the term "control" means the possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through ownership of
voting securities, by contract or otherwise.
"Aggregate Remaining Net Positive Adjustments" means, as of the
end of any taxable period, the sum of the Remaining Net Positive
Adjustments of all the Partners.
"Agreed Allocation" means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant to
the provisions of Section 6.1, including, without limitation, a
Curative Allocation (if appropriate to the context in which the term
"Agreed Allocation" is used).
"Agreed Value" of any Contributed Property means the fair market
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value of such property or other consideration at the time of
contribution as determined by the Managing General Partner using such
reasonable method of valuation as it may adopt; provided, however,
that the Agreed Value of any property deemed contributed to the
Partnership for federal income tax purposes upon termination and
reconstitution thereof pursuant to Section 708 of the Code (whether
before or after finalization of Proposed Treasury Regulation
Section 1.708-1(b)(l)(iv)) shall be determined in accordance with
Section 5.5(c)(i). Subject to Section 5.5(c)(i), the Managing General
Partner shall, in its discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate Agreed Value of
Contributed Properties contributed to the Partnership in a single or
integrated transaction among each separate property on a basis
proportional to the fair market value of each Contributed Property.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership of Cornerstone Propane Partners, L.P., as it may be
amended, supplemented or restated from time to time.
"Assignee" means a Non-citizen Assignee or a Person to whom one
or more Limited Partner Interests have been transferred in a manner
permitted under this Agreement and who has executed and delivered a
Transfer Application as required by this Agreement, but who has not
been admitted as a Substituted Limited Partner.
"Associate" means, when used to indicate a relationship with any
Person, (a) any corporation or organization of which such Person is a
director, officer or partner or is, directly or indirectly, the owner
of 20% or more of any class of voting stock or other voting interest;
(b) any trust or other estate in which such Person has at least a 20%
beneficial interest or as to which such Person serves as trustee or in
a similar fiduciary capacity; and (c) any relative or spouse of such
Person, or any relative of such spouse, who has the same principal
residence as such Person.
"Audit Committee" means a committee of the Board of Directors of
the Managing General Partner composed entirely of two or more
directors who are neither officers nor employees of either of the
General Partners nor officers, directors or employees of any Affiliate
of the General Partners.
"Available Cash" means, with respect to any Quarter ending prior
to the Liquidation Date,
(a) the sum of (i) all cash and cash equivalents of the
Partnership Group on hand at the end of such Quarter, and
(ii) all additional cash and cash equivalents of the Partnership
Group on hand on the date of determination of Available Cash with
respect to such Quarter resulting from borrowings for working
capital purposes made subsequent to the end of such Quarter, less
(b) the amount of any cash reserves that is necessary or
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appropriate in the reasonable discretion of the Managing General
Partner to (i) provide for the proper conduct of the business of
the Partnership Group (including reserves for future capital
expenditures and for anticipated future credit needs of the
Partnership Group) subsequent to such Quarter, (ii) comply with
applicable law or any loan agreement, security agreement,
mortgage, debt instrument or other agreement or obligation to
which any Group Member is a party or by which it is bound or its
assets are subject or (iii) provide funds for distributions under
Section 6.4 or 6.5 in respect of any one or more of the next four
Quarters; provided, however, that the Managing General Partner
may not establish cash reserves pursuant to (iii) above if the
effect of such reserves would be that the Partnership is unable
to distribute the Minimum Quarterly Distribution on all Common
Units with respect to such Quarter; and, provided further, that
disbursements made by a Group Member or cash reserves
established, increased or reduced after the end of such Quarter
but on or before the date of determination of Available Cash with
respect to such Quarter shall be deemed to have been made,
established, increased or reduced, for purposes of determining
Available Cash, within such Quarter if the Managing General
Partner so determines.
Notwithstanding the foregoing, "Available Cash" with respect to
the Quarter in which the Liquidation Date occurs and any subsequent
Quarter shall equal zero.
"Book Basis Derivative Items" means any item of income,
deduction, gain or loss included in the determination of Net Income or
Net Loss that is computed with reference to the Carrying Value of an
Adjusted Property (e.g., depreciation, depletion, or gain or loss with
respect to an Adjusted Property).
"Book-Down Event" means an event which triggers a negative
adjustment to the Capital Accounts of the Partners pursuant to Section
5.5(d).
"Book-Tax Disparity" means with respect to any item of
Contributed Property or Adjusted Property, as of the date of any
determination, the difference between the Carrying Value of such
Contributed Property or Adjusted Property and the adjusted basis
thereof for federal income tax purposes as of such date. A Partner's
share of the Partnership's Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as
maintained pursuant to Section 5.5 and the hypothetical balance of
such Partner's Capital Account computed as if it had been maintained
strictly in accordance with federal income tax accounting principles.
"Book-Up Event" means an event which triggers a positive
adjustment to the Capital Accounts of the Partners pursuant to Section
5.5(d).
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"Business Day" means Monday through Friday of each week, except
that a legal holiday recognized as such by the government of the
United States of America or the states of New York or California shall
not be regarded as a Business Day.
"Capital Account" means the capital account maintained for a
Partner pursuant to Section 5.5. The "Capital Account" of a Partner in
respect of a general partner interest, a Common Unit, a Subordinated
Unit, an Incentive Distribution Right or any other Partnership
Interest shall be the amount which such Capital Account would be if
such general partner interest, Common Unit, Subordinated Unit,
Incentive Distribution Right, or other Partnership Interest were the
only interest in the Partnership held by a Partner from and after the
date on which such general partner interest, Common Unit, Subordinated
Unit, Incentive Distribution Right or other Partnership Interest was
first issued.
"Capital Contribution" means any cash, cash equivalents or the
Net Agreed Value of Contributed Property that a Partner contributes to
the Partnership pursuant to this Agreement.
"Capital Improvement" means any (a) addition or improvement to
the capital assets owned by any Group Member or (b) acquisition of
existing, or the construction of new, capital assets (including retail
distribution outlets, propane tanks, pipeline systems, storage
facilities, appliance showrooms, training facilities and related
assets), in each case made to increase the operating capacity or
revenues of the Partnership Group from the operating capacity or
revenues of the Partnership Group existing immediately prior to such
addition, improvement, acquisition or construction.
"Capital Surplus" has the meaning assigned to such term in
Section 6.3(a).
"Carrying Value" means (a) with respect to a Contributed
Property, the Agreed Value of such property reduced (but not below
zero) by all depreciation, amortization and cost recovery deductions
charged to the Partners' and Assignees' Capital Accounts in respect of
such Contributed Property, and (b) with respect to any other
Partnership property, the adjusted basis of such property for federal
income tax purposes, all as of the time of determination. The Carrying
Value of any property shall be adjusted from time to time in
accordance with Sections 5.5(d)(i) and 5.5(d)(ii) and to reflect
changes, additions or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed
appropriate by the Managing General Partner.
"Cause" means a court of competent jurisdiction has entered a
final, non-appealable judgment finding the Managing General Partner
liable for actual fraud, gross negligence or willful or wanton
misconduct in its capacity as general partner of the Partnership.
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"Certificate" means a certificate, substantially in the form of
Exhibit A to this Agreement or in such other form as may be adopted by
the Managing General Partner in its discretion, issued by the
Partnership evidencing ownership of one or more Common Units or a
certificate, in such form as may be adopted by the Managing General
Partner in its discretion, issued by the Partnership evidencing
ownership of one or more other Partnership Securities.
"Certificate of Limited Partnership" means the Certificate of
Limited Partnership of the Partnership filed with the Secretary of
State of the State of Delaware as referenced in Section 2.1, as such
Certificate of Limited Partnership may be amended, supplemented or
restated from time to time.
"Citizenship Certification" means a properly completed
certificate in such form as may be specified by the Managing General
Partner by which an Assignee or a Limited Partner certifies that he
(and if he is a nominee holding for the account of another Person,
that to the best of his knowledge such other Person) is an Eligible
Citizen.
"Claim" has the meaning assigned to such term in Section 7.13(c).
"Closing Date" means the first date on which Common Units are
sold by the Partnership to the Underwriters pursuant to the provisions
of the Underwriting Agreement.
"Closing Price" has the meaning assigned to such term in Section
15.1(a).
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time. Any reference herein to a specific section
or sections of the Code shall be deemed to include a reference to any
corresponding provision of successor law.
"Combined Interest" has the meaning assigned to such term in
Section 11.3(a).
"Commission" means the United States Securities and Exchange
Commission.
"Common Unit" means a Partnership Security representing a
fractional part of the Partnership Interests of all Limited Partners
and Assignees and of the General Partners (exclusive of their interest
as holders of the general partner interests and the Incentive
Distribution Rights) and having the rights and obligations specified
with respect to Common Units in this Agreement. The term "Common Unit"
does not refer to a Subordinated Unit prior to its conversion into
Common Unit pursuant to the terms hereof.
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"Common Unit Arrearage" means, with respect to any Common Unit,
whenever issued, as to any Quarter within the Subordination Period,
the excess, if any, of (a) the Minimum Quarterly Distribution with
respect to a Common Unit in respect of such Quarter over (b) the sum
of all Available Cash distributed with respect to a Common Unit in
respect of such Quarter pursuant to Section 6.4(a)(i).
"Contributed Property" means each property or other asset, in
such form as may be permitted by the Delaware Act, but excluding cash,
contributed to the Partnership (or deemed contributed to the
Partnership on termination and reconstitution thereof pursuant to
Section 708 of the Code, whether before or after finalization of
Proposed Treasury Regulation Section 1.708-1(b)(1)(iv)). Once the
Carrying Value of a Contributed Property is adjusted pursuant to
Section 5.5(d), such property shall no longer constitute a Contributed
Property, but shall be deemed an Adjusted Property.
"Contribution and Conveyance Agreement" means that certain
Contribution, Conveyance and Assumption Agreement, dated as of the
Closing Date, among the General Partners, the Partnership, the
Operating Partnership and certain other parties, together with the
additional conveyance documents and instruments contemplated or
referenced thereunder.
"Cornerstone Propane GP, Inc." means Cornerstone Propane
GP, Inc., a California corporation, which is currently the Managing
General Partner of the Partnership, and is the successor to
Cornerstone Propane GP, Inc., a Delaware corporation.
"Cumulative Common Unit Arrearage" means, with respect to any
Common Unit, whenever issued, and as of the end of any Quarter, the
excess, if any, of (a) the sum resulting from adding together the
Common Unit Arrearage as to an Initial Common Unit for each of the
Quarters within the Subordination Period ending on or before the last
day of such Quarter over (b) the sum of any distributions theretofore
made pursuant to Section 6.4(a)(ii) and the second sentence of Section
6.5 with respect to an Initial Common Unit (including any
distributions to be made in respect of the last of such Quarters).
"Curative Allocation" means any allocation of an item of income,
gain, deduction, loss or credit pursuant to the provisions of Section
6.1(d)(xi).
"Current Market Price" has the meaning assigned to such term in
Section 15.1(a).
"Delaware Act" means the Delaware Revised Uniform Limited
Partnership Act, 6 Del C. Section 17-101, et seq., as amended,
supplemented or restated from time to time, and any successor to
such statute.
"Departing Partner" means a former General Partner, either
Managing General Partner or Special General Partner, from and after
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the effective date of any withdrawal or removal of such former General
Partner pursuant to Section 11.1 or 11.2.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"EESC" means Empire Energy SC Corporation, a Delaware
corporation.
"Eligible Citizen" means a Person qualified to own interests in
real property in jurisdictions in which any Group Member does business
or proposes to do business from time to time, and whose status as a
Limited Partner or Assignee does not or would not subject such Group
Member to a significant risk of cancellation or forfeiture of any of
its properties or any interest therein.
"Event of Withdrawal" has the meaning assigned to such term in
Section 11.1(a).
"Final Subordinated Units" has the meaning assigned to such term
in Section 6.1(d)(x).
"First Liquidation Target Amount" has the meaning assigned to
such term in Section 6.1(c)(i)(D).
"First Target Distribution" means $0.594 per Unit per Quarter
(or, with respect to the period commencing on the Closing Date and
ending on March 31, 1997, it means the product of $0.594 multiplied by
a fraction of which the numerator is the number of days in such
period, and of which the denominator is 90), subject to adjustment in
accordance with Sections 6.6 and 6.9.
"General Partners" means the Managing General Partner and the
Special General Partner and their successors and permitted assigns as
general partners of the Partnership.
"Group" means a Person that with or through any of its Affiliates
or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except voting pursuant to a
revocable proxy or consent given to such Person in response to a proxy
or consent solicitation made to 10 or more Persons) or disposing of
any Partnership Securities with any other Person that beneficially
owns, or whose Affiliates or Associates beneficially own, directly or
indirectly, Partnership Securities.
"Group Member" means a member of the Partnership Group.
"Holder" as used in Section 7.13, has the meaning assigned to
such term in Section 7.13(a).
"Incentive Distribution Right" means a non-voting limited partner
Partnership Interest issued to the General Partners in connection with
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the transfer of their assets to the Partnership pursuant to Section
5.2, which Partnership Interest shall confer upon the holder thereof
only the rights and obligations specifically provided in this
Agreement with respect to Incentive Distribution Rights (and no other
rights otherwise available to or other obligations of holders of a
Partnership Interest).
"Incentive Distributions" means any amount of cash distributed to
the holders of the Incentive Distribution Rights pursuant to Sections
6.4(a)(v), (vi) and (vii) and 6.4(b)(iii), (iv) and (v).
"Indemnified Persons" has the meaning assigned to such term in
Section 7.13(c).
"Indemnitee" means (a) any General Partner, any Departing Partner
and any Person who is or was an Affiliate of any General Partner or
any Departing Partner, (b) any Person who is or was a director,
officer, employee, agent or trustee of a Group Member, (c) any Person
who is or was an officer, member, partner, director, employee, agent
or trustee of any General Partner or any Departing Partner or any
Affiliate of the General Partner or any Departing Partner, or any
Affiliate of any such Person and (d) any Person who is or was serving
at the request of any General Partner or any Departing Partner or any
such Affiliate as a director, officer, employee, member, partner,
agent, fiduciary or trustee of another Person; provided, that a Person
shall not be an Indemnitee by reason of providing, on a
fee-for-services basis, trustee, fiduciary or custodial services.
"Initial Common Units" means the Common Units sold in the Initial
Offering.
"Initial Limited Partners" means the General Partners (with
respect to the Subordinated Units and the Incentive Distribution
Rights received by them pursuant to Section 5.2), EESC (with respect
to the Subordinated Units it receives pursuant to Section 5.2) and the
Underwriters, in each case upon being admitted to the Partnership in
accordance with Section 10.1.
"Initial Offering" means the initial offering and sale of Common
Units to the public, as described in the Registration Statement.
"Initial Unit Price" means (a) with respect to the Common Units
and the Subordinated Units, the initial public offering price per
Common Unit at which the Underwriters offered the Common Units to the
public for sale as set forth on the cover page of the prospectus
included as part of the Registration Statement and first issued at or
after the time the Registration Statement first became effective or
(b) with respect to any other class or series of Units, the price per
Unit at which such class or series of Units is initially sold by the
Partnership, as determined by the Managing General Partner, in each
case adjusted as the Managing General Partner determines to be
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appropriate to give effect to any distribution, subdivision or
combination of Units.
"Interim Capital Transactions" means the following transactions
if they occur prior to the Liquidation Date: (a) borrowings,
refinancings or refundings of indebtedness and sales of debt
securities (other than for working capital purposes and other than for
items purchased on open account in the ordinary course of business) by
any Group Member; (b) sales of equity interests by any Group Member
(including Initial Common Units sold to the Underwriters pursuant to
the exercise of the Over-allotment Option); and (c) sales or other
voluntary or involuntary dispositions of any assets of any Group
Member other than (x) sales or other dispositions of inventory in the
ordinary course of business, (y) sales or other dispositions of other
current assets, including receivables and accounts in the ordinary
course of business, and (z) sales or other dispositions of assets as
part of normal retirements or replacements.
"Issue Price" means the price at which a Unit is purchased from
the Partnership, after taking into account any sales commission or
underwriting discount charged to the Partnership.
"Limited Partner" means, unless the context otherwise requires,
(a) the Organizational Limited Partner, each Initial Limited Partner,
each Substituted Limited Partner, each Additional Limited Partner and
any Partner upon the change of its status from General Partner to
Limited Partner pursuant to Section 11.3 or (b) solely for purposes of
Articles V, VI, VII and IX and Sections 12.3 and 12.4, each Assignee.
"Limited Partner Interest" means the ownership interest of a
Limited Partner or Assignee in the Partnership, which may be evidenced
by Common Units, Subordinated Units, Incentive Distribution Rights or
other Partnership Securities or a combination thereof or interest
therein, and includes any and all benefits to which such Limited
Partner or Assignee is entitled as provided in this Agreement,
together with all obligations of such Limited Partner or Assignee to
comply with the terms and provisions of this Agreement.
"Liquidation Date" means (a) in the case of an event giving rise
to the dissolution of the Partnership of the type described in clauses
(a) and (b) of the first sentence of Section 12.2, the date on which
the applicable time period during which the holders of Outstanding
Units have the right to elect to reconstitute the Partnership and
continue its business has expired without such an election being made,
and (b) in the case of any other event giving rise to the dissolution
of the Partnership, the date on which such event occurs.
"Liquidator" means one or more Persons selected by the Managing
General Partner to perform the functions described in Section 12.3 as
liquidating trustee of the Partnership within the meaning of the
Delaware Act.
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"Managing General Partner" means Cornerstone Propane GP, Inc. and
its predecessors, successors and permitted assigns as general partner
of the Partnership.
"Merger Agreement" has the meaning assigned to such term in
Section 14.1.
"Minimum Quarterly Distribution" means $0.54 per Unit per Quarter
(or with respect to the period commencing on the Closing Date and
ending on March 31, 1997, it means the product of $0.54 multiplied by
a fraction of which the numerator is the number of days in such period
and of which the denominator is 90), subject to adjustment in
accordance with Sections 6.6 and 6.9.
"National Securities Exchange" means an exchange registered with
the Commission under Section 6(a) of the Securities Exchange Act of
1934, as amended, supplemented or restated from time to time, and any
successor to such statute, or the Nasdaq Stock Market or any successor
thereto.
"Net Agreed Value" means, (a) in the case of any Contributed
Property, the Agreed Value of such property reduced by any liabilities
either assumed by the Partnership upon such contribution or to which
such property is subject when contributed, and (b) in the case of any
property distributed to a Partner or Assignee by the Partnership, the
Partnership's Carrying Value of such property (as adjusted pursuant to
Section 5.5(d)(ii)) at the time such property is distributed, reduced
by any indebtedness either assumed by such Partner or Assignee upon
such distribution or to which such property is subject at the time of
distribution, in either case, as determined under Section 752 of the
Code.
"Net Income" means, for any taxable year, the excess, if any, of
the Partnership's items of income and gain (other than those items
taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year over the Partnership's items
of loss and deduction (other than those items taken into account in
the computation of Net Termination Gain or Net Termination Loss) for
such taxable year. The items included in the calculation of Net Income
shall be determined in accordance with Section 5.5(b) and shall not
include any items specially allocated under Section 6.1(d); provided
that the determination of the items that have been specially allocated
under Section 6.1(d) shall be made as if Section 6.1(d)(xii) were not
in this Agreement.
"Net Loss" means, for any taxable year, the excess, if any, of
the Partnership's items of loss and deduction (other than those items
taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year over the Partnership's items
of income and gain (other than those items taken into account in the
computation of Net Termination Gain or Net Termination Loss) for such
taxable year. The items included in the calculation of Net Loss shall
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be determined in accordance with Section 5.5(b) and shall not include
any items specially allocated under Section 6.1(d); provided that the
determination of the items that have been specially allocated under
Section 6.1(d) shall be made as if Section 6.1(d)(xii) were not in
this Agreement.
"Net Positive Adjustments" means, with respect to any Partner,
the excess, if any, of the total positive adjustments over the total
negative adjustments made to the Capital Account of such Partner
pursuant to Book-Up Events and Book-Down Events.
"Net Termination Gain" means, for any taxable year, the sum, if
positive, of all items of income, gain, loss or deduction recognized
by the Partnership after the Liquidation Date. The items included in
the determination of Net Termination Gain shall be determined in
accordance with Section 5.5(b) and shall not include any items of
income, gain or loss specially allocated under Section 6.1(d).
"Net Termination Loss" means, for any taxable year, the sum, if
negative, of all items of income, gain, loss or deduction recognized
by the Partnership after the Liquidation Date. The items included in
the determination of Net Termination Loss shall be determined in
accordance with Section 5.5(b) and shall not include any items of
income, gain or loss specially allocated under Section 6.1(d).
"Non-citizen Assignee" means a Person whom the Managing General
Partner has determined in its discretion does not constitute an
Eligible Citizen and as to whose Partnership Interest the Managing
General Partner has become the Substituted Limited Partner, pursuant
to Section 4.10.
"Nonrecourse Built-in Gain" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or
pledge securing a Nonrecourse Liability, the amount of any taxable
gain that would be allocated to the Partners pursuant to Sections
6.2(b)(i)(A), 6.2(b)(ii)(A) and 6.2(b)(iii) if such properties were
disposed of in a taxable transaction in full satisfaction of such
liabilities and for no other consideration.
"Nonrecourse Deductions" means any and all items of loss,
deduction or expenditures (described in Section 705(a)(2)(B) of the
Code) that, in accordance with the principles of Treasury Regulation
Section 1.704-2(b), are attributable to a Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
"Notes" means the $220 million of Senior Secured Notes issued by
the Operating Partnership in a private placement in conjunction with
the Initial Offering.
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"Notice of Election to Purchase" has the meaning assigned to such
term in Section 15.1(b) hereof.
"NPS Note" means the note evidencing the loan from Northwestern
Public Service Company to the Partnership on the Closing Date to
finance certain fees and expenses incurred in connection with the
Initial Offering and the issuance of the Notes.
"Operating Expenditures" means all Partnership Group
expenditures, including, but not limited to, taxes, reimbursements of
the General Partners, debt service payments, and capital expenditures,
subject to the following:
(a) Payments (including prepayments) of principal of and
premium on indebtedness shall not be an Operating Expenditure if
the payment is (i) required in connection with the sale or other
disposition of assets or (ii) made in connection with the
refinancing or refunding of indebtedness with the proceeds from
new indebtedness or from the sale of equity interests. For
purposes of the foregoing, at the election and in the reasonable
discretion of the Managing General Partner, any payment of
principal or premium shall be deemed to be refunded or refinanced
by any indebtedness incurred or to be incurred by the Partnership
Group within 180 days before or after such payment to the extent
of the principal amount of such indebtedness.
(b) Operating Expenditures shall not include (i) capital
expenditures made for Acquisitions or for Capital Improvements,
(ii) payment of transaction expenses relating to Interim Capital
Transactions or (iii) distributions to Partners. Where capital
expenditures are made in part for Acquisitions or for Capital
Improvements and in part for other purposes, the Managing General
Partner's good faith allocation between the amounts paid for each
shall be conclusive.
"Operating Partnership" means Cornerstone Propane L.P., a
Delaware limited partnership, and any successors thereto.
"Operating Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of the Operating Partnership, as it
may be amended, supplemented or restated from time to time.
"Operating Surplus," means, with respect to any period ending
prior to the Liquidation Date, on a cumulative basis and without
duplication,
(a) the sum of (i) $25 million plus all cash and cash
equivalents of the Partnership Group on hand as of the close of
business on the Closing Date, (ii) all cash receipts of the
Partnership Group for the period beginning on the Closing Date
and ending with the last day of such period, other than cash
receipts from Interim Capital Transactions (except to the extent
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specified in Section 6.5) and (iii) all cash receipts of the
Partnership Group after the end of such period but on or before
the date of determination of Operating Surplus with respect to
such period resulting from borrowings for working capital
purposes, less
(b) the sum of (i) Operating Expenditures for the period
beginning on the Closing Date and ending with the last day of
such period and (ii) the amount of cash reserves that is
necessary or advisable in the reasonable discretion of the
Managing General Partner to provide funds for future Operating
Expenditures, provided, however, that disbursements made
(including contributions to a Group Member or disbursements on
behalf of a Group Member) or cash reserves established, increased
or reduced after the end of such period but on or before the date
of determination of Available Cash with respect to such period
shall be deemed to have been made, established, increased or
reduced, for purposes of determining Operating Surplus, within
such period if the Managing General Partner so determines.
Notwithstanding the foregoing, "Operating Surplus" with respect
to the Quarter in which the Liquidation Date occurs and any subsequent
Quarter shall equal zero.
"Opinion of Counsel" means a written opinion of counsel (who may
be regular counsel to the Partnership or the General Partners or any
of their Affiliates) acceptable to the Managing General Partner in its
reasonable discretion.
"Option Closing Date" has the meaning assigned to such term in
the Underwriting Agreement.
"Organizational Limited Partner" means Northwestern Growth
Corporation in its capacity as the organizational limited partner of
the Partnership pursuant to this Agreement.
"Outstanding" means, with respect to Partnership Securities, all
Partnership Securities that are issued by the Partnership and
reflected as outstanding on the Partnership's books and records as of
the date of determination; provided, however, that if at any time any
Person or Group (other than the Managing General Partner or its
Affiliates) beneficially owns 20% or more of any Outstanding
Partnership Securities of any class then Outstanding, all Partnership
Securities owned by such Person or Group shall not be voted on any
matter and shall not be considered to be Outstanding when sending
notices of a meeting of Limited Partners to vote on any matter (unless
otherwise required by law), calculating required votes, determining
the presence of a quorum or for other similar purposes under this
Agreement, except that Common Units so owned shall be considered to be
Outstanding for purposes of Section 11.1(b)(iv) (such Common Units
shall not, however, be treated as a separate class of Partnership
Securities for purposes of this Agreement).
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"Over-allotment Option" means the over-allotment option granted
to the Underwriters by the Partnership pursuant to the Underwriting
Agreement.
"Parity Units" means Common Units and all other Units having
rights to distributions or in liquidation ranking on a parity with the
Common Units.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth
in Treasury Regulation Section 1.704-2(i)(2).
"Partner Nonrecourse Deductions" means any and all items of loss,
deduction or expenditure (including, without limitation, any
expenditure described in Section 705(a)(2)(B) of the Code) that, in
accordance with the principles of Treasury Regulation Section
1.704-2(i), are attributable to a Partner Nonrecourse Debt.
"Partners" means the General Partners, the Limited Partners and
the holders of Common Units, Subordinated Units and Incentive
Distribution Rights.
"Partnership" means Cornerstone Propane Partners, L.P., a
Delaware limited partnership, and any successors thereto.
"Partnership Group" means the Partnership, the Operating
Partnership and any Subsidiary of either such entity, treated as a
single consolidated entity.
"Partnership Interest" means an interest in the Partnership,
which shall include general partner interests, Common Units,
Subordinated Units, Incentive Distribution Rights and other
Partnership Securities, or a combination thereof or interest therein,
as the case may be.
"Partnership Minimum Gain" means that amount determined in
accordance with the principles of Treasury Regulation Section
1.704-2(d).
"Partnership Security" means any class or series of Unit, any
option, right, warrant or appreciation rights relating thereto, or any
other type of equity interest that the Partnership may lawfully issue,
or any unsecured or secured debt obligation of the Partnership that is
convertible into any class or series of equity interests of the
Partnership.
"Percentage Interest" means as of the date of such determination
(a) as to the General Partners (in their capacity as General Partners
without reference to any Units or limited partner interests held by
them), an aggregate 1.0%, (b) as to any Unitholder or Assignee holding
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Units, the product obtained by multiplying (i) 99% less the percentage
applicable to paragraph (c) by (ii) the quotient obtained by dividing
(A) the number of Units held by such Unitholder or Assignee by (B) the
total number of all Outstanding Units, and (c) as to the holders of
additional Partnership Securities issued by the Partnership in
accordance with Section 5.6, the percentage established as a part of
such issuance. The Percentage Interest with respect to an Incentive
Distribution Right shall at all times be zero.
"Person" means an individual or a corporation, limited liability
company, partnership, joint venture, trust, unincorporated
organization, association, government agency or political subdivision
thereof or other entity.
"Per Unit Capital Amount" means, as of any date of determination,
the Capital Account, stated on a per Unit basis, underlying any Unit
held by a Person other than the General Partners or any Affiliate of a
General Partner who holds Units.
"Proportionate Share" means (i) with respect to the Managing
General Partner, the percentage share equal to the quotient of (A) the
Net Agreed Value of the assets contributed by the Managing General
Partner to the Partnership reduced by the value of the general partner
interest and Incentive Distribution Rights received by the Managing
General Partner divided by (B) the sum of the amount described in (A)
above plus the Net Agreed Value of the assets contributed by EESC to
the Partnership and (ii) with respect to EESC, the percentage share
equal to the quotient of (A) the Net Agreed Value of the assets
contributed by EESC to the Partnership divided by the amount described
in (B) above.
"Pro Rata" means (a) when modifying Units or any class thereof,
apportioned equally among all designated Units in accordance with
their relative Percentage Interests, (b) when modifying Partners and
Assignees, apportioned among all Partners and Assignees in accordance
with their respective Percentage Interests, (c) when modifying holders
of Incentive Distribution Rights, apportioned equally among all
holders of Incentive Distribution Rights in accordance with the
relative number of Incentive Distribution Rights held by each such
holder and (d) when modifying the General Partners, apportioned
76.8645% to the Managing General Partner and 23.1355% to the Special
General Partner, provided, however, to the extent an allocation of
losses pursuant to Section 6.1(b) or Section 6.1(c)(ii) would cause
the Special General Partner to have a deficit balance in its Adjusted
Capital Account at the end of such taxable year (or increase any
existing deficit in its Adjusted Capital Account), then Pro Rata shall
mean 100% to the Managing General Partner and zero to the Special
General Partner.
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"Purchase Date" means the date determined by the Managing General
Partner as the date for purchase of all Outstanding Units (other than
Units owned by the General Partners and their Affiliates) pursuant to
Article XV.
"Quarter" means, unless the context requires otherwise, a fiscal
quarter of the Partnership.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Sections 734 or
743 of the Code) upon the disposition of any property or asset of the
Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect
to such property or asset.
"Record Date" means the date established by the Managing General
Partner for determining (a) the identity of the Record Holders
entitled to notice of, or to vote at, any meeting of Limited Partners
or entitled to vote by ballot or give approval of Partnership action
in writing without a meeting or entitled to exercise rights in respect
of any lawful action of Limited Partners or (b) the identity of Record
Holders entitled to receive any report or distribution or to
participate in any offer.
"Record Holder" means the Person in whose name a Common Unit is
registered on the books of the Transfer Agent as of the opening of
business on a particular Business Day, or with respect to other
Partnership Securities, the Person in whose name any such other
Partnership Security is registered on the books which the Managing
General Partner has caused to be kept as of the opening of business on
such Business Day.
"Redeemable Interests" means any Partnership Interests for which
a redemption notice has been given, and has not been withdrawn,
pursuant to Section 4.11.
"Registration Statement" means the Registration Statement on Form
S-1 (Registration No. 333-13879) as it has been or as it may be
amended or supplemented from time to time, filed by the Partnership
with the Commission under the Securities Act to register the offering
and sale of the Common Units in the Initial Offering.
"Remaining Net Positive Adjustments" means as of the end of any
taxable period, (i) with respect to the Unitholders holding Common
Units or Subordinated Units, the excess of (a) the Net Positive
Adjustments of the Unitholders holding Common Units or Subordinated
Units as of the end of such period over (b) the sum of those Partners'
Share of Additional Book Basis Derivative Items for each prior taxable
period, (ii) with respect to the General Partners (as holders of the
general partner interests), the excess of (a) the Net Positive
Adjustments of the General Partners as of the end of such period over
(b) the sum of the General Partners' Share of Additional Book Basis
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Derivative Items with respect to the general partner interests for
each prior taxable period, and (iii) with respect to the holders of
Incentive Distribution Rights, the excess of (a) the Net Positive
Adjustments of the holders of Incentive Distribution Rights as of the
end of such period over (b) the sum of the Share of Additional Book
Basis Derivative Items of the holders of the Incentive Distribution
Rights for each prior taxable period.
"Required Allocations" means (a) any limitation imposed on any
allocation of Net Losses or Net Termination Losses under Section
6.1(b) or 6.1(c)(ii) and (b) any allocation of an item of income,
gain, loss or deduction pursuant to Section 6.1(d)(i), 6.1(d)(ii),
6.1(d)(iv), 6.1(d)(vii) or 6.1(d)(ix).
"Residual Gain" or "Residual Loss" means any item of gain or
loss, as the case may be, of the Partnership recognized for federal
income tax purposes resulting from a sale, exchange or other
disposition of a Contributed Property or Adjusted Property, to the
extent such item of gain or loss is not allocated pursuant to Section
6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to eliminate Book-Tax
Disparities.
"Second Liquidation Target Amount" has the meaning assigned to
such term in Section 6.1(c)(i)(E).
"Second Target Distribution" means $0.700 per Unit per Quarter
(or, with respect to the period commencing on the Closing Date and
ending on March 31, 1997, it means the product of $0.700 multiplied by
a fraction of which the numerator is equal to the number of days in
such period and of which the denominator is 90), subject to adjustment
in accordance with Sections 6.6 and 6.9.
"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such
statute.
"Share of Additional Book Basis Derivative Items" means in
connection with any allocation of Additional Book Basis Derivative
Items for any taxable period, (i) with respect to the Unitholders
holding Common Units or Subordinated Units, the amount that bears the
same ratio to such Additional Book Basis Derivative Items as the
Unitholders' Remaining Net Positive Adjustments as of the end of such
period bears to the Aggregate Remaining Net Positive Adjustments as of
that time, (ii) with respect to the General Partners (as holders of
the general partner interests), the amount that bears the same ratio
to such additional Book Basis Derivative Items as the General
Partners' Remaining Net Positive Adjustments as of the end of such
period bears to the Aggregate Remaining Net Positive Adjustment as of
that time, and (iii) with respect to the Partners holding Incentive
Distribution Rights, the amount that bears the same ratio to such
Additional Book Basis Derivative Items as the Remaining Net Positive
Adjustments of the Partners holding the Incentive Distribution Rights
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as of the end of such period bears to the Aggregate Remaining Net
Positive Adjustments as of that time.
"Special Approval" means approval by a majority of the members of
the Audit Committee.
"Special General Partner" means SYN and its successors and
assigns as special general partner of the Partnership.
"Subordinated Unit" means a Unit representing a fractional part
of the Partnership Interests of all Limited Partners and Assignees
(other than of holders of the Incentive Distribution Rights) and
having the rights and obligations specified with respect to
Subordinated Units in this Agreement. The term "Subordinated Unit" as
used herein does not include a Common Unit.
"Subordination Period" means the period commencing on the Closing
Date and ending on the first to occur of the following dates:
(a) the first day of any Quarter beginning after
December 31, 2001 in respect of which (i) (A) distributions of
Available Cash from Operating Surplus on each of the Outstanding
Common Units and Subordinated Units with respect to each of the
three consecutive, non-overlapping four- Quarter periods
immediately preceding such date equaled or exceeded the sum of
the Minimum Quarterly Distribution on all Outstanding Common
Units and Subordinated Units during such periods and (B) the
Adjusted Operating Surplus generated during each of the three
consecutive, non-overlapping four-Quarter periods immediately
preceding such date equaled or exceeded the sum of the Minimum
Quarterly Distribution on all of the Outstanding Common Units and
Subordinated Units, plus the related distribution on the general
partner interests in the Partnership and in the Operating
Partnership, during such periods and (ii) there are no Cumulative
Common Unit Arrearages; and
(b) the date on which the Managing General Partner is
removed as general partner of the Partnership upon the requisite
vote by holders of Outstanding Units under circumstances where
Cause does not exist and Units held by the General Partners and
their Affiliates are not voted in favor of such removal.
"Subsidiary" means, with respect to any Person, (a) a corporation
of which more than 50% of the voting power of shares entitled (without
regard to the occurrence of any contingency) to vote in the election
of directors or other governing body of such corporation is owned,
directly or indirectly, at the date of determination, by such Person,
by one or more Subsidiaries of such Person or a combination thereof,
(b) a partnership (whether general or limited) in which such Person or
a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than
50% of the partnership interests of such partnership (considering all
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of the partnership interests of the partnership as a single class) is
owned, directly or indirectly, at the date of determination, by such
Person, by one or more Subsidiaries of such Person, or a combination
thereof, or (c) any other Person (other than a corporation or a
partnership) in which such Person, one or more Subsidiaries of such
Person, or a combination thereof, directly or indirectly, at the date
of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 10.2 in place
of and with all the rights of a Limited Partner and who is shown as a
Limited Partner on the books and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such term
in Section 14.2(b).
"SYN" means SYN Inc., a Delaware corporation.
"Third Target Distribution" means $0.900 per Unit per Quarter
(or, with respect to the period commencing on the Closing Date and
ending on March 31, 1997, it means the product of $0.900 multiplied by
a fraction of which the numerator is equal to the number of days in
such period and of which the denominator is 90), subject to adjustment
in accordance with Sections 6.6 and 6.9.
"Trading Day" has the meaning assigned to such term in Section
15.1(a).
"Transfer" has the meaning assigned to such term in Section
4.4(a).
"Transfer Agent" means such bank, trust company or other Person
(including the Managing General Partner or one of its Affiliates) as
shall be appointed from time to time by the Partnership to act as
registrar and transfer agent for the Common Units.
"Transfer Application" means an application and agreement for
transfer Limited Partner Interests in the form set forth on the back
of a Certificate or in a form substantially to the same effect in a
separate instrument.
"Underwriter" means each Person named as an underwriter in
Schedule I to the Underwriting Agreement who purchases Common Units
pursuant thereto.
"Underwriting Agreement" means the Underwriting Agreement dated
December 11, 1996, among the Underwriters, the Partnership and certain
other parties, providing for the purchase of Common Units by such
Underwriters.
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"Unit" means a Partnership Interest of a Limited Partner or
Assignee in the Partnership and shall include Common Units and
Subordinated Units but shall not include (x) the general partner
interests in the Partnership or (y) Incentive Distribution Rights.
"Unitholders" means the holders of Common Units and Subordinated
Units.
"Unit Majority" means, during the Subordination Period, at least
a majority of the Outstanding Common Units voting as a class and at
least a majority of the Outstanding Subordinated Units voting as a
class, and thereafter, at least a majority of the Outstanding Units.
"Unpaid MQD" has the meaning assigned to such term in Section
6.1(c)(i)(B).
"Unrealized Gain" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any,
of (a) the fair market value of such property as of such date (as
determined under Section 5.5(d)) over (b) the Carrying Value of such
property as of such date (prior to any adjustment to be made pursuant
to Section 5.5(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any,
of (a) the Carrying Value of such property as of such date (prior to
any adjustment to be made pursuant to Section 5.5(d) as of such date)
over (b) the fair market value of such property as of such date (as
determined under Section 5.5(d)).
"Unrecovered Capital" means at any time, with respect to a Unit,
the Initial Unit Price less the sum of all distributions constituting
Capital Surplus theretofore made in respect of an Initial Common Unit
and any distributions of cash (or the Net Agreed Value of any
distributions in kind) in connection with the dissolution and
liquidation of the Partnership theretofore made in respect of an
Initial Common Unit, adjusted as the Managing General Partner
determines to be appropriate to give effect to any distribution,
subdivision or combination of such Units.
"U.S. GAAP" means United States Generally Accepted Accounting
Principles consistently applied.
"Withdrawal Opinion of Counsel" has the meaning assigned to such
term in Section 11.1(b).
1.2. CONSTRUCTION
Unless the context requires otherwise: (a) any pronoun used in
this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns, pronouns and verbs shall
include the plural and vice versa; (b) references to Articles and
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Sections refer to Articles and Sections of this Agreement; and
(c) "include" or "includes" means includes, without limitation, and
"including" means including, without limitation.
ARTICLE II
ORGANIZATION
2.1 FORMATION
The Managing General Partner and the Organizational Limited
Partner have previously formed the Partnership as a limited
partnership pursuant to the provisions of the Delaware Act and hereby
amend and restate the original Agreement of Limited Partnership of
Cornerstone Propane Partners, L.P. in its entirety. This amendment and
restatement shall become effective on the date of this Agreement.
Except as expressly provided to the contrary in this Agreement, the
rights, duties (including fiduciary duties), liabilities and
obligations of the Partners and the administration, dissolution and
termination of the Partnership shall be governed by the Delaware Act.
All Partnership Interests shall constitute personal property of the
owner thereof for all purposes and a Partner has no interest in
specific Partnership property.
2.2 NAME
The name of the Partnership shall be "Cornerstone Propane
Partners, L.P." The Partnership's business may be conducted under any
other name or names deemed necessary or appropriate by the Managing
General Partner in its sole discretion, including the name of the
Managing General Partner. The words "Limited Partnership," "L.P.,"
"Ltd." or similar words or letters shall be included in the
Partnership's name where necessary for the purpose of complying with
the laws of any jurisdiction that so requires. The Managing General
Partner in its discretion may change the name of the Partnership at
any time and from time to time and shall notify the Limited Partners
of such change in the next regular communication to the Limited
Partners.
2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE; OTHER
OFFICES
Unless and until changed by the Managing General Partner, the
registered office of the Partnership in the State of Delaware shall be
located at 0000 Xxxxxx Xxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000, 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 000 Xxxxxxxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxxxxx 00000 or such other place as the Managing General Partner
may from time to time designate by notice to the Limited Partners. The
Partnership may maintain offices at such other place or places within
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or outside the State of Delaware as the Managing General Partner deems
necessary or appropriate. The address of the Managing General Partner
shall be 000 Xxxxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxx 00000 or such
other place as the Managing 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 a limited partner in the
Operating Partnership and, in connection therewith, to exercise all
the rights and powers conferred upon the Partnership as a limited
partner in the Operating Partnership pursuant to the Operating
Partnership Agreement or otherwise, (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 the Operating Partnership is permitted to
engage in by the Operating Partnership Agreement 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, (c) engage directly in, or enter into or form any
corporation, partnership, joint venture, limited liability company or
other arrangement to engage indirectly in, any business activity that
is approved by the Managing General Partner and which lawfully may be
conducted by a limited partnership organized pursuant to the Delaware
Act and, in connection therewith, to exercise all of the rights and
powers conferred upon the Partnership pursuant to the agreements
relating to such business activity; provided, however, that the
Managing General Partner reasonably determines, as of the date of the
acquisition or commencement of such activity, that such activity
(i) generates "qualifying income" (as such term is defined pursuant to
Section 7704 of the Code) or (ii) enhances the operations of an
activity of the Operating Partnership or a Partnership activity that
generates qualifying income, and (d) do anything necessary or
appropriate to the foregoing, including the making of capital
contributions or loans to a Group Member. The Managing General Partner
has no obligation or duty to the Partnership, the Limited Partners, or
the Assignees to propose or approve, and in its discretion may decline
to propose or approve, the conduct by the Partnership of any business.
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 POWER OF ATTORNEY
(a) The Special General Partner, each Limited Partner and each
Assignee hereby constitutes and appoints the Managing General Partner
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and, if a Liquidator shall have been selected pursuant to Section
12.3, the Liquidator, severally (and any successor to the Liquidator
by merger, transfer, assignment, election or otherwise) and each of
their authorized officers and attorneys-in-fact, as the case may be,
with full power of substitution, as his true and lawful agent and
attorney-in-fact, with full power and authority in his name, place and
xxxxx, to:
(i) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (A) all certificates,
documents and other instruments (including this Agreement and the
Certificate of Limited Partnership and all amendments or
restatements hereof or thereof) that the Managing General Partner
or the Liquidator deems necessary or appropriate to form, qualify
or continue the existence or qualification of the Partnership as
a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware and in
all other jurisdictions in which the Partnership may conduct
business or own property; (B) all certificates, documents and
other instruments that the Managing General Partner or the
Liquidator deems necessary or appropriate to reflect, in
accordance with its terms, any amendment, change, modification or
restatement of this Agreement; (C) all certificates, documents
and other instruments (including conveyances and a certificate of
cancellation) that the Managing General Partner or the Liquidator
deems necessary or appropriate to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this
Agreement; (D) all certificates, documents and other instruments
relating to the admission, withdrawal, removal or substitution of
any Partner pursuant to, or other events described in,
Article IV, X, XI or XII; (E) all certificates, documents and
other instruments relating to the determination of the rights,
preferences and privileges of any class or series of Partnership
Securities issued pursuant to Section 5.6; and (F) all
certificates, documents and other instruments (including
agreements and a certificate of merger) relating to a merger or
consolidation of the Partnership pursuant to Article XIV; and
(ii) execute, swear to, acknowledge, deliver, file and
record all ballots, consents, approvals, waivers, certificates,
documents and other instruments necessary or appropriate, in the
discretion of the Managing General Partner or the Liquidator, to
make, evidence, give, confirm or ratify any vote, consent,
approval, agreement or other action that is made or given by the
Partners hereunder or is consistent with the terms of this
Agreement or is necessary or appropriate, in the discretion of
the Managing General Partner or the Liquidator, to effectuate the
terms or intent of this Agreement; provided, that when required
by Section 13.3 or any other provision of this Agreement that
establishes a percentage of the Limited Partners or of the
Limited Partners of any class or series required to take any
action, the Managing General Partner and the Liquidator may
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exercise the power of attorney made in this Section
2.6(a)(ii) only after the necessary vote, consent or approval of
the Limited Partners or of the Limited Partners of such class or
series, as applicable.
Nothing contained in this Section 2.6(a) shall be construed as
authorizing the Managing General Partner to amend this Agreement
except in accordance with Article XIII or as may be otherwise
expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive
and, to the maximum extent permitted by law, not be affected by the
subsequent death, incompetency, disability, incapacity, dissolution,
bankruptcy or termination of any Limited Partner or Assignee and the
transfer of all or any portion of such Special General Partner's,
Limited Partner's or Assignee's Partnership Interest and shall extend
to such Special General Partner's, Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such
Special General Partner, Limited Partner or Assignee hereby agrees to
be bound by any representation made by the Managing General Partner or
the Liquidator acting in good faith pursuant to such power of
attorney; and each such Special General Partner, Limited Partner or
Assignee, to the maximum extent permitted by law, hereby waives any
and all defenses that may be available to contest, negate or disaffirm
the action of the Managing General Partner or the Liquidator taken in
good faith under such power of attorney. Each Special General Partner,
Limited Partner or Assignee shall execute and deliver to the Managing
General Partner or the Liquidator, within 15 days after receipt of the
request therefor, such further designation, powers of attorney and
other instruments as the Managing General Partner or the Liquidator
deems necessary to effectuate this Agreement and the purposes of the
Partnership.
2.7 TERM
The term of the Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware Act
and shall continue in existence until the close of Partnership
business on December 31, 2086 or until the earlier dissolution of the
Partnership in accordance with the provisions of Article XII. The
existence of the Partnership as a separate legal entity shall continue
until the cancellation of the Certificate of Limited Partnership as
provided in the Delaware Act.
2.8 TITLE TO PARTNERSHIP ASSETS
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partner or Assignee, individually or
collectively, shall have any ownership interest in such Partnership
assets or any portion thereof. Title to any or all of the Partnership
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assets may be held in the name of the Partnership, a General Partner,
one or more of its Affiliates or one or more nominees, as the Managing
General Partner may determine. The General Partners hereby declare and
warrant that any Partnership assets for which record title is held in
the name of a General Partner or one or more of its Affiliates or one
or more nominees shall be held by such General Partner or such
Affiliate or nominee for the use and benefit of the Partnership in
accordance with the provisions of this Agreement; provided, however,
that such General Partner shall use reasonable efforts to cause record
title to such assets (other than those assets in respect of which the
Managing General Partner determines that the expense and difficulty of
conveyancing makes transfer of record title to the Partnership
impracticable) to be vested in the Partnership as soon as reasonably
practicable; provided, further, that, prior to the withdrawal or
removal of such General Partner or as soon thereafter as practicable,
such General Partner shall use reasonable efforts to effect the
transfer of record title to the Partnership and, prior to any such
transfer, will provide for the use of such assets in a manner
satisfactory to the Managing General Partner. All Partnership assets
shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which record title to such
Partnership assets is held.
ARTICLE III
RIGHTS OF LIMITED PARTNERS
3.1 LIMITATION OF LIABILITY
The Limited Partners and the Assignees shall have no liability
under this Agreement except as expressly provided in this Agreement or
the Delaware Act.
3.2 MANAGEMENT OF BUSINESS
No Limited Partner or Assignee, in its capacity as such, shall
participate in the operation, management or control (within the
meaning of the Delaware Act) of the Partnership's business, transact
any business in the Partnership's name or have the power to sign
documents for or otherwise bind the Partnership. Any action taken by
any Affiliate of the Managing General Partner or any officer,
director, employee, member, general partner, agent or trustee of the
Managing General Partner or any of its Affiliates, or any officers,
director, employee, member, general partner, agent or trustee of a
Group Member, in its capacity as such, shall not be deemed to be
participation in the control of the business of the Partnership by a
limited partner of the Partnership (within the meaning of
Section 17-303(a) of the Delaware Act) and shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or
Assignees under this Agreement.
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3.3 OUTSIDE ACTIVITIES OF THE LIMITED PARTNERS
Subject to the provisions of Section 7.5, which shall continue to
be applicable to the Persons referred to therein, regardless of
whether such Persons shall also be Limited Partners or Assignees, any
Limited Partner or Assignee shall be entitled to and may have business
interests and engage in business activities in addition to those
relating to the Partnership, including business interests and
activities in direct competition with the Partnership Group. Neither
the Partnership nor any of the other Partners or Assignees shall have
any rights by virtue of this Agreement in any business ventures of any
Limited Partner or Assignee.
3.4 RIGHTS OF LIMITED PARTNERS
(a) In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 3.4(b), each Limited
Partner shall have the right, for a purpose reasonably related to such
Limited Partner's interest as a limited partner in the Partnership,
upon reasonable written demand and at such Limited Partner's own
expense:
(i) to obtain true and full information regarding the
status of the business and financial condition of the
Partnership;
(ii) promptly after becoming available, to obtain a copy of
the Partnership's federal, state and local income tax returns for
each year;
(iii) to have furnished to him a current list of the
name and last known business, residence or mailing address of
each Partner;
(iv) to have furnished to him a copy of this Agreement and
the Certificate of Limited Partnership and all amendments
thereto, together with a copy of the executed copies of all
powers of attorney pursuant to which this Agreement, the
Certificate of Limited Partnership and all amendments thereto
have been executed;
(v) to obtain true and full information regarding the
amount of cash and a description and statement of the Net Agreed
Value of any other Capital Contribution by each Partner and which
each Partner has agreed to contribute in the future, and the date
on which each became a Partner; and
(vi) to obtain such other information regarding the affairs
of the Partnership as is just and reasonable.
(b) The General Partners may keep confidential from the Limited
Partners and Assignees, for such period of time as the Managing
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General Partner deems reasonable, (i) any information that the
Managing General Partner reasonably believes to be in the nature of
trade secrets or (ii) other information the disclosure of which the
Managing General Partner in good faith believes (A) is not in the best
interests of the Partnership Group, (B) could damage the Partnership
Group or (C) that any Group Member is required by law or by agreement
with any third party to keep confidential (other than agreements with
Affiliates of the Partnership the primary purpose of which is to
circumvent the obligations set forth in this Section 3.4).
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF
PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS
4.1 CERTIFICATES
Upon the Partnership's issuance of Common Units or Subordinated
Units to any Person, the Partnership shall issue one or more
Certificates in the name of such Person evidencing the number of such
Units being so issued. In addition, (a) upon a General Partner's
request, the Partnership shall issue to it one or more Certificates in
the name of such General Partner evidencing its interests in the
Partnership and (b) upon the request of any Person owning Incentive
Distribution Rights or any Partnership Securities, the Partnership
shall issue to such Person one or more certificates evidencing such
Incentive Distribution Rights or Partnership Securities. Certificates
shall be executed on behalf of the Partnership by the Chairman of the
Board, President or any Vice President and the Secretary or any
Assistant Secretary of the Managing General Partner. No Common Unit
Certificate shall be valid for any purpose until it has been
countersigned by the Transfer Agent. Subject to the requirements of
Section 6.7(b), the Partners holding Certificates evidencing
Subordinated Units may exchange such Certificates for Certificates
evidencing Common Units on or after the date on which such
Subordinated Units are converted into Common Units pursuant to the
terms of Section 5.8.
4.2 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES
(a) If any mutilated Certificate is surrendered to the Transfer
Agent, the appropriate officers of the Managing General Partner on
behalf of the Partnership shall execute, and the Transfer Agent shall
countersign and deliver in exchange therefor, a new Certificate
evidencing the same number and type of Partnership Securities as the
Certificate so surrendered.
(b) The appropriate officers of the Managing General Partner on
behalf of the Partnership shall execute and deliver, and the Transfer
Agent shall countersign a new Certificate in place of any Certificate
previously issued if the Record Holder of the Certificate:
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(i) makes proof by affidavit, in form and substance
satisfactory to the Partnership, that a previously issued
Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate before the
Partnership has notice that the Certificate has been acquired by
a purchaser for value in good faith and without notice of an
adverse claim;
(iii) if requested by the Partnership, delivers to the
Partnership a bond, in form and substance satisfactory to the
Partnership, with surety or sureties and with fixed or open
penalty as the Partnership may reasonably direct, in its sole
discretion, to indemnify the Partnership, the Partners, the
Managing General Partner and the Transfer Agent against any claim
that may be made on account of the alleged loss, destruction or
theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by
the Partnership.
If a Limited Partner or Assignee fails to notify the Partnership
within a reasonable time after he has notice of the loss, destruction
or theft of a Certificate, and a transfer of the Limited Partner
Interests represented by the Certificate is registered before the
Partnership, the Managing General Partner or the Transfer Agent
receives such notification, the Limited Partner or Assignee shall be
precluded from making any claim against the Partnership, the Managing
General Partner or the Transfer Agent for such transfer or for a new
Certificate.
(c) As a condition to the issuance of any new Certificate under
this Section 4.2, the Partnership may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees
and expenses of the Transfer Agent) reasonably connected therewith.
4.3 RECORD HOLDERS
The Partnership shall be entitled to recognize the Record Holder
as the Partner or Assignee with respect to any Partnership Interest
and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Partnership Interest on the part of
any other Person, regardless of whether the Partnership shall have
actual or other notice thereof, except as otherwise provided by law or
any applicable rule, regulation, guideline or requirement of any
National Securities Exchange on which such Partnership Interests are
listed for trading. Without limiting the foregoing, when a Person
(such as a broker, dealer, bank, trust company or clearing corporation
or an agent of any of the foregoing) is acting as nominee, agent or in
some other representative capacity for another Person in acquiring
and/or holding Partnership Interests, as between the Partnership on
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the one hand, and such other Persons on the other, such representative
Person (a) shall be the Partner or Assignee (as the case may be) of
record and beneficially, (b) must execute and deliver a Transfer
Application and (c) shall be bound by this Agreement and shall have
the rights and obligations of a Partner or Assignee (as the case may
be) hereunder and as, and to the extent, provided for herein.
4.4 TRANSFER GENERALLY
(a) The term "transfer," when used in this Agreement with
respect to a Partnership Interest, shall be deemed to refer to a
transaction by which a General Partner assigns its Partnership
Interest as a general partner in the Partnership to another Person who
becomes the General Partner, by which the holder of a Limited Partner
Interest assigns such Limited Partner Interest to another Person who
is or becomes a Limited Partner or an Assignee, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage,
exchange or any other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in
this Article IV. Any transfer or purported transfer of a Partnership
Interest not made in accordance with this Article IV shall be null and
void.
(c) Nothing contained in this Agreement shall be construed to
prevent a disposition by any shareholder of a General Partner of any
or all of the issued and outstanding capital stock of a General
Partner.
4.5 REGISTRATION AND TRANSFER OF LIMITED PARTNER INTERESTS
(a) The Partnership shall keep or cause to be kept on behalf of
the Partnership a register in which, subject to such reasonable
regulations as it may prescribe and subject to the provisions of
Section 4.5(b), the Partnership will provide for the registration and
transfer of Limited Partner Interests. The Transfer Agent is hereby
appointed registrar and transfer agent for the purpose of registering
Common Units and transfers of such Common Units as herein provided.
The Partnership shall not recognize transfers of Certificates
evidencing Limited Partner Interests unless such transfers are
effected in the manner described in this Section 4.5. Upon surrender
of a Certificate for registration of transfer of any Limited Partner
Interests evidenced by a Certificate, and subject to the provisions of
Section 4.5(b), the appropriate officers of the Managing General
Partner on behalf of the Partnership shall execute and deliver, and in
the case of Common Units, the Transfer Agent shall countersign and
deliver, in the name of the holder or the designated transferee or
transferees, as required pursuant to the holder's instructions, one or
more new Certificates evidencing the same aggregate number and type of
Limited Partner Interests as was evidenced by the Certificate so
surrendered.
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(b) Except as otherwise provided in Section 4.10, the
Partnership shall not recognize any transfer of Limited Partner
Interests until the Certificates evidencing such Limited Partner
Interests are surrendered for registration of transfer and such
Certificates are accompanied by a Transfer Application duly executed
by the transferee (or the transferee's attorney-in-fact duly
authorized in writing). No charge shall be imposed by the Partnership
for such transfer; provided, that as a condition to the issuance of
any new Certificate under this Section 4.5, the Partnership may
require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed with respect thereto.
(c) Limited Partner Interests may be transferred only in the
manner described in this Section 4.5. The transfer of any Limited
Partner Interests and the admission of any new Limited Partner shall
not constitute an amendment to this Agreement.
(d) Until admitted as a Substituted Limited Partner pursuant to
Section 10.2, the Record Holder of a Limited Partner Interest shall be
an Assignee in respect of such Limited Partner Interest. Limited
Partners may include custodians, nominees or any other individual or
entity in its own or any representative capacity.
(e) A transferee of a Limited Partner Interest who has completed
and delivered a Transfer Application shall be deemed to have
(i) requested admission as a Substituted Limited Partner, (ii) agreed
to comply with and be bound by and to have executed this Agreement,
(iii) represented and warranted that such transferee has the right,
power and authority and, if an individual, the capacity to enter into
this Agreement, (iv) granted the powers of attorney set forth in this
Agreement and (v) given the consents and approvals and made the
waivers contained in this Agreement.
(f) The General Partners and EESC shall have the right at any
time to transfer their Subordinated Units and Common Units (whether
issued upon conversion of the Subordinated Units or otherwise) to one
or more Persons.
4.6 TRANSFER OF A GENERAL PARTNER'S GENERAL PARTNER INTEREST
(a) Subject to Section 4.6(c) below, prior to December 31, 2006,
a General Partner shall not transfer all or any part of its
Partnership Interest as general partner in the Partnership to a Person
unless such transfer (i) has been approved by the prior written
consent or vote of the holders of at least a Unit Majority or (ii) is
of all, but not less than all, of its Partnership Interest as general
partner in the Partnership to (A) an Affiliate of such General Partner
or (B) another Person in connection with the merger or consolidation
of such General Partner with or into another Person or the transfer by
such General Partner of all or substantially all of its assets to
another Person.
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(b) Subject to Section 4.6(c) below, on or after December 31,
2006, a General Partner may transfer all or any of its Partnership
Interest as general partner in the Partnership without Unitholder
approval.
(c) Notwithstanding anything herein to the contrary, no transfer
by a General Partner of all or any part of its Partnership Interest as
general partner in the Partnership to another Person shall be
permitted unless (i) the transferee agrees to assume the rights and
duties of such General Partner under this Agreement and the Operating
Partnership Agreement and to be bound by the provisions of this
Agreement and the Operating Partnership Agreement, (ii) the
Partnership receives an Opinion of Counsel that such transfer would
not result in the loss of limited liability of any Limited Partner or
of any limited partner of the Operating Partnership or cause the
Partnership or the Operating Partnership to be treated as an
association taxable as a corporation or otherwise to be taxed as an
entity for federal income tax purposes (to the extent not already so
treated or taxed) and (iii) such transferee also agrees to purchase
all (or the appropriate portion thereof, if applicable) of the
partnership interest of such General Partner as the General Partner of
each other Group Member. In the case of a transfer pursuant to and in
compliance with this Section 4.6, the transferee or successor (as the
case may be) shall, subject to compliance with the terms of Section
10.3, be admitted to the Partnership as a General Partner immediately
prior to the transfer of the Partnership Interest, and the business of
the Partnership shall continue without dissolution.
4.7 RESTRICTION ON TRANSFER OF SPECIAL GENERAL PARTNER'S GENERAL
PARTNER INTEREST
Notwithstanding anything else herein contained, the Special
General Partner cannot transfer its general partner interest in the
Partnership without the approval of the Managing General Partner,
which approval is in the sole discretion of the Managing General
Partner.
4.8 TRANSFER OF INCENTIVE DISTRIBUTION RIGHTS
Prior to December 31, 2006, a holder of Incentive Distribution
Rights may transfer any or all of the Incentive Distribution Rights
held by such holder without any consent of the Unitholders (a) to an
Affiliate or (b) to another Person in connection with (i) the merger
or consolidation of such holder of Incentive Distribution Rights with
or into such other Person or (ii) the transfer by such holder of all
or substantially all of its assets to such other Person. Any other
transfer of the Incentive Distribution Rights prior to December 31,
2006, shall require the prior approval of holders of at least a Unit
Majority. On or after December 31, 2006, a General Partner may
transfer any or all of its Incentive Distribution Rights without
Unitholder approval. The Managing General Partner shall have the
authority (but shall not be required) to adopt such reasonable
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restrictions on the transfer of Incentive Distribution Rights and
requirements for registering the transfer of Incentive Distribution
Rights as the Managing General Partner, in its sole discretion, shall
determine are necessary or appropriate.
4.9 RESTRICTIONS ON TRANSFERS
(a) Except as provided in Section 4.9(d) below, but
notwithstanding the other provisions of this Article IV, no transfer
of any Partnership Interests shall be made if such transfer would
(i) violate the then applicable federal or state securities laws or
rules and regulations of the Commission, any state securities
commission or any other governmental authority with jurisdiction over
such transfer, (ii) terminate the existence or qualification of the
Partnership or the Operating Partnership under the laws of the
jurisdiction of its formation, or (iii) cause the Partnership or the
Operating Partnership to be treated as an association taxable as a
corporation or otherwise to be taxed as an entity for federal income
tax purposes (to the extent not already so treated or taxed).
(b) The Managing General Partner may impose restrictions on the
transfer of Partnership Interests if a subsequent Opinion of Counsel
determines that such restrictions are necessary to avoid a significant
risk of the Partnership or the Operating Partnership becoming taxable
as a corporation or otherwise to be taxed as an entity for federal
income tax purposes. The restrictions may be imposed by making such
amendments to this Agreement as the Managing General Partner may
determine to be necessary or appropriate to impose such restrictions;
provided, however, that any amendment that the Managing General
Partner believes, in the exercise of its reasonable discretion, could
result in the delisting or suspension of trading of any class of
Limited Partner Interests on the principal National Securities
Exchange on which such class of Limited Partner Interests is then
traded must be approved, prior to such amendment being effected, by
the holders of at least a majority of the Outstanding Limited Partner
Interests of such class.
(c) The transfer of a Subordinated Unit that has converted into
a Common Unit shall be subject to the restrictions imposed by Section
6.7(b).
(d) Nothing contained in this Article IV, or elsewhere in this
Agreement, shall preclude the settlement of any transactions involving
Partnership Interests entered into through the facilities of any
National Securities Exchange on which such Partnership Interests are
listed for trading.
4.10 CITIZENSHIP CERTIFICATES; NON-CITIZEN ASSIGNEES
(a) If any Group Member is or becomes subject to any federal,
state or local law or regulation that, in the reasonable determination
of the Managing General Partner, creates a substantial risk of
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cancellation or forfeiture of any property in which the Group Member
has an interest based on the nationality, citizenship or other related
status of a Limited Partner or Assignee, the Managing General Partner
may request any Partner or Assignee to furnish to the Managing General
Partner, within 30 days after receipt of such request, an executed
Citizenship Certification or such other information concerning his
nationality, citizenship or other related status (or, if the Limited
Partner or Assignee is a nominee holding for the account of another
Person, the nationality, citizenship or other related status of such
Person) as the Managing General Partner may request. If a Limited
Partner or Assignee fails to furnish to the Managing General Partner
within the aforementioned 30-day period such Citizenship Certification
or other requested information or if upon receipt of such Citizenship
Certification or other requested information the Managing General
Partner determines, with the advice of counsel, that a Limited Partner
or Assignee is not an Eligible Citizen, the Partnership Interests
owned by such Limited Partner or Assignee shall be subject to
redemption in accordance with the provisions of Section 4.11. In
addition, the Managing General Partner may require that the status of
any such Partner or Assignee be changed to that of a Non-citizen
Assignee and, thereupon, the Managing General Partner shall be
substituted for such Non-citizen Assignee as the Limited Partner in
respect of his Limited Partner Interests.
(b) The Managing General Partner shall, in exercising voting
rights in respect of Limited Partner Interests held by it on behalf of
Non-citizen Assignees, distribute the votes in the same ratios as the
votes of Partners (including without limitation the General Partners)
in respect of Limited Partner Interests other than those of
Non-citizen Assignees are cast, either for, against or abstaining as
to the matter.
(c) Upon dissolution of the Partnership, a Non-citizen Assignee
shall have no right to receive a distribution in kind pursuant to
Section 12.4 but shall be entitled to the cash equivalent thereof, and
the Partnership shall provide cash in exchange for an assignment of
the Non-citizen Assignee's share of the distribution in kind. Such
payment and assignment shall be treated for Partnership purposes as a
purchase by the Partnership from the Non-citizen Assignee of his
Limited Partner Interest (representing his right to receive his share
of such distribution in kind).
(d) At any time after he can and does certify that he has become
an Eligible Citizen, a Non-citizen Assignee may, upon application to
the Managing General Partner, request admission as a Substituted
Limited Partner with respect to any Limited Partner Interests of such
Non-citizen Assignee not redeemed pursuant to Section 4.11, and upon
his admission pursuant to Section 10.2, the Managing General Partner
shall cease to be deemed to be the Limited Partner in respect of the
Non-citizen Assignee's Limited Partner Interests.
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4.11 REDEMPTION OF PARTNERSHIP INTERESTS OF NON-CITIZEN ASSIGNEES
(a) If at any time a Limited Partner or Assignee fails to
furnish a Citizenship Certification or other information requested
within the 30-day period specified in Section 4.10(a), or if upon
receipt of such Citizenship Certification or other information the
Managing General Partner determines, with the advice of counsel, that
a Limited Partner or Assignee is not an Eligible Citizen, the
Partnership may, unless the Limited Partner or Assignee establishes to
the satisfaction of the Managing General Partner that such Limited
Partner or Assignee is an Eligible Citizen or has transferred his
Partnership Interests to a Person who is an Eligible Citizen and who
furnishes a Citizenship Certification to the Managing General Partner
prior to the date fixed for redemption as provided below, redeem the
Partnership Interest of such Limited Partner or Assignee as follows:
(i) The Managing General Partner shall, not later than the
30th day before the date fixed for redemption, give notice of
redemption to the Limited Partner or Assignee, at his last
address designated on the records of the Partnership or the
Transfer Agent, by registered or certified mail, postage prepaid.
The notice shall be deemed to have been given when so mailed. The
notice shall specify the Redeemable Interests, the date fixed for
redemption, the place of payment, that payment of the redemption
price will be made upon surrender of the Certificate evidencing
the Redeemable Interests and that on and after the date fixed for
redemption no further allocations or distributions to which the
Limited Partner or Assignee would otherwise be entitled in
respect of the Redeemable Interests will accrue or be made.
(ii) The aggregate redemption price for Redeemable Interests
shall be an amount equal to the Current Market Price (the date of
determination of which shall be the date fixed for redemption) of
Limited Partner Interests of the class to be so redeemed
multiplied by the number of Limited Partner Interests of each
such class included among the Redeemable Interests. The
redemption price shall be paid, in the discretion of the Managing
General Partner, in cash or by delivery of a promissory note of
the Partnership in the principal amount of the redemption price,
bearing interest at the rate of 10% annually and payable in three
equal annual installments of principal together with accrued
interest, commencing one year after the redemption date.
(iii) Upon surrender by or on behalf of the Limited
Partner or Assignee, at the place specified in the notice of
redemption, of the Certificate evidencing the Redeemable
Interests, duly endorsed in blank or accompanied by an assignment
duly executed in blank, the Limited Partner or Assignee or his
duly authorized representative shall be entitled to receive the
payment therefor.
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(iv) After the redemption date, Redeemable Interests shall
no longer constitute issued and Outstanding Limited Partner
Interests.
(b) The provisions of this Section 4.11 shall also be applicable
to Limited Partner Interests held by a Limited Partner or Assignee as
nominee of a Person determined to be other than an Eligible Citizen.
(c) Nothing in this Section 4.11 shall prevent the recipient of
a notice of redemption from transferring his Limited Partner Interest
before the redemption date if such transfer is otherwise permitted
under this Agreement. Upon receipt of notice of such a transfer, the
Managing General Partner shall withdraw the notice of redemption,
provided the transferee of such Limited Partner Interest certifies to
the satisfaction of the Managing General Partner in a Citizenship
Certification delivered in connection with the Transfer Application
that he is an Eligible Citizen. If the transferee fails to make such
certification, such redemption shall be effected from the transferee
on the original redemption date.
ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
5.1 ORGANIZATIONAL CONTRIBUTIONS
In connection with the formation of the Partnership under the
Delaware Act, the Managing General Partner made an initial Capital
Contribution to the Partnership in the amount of $10.00, for an
interest in the Partnership and has been admitted as the Managing
General Partner of the Partnership, and the Organizational Limited
Partner made an initial Capital Contribution to the Partnership in the
amount of $990.00 for an interest in the Partnership and has been
admitted as a Limited Partner of the Partnership. As of the Closing
Date, the interest of the Organizational Limited Partner shall be
redeemed as provided in the Contribution and Conveyance Agreement; the
initial Capital Contributions of each Partner shall thereupon be
refunded; and the Organizational Limited Partner shall cease to be a
Limited Partner of the Partnership. Ninety-nine percent of any
interest or other profit that may have resulted from the investment or
other use of such initial Capital Contributions shall be allocated and
distributed to the Organizational Limited Partner, and the balance
thereof shall be allocated and distributed to the Managing General
Partner.
5.2 CONTRIBUTIONS BY THE GENERAL PARTNERS AND THEIR AFFILIATES
(a) On the Closing Date and pursuant to the Contribution and
Conveyance Agreement, the Managing General Partner shall contribute to
the Partnership, as a Capital Contribution, all of its limited partner
interest in the Operating Partnership in exchange for (i) its .7686%
Partnership Interest as Managing General Partner of the Partnership,
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subject to all of the rights, privileges and duties of the Managing
General Partner under this Agreement, (ii) its Proportionate Share of
5,352,162 Subordinated Units and (iii) 7,686 Incentive Distribution
Rights.
(b) On the Closing Date and pursuant to the Contribution and
Conveyance Agreement, the Special General Partner shall contribute to
the Partnership, as a Capital Contribution, all of its limited partner
interest in the Operating Partnership in exchange for (i) its .2314%
Partnership Interest as Special General Partner of the Partnership ,
(ii) 1,610,942 Subordinated Units, and (iii) 2,314 Incentive
Distribution Rights.
(c) On the Closing Date and pursuant to the Contribution and
Conveyance Agreement, EESC shall contribute to the Partnership, as a
Capital Contribution, all of its limited partner interest in the
Operating Partnership in exchange for its Proportionate Share of
5,352,162 Subordinated Units.
(d) Upon the issuance of any additional Limited Partner
Partnership Interests by the Partnership (other than the issuance of
the Common Units issued in the Initial Offering or pursuant to the
Over-allotment Option), the General Partners shall be required to make
additional combined Capital Contributions equal to 1/99th of any
amount contributed to the Partnership in exchange for such Additional
Units. Each General Partner shall contribute its Pro Rata share of
such additional Capital Contributions. Except as set forth in the
immediately preceding sentence, Section 5.2(e) and Article XII, the
General Partners shall not be obligated to make any additional Capital
Contributions to the Partnership.
(e) Immediately after the exercise or lapse of the
Over-allotment Option, if any amount remains outstanding with respect
to the NPS Note after the payments described in Section 5.3(b) below,
the General Partners shall contribute, Pro Rata, cash to the
Partnership in an amount equal to the outstanding balance of the NPS
Note in exchange for the issuance to the General Partners, Pro Rata,
of an aggregate number of Subordinated Units equal to the quotient
obtained by dividing (i) such cash contribution to the Partnership by
(ii) the Issue Price per Initial Common Unit. The cash received by the
Partnership pursuant to this Section 5.2(e) shall be used to satisfy
the NPS Note.
5.3 CONTRIBUTIONS BY INITIAL LIMITED PARTNERS
(a) On the Closing Date and pursuant to the Underwriting
Agreement, each Underwriter shall contribute to the Partnership cash
in an amount equal to the Issue Price per Initial Common Unit,
multiplied by the number of Common Units specified in the Underwriting
Agreement to be purchased by such Underwriter at the Closing Date. In
exchange for such Capital Contributions by the Underwriters, the
Partnership shall issue Common Units to each Underwriter on whose
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behalf such Capital Contribution is made in an amount equal to the
quotient obtained by dividing (i) the cash contribution to the
Partnership by or on behalf of such Underwriter by (ii) the Issue
Price per Initial Common Unit.
(b) Upon the exercise of the Over-allotment Option, each
Underwriter shall contribute to the Partnership cash in an amount
equal to the Issue Price per Initial Common Unit, multiplied by the
number of Common Units specified in the Underwriting Agreement to be
purchased by such Underwriter at the Option Closing Date. In exchange
for such Capital Contributions by the Underwriters, the Partnership
shall issue Common Units to each Underwriter on whose behalf such
Capital Contribution is made in an amount equal to the quotient
obtained by dividing (i) the cash contributions to the Partnership by
or on behalf of such Underwriter by (ii) the Issue Price per Initial
Common Unit.
Notwithstanding anything else herein contained, but subject to
Section 17-607 of the Delaware Act, the proceeds received by the
Partnership from the issuance of Common Units upon the exercise of the
Over-allotment Option will be utilized: first, to pay any underwriting
commissions and expenses relating to the exercise of the
Over-allotment Option; second, to satisfy the NPS Note; and third, the
remaining proceeds (if any) will be distributed to the General
Partners, Pro Rata, to redeem from the General Partners, Pro Rata, an
aggregate number of Subordinated Units equal to the quotient obtained
by dividing (i) such remaining proceeds by (ii) the Issue Price per
Initial Common Unit. Such redemption shall be a partial reimbursement
for capital expenditures incurred by the General Partners within two
years preceding the Closing Date with respect to Assets they
contributed to the Partnership Group.
(c) No Limited Partner Partnership Interests will be issued or
issuable as of or at the Closing Date other than (i) the Common Units
issuable pursuant to subparagraph (a) hereof in aggregate number equal
to 8,540,000, (ii) the "Additional Units" as such term is defined in
the Underwriting Agreement in aggregate number up to 1,281,000
issuable upon exercise of the Over-allotment Option pursuant to
subparagraph (b) hereof, (iii) the 7,878,619 Subordinated Units
issuable to the General Partners and EESC pursuant to Section 5.2
hereof, and (iv) the 10,000 Incentive Distribution Rights issuable to
the General Partners pursuant to Section 5.2 hereof.
5.4 INTEREST AND WITHDRAWAL
No interest shall be paid by the Partnership on Capital
Contributions. No Partner or Assignee shall be entitled to the
withdrawal or return of its Capital Contribution, except to the
extent, if any, that distributions made pursuant to this Agreement or
upon termination of the Partnership may be considered as such by law
and then only to the extent provided for in this Agreement. Except to
the extent expressly provided in this Agreement, no Partner or
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Assignee shall have priority over any other Partner or Assignee either
as to the return of Capital Contributions or as to profits, losses or
distributions. Any such return shall be a compromise to which all
Partners and Assignees agree within the meaning of 17-502(b) of the
Delaware Act.
5.5 CAPITAL ACCOUNTS
(a) The Partnership shall maintain for each Partner (or a
beneficial owner of Partnership Interests held by a nominee in any
case in which the nominee has furnished the identity of such owner to
the Partnership in accordance with Section 6031(c) of the Code or any
other method acceptable to the Managing General Partner in its sole
discretion) owning a Partnership Interest a separate Capital Account
with respect to such Partnership Interest in accordance with the rules
of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account
shall be increased by (i) the amount of all Capital Contributions made
to the Partnership with respect to such Partnership Interest pursuant
to this Agreement and (ii) all items of Partnership income and gain
(including, without limitation, income and gain exempt from tax)
computed in accordance with Section 5.5(b) and allocated with respect
to such Partnership Interest pursuant to Section 6.1, and decreased by
(x) the amount of cash or Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such
Partnership Interest pursuant to this Agreement and (y) all items of
Partnership deduction and loss computed in accordance with
Section 5.5(b) and allocated with respect to such Partnership Interest
pursuant to Section 6.1.
(b) For purposes of computing the amount of any item of income,
gain, loss or deduction which is to be allocated pursuant to
Article VI and is to be reflected in the Partners' Capital Accounts,
the determination, recognition and classification of any such item
shall be the same as its determination, recognition and classification
for federal income tax purposes (including, without limitation, any
method of depreciation, cost recovery or amortization used for that
purpose), provided, that:
(i) Solely for purposes of this Section 5.5, the
Partnership shall be treated as owning directly its proportionate
share (as determined by the Managing General Partner based upon
the provisions of the Operating Partnership Agreement) of all
property owned by the Operating Partnership.
(ii) All fees and other expenses incurred by the Partnership
to promote the sale of (or to sell) a Partnership Interest that
can neither be deducted nor amortized under Section 709 of the
Code, if any, shall, for purposes of Capital Account maintenance,
be treated as an item of deduction at the time such fees and
other expenses are incurred and shall be allocated among the
Partners pursuant to Section 6.1.
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(iii) Except as otherwise provided in Treasury
Regulation Section 1.704-1(b)(2)(iv)(m), the computation of all
items of income, gain, loss and deduction shall be made without
regard to any election under Section 754 of the Code which may be
made by the Partnership and, as to those items described in
Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without regard
to the fact that such items are not includable in gross income or
are neither currently deductible nor capitalized for federal
income tax purposes. To the extent an adjustment to the adjusted
tax basis of any Partnership asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment in
the Capital Accounts shall be treated as an item of gain or loss.
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if
the adjusted basis of such property as of such date of
disposition were equal in amount to the Partnership's Carrying
Value with respect to such property as of such date.
(v) In accordance with the requirements of Section 704(b)
of the Code, any deductions for depreciation, cost recovery or
amortization attributable to any Contributed Property shall be
determined as if the adjusted basis of such property on the date
it was acquired by the Partnership were equal to the Agreed Value
of such property. Upon an adjustment pursuant to Section 5.5(d)
to the Carrying Value of any Partnership property subject to
depreciation, cost recovery or amortization, any further
deductions for such depreciation, cost recovery or amortization
attributable to such property shall be determined (A) as if the
adjusted basis of such property were equal to the Carrying Value
of such property immediately following such adjustment and
(B) using a rate of depreciation, cost recovery or amortization
derived from the same method and useful life (or, if applicable,
the remaining useful life) as is applied for federal income tax
purposes; provided, however, that, if the asset has a zero
adjusted basis for federal income tax purposes, depreciation,
cost recovery or amortization deductions shall be determined
using any reasonable method that the Managing General Partner may
adopt.
(vi) If the Partnership's adjusted basis in a depreciable or
cost recovery property is reduced for federal income tax purposes
pursuant to Section 48(q)(1) or 48(q)(3) of the Code, the amount
of such reduction shall, solely for purposes hereof, be deemed to
be an additional depreciation or cost recovery deduction in the
year such property is placed in service and shall be allocated
among the Partners pursuant to Section 6.1. Any restoration of
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such basis pursuant to Section 48(q)(2) of the Code shall, to the
extent possible, be allocated in the same manner to the Partners
to whom such deemed deduction was allocated.
(c) (i) A transferee of a Partnership Interest shall succeed to
a pro rata portion of the Capital Account of the transferor relating
to the Partnership Interest so transferred; provided, however, that,
if the transfer causes a termination of the Partnership under
Section 708(b)(1)(B) of the Code, the Partnership's properties and
liabilities shall be deemed (i) to have been distributed in
liquidation of the Partnership to the Partners (including any
transferee of a Partnership Interest that is a party to the transfer
causing such termination) pursuant to Section 12.4 (after adjusting
the balance of the Capital Accounts of the Partners as provided in
Section 5.5(d)(ii)) and recontributed by such Partners in
reconstitution of the Partnership or (ii) in the event of a
termination of the Partnership that occurs after the finalization of
Proposed Treasury Regulation Section 1.704-1(b)(1)(iv), to have been
contributed to a new partnership which will be deemed to be a
continuation of, and successor to, the Partnership and the Partnership
will be deemed to make liquidating distributions of the interests in
this new partnership to the Partners (including any transferee of a
Partnership Interest that is a party to the transfer causing such
termination) pursuant to Section 12.4 (after adjusting the balance of
the Capital Accounts of the Partners as provided in
Section 5.5(d)(ii)). Any such deemed distribution and contribution, in
the case of a characterization under clause (i) of the preceding
sentence, or any such deemed contribution and distribution, in the
case of a characterization under clause (ii) of the preceding
sentence, shall be treated as an actual contribution and distribution
for purposes of this Section 5.5. In such event, the Carrying Values
of the Partnership's properties shall be adjusted immediately prior to
such deemed distribution and contribution, or deemed contribution and
distribution, pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv) and this Section 5.5 and such Carrying
Values shall then constitute the Agreed Values of such properties upon
such deemed contribution to the new partnership. In either case, the
Capital Accounts of the new partnership that results under the
applicable characterization shall be maintained in accordance with the
principles of this Section 5.5.
(ii) Immediately prior to the transfer of a Subordinated Unit or
of a Subordinated Unit that has converted into a Common Unit pursuant
to Section 5.8 by a holder thereof (other than a transfer to an
Affiliate unless the Managing General Partner elects to have this
subparagraph 5.5(c)(ii) apply), the Capital Account maintained for
such Person with respect to its Subordinated Units or converted
Subordinated Units will (A) first, be allocated to the Subordinated
Units or converted Subordinated Units to be transferred in an amount
equal to the product of (x) the number of such Subordinated Units or
converted Subordinated Units to be transferred and (y) the Per Unit
Capital Amount for a Common Unit, and (B) second, any remaining
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balance in such Capital Account will be retained by the transferor,
regardless of whether it has retained any Subordinated Units or
converted Subordinated Units. Following any such allocation, the
transferor's Capital Account, if any, maintained with respect to the
retained Subordinated Units or converted Subordinated Units, if any,
will have a balance equal to the amount allocated under clause (B)
hereinabove, and the transferee's Capital Account established with
respect to the transferred Subordinated Units or converted
Subordinated Units will have a balance equal to the amount allocated
under clause (A) hereinabove.
(d) (i) In accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership
Interests for cash or Contributed Property or the conversion of the
General Partners' Combined Interest to Common Units pursuant to
Section 11.3(b), the Capital Account of all Partners and the Carrying
Value of each Partnership property immediately prior to such issuance
shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual
sale of each such property immediately prior to such issuance and had
been allocated to the Partners at such time pursuant to Section 6.1 in
the same manner as any item of gain or loss actually recognized during
such period would have been allocated. In determining such Unrealized
Gain or Unrealized Loss, the aggregate cash amount and fair market
value of all Partnership assets (including, without limitation, cash
or cash equivalents) immediately prior to the issuance of additional
Partnership Interests shall be determined by the Managing General
Partner using such reasonable method of valuation as it may adopt;
provided, however, that the Managing General Partner, in arriving at
such valuation, must take fully into account the fair market value of
the Partnership Interests of all Partners at such time. The Managing
General Partner shall allocate such aggregate value among the assets
of the Partnership (in such manner as it determines in its discretion
to be reasonable) to arrive at a fair market value for individual
properties.
(ii) In accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), immediately prior to any actual or
deemed distribution to a Partner of any Partnership property (other
than a distribution of cash that is not in redemption or retirement of
a Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of all Partnership property shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized Gain
or Unrealized Loss had been recognized in a sale of such property
immediately prior to such distribution for an amount equal to its fair
market value, and had been allocated to the Partners, at such time,
pursuant to Section 6.1 in the same manner as any item of gain or loss
actually recognized during such period would have been allocated. In
determining such Unrealized Gain or Unrealized Loss the aggregate cash
amount and fair market value of all Partnership assets (including,
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without limitation, cash or cash equivalents) immediately prior to a
distribution shall (A) in the case of an actual distribution which is
not made pursuant to Section 12.4 or in the case of a deemed
contribution and/or distribution occurring as a result of a
termination of the Partnership pursuant to Section 708 of the Code, be
determined and allocated in the same manner as that provided in
Section 5.5(d)(i) or (B) in the case of a liquidating distribution
pursuant to Section 12.4, be determined and allocated by the
Liquidator using such reasonable method of valuation as it may adopt.
5.6 ISSUANCES OF ADDITIONAL PARTNERSHIP SECURITIES
(a) Subject to Section 5.7, the Partnership may issue additional
Partnership Securities and options, rights, warrants and appreciation
rights relating to the Partnership Securities for any Partnership
purpose at any time and from time to time to such Persons for such
consideration and on such terms and conditions as shall be established
by the Managing General Partner in its sole discretion, all without
the approval of any Limited Partners.
(b) Each additional Partnership Security authorized to be issued
by the Partnership pursuant to Section 5.6(a) may be issued in one or
more classes, or one or more series of any such classes, with such
designations, preferences, rights, powers and duties (which may be
senior to existing classes and series of Partnership Securities), as
shall be fixed by the Managing General Partner in the exercise of its
sole discretion, including (i) the right to share Partnership profits
and losses or items thereof; (ii) the right to share in Partnership
distributions; (iii) the rights upon dissolution and liquidation of
the Partnership; (iv) whether, and the terms and conditions upon
which, the Partnership may redeem the Partnership Security;
(v) whether such Partnership Security is issued with the privilege of
conversion or exchange and, if so, the terms and conditions of such
conversion or exchange; (vi) the terms and conditions upon which each
Partnership Security will be issued, evidenced by certificates and
assigned or transferred; and (vii) the right, if any, of each such
Partnership Security to vote on Partnership matters, including matters
relating to the relative rights, preferences and privileges of such
Partnership Security.
(c) The Managing General Partner is hereby authorized and
directed to take all actions that it deems necessary or appropriate in
connection with (i) each issuance of Partnership Securities and
options, rights, warrants and appreciation rights relating to
Partnership Securities pursuant to this Section 5.6, (ii) the
conversion of a general partner interest and Incentive Distribution
Rights into Units pursuant to the terms of this Agreement, (iii) the
admission of Additional Limited Partners and (iv) all additional
issuances of Partnership Securities. The Managing General Partner is
further authorized and directed to specify the relative rights, powers
and duties of the holders of the Units or other Partnership Securities
being so issued. The Managing General Partner shall do all things
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necessary to comply with the Delaware Act and is authorized and
directed to do all things it deems to be necessary or advisable in
connection with any future issuance of Partnership Securities or in
connection with the conversion of a general partner interest into
Units pursuant to the terms of this Agreement, including compliance
with any statute, rule, regulation or guideline of any federal, state
or other governmental agency or any National Securities Exchange on
which the Units or other Partnership Securities are listed for
trading.
5.7 LIMITATIONS ON ISSUANCE OF ADDITIONAL PARTNERSHIP SECURITIES
The issuance of Partnership Securities pursuant to Section 5.6
shall be subject to the following restrictions and limitations:
(a) During the Subordination Period, the Partnership shall not
issue (and shall not issue any options, rights, warrants or
appreciation rights relating to) an aggregate of more than 4,270,000
additional Parity Units without the prior approval of the holders of a
Unit Majority. In applying this limitation, there shall be excluded
Common Units and other Parity Units issued (A) in connection with the
exercise of the Over-allotment Option, (B) in accordance with Sections
5.7(b) and 5.7(c), (C) upon conversion of Subordinated Units pursuant
to Section 5.8, (D) upon conversion of general partner interests and
Incentive Distribution Rights pursuant to Section 11.3(b),(E) pursuant
to the employee benefit plans of the Managing General Partner, the
Partnership or any other Group Member and (F) in the event of a
combination or subdivision of Common Units.
(b) The Partnership may also issue an unlimited number of Parity
Units, prior to the end of the Subordination Period and without the
prior approval of the Unitholders, if such issuance occurs (i) in
connection with an Acquisition or a Capital Improvement or (ii) within
365 days of, and the net proceeds from such issuance are used to repay
debt incurred in connection with, an Acquisition or a Capital
Improvement, in each case where such Acquisition or Capital
Improvement involves assets that, if acquired by the Partnership as of
the date that is one year prior to the first day of the Quarter in
which such Acquisition is to be consummated or such Capital
Improvement is to be completed, would have resulted in an increase in:
(A) the amount of Adjusted Operating Surplus generated by
the Partnership on a per-Unit basis (for all Outstanding Units)
with respect to each of the four most recently completed Quarters
(on a pro-forma basis as described below) as compared to
(B) the actual amount of Adjusted Operating Surplus
generated by the Partnership on a per-Unit basis (for all
Outstanding Units) (excluding Adjusted Operating Surplus
attributable to the Acquisition or Capital Improvement) with
respect to each of such four most recently completed Quarters.
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If the issuance of Parity Units with respect to an
Acquisition or Capital Improvement occurs within the first four
full Quarters after the Closing Date, then Adjusted Operating
Surplus as used in clauses (A) (subject to the succeeding
sentence) and (B) above shall be calculated (i) for each Quarter,
if any, that commenced after the Closing Date for which actual
results of operations are available, based on the actual Adjusted
Operating Surplus of the Partnership generated with respect to
such Quarter, and (ii) for each other Quarter, on a pro forma
basis consistent with the procedure, as applicable, set forth in
Appendix D to the Registration Statement. Furthermore, the amount
in clause (A) shall be determined on a pro forma basis assuming
that (1) all of the Parity Units or Partnership Securities to be
issued in connection with or within 365 days of such Acquisition
or Capital Improvement had been issued and outstanding, (2) all
indebtedness for borrowed money to be incurred or assumed in
connection with such Acquisition or Capital Improvement (other
than any such indebtedness that is to be repaid with the proceeds
of such issuance of Parity Units) had been incurred or assumed,
in each case as of the commencement of such four-Quarter period,
(3) the personnel expenses that would have been incurred by the
Partnership in the operation of the acquired assets are the
personnel expenses for employees to be retained by the
Partnership in the operation of the acquired assets, and (4) the
non-personnel costs and expenses are computed on the same basis
as those incurred by the Partnership in the operation of the
Partnership's business at similarly situated Partnership
facilities.
(c) The Partnership may also issue an unlimited number of Parity
Units, prior to the end of the Subordination Period and without the
approval of the Unitholders, if the proceeds from such issuance are
used exclusively to repay up to $75 million of indebtedness of a Group
Member where the aggregate amount of distributions that would have
been paid with respect to such newly issued Units or Partnership
Securities, plus the related distributions on the general partner
interests in the Partnership and the Operating Partnership in respect
of the four-Quarter period ending prior to the first day of the
Quarter in which the issuance is to be consummated (assuming such
additional Units or Partnership Securities had been Outstanding
throughout such period and that distributions equal to the
distributions that were actually paid on the Outstanding Units during
the period were paid on such additional Units or Partnership
Securities) did not exceed the interest costs actually incurred during
such period on the indebtedness that is to be repaid (or, if such
indebtedness was not outstanding throughout the entire period, would
have been incurred had such indebtedness been outstanding for the
entire period).
(d) During the Subordination Period, the Partnership shall not
issue (and shall not issue any options, rights, warrants or
appreciation rights relating to) additional Partnership Securities
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having rights to distributions or in liquidation ranking prior or
senior to the Common Units, without the prior approval of the holders
of a Unit Majority.
(e) No fractional Units shall be issued by the Partnership.
5.8 CONVERSION OF SUBORDINATED UNITS
(a) A total of one-quarter of the Outstanding Subordinated Units
(determined upon the exercise or expiration of the Over-allotment
Option after taking into account the redemption of Subordinated Units
pursuant to Section 5.3 or the issuance of additional Subordinated
Units pursuant to Section 5.2) will convert into Common Units on a
one-for-one basis on the first day after the Record Date for
distribution in respect of any Quarter ending on or after December 31,
1999, in respect of which:
(i) distributions under Section 6.4 in respect of all
Outstanding Common Units and Subordinated Units with respect to
each of the three consecutive, non-overlapping four-Quarter
periods immediately preceding such date equaled or exceeded the
sum of the Minimum Quarterly Distribution on all of the
Outstanding Common Units and Subordinated Units during such
periods;
(ii) the Adjusted Operating Surplus generated during each of
the two consecutive, non-overlapping four-Quarter periods
immediately preceding such date equaled or exceeded the sum of
the Minimum Quarterly Distribution on all of the Outstanding
Common Units and Subordinated Units, plus the related
distribution on the general partner interests in the Partnership
and in the Operating Partnership, during such periods; and
(iii) the Cumulative Common Unit Arrearage on all of the
Common Units is zero.
(b) An additional one-quarter of the Outstanding Subordinated
Units (determined upon the exercise or expiration of the
Over-allotment Option after taking into account the redemption of
Subordinated Units pursuant to Section 5.3 or the issuance of
additional Subordinated Units pursuant to Section 5.2) will convert
into Common Units on a one-for-one basis on the first day after the
Record Date for distribution in respect of any Quarter ending on or
after December 31, 2000, in respect of which:
(i) distributions under Section 6.4 in respect of all
Outstanding Common Units and Subordinated Units with respect to
each of the three consecutive, non-overlapping four-Quarter
periods immediately preceding such date equaled or exceeded the
sum of the Minimum Quarterly Distribution on all of the
Outstanding Common Units and Subordinated Units during such
periods;
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(ii) the Adjusted Operating Surplus generated during each of
the two consecutive, non-overlapping four-Quarter periods
immediately preceding such date equaled or exceeded the sum of
the Minimum Quarterly Distribution on all of the Outstanding
Common Units and Subordinated Units, plus the related
distribution on the general partner interests in the Partnership
and in the Operating Partnership, during such periods; and
(iii) the Cumulative Common Unit Arrearage on all of the
Common Units is zero;
provided, however, that the conversion of Subordinated Units pursuant
to this Section 5.8(b) may not occur until at least one year following
the conversion of Subordinated Units pursuant to Section 5.8(a).
(c) In the event that less than all of the Outstanding
Subordinated Units shall convert into Common Units pursuant to
Section 5.8(a) or 5.8(b) at a time when there shall be more than one
holder of Subordinated Units, then, unless all of the holders of
Subordinated Units shall agree to a different allocation, the
Subordinated Units that are to be converted into Common Units shall be
allocated among the holders of Subordinated Units pro rata based on
the number of Subordinated Units held by each such holder.
(d) Any Subordinated Units that are not converted into Common
Units pursuant to Sections 5.8(a) and (b) shall convert into Common
Units on a one-for-one basis on the first day following the Record
Date for distributions in respect of the final Quarter of the
Subordination Period.
(e) Notwithstanding any other provision of this Agreement, all
the then Outstanding Subordinated Units will automatically convert
into Common Units on a one-for-one basis as set forth in, and pursuant
to the terms of, Section 11.4.
(f) A Subordinated Unit that has converted into a Common Unit
shall be subject to the provisions of Section 6.7(b).
5.9 LIMITED PREEMPTIVE RIGHT
Except as provided in this Section 5.9 and in Section 5.2, no
Person shall have any preemptive, preferential or other similar right
with respect to the issuance of any Partnership Security, whether
unissued, held in the treasury or hereafter created. The Managing
General Partner shall have the right, which it may from time to time
assign in whole or in part to any of its Affiliates, to purchase
Partnership Securities from the Partnership whenever, and on the same
terms that, the Partnership issues Partnership Securities to Persons
other than the General Partners and their Affiliates, to the extent
necessary to maintain the Percentage Interests of the General Partners
and their Affiliates equal to that which existed immediately prior to
the issuance of such Partnership Securities.
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5.10 SPLITS AND COMBINATION
(a) Subject to Sections 5.10(d), 6.6 and 6.9 (dealing with
adjustments of distribution levels), the Partnership may make a Pro
Rata distribution of Partnership Securities to all Record Holders or
may effect a subdivision or combination of Partnership Securities so
long as, after any such event, each Partner shall have the same
Percentage Interest in the Partnership as before such event, and any
amounts calculated on a per Unit basis (including any Common Unit
Arrearage or Cumulative Common Unit Arrearage) or stated as a number
of Units (including the number of Subordinated Units that may convert
prior to the end of the Subordination Period and the number of
additional Parity Units that may be issued pursuant to Section 5.7
without a Unitholder vote) are proportionately adjusted retroactive to
the beginning of the Partnership.
(b) Whenever such a distribution, subdivision or combination of
Partnership Securities is declared, the Managing General Partner shall
select a Record Date as of which the distribution, subdivision or
combination shall be effective and shall send notice thereof at least
20 days prior to such Record Date to each Record Holder as of a date
not less than 10 days prior to the date of such notice. The Managing
General Partner also may cause a firm of independent public
accountants selected by it to calculate the number of Partnership
Securities to be held by each Record Holder after giving effect to
such distribution, subdivision or combination. The Managing General
Partner shall be entitled to rely on any certificate provided by such
firm as conclusive evidence of the accuracy of such calculation.
(c) Promptly following any such distribution, subdivision or
combination, the Partnership may issue Certificates to the Record
Holders of Partnership Securities as of the applicable Record Date
representing the new number of Partnership Securities held by such
Record Holders, or the Managing General Partner may adopt such other
procedures as it may deem appropriate to reflect such changes. If any
such combination results in a smaller total number of Partnership
Securities Outstanding, the Partnership shall require, as a condition
to the delivery to a Record Holder of such new Certificate, the
surrender of any Certificate held by such Record Holder immediately
prior to such Record Date.
(d) The Partnership shall not issue fractional Units upon any
distribution, subdivision or combination of Units. If a distribution,
subdivision or combination of Units would result in the issuance of
fractional Units but for the provisions of Section 5.7(e) and this
Section 5.10(d), each fractional Unit shall be rounded to the nearest
whole Unit (and a 0.5 Unit shall be rounded to the next higher Unit).
5.11 FULLY PAID AND NON-ASSESSABLE NATURE OF LIMITED PARTNER INTERESTS
All Limited Partner Interests issued pursuant to, and in
accordance with the requirements of, this Article V shall be fully
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paid and non-assessable Limited Partner Interests in the Partnership,
except as such non-assessability may be affected by Section 17-607 of
the Delaware Act.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES
For purposes of maintaining the Capital Accounts and in
determining the rights of the Partners among themselves, the
Partnership's items of income, gain, loss and deduction (computed in
accordance with Section 5.5(b)) shall be allocated among the Partners
in each taxable year (or portion thereof) as provided herein below.
(a) NET INCOME. After giving effect to the special allocations set
forth in Section 6.1(d), Net Income for each taxable year and all
items of income, gain, loss and deduction taken into account in
computing Net Income for such taxable year shall be allocated as
follows:
(i) First, 100% to the General Partners in proportion to
the aggregate Net Losses allocated to the General Partners
pursuant to Section 6.1(b)(iii) for all previous taxable years
until the aggregate Net Income allocated to the General Partners
pursuant to this Section 6.1(a)(i) for the current taxable year
and all previous taxable years is equal to the aggregate Net
Losses allocated to the General Partners pursuant to
Section 6.1(b)(iii) for all previous taxable years;
(ii) Second, 1% to the General Partners in proportion to the
aggregate Net Losses allocated to the General Partners pursuant
to Section 6.1(b)(ii) for all previous taxable years and 99% to
the Unitholders, in accordance with their respective Percentage
Interests, until the aggregate Net Income allocated to such
Partners pursuant to this Section 6.1(a)(ii) for the current
taxable year and all previous taxable years is equal to the
aggregate Net Losses allocated to such Partners pursuant to
Section 6.1(b)(ii) for all previous taxable years; and
(iii) Third, the balance, if any, 100% to the General
Partners, Pro Rata, and the Unitholders in accordance with their
respective Percentage Interests.
(b) NET LOSSES. After giving effect to the special allocations set
forth in Section 6.1(d), Net Losses for each taxable period and all
items of income, gain, loss and deduction taken into account in
computing Net Losses for such taxable period shall be allocated as
follows:
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(i) First, 1% to the General Partners, Pro Rata, and 99% to
the Unitholders, in accordance with their respective Percentage
Interests, until the aggregate Net Losses allocated pursuant to
this Section 6.1(b)(i) for the current taxable year and all
previous taxable years is equal to the aggregate Net Income
allocated to such Partners pursuant to Section 6.1(a)(iii) for
all previous taxable years, provided that the Net Losses shall
not be allocated pursuant to this Section 6.1(b)(i) to the extent
that such allocation would cause any Unitholder to have a deficit
balance in its Adjusted Capital Account at the end of such
taxable year (or increase any existing deficit balance in its
Adjusted Capital Account);
(ii) Second, 1% to the General Partners, Pro Rata, and 99%
to the Unitholders in accordance with their respective Percentage
Interests; provided, that Net Losses shall not be allocated
pursuant to this Section 6.1(b)(ii) to the extent that such
allocation would cause any Unitholder to have a deficit balance
in its Adjusted Capital Account at the end of such taxable year
(or increase any existing deficit balance in its Adjusted Capital
Account);
(iii) Third, the balance, if any, 100% to the General
Partners, Pro Rata.
(c) NET TERMINATION GAINS AND LOSSES. After giving effect to the
special allocations set forth in Section 6.1(d), all items of income,
gain, loss and deduction taken into account in computing Net
Termination Gain or Net Termination Loss for such taxable period shall
be allocated in the same manner as such Net Termination Gain or Net
Termination Loss is allocated hereunder. All allocations under this
Section 6.1(c) shall be made after Capital Account balances have been
adjusted by all other allocations provided under this Section 6.1 and
after all distributions of Available Cash provided under Sections 6.4
and 6.5 have been made; provided, however, that solely for purposes of
this Section 6.1(c), Capital Accounts shall not be adjusted for
distributions made pursuant to Section 12.4.
(i) If a Net Termination Gain is recognized (or deemed
recognized pursuant to Section 5.5(d)), such Net Termination Gain
shall be allocated among the Partners in the following manner (and the
Capital Accounts of the Partners shall be increased by the amount so
allocated in each of the following subclauses, in the order listed,
before an allocation is made pursuant to the next succeeding
subclause):
(A) First, to each Partner having a deficit balance in its
Capital Account, in the proportion that such deficit balance
bears to the total deficit balances in the Capital Accounts of
all Partners, until each such Partner has been allocated Net
Termination Gain equal to any such deficit balance in its Capital
Account;
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(B) Second, 99% to all Unitholders holding Common Units, in
proportion to their relative Percentage Interests, and 1% to the
General Partners, Pro Rata, until the Capital Account in respect
of each Common Unit then Outstanding is equal to the sum of
(1) its Unrecovered Capital plus (2) the Minimum Quarterly
Distribution for the Quarter during which the Liquidation Date
occurs, (the amount determined pursuant to this clause (2) is
hereinafter defined as the "Unpaid MQD") plus (3) any then
existing Cumulative Common Unit Arrearage;
(C) Third, if such Net Termination Gain is recognized (or
is deemed to be recognized) prior to the expiration of the
Subordination Period, 99% to all Unitholders holding Subordinated
Units, in proportion to their relative Percentage Interests, and
1% to the General Partners, Pro Rata, until the Capital Account
in respect of each Subordinated Unit then Outstanding equals the
sum of (1) its Unrecovered Capital, determined for the taxable
year (or portion thereof) to which this allocation of gain
relates, plus (2) the Minimum Quarterly Distribution for the
Quarter during which the Liquidation Date occurs;
(D) Fourth, 99% to all Unitholders, in accordance with
their relative Percentage Interests, and 1% to the General
Partners, Pro Rata, until the Capital Account in respect of each
Common Unit then Outstanding is equal to the sum of (1) its
Unrecovered Capital, plus (2) the Unpaid MQD, plus (3) any then
existing Cumulative Common Unit Arrearage, plus (4) the excess of
(aa) the First Target Distribution less the Minimum Quarterly
Distribution for each Quarter of the Partnership's existence over
(bb) the cumulative per Unit amount of any distributions of
Operating Surplus that was distributed pursuant to Sections
6.4(a)(iv) and 6.4(b)(ii) (the sum of (1) plus (2) plus (3) plus
(4) is hereinafter defined as the "First Liquidation Target
Amount");
(E) Fifth, 85.8673% to all Unitholders, in accordance with
their relative Percentage Interests, 13.1327% to the holders of
the Incentive Distribution Rights, Pro Rata, and 1% to the
General Partners, Pro Rata, until the Capital Account in respect
of each Common Unit then Outstanding is equal to the sum of
(1) the First Liquidation Target Amount, plus (2) the excess of
(aa) the Second Target Distribution less the First Target
Distribution for each Quarter of the Partnership's existence over
(bb) the cumulative per Unit amount of any distributions of
Operating Surplus that was distributed pursuant to Sections
6.4(a)(v) and 6.4(b)(iii) (the sum of (1) plus (2) is hereinafter
defined as the "Second Liquidation Target Amount");
(F) Sixth, 75.7653% to all Unitholders, in accordance with
their relative Percentage Interests, 23.2347% to the holders of
the Incentive Distribution Rights, Pro Rata, and 1% to the
General Partners, Pro Rata, until the Capital Account in respect
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of each Common Unit then Outstanding is equal to the sum of
(1) the Second Liquidation Target Amount, plus (2) the excess of
(aa) the Third Target Distribution less the Second Target
Distribution for each Quarter of the Partnership's existence over
(bb) the cumulative per Unit amount of any distributions of
Operating Surplus that was distributed pursuant to Sections
6.4(a)(vi) and 6.4(b)(iv); and
(G) Finally, any remaining amount 50.5102% to all
Unitholders, in accordance with their relative Percentage
Interests, 48.4898% to the holders of the Incentive Distribution
Rights, Pro Rata, and 1% to the General Partners, Pro Rata.
(ii) If a Net Termination Loss is recognized (or deemed
recognized pursuant to Section 5.5(d)), such Net Termination Loss
shall be allocated among the Partners in the following manner:
(A) First, if such Net Termination Loss is recognized (or
is deemed to be recognized) prior to the conversion of the last
Outstanding Subordinated Unit, 99% to the Unitholders holding
Subordinated Units, in proportion to their relative Percentage
Interests, and 1% to the General Partners, Pro Rata, until the
Capital Account in respect of each Subordinated Unit then
Outstanding has been reduced to zero;
(B) Second, 99% to all Unitholders holding Common Units, in
proportion to their relative Percentage Interests, and 1% to the
General Partners, Pro Rata, until the Capital Account in respect
of each Common Unit then Outstanding has been reduced to zero;
and
(C) Third, the balance, if any, 100% to the General
Partners, Pro Rata.
(d) SPECIAL ALLOCATIONS. Notwithstanding any other provision of
this Section 6.1, the following special allocations shall be made for
such taxable period:
(i) PARTNERSHIP MINIMUM GAIN CHARGEBACK. Notwithstanding any
other provision of this Section 6.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period, each
Partner shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in the manner and
amounts provided in Treasury Regulation Sections 1.704-2(f)(6),
1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor provision. For
purposes of this Section 6.1(d), each Partner's Adjusted Capital
Account balance shall be determined, and the allocation of income or
gain required hereunder shall be effected, prior to the application of
any other allocations pursuant to this Section 6.1(d) with respect to
such taxable period (other than an allocation pursuant to
Sections 6.1(d)(vi) and 6.1(d)(vii)). This Section 6.1(d)(i) is
intended to comply with the Partnership Minimum Gain chargeback
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requirement in Treasury Regulation Section 1.704-2(f) and shall be
interpreted consistently therewith.
(ii) CHARGEBACK OF PARTNER NONRECOURSE DEBT MINIMUM GAIN.
Notwithstanding the other provisions of this Section 6.1 (other than
Section 6.1(d)(i)), except as provided in Treasury Regulation
Section 1.704-2(i)(4), if there is a net decrease in Partner
Nonrecourse Debt Minimum Gain during any Partnership taxable period,
any Partner with a share of Partner Nonrecourse Debt Minimum Gain at
the beginning of such taxable period shall be allocated items of
Partnership income and gain for such period (and, if necessary,
subsequent periods) in the manner and amounts provided in Treasury
Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any
successor provisions. For purposes of this Section 6.1(d), each
Partner's Adjusted Capital Account balance shall be determined, and
the allocation of income or gain required hereunder shall be effected,
prior to the application of any other allocations pursuant to this
Section 6.1(d), other than Section 6.1(d)(i) and other than an
allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vii), with
respect to such taxable period. This Section 6.1(d)(ii) is intended to
comply with the chargeback of items of income and gain requirement in
Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(iii) PRIORITY ALLOCATIONS.
(A) If the amount of cash or the Net Agreed Value of any
property distributed (except cash or property distributed
pursuant to Section 12.4) to any Unitholder with respect to its
Units for a taxable year is greater (on a per Unit basis) than
the amount of cash or the Net Agreed Value of property
distributed to the other Unitholders with respect to their Units
(on a per Unit basis), then (1) each Unitholder receiving such
greater cash or property distribution shall be allocated gross
income in an amount equal to the product of (aa) the amount by
which the distribution (on a per Unit basis) to such Unitholder
exceeds the distribution (on a per Unit basis) to the Unitholders
receiving the smallest distribution and (bb) the number of Units
owned by the Unitholder receiving the greater distribution; and
(2) the General Partners shall be allocated gross income, Pro
Rata, in an aggregate amount equal to 1/99TH of the sum of the
amounts allocated in clause (1) above.
(B) After the application of Section 6.1(d)(iii)(A), all or
any portion of the remaining items of Partnership gross income or
gain for the taxable period, if any, shall be allocated 100% to
the holders of Incentive Distribution Rights, Pro Rata, until the
aggregate amount of such items allocated to the holders of
Incentive Distribution Rights pursuant to this paragraph
6.1(d)(iii)(B) for the current taxable year and all previous
taxable years is equal to the cumulative amount of all Incentive
Distributions made to the holders of Incentive Distribution
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Rights from the Closing Date to a date 45 days after the end of
the current taxable year.
(iv) QUALIFIED INCOME OFFSET. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of
Partnership income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations promulgated under Section
704(b) of the Code, the deficit balance, if any, in its Adjusted
Capital Account created by such adjustments, allocations or
distributions as quickly as possible unless such deficit balance is
otherwise eliminated pursuant to Section 6.1(d)(i) or (ii).
(v) GROSS INCOME ALLOCATIONS. In the event any Partner has a
deficit balance in its Capital Account at the end of any Partnership
taxable period in excess of the sum of (A) the amount such Partner is
required to restore pursuant to the provisions of this Agreement and
(B) the amount such Partner is deemed obligated to restore pursuant to
Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such
Partner shall be specially allocated items of Partnership gross income
and gain in the amount of such excess as quickly as possible;
provided, that an allocation pursuant to this Section 6.1(d)(v) shall
be made only if and to the extent that such Partner would have a
deficit balance in its Capital Account as adjusted after all other
allocations provided for in this Section 6.1 have been tentatively
made as if this Section 6.1(d)(v) were not in this Agreement.
(vi) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with
their respective Percentage Interests. If the Managing General Partner
determines in its good faith discretion that the Partnership's
Nonrecourse Deductions must be allocated in a different ratio to
satisfy the safe harbor requirements of the Treasury Regulations
promulgated under Section 704(b) of the Code, the Managing General
Partner is authorized, upon notice to the other Partners, to revise
the prescribed ratio to the numerically closest ratio that does
satisfy such requirements.
(vii) PARTNER NONRECOURSE DEDUCTIONS. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the
Partner that bears the Economic Risk of Loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable in accordance with Treasury Regulation Section
1.704-2(i). If more than one Partner bears the Economic Risk of Loss
with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse
Deductions attributable thereto shall be allocated between or among
such Partners in accordance with the ratios in which they share such
Economic Risk of Loss.
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(viii) NONRECOURSE LIABILITIES. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (A) the amount
of Partnership Minimum Gain and (B) the total amount of Nonrecourse
Built-in Gain shall be allocated among the Partners in accordance with
their respective Percentage Interests.
(ix) CODE SECTION 743 ADJUSTMENTS. To the extent an adjustment to
the adjusted tax basis of any Partnership asset pursuant to Section
734(b) or 743(c) of the Code is required, pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the
Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis), and such item of gain or loss shall
be specially allocated to the Partners in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted
pursuant to such Section of the Treasury Regulations.
(x) ECONOMIC UNIFORMITY. At the election of the Managing General
Partner with respect to any taxable period ending upon, or after, the
termination of the Subordination Period, all or a portion of the
remaining items of Partnership gross income or gain for such taxable
period, after taking into account allocations pursuant to Section
6.1(d)(iii), shall be allocated 100% to each Partner holding
Subordinated Units that are Outstanding as of the termination of the
Subordination Period ("Final Subordinated Units") in the proportion of
the number of Final Subordinated Units held by such Partner to the
total number of Final Subordinated Units then Outstanding, until each
such Partner has been allocated an amount of gross income or gain
which increases the Capital Account maintained with respect to such
Final Subordinated Units to an amount equal to the product of (A) the
number of Final Subordinated Units held by such Partner and (B) the
Per Unit Capital Amount for a Common Unit. The purpose of this
allocation is to establish uniformity between the Capital Accounts
underlying Final Subordinated Units and the Capital Accounts
underlying Common Units held by Persons other than the General
Partners and their Affiliates immediately prior to the conversion of
such Final Subordinated Units into Common Units. This allocation
method for establishing such economic uniformity will only be
available to the Managing General Partner if the method for allocating
the Capital Account maintained with respect to the Subordinated Units
between the transferred and retained Subordinated Units pursuant to
Section 5.5(c)(ii) does not otherwise provide such economic uniformity
to the Final Subordinated Units.
(xi) CURATIVE ALLOCATION.
(A) Notwithstanding any other provision of this Section
6.1, other than the Required Allocations, the Required
Allocations shall be taken into account in making the Agreed
Allocations so that, to the extent possible, the net amount of
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items of income, gain, loss and deduction allocated to each
Partner pursuant to the Required Allocations and the Agreed
Allocations, together, shall be equal to the net amount of such
items that would have been allocated to each such Partner under
the Agreed Allocations had the Required Allocations and the
related Curative Allocation not otherwise been provided in this
Section 6.1. Notwithstanding the preceding sentence, Required
Allocations relating to (1) Nonrecourse Deductions shall not be
taken into account except to the extent that there has been a
decrease in Partnership Minimum Gain and (2) Partner Nonrecourse
Deductions shall not be taken into account except to the extent
that there has been a decrease in Partner Nonrecourse Debt
Minimum Gain. Allocations pursuant to this Section
6.1(d)(xi)(A) shall only be made with respect to Required
Allocations to the extent the Managing General Partner reasonably
determines that such allocations will otherwise be inconsistent
with the economic agreement among the Partners. Further,
allocations pursuant to this Section 6.1(d)(xi)(A) shall be
deferred with respect to allocations pursuant to clauses (1) and
(2) hereof to the extent the Managing General Partner reasonably
determines that such allocations are likely to be offset by
subsequent Required Allocations.
(B) The Managing General Partner shall have reasonable
discretion, with respect to each taxable period, to (1) apply the
provisions of Section 6.1(d)(xi)(A) in whatever order is most
likely to minimize the economic distortions that might otherwise
result from the Required Allocations, and (2) divide all
allocations pursuant to Section 6.1(d)(xi)(A) among the Partners
in a manner that is likely to minimize such economic distortions.
(xii) CORRECTIVE ALLOCATIONS. In the event of any allocation
of Additional Book Basis Derivative Items or any Book-Down Event or
any recognition of a Net Termination Loss, the following rules shall
apply:
(A) In the case of any allocation of Additional Book Basis
Derivative Items (other than an allocation of Unrealized Gain or
Unrealized Loss under Section 5.5(d) hereof), the Managing
General Partner shall allocate additional items of gross income
and gain away from the holders of Incentive Distribution Rights
to the Unitholders and the General Partners, or additional items
of deduction and loss away from the Unitholders and the General
Partners to the holders of Incentive Distribution Rights, to the
extent that the Additional Book Basis Derivative Items allocated
to the Unitholders or the General Partners exceed their Share of
Additional Book Basis Derivative Items. For this purpose, the
Unitholders and the General Partners shall be treated as being
allocated Additional Book Basis Derivative Items to the extent
that such Additional Book Basis Derivative Items have reduced the
amount of income that would otherwise have been allocated to the
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Unitholders or the General Partners under the Partnership
Agreement (e.g., Additional Book Basis Derivative Items taken
into account in computing cost of goods sold would reduce the
amount of book income otherwise available for allocation among
the Partners). Any allocation made pursuant to this Section
6.1(d)(xii)(A) shall be made after all of the other Agreed
Allocations have been made as if this Section 6.1(d)(xii) were
not in this Agreement and, to the extent necessary, shall require
the reallocation of items that have been allocated pursuant to
such other Agreed Allocations.
(B) In the case of any negative adjustments to the Capital
Accounts of the Partners resulting from a Book-Down Event or from
the recognition of a Net Termination Loss, such negative
adjustment (1) shall first be allocated, to the extent of the
Aggregate Remaining Net Positive Adjustments, in such a manner,
as reasonably determined by the Managing General Partner, that to
the extent possible the aggregate Capital Accounts of the
Partners will equal the amount which would have been the Capital
Account balance of the Partners if no prior Book-Up Events had
occurred, and (2) any negative adjustment in excess of the
Aggregate Remaining Net Positive Adjustments shall be allocated
pursuant to Section 6.1(c) hereof.
(C) In making the allocations required under this Section
6.1(d)(xii), the Managing General Partner, in its sole
discretion, may apply whatever conventions or other methodology
it deems reasonable to satisfy the purpose of this Section
6.1(d)(xii).
(xiii) FIRST YEAR ALLOCATION. Net Income or Net Loss of the
Partnership for the period beginning on the Closing Date and ending on
the last day of the taxable year of the Partnership that includes the
Closing Date shall be allocated 100% to the General Partners, Pro
Rata.
6.2 ALLOCATIONS FOR TAX PURPOSES
(a) Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as its correlative
item of "book" income, gain, loss or deduction is allocated pursuant
to Section 6.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable
to a Contributed Property or Adjusted Property, items of income, gain,
loss, depreciation, amortization and cost recovery deductions shall be
allocated for federal income tax purposes among the Partners as
follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the
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manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property
and its adjusted basis at the time of contribution; and (B) any
item of Residual Gain or Residual Loss attributable to a
Contributed Property shall be allocated among the Partners in the
same manner as its correlative item of "book" gain or loss is
allocated pursuant to Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items
shall (1) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code to
take into account the Unrealized Gain or Unrealized Loss
attributable to such property and the allocations thereof
pursuant to Section 5.5(d)(i) or 5.5(d)(ii), and (2) second, in
the event such property was originally a Contributed Property, be
allocated among the Partners in a manner consistent with
Section 6.2(b)(i)(A); and (B) any item of Residual Gain or
Residual Loss attributable to an Adjusted Property shall be
allocated among the Partners in the same manner as its
correlative item of "book" gain or loss is allocated pursuant to
Section 6.1.
(iii) The Managing General Partner shall apply the
principles of Treasury Regulation Section 1.704-3(d) to eliminate
Book-Tax Disparities.
(c) For the proper administration of the Partnership and for the
preservation of uniformity of the Limited Partner Interests (or any
class or classes thereof), the Managing General Partner shall have
sole discretion to (i) adopt such conventions as it deems appropriate
in determining the amount of depreciation, amortization and cost
recovery deductions; (ii) make special allocations for federal income
tax purposes of income (including, without limitation, gross income)
or deductions; and (iii) amend the provisions of this Agreement as
appropriate (x) to reflect the proposal or promulgation of Treasury
Regulations under Section 704(b) or Section 704(c) of the Code or (y)
otherwise to preserve or achieve uniformity of the Limited Partner
Interests (or any class or classes thereof). The Managing General
Partner may adopt such conventions, make such allocations and make
such amendments to this Agreement as provided in this Section
6.2(c) only if such conventions, allocations or amendments would not
have a material adverse effect on the Partners, the holders of any
class or classes of Limited Partner Interests issued and Outstanding
or the Partnership, and if such allocations are consistent with the
principles of Section 704 of the Code.
(d) The Managing General Partner in its discretion may determine
to depreciate or amortize the portion of an adjustment under Section
743(b) of the Code attributable to unrealized appreciation in any
Adjusted Property (to the extent of the unamortized Book-Tax
Disparity) using a predetermined rate derived from the depreciation or
amortization method and useful life applied to the Partnership's
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common basis of such property, despite any inconsistency of such
approach with Proposed Treasury Regulation Section 1.168-2(n),
Treasury Regulation Section 1.167(c)-l(a)(6) or the legislative
history of Section 197 of the Code. If the Managing General Partner
determines that such reporting position cannot reasonably be taken,
the Managing General Partner may adopt depreciation and amortization
conventions under which all purchasers acquiring Limited Partner
Interests in the same month would receive depreciation and
amortization deductions, based upon the same applicable rate as if
they had purchased a direct interest in the Partnership's property. If
the Managing General Partner chooses not to utilize such aggregate
method, the Managing General Partner may use any other reasonable
depreciation and amortization conventions to preserve the uniformity
of the intrinsic tax characteristics of any Limited Partner Interests
that would not have a material adverse effect on the Limited Partners
or the Record Holders of any class or classes of Limited Partner
Interests.
(e) Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall, to the extent
possible, after taking into account other required allocations of gain
pursuant to this Section 6.2, be characterized as Recapture Income in
the same proportions and to the same extent as such Partners (or their
predecessors in interest) have been allocated any deductions directly
or indirectly giving rise to the treatment of such gains as Recapture
Income.
(f) All items of income, gain, loss, deduction and credit
recognized by the Partnership for federal income tax purposes and
allocated to the Partners in accordance with the provisions hereof
shall be determined without regard to any election under Section 754
of the Code which may be made by the Partnership; provided, however,
that such allocations, once made, shall be adjusted as necessary or
appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction
attributable to a transferred Partnership Interest, shall for federal
income tax purposes, be determined on an annual basis and prorated on
a monthly basis and shall be allocated to the Partners as of the
opening of the New York Stock Exchange on the first Business Day of
each month; provided, however, that (i) such items for the period
beginning on the Closing Date and ending on the last day of the month
in which the Option Closing Date or the expiration of the
Over-allotment Option occurs shall be allocated to the Partners as of
the opening of the New York Stock Exchange on the first Business Day
of the next succeeding month; and provided, further, that gain or loss
on a sale or other disposition of any assets of the Partnership other
than in the ordinary course of business shall be allocated to the
Partners as of the opening of the New York Stock Exchange on the first
Business Day of the month in which such gain or loss is recognized for
federal income tax purposes. The Managing General Partner may revise,
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alter or otherwise modify such methods of allocation as it determines
necessary, to the extent permitted or required by Section 706 of the
Code and the regulations or rulings promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited
Partner under the provisions of this Article VI shall instead be made
to the beneficial owner of Limited Partner Interests held by a nominee
in any case in which the nominee has furnished the identity of such
owner to the Partnership in accordance with Section 6031(c) of the
Code or any other method acceptable to the Managing General Partner in
its sole discretion.
6.3 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS; DISTRIBUTIONS
TO RECORD HOLDERS
(a) Within 45 days following the end of each Quarter commencing
with the Quarter ending on March 31, 1997, an amount equal to 100% of
Available Cash with respect to such Quarter shall, subject to Section
17-607 of the Delaware Act, be distributed in accordance with this
Article VI by the Partnership to the Partners as of the Record Date
selected by the Managing General Partner in its reasonable discretion.
All amounts of Available Cash distributed by the Partnership on any
date from any source shall be deemed to be Operating Surplus until the
sum of all amounts of Available Cash theretofore distributed by the
Partnership to the Partners pursuant to Section 6.4 equals the
Operating Surplus from the Closing Date through the close of the
immediately preceding Quarter. Any remaining amounts of Available Cash
distributed by the Partnership on such date shall, except as otherwise
provided in Section 6.5, be deemed to be "Capital Surplus." All
distributions required to be made under this Agreement shall be made
subject to Section 17-607 of the Delaware Act.
(b) Notwithstanding Section 6.3(a), in the event of the
dissolution and liquidation of the Partnership, all receipts received
during or after the Quarter in which the Liquidation Date occurs,
other than from borrowings described in (a)(ii) of the definition of
Available Cash, shall be applied and distributed solely in accordance
with, and subject to the terms and conditions of, Section 12.4.
(c) The Managing General Partner shall have the discretion to
treat taxes paid by the Partnership on behalf of, or amounts withheld
with respect to, all or less than all of the Partners, as a
distribution of Available Cash to such Partners.
(d) Each distribution in respect of a Partnership Interest shall
be paid by the Partnership, directly or through the Transfer Agent or
through any other Person or agent, only to the Record Holder of such
Partnership Interest as of the Record Date set for such distribution.
Such payment shall constitute full payment and satisfaction of the
Partnership's liability in respect of such payment, regardless of any
claim of any Person who may have an interest in such payment by reason
of an assignment or otherwise.
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6.4 DISTRIBUTIONS OF AVAILABLE CASH FROM OPERATING SURPLUS
(a) DURING SUBORDINATION PERIOD. Available Cash with respect to
any Quarter within the Subordination Period that is deemed to be
Operating Surplus pursuant to the provisions of Section 6.3 or 6.5
shall, subject to Section 17-607 of the Delaware Act, be distributed
as follows, except as otherwise required by Section 5.6(b) in respect
of additional Partnership Securities issued pursuant thereto:
(i) First, 99% to the Unitholders holding Common Units, in
proportion to their relative Percentage Interests, and 1% to the
General Partners, Pro Rata, until there has been distributed in
respect of each Common Unit then Outstanding an amount equal to
the Minimum Quarterly Distribution for such Quarter;
(ii) Second, 99% to the Unitholders holding Common Units, in
proportion to their relative Percentage Interests, and 1% to the
General Partners, Pro Rata, until there has been distributed in
respect of each Common Unit then Outstanding an amount equal to
the Cumulative Common Unit Arrearage existing with respect to
such Quarter;
(iii) Third, 99% to the Unitholders holding Subordinated
Units, in proportion to their relative Percentage Interests, and
1% to the General Partners, Pro Rata, until there has been
distributed in respect of each Subordinated Unit then Outstanding
an amount equal to the Minimum Quarterly Distribution for such
Quarter;
(iv) Fourth, 99% to all Unitholders, in accordance with
their relative Percentage Interests, and 1% to the General
Partners, Pro Rata, until there has been distributed in respect
of each Unit then Outstanding an amount equal to the excess of
the First Target Distribution over the Minimum Quarterly
Distribution for such Quarter;
(v) Fifth, 85.8673% to all Unitholders, in accordance with
their relative Percentage Interests, 13.1327% to the holders of
the Incentive Distribution Rights, Pro Rata, and 1% to the
General Partners, Pro Rata, until there has been distributed in
respect of each Unit then Outstanding an amount equal to the
excess of the Second Target Distribution over the First Target
Distribution for such Quarter;
(vi) Sixth, 75.7653% to all Unitholders, in accordance with
their relative Percentage Interests, 23.2347% to the holders of
the Incentive Distribution Rights, Pro Rata, and 1% to the
General Partners, Pro Rata, until there has been distributed in
respect of each Unit then Outstanding an amount equal to the
excess of the Third Target Distribution over the Second Target
Distribution for such Quarter; and
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(vii) Thereafter, 50.5102% to all Unitholders, in
accordance with their relative Percentage Interests, 48.4898% to
the holders of the Incentive Distribution Rights, Pro Rata, and
1% to the General Partners, Pro Rata;
provided, however, if the Minimum Quarterly Distribution, the First
Target Distribution, the Second Target Distribution and the Third
Target Distribution have been reduced to zero pursuant to the second
sentence of Section 6.6(a), the distribution of Available Cash that is
deemed to be Operating Surplus with respect to any Quarter will be
made solely in accordance with Section 6.4(a)(vii).
(b) AFTER SUBORDINATION PERIOD. Available Cash with respect to
any Quarter after the Subordination Period that is deemed to be
Operating Surplus pursuant to the provisions of Section 6.3 or 6.5,
subject to Section 17-607 of the Delaware Act, shall be distributed as
follows, except as otherwise required by Section 5.6(b) in respect of
additional Partnership Securities issued pursuant thereto:
(i) First, 99% to all Unitholders, in accordance with their
relative Percentage Interests, and 1% to the General Partners,
Pro Rata, until there has been distributed in respect of each
Unit then Outstanding an amount equal to the Minimum Quarterly
Distribution for such Quarter;
(ii) Second, 99% to all Unitholders, in accordance with
their relative Percentage Interests, and 1% to the General
Partners, Pro Rata, until there has been distributed in respect
of each Unit then Outstanding an amount equal to the excess of
the First Target Distribution over the Minimum Quarterly
Distribution for such Quarter;
(iii) Third, 85.8673% to all Unitholders, in accordance
with their relative Percentage Interests, and 13.1327% to the
holders of the Incentive Distribution Rights, Pro Rata, and 1% to
the General Partners, Pro Rata, until there has been distributed
in respect of each Unit then Outstanding an amount equal to the
excess of the Second Target Distribution over the First Target
Distribution for such Quarter;
(iv) Fourth, 75.7653% to all Unitholders, in accordance with
their relative Percentage Interests, and 23.2347% to the holders
of the Incentive Distribution Rights, Pro Rata, and 1% to the
General Partners, Pro Rata, until there has been distributed in
respect of each Unit then Outstanding an amount equal to the
excess of the Third Target Distribution over the Second Target
Distribution for such Quarter; and
(v) Thereafter, 50.5102% to all Unitholders, in accordance
with their relative Percentage Interests, and 48.4898% to the
holders of the Incentive Distribution Rights, Pro Rata, and 1% to
the General Partners, Pro Rata;
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provided, however, if the Minimum Quarterly Distribution, the First
Target Distribution, the Second Target Distribution and the Third
Target Distribution have been reduced to zero pursuant to the second
sentence of Section 6.6(a), the distribution of Available Cash that is
deemed to be Operating Surplus with respect to any Quarter will be
made solely in accordance with Section 6.4(b)(v).
6.5 DISTRIBUTIONS OF AVAILABLE CASH FROM CAPITAL SURPLUS
Available Cash that is deemed to be Capital Surplus pursuant to
the provisions of Section 6.3(a) shall, subject to Section 17-607 of
the Delaware Act, be distributed, unless the provisions of Section 6.3
require otherwise, 99% to all Unitholders, in accordance with their
relative Percentage Interests, and 1% to the General Partners, Pro
Rata, until a hypothetical holder of a Common Unit acquired on the
Closing Date has received with respect to such Common Unit, during the
period since the Closing Date through such date, distributions of
Available Cash that are deemed to be Capital Surplus in an aggregate
amount equal to the Initial Unit Price. Available Cash that is deemed
to be Capital Surplus shall then be distributed 99% to all Unitholders
holding Common Units, in accordance with their relative Percentage
Interests, and 1% to the General Partners, Pro Rata, until there has
been distributed in respect of each Common Unit then Outstanding an
amount equal to the Cumulative Common Unit Arrearage. Thereafter, all
Available Cash shall be distributed as if it were Operating Surplus
and shall be distributed in accordance with Section 6.4.
6.6 ADJUSTMENT OF MINIMUM QUARTERLY DISTRIBUTION AND TARGET
DISTRIBUTION LEVELS
(a) The Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution, Third Target Distribution,
Common Unit Arrearages and Cumulative Common Unit Arrearages shall be
proportionately adjusted in the event of any distribution, combination
or subdivision (whether effected by a distribution payable in Units or
otherwise) of Units or other Partnership Securities in accordance with
Section 5.10. In the event of a distribution of Available Cash that is
deemed to be from Capital Surplus, the then applicable Minimum
Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution shall be adjusted
proportionately downward to equal the product obtained by multiplying
the otherwise applicable Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target
Distribution, as the case may be, by a fraction of which the numerator
is the Unrecovered Capital of the Common Units immediately after
giving effect to such distribution and of which the denominator is the
Unrecovered Capital of the Common Units immediately prior to giving
effect to such distribution.
(b) The Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution
shall also be subject to adjustment pursuant to Section 6.9.
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6.7 SPECIAL PROVISIONS RELATING TO THE HOLDERS OF SUBORDINATED UNITS
(a) Except with respect to the right to vote on or approve
matters requiring the vote or approval of a percentage of the holders
of Outstanding Common Units and the right to participate in
allocations of income, gain, loss and deduction and distributions made
with respect to Common Units, the holder of a Subordinated Unit shall
have all of the rights and obligations of a Unitholder holding Common
Units hereunder; provided, however, that immediately upon the
conversion of Subordinated Units into Common Units pursuant to
Section 5.8, the Unitholder holding a Subordinated Unit shall possess
all of the rights and obligations of a Unitholder holding Common Units
hereunder, including the right to vote as a Common Unitholder and the
right to participate in allocations of income, gain, loss and
deduction and distributions made with respect to Common Units;
provided, however, that such converted Subordinated Units shall remain
subject to the provisions of Sections 5.5(c)(ii), 6.1(d)(x) and
6.7(b).
(b) The Unitholder holding a Subordinated Unit which has
converted into a Common Unit pursuant to Section 5.8 shall not be
issued a Common Unit Certificate pursuant to Section 4.1, and shall
not be permitted to transfer its converted Subordinated Units to a
Person which is not an Affiliate of the holder until such time as the
Managing General Partner determines, based on advice of counsel, that
a converted Subordinated Unit should have, as a substantive matter,
like intrinsic economic and federal income tax characteristics, in all
material respects, to the intrinsic economic and federal income tax
characteristics of an Initial Common Unit. In connection with the
condition imposed by this Section 6.7(b), the Managing General Partner
may take whatever reasonable steps are required to provide economic
uniformity to the converted Subordinated Units in preparation for a
transfer of such converted Subordinated Units, including the
application of Sections 5.5(c)(ii) and 6.1(d)(x); provided, however,
that no such steps may be taken that would have a material adverse
effect on the Unitholders holding Common Units represented by Common
Unit Certificates.
6.8 SPECIAL PROVISIONS RELATING TO THE HOLDERS OF INCENTIVE
DISTRIBUTION RIGHTS
Notwithstanding anything to the contrary set forth in this
Agreement, the holders of the Incentive Distribution Rights (a) shall
(i) possess the rights and obligations provided in this Agreement with
respect to a Limited Partner pursuant to Articles III and VII and
(ii) have a Capital Account as a Partner pursuant to Section 5.5 and
all other provisions related thereto and (b) shall not (i) be entitled
to vote on any matters requiring the approval or vote of the holders
of Outstanding Units, (ii) be entitled to any distributions other than
as provided in Sections 6.4(a)(v), (vi) and (vii), 6.4(b)(iii),
(iv) and (v), and 12.4 or (iii) be allocated items of income, gain,
loss or deduction other than as specified in this Article VI.
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6.9 ENTITY-LEVEL TAXATION
If legislation is enacted or the interpretation of existing
language is modified by the relevant governmental authority which
causes the Partnership or the Operating Partnership to be treated as
an association taxable as a corporation or otherwise subjects the
Partnership or the Operating Partnership to entity-level taxation for
federal income tax purposes, the then applicable Minimum Quarterly
Distribution, First Target Distribution, Second Target Distribution
and Third Target Distribution shall be adjusted to equal the product
obtained by multiplying (a) the amount thereof by (b) one minus the
sum of (i) the highest marginal federal corporate (or other entity, as
applicable) income tax rate of the Partnership or the Operating
Partnership for the taxable year of the Partnership or the Operating
Partnership in which such Quarter occurs (expressed as a percentage)
plus (ii) the effective overall state and local income tax rate
(expressed as a percentage) applicable to the Partnership or the
Operating Partnership for the calendar year next preceding the
calendar year in which such Quarter occurs (after taking into account
the benefit of any deduction allowable for federal income tax purposes
with respect to the payment of state and local income taxes), but only
to the extent of the increase in such rates resulting from such
legislation or interpretation. Such effective overall state and local
income tax rate shall be determined for the taxable year next
preceding the first taxable year during which the Partnership or the
Operating Partnership is taxable for federal income tax purposes as an
association taxable as a corporation or is otherwise subject to
entity-level taxation by determining such rate as if the Partnership
or the Operating Partnership had been subject to such state and local
taxes during such preceding taxable year.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
7.1 MANAGEMENT
(a) The Managing General Partner shall conduct, direct and
manage all activities of the Partnership. Except as otherwise
expressly provided in this Agreement, all management powers over the
business and affairs of the Partnership shall be exclusively vested in
the Managing General Partner, and neither the Special General Partner
nor any Limited Partner or Assignee shall have any management power
over the business and affairs of the Partnership. In addition to the
powers now or hereafter granted a general partner of a limited
partnership under applicable law or which are granted to the Managing
General Partner under any other provision of this Agreement, the
Managing General Partner, subject to Section 7.3, shall have full
power and authority to do all things and on such terms as it, in its
sole discretion, may deem necessary or appropriate to conduct the
business of the Partnership, to exercise all powers set forth in
Section 2.5 and to effectuate the purposes set forth in Section 2.4,
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including the following:
(i) the making of any expenditures, the lending or
borrowing of money, the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance
of evidences of indebtedness, including indebtedness that is
convertible into Partnership Securities, and the incurring of any
other obligations;
(ii) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other
agencies having jurisdiction over the business or assets of the
Partnership;
(iii) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the
assets of the Partnership or the merger or other combination of
the Partnership with or into another Person (the matters
described in this clause (iii) being subject, however, to any
prior approval that may be required by Section 7.3);
(iv) the use of the assets of the Partnership (including
cash on hand) for any purpose consistent with the terms of this
Agreement, including the financing of the conduct of the
operations of the Partnership Group, the lending of funds to
other Persons (including the Operating Partnership), the
repayment of obligations of the Partnership Group and the making
of capital contributions to any member of the Partnership Group;
(iv) the negotiation, execution and performance of any
contracts, conveyances or other instruments (including
instruments that limit the liability of the Partnership under
contractual arrangements to all or particular assets of the
Partnership, with the other party to the contract to have no
recourse against the General Partners or their assets other than
their interest in the Partnership, even if same results in the
terms of the transaction being less favorable to the Partnership
than would otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees
(including employees having titles such as "president," "vice
president," "secretary" and "treasurer") and agents, outside
attorneys, accountants, consultants and contractors and the
determination of their compensation and other terms of employment
or hiring;
(viii) the maintenance of such insurance for the benefit
of the Partnership Group and the Partners as it deems necessary
or appropriate;
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(ix) the formation of, or acquisition of an interest in, and
the contribution of property and the making of loans to, any
further limited or general partnerships, joint ventures,
corporations or other relationships (including the acquisition of
interests in, and the contributions of property to, the Operating
Partnership from time to time) subject to the restrictions set
forth in Section 2.4;
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the bringing and
defending of actions at law or in equity and otherwise engaging
in the conduct of litigation and the incurring of legal expense
and the settlement of claims and litigation;
(xi) the indemnification of any Person against liabilities
and contingencies to the extent permitted by law;
(xii) the entering into of listing agreements with any
National Securities Exchange and the delisting of some or all of
the Limited Partner Interests from, or requesting that trading be
suspended on, any such exchange (subject to any prior approval
that may be required under Section 4.9);
(xiii) unless restricted or prohibited by Section 5.7,
the purchase, sale or other acquisition or disposition of
Partnership Securities, or the issuance of additional options,
rights, warrants and appreciation rights relating to Partnership
Securities; and
(xiv) the undertaking of any action in connection with
the Partnership's participation in the Operating Partnership as
the limited partner.
(b) Notwithstanding any other provision of this Agreement, the
Operating Partnership Agreement, the Delaware Act or any applicable
law, rule or regulation, each of the Partners and Assignees and each
other Person who may acquire an interest in Partnership Securities
hereby (i) approves, ratifies and confirms the execution, delivery and
performance by the parties thereto of the Operating Partnership
Agreement, the Underwriting Agreement, the Contribution and Conveyance
Agreement, the agreements and other documents filed as exhibits to the
Registration Statement, and the other agreements described in or filed
as a part of the Registration Statement; (ii) agrees that the Managing
General Partner (on its own or through any officer of the Partnership)
is authorized to execute, deliver and perform the agreements referred
to in clause (i) of this sentence and the other agreements, acts,
transactions and matters described in or contemplated by the
Registration Statement on behalf of the Partnership without any
further act, approval or vote of the Partners or the Assignees or the
other Persons who may acquire an interest in Partnership Securities;
and (iii) agrees that the execution, delivery or performance by the
General Partners, any Group Member or any Affiliate of any of them, of
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this Agreement or any agreement authorized or permitted under this
Agreement (including the exercise by the Managing General Partner or
any Affiliate of the Managing General Partner of the rights accorded
pursuant to Article XV), shall not constitute a breach by the General
Partners of any duty that the General Partners may owe the Partnership
or the Limited Partners or any other Persons under this Agreement (or
any other agreements) or of any duty stated or implied by law or
equity.
7.2 CERTIFICATE OF LIMITED PARTNERSHIP
The Managing General Partner has caused the Certificate of
Limited Partnership to be filed with the Secretary of State of the
State of Delaware as required by the Delaware Act and shall use all
reasonable efforts to cause to be filed such other certificates or
documents as may be determined by the Managing General Partner in its
sole discretion to be reasonable and necessary or appropriate for the
formation, continuation, qualification and operation of a limited
partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the
extent that such action is determined by the Managing General Partner
in its sole discretion to be reasonable and necessary or appropriate,
the Managing General Partner shall file amendments to and restatements
of the Certificate of Limited Partnership and do all things to
maintain the Partnership as a limited partnership (or a partnership or
other entity in which the limited partners have limited liability)
under the laws of the State of Delaware or of any other state in which
the Partnership may elect to do business or own property. Subject to
the terms of Section 3.4(a), the Managing General Partner shall not be
required, before or after filing, to deliver or mail a copy of the
Certificate of Limited Partnership, any qualification document or any
amendment thereto to any Limited Partner.
7.3 RESTRICTIONS ON GENERAL PARTNERS' AUTHORITY
(a) The Managing General Partner may not, without written
approval of the specific act by holders of all of the Outstanding
Limited Partner Interests or by other written instrument executed and
delivered by holders of all of the Outstanding Limited Partner
Interests subsequent to the date of this Agreement, take any action in
contravention of this Agreement, including, except as otherwise
provided in this Agreement, (i) committing any act that would make it
impossible to carry on the ordinary business of the Partnership;
(ii) possessing Partnership property, or assigning any rights in
specific Partnership property, for other than a Partnership purpose;
(iii) admitting a Person as a Partner; (iv) amending this Agreement in
any manner; or (v) transferring its interest as general partner of the
Partnership.
(b) Except as provided in Articles XII and XIV, the Managing
General Partner may not sell, exchange or otherwise dispose of all or
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substantially all of the Partnership's assets in a single transaction
or a series of related transactions or approve on behalf of the
Partnership the sale, exchange or other disposition of all or
substantially all of the assets of the Operating Partnership, without
the approval of holders of at least a Unit Majority; provided however
that this provision shall not preclude or limit the Managing General
Partner's ability to mortgage, pledge, hypothecate or grant a security
interest in all or substantially all of the assets of the Partnership
or Operating Partnership and shall not apply to any forced sale of any
or all of the assets of the Partnership or Operating Partnership
pursuant to the foreclosure of, or other realization upon, any such
encumbrance. Without the approval of holders of at least a Unit
Majority, the Managing General Partner shall not, on behalf of the
Partnership, (i) consent to any amendment to the Operating Partnership
Agreement or, except as expressly permitted by Section 7.9(d), take
any action permitted to be taken by a partner of the Operating
Partnership, in either case, that would have a material adverse effect
on the Partnership as a partner of the Operating Partnership or
(ii) except as permitted under Sections 4.6, 11.1 and 11.2, elect or
cause the Partnership to elect a successor general partner of the
Partnership or the Operating Partnership.
(c) At all times while serving as a General Partner of the
Partnership, each General Partner shall not make any dividend or
distribution on, or repurchase any shares of, its stock or take any
other action within its control if the effect of such action would
cause the combined net worth of the General Partners, independent of
their interest in the Partnership Group, to be less than $15.0
million or such lower amount, which lower amount is based on an
Opinion of Counsel that states, (i) based on a change in the position
of the Internal Revenue Service with respect to partnership status
pursuant to Code Section 7701, such lower amount would not cause the
Partnership or the Operating Partnership to be treated as an
association taxable as a corporation or otherwise to be taxed as an
entity for federal income tax purposes and (ii) would not result in
the loss of the limited liability of any Limited Partner or of the
limited partner of the Operating Partnership.
7.4 REIMBURSEMENT OF THE MANAGING GENERAL PARTNER
(a) Except as provided in this Section 7.4 and elsewhere in this
Agreement or in the Operating Partnership Agreement, the Managing
General Partner shall not be compensated for its services as general
partner of any Group Member.
(b) The Managing General Partner shall be reimbursed on a
monthly basis, or such other reasonable basis as the Managing General
Partner may determine in its sole discretion, for (i) all direct and
indirect expenses it incurs or payments it makes on behalf of the
Partnership (including salary, bonus, incentive compensation and other
amounts paid to any Person including Affiliates of the Managing
General Partner to perform services for the Partnership or for the
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Managing General Partner in the discharge of its duties to the
Partnership), and (ii) all other necessary or appropriate expenses
allocable to the Partnership or otherwise reasonably incurred by the
Managing General Partner in connection with operating the
Partnership's business (including expenses allocated to the Managing
General Partner by its Affiliates). The Managing General Partner shall
determine the expenses that are allocable to the Partnership in any
reasonable manner determined by the Managing General Partner in its
sole discretion. Reimbursements pursuant to this Section 7.4 shall be
in addition to any reimbursement to the Managing General Partner as a
result of indemnification pursuant to Section 7.7.
(c) Subject to Section 5.7, the Managing General Partner, in its
sole discretion and without the approval of the Limited Partners (who
shall have no right to vote in respect thereof), may propose and adopt
on behalf of the Partnership employee benefit plans, employee programs
and employee practices (including plans, programs and practices
involving the issuance of Partnership Securities or options to
purchase Partnership Securities), or cause the Partnership to issue
Partnership Securities in connection with, or pursuant to, any
employee benefit plan, employee program or employee practice
maintained or sponsored by the Managing General Partner or any of its
Affiliates, in each case for the benefit of employees of the Managing
General Partner, any Group Member or any Affiliate, or any of them, in
respect of services performed, directly or indirectly, for the benefit
of the Partnership Group. The Partnership agrees to issue and sell to
the Managing General Partner or any of its Affiliates any Partnership
Securities that the Managing General Partner or such Affiliate is
obligated to provide to any employees pursuant to any such employee
benefit plans, employee programs or employee practices. Expenses
incurred by the Managing General Partner in connection with any such
plans, programs and practices (including the net cost to the Managing
General Partner or such Affiliate of Partnership Securities purchased
by the Managing General Partner or such Affiliate from the Partnership
to fulfill options or awards under such plans, programs and practices)
shall be reimbursed in accordance with Section 7.4(b). Any and all
obligations of the Managing General Partner under any employee benefit
plans, employee programs or employee practices adopted by the Managing
General Partner as permitted by this Section 7.4(c) shall constitute
obligations of the Managing General Partner hereunder and shall be
assumed by any successor Managing General Partner approved pursuant to
Section 11.1 or 11.2 or the transferee of or successor to all of the
Managing General Partner's Partnership Interest as a general partner
in the Partnership pursuant to Section 4.6.
7.5 OUTSIDE ACTIVITIES
(a) After the Closing Date, the Managing General Partner, for so
long as it is the Managing General Partner of the Partnership
(i) agrees that its sole business will be to act as a general partner
of the Partnership, the Operating Partnership, and any other
partnership of which the Partnership or the Operating Partnership is,
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directly or indirectly, a partner and to undertake activities that are
ancillary or related thereto (including being a limited partner in the
partnership), (ii) shall not engage in any business or activity or
incur any debts or liabilities except in connection with or incidental
to (A) its performance as general partner of one or more Group Members
or as described in or contemplated by the Registration Statement or
(B) the acquiring, owning or disposing of debt or equity securities in
any Group Member and (iii) shall not engage in the retail sale of
propane to end users in the continental United States. Except as
provided in this Section 7.5(a) with respect to the retail sale of
propane to end users in the continental United States, nothing herein
contained in this paragraph shall prohibit an Affiliate of the
Managing General Partner (including the Special General Partner) from
competing with the Partnership.
Affiliates of the Managing General Partner may engage in a
business activity that involves the retail sales of propane to end
users in the continental United States only if (i) the Managing
General Partner determines in its reasonable judgment, prior to the
commencement of such activity, that it is not in the best interests of
the Partnership to engage in such activity either (A) because of the
financial commitments or operating characteristics associated with
such activity or (B) because such activity is not consistent with the
Partnership's business strategy or cannot otherwise be integrated with
the Partnership's operations on a beneficial basis to the Partnership
or (ii) such activity is being undertaken as provided in a joint
venture agreement or other agreement between the Partnership and an
Affiliate of a General Partner and such joint venture or other
agreement was determined at the time it was entered into to be fair to
the Partnership in the reasonable judgment of the Managing General
Partner.
(b) Except as specifically restricted by Section 7.5(a), each
Indemnitee shall have the right to engage in businesses of every type
and description and other activities for profit and to engage in and
possess an interest in other business ventures of any and every type
or description, whether in businesses engaged in or anticipated to be
engaged in by any Group Member, independently or with others,
including business interests and activities in direct competition with
the business and activities of any Group Member, and none of the same
shall constitute a breach of this Agreement or any duty express or
implied by law to any Group Member or any Partner or Assignee. Neither
any Group Member, any Limited Partner nor any other Person shall have
any rights by virtue of this Agreement, the Operating Partnership
Agreement or the partnership relationship established hereby or
thereby in any business ventures of any Indemnitee.
(c) Subject to the terms of Section 7.5(a) and (b), but
otherwise notwithstanding anything to the contrary in this Agreement,
(i) the engaging in competitive activities by any Indemnitees (other
than the Managing General Partner) in accordance with the provisions
of this Section 7.5 is hereby approved by the Partnership and all
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Partners and (ii) it shall be deemed not to be a breach of the
Managing General Partner's fiduciary duty or any other obligation of
any type whatsoever of the General Partners for the Indemnitees (other
than the Managing General Partner) to engage in such business
interests and activities in preference to or to the exclusion of the
Partnership (including, without limitation, the Managing General
Partner and the Indemnities shall have no obligation to present
business opportunities to the Partnership).
(d) The Managing General Partner and any of its Affiliates may
acquire Units or other Partnership Securities in addition to those
acquired on the Closing Date and, except as otherwise provided in this
Agreement, shall be entitled to exercise all rights of a General
Partner or Limited Partner, as applicable, relating to such Units or
Partnership Securities.
(e) The term "Affiliates" when used in Sections 7.5(a) and
7.5(b) with respect to the Managing General Partner shall not include
any Group Member or any Subsidiary of the Group Member. (f)
Anything in this Agreement to the contrary notwithstanding, to the
extent that provisions of Sections 7.7, 7.8, 7.9, 7.10 or other
Sections of this Agreement purport or are interpreted to have the
effect of restricting the fiduciary duties that might otherwise, as a
result of Delaware or other applicable law, be owed by the Managing
General Partner to the Partnership and its Limited Partners, or to
constitute a waiver or consent by the Limited Partners to any such
restriction, such provisions shall be inapplicable and have no effect
in determining whether the Managing General Partner has complied with
its fiduciary duties in connection with determinations made by it
under this Section 7.5.
7.6 LOANS FROM THE GENERAL PARTNERS; LOANS OR CONTRIBUTIONS FROM
THE PARTNERSHIP; CONTRACTS WITH AFFILIATES; CERTAIN
RESTRICTIONS ON THE GENERAL PARTNERS
(a) The General Partners or their Affiliates may lend to any
Group Member, and any Group Member may borrow from the General
Partners or any of their Affiliates, funds needed or desired by the
Group Member for such periods of time and in such amounts as the
Managing General Partner may determine; provided, however, that in any
such case the lending party may not charge the borrowing party
interest at a rate greater than the rate that would be charged the
borrowing party or impose terms less favorable to the borrowing party
than would be charged or imposed on the borrowing party by unrelated
lenders on comparable loans made on an arm's-length basis (without
reference to the lending party's financial abilities or guarantees).
The borrowing party shall reimburse the lending party for any costs
(other than any additional interest costs) incurred by the lending
party in connection with the borrowing of such funds. For purposes of
this Section 7.6(a) and Section 7.6(b), the term "Group Member" shall
include any Affiliate of a Group Member that is controlled by the
Group Member. No Group Member may lend funds to the General Partners
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or any of their Affiliates (other than another Group Member).
(b) The Partnership may lend or contribute to any Group Member,
and any Group Member may borrow from the Partnership, funds on terms
and conditions established in the sole discretion of the Managing
General Partner; provided, however, that the Partnership may not
charge the Group Member interest at a rate less than the rate that
would be charged to the Group Member (without reference to the General
Partners' financial abilities or guarantees) by unrelated lenders on
comparable loans. The foregoing authority shall be exercised by the
Managing General Partner in its sole discretion and shall not create
any right or benefit in favor of any Group Member or any other Person.
(c) The Managing General Partner may itself, or may enter into
an agreement with any of its Affiliates to, render services to a Group
Member or to the Managing General Partner in the discharge of its
duties as general partner of the Partnership. Any services rendered to
a Group Member by the Managing General Partner or any of its
Affiliates shall be on terms that are fair and reasonable to the
Partnership; provided, however, that the requirements of this
Section 7.6(c) shall be deemed satisfied as to (i) any transaction
approved by Special Approval, (ii) any transaction, the terms of which
are no less favorable to the Partnership Group than those generally
being provided to or available from unrelated third parties or
(iii) any transaction that, taking into account the totality of the
relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership Group), is equitable to the Partnership Group. The
provisions of Section 7.4 shall apply to the rendering of services
described in this Section 7.6(c).
(d) The Partnership Group may transfer assets to joint ventures,
other partnerships, corporations, limited liability companies or other
business entities in which it is or thereby becomes a participant upon
such terms and subject to such conditions as are consistent with this
Agreement and applicable law.
(e) Neither the General Partners nor any of their Affiliates
shall sell, transfer or convey any property to, or purchase any
property from, the Partnership, directly or indirectly, except
pursuant to transactions that are fair and reasonable to the
Partnership; provided, however, that the requirements of this
Section 7.6(e) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to Sections 5.2 and 5.3, the
Contribution and Conveyance Agreement and any other transactions
described in or contemplated by the Registration Statement, (ii) any
transaction approved by Special Approval, (iii) any transaction, the
terms of which are no less favorable to the Partnership than those
generally being provided to or available from unrelated third parties,
or (iv) any transaction that, taking into account the totality of the
relationships between the parties involved (including other
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transactions that may be particularly favorable or advantageous to the
Partnership), is equitable to the Partnership. With respect to any
contribution of assets to the Partnership in exchange for Partnership
Securities, the Audit Committee, in determining whether the
appropriate number of Partnership Securities are being issued, may
take into account, among other things, the fair market value of the
assets, the liquidated and contingent liabilities assumed, the tax
basis in the assets, the extent to which tax-only allocations to the
transferor will protect the existing partners of the Partnership
against a low tax basis, and such other factors as the Audit Committee
deems relevant under the circumstances.
(f) The General Partners and their Affiliates will have no
obligation to permit any Group Member to use any facilities or assets
of the General Partners and their Affiliates, except as may be
provided in contracts entered into from time to time specifically
dealing with such use, nor shall there be any obligation on the part
of the General Partners or their Affiliates to enter into such
contracts.
(g) Without limitation of Sections 7.6(a) through 7.6(f), and
notwithstanding anything to the contrary in this Agreement, the
existence of the conflicts of interest described in the Registration
Statement are hereby approved by all Partners.
7.7 INDEMNIFICATION
(a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, all Indemnitees
shall be indemnified and held harmless by the Partnership from and
against any and all losses, claims, damages, liabilities, joint or
several, expenses (including legal fees and expenses), judgments,
fines, penalties, interest, settlements or other amounts arising from
any and all claims, demands, actions, suits or proceedings, whether
civil, criminal, administrative or investigative, in which any
Indemnitee may be involved, or is threatened to be involved, as a
party or otherwise, by reason of its status as an Indemnitee;
provided, that in each case the Indemnitee acted in good faith and in
a manner that such Indemnitee reasonably believed to be in, or (in the
case of a Person other than a General Partner) not opposed to, the
best interests of the Partnership and, with respect to any criminal
proceeding, had no reasonable cause to believe its conduct was
unlawful; provided, further, no indemnification pursuant to this
Section 7.7 shall be available to the General Partners with respect to
their obligations incurred pursuant to the Underwriting Agreement or
the Contribution and Conveyance Agreement (other than obligations
incurred by the Managing General Partner on behalf of the Partnership
or the Operating Partnership). The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea
of nolo contendere, or its equivalent, shall not create a presumption
that the Indemnitee acted in a manner contrary to that specified
above. Any indemnification pursuant to this Section 7.7 shall be made
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only out of the assets of the Partnership, it being agreed that the
General Partners shall not be personally liable for such
indemnification and shall have no obligation to contribute or loan any
monies or property to the Partnership to enable it to effectuate such
indemnification.
(b) To the fullest extent permitted by law, expenses (including
legal fees and expenses) incurred by an Indemnitee who is indemnified
pursuant to Section 7.7(a) in defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the
Partnership prior to the final disposition of such claim, demand,
action, suit or proceeding upon receipt by the Partnership of any
undertaking by or on behalf of the Indemnitee to repay such amount if
it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 7.7.
(c) The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee may be entitled
under any agreement, pursuant to any vote of the holders of
Outstanding Limited Partner Interests, as a matter of law or
otherwise, both as to actions in the Indemnitee's capacity as an
Indemnitee and as to actions in any other capacity (including any
capacity under the Underwriting Agreement), and shall continue as to
an Indemnitee who has ceased to serve in such capacity and shall inure
to the benefit of the heirs, successors, assigns and administrators of
the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the
General Partners or their Affiliates for the cost of) insurance, on
behalf of the General Partners, their Affiliates and such other
Persons as the Managing General Partner shall determine, against any
liability that may be asserted against or expense that may be incurred
by such Person in connection with the Partnership's activities or such
Person's activities on behalf of the Partnership, regardless of
whether the Partnership would have the power to indemnify such Person
against such liability under the provisions of this Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an
employee benefit plan whenever the performance by it of its duties to
the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan;
excise taxes assessed on an Indemnitee with respect to an employee
benefit plan pursuant to applicable law shall constitute "fines"
within the meaning of Section 7.7(a); and action taken or omitted by
it with respect to any employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest
of the participants and beneficiaries of the plan shall be deemed to
be for a purpose which is in, or not opposed to, the best interests of
the Partnership.
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(f) In no event may an Indemnitee subject the Limited Partners
to personal liability by reason of the indemnification provisions set
forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole
or in part under this Section 7.7 because the Indemnitee had an
interest in the transaction with respect to which the indemnification
applies if the transaction was otherwise permitted by the terms of
this Agreement.
(h) The provisions of this Section 7.7 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of any
other Persons.
(i) No amendment, modification or repeal of this Section 7.7 or
any provision hereof shall in any manner terminate, reduce or impair
the right of any past, present or future Indemnitee to be indemnified
by the Partnership, nor the obligations of the Partnership to
indemnify any such Indemnitee under and in accordance with the
provisions of this Section 7.7 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from
or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
7.8 LIABILITY OF INDEMNITEES
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partners, the Assignees or any other Persons
who have acquired interests in the Partnership Securities, for losses
sustained or liabilities incurred as a result of any act or omission
if such Indemnitee acted in good faith.
(b) Subject to its obligations and duties as Managing General
Partner set forth in Section 7.1(a), the Managing General Partner may
exercise any of the powers granted to it by this Agreement and perform
any of the duties imposed upon it hereunder either directly or by or
through its agents, and the Managing General Partner shall not be
responsible for any misconduct or negligence on the part of any such
agent appointed by the Managing General Partner in good faith.
(c) To the extent that, at law or in equity, an Indemnitee has
duties (including fiduciary duties) and liabilities relating thereto
to the Partnership or to the Partners, the General Partners and any
other Indemnitee acting in connection with the Partnership's business
or affairs shall not be liable to the Partnership or to any Partner
for its good faith reliance on the provisions of this Agreement. The
provisions of this Agreement, to the extent that they restrict or
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otherwise modify the duties and liabilities of an Indemnitee otherwise
existing at law or in equity, are agreed by the Partners to replace
such other duties and liabilities of such Indemnitee.
(d) Any amendment, modification or repeal of this Section 7.8 or
any provision hereof shall be prospective only and shall not in any
way affect the limitations on the liability to the Partnership, the
Limited Partners, the General Partners, and the Partnership's and
General Partners' directors, officers and employees under this
Section 7.8 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating
to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
7.9 RESOLUTION OF CONFLICTS OF INTEREST
(a) Unless otherwise expressly provided in this Agreement or the
Operating Partnership Agreement, whenever a potential conflict of
interest exists or arises between any of the General Partners or any
of their Affiliates, on the one hand, and the Partnership, the
Operating Partnership, any Partner or any Assignee, on the other, any
resolution or course of action by the Managing General Partner or its
Affiliates in respect of such conflict of interest shall be permitted
and deemed approved by all Partners, and shall not constitute a breach
of this Agreement, of the Operating Partnership Agreement, of any
agreement contemplated herein or therein, or of any duty stated or
implied by law or equity, if the resolution or course of action is, or
by operation of this Agreement is deemed to be, fair and reasonable to
the Partnership. The Managing General Partner shall be authorized but
not required in connection with its resolution of such conflict of
interest to seek Special Approval of such resolution. Any conflict of
interest and any resolution of such conflict of interest shall be
conclusively deemed fair and reasonable to the Partnership if such
conflict of interest or resolution is (i) approved by Special Approval
(as long as the material facts known to the Managing General Partner
or any of its Affiliates regarding any proposed transaction were
disclosed to the Audit Committee at the time it gave its approval),
(ii) on terms no less favorable to the Partnership than those
generally being provided to or available from unrelated third parties
or (iii) fair to the Partnership, taking into account the totality of
the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership). The Managing General Partner may also adopt a resolution
or course of action that has not received Special Approval. The
Managing General Partner (including the Audit Committee in connection
with Special Approval) shall be authorized in connection with its
determination of what is "fair and reasonable" to the Partnership and
in connection with its resolution of any conflict of interest to
consider (A) the relative interests of any party to such conflict,
agreement, transaction or situation and the benefits and burdens
relating to such interest; (B) any customary or accepted industry
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practices and any customary or historical dealings with a particular
Person; (C) any applicable generally accepted accounting practices or
principles; and (D) such additional factors as the Managing General
Partner (including the Audit Committee) determines in its sole
discretion to be relevant, reasonable or appropriate under the
circumstances. Nothing contained in this Agreement, however, is
intended to nor shall it be construed to require the Managing General
Partner (including the Audit Committee) to consider the interests of
any Person other than the Partnership. In the absence of bad faith by
the Managing General Partner, the resolution, action or terms so made,
taken or provided by the Managing General Partner with respect to such
matter shall not constitute a breach of this Agreement or any other
agreement contemplated herein or a breach of any standard of care or
duty imposed herein or therein or, to the extent permitted by law,
under the Delaware Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated
hereby provides that the Managing General Partner or any of its
Affiliates is permitted or required to make a decision (i) in its
"sole discretion" or "discretion," that it deems "necessary or
appropriate" or "necessary or advisable" or under a grant of similar
authority or latitude, except as otherwise provided herein, the
Managing General Partner or such Affiliate shall be entitled to
consider only such interests and factors as it desires and shall have
no duty or obligation to give any consideration to any interest of, or
factors affecting, the Partnership, the Operating Partnership, any
Limited Partner or any Assignee, (ii) it may make such decision in its
sole discretion (regardless of whether there is a reference to "sole
discretion" or "discretion") unless another express standard is
provided for, or (iii) in "good faith" or under another express
standard, the Managing General Partner or such Affiliate shall act
under such express standard and shall not be subject to any other or
different standards imposed by this Agreement, the Operating
Partnership Agreement, any other agreement contemplated hereby or
under the Delaware Act or any other law, rule or regulation. In
addition, any actions taken by the Managing General Partner or such
Affiliate consistent with the standards of "reasonable discretion" set
forth in the definitions of Available Cash or Operating Surplus shall
not constitute a breach of any duty of the Managing General Partner to
the Partnership or the Limited Partners. The Managing General Partner
shall have no duty, express or implied, to sell or otherwise dispose
of any asset of the Partnership Group other than in the ordinary
course of business. No borrowing by any Group Member or the approval
thereof by the Managing General Partner shall be deemed to constitute
a breach of any duty of the Managing General Partner to the
Partnership or the Limited Partners by reason of the fact that the
purpose or effect of such borrowing is directly or indirectly to
(A) enable distributions to the General Partners or their Affiliates
(including in their capacities as Limited Partners) to exceed 1% of
the total amount distributed to all partners or (B) hasten the
expiration of the Subordination Period or the conversion of any
Subordinated Units into Common Units.
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(c) Whenever a particular transaction, arrangement or resolution
of a conflict of interest is required under this Agreement to be "fair
and reasonable" to any Person, the fair and reasonable nature of such
transaction, arrangement or resolution shall be considered in the
context of all similar or related transactions.
(d) The Unitholders hereby authorize the Managing General
Partner, on behalf of the Partnership as a partner of a Group Member,
to approve of actions by the general partner of such Group Member
similar to those actions permitted to be taken by the Managing General
Partner pursuant to this Section 7.9.
7.10 OTHER MATTERS CONCERNING THE MANAGING GENERAL PARTNER
(a) The Managing General Partner may rely and shall be protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties.
(b) The Managing General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers
and other consultants and advisers selected by it, and any act taken
or omitted to be taken in reliance upon the opinion (including an
Opinion of Counsel) of such Persons as to matters that the Managing
General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to
have been done or omitted in good faith and in accordance with such
opinion.
(c) The Managing General Partner shall have the right, in
respect of any of its powers or obligations hereunder, to act through
any of its duly authorized officers, a duly appointed attorney or
attorneys-in-fact or the duly authorized officers of the Partnership.
(d) Any standard of care and duty imposed by this Agreement or
under the Delaware Act or any applicable law, rule or regulation shall
be modified, waived or limited, to the extent permitted by law, as
required to permit the Managing General Partner to act under this
Agreement or any other agreement contemplated by this Agreement and to
make any decision pursuant to the authority prescribed in this
Agreement, so long as such action is reasonably believed by the
Managing General Partner to be in, or not inconsistent with, the best
interests of the Partnership.
7.11 INTENTIONALLY DELETED
7.12 PURCHASE OR SALE OF PARTNERSHIP SECURITIES
The Managing General Partner may cause the Partnership to
purchase or otherwise acquire Partnership Securities; provided that,
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the Managing General Partner may not cause any Group Member to
purchase Subordinated Units during the Subordination Period. As long
as Partnership Securities are held by any Group Member, such
Partnership Securities shall not be considered outstanding for any
purpose, except as otherwise provided herein. The General Partners or
any Affiliate of the General Partners may also purchase or otherwise
acquire and sell or otherwise dispose of Partnership Securities for
its own account, subject to the provisions of Articles IV and X.
7.13 REGISTRATION RIGHTS OF THE GENERAL PARTNERS AND THEIR AFFILIATES
(a) If (i) either of the General Partners or any Affiliate of a
General Partner (including for purposes of this Section 7.13, any
Person that is an Affiliate of a General Partner at the date hereof
notwithstanding that it may later cease to be an Affiliate of a
General Partner) holds Partnership Securities that it desires to sell
and (ii) Rule 144 of the Securities Act (or any successor rule or
regulation to Rule 144) or another exemption from registration is not
available to enable such holder of Partnership Securities (the
"Holder") to dispose of the number of Partnership Securities it
desires to sell at the time it desires to do so without registration
under the Securities Act, then upon the request of either of the
General Partners or any of their Affiliates, the Partnership shall
file with the Commission as promptly as practicable after receiving
such request, and use all reasonable efforts to cause to become
effective and remain effective for a period of not less than six
months following its effective date or such shorter period as shall
terminate when all Partnership Securities covered by such registration
statement have been sold, a registration statement under the
Securities Act registering the offering and sale of the number of
Partnership Securities specified by the Holder; provided, however,
that the Partnership shall not be required to effect more than three
registrations pursuant to this Section 7.13(a); and provided further,
however, that if the Audit Committee determines in its good faith
judgment that a postponement of the requested registration for up to
six months would be in the best interests of the Partnership and its
Partners due to a pending transaction, investigation or other event,
the filing of such registration statement or the effectiveness thereof
may be deferred for up to six months, but not thereafter. In
connection with any registration pursuant to the immediately preceding
sentence, the Partnership shall promptly prepare and file (x) such
documents as may be necessary to register or qualify the securities
subject to such registration under the securities laws of such states
as the Holder shall reasonably request; provided, however, that no
such qualification shall be required in any jurisdiction where, as a
result thereof, the Partnership would become subject to general
service of process or to taxation or qualification to do business as a
foreign corporation or partnership doing business in such jurisdiction
solely as a result of such registration, and (y) such documents as may
be necessary to apply for listing or to list the Partnership
Securities subject to such registration on such National Securities
Exchange as the Holder shall reasonably request, and do any and all
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other acts and things that may reasonably be necessary or advisable to
enable the Holder to consummate a public sale of such Partnership
Securities in such states. Except as set forth in Section 7.13(c), all
costs and expenses of any such registration and offering (other than
the underwriting discounts and commissions) shall be paid by the
Partnership, without reimbursement by the Holder.
(b) If the Partnership shall at any time propose to file a
registration statement under the Securities Act for an offering of
equity securities of the Partnership for cash (other than an offering
relating solely to an employee benefit plan), the Partnership shall
use all reasonable efforts to include such number or amount of
securities held by the Holder in such registration statement as the
Holder shall request. If the proposed offering pursuant to this
Section 7.13(b) shall be an underwritten offering, then, in the event
that the managing underwriter or managing underwriters of such
offering advise the Partnership and the Holder in writing that in
their opinion the inclusion of all or some of the Holder's Partnership
Securities would adversely and materially affect the success of the
offering, the Partnership shall include in such offering only that
number or amount, if any, of securities held by the Holder which, in
the opinion of the managing underwriter or managing underwriters, will
not so adversely and materially affect the offering. Except as set
forth in Section 7.13(c), all costs and expenses of any such
registration and offering (other than the underwriting discounts and
commissions) shall be paid by the Partnership, without reimbursement
by the Holder.
(c) If underwriters are engaged in connection with any
registration referred to in this Section 7.13, the Partnership shall
provide indemnification, representations, covenants, opinions and
other assurance to the underwriters in form and substance reasonably
satisfactory to such underwriters. Further, in addition to and not in
limitation of the Partnership's obligation under Section 7.7, the
Partnership shall, to the fullest extent permitted by law, indemnify
and hold harmless the Holder, its officers, directors and each Person
who controls the Holder (within the meaning of the Securities Act) and
any agent thereof (collectively, "Indemnified Persons") against any
losses, claims, demands, actions, causes of action, assessments,
damages, liabilities (joint or several), costs and expenses (including
interest, penalties and reasonable attorneys' fees and disbursements),
resulting to, imposed upon, or incurred by the Indemnified Persons,
directly or indirectly, under the Securities Act or otherwise
(hereinafter referred to in this Section 7.13(c) as a "claim" and in
the plural as "claims") based upon, arising out of or resulting from
any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which any Partnership
Securities were registered under the Securities Act or any state
securities or Blue Sky laws, in any preliminary prospectus (if used
prior to the effective date of such registration statement), or in any
summary or final prospectus or in any amendment or supplement thereto
(if used during the period the Partnership is required to keep the
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registration statement current), or arising out of, based upon or
resulting from the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements made therein not misleading; provided, however, that the
Partnership shall not be liable to any Indemnified Person to the
extent that any such claim arises out of, is based upon or results
from an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, such
preliminary, summary or final prospectus or such amendment or
supplement, in reliance upon and in conformity with written
information furnished to the Partnership by or on behalf of such
Indemnified Person specifically for use in the preparation thereof.
(d) The provisions of Section 7.13(a) and 7.13(b) shall continue
to be applicable with respect to each of the General Partners (and any
of the General Partners' Affiliates) after it ceases to be a Partner
of the Partnership, during a period of two years subsequent to the
effective date of such cessation and for so long thereafter as is
required for the Holder to sell all of the Partnership Securities with
respect to which it has requested during such two-year period
inclusion in a registration statement otherwise filed or that a
registration statement be filed; provided, however, that the
Partnership shall not be required to file successive registration
statements covering the same Partnership Securities for which
registration was demanded during such two-year period. The provisions
of Section 7.13(c) shall continue in effect thereafter.
(e) Any request to register Partnership Securities pursuant to
this Section 7.13 shall (i) specify the Partnership Securities
intended to be offered and sold by the Person making the request,
(ii) express such Person's present intent to offer such shares for
distribution, (iii) describe the nature or method of the proposed
offer and sale of Partnership Securities, and (iv) contain the
undertaking of such Person to provide all such information and
materials and take all action as may be required in order to permit
the Partnership to comply with all applicable requirements in
connection with the registration of such Partnership Securities.
7.14 RELIANCE BY THIRD PARTIES
Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Partnership shall be entitled to assume that
the Managing General Partner and any officer of the Managing General
Partner authorized by the Managing General Partner to act on behalf of
and in the name of the Partnership has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf
of the Partnership, and such Person shall be entitled to deal with the
Managing General Partner or any such officer as if it were the
Partnership's sole party in interest, both legally and beneficially.
Each Limited Partner hereby waives any and all defenses or other
remedies that may be available against such Person to contest, negate
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or disaffirm any action of the Managing General Partner or any such
officer in connection with any such dealing. In no event shall any
Person dealing with the Managing General Partner or any such officer
or its representatives be obligated to ascertain that the terms of the
Agreement have been complied with or to inquire into the necessity or
expedience of any act or action of the Managing General Partner or any
such officer or its representatives. Each and every certificate,
document or other instrument executed on behalf of the Partnership by
the Managing General Partner or its representatives shall be
conclusive evidence in favor of any and every Person relying thereon
or claiming thereunder that (a) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement
was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and
empowered to do so for and on behalf of the Partnership and (c) such
certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is
binding upon the Partnership.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 RECORDS AND ACCOUNTING
The Managing General Partner shall keep or cause to be kept at
the principal office of the Partnership appropriate books and records
with respect to the Partnership's business, including all books and
records necessary to provide to the Limited Partners any information
required to be provided pursuant to Section 3.4(a). Any books and
records maintained by or on behalf of the Partnership in the regular
course of its business, including the record of the Record Holders and
Assignees of Units or other Partnership Securities, books of account
and records of Partnership proceedings, may be kept on, or be in the
form of, computer disks, hard drives, punch cards, magnetic tape,
photographs, micrographics or any other information storage device;
provided, that the books and records so maintained are convertible
into clearly legible written form within a reasonable period of time.
The books of the Partnership shall be maintained, for financial
reporting purposes, on an accrual basis in accordance with U.S. GAAP.
8.2 FISCAL YEAR
The fiscal year of the Partnership shall be a fiscal year ending
June 30.
8.3 REPORTS
(a) As soon as practicable, but in no event later than 120 days
after the close of each fiscal year of the Partnership, the Managing
General Partner shall cause to be mailed or furnished to each Record
Holder of a Unit as of a date selected by the Managing General Partner
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in its discretion, an annual report containing financial statements of
the Partnership for such fiscal year of the Partnership, presented in
accordance with U.S. GAAP, including a balance sheet and statements of
operations, Partnership equity and cash flows, such statements to be
audited by a firm of independent public accountants selected by the
Managing General Partner.
(b) As soon as practicable, but in no event later than 90 days
after the close of each Quarter except the last Quarter of each fiscal
year, the Managing General Partner shall cause to be mailed or
furnished to each Record Holder of a Unit, as of a date selected by
the Managing General Partner in its discretion, a report containing
unaudited financial statements of the Partnership and such other
information as may be required by applicable law, regulation or
rule of any National Securities Exchange on which the Units are listed
for trading, or as the Managing General Partner determines to be
necessary or appropriate.
ARTICLE IX
TAX MATTERS
9.1 TAX RETURNS AND INFORMATION
The Partnership shall timely file all returns of the Partnership
that are required for federal, state and local income tax purposes on
the basis of the accrual method and a taxable year ending on
December 31. The tax information reasonably required by Record Holders
for federal and state income tax reporting purposes with respect to a
taxable year shall be furnished to them within 90 days of the close of
the calendar year in which the Partnership's taxable year ends. The
classification, realization and recognition of income, gain, losses
and deductions and other items shall be on the accrual method of
accounting for federal income tax purposes.
9.2 TAX ELECTIONS
(a) The Partnership shall make the election under Section 754 of
the Code in accordance with applicable regulations thereunder, subject
to the reservation of the right to seek to revoke any such election
upon the Managing General Partner's determination that such revocation
is in the best interests of the Limited Partners. Notwithstanding any
other provision herein contained, for the purposes of computing the
adjustments under Section 743(b) of the Code, the Managing General
Partner shall be authorized (but not required) to adopt a convention
whereby the price paid by a transferee of a Limited Partner Interest
will be deemed to be the lowest quoted closing price of the Limited
Partner Interests on any National Securities Exchange on which such
Limited Partner Interests are traded during the calendar month in
which such transfer is deemed to occur pursuant to Section 6.2(g)
without regard to the actual price paid by such transferee.
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(b) The Partnership shall elect to deduct expenses incurred in
organizing the Partnership ratably over a sixty-month period as
provided in Section 709 of the Code.
(c) Except as otherwise provided herein, the Managing General
Partner shall determine whether the Partnership should make any other
elections permitted by the Code.
9.3 TAX CONTROVERSIES
Subject to the provisions hereof, the Managing General Partner is
designated as the Tax Matters Partner (as defined in the Code) and is
authorized and required to represent the Partnership (at the
Partnership's expense) in connection with all examinations of the
Partnership's affairs by tax authorities, including resulting
administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. Each
Partner agrees to cooperate with the Managing General Partner and to
do or refrain from doing any or all things reasonably required by the
Managing General Partner to conduct such proceedings.
9.4 WITHHOLDING
Notwithstanding any other provision of this Agreement, the
Managing General Partner is authorized to take any action that it
determines in its discretion to be necessary or appropriate to cause
the Partnership and the Operating Partnership to comply with any
withholding requirements established under the Code or any other
federal, state or local law including, without limitation, pursuant to
Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that the
Partnership is required or elects to withhold and pay over to any
taxing authority any amount resulting from the allocation or
distribution of income to any Partner or Assignee (including, without
limitation, by reason of Section 1446 of the Code), the amount
withheld may at the discretion of the Managing General Partner be
treated by the Partnership as a distribution of cash pursuant to
Section 6.3 in the amount of such withholding from such Partner.
ARTICLE X
ADMISSION OF PARTNERS
10.1 ADMISSION OF INITIAL LIMITED PARTNERS
Upon the issuance by the Partnership of Subordinated Units and
Incentive Distribution Rights to the General Partners and Subordinated
Units to EESC as described in Section 5.2, each of the General
Partners and EESC shall be deemed to have been admitted to the
Partnership as a Limited Partner in respect of the Subordinated Units
and Incentive Distribution Rights issued to it. Upon the issuance by
the Partnership of Common Units to the Underwriters as described in
Section 5.3 in connection with the Initial Offering and the execution
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by each Underwriter of a Transfer Application, the Managing General
Partner shall admit the Underwriters to the Partnership as Initial
Limited Partners in respect of the Common Units purchased by them.
10.2 ADMISSION OF SUBSTITUTED LIMITED PARTNER
By transfer of a Limited Partner Interest in accordance with
Article IV, the transferor shall be deemed to have given the
transferee the right to seek admission as a Substituted Limited
Partner subject to the conditions of, and in the manner permitted
under, this Agreement. A transferor of a Certificate representing a
Limited Partner Interest shall, however, only have the authority to
convey to a purchaser or other transferee who does not execute and
deliver a Transfer Application (a) the right to negotiate such
Certificate to a purchaser or other transferee and (b) the right to
transfer the right to request admission as a Substituted Limited
Partner to such purchaser or other transferee in respect of the
transferred Limited Partner Interests. Each transferee of a Limited
Partner Interest (including any nominee holder or an agent acquiring
such Limited Partner Interest for the account of another Person) who
executes and delivers a Transfer Application shall, by virtue of such
execution and delivery, be an Assignee and be deemed to have applied
to become a Substituted Limited Partner with respect to the Limited
Partner Interests so transferred to such Person. Such Assignee shall
become a Substituted Limited Partner (x) at such time as the Managing
General Partner consents thereto, which consent may be given or
withheld in the Managing General Partner's discretion, and (y) when
any such admission is shown on the books and records of the
Partnership. If such consent is withheld, such transferee shall be an
Assignee. An Assignee shall have an interest in the Partnership
equivalent to that of a Limited Partner with respect to allocations
and distributions, including liquidating distributions, of the
Partnership. With respect to voting rights attributable to Limited
Partner Interests that are held by Assignees, the Managing General
Partner shall be deemed to be the Limited Partner with respect thereto
and shall, in exercising the voting rights in respect of such Limited
Partner Interests on any matter, vote such Limited Partner Interests
at the written direction of the Assignee who is the Record Holder of
such Limited Partner Interests. If no such written direction is
received, such Limited Partner Interests will not be voted. An
Assignee shall have no other rights of a Limited Partner.
10.3 ADMISSION OF SUCCESSOR GENERAL PARTNER
A successor General Partner approved pursuant to Section 11.1 or
11.2 or the transferee of or successor to all of a General Partner's
Partnership Interest as general partner in the Partnership pursuant to
Section 4.6 who is proposed to be admitted as a successor General
Partner shall be admitted to the Partnership as a General Partner,
effective immediately prior to the withdrawal or removal of the
predecessor or transferring General Partner pursuant to Section 11.1
or 11.2 or the transfer of a General Partner's Partnership Interest as
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a general partner in the Partnership pursuant to Section 4.6,
provided, however, that no such successor shall be admitted to the
Partnership until compliance with the terms of Section 4.6 has
occurred and such successor has executed and delivered such other
documents or instruments as may be required to effect such admission.
Any such successor shall, subject to the terms hereof, carry on the
business of the members of the Partnership Group without dissolution.
10.4 ADMISSION OF ADDITIONAL LIMITED PARTNERS
(a) A Person (other than the General Partners, an Initial
Limited Partner or a Substituted Limited Partner) who makes a Capital
Contribution to the Partnership in accordance with this Agreement
shall be admitted to the Partnership as an Additional Limited Partner
only upon furnishing to the Managing General Partner (i) evidence of
acceptance in form satisfactory to the Managing General Partner of all
of the terms and conditions of this Agreement, including the power of
attorney granted in Section 2.6, and (ii) such other documents or
instruments as may be required in the discretion of the Managing
General Partner to effect such Person's admission as an Additional
Limited Partner.
(b) Notwithstanding anything to the contrary in this
Section 10.4, no Person shall be admitted as an Additional Limited
Partner without the consent of the Managing General Partner, which
consent may be given or withheld in the Managing General Partner's
discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such
Person is recorded as such in the books and records of the
Partnership, following the consent of the Managing General Partner to
such admission.
10.5 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
To effect the admission to the Partnership of any Partner, the
Managing General Partner shall take all steps necessary and
appropriate under the Delaware Act to amend the records of the
Partnership to reflect such admission and, if necessary, to prepare as
soon as practicable an amendment to this Agreement and, if required by
law, the Managing General Partner shall prepare and file an amendment
to the Certificate of Limited Partnership, and the Managing General
Partner may for this purpose, among others, exercise the power of
attorney granted pursuant to Section 2.6.
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
11.1 WITHDRAWAL OF THE GENERAL PARTNERS
(a) The Managing General Partner shall be deemed to have
withdrawn from the Partnership upon the occurrence of any one of the
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following events (each such event herein referred to as an "Event of
Withdrawal");
(i) The Managing General Partner voluntarily withdraws from
the Partnership by giving written notice to the other Partners
(and it shall be deemed that the Managing General Partner has
withdrawn pursuant to this Section 11.1(a)(i) if the Managing
General Partner voluntarily withdraws as general partner of the
Operating Partnership);
(ii) The Managing General Partner transfers all of its
rights as Managing General Partner pursuant to Section 4.6;
(iii) The Managing General Partner is removed pursuant
to Section 11.2;
(iv) The Managing General Partner (A) makes a general
assignment for the benefit of creditors; (B) files a voluntary
bankruptcy petition for relief under Chapter 7 of the United
States Bankruptcy Code; (C) files a petition or answer seeking
for itself a liquidation, dissolution or similar relief (but not
a reorganization) under any law; (D) files an answer or other
pleading admitting or failing to contest the material allegations
of a petition filed against the Managing General Partner in a
proceeding of the type described in clauses (A)-(C) of this
Section 11.1(a)(iv); or (E) seeks, consents to or acquiesces in
the appointment of a trustee (but not a debtor in possession),
receiver or liquidator of the Managing General Partner or of all
or any substantial part of its properties;
(v) A final and non-appealable order of relief under
Chapter 7 of the United States Bankruptcy Code is entered by a
court with appropriate jurisdiction pursuant to a voluntary or
involuntary petition by or against the Managing General Partner;
or
(vi) (A) in the event the Managing General Partner is a
corporation, a certificate of dissolution or its equivalent is
filed for the Managing General Partner, or 90 days expire after
the date of notice to the Managing General Partner of revocation
of its charter without a reinstatement of its charter, under the
laws of its state of incorporation; (B) in the event the Managing
General Partner is a partnership, the dissolution and
commencement of winding up of the Managing General Partner;
(C) in the event the Managing General Partner is acting in such
capacity by virtue of being a trustee of a trust, the termination
of the trust; (D) in the event the Managing General Partner is a
natural person, his death or adjudication of incompetency; and
(E) otherwise in the event of the termination of the Managing
General Partner.
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If an Event of Withdrawal specified in Section 11.1(a)(iv),
(v) or (vi)(A), (B), (C) or (E) occurs, the withdrawing Managing
General Partner shall give notice to the Limited Partners within 30
days after such occurrence. The Partners hereby agree that only the
Events of Withdrawal described in this Section 11.1 shall result in
the withdrawal of the Managing General Partner from the Partnership.
(b) Withdrawal of the Managing General Partner from the
Partnership upon the occurrence of an Event of Withdrawal shall not
constitute a breach of this Agreement under the following
circumstances: (i) at any time during the period beginning on the
Closing Date and ending at 12:00 midnight, Eastern Standard Time, on
December 31, 2006, the Managing General Partner voluntarily withdraws
by giving at least 90 days' advance notice of its intention to
withdraw to the Limited Partners; provided that prior to the effective
date of such withdrawal, the withdrawal is approved by Unitholders
holding at least a Unit Majority and the Managing General Partner
delivers to the Partnership an Opinion of Counsel ("Withdrawal Opinion
of Counsel") that such withdrawal (following the selection of the
successor General Partner) would not result in the loss of the limited
liability of any Limited Partner or of the limited partner of the
Operating Partnership or cause the Partnership or the Operating
Partnership to be treated as an association taxable as a corporation
or otherwise to be taxed as an entity for federal income tax purposes
(to the extent not previously treated as such); (ii) at any time after
12:00 midnight, Eastern Standard Time, on December 31, 2006, the
Managing General Partner voluntarily withdraws by giving at least 90
days' advance notice to the Unitholders, such withdrawal to take
effect on the date specified in such notice; (iii) at any time that
the Managing General Partner ceases to be the Managing General Partner
pursuant to Section 11.1(a)(ii) or is removed pursuant to
Section 11.2; or (iv) notwithstanding clause (i) of this sentence, at
any time that the Managing General Partner voluntarily withdraws by
giving at least 90 days' advance notice of its intention to withdraw
to the Limited Partners, such withdrawal to take effect on the date
specified in the notice, if at the time such notice is given one
Person and its Affiliates (other than the Managing General Partner and
its Affiliates) own beneficially or of record or control at least 50%
of the Outstanding Units. The withdrawal of the Managing General
Partner from the Partnership upon the occurrence of an Event of
Withdrawal shall also constitute the withdrawal of the Managing
General Partner as general partner of the other Group Members. If the
Managing General Partner gives a notice of withdrawal pursuant to
Section 11.1(a)(i), the holders of a Unit Majority, may, prior to the
effective date of such withdrawal, elect a successor Managing General
Partner. The Person so elected as successor Managing General Partner
shall automatically become the successor general partner of the other
Group Members of which the Managing General Partner is a general
partner. If, prior to the effective date of the Managing General
Partner's withdrawal, a successor is not selected by the Unitholders
as provided herein or the Partnership does not receive a Withdrawal
Opinion of Counsel, the Partnership shall be dissolved in accordance
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with Section 12.1. Any successor Managing General Partner elected in
accordance with the terms of this Section 11.1 shall be subject to the
provisions of Section 10.3.
(c) An Event of Withdrawal of the Managing General Partner shall
also be an Event of Withdrawal of the Special General Partner from the
Partnership and as general partner of other Group Members of which the
Special General Partner is a general partner at the same time and upon
the same conditions as set forth in Sections 11.1(a) and 11.1(b) with
respect to the Managing General Partner. The Partners hereby agree
that only the Withdrawal Events described in Section 11.1 with respect
to the Managing General Partner shall result in the withdrawal of the
Special General Partner. Upon a withdrawal of the Special General
Partner, the Unitholders are not required to elect a successor Special
General Partner of the Partnership.
11.2 REMOVAL OF THE MANAGING GENERAL PARTNER
The Managing General Partner may be removed if such removal is
approved by the Unitholders holding at least 66 2/3% of the
Outstanding Units (including Units held by the General Partners and
their Affiliates). Any such action by such holders for removal of the
Managing General Partner must also provide for the election of a
successor Managing General Partner by the Unitholders holding at least
a Unit Majority (including Units held by the General Partners and
their Affiliates). Such removal shall be effective immediately
following the admission of a successor Managing General Partner
pursuant to Section 10.3. The removal of the Managing General Partner
shall also automatically constitute the removal of the Managing
General Partner as general partner of the other Group Members of which
the Managing General Partner is a general partner. If a Person is
elected as a successor Managing General Partner in accordance with the
terms of this Section 11.2, such Person shall, upon admission pursuant
to Section 10.3, automatically become a successor general partner of
the other Group Members of which the Managing General Partner is a
general partner. The right of the holders of Outstanding Units to
remove the Managing General Partner shall not exist or be exercised
unless the Partnership has received an opinion opining as to the
matters covered by a Withdrawal Opinion of Counsel. Any successor
Managing General Partner elected in accordance with the terms of this
Section 11.2 shall be subject to the provisions of Section 10.3.
11.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR GENERAL PARTNER
(a) In the event of (i) withdrawal of the Managing General
Partner under circumstances where such withdrawal does not violate
this Agreement or (ii) removal of the Managing General Partner by the
holders of Outstanding Units under circumstances where Cause does not
exist, if a successor Managing General Partner is elected in
accordance with the terms of Section 11.1 or 11.2, the Departing
Partner shall have the option exercisable prior to the effective date
of the departure of such Departing Partner to require its successor to
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purchase its Partnership Interest as a general partner in the
Partnership and its partnership interest as the general partner in the
other Group Members and all of its Incentive Distribution Rights
(collectively, the "Combined Interest") in exchange for an amount in
cash equal to the fair market value of such Combined Interest, such
amount to be determined and payable as of the effective date of its
departure. If the Managing General Partner is removed by the
Unitholders under circumstances where Cause exists or if the Managing
General Partner withdraws under circumstances where such withdrawal
violates this Agreement or the Operating Partnership Agreement, and if
a successor Managing General Partner is elected in accordance with the
terms of Section 11.1 or 11.2, such successor shall have the option,
exercisable prior to the effective date of the departure of such
Departing Partner, to purchase the Combined Interest for such fair
market value of such Combined Interest. In either event, the Departing
Partner shall be entitled to receive all reimbursements due such
Departing Partner pursuant to Section 7.4, including any
employee-related liabilities (including severance liabilities),
incurred in connection with the termination of any employees employed
by the Managing General Partner for the benefit of the Partnership or
the other Group Members.
For purposes of this Section 11.3(a), the fair market value of
the Combined Interest shall be determined by agreement between the
Departing Partner and its successor or, failing agreement within 30
days after the effective date of such Departing Partner's departure,
by an independent investment banking firm or other independent expert
selected by the Departing Partner and its successor, which, in turn,
may rely on other experts, and the determination of which shall be
conclusive as to such matter. If such parties cannot agree upon one
independent investment banking firm or other independent expert within
45 days after the effective date of such departure, then the Departing
Partner shall designate an independent investment banking firm or
other independent expert, the Departing Partner's successor shall
designate an independent investment banking firm or other independent
expert, and such firms or experts shall mutually select a third
independent investment banking firm or independent expert, which third
independent investment banking firm or other independent expert shall
determine the fair market value of the Combined Interest. In making
its determination, such third independent investment banking firm or
other independent expert may consider the then current trading price
of Units on any National Securities Exchange on which Units are then
listed, the value of the Partnership's assets, the rights and
obligations of the Departing Partner and other factors it may deem
relevant.
(b) If the Combined Interest is not purchased in the manner set
forth in Section 11.3(a), the Departing Partners (or their
transferees) shall become Limited Partners and their Combined Interest
shall be converted into Common Units pursuant to a valuation made by
an investment banking firm or other independent expert selected
pursuant to Section 11.3(a), without reduction in such Partnership
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Interest (but subject to proportionate dilution by reason of the
admission of its successor). Any successor Managing General Partner
shall indemnify the Departing Partners (or their transferees) as to
all debts and liabilities of the Partnership arising on or after the
date on which the Departing Partners (or their transferees) become
Limited Partners. For purposes of this Agreement, conversion of the
Combined Interest to Common Units will be characterized as if the
General Partners (or their transferees) contributed their Combined
Interest to the Partnership in exchange for the newly issued Common
Units.
(c) If a successor Managing General Partner is elected in
accordance with the terms of Section 11.1 or 11.2 and the option
described in Section 11.3(a) is not exercised by the party entitled to
do so, the successor Managing General Partner shall, at the effective
date of its admission to the Partnership, contribute to the
Partnership cash in the amount equal to 1/99th of the Net Agreed
Value of the Partnership's assets on such date. In such event, such
successor Managing General Partner shall, subject to the following
sentence, be entitled to 1% of all Partnership allocations and
distributions. The successor Managing General Partner shall cause this
Agreement to be amended to reflect that, from and after the date of
such successor Managing General Partner's admission, the successor
Managing General Partner's interest in all Partnership distributions
and allocations shall be 1%.
11.4 TERMINATION OF SUBORDINATION PERIOD, CONVERSION OF SUBORDINATED
UNITS AND EXTINGUISHMENT OF CUMULATIVE COMMON UNIT ARREARAGES
Notwithstanding any provision of this Agreement, if the Managing
General Partner is removed as general partner of the Partnership under
circumstances where Cause does not exist and Units held by the General
Partners and their Affiliates are not voted in favor of such removal,
(i) the Subordination Period will end and all Outstanding Subordinated
Units will immediately and automatically convert into Common Units on
a one-for-one basis and (ii) all Cumulative Common Unit Arrearages on
the Common Units will be extinguished.
11.5 WITHDRAWAL OF LIMITED PARTNERS
No Limited Partner shall have any right to withdraw from the
Partnership; provided, however, that when a transferee of a Limited
Partner's Limited Partner Interest becomes a Record Holder of the
Limited Partner Interest so transferred, such transferring Limited
Partner shall cease to be a Limited Partner with respect to the
Limited Partner Interest so transferred.
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ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 DISSOLUTION
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the
admission of a successor Managing General Partner in accordance with
the terms of this Agreement. Upon the removal or withdrawal of the
Managing General Partner, if a successor Managing General Partner is
elected pursuant to Section 11.1 or 11.2, the Partnership shall not be
dissolved and such successor Managing General Partner shall continue
the business of the Partnership. The Partnership shall dissolve, and
(subject to Section 12.2) its affairs shall be wound up, upon:
(a) the expiration of its term as provided in Section 2.7;
(b) an Event of Withdrawal of the Managing General Partner
as provided in Section 11.1(a) (other than Section 11.1(a)(ii)),
unless a successor is elected and an Opinion of Counsel is
received as provided in Section 11.1(b) or 11.2 and such
successor is admitted to the Partnership pursuant to
Section 10.3;
(c) an election to dissolve the Partnership by the Managing
General Partner that is approved by the holders of a Unit
Majority;
(d) the entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Delaware Act; or
(e) the sale of all or substantially all of the assets and
properties of the Partnership Group.
12.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER DISSOLUTION
Upon (a) dissolution of the Partnership following an Event of
Withdrawal caused by the withdrawal or removal of the Managing General
Partner as provided in Section 11.1(a)(i) or (iii) and the failure of
the Partners to select a successor to such Departing Partner pursuant
to Section 11.1 or 11.2, then within 90 days thereafter, or
(b) dissolution of the Partnership upon an event constituting an Event
of Withdrawal as defined in Section 11.1(a)(iv), (v) or (vi), then, to
the maximum extent permitted by law, within 180 days thereafter, the
holders of a Unit Majority may elect to reconstitute the Partnership
and continue its business on the same terms and conditions set forth
in this Agreement by forming a new limited partnership on terms
identical to those set forth in this Agreement and having as the
successor general partner a Person approved by the holders of a Unit
Majority. Unless such an election is made within the applicable time
period as set forth above, the Partnership shall conduct only
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activities necessary to wind up its affairs. If such an election is so
made, then:
(i) the reconstituted Partnership shall continue until the
end of the term set forth in Section 2.7 unless earlier dissolved
in accordance with this Article XII;
(ii) if the successor Managing General Partner is not the
former Managing General Partner, then the interest of the former
Managing General Partner shall be treated in the manner provided
in Section 11.3; and
(iii) all necessary steps shall be taken to cancel this
Agreement and the Certificate of Limited Partnership and to enter
into and, as necessary, to file a new partnership agreement and
certificate of limited partnership, and the successor general
partner may for this purpose exercise the powers of attorney
granted the Managing General Partner pursuant to Section 2.6;
provided, that the right of the holders of a Unit Majority to
approve a successor Managing General Partner and to reconstitute
and to continue the business of the Partnership shall not exist
and may not be exercised unless the Partnership has received an
Opinion of Counsel that (x) the exercise of the right would not
result in the loss of limited liability of any Limited Partner
and (y) neither the Partnership, the reconstituted limited
partnership nor the Operating Partnership would be treated as an
association taxable as a corporation or otherwise be taxable as
an entity for federal income tax purposes upon the exercise of
such right to continue.
12.3 LIQUIDATOR
Upon dissolution of the Partnership, unless the Partnership is
continued under an election to reconstitute and continue the
Partnership pursuant to Section 12.2, the Managing General Partner
shall select one or more Persons to act as Liquidator. The Liquidator
(if other than the Managing General Partner) shall be entitled to
receive such compensation for its services as may be approved by
holders of at least a majority of the Outstanding Common Units and
Subordinated Units voting as a single class. The Liquidator (if other
than the Managing General Partner) shall agree not to resign at any
time without 15 days' prior notice and may be removed at any time,
with or without cause, by notice of removal approved by holders of at
least a majority of the Outstanding Common Units and Subordinated
Units voting as a single class. Upon dissolution, removal or
resignation of the Liquidator, a successor and substitute Liquidator
(who shall have and succeed to all rights, powers and duties of the
original Liquidator) shall within 30 days thereafter be approved by
holders of at least a majority of the Outstanding Common Units and
Subordinated Units voting as a single class. The right to approve a
successor or substitute Liquidator in the manner provided herein shall
be deemed to refer also to any such successor or substitute Liquidator
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approved in the manner herein provided. Except as expressly provided
in this Article XII, the Liquidator approved in the manner provided
herein shall have and may exercise, without further authorization or
consent of any of the parties hereto, all of the powers conferred upon
the Managing General Partner under the terms of this Agreement (but
subject to all of the applicable limitations, contractual and
otherwise, upon the exercise of such powers, other than the limitation
on sale set forth in Section 7.3(b)) to the extent necessary or
desirable in the good faith judgment of the Liquidator to carry out
the duties and functions of the Liquidator hereunder for and during
such period of time as shall be reasonably required in the good faith
judgment of the Liquidator to complete the winding up and liquidation
of the Partnership as provided for herein.
12.4 LIQUIDATION
The Liquidator shall proceed to dispose of the assets of the
Partnership, discharge its liabilities, and otherwise wind up its
affairs in such manner and over such period as the Liquidator
determines to be in the best interest of the Partners, subject to
Section 17-804 of the Delaware Act and the following:
(a) Disposition of Assets. The assets may be disposed of by public
or private sale or by distribution in kind to one or more Partners on
such terms as the Liquidator and such Partner or Partners may agree.
If any property is distributed in kind, the Partner receiving the
property shall be deemed for purposes of Section 12.4(c) to have
received cash equal to its fair market value; and contemporaneously
therewith, appropriate cash distributions must be made to the other
Partners. The Liquidator may, in its absolute discretion, defer
liquidation or distribution of the Partnership's assets for a
reasonable time if it determines that an immediate sale or
distribution of all or some of the Partnership's assets would be
impractical or would cause undue loss to the Partners. The Liquidator
may, in its absolute discretion, distribute the Partnership's assets,
in whole or in part, in kind if it determines that a sale would be
impractical or would cause undue loss to the partners.
(b) Discharge of Liabilities. Liabilities of the Partnership
include amounts owed to Partners otherwise than in respect of their
distribution rights under Article VI. With respect to any liability
that is contingent, conditional or unmatured or is otherwise not yet
due and payable, the Liquidator shall either settle such claim for
such amount as it thinks appropriate or establish a reserve of cash or
other assets to provide for its payment. When paid, any unused portion
of the reserve shall be distributed as additional liquidation
proceeds.
(c) Liquidation Distributions. All property and all cash in excess
of that required to discharge liabilities as provided in
Section 12.4(b) shall be distributed to the Partners in accordance
with, and to the extent of, the positive balances in their respective
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Capital Accounts, as determined after taking into account all Capital
Account adjustments (other than those made by reason of distributions
pursuant to this Section 12.4(c)) for the taxable year of the
Partnership during which the liquidation of the Partnership occurs
(with such date of occurrence being determined pursuant to Treasury
Regulation Section 1.704-1(b)(2)(ii)(g)), and such distribution shall
be made by the end of such taxable year (or, if later, within 90 days
after said date of such occurrence).
12.5 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP
Upon the completion of the distribution of Partnership cash and
property as provided in Section 12.4 in connection with the
liquidation of the Partnership, the Partnership shall be terminated
and the Certificate of Limited Partnership and all qualifications of
the Partnership as a foreign limited partnership in jurisdictions
other than the State of Delaware shall be canceled and such other
actions as may be necessary to terminate the Partnership shall be
taken.
12.6 RETURN OF CONTRIBUTIONS
The General Partners shall not be personally liable for, and
shall have no obligation to contribute or loan any monies or property
to the Partnership to enable it to effectuate, the return of the
Capital Contributions of the Limited Partners or Unitholders, or any
portion thereof, it being expressly understood that any such return
shall be made solely from Partnership assets.
12.7 WAIVER OF PARTITION
To the maximum extent permitted by law, each Partner hereby
waives any right to partition of the Partnership property.
12.8 CAPITAL ACCOUNT RESTORATION
No Limited Partner shall have any obligation to restore any
negative balance in its Capital Account upon liquidation of the
Partnership. Each of the General Partners shall be obligated to
restore any negative balance in its Capital Account upon liquidation
of its interest in the Partnership by the end of the taxable year of
the Partnership during which such liquidation occurs, or, if later,
within 90 days after the date of such liquidation; provided, however,
the Special General Partner's total obligation pursuant to this
Section 12.8 and Section 12.8 of the Operating Partnership Agreement
shall be limited to $78,000,000. The non-contributing General Partner
shall indemnify the contributing General Partner for amounts
contributed to the Partnership pursuant to this Section 12.8 and by it
to the Operating Partnership pursuant to Section 12.8 of the Operating
Partnership Agreement to the extent it exceeds the contributing
General Partner's Pro Rata share of the amounts so contributed,
provided, however, that the Special General Partner's total
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indemnification obligation is limited by the excess of $78,000,000
over the aggregate amount previously contributed by it to the
Partnership pursuant to this Section 12.8 and by it to the Operating
Partnership pursuant to Section 12.8 of the Operating Partnership
Agreement.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
13.1 AMENDMENT TO BE ADOPTED SOLELY BY THE MANAGING GENERAL PARTNER
Each Partner agrees that the Managing General Partner, without
the approval of any Partner or Assignee, may amend any provision of
this Agreement and execute, swear to, acknowledge, deliver, file and
record whatever documents may be required in connection therewith, to
reflect:
(a) a change in the name of the Partnership, the location
of the principal place of business of the Partnership, the
registered agent of the Partnership or the registered office of
the Partnership;
(b) admission, substitution, withdrawal or removal of
Partners in accordance with this Agreement;
(c) a change that, in the sole discretion of the Managing
General Partner, is necessary or advisable to qualify or continue
the qualification of the Partnership as a limited partnership or
a partnership in which the Limited Partners have limited
liability under the laws of any state or to ensure that the
Partnership and the Operating Partnership will not be treated as
an association taxable as a corporation or otherwise taxed as an
entity for federal income tax purposes;
(d) a change that, in the discretion of the Managing
General Partner, (i) does not adversely affect the Limited
Partners in any material respect, (ii) is necessary or advisable
to (A) satisfy any requirements, conditions or guidelines
contained in any opinion, directive, order, ruling or regulation
of any federal or state agency or judicial authority or contained
in any federal or state statute (including the Delaware Act) or
(B) facilitate the trading of the Limited Partner Interest
(including the division of any class or classes of Outstanding
Limited Partner Interest into different classes to facilitate
uniformity of tax consequences within such classes of Limited
Partner Interests) or comply with any rule, regulation, guideline
or requirement of any National Securities Exchange on which the
Limited Partner Interests are or will be listed for trading,
compliance with any of which the Managing General Partner
determines in its discretion to be in the best interests of the
Partnership and the Limited Partners, (iii) is necessary or
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advisable in connection with action taken by the Managing General
Partner pursuant to Section 5.10, or (iv) is required to effect
the intent expressed in the Registration Statement or the intent
of the provisions of this Agreement or is otherwise contemplated
by this Agreement;
(e) a change in the fiscal year or taxable year of the
Partnership and any changes that, in the discretion of the
Managing General Partner, are necessary or advisable as a result
of a change in the fiscal year or taxable year of the Partnership
including, if the Managing General Partner shall so determine, a
change in the definition of "Quarter" and the dates on which
distributions are to be made by the Partnership;
(f) an amendment that is necessary, in the Opinion of
Counsel, to prevent the Partnership, or the General Partners or
their directors, officers, trustees or agents from in any manner
being subjected to the provisions of the Investment Company Act
of 1940, as amended, the Investment Advisers Act of 1940, as
amended, or "plan asset" regulations adopted under the Employee
Retirement Income Security Act of 1974, as amended, regardless of
whether such are substantially similar to plan asset regulations
currently applied or proposed by the United States Department of
Labor;
(g) subject to the terms of Section 5.7, an amendment that,
in the discretion of the Managing General Partner, is necessary
or advisable in connection with the authorization of issuance of
any class or series of Partnership Securities pursuant to
Section 5.6;
(h) any amendment expressly permitted in this Agreement to
be made by the Managing General Partner acting alone;
(i) an amendment effected, necessitated or contemplated by
a Merger Agreement approved in accordance with Section 14.3;
(j) an amendment that, in the discretion of the Managing
General Partner, is necessary or advisable to reflect, account
for and deal with appropriately the formation by the Partnership
of, or investment by the Partnership in, any corporation,
partnership, joint venture, limited liability company or other
entity other than the Operating Partnership, in connection with
the conduct by the Partnership of activities permitted by the
terms of Section 2.4;
(k) a merger or conveyance pursuant to Section 14.3(d); or
(l) any other amendments substantially similar to the
foregoing.
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13.2 AMENDMENT PROCEDURES
Except as provided in Sections 13.1 and 13.3, all amendments to
this Agreement shall be made in accordance with the following
requirements. Amendments to this Agreement may be proposed only by or
with the consent of the Managing General Partner which consent may be
given or withheld in its sole discretion. A proposed amendment shall
be effective upon its approval by the holders of at least a Unit
Majority, unless a greater or different percentage is required under
this Agreement or by Delaware law. Each proposed amendment that
requires the approval of the holders of a specified percentage of
Outstanding Units shall be set forth in a writing that contains the
text of the proposed amendment. If such an amendment is proposed, the
Managing General Partner shall seek the written approval of the
requisite percentage of Outstanding Units or call a meeting of the
Unitholders to consider and vote on such proposed amendment. The
Managing General Partner shall notify all Record Holders upon final
adoption of any such proposed amendments.
13.3 AMENDMENT REQUIREMENTS
(a) Notwithstanding the provisions of Sections 13.1 and
13.2, no provision of this Agreement that establishes a
percentage of Outstanding Units (including Units deemed owned by
the General Partners) required to take any action shall be
amended, altered, changed, repealed or rescinded in any respect
that would have the effect of reducing such voting percentage
unless such amendment is approved by the written consent or the
affirmative vote of holders of Outstanding Units whose aggregate
Outstanding Units constitute not less than the voting requirement
sought to be reduced.
(b) Notwithstanding the provisions of Sections 13.1 and
13.2, no amendment to this Agreement may (i) enlarge the
obligations of any Limited Partner without its consent, unless
such shall be deemed to have occurred as a result of an amendment
approved pursuant to Section 13.3(c), (ii) enlarge the
obligations of, restrict in any way any action by or rights of,
or reduce in any way the amounts distributable, reimbursable or
otherwise payable to, the Managing General Partner or any of its
Affiliates without its consent, which may be given or withheld in
its sole discretion, (iii) change Section 12.1(a) or 12.1(c), or
(iv) change the term of the Partnership or, except as set forth
in Section 12.1(c), give any Person the right to dissolve the
Partnership.
(c) Except as provided in Section 14.3, and except as
otherwise provided, and without limitation of the Managing
General Partner's authority to adopt amendments to this Agreement
as contemplated in Section 13.1, any amendment that would have a
material adverse effect on the rights or preferences of any class
of Partnership Interests in relation to other classes of
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Partnership Interests must be approved by the holders of not less
than a majority of the Outstanding Partnership Interests of the
class affected.
(d) Notwithstanding any other provision of this Agreement,
except for amendments pursuant to Section 13.1 and except as
otherwise provided by Section 14.3(b), no amendments shall become
effective without the approval of the holders of at least 90% of
the Outstanding Common Units and Subordinated Units voting as a
single class unless the Partnership obtains an Opinion of Counsel
to the effect that such amendment will not affect the limited
liability of any Limited Partner under applicable law.
(e) Except as provided in Section 13.1, this Section 13.3
shall only be amended with the approval of the holders of at
least 90% of the Outstanding Units.
13.4 SPECIAL MEETINGS
All acts of Limited Partners to be taken pursuant to this
Agreement shall be taken in the manner provided in this Article XIII.
Special meetings of the Limited Partners may be called by the Managing
General Partner or by Limited Partners owning 20% or more of the
Outstanding Limited Partner Interests of the class or classes for
which a meeting is proposed. Limited Partners shall call a special
meeting by delivering to the Managing General Partner one or more
requests in writing stating that the signing Limited Partners wish to
call a special meeting and indicating the general or specific purposes
for which the special meeting is to be called. Within 60 days after
receipt of such a call from Limited Partners or within such greater
time as may be reasonably necessary for the Partnership to comply with
any statutes, rules, regulations, listing agreements or similar
requirements governing the holding of a meeting or the solicitation of
proxies for use at such a meeting, the Managing General Partner shall
send a notice of the meeting to the Limited Partners either directly
or indirectly through the Transfer Agent. A meeting shall be held at a
time and place determined by the Managing General Partner on a date
not less than 10 days nor more than 60 days after the mailing of
notice of the meeting. Limited Partners shall not vote on matters that
would cause the Limited Partners to be deemed to be taking part in the
management and control of the business and affairs of the Partnership
so as to jeopardize the Limited Partners' limited liability under the
Delaware Act or the law of any other state in which the Partnership is
qualified to do business.
13.5 NOTICE OF A MEETING
Notice of a meeting called pursuant to Section 13.4 shall be
given to the Record Holders of the class or classes of Limited Partner
Interests for which a meeting is proposed in writing by mail or other
means of written communication in accordance with Section 16.1. The
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notice shall be deemed to have been given at the time when deposited
in the mail or sent by other means of written communication.
13.6 RECORD DATE
For purposes of determining the Limited Partners entitled to
notice of or to vote at a meeting of the Limited Partners or to give
approvals without a meeting as provided in Section 13.11, the Managing
General Partner may set a Record Date, which shall not be less than 10
nor more than 60 days before (a) the date of the meeting (unless such
requirement conflicts with any rule, regulation, guideline or
requirement of any National Securities Exchange on which the Limited
Partner Interests are listed for trading, in which case the rule,
regulation, guideline or requirement of such exchange shall govern) or
(b) in the event that approvals are sought without a meeting, the date
by which Limited Partners are requested in writing by the Managing
General Partner to give such approvals.
13.7 ADJOURNMENT
When a meeting is adjourned to another time or place, notice need
not be given of the adjourned meeting and a new Record Date need not
be fixed, if the time and place thereof are announced at the meeting
at which the adjournment is taken, unless such adjournment shall be
for more than 45 days. At the adjourned meeting, the Partnership may
transact any business which might have been transacted at the original
meeting. If the adjournment is for more than 45 days or if a new
Record Date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given in accordance with this Article XIII.
13.8 WAIVER OF NOTICE; APPROVAL OF MEETING; APPROVAL OF MINUTES
The transactions of any meeting of Limited Partners, however
called and noticed, and whenever held, shall be as valid as if it had
occurred at a meeting duly held after regular call and notice, if a
quorum is present either in person or by proxy, and if, either before
or after the meeting, Limited Partners representing such quorum who
were present in person or by proxy and entitled to vote, sign a
written waiver of notice or an approval of the holding of the meeting
or an approval of the minutes thereof. All waivers and approvals shall
be filed with the Partnership records or made a part of the minutes of
the meeting. Attendance of a Limited Partner at a meeting shall
constitute a waiver of notice of the meeting, except when the Limited
Partner does not approve, at the beginning of the meeting, of the
transaction of any business because the meeting is not lawfully called
or convened; and except that attendance at a meeting is not a waiver
of any right to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, if the
disapproval is expressly made at the meeting.
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13.9 QUORUM
The holders of a majority of the Outstanding Limited Partner
Interests of the class or classes for which a meeting has been called
(including Limited Partner Interests deemed owned by the General
Partners) represented in person or by proxy shall constitute a quorum
at a meeting of Limited Partners of such class or classes unless any
such action by the Limited Partners requires approval by holders of a
greater percentage of such Limited Partner Interests, in which case
the quorum shall be such greater percentage. At any meeting of the
Limited Partners duly called and held in accordance with this
Agreement at which a quorum is present, the act of Limited Partners
holding Outstanding Limited Partner Interests that in the aggregate
represent a majority of the Outstanding Limited Partner Interests
entitled to vote and be present in person or by proxy at such meeting
shall be deemed to constitute the act of all Limited Partners, unless
a greater or different percentage is required with respect to such
action under the provisions of this Agreement, in which case the act
of the Limited Partners holding Outstanding Limited Partner Interests
that in the aggregate represent at least such greater or different
percentage shall be required. The Limited Partners present at a duly
called or held meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the withdrawal of
enough Limited Partners to leave less than a quorum, if any action
taken (other than adjournment) is approved by the required percentage
of Outstanding Limited Partner Interests specified in this Agreement
(including Limited Partner Interests deemed owned by the General
Partners). In the absence of a quorum any meeting of Limited Partners
may be adjourned from time to time by the affirmative vote of holders
of at least a majority of the Outstanding Limited Partner Interests
entitled to vote at such meeting (including Limited Partner Interests
deemed owned by the General Partners) represented either in person or
by proxy, but no other business may be transacted, except as provided
in Section 13.7.
13.10 CONDUCT OF A MEETING
The Managing General Partner shall have full power and authority
concerning the manner of conducting any meeting of the Limited
Partners or solicitation of approvals in writing, including the
determination of Persons entitled to vote, the existence of a quorum,
the satisfaction of the requirements of Section 13.4, the conduct of
voting, the validity and effect of any proxies and the determination
of any controversies, votes or challenges arising in connection with
or during the meeting or voting. The Managing General Partner shall
designate a Person to serve as chairman of any meeting and shall
further designate a Person to take the minutes of any meeting. All
minutes shall be kept with the records of the Partnership maintained
by the Managing General Partner. The Managing General Partner may make
such other regulations consistent with applicable law and this
Agreement as it may deem advisable concerning the conduct of any
meeting of the Limited Partners or solicitation of approvals in
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writing, including regulations in regard to the appointment of
proxies, the appointment and duties of inspectors of votes and
approvals, the submission and examination of proxies and other
evidence of the right to vote, and the revocation of approvals in
writing.
13.11 ACTION WITHOUT A MEETING
If authorized by the Managing General Partner, any action that
may be taken at a meeting of the Limited Partners may be taken without
a meeting if an approval in writing setting forth the action so taken
is signed by Limited Partners owning not less than the minimum
percentage of the Outstanding Limited Partner Interests (including
Limited Partner Interests deemed owned by the General Partners) that
would be necessary to authorize or take such action at a meeting at
which all the Limited Partners were present and voted (unless such
provision conflicts with any rule, regulation, guideline or
requirement of any National Securities Exchange on which the Limited
Partner Interests are listed for trading, in which case the rule,
regulation, guideline or requirement of such exchange shall govern).
Prompt notice of the taking of action without a meeting shall be given
to the Limited Partners who have not approved in writing. The Managing
General Partner may specify that any written ballot submitted to
Limited Partners for the purpose of taking any action without a
meeting shall be returned to the Partnership within the time period,
which shall be not less than 20 days, specified by the Managing
General Partner. If a ballot returned to the Partnership does not vote
all of the Limited Partner Interests held by the Limited Partners the
Partnership shall be deemed to have failed to receive a ballot for the
Limited Partner Interests that were not voted. If approval of the
taking of any action by the Limited Partners is solicited by any
Person other than by or on behalf of the Managing General Partner, the
written approvals shall have no force and effect unless and until
(a) they are deposited with the Partnership in care of the Managing
General Partner, (b) approvals sufficient to take the action proposed
are dated as of a date not more than 90 days prior to the date
sufficient approvals are deposited with the Partnership and (c) an
Opinion of Counsel is delivered to the Managing General Partner to the
effect that the exercise of such right and the action proposed to be
taken with respect to any particular matter (i) will not cause the
Limited Partners to be deemed to be taking part in the management and
control of the business and affairs of the Partnership so as to
jeopardize the Limited Partners' limited liability, and (ii) is
otherwise permissible under the state statutes then governing the
rights, duties and liabilities of the Partnership and the Partners.
13.12 VOTING AND OTHER RIGHTS
(a) Only those Record Holders of the Limited Partner Interests
on the Record Date set pursuant to Section 13.6 (and also subject to
the limitations contained in the definition of "Outstanding") shall be
entitled to notice of, and to vote at, a meeting of Limited Partners
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or to act with respect to matters as to which the holders of the
Outstanding Limited Partner Interests have the right to vote or to
act. All references in this Agreement to votes of, or other acts that
may be taken by, the Outstanding Limited Partner Interests shall be
deemed to be references to the votes or acts of the Record Holders of
such Outstanding Limited Partner Interests.
(b) With respect to Limited Partner Interests that are held for
a Person's account by another Person (such as a broker, dealer, bank,
trust company or clearing corporation, or an agent of any of the
foregoing), in whose name such Limited Partner Interests are
registered, such other Person shall, in exercising the voting rights
in respect of such Limited Partner Interests on any matter, and unless
the arrangement between such Persons provides otherwise, vote such
Limited Partner Interests in favor of, and at the direction of, the
Person who is the beneficial owner, and the Partnership shall be
entitled to assume it is so acting without further inquiry. The
provisions of this Section 13.12(b) (as well as all other provisions
of this Agreement) are subject to the provisions of Section 4.3.
ARTICLE XIV
MERGER
14.1 AUTHORITY
The Partnership may merge or consolidate with one or more
corporations, limited liability companies, business trusts or
associations, real estate investment trusts, common law trusts or
unincorporated businesses, including a general partnership or limited
partnership, formed under the laws of the State of Delaware or any
other state of the United States of America, pursuant to a written
agreement of merger or consolidation ("Merger Agreement") in
accordance with this Article XIV.
14.2 PROCEDURE FOR MERGER OR CONSOLIDATION
Merger or consolidation of the Partnership pursuant to this
Article XIV requires the prior approval of the Managing General
Partner. If the Managing General Partner shall determine, in the
exercise of its discretion, to consent to the merger or consolidation,
the Managing General Partner shall approve the Merger Agreement, which
shall set forth:
(a) The names and jurisdictions of formation or
organization of each of the business entities proposing to merge
or consolidate;
(b) The name and jurisdiction of formation or organization
of the business entity that is to survive the proposed merger or
consolidation (the "Surviving Business Entity");
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(c) The terms and conditions of the proposed merger or
consolidation;
(d) The manner and basis of exchanging or converting the
equity securities of each constituent business entity for, or
into, cash, property or general or limited partner interests,
rights, securities or obligations of the Surviving Business
Entity; and (i) if any general or limited partner interests,
securities or rights of any constituent business entity are not
to be exchanged or converted solely for, or into, cash, property
or general or limited partner interests, rights, securities or
obligations of the Surviving Business Entity, the cash, property
or general or limited partner interests, rights, securities or
obligations of any limited partnership, corporation, trust or
other entity (other than the Surviving Business Entity) which the
holders of such general or limited partner interests, securities
or rights are to receive in exchange for, or upon conversion of
their general or limited partner interests, securities or rights,
and (ii) in the case of securities represented by certificates,
upon the surrender of such certificates, which cash, property or
general or limited partner interests, rights, securities or
obligations of the Surviving Business Entity or any general or
limited partnership, corporation, trust or other entity (other
than the Surviving Business Entity), or evidences thereof, are to
be delivered;
(e) A statement of any changes in the constituent documents
or the adoption of new constituent documents (the articles or
certificate of incorporation, articles of trust, declaration of
trust, certificate or agreement of limited partnership or other
similar charter or governing document) of the Surviving Business
Entity to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date
of the filing of the certificate of merger pursuant to
Section 14.4 or a later date specified in or determinable in
accordance with the Merger Agreement (provided, that if the
effective time of the merger is to be later than the date of the
filing of the certificate of merger, the effective time shall be
fixed no later than the time of the filing of the certificate of
merger and stated therein); and
(g) Such other provisions with respect to the proposed
merger or consolidation as are deemed necessary or appropriate by
the Managing General Partner.
14.3 APPROVAL BY LIMITED PARTNERS OF MERGER OR CONSOLIDATION
(a) Except as provided in Section 14.3(d), the Managing
General Partner, upon its approval of the Merger Agreement, shall
direct that the Merger Agreement be submitted to a vote of
Limited Partners, whether at a special meeting or by written
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consent, in either case in accordance with the requirements of
Article XIII. A copy or a summary of the Merger Agreement shall
be included in or enclosed with the notice of a special meeting
or the written consent.
(b) Except as provided in Section 14.3(d), the Merger
Agreement shall be approved upon receiving the affirmative vote
or consent of the holders of a Unit Majority unless the Merger
Agreement contains any provision that, if contained in an
amendment to this Agreement, the provisions of this Agreement or
the Delaware Act would require for its approval the vote or
consent of a greater percentage of the Outstanding Limited
Partner Interests or of any class of Limited Partners, in which
case such greater percentage vote or consent shall be required
for approval of the Merger Agreement.
(c) Except as provided in Section 14.3(d), after such
approval by vote or consent of the Limited Partners, and at any
time prior to the filing of the certificate of merger pursuant to
Section 14.4, the merger or consolidation may be abandoned
pursuant to provisions therefor, if any, set forth in the Merger
Agreement.
(d) Notwithstanding anything else contained in this
Article XIV or in this Agreement, the Managing General Partner is
permitted, in its discretion, without Limited Partner approval,
to merge the Partnership or any Group Member into, or convey all
of the Partnership's assets to, another limited liability entity
which shall be newly formed and shall have no assets, liabilities
or operations at the time of such Merger other than those it
receives from the Partnership or other Group Member if (i) the
Managing General Partner has received an Opinion of Counsel that
the merger or conveyance, as the case may be, would not result in
the loss of the limited liability of any Limited Partner or any
limited partner in the Operating Partnership or cause the
Partnership or Operating Partnership to be treated as an
association taxable as a corporation or otherwise to be taxed as
an entity for federal income tax purposes (to the extent not
previously treated as such), (ii) the sole purpose of such merger
or conveyance is to effect a mere change in the legal form of the
Partnership into another limited liability entity and (iii) the
governing instruments of the new entity provide the Limited
Partners and the Managing General Partner with the same rights
and obligations as are herein contained.
14.4 CERTIFICATE OF MERGER
Upon the required approval by the Managing General Partner and
the Unitholders of a Merger Agreement, a certificate of merger shall
be executed and filed with the Secretary of State of the State of
Delaware in conformity with the requirements of the Delaware Act.
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14.5 EFFECT OF MERGER
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all
property, real, personal and mixed, and all debts due to any of
those business entities and all other things and causes of action
belonging to each of those business entities, shall be vested in
the Surviving Business Entity and after the merger or
consolidation shall be the property of the Surviving Business
Entity to the extent they were of each constituent business
entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not
revert and is not in any way impaired because of the merger or
consolidation;
(iii) all rights of creditors and all liens on or
security interests in property of any of those constituent
business entities shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity
and may be enforced against it to the same extent as if the
debts, liabilities and duties had been incurred or contracted by
it.
(b) A merger or consolidation effected pursuant to this
Article shall not be deemed to result in a transfer or assignment of
assets or liabilities from one entity to another.
ARTICLE XV
RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
15.1 RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
(a) Notwithstanding any other provision of this Agreement, if at
any time not more than 20% of the total Limited Partner Interests of
any class then Outstanding is held by Persons other than the Managing
General Partner and its Affiliates, the Managing General Partner shall
then have the right, which right it may assign and transfer in whole
or in part to the Partnership or any Affiliate of the Managing General
Partner, exercisable in its sole discretion, to purchase all, but not
less than all, of such Limited Partner Interests of such class then
Outstanding held by Persons other than the Managing General Partner
and its Affiliates, at the greater of (x) the Current Market Price as
of the date three days prior to the date that the notice described in
Section 15.1(b) is mailed and (y) the highest price paid by the
Managing General Partner or any of its Affiliates for any such Limited
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Partner Interest of such class purchased during the 90-day period
preceding the date that the notice described in Section 15.1(b) is
mailed. As used in this Agreement, (i) "Current Market Price" as of
any date of any class of limited partner interests listed or admitted
to trading on any National Securities Exchange means the average of
the daily Closing Prices (as hereinafter defined) per limited partner
interest of such class for the 20 consecutive Trading Days (as
hereinafter defined) immediately prior to such date; (ii) "Closing
Price" for any day means the last sale price on such day, regular way,
or in case no such sale takes place on such day, the average of the
closing bid and asked prices on such day, regular way, in either case
as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted for trading on the
principal National Securities Exchange (other than the Nasdaq Stock
Market) on which such Limited Partner Interests of such class are
listed or admitted to trading or, if such Limited Partner Interests of
such class are not listed or admitted to trading on any National
Securities Exchange (other than the Nasdaq Stock Market), the last
quoted price on such day or, if not so quoted, the average of the high
bid and low asked prices on such day in the over-the-counter market,
as reported by the Nasdaq Stock Market or such other system then in
use, or, if on any such day such Limited Partner Interests of such
class are not quoted by any such organization, the average of the
closing bid and asked prices on such day as furnished by a
professional market maker making a market in such Limited Partner
Interests of such class selected by the Managing General Partner, or
if on any such day no market maker is making a market in such Limited
Partner Interests of such class, the fair value of such Limited
Partner Interests on such day as determined reasonably and in good
faith by the Managing General Partner; and (iii) "Trading Day" means a
day on which the principal National Securities Exchange on which such
limited partner interests of any class are listed or admitted to
trading is open for the transaction of business or, if Limited Partner
Interests of a class are not listed or admitted to trading on any
National Securities Exchange, a day on which banking institutions in
New York City generally are open.
(b) If the Managing General Partner, any Affiliate of the
Managing General Partner or the Partnership elects to exercise the
right to purchase Limited Partner Interests granted pursuant to
Section 15.1(a), the Managing General Partner shall deliver to the
Transfer Agent notice of such election to purchase (the "Notice of
Election to Purchase") and shall cause the Transfer Agent to mail a
copy of such Notice of Election to Purchase to the Record Holders of
Limited Partner Interests of such class (as of a Record Date selected
by the Managing General Partner) at least 10, but not more than 60,
days prior to the Purchase Date. Such Notice of Election to Purchase
shall also be published for a period of at least three consecutive
days in at least two daily newspapers of general circulation printed
in the English language and published in the Borough of Manhattan, New
York. The Notice of Election to Purchase shall specify the Purchase
Date and the price (determined in accordance with Section 15.1(a)) at
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which Limited Partner Interests will be purchased and state that the
Managing General Partner, its Affiliate or the Partnership, as the
case may be, elects to purchase such Limited Partner Interests, upon
surrender of Certificates representing such Limited Partner Interests
in exchange for payment, at such office or offices of the Transfer
Agent as the Transfer Agent may specify, or as may be required by any
National Securities Exchange on which such Limited Partner Interests
are listed or admitted to trading. Any such Notice of Election to
Purchase mailed to a Record Holder of Limited Partner Interests at his
address as reflected in the records of the Transfer Agent shall be
conclusively presumed to have been given regardless of whether the
owner receives such notice. On or prior to the Purchase Date, the
Managing General Partner, its Affiliate or the Partnership, as the
case may be, shall deposit with the Transfer Agent cash in an amount
sufficient to pay the aggregate purchase price of all of such Limited
Partner Interests to be purchased in accordance with this
Section 15.1. If the Notice of Election to Purchase shall have been
duly given as aforesaid at least 10 days prior to the Purchase Date,
and if on or prior to the Purchase Date the deposit described in the
preceding sentence has been made for the benefit of the holders of
Limited Partner Interests subject to purchase as provided herein, then
from and after the Purchase Date, notwithstanding that any Certificate
shall not have been surrendered for purchase, all rights of the
holders of such Limited Partner Interests (including any rights
pursuant to Articles IV, V, VI, and XII) shall thereupon cease, except
the right to receive the purchase price (determined in accordance with
Section 15.1(a)) for Limited Partner Interests therefor, without
interest, upon surrender to the Transfer Agent of the Certificates
representing such Limited Partner Interests, and such Limited Partner
Interests shall thereupon be deemed to be transferred to the Managing
General Partner, its Affiliate or the Partnership, as the case may be,
on the record books of the Transfer Agent and the Partnership, and the
Managing General Partner or any Affiliate of the Managing General
Partner, or the Partnership, as the case may be, shall be deemed to be
the owner of all such Limited Partner Interests from and after the
Purchase Date and shall have all rights as the owner of such Limited
Partner Interests (including all rights as owner of such Limited
Partner Interests pursuant to Articles IV, V, VI and XII).
(c) At any time from and after the Purchase Date, a holder of an
Outstanding Limited Partner Interest subject to purchase as provided
in this Section 15.1 may surrender his Certificate evidencing such
Limited Partner Interest to the Transfer Agent in exchange for payment
of the amount described in Section 15.1(a), therefor, without interest
thereon.
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ARTICLE XVI
GENERAL PROVISIONS
16.1 ADDRESSES AND NOTICES
Any notice, demand, request, report or proxy materials required
or permitted to be given or made to a Partner or Assignee under this
Agreement shall be in writing and shall be deemed given or made when
delivered in person or when sent by first class United States mail or
by other means of written communication to the Partner or Assignee at
the address described below. Any notice, payment or report to be given
or made to a Partner or Assignee hereunder shall be deemed
conclusively to have been given or made, and the obligation to give
such notice or report or to make such payment shall be deemed
conclusively to have been fully satisfied, upon sending of such
notice, payment or report to the Record Holder of such Partnership
Securities at his address as shown on the records of the Transfer
Agent or as otherwise shown on the records of the Partnership,
regardless of any claim of any Person who may have an interest in such
Partnership Securities by reason of any assignment or otherwise. An
affidavit or certificate of making of any notice, payment or report in
accordance with the provisions of this Section 16.1 executed by the
Managing General Partner, the Transfer Agent or the mailing
organization shall be prima facie evidence of the giving or making of
such notice, payment or report. If any notice, payment or report
addressed to a Record Holder at the address of such Record Holder
appearing on the books and records of the Transfer Agent or the
Partnership is returned by the United States Post Office marked to
indicate that the United States Postal Service is unable to deliver
it, such notice, payment or report and any subsequent notices,
payments and reports shall be deemed to have been duly given or made
without further mailing (until such time as such Record Holder or
another Person notifies the Transfer Agent or the Partnership of a
change in his address) if they are available for the Partner or
Assignee at the principal office of the Partnership for a period of
one year from the date of the giving or making of such notice, payment
or report to the other Partners and Assignees. Any notice to the
Partnership shall be deemed given if received by the Managing General
Partner at the principal office of the Partnership designated pursuant
to Section 2.3. The Managing General Partner may rely and shall be
protected in relying on any notice or other document from a Partner,
Assignee or other Person if believed by it to be genuine.
16.2 FURTHER ACTION
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary
or appropriate to achieve the purposes of this Agreement.
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16.3 BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
16.4 INTEGRATION
This Agreement constitutes the entire agreement among the parties
hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.
16.5 CREDITORS
None of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
16.6 WAIVER
No failure by any party to insist upon the strict performance of
any covenant, duty, agreement or condition of this Agreement or to
exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach of any other covenant, duty,
agreement or condition.
16.7 COUNTERPARTS
This Agreement may be executed in counterparts, all of which
together shall constitute an agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to
the original or the same counterpart. Each party shall become bound by
this Agreement immediately upon affixing its signature hereto or, in
the case of a Person acquiring a Unit, upon accepting the certificate
evidencing such Unit or executing and delivering a Transfer
Application as herein described, independently of the signature of any
other party.
16.8 APPLICABLE LAW
This Agreement shall be construed in accordance with and governed
by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
16.9 INVALIDITY OF PROVISIONS
If any provision of this Agreement is or becomes invalid, illegal
or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not
be affected thereby.
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16.10 CONSENT OF PARTNERS
Each Partner hereby expressly consents and agrees that, whenever
in this Agreement it is specified that an action may be taken upon the
affirmative vote or consent of less than all of the Partners, such
action may be so taken upon the concurrence of less than all of the
Partners and each Partner shall be bound by the results of such
action.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
MANAGING GENERAL PARTNER:
CORNERSTONE PROPANE GP, INC.
By: /s/ X. X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vicve President &
Chief Financial Officer
SPECIAL GENERAL PARTNER:
SYN INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
ORGANIZATIONAL LIMITED PARTNER:
NORTHWESTERN GROWTH CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
LIMITED PARTNERS
All Limited Partners now and hereafter
admitted as Limited Partners of the
Partnership, pursuant to powers of
attorney now and hereafter executed in
favor of, and granted and delivered to
the Managing General Partner.
By: /s/ X. X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
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EXHIBIT A TO THE AMENDED AND
RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
CORNERSTONE PROPANE PARTNERS, L.P.
CERTIFICATE EVIDENCING COMMON UNITS
REPRESENTING LIMITED PARTNER INTERESTS IN
CORNERSTONE PROPANE PARTNERS, L.P.
NO. COMMON UNITS
In accordance with Section 4.1 of the Amended and Restated
Agreement of Limited Partnership of Cornerstone Propane Partners,
L.P., as amended, supplemented or restated from time to time (the
"Partnership Agreement"), Cornerstone Propane Partners, L.P., a
Delaware limited partnership (the "Partnership"), hereby certifies
that (the "Holder") is the registered owner of Common
Units representing limited partner interests in the Partnership (the
"Common Units") transferable on the books of the Partnership, in
person or by duly authorized attorney, upon surrender of this
Certificate properly endorsed and accompanied by a properly executed
application for transfer of the Common Units represented by this
Certificate. The rights, preferences and limitations of the Common
Units are set forth in, and this Certificate and the Common Units
represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Partnership Agreement. Copies of the
Partnership Agreement are on file at, and will be furnished without
charge on delivery of written request to the Partnership at, the
principal office of the Partnership located at 000 Xxxxxxxxx Xxxxx,
Xxxxxxxxxxx, Xxxxxxxxxx 00000. Capitalized terms used herein but not
defined shall have the meanings given them in the Partnership
Agreement.
The Holder, by accepting this Certificate, is deemed to have
(i) requested admission as, and agreed to become, a Limited Partner
and to have agreed to comply with and be bound by and to have executed
the Partnership Agreement, (ii) represented and warranted that the
Holder has all right, power and authority and, if an individual, the
capacity necessary to enter into the Partnership Agreement,
(iii) granted the powers of attorney provided for in the Partnership
Agreement and (iv) made the waivers and given the consents and
approvals contained in the Partnership Agreement.
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This Certificate shall not be valid for any purpose unless it has
been countersigned and registered by the Transfer Agent and Registrar.
Dated: _____________________________ CORNERSTONE PROPANE PARTNERS, L.P.
Countersigned and Registered by: By: ________________________________
Cornerstone Propane GP, Inc.,
its Managing General Partner
____________________________________ By: ________________________________
as Transfer Agent and Registrar President and Chief Executive
Officer
By: By: ______________________________
__________________________________ Secretary
Authorized Signature
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[REVERSE OF CERTIFICATE]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this Certificate, shall be construed as follows according to
applicable laws or regulations:
TEN as tenants in common UNIF GIFT MIN ACT
COM ___
TEN as tenants by the Custodian
ENT___ entireties
JT as joint tenants with (Cust) (Minor)
TEN___ right of survivorship
and not as
tenants in common under Uniform Gifts to Minors
Act
State
Additional abbreviations, though not in the above list, may also be
used.
ASSIGNMENT OF COMMON UNITS
in
CORNERSTONE PROPANE PARTNERS, L.P.
IMPORTANT NOTICE REGARDING INVESTOR RESPONSIBILITIES
DUE TO TAX SHELTER STATUS OF CORNERSTONE PROPANE PARTNERS, L.P.
You have acquired an interest in Cornerstone Propane
Partners, L.P., 000 Xxxxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxx 00000,
whose taxpayer identification number is 00-0000000. The Internal
Revenue Service has issued Cornerstone Propane Partners, L.P. the
following tax shelter registration number: .
YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL REVENUE
SERVICE IF YOU CLAIM ANY DEDUCTION, LOSS, CREDIT OR OTHER TAX BENEFIT
OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT IN CORNERSTONE
PROPANE PARTNERS, L.P.
You must report the registration number as well as the name and
taxpayer identification number of CORNERSTONE PROPANE PARTNERS, L.P.
on Form 8271. FORM 8271 MUST BE ATTACHED TO THE RETURN ON WHICH YOU
CLAIM THE DEDUCTION, LOSS, CREDIT OR OTHER TAX BENEFIT OR REPORT ANY
INCOME BY REASON OF YOUR INVESTMENT IN CORNERSTONE PROPANE PARTNERS,
L.P.
If you transfer your interest in Cornerstone Propane Partners,
L.P. to another person, you are required by the Internal Revenue
Service to keep a list containing (a) that person's name, address and
taxpayer identification number, (b) the date on which you transferred
the interest and (c) the name, address and tax shelter registration
number of Cornerstone Propane Partners, L.P. If you do not want to
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keep such a list, you must (1) send the information specified above to
the Partnership, which will keep the list for this tax shelter, and
(2) give a copy of this notice to the person to whom you transfer your
interest. Your failure to comply with any of the above-described
responsibilities could result in the imposition of a penalty under
Section 6707(b) or 6708(a) of the Internal Revenue Code of 1986, as
amended, unless such failure is shown to be due to reasonable cause.
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS
INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR
APPROVED BY THE INTERNAL REVENUE SERVICE.
FOR VALUE RECEIVED, ________________ hereby assigns, conveys,
sells and transfers unto ________________
(Please insert Social Security or
(Please print or typewrite name other
and address of Assignee) identifying number of Assignee)
________________ Common Units representing limited partner interests
evidenced by this Certificate, subject to the Partnership Agreement,
and does hereby irrevocably constitute and appoint ________________ as
its attorney-in-fact with full power of substitution to transfer the
same on the books of Cornerstone Propane Partners, L.P.
Date: NOTE: The signature to any
endorsement hereon must
correspond with the name as
written upon the face of this
Certificate in every
particular, without
alteration, enlargement or
change.
SIGNATURE(S) MUST BE ______________________________
GUARANTEED BY A MEMBER (Signature)
FIRM OF THE NATIONAL
ASSOCIATION OF
SECURITIES DEALERS, ______________________________
INC. OR BY A COMMERCIAL (Signature)
BANK OR TRUST COMPANY
SIGNATURE(S) GUARANTEED
No transfer of the Common Units evidenced hereby will be
registered on the books of the Partnership, unless the Certificate
evidencing the Common Units to be transferred is surrendered for
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registration or transfer and an Application for Transfer of Common
Units has been executed by a transferee either (a) on the form set
forth below or (b) on a separate application that the Partnership will
furnish on request without charge. A transferor of the Common Units
shall have no duty to the transferee with respect to execution of the
transfer application in order for such transferee to obtain
registration of the transfer of the Common Units.
_________
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APPLICATION FOR TRANSFER OF COMMON UNITS
The undersigned ("Assignee") hereby applies for transfer to the
name of the Assignee of the Common Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited
Partner and agrees to comply with and be bound by, and hereby
executes, the Amended and Restated Agreement of Limited Partnership of
Cornerstone Propane Partners, L.P. (the "Partnership"), as amended,
supplemented or restated to the date hereof (the "Partnership
Agreement"), (b) represents and warrants that the Assignee has all
right, power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement, (c) appoints the
Managing General Partner of the Partnership and, if a Liquidator shall
be appointed, the Liquidator of the Partnership as the Assignee's
attorney-in-fact to execute, swear to, acknowledge and file any
document, including, without limitation, the Partnership Agreement and
any amendment thereto and the Certificate of Limited Partnership of
the Partnership and any amendment thereto, necessary or appropriate
for the Assignee's admission as a Substituted Limited Partner and as a
party to the Partnership Agreement, (d) gives the powers of attorney
provided for in the Partnership Agreement, and (e) makes the waivers
and gives the consents and approvals contained in the Partnership
Agreement. Capitalized terms not defined herein have the meanings
assigned to such terms in the Partnership Agreement.
Date:
------------------------
Social Security or other identifying Signature of Assignee
number of Assignee
Purchase Price including Name and Address of Assignee
commissions, if any
Type of Entity (check one):
/__/ Individual /__/ Partnership /__/ Corporation
/__/ Trust /__/ Other (specify) ___
Nationality (check
one):
/__/ U.S. Citizen, Resident or Domestic
Entity
/__/ Foreign /__/ Non-resident
Corporation Alien
If the U.S. Citizen, Resident or Domestic Entity box is checked,
the following certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Partnership must withhold tax with respect
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to certain transfers of property if a holder of an interest in the
Partnership is a foreign person. To inform the Partnership that no
withholding is required with respect to the undersigned
interestholder's interest in it, the undersigned hereby certifies the
following (or, if applicable, certifies the following on behalf of the
interestholder).
Complete Either A or B:
A. Individual Interestholder
1. I am not a non-resident alien for purposes of U.S. income
taxation.
2. My U.S. taxpayer identification number (Social Security
Number) is __.
3. My home address is __.
B. Partnership, Corporation or Other Interestholder
1. __ is not a foreign
(Name of Interestholder)
corporation, foreign partnership, foreign trust or foreign
estate (as those terms are defined in the Code and Treasury
Regulations).
2. The interestholder's U.S. employer identification number
is __
3. The interestholder's office address and place of
incorporation (if applicable) is __.
The interestholder agrees to notify the Partnership within sixty
(60) days of the date the interestholder becomes a foreign person.
The interestholder understands that this certificate may be
disclosed to the Internal Revenue Service by the Partnership and that
any false statement contained herein could be punishable by fine,
imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true,
correct and complete and, if applicable, I further declare that I have
authority to sign this document on behalf of
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Name of
Interestholder
Signature and Date
Title (if
applicable)
Note: If the Assignee is a broker, dealer, bank, trust company,
clearing corporation, other nominee holder or an agent of any of the
foregoing, and is holding for the account of any other person, this
application should be completed by an officer thereof or, in the case
of a broker or dealer, by a registered representative who is a member
of a registered national securities exchange or a member of the
National Association of Securities Dealers, Inc., or, in the case of
any other nominee holder, a person performing a similar function. If
the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee owner or an agent of any of the foregoing,
the above certification as to any person for whom the Assignee will
hold the Common Units shall be made to the best of the Assignee's
knowledge.
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