Exhibit 4.2
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ENBRIDGE ENERGY PARTNERS, L.P.
DATED AS OF __________, 2002
TABLE OF CONTENTS
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 Continuation.............................................................................................2
1.2 Name.....................................................................................................2
1.3 Registered Office; Principal Office......................................................................2
1.4 Power of Attorney........................................................................................2
1.5 Term.....................................................................................................4
1.6 Possible Restrictions on Transfer........................................................................4
ARTICLE II
DEFINITIONS
ARTICLE III
PURPOSE
3.1 Purpose and Business....................................................................................17
3.2 Powers..................................................................................................17
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 Initial Contribution....................................................................................18
4.2 Intentionally Omitted...................................................................................18
4.3 Intentionally Omitted...................................................................................18
4.4 Issuances of Units and Other Securities.................................................................18
4.5 Limited Preemptive Rights...............................................................................19
4.6 Capital Accounts........................................................................................20
4.7 Interest................................................................................................22
4.8 No Withdrawal...........................................................................................22
4.9 Loans from Partners.....................................................................................22
4.10 No Fractional Units.....................................................................................22
4.11 Splits and Combinations.................................................................................22
4.12 I-Units.................................................................................................23
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocations for Capital Account Purposes................................................................24
5.2 Allocations for Tax Purposes............................................................................30
5.3 Requirement and Characterization of Distributions.......................................................32
5.4 [Intentionally Omitted].................................................................................33
5.5 Cash from Operations....................................................................................33
5.6 Change of Class A Common Units and Class B Common Units.................................................34
5.7 Cash from Interim Capital Transactions..................................................................34
5.8 Definitions.............................................................................................34
5.9 Adjustment of Minimum Quarterly Distribution and Target Distribution Levels.............................37
5.10 Special Provisions Relating to I-Units..................................................................38
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ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
6.1 Management..............................................................................................40
6.2 Certificate of Limited Partnership......................................................................42
6.3 Restrictions on General Partner's Authority.............................................................42
6.4 Reimbursement of the General Partner....................................................................43
6.5 Outside Activities......................................................................................44
6.6 Loans to and from the General Partner; Contracts with Affiliates........................................44
6.7 Indemnification.........................................................................................46
6.8 Liability of Indemnitees................................................................................47
6.9 Resolution of Conflicts of Interest.....................................................................48
6.10 Other Matters Concerning the General Partner............................................................49
6.11 Title to Partnership Assets.............................................................................50
6.12 Purchase or Sale of Class A Common Units................................................................50
6.13 Reliance by Third Parties...............................................................................50
6.14 Registration Rights of the General Partner and its Affiliates...........................................51
6.15 Delegation to EEM.......................................................................................53
ARTICLE VII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
7.1 Limitation of Liability.................................................................................54
7.2 Management of Business..................................................................................54
7.3 Outside Activities......................................................................................54
7.4 Return of Capital.......................................................................................54
7.5 Rights of Limited Partners Relating to the Partnership..................................................54
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 Records and Accounting..................................................................................55
8.2 Fiscal Year.............................................................................................56
8.3 Reports.................................................................................................56
ARTICLE IX
TAX MATTERS
9.1 Preparation of Tax Returns..............................................................................56
9.2 Tax Elections...........................................................................................56
9.3 Tax Controversies.......................................................................................56
9.4 Organizational Expenses.................................................................................57
9.5 Withholding.............................................................................................57
9.6 Entity-Level Taxation...................................................................................57
9.7 Entity-Level Deficiency Collections.....................................................................57
9.8 Opinions of Counsel.....................................................................................58
ARTICLE X
UNIT CERTIFICATES
10.1 Unit Certificates.......................................................................................58
10.2 Registration, Registration of Transfer and Exchange.....................................................58
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10.3 Mutilated, Destroyed, Lost or Stolen Certificates.......................................................59
10.4 Record Holder...........................................................................................60
ARTICLE XI
TRANSFER OF INTERESTS
11.1 Transfer................................................................................................60
11.2 Transfer of General Partner's Partnership Interest......................................................60
11.3 Transfer of Units.......................................................................................61
11.4 Restrictions on Transfers...............................................................................62
11.5 Citizenship Certificates; Non-citizen Assignees.........................................................62
11.6 Redemption of Interests.................................................................................63
ARTICLE XII
ADMISSION OF PARTNERS
12.1 [Intentionally Omitted].................................................................................64
12.2 Admission of Substituted Limited Partners...............................................................64
12.3 Admission of Successor General Partner..................................................................65
12.4 Admission of Additional Limited Partners................................................................65
12.5 Amendment of Agreement and Certificate of Limited Partnership...........................................66
ARTICLE XIII
WITHDRAWAL OR REMOVAL OF PARTNERS
13.1 Withdrawal of the General Partner.......................................................................66
13.2 Removal of the General Partner..........................................................................67
13.3 Interest of Departing Partner and Successor General Partner.............................................68
13.4 [Intentionally Omitted].................................................................................69
13.5 Withdrawal of Limited Partners..........................................................................69
ARTICLE XIV
DISSOLUTION AND LIQUIDATION
14.1 Dissolution.............................................................................................69
14.2 Continuation of the Business of the Partnership after Dissolution.......................................70
14.3 Liquidation.............................................................................................70
14.4 Distributions in Kind...................................................................................71
14.5 Cancellation of Certificate of Limited Partnership......................................................72
14.6 Reasonable Time for Winding Up..........................................................................72
14.7 Return of Capital.......................................................................................72
14.8 Capital Account Restoration.............................................................................72
14.9 Waiver of Partition.....................................................................................72
ARTICLE XV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
15.1 Amendment to be Adopted Solely by General Partner.......................................................72
15.2 Amendment Procedures....................................................................................74
15.3 Amendment Requirements..................................................................................74
15.4 Meetings................................................................................................75
15.5 Notice of a Meeting.....................................................................................75
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15.6 Record Date.............................................................................................76
15.7 Adjournment.............................................................................................76
15.8 Waiver of Notice; Approval of Meeting; Approval of Minutes..............................................76
15.9 Quorum..................................................................................................76
15.10 Conduct of Meeting......................................................................................77
15.11 Action Without a Meeting................................................................................77
15.12 Voting and Other Rights.................................................................................78
ARTICLE XVI
MERGER
16.1 Authority...............................................................................................78
16.2 Procedure for Merger or Consolidation...................................................................78
16.3 Approval by Limited Partners of Merger or Consolidation.................................................79
16.4 Certificate of Merger...................................................................................80
16.5 Effect of Merger........................................................................................80
16.6 Merger with EEM upon Tax Status Event...................................................................80
ARTICLE XVII
RIGHT TO ACQUIRE UNITS
17.1 Right to Acquire Units..................................................................................81
ARTICLE XVIII
GENERAL PROVISIONS
18.1 Addresses and Notices...................................................................................83
18.2 Titles and Captions.....................................................................................84
18.3 Pronouns and Plurals....................................................................................84
18.4 Further Action..........................................................................................84
18.5 Binding Effect..........................................................................................84
18.6 Integration.............................................................................................84
18.7 Creditors...............................................................................................84
18.8 Waiver..................................................................................................84
18.9 Counterparts............................................................................................84
18.10 Applicable Law..........................................................................................85
18.11 Invalidity of Provisions................................................................................85
18.12 Amendments to Reflect GP Reorganization Agreement.......................................................85
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THIRD AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
ENBRIDGE ENERGY PARTNERS, L.P.
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
ENBRIDGE ENERGY PARTNERS, L.P., dated as of __________, 2002, is entered into
by and among Enbridge Energy Company, Inc., a
Delaware corporation, as the
General Partner, and the Limited Partners, together with any other Persons who
become Partners in the Partnership as provided herein.
WHEREAS, the General Partner and the other parties thereto entered into
that certain Agreement of Limited Partnership of the Partnership on December 19,
1991 (the "ORIGINAL AGREEMENT"); and
WHEREAS, the General Partner amended and restated the Original Agreement,
as evidenced by that certain Amended and Restated Agreement of Limited
Partnership of the Partnership dated as of December 27, 1991 (the "FIRST AMENDED
AND RESTATED AGREEMENT"); and
WHEREAS, the General Partner, acting pursuant to Section 15.1 of the First
Amended and Restated Agreement, amended and restated the First Amended and
Restated Agreement, as evidenced by that certain Amended and Restated Agreement
of Limited Partnership of the Partnership dated as of April 15, 1997 (the
"SECOND AMENDED AND RESTATED AGREEMENT"); and
WHEREAS, the General Partner, acting pursuant to Section 15.1 of the
Second Amended and Restated Agreement, amended the Second Amended and Restated
Agreement, as evidenced by that certain Amendment to Amended and Restated
Agreement of Limited Partnership of the Partnership, dated as of August 28, 2001
(the "AMENDMENT AGREEMENT"); and
WHEREAS, pursuant to the authority granted to the General Partner in the
Second Amended and Restated Agreement, as amended, the General Partner desires
(i) to amend the Second Amended and Restated Agreement to create a class of
Units to be designated "I-Units," and to fix the preferences and relative,
participating, optional and other special rights, powers and duties pertaining
to the I-Units, (ii) to amend the Second Amended and Restated Agreement to
reflect the withdrawal of the General Partner as the general partner of Enbridge
Energy, Limited Partnership and the increase in the General Partner's general
partner interest in the Partnership, (iii) to amend the Second Amended and
Restated Agreement to reflect the expiration of the Preference Period (as
defined in the Second Amended and Restated Agreement) and the inapplicability of
various rights, preferences, duties and obligations associated therewith,
including the purchase and redemption obligations and rights associated with
APIs, and (iv) to restate the Second Amended and Restated Agreement as amended
by the Amendment Agreement and the amendments described in (i) through (iii)
above; and
WHEREAS, Article IV and Section 15.1 of the Second Amended and Restated
Agreement permit the General Partner, without the approval of any Limited
Partner or Assignee, to amend the Second Amended and Restated Agreement as
provided herein;
NOW, THEREFORE, the General Partner does hereby amend and restate the
Second Amended and Restated Agreement, as amended, to provide, in its entirety,
as follows:
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 CONTINUATION. The General Partner and the Limited Partners
hereby continue the Partnership as a limited partnership pursuant to the
provisions of the
Delaware Act. Except as expressly provided to the contrary
in this Agreement, the rights and obligations of the Partners and the
administration, dissolution and termination of the Partnership shall be
governed by the
Delaware Act. The Partnership Interest of each Partner shall
be personal property for all purposes.
1.2 NAME. The name of the Partnership shall be "Enbridge Energy
Partners, L.P." The Partnership's business may be conducted under any other
name or names deemed necessary or appropriate by the General Partner,
including, without limitation, the name of the General Partner or any
Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or similar
words or letters shall be included in the Partnership's name where necessary
for the purposes of complying with the laws of any jurisdiction that so
requires. The General Partner in its sole discretion may change the name of
the Partnership at any time and from time to time and shall notify the
Limited Partners of such change in the next regular communication to Limited
Partners.
1.3 REGISTERED OFFICE; PRINCIPAL OFFICE. Unless and until
changed by the General Partner, the registered office of the Partnership in
the State of
Delaware shall be located at The Corporation Trust Center, 1209
Orange Street, New Castle County, 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 and the address of the General
Partner shall be 0000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, or such
other place as the General Partner may from time to time designate by notice
to the Limited Partners. The Partnership may maintain offices at such other
place or places within or outside the State of
Delaware as the General
Partner deems advisable.
1.4 POWER OF ATTORNEY. (a) Each Limited Partner and each
Assignee hereby constitutes and appoints each of the General Partner and, if
a Liquidator shall have been selected pursuant to Section 14.3, the
Liquidator severally (and any successor to either thereof by merger,
transfer, assignment, election or otherwise) and each of their authorized
officers and attorneys-in-fact, with full power of substitution, as his true
and lawful agent and attorney-in-fact, with full power and authority in his
name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (A) all certificates, documents
and other instruments (including, without limitation, this Agreement
and the Certificate of Limited Partnership and all amendments or
restatements thereof) that the General Partner or the Liquidator
deems necessary or appropriate to form, qualify or continue the
existence or qualification of the Partnership as a limited
partnership (or a partnership in which the limited partners have
limited liability) in the State of
Delaware and in all other
jurisdictions in which the Partnership may conduct business or own
property; (B) all certificates, documents and other instruments that
the General Partner or the Liquidator deems necessary or appropriate
to
2
reflect, in accordance with its terms, any amendment, change,
modification or restatement of this Agreement; (C) all certificates,
documents and other instruments (including, without limitation,
conveyances and a certificate of cancellation) that the General
Partner or the Liquidator deems necessary or appropriate to reflect
the dissolution and liquidation of the Partnership pursuant to the
terms of this Agreement; (D) all certificates, documents and other
instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other events described
in, Article XI, XII, XIII or XIV or the Capital Contribution of any
Partner; (E) all certificates, documents and other instruments
relating to the determination of the rights, preferences and
privileges of any class or series of Units or other securities
issued pursuant to Section 4.4; and (F) all certificates, documents
and other instruments (including, without limitation, agreements and
a certificate of merger) relating to a merger or consolidation of
the Partnership pursuant to Article XVI; and
(ii) execute, swear to, acknowledge, deliver, file and record
all ballots, consents, approvals, waivers, certificates and other
instruments necessary or appropriate, in the sole discretion of the
General Partner or the Liquidator, to make, evidence, give, confirm
or ratify any vote, consent, approval, agreement or other action
that is made or given by the Partners hereunder or is consistent
with the terms of this Agreement or is necessary or appropriate, in
the sole discretion of the General Partner or the Liquidator, to
effectuate the terms or intent of this Agreement; provided, that
when required by Section 15.3 or any other provision of this
Agreement that establishes a percentage of the Limited Partners or
of the Limited Partners of any class or series required to take any
action, the General Partner or the Liquidator may exercise the power
of attorney made in this Section 1.4(a)(ii) only after the necessary
vote, consent or approval of the Limited Partners or of the Limited
Partners of such class or series. Nothing contained in this Section
1.4 shall be construed as authorizing the General Partner to amend
this Agreement except in accordance with Article XV, or as may be
otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and
not be affected by the subsequent death, incompetency, disability,
incapacity, dissolution, bankruptcy or termination of any Limited Partner
or Assignee and the transfer of all or any portion of such Limited
Partner's or Assignee's Partnership Interest and shall extend to such
Limited Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees to be
bound by any representation made by the General Partner or the Liquidator
acting in good faith pursuant to such power of attorney; and each such
Limited Partner or Assignee hereby waives any and all defenses that may be
available to contest, negate or disaffirm the action of the General
Partner or the Liquidator taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to
the General Partner or the Liquidator, within 15 days after receipt of the
General Partner's or the Liquidator's request therefor, such further
designation, powers of attorney and other instruments as the General
Partner or
3
the Liquidator deems necessary to effectuate this Agreement and
the purposes of the Partnership.
1.5 TERM. The Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the
Delaware Act and
shall continue in existence until the close of Partnership business on
December 31, 2031 or until the earlier termination of the Partnership in
accordance with the provisions of Article XIV.
1.6 POSSIBLE RESTRICTIONS ON TRANSFER. Notwithstanding anything
to the contrary contained in this Agreement, in the event of (i) the
enactment (or imminent enactment) of any legislation, (ii) the publication of
any temporary or final regulation by the Treasury Department (a "TREASURY
REGULATION"), (iii) any ruling by the Internal Revenue Service or (iv) any
judicial decision, that, in any such case, in the Opinion of Counsel, would
result in the taxation of the Partnership for federal income tax purposes as
a corporation or would otherwise subject the Partnership to being taxed as an
entity for federal income tax purposes, then, either (a) the General Partner
may impose such restrictions on the transfer of Units or Partnership
Interests as may be required, in the Opinion of Counsel, to prevent the
Partnership from being taxed as a corporation or otherwise being taxed as an
entity for federal income tax purposes, including, without limitation, making
any amendments to this Agreement as the General Partner in its sole
discretion may determine to be necessary or appropriate to impose such
restrictions, provided, that any such amendment to this Agreement that would
result in the delisting or suspension of trading of the Units on any National
Securities Exchange on which the Units are then traded must be approved by
the holders of at least 66 2/3% of the Outstanding Units (excluding for this
purpose Units held by the General Partner and its Affiliates) or (b) upon the
recommendation of the General Partner and the approval of the holders of at
least 66 2/3% of the Outstanding Units (excluding for this purpose Units held
by the General Partner and its Affiliates), the Partnership may be converted
into and reconstituted as a trust or any other type of legal entity (the "NEW
ENTITY") the manner and on other terms so recommended and approved. In such
event, the business of the Partnership shall be continued by the New Entity
and the Units shall be converted into equity interests of the New Entity in
the manner and on the terms so recommended and approved. Notwithstanding the
foregoing, no such reconstitution shall take place unless the Partnership
shall have received an Opinion of Counsel to the effect that the liability of
the Limited Partners for the debts and obligations of the New Entity shall
not, unless such Limited Partners take part in the control of the business of
the New Entity, exceed that which otherwise had been applicable to such
Limited Partners as limited partners of the Partnership under the
Delaware
Act.
ARTICLE II
DEFINITIONS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to the Partnership as
a Limited Partner pursuant to Section 12.4 and who is shown as such on the books
and records of the Partnership.
4
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account maintained for each
Partner as of the end of each taxable 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 1.704-1T(b)(4)(iv)(f) and
1.704-1T(b)(4)(iv)(h)(5)), and (b) decreased by (i) the amount of all losses and
deductions that, as of the end of such taxable 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 taxable 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 5.1(e)(i) or 5.1(e)(ii)). The foregoing
definition of Adjusted Capital Account is intended to comply with the provisions
of Treasury Regulation Section 1.704-(b)(2)(ii)(d) and shall be interpreted
consistently therewith. The Adjusted Capital Account of a Partner in respect of
a Class A Common Unit, a Class B Common Unit, an I-Unit or any other interest in
the Partnership shall be the amount which such Adjusted Capital Account would be
if such Class A Common Unit, Class B Common Unit, I-Unit or other interest in
the Partnership was the only interest in the Partnership held by a Partner.
"ADJUSTED PROPERTY" means any property the Carrying Value of which has
been adjusted pursuant to Section 4.6(d)(i) or 4.6(d)(ii). Once an Adjusted
Property is deemed distributed by, and recontributed to, the Partnership for
federal income tax purposes upon a termination thereof pursuant to Section 708
of the Code, such property shall thereafter constitute a Contributed Property
until the Carrying Value of such property is further adjusted pursuant to
Section 4.6(d)(i) or 4.6(d)(ii) hereof.
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with, the Person in question. As used herein, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise. For purposes of this Agreement,
EEM is an Affiliate of the Company.
"AGREED ALLOCATION" means any allocation made pursuant to Section 5.1(a),
(b), (c), (d) or (f).
"AGREED VALUE" of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution as determined
by the General Partner using such reasonable method of valuation as it may
adopt. The General Partner shall, in its sole discretion, use such method as it
deems reasonable and appropriate to allocate the aggregate Agreed Value of
Contributed Properties contributed to the Partnership in a single or integrated
transaction among such properties on a basis proportional to their fair market
value.
5
"AGREEMENT" means this Third Amended and Restated Agreement of Limited
Partnership of Enbridge Energy Partners, L.P., as it may be further amended,
supplemented or restated from time to time.
"AMENDMENT AGREEMENT" has the meaning assigned to such term in the
recitals to this Agreement.
"ASSIGNEE" means a Non-citizen Assignee or a Person to whom one or more
Units have been transferred in a manner permitted under this Agreement and who
has executed and delivered a Transfer Application as required by this Agreement,
but who has not become a Substituted Limited Partner.
"AVAILABLE CASH" has the meaning assigned to such term in Section 5.8 (a).
"AVERAGE MARKET PRICE" has the meaning assigned to such term in Section
5.10(c).
"BOOK-TAX DISPARITY" means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Section 4.6 and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"BUSINESS DAY" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States or
Canada or the State of New York or the Province of Alberta shall not be regarded
as a Business Day.
"CALCULATED UNIT AMOUNT" has the meaning assigned to such term in Section
5.10(c).
"CAPITAL ACCOUNT" means the capital account maintained for any Partner
pursuant to Section 4.6.
"CAPITAL CONTRIBUTION" means any cash, cash equivalents or the Net Agreed
Value of Contributed Property that a Partner has previously contributed to the
Partnership pursuant to the Prior Agreements or hereafter contributes to the
Partnership pursuant to Sections 4.4, 4.6(c) or 13.3(c).
"CARRYING VALUE" means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' Capital
Accounts, and (b) with respect to any other Partnership property, the adjusted
basis of such property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted from time to
time in accordance with Sections 4.6(d)(i) and 4.6(d)(ii) and to reflect
changes, additions or other adjustments to the Carrying Value for dispositions
and acquisitions of Partnership properties, as deemed appropriate by the General
Partner.
6
"CASH FROM INTERIM CAPITAL TRANSACTIONS" has the meaning assigned to such
term in Section 5.8(b).
"CASH FROM OPERATIONS" has the meaning assigned to such term in Section
5.8(c).
"CAUSE" means a court of competent jurisdiction has entered a final,
non-appealable judgment finding the General Partner liable for actual fraud,
gross negligence or willful or wanton misconduct in its capacity as general
partner of the Partnership.
"CERTIFICATE" means a certificate issued by the Partnership evidencing
ownership of one or more Partnership Interests.
"CERTIFICATE OF LIMITED PARTNERSHIP" means the Certificate of Limited
Partnership filed with the Secretary of State of the State of
Delaware as
referenced in Section 6.2, as such Certificate may be amended or restated from
time to time.
"CERTIFICATE OF MERGER" has the meaning assigned to such term in the LLC
Agreement.
"CITIZENSHIP CERTIFICATION" means a properly completed certificate in such
form as may be specified by the General Partner by which an Assignee or a
Limited Partner certifies that he (and if he is a nominee holding for the
account of another Person, that to the best of his knowledge such other Person)
is an Eligible Citizen.
"CLASS A COMMON UNIT" means, except as otherwise provided in Section
16.6(c), a Unit representing a fractional part of the Partnership Interests of
all Limited Partners and Assignees and having the rights and obligations
specified with respect to Class A Common Units in this Agreement.
"CLASS B COMMON UNIT" means a Unit representing a fractional part of the
Partnership Interests of the Limited Partners and Assignees and having the
rights and obligations specified with respect to Class B Common Units in this
Agreement.
"CLOSING DATE" means December 27, 1991.
"CLOSING PRICE" has the meaning assigned to such term in Section 17.1(a).
"CODE" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, as interpreted by the applicable regulations thereunder. Any
reference herein to a specific section or sections of the Code shall be deemed
to include a reference to any corresponding provision of future law.
"COMMON UNIT" means a Class A Common Unit or a Class B Common Unit.
"COMPANY" means Enbridge Energy Company, Inc., a Delaware
corporation.
"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
7
of the Code or otherwise). Once the Carrying Value of a Contributed Property
is adjusted pursuant to Section 4.6(d), such property shall no longer
constitute a Contributed Property for purposes of Section 5.1, but shall be
deemed an Adjusted Property for such purposes.
"CONTRIBUTING PARTNER" means each Partner contributing (or deemed to have
contributed on termination and reconstitution of the Partnership pursuant to
Section 708 of the Code or otherwise) a Contributed Property.
"CONTRIBUTION AGREEMENT" means the Contribution Agreement, dated as of May
16, 2002, between the Company and the Partnership, as amended, supplemented or
restated from time to time.
"CONVEYANCE AGREEMENT" means the Contribution, Conveyance and Assumption
Agreement dated as of December 27, 1991, among the Company, the Partnership and
Enbridge Energy, Limited Partnership.
"CURRENT MARKET PRICE" has the meaning assigned to such term in Section
17.1(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.
"DELEGATION OF CONTROL AGREEMENT" means the Delegation of Control
Agreement, dated as of , 2002, among the Partnership, the Company and EEM, as
amended, supplemented or restated from time to time.
"DEPARTING INTEREST" has the meaning assigned to such term in Section
13.3(a).
"DEPARTING PARTNER" means a former general partner of the Partnership,
from and after the effective date of any withdrawal or removal of such former
general partner pursuant to Section 13.1 or Section 13.2.
"DISCRETIONARY ALLOCATION" shall mean any allocation of an item of income,
gain, deduction, or loss pursuant to the provisions of Section 5.1(d)(iii).
"ECONOMIC RISK OF LOSS" has the meaning set forth in Treasury Regulation
Section 1.704-1T(b)(4)(iv)(k)(1).
"EEM" means Enbridge Energy Management, L.L.C., a Delaware Limited
Liability Company.
"ELIGIBLE CITIZEN" means a Person qualified to own interests in real
property in jurisdictions in which the Partnership or any Operating Subsidiary
does business or proposes to do business from time to time, and whose status as
a Limited Partner or Assignee does not or would not subject the Partnership or
any Operating Subsidiary to a substantial risk of cancellation or forfeiture of
any of its properties or any interest therein.
"ENBRIDGE INC." means Enbridge Inc., a Canadian corporation.
8
"EQUIVALENT NON-CASH AMOUNT" has the meaning assigned to such term in
Section 5.10(c).
"EVENT OF WITHDRAWAL" has the meaning assigned to such term in Section
13.1(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934 as amended,
supplemented or restated from time to time, and any successor to such statute.
"FIRST AMENDED AND RESTATED AGREEMENT" has the meaning assigned to such
term in the recitals to this Agreement.
"FIRST LIQUIDATION TARGET AMOUNT" has the meaning assigned to such term in
Section 5.1(c)(i)(H).
"FIRST TARGET DISTRIBUTION" has the meaning assigned to such term in
Section 5.8(h).
"GENERAL PARTNER" means the Company, and its successors as general partner
of the Partnership.
"GENERAL PARTNER EQUITY VALUE" means, as of any date of determination, the
fair market value of the General Partner's Partnership Interest as a general
partner as determined by the General Partner using whatever reasonable method of
valuation it may adopt.
"GP REORGANIZATION AGREEMENT" means the Reorganization Agreement, dated as
of , 2002, among the Partnership, the General Partner, Enbridge Energy,
Limited Partnership and Enbridge Pipelines (Lakehead) L.L.C.
"I-UNIT" means a Unit representing a fractional part of the Partnership
Interests of all Limited Partners and Assignees and having the rights and
obligations specified with respect to I-Units in this Agreement.
"INCENTIVE DISTRIBUTION" means any amount of cash distributed to the
General Partner, in its capacity as general partner of the Partnership, pursuant
to paragraph (d), (e) or (f) of Section 5.5 which exceeds an amount equal to
2.0% of the aggregate amount of cash then being distributed pursuant to such
provisions.
"INDEMNITEE" means the General Partner, any Operating General Partner, any
Departing Partner, any Person who is or was an Affiliate of the General Partner,
any Operating General Partner or any Departing Partner, any Person who is or was
an officer, director, employee, partner, agent or trustee of the General
Partner, any Operating General Partner or any Departing Partner or any such
Affiliate, or any Person who is or was serving at the request of the General
Partner, any Operating General Partner or any Departing Partner or any such
Affiliate as a director, officer, employee, partner, agent or trustee of another
Person.
"INITIAL OFFERING" means the initial offering of Class A Common Units to
the public, as described in the Registration Statement.
"INITIAL UNIT PRICE" means $21.50.
9
"INTERIM CAPITAL TRANSACTION" has the meaning assigned to such term in
Section 5.8(i).
"ISSUE PRICE" means the price at which a Unit is purchased from the
Partnership, less any sales commission or underwriting discount charged to the
Partnership.
"LIMITED PARTNER" means each initial Limited Partner, each Substituted
Limited Partner, each Additional Limited Partner and any Departing Partner upon
the change of its status from General Partner to Limited Partner pursuant to
Section 13.3 and, solely for purposes of Articles IV, V and VI and Sections 14.3
and 14.4, shall include an Assignee.
"LIMITED PARTNER EQUITY VALUE" means, as of any date of determination, the
amount equal to the sum of (a) the product obtained by multiplying (i) the total
number of Class A Common Units Outstanding (immediately prior to an issuance of
Units or distribution of cash or Partnership property), by (ii)(A) in the case
of a valuation required by Section 4.6(d)(i) (other than valuations caused by
sales of a de minimis quantity of Units), the Issue Price or (B) in the case of
a valuation required by Section 4.6(d)(ii) (or a valuation required by Section
4.6(d)(i) caused by sales of a de minimis quantity of Units), the Closing Price
and (b) the fair market value of the Class B Common Units Outstanding
(immediately prior to an issuance of Units or distribution of cash or
Partnership property) as determined by the General Partner using whatever
reasonable method of valuation it may adopt.
"LIQUIDATOR" means the General Partner or other Person approved pursuant
to Section 14.3 who performs the functions described therein.
"LISTED SHARES" means the limited liability company interests in EEM
designated in the LLC Agreement as "Listed Shares."
"LLC AGREEMENT" means the Amended and Restated Limited Liability Company
Agreement of EEM dated as of , 2002, including exhibits and annexes thereto,
as it may be amended, supplemented or restated from time to time.
"LPL CONTRIBUTION AGREEMENT" means the LPL Contribution and Assumption
Agreement dated as of December 27, 1991 among the Company, the Partnership and
Lakehead Services, Limited Partnership.
"MANDATORY PURCHASE EVENT" has the meaning assigned to such term in the
Purchase Provisions.
"MAXIMUM PERMITTED DELEGATION" has the meaning assigned to such term in
the Delegation of Control Agreement.
"MERGER AGREEMENT" has the meaning assigned to such term in Section 16.1;
provided, however, that as used in Section 16.6, such term has the meaning
assigned to such term in the LLC Agreement.
"MINIMUM GAIN ATTRIBUTABLE TO PARTNER NONRECOURSE DEBT" means that amount
determined in accordance with the principles of Treasury Regulation Section
1.704-1T(b)(iv)(4)(h)(6).
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"MINIMUM QUARTERLY DISTRIBUTION" has the meaning assigned to such term in
Section 5.8(j).
"NATIONAL SECURITIES EXCHANGE" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Exchange Act.
"NET AGREED VALUE" means, (a) in the case of any Contributed Property, the
Agreed Value of such property reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
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 as determined under Section 752
of the Code.
"NET INCOME" has the meaning assigned to such term in Section 5.8(k).
"NET LOSS" has the meaning assigned to such term in Section 5.8(l).
"NET TERMINATION GAIN" has the meaning assigned to such term in Section
5.8(m).
"NET TERMINATION LOSS" has the meaning assigned to such term in Section
5.8(n).
"NEW ENTITY" has the meaning assigned to such term in Section 1.6.
"NON-CITIZEN ASSIGNEE" means a Person who the General Partner has
determined in its sole discretion does not constitute an Eligible Citizen and as
to whose Partnership Interest the General Partner has become the Substituted
Limited Partner, pursuant to Section 11.5.
"NONRECOURSE BUILT-IN GAIN" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 5.2(b)(i)(A),
5.2(b)(ii)(A) or 5.2(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
expenditure (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Treasury Regulation Section 1.704-1T(b)(4)(iv)(b), are
attributable to a Nonrecourse Liability.
"NONRECOURSE LIABILITY" has the meaning set forth in Treasury Regulation
Section 1.704-1T(b)(4)(iv)(k)(3).
"NOTICE OF ELECTION TO PURCHASE" has the meaning assigned to such term in
Section 17.1(b).
"OMNIBUS AGREEMENT" means the Omnibus Agreement dated as of ____, 2002,
among Enbridge Inc., the Company and the Partnership, which specifies certain
business opportunities in which the Company or its Affiliates are prohibited
from engaging and which amends and restates the Distribution Support Agreement,
dated December 27, 1991, to delete the provisions
11
therein relating to distribution support, including the purchase and
redemption of APIs (as defined therein) and to reflect the reorganization of
the Partnership as contemplated by the GP Reorganization Agreement.
"OPERATING GENERAL PARTNER" means each of Enbridge Pipelines (Lakehead)
L.L.C., a Delaware limited liability company, Enbridge (East Texas) L.L.C., a
Delaware limited liability company and Enbridge Midcoast Holdings, L.L.C., a
Delaware limited liability company, and such other Persons that serve as a
general partner or otherwise manage and control the business and affairs, of any
Operating Subsidiary.
"OPERATING SUBSIDIARY" means a Subsidiary of the Partnership.
"OPERATING SUBSIDIARY AGREEMENT" means the partnership agreement of any
Operating Subsidiary that is a limited or general partnership, the limited
liability company agreement of any Operating Subsidiary that is a limited
liability company, the certificate of incorporation and bylaws or similar
organizational documents of any Operating Subsidiary that is a corporation, the
joint venture agreement or similar governing document of any Operating
Subsidiary that is a joint venture and the governing or organizational or
similar documents of any other Operating Subsidiary that is a Person other than
a limited or general partnership, limited liability company, corporation or
joint venture, as such may be amended, supplemented or restated from time to
time.
"OPINION OF COUNSEL" means a written opinion of counsel (who may be
regular counsel to the Partnership or the General Partner) acceptable to the
General Partner.
"OPTIONAL PURCHASE PRICE" has the meaning assigned to such term in Section
17.1.
"ORIGINAL AGREEMENT" has the meaning assigned to such term in the recitals
to this Agreement.
"OUTSTANDING" means, with respect to the Units or other Partnership
Securities, as the case may be, all Units or other Partnership Securities, as
the case may be, 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 on any matter in this Agreement in respect of which Record Holders
of I-Units are entitled to vote, a number of I-Units equal to the number of
Listed Shares and Voting Shares held by Persons not entitled to vote their
Listed Shares or Voting Shares on such matter under the LLC Agreement shall be
deemed to be not Outstanding and shall not be included in the numerator or
denominator of any calculation to determine if the required percentage of Units
or I-Units has been voted to approve such matter under this Agreement.
"PARTNER" means a General Partner or a Limited Partner and Assignees
thereof, if applicable.
"PARTNER NONRECOURSE DEBT" has the meaning set forth in Treasury
Regulation Section 1.704-1T(b)(4)(iv)(k)(4).
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"PARTNER NONRECOURSE DEDUCTIONS" means any and all items of loss,
deduction or expenditure (including any expenditure described in Section
705(a)(2)(B) of the Code) that, in accordance with the principles of Treasury
Regulation Section 1.704-1T(b)(4)(iv)(h)(3), are attributable to a Partner
Nonrecourse Debt.
"PARTNERSHIP" means Enbridge Energy Partners, L.P., a Delaware limited
partnership heretofore formed and continued pursuant to this Agreement, and any
successor thereto.
"PARTNERSHIP ASSETS" means all assets of the Partnership and any Operating
Subsidiary, whether tangible or intangible and whether real, personal or mixed,
including, without limitation, all ownership interests of the Partnership in any
Operating Subsidiary.
"PARTNERSHIP INCEPTION" means the Closing Date.
"PARTNERSHIP INTEREST" means the interest of a Partner in the Partnership,
which, in the case of a Limited Partner or an Assignee, shall be expressed in
terms of Units or other Partnership Securities or a combination thereof, as the
case may be.
"PARTNERSHIP MINIMUM GAIN" means the amount determined pursuant to the
provisions of Treasury Regulation Sections 1.704-1T(b)(4)(iv)(a) and
1.704-1T(b)(4)(iv)(c).
"PARTNERSHIP SECURITIES" has the meaning assigned to such term in Section
4.4(a).
"PARTNERSHIP YEAR" means the fiscal year of the Partnership, which shall
be the calendar year.
"PERCENTAGE INTEREST" means, as of the date of such determination, (a) as
to the General Partner, 2% and (b) as to any Limited Partner or Assignee holding
Units, the product of (i) 98% multiplied by (ii) the quotient of (x) the number
of Units, and fractions thereof, held by such Limited Partner or Assignee
divided by (y) the total number of all Units, and fractions thereof, then
Outstanding; provided, however, that following any issuance of any new class of
Units or other equity securities by the Partnership in accordance with Section
4.4, proper adjustment shall be made to the Percentage Interest represented by
each Unit to reflect such issuance.
"PERSON" means an individual or a corporation, partnership, limited
liability company, trust, unincorporated organization, association or other
entity.
"PRIOR AGREEMENTS" means the Original Agreement, the First Amended and
Restated Agreement, the Second Amended and Restated Agreement and the Amendment
Agreement.
"PRO RATA" means (a) when modifying Units or any class thereof,
apportioned equally among all designated Units, and fractions thereof, and (b)
when modifying Partners and Assignees, apportioned among all designated Partners
and Assignees in accordance with their relative Percentage Interests.
"PURCHASE DATE" means the date determined by the General Partner, an
Affiliate of the General Partner or the Partnership, as the case may be, as the
date for purchase of all
13
Outstanding Units (other than Units owned by the General Partner and its
Affiliates) pursuant to Article XVII.
"PURCHASE PROVISIONS" means the purchase provisions that are attached to
the LLC Agreement as Annex B.
"RECAPTURE INCOME" means any gain recognized by the Partnership (computed
without regard to any adjustment required by Section 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.
"RECAPTURED CREDITS" means credits previously taken against federal income
tax liability which are required to be recaptured upon the disposition of any
property by the Partnership prior to the end of such property's useful life used
in determining the amount of the credit relating thereto.
"RECORD DATE" means the date established by the General Partner for
determining (a) the identity of Limited Partners (or Assignees if applicable)
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.
"RECORD HOLDER" means the Person in whose name a Unit is registered on the
books of the Transfer Agent as of the opening of business on a particular
Business Day; provided, however, that when such term is used in relation to
Listed Shares, such term shall have the meaning ascribed to such term in the LLC
Agreement.
"REDEEMABLE UNITS" means any Units for which a redemption notice has been
given, and has not been withdrawn, under Section 11.6.
"REGISTRATION STATEMENT" means the Registration Statement on Form S-1
(Registration No. 33-43425), as it may have been amended or supplemented from
time to time, filed by the Partnership with the Securities and Exchange
Commission under the Securities Act to register the offering and sale of Class A
Common Units in the Initial Offering.
"REQUIRED ALLOCATIONS" means any allocation (or limitation imposed on any
allocation) of an item of income, gain, deduction or loss pursuant to (a) the
proviso-clause of Section 5.1(b)(i) or (b) Section 5.1(e), such allocations (or
limitations thereon) being directly or indirectly required by the Treasury
Regulations promulgated under Section 704(b) of the Code.
"RESIDUAL GAIN" or "RESIDUAL LOSS" means any item of gain or loss, as the
case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 5.2(b)(i)(A) or 5.2(b)(ii)(A), to eliminate Book-Tax
Disparities.
"SECOND AMENDED AND RESTATED AGREEMENT" has the meaning assigned to such
term in the recitals to this Agreement.
14
"SECOND TARGET DISTRIBUTION" has the meaning assigned to such term in
Section 5.8(o).
"SECURITIES ACT" means the Securities Act of 1933, as amended,
supplemented or restated from time to time, and any successor to such statute.
"SHARE DISTRIBUTION" has the meaning assigned to such term in the LLC
Agreement.
"SUBSIDIARY" means, with respect to any Person, (a) a corporation of which
more than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person, is at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
subsidiaries of such Person, or 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 12.2 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 16.2(b).
"TAX STATUS EVENT" has the meaning assigned to such term in the LLC
Agreement.
"TRADING DAY" has the meaning assigned to such term in Section 17.1(a).
"TRANSFER AGENT" means such bank, trust company or other Person
(including, without limitation, the General Partner or one of its Affiliates) as
shall be appointed from time to time by the Partnership to act as registrar and
transfer agent for the Units.
"TRANSFER APPLICATION" means an application and agreement for transfer of
Units in the form set forth on the back of a Unit Certificate or in a form
substantially to the same effect in a separate instrument.
"TRANSPORTATION SYSTEM" means any of the following assets and related
facilities that are owned or operated directly or indirectly by the Partnership
or any Operating Subsidiary, as such assets and facilities may be maintained or
improved from time to time: (a) crude oil and natural gas liquids pipeline
assets and related facilities, (b) natural gas pipeline assets and related
facilities, and (c) crude oil, natural gas liquids, natural gas and carbon
dioxide trucking and railcar assets and related facilities.
"TREASURY REGULATION" has the meaning assigned to such term in Section
1.6.
15
"UNDERWRITER" means each Person named as an underwriter in the
Underwriting Agreement who purchased Units pursuant thereto.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated December
19, 1991 among the Underwriters, the Partnership, the General Partner and
Enbridge Inc. providing for the purchase of Class A Common Units by such
Underwriters.
"UNIT" means a Partnership Interest of a Limited Partner or Assignee in
the Partnership representing a fractional part of the Partnership Interests of
all Limited Partners and Assignees and shall include, without limitation, Class
A Common Units, Class B Common Units and I-Units.
"UNITHOLDER" means a Person who is the holder of a Unit.
"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 over (b) the Carrying Value of such
property as of such date (prior to any adjustment to be made pursuant to Section
4.6(d) as of such date). In determining such Unrealized Gain, the aggregate cash
amount and fair market value of all Partnership Assets (including cash or cash
equivalents) shall be determined by the General Partner using such reasonable
method of valuation as it may adopt; provided, however, the General Partner, in
arriving at such valuation, must take fully into account the Limited Partner
Equity Value and the General Partner Equity Value at such time. In determining
the fair market value of the Partnership Assets, the General Partner shall treat
the amount determined pursuant to paragraph (a) of the definition of Limited
Partner Equity Value as the fair market value of the Partnership assets that
would be distributed with respect to the Class A Common Units Outstanding
pursuant to Article XIV upon a hypothetical dissolution and liquidation of the
Partnership as of the relevant date of determination (assuming that all
Partnership indebtedness is paid pursuant to Section 14.3(a) prior to any
distributions to Partners pursuant to Sections 14.3(b) or 14.3(c)). The General
Partner shall allocate such aggregate value among the assets of the Partnership
(in such manner as it determines in its sole discretion to be reasonable) to
arrive at a fair market value for individual properties.
"UNREALIZED LOSS" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the Carrying Value
of such property as of such date (prior to any adjustment to be made pursuant to
Section 4.6(d) as of such date) over (b) the fair market value of such property
as of such date. In determining such Unrealized Loss, the aggregate cash amount
and fair market value of all Partnership Assets (including cash or cash
equivalents) shall be determined by the General Partner using such reasonable
method of valuation as it may adopt; provided, however, the General Partner, in
arriving at such valuation, must take fully into account the Limited Partner
Equity Value and the General Partner Equity Value at such time. In determining
the fair market value of the Partnership Assets, the General Partner shall treat
the amount determined pursuant to paragraph (a) of the definition of Limited
Partner Equity Value as the fair market value of the Partnership assets that
would be distributed with respect to the Class A Common Units Outstanding
pursuant to Article XIV upon a hypothetical dissolution and liquidation of the
Partnership as of the relevant date of determination (assuming that all
Partnership indebtedness is paid pursuant to Section 14.3(a) prior to any
distributions to Partners pursuant to Sections 14.3(b) or 14.3(c)). The General
16
Partner shall allocate such aggregate value among the assets of the Partnership
(in such manner as it determines in its sole discretion to be reasonable) to
arrive at a fair market value for individual properties.
"UNRECOVERED CAPITAL" means, at any time, with respect to a Unit, the
Unrecovered Initial Unit Price.
"UNRECOVERED INITIAL UNIT PRICE" means, at any time, with respect to any
Unit, the Initial Unit Price, less the sum of all distributions theretofore made
in respect of a Class A Common Unit issued in the Initial Offering constituting,
and which for purposes of determining the priority of such distribution is
treated as constituting, Cash from Interim Capital Transactions and of any
distributions of cash (or the Net Agreed Value of any distributions in kind) in
connection with the dissolution and liquidation of the Partnership theretofore
made in respect of a Class A Common Unit that was issued in the Initial
Offering.
"VOTING SHARES" has the meaning assigned to such term in the LLC
Agreement.
"WITHDRAWAL OPINION OF COUNSEL" has the meaning assigned to such term in
Section 13.1(b).
ARTICLE III
PURPOSE
3.1 PURPOSE AND BUSINESS. The purpose and nature of the business
to be conducted by the Partnership shall be (i) to serve as a partner in any
Operating Subsidiary that is a partnership and, in connection therewith, to
exercise all of the rights and powers conferred upon the Partnership as a
partner in any Operating Subsidiary that is a partnership pursuant to any
Operating Subsidiary Agreement or otherwise, (ii) to serve as a member,
shareholder or other equity interest holder of any Operating Subsidiary that
is a limited liability company or corporation, and in connection therewith,
to exercise all of the rights and powers conferred upon the Partnership as a
member, shareholder or other equity interest holder of any Operating
Subsidiary pursuant to any Operating Subsidiary Agreement or otherwise, (iii)
to engage directly in, or to enter into any partnership, joint venture or
similar arrangement to engage in, any business activity that may be lawfully
conducted by a limited partnership organized pursuant to the Delaware Act
and, in connection therewith, to exercise all of the rights and powers
conferred upon the Partnership pursuant to the agreements relating to such
business activity, (iv) to do anything necessary or appropriate to the
foregoing (including, without limitation, the making of capital contributions
or loans to any Operating Subsidiary or in connection with its involvement in
the activities referred to in clause (iii) of this sentence), and (v) to
engage in any other business activity as permitted under Delaware law.
3.2 POWERS. The Partnership shall be empowered to do any and all
acts and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and
business described in Section 3.1 and for the protection and benefit of the
Partnership.
17
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 INITIAL CONTRIBUTION. The initial Capital Contributions of
the General Partner and the initial Limited Partners were made in accordance
with Section 4.3 of the First Amended and Restated Agreement.
4.2 INTENTIONALLY OMITTED.
4.3 INTENTIONALLY OMITTED.
4.4 ISSUANCES OF UNITS AND OTHER SECURITIES.
(a) Subject to Section 4.4(c), the General Partner is hereby
authorized to cause the Partnership to issue, in addition to the Common
Units issued heretofore by the Partnership, such additional Units, or
classes or series thereof, or options, rights, warrants or appreciation
rights relating thereto, or any other type of equity security that the
Partnership may lawfully issue, or any unsecured or secured debt
obligations of the Partnership or debt obligations of the Partnership
convertible into any class or series of equity securities of the
Partnership (collectively, "PARTNERSHIP SECURITIES"), for any Partnership
purpose, at any time or from time to time, to the Partners or to other
Persons for such consideration and on such terms and conditions as shall
be established by the General Partner in its sole discretion, all without
the approval of any Limited Partners. The General Partner shall have sole
discretion, subject to the guidelines set forth in this Section 4.4 and
the requirements of the Delaware Act, in determining the consideration and
terms and conditions with respect to any future issuance of Partnership
Securities.
(b) Notwithstanding any provision of this Agreement to the contrary,
additional Partnership Securities to be issued by the Partnership pursuant
to this Section 4.4 shall be issuable from time to time in one or more
classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other
special rights, powers and duties, including, without limitation, rights,
powers and duties senior to existing classes and series of Partnership
Securities, all as shall be fixed by the General Partner in the exercise
of its sole and complete discretion, subject to Delaware law, including,
without limitation, (i) the allocations of items of Partnership income,
gain, loss, deduction and credit to each such class or series of
Partnership Securities; (ii) the right of each such class or series of
Partnership Securities to share in Partnership distributions; (iii) the
rights of each such class or series of Partnership Securities upon
dissolution and liquidation of the Partnership; (iv) whether such class or
series of additional Partnership Securities is redeemable by the
Partnership and, if so, the price at which, and the terms and conditions
upon which, such class or series of additional Partnership Securities may
be redeemed by the Partnership; (v) whether such class or series of
additional Partnership Securities is issued with the privilege of
conversion and, if so, the rate at which, and the terms and conditions
upon which, such class or series of Partnership Securities may be
converted into any other class or series of Partnership Securities; (vi)
the terms and conditions upon which each such class or series of
Partnership Securities will be issued, evidenced by Unit
18
Certificates and assigned or transferred; and (vii) the right, if any,
of each such class or series of Partnership Securities to vote on
Partnership matters, including, without limitation, matters relating to
the relative rights, preferences and privileges of each such class or
series.
(c) Upon the issuance of any Units by the Partnership (other than
I-Units or fractions of I-Units pursuant to Sections 5.10(a) and 5.10(e),
and except upon the change of Class A Common Units and Class B Common
Units pursuant to Section 5.6), the General Partner shall be required to
make additional Capital Contributions to the Partnership such that the
General Partner shall at all times have a balance in its Capital Account
equal to 2% of the total positive Capital Account balances of all
Partners.
(d) The General Partner is hereby authorized and directed to take
all actions that it deems necessary or appropriate in connection with each
issuance of Units or other Partnership Securities pursuant to Section
4.4(a) and to amend this Agreement in any manner that it deems necessary
or appropriate to provide for each such issuance, to admit Additional
Limited Partners in connection therewith and to specify the relative
rights, powers and duties of the holders of the Units or other Partnership
Securities being so issued.
(e) Subject to the terms of Sections 4.4(c) and 6.4(c), the General
Partner is authorized to cause the issuance of Partnership Securities
(other than I-Units) pursuant to any employee benefit plan for the benefit
of employees responsible for the operations of the Partnership or any
Operating Subsidiary maintained or sponsored by the General Partner, the
Partnership, any Operating Subsidiary or any Affiliate of any of them.
(f) The General Partner shall do all things necessary to comply with
the Delaware Act and is authorized and directed to do all things it deems
to be necessary or advisable in connection with any future issuance of
Partnership Securities, including, without limitation, compliance with any
statute, rule, regulation or guideline of any federal, state or other
governmental agency or any National Securities Exchange on which the Units
or other Partnership Securities are listed for trading.
4.5 LIMITED PREEMPTIVE RIGHTS. Except as provided in Section
4.4(c), no Person shall have any preemptive, preferential or other similar
right with respect to (a) additional Capital Contributions; (b) issuance or
sale of any class or series of Units or other Partnership Securities, whether
unissued, held in the treasury or hereafter created; (c) issuance of any
obligations, evidences of indebtedness or other securities of the Partnership
convertible into or exchangeable for, or carrying or accompanied by any
rights to receive, purchase or subscribe to, any such Units or other
Partnership Securities; (d) issuance of any right of subscription to or right
to receive, or any warrant or option for the purchase of, any such Units or
other Partnership Securities; or (e) issuance or sale of any other securities
that may be issued or sold by the Partnership.
19
4.6 CAPITAL ACCOUNTS.
(a) The Partnership shall maintain for each Partner (or a beneficial
owner of Units held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the General
Partner in its sole discretion) a separate Capital Account in accordance
with the rules of Treasury Regulation Section 1.704-1(b)(2)(iv). Such
Capital Account shall be increased by (i) the amount of all Capital
Contributions made by such Partner to the Partnership pursuant to this
Agreement and (ii) all items of Partnership income and gain (including,
without limitation, income and gain exempt from tax) computed in
accordance with Section 4.6(b) and allocated to such Partner pursuant to
Section 5.1 and decreased by (x) the amount of cash or Net Agreed Value of
all distributions of cash or property made to such Partner pursuant to
this Agreement and (y) all items of Partnership deduction and loss
computed in accordance with Section 4.6(b) and allocated to such Partner
pursuant to Section 5.1.
(b) For purposes of computing the amount of any item of income,
gain, loss or deduction to be reflected in the Partners' Capital Accounts,
the determination, recognition and classification of any such item shall
be the same as its determination, recognition and classification for
federal income tax purposes (including, without limitation, any method of
depreciation, cost recovery or amortization used for that purpose),
provided, that:
(i) Solely for purposes of this Section 4.6, the Partnership
shall be treated as owning directly its proportionate share (as
determined by the General Partner based upon the provisions of any
Operating Subsidiary Agreement) of all property owned by any
Operating Subsidiary that is not treated as a corporation for
federal income tax purposes.
(ii) All fees and other expenses incurred by the Partnership
to promote the sale of (or to sell) a Partnership Interest that can
neither be deducted nor amortized under Section 709 of the Code, if
any, shall, for purposes of Capital Account maintenance, be treated
as an item of deduction at the time such fees and other expenses are
incurred and shall be allocated among the Partners pursuant to
Section 5.1.
(iii) Except as otherwise provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), the computation of all items of
income, gain, loss and deduction shall be made without regard to any
election under Section 754 of the Code which may be made by the
Partnership and, as to those items described in Section 705(a)(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.
(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
20
property as of such date of disposition were equal in amount to
the Partnership's Carrying Value with respect to such property as
of such date.
(v) In accordance with the requirements of Section 704(b) of
the Code, any deductions for depreciation, cost recovery or
amortization attributable to any Contributed Property shall be
determined as if the adjusted basis of such property on the date it
was acquired by the Partnership were equal to the Agreed Value of
such property. Upon an adjustment pursuant to Section 4.6(d) to the
Carrying Value of any Partnership property subject to depreciation,
cost recovery or amortization, any further deductions for such
depreciation, cost recovery or amortization attributable to such
property shall be determined (A) as if the adjusted basis of such
property were equal to the Carrying Value of such property
immediately following such adjustment and (B) using a rate of
depreciation, cost recovery or amortization derived from the same
method and useful life (or, if applicable, the remaining useful
life) as is applied for federal income tax purposes; provided,
however, that, if the asset has a zero adjusted basis for federal
income tax purposes, depreciation, cost recovery or amortization
deductions shall be determined using any reasonable method that the
General Partner may adopt.
(vi) If the Partnership's adjusted basis in depreciable or
cost recovery property is reduced for federal income tax purposes
pursuant to Section 48(q)(1) or 48(q)(3) of the Code, the amount of
such reduction shall, solely for purposes hereof, be deemed to be an
additional depreciation or cost recovery deduction in the year such
property is placed in service and shall be allocated among the
Partners pursuant to Section 5.1. Any restoration of such basis
pursuant to Section 48(q)(2) of the Code shall to the extent
possible, be allocated in the year of such restoration as an item of
income pursuant to Section 5.1.
(c) A transferee of a Partnership Interest shall succeed to a pro
rata portion of the Capital Account of the transferor relating to the
Partnership Interest so transferred.
(d) (i) Consistent with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), on an issuance of additional Units for cash
or Contributed Property or the conversion of the General Partner's
Partnership Interest to Units pursuant to Section 13.3(b), the Capital
Accounts of all Partners (other than those holding I-Units) and the
Carrying Value of each Partnership property immediately prior to such
issuance shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership property, as if
such Unrealized Gain or Unrealized Loss had been recognized on an actual
sale of each such property immediately prior to such issuance and had been
allocated to the Partners at such time pursuant to Section 5.1.
(ii) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any 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 or an increase in the number
of Outstanding I-Units (or fractions thereof) pursuant to Sections 5.10(a) and
5.10(e)), the Capital Accounts of all Partners other than those holding I-Units
unless the redemption or retirement is pursuant to Section 14.3 and the Carrying
Value of each Partnership
21
property shall be adjusted upward or downward to reflect any Unrealized Gain
or Unrealized Loss attributable to such Partnership property, as if such
Unrealized Gain or Unrealized Loss had been recognized in a sale of such
property immediately prior to such distribution for an amount equal to its
fair market value, and had been allocated to the Partners, at such time,
pursuant to Section 5.1(c).
(iii) Upon an increase in the number of Outstanding I-Units (or
fractions thereof) pursuant to Sections 5.10(a) or 5.10(e), the Capital Accounts
of all I-Units that are Outstanding prior to such increase shall be divided
equally among all I-Units that are Outstanding after such increase (and any
fractional I-Unit shall be allocated a fractional part of such Capital
Accounts).
4.7 INTEREST. No interest shall be paid by the Partnership on
Capital Contributions or on balances in Partners' Capital Accounts.
4.8 NO WITHDRAWAL. No Partner shall be entitled to withdraw any
part of its Capital Contributions or its Capital Account or to receive any
distribution from the Partnership, except as provided herein.
4.9 LOANS FROM PARTNERS. Loans by a Partner to the Partnership
shall not constitute Capital Contributions. If any Partner shall advance
funds to the Partnership in excess of the amounts required hereunder to be
contributed by it to the capital of the Partnership, the making of such
excess advances shall not result in any increase in the amount of the Capital
Account of such Partner. The amount of any such excess advances shall be a
debt obligation of the Partnership to such Partner and shall be payable or
collectible only out of the Partnership Assets in accordance with the terms
and conditions upon which such advances are made.
4.10 NO FRACTIONAL UNITS. Except with respect to I-Units, no
fractional Units shall be issued by the Partnership.
4.11 SPLITS AND COMBINATIONS.
(a) Subject to Sections 4.11(d) and 5.10(a) and (d), the General
Partner may make a Pro Rata distribution of Units or other Partnership
Securities to all Record Holders or may effect a subdivision or
combination of Units or other Partnership Securities; provided, however,
that, subject to Sections 4.11(d) and 5.10(a) and (d), after any such
distribution, subdivision or combination, each Partner shall have the same
Percentage Interest in the Partnership as before such distribution,
subdivision or combination and the Capital Accounts of all such classes of
distributed, subdivided or combined Units or other Partnership Securities
Outstanding prior to such distribution, subdivision or combination shall
be divided equally (on a class by class basis) among all such Units or
other Partnership Securities Outstanding after such distribution,
subdivision or combination.
(b) Except with respect to subdivisions of Outstanding I-Units
pursuant to Section 5.10(a), whenever such a distribution, subdivision or
combination of Units or other Partnership Securities is declared, the
General Partner shall select a Record Date as of which the distribution,
subdivision or combination shall be effective and shall send
22
notice of the distribution, subdivision or combination 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 General Partner also
may cause a firm of independent public accountants selected by it to
calculate the number of Units to be held by each Record Holder after
giving effect to such distribution, subdivision or combination. The
General Partner shall be entitled to rely on any certificate provided
by such firm as conclusive evidence of the accuracy of such calculation.
(c) Promptly following any such distribution, subdivision or
combination, the General Partner may cause Unit Certificates to be issued
to the Record Holders of Units as of the applicable Record Date
representing the new number of Units held by such Record Holders, or the
General Partner may adopt such other procedures as it may deem appropriate
to reflect such distribution, subdivision or combination; provided,
however, if any such distribution, subdivision or combination results in a
smaller total number of Units Outstanding, the General Partner shall
require, as a condition to the delivery to a Record Holder of such new
Unit Certificate, the surrender of any Unit Certificate held by such
Record Holder immediately prior to such Record Date.
(d) Except with respect to I-Units, the Partnership shall not issue
fractional Units upon any distribution, subdivision or combination of
Units. If a distribution, subdivision or combination of Units would result
in the issuance of fractional Units but for the provision of Section 4.10
and this Section 4.11(d), each fractional Unit (other than a fractional
I-Unit) shall be rounded to the nearest whole Unit (and a 0.5 Unit shall
be rounded to the next higher Unit).
4.12 I-UNITS. Pursuant to Section 4.4, the General Partner
hereby designates and creates a special class of Units designated "I-UNITS"
and fixes the designations, preferences and relative, participating, optional
or other special rights, powers and duties of the holders of the I-Units as
follows:
(a) Except as otherwise provided in Section 5.1(c), a holder of an
I-Unit will receive no allocations of income, gain, loss or deductions.
Except for distributions made in accordance with Sections 14.3(b) and
14.3(c), no distributions or payments shall be made to a holder of an
I-Unit except in additional I-Units (or fractions thereof) or a security
that has in all material respects the same rights and privileges as the
I-Units, in accordance with Section 5.10.
(b) The number of Outstanding I-Units may be subdivided
pursuant to Section 5.10.
(c) Except as otherwise provided in this Agreement, each I-Unit
shall have the rights of a holder of a Common Unit with respect to voting.
Except as otherwise provided in this Agreement, all Units shall vote or
consent together as a single class on all matters submitted for a vote or
consent of the Outstanding Units.
23
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES. For purposes of
maintaining the Capital Accounts and in determining the rights of the
Partners among themselves, the Partnership's items of income, gain, loss and
deduction (computed in accordance with Section 4.6(b)) shall be allocated
among the Partners in each taxable year (or portion thereof) as provided
herein below.
(a) NET INCOME. All items of income, gain, loss and deduction taken
into account in computing Net Income for such taxable period shall be
allocated in the same manner as such Net Income is allocated hereunder,
which Net Income shall be allocated as follows:
(i) FIRST, 100% to the General Partner until the aggregate
Net Income allocated to the General Partner pursuant to this
Section 5.1(a)(i) for the current taxable year and all previous
taxable years is equal to the aggregate Net Losses allocated to
the General Partner pursuant to Section 5.1(b)(ii) for all
previous taxable years; and
(ii) SECOND, the balance, if any, 98% to the Limited Partners
holding Common Units, Pro Rata, and 2% to the General Partner.
(b) NET LOSSES. All items of income, gain, loss and deduction taken
into account in computing Net Losses for such taxable period shall be
allocated in the same manner as such Net Losses are allocated hereunder,
which Net Losses shall be allocated as follows:
(i) FIRST, 98% to the Limited Partners holding Common Units,
Pro Rata, and 2% to the General Partner; PROVIDED, that Net Losses
shall not be allocated pursuant to this Section 5.1(b)(i) to the
extent that such allocation would cause any Partner to have a
deficit balance in its Adjusted Capital Account at the end of such
taxable year (or increase any existing deficit balance in its
Adjusted Capital Account); and
(ii) SECOND, the balance, if any, 100% to the General
Partner.
(c) NET TERMINATION GAINS AND LOSSES. After giving effect to the
special allocations set forth in Sections 5.1(d) and 5.1(e), 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 5.1(c) shall be made after Capital Account balances have been
adjusted by all other allocations provided under this Section 5.1 and
after all distributions of Available Cash provided under Section 5.5 have
been made with respect to such taxable period.
(i) If a Net Termination Gain is recognized, such Net
Termination Gain shall be allocated between the General Partner and
the Limited Partners in the
24
following manner (and the Adjusted 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
Adjusted Capital Account, in the proportion that such deficit
balance bears to the total deficit balances in the Adjusted Capital
Accounts of all Partners, until each such Partner has been allocated
Net Termination Gain equal to any such deficit balance in its
Adjusted Capital Account;
(B) SECOND, if the Adjusted Capital Account of an I-Unit is
less than the Adjusted Capital Account of a Common Unit, 98% to the
Limited Partners holding I-Units or fractions thereof, Pro Rata, and
2% to the General Partner until the Adjusted Capital Account of each
I-Unit or fractions thereof, equals the Adjusted Capital Account of
each Common Unit, or comparable fraction thereof, or, if the
Adjusted Capital Account of an I-Unit is greater than the Adjusted
Capital Account of a Common Unit, 98% to the Limited Partners
holding Common Units, Pro Rata, and 2% to the General Partner until
the Adjusted Capital Account of each Common Unit equals the Adjusted
Capital Account of each I-Unit;
(C) THIRD, 98% to the Limited Partners holding I-Units, or
fractions thereof, and Common Units, Pro Rata, and 2% to the General
Partner, until each Limited Partner's Adjusted Capital Account
(determined on a per Unit basis) is equal to the sum of (aa) the
Unrecovered Capital plus (bb) any cumulative arrearages in the
payment of the Minimum Quarterly Distribution for any quarter
commencing after December 31, 1996;
(D) FOURTH, 85% to all Limited Partners holding I-Units, or
fractions thereof, and Common Units, Pro Rata, and 15% to the
General Partner until each such Limited Partner's Adjusted Capital
Account in respect of its Units or fractions thereof (determined on
a per Unit basis) is equal to the sum of (aa) the Unrecovered
Capital, plus (bb) any cumulative arrearages in the payment of the
Minimum Quarterly Distribution for any quarter commencing after
December 31, 1996, plus (cc) the excess of the First Target
Distribution over the Minimum Quarterly Distribution for each
quarter of the Partnership's existence, less (dd) the amount of any
distributions of Available Cash that is deemed to be Cash from
Operations that was distributed pursuant to Section 5.5(d) (the sum
of (bb) plus (cc) less (dd) is hereinafter defined as the "FIRST
LIQUIDATION TARGET AMOUNT");
(E) FIFTH, 75% to all Limited Partners holding I-Units, or
fractions thereof, and Common Units, Pro Rata, and 25% to the
General Partner until each such Limited Partner's Adjusted Capital
Account in respect of its Units or fractions thereof (determined on
a per Unit basis) is equal to the sum of (aa) the Unrecovered
Capital, plus (bb) the First Liquidation Target Amount, plus (cc)
the excess of the Second Target Distribution over the First Target
Distribution for
25
each quarter of the Partnership's existence less (dd) the amount of
any distributions of Available Cash that is deemed to be Cash from
Operations distributed pursuant to Section 5.5(e); and
(F) SIXTH, the balance, if any, 50% to all Limited Partners
holding I-Units, or fractions thereof, and Common Units, Pro Rata,
and 50% to the General Partner.
(ii) If a Net Termination Loss is recognized, such Net
Termination Loss shall be allocated to the Partners in the following
manner:
(A) FIRST, if the Adjusted Capital Account of an I-Unit, or
fraction thereof, is less than the Adjusted Capital Account of a
Common Unit, 98% to the Limited Partners holding Common Units, Pro
Rata, and 2% to the General Partner until the Adjusted Capital
Account of each Common Unit equals the Adjusted Capital Account of
each I-Unit or, if the Adjusted Capital Account of an I-Unit is
greater than the Adjusted Capital Account of a Common Unit, 98% to
the Limited Partners holding I-Units, or fractions thereof, Pro
Rata, and 2% to the General Partner until the Adjusted Capital
Account of each I-Unit, or fraction thereof, equals the Adjusted
Capital Account of each Common Unit, or comparable fraction thereof;
(B) SECOND, 100% to the General Partner and the Limited
Partners in proportion to, and to the extent of, the positive
balances in their respective Adjusted Capital Accounts until all
such balances are reduced to zero; and
(C) THIRD, the balance, if any, 100% to the General Partner.
(d) SPECIAL ALLOCATIONS. Notwithstanding any other
provisions of this Section 5.1 (other than Section 5.1(e)), the
following special allocations shall be made for such taxable period:
(i) 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 14.3 or 14.4) to any Limited Partner
holding Units during 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 Limited Partners holding Units other than
I-Units (on a per Unit basis), then (1) each Limited Partner holding
Units receiving such greater cash or property distribution shall be
allocated gross income in an amount equal to the product of (x) the
amount by which the distribution (on a per Unit basis) to such
Limited Partner holding Units exceeds the distribution (on a per
Unit basis) to the Limited Partners holding Units other than I-Units
receiving the smallest distribution and (y) the number of Units
owned by the Limited Partner holding Units receiving the greater
distribution; and (2) the General Partner shall be allocated gross
income in an amount equal to 2.04% of the sum of the amounts
allocated in clause (1) above.
26
(B) After the application of Section 5.1(d)(i)(A), all or a
portion of the remaining items of Partnership gross income or gain
for the taxable period, if any, shall be allocated 100% to the
General Partner (or its assignee) until the aggregate amount of such
items allocated to the General Partner (or its assignee) pursuant to
this paragraph (d)(i)(B) for the current taxable period and all
previous taxable periods is equal to the cumulative amount of all
Incentive Distributions made to the General Partner (or its
assignee) from the Closing Date to a date 45 days after the end of
the current taxable period.
(C) At the election of the General Partner with respect to any
taxable period, all or a portion of the remaining items of
Partnership gross income or gain for the taxable period, if any,
shall be allocated to each Partner holding Class B Common Units, in
the proportion that the respective number of Class B Common Units
held by such Partner bears to the total number of Class B Common
Units then outstanding, until such Partner has been allocated an
amount of gross income or gain which increases the Capital Account
maintained with respect to such Class B Common Units to an amount
such that the Capital Account attributable to each Class B Common
Unit held by the Partner, on a per Unit basis, is equal to the
Capital Account, stated on a per Unit basis, underlying any Class A
Common Unit Outstanding at the time of determination. The purpose of
this allocation is to establish uniformity between the Capital
Accounts underlying Class B Common Units and the Capital Accounts
underlying Class A Common Units immediately prior to the change of
all Class A Common Units into Class B Common Units pursuant to
Section 5.6.
(ii) 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 General
Partner and the holders of Common Units in accordance with the
allocation of Net Income set forth in Section 5.1(a)(ii).
(iii) DISCRETIONARY ALLOCATION. (A) Notwithstanding any other
provision of Section 5.1(a), (b) or (c), the Agreed Allocations
shall be adjusted so that, to the extent possible, the net amount of
items of income, gain, loss and deduction allocated to each Partner
pursuant to the Required Allocations and the Agreed Allocations,
together, shall be equal to the net amount of such items that would
have been allocated to each such Partner under the Agreed
Allocations had there been no Required Allocations; provided,
however, that for purposes of applying this Section 5.1(d)(iii)(A),
it shall be assumed that all chargebacks pursuant to Sections
5.1(e)(i) and (ii) have occurred.
(B) The General Partner shall have reasonable discretion, with
respect to each taxable year, to (1) apply the provisions of Section
5.1(d)(iii)(A) in whatever fashion as is most likely to minimize the
economic distortions that might otherwise result from the Required
Allocations, and (2) divide all
27
allocations pursuant to Section 5.1(d)(iii)(A) among the Partners
in a manner that is likely to minimize such economic distortions.
(e) REQUIRED ALLOCATIONS. Notwithstanding any other
provision of this Section 5.1, the following special allocations shall be
made for such taxable period:
(i) PARTNERSHIP MINIMUM GAIN CHARGEBACK. Notwithstanding the
other provisions of this Section 5.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period, each
Partner shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in 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 provisions. For
purposes of this Section 5.1(e), each Partner's Adjusted Capital
Account balance shall be determined, and the allocation of income or
gain required hereunder shall be effected, prior to the application
of any other allocations pursuant to this Section 5.1 with respect
to such taxable period.
(ii) CHARGEBACK OF MINIMUM GAIN ATTRIBUTABLE TO PARTNER
NONRECOURSE DEBT. Notwithstanding the other provisions of this
Section 5.1 (other than 5.1(e)(i)), except as provided in Treasury
Regulation Section 1.704-2(i)(4) if there is a net decrease in
Minimum Gain Attributable to Partner Nonrecourse Debt during any
Partnership taxable period, any Partner with a share of Minimum Gain
Attributable to Partner Nonrecourse Debt at the beginning of such
taxable period shall be allocated items of Partnership income and
gain for such period (and, if necessary, subsequent periods) in the
manner and amounts provided in Treasury Regulation Sections
1.704-2(a)(4) and 1.704-2(j)(ii), or any successor provisions. For
purposes of this Section 5.1, each Partner's Adjusted Capital
Account balance shall be determined and the allocation of income or
gain required hereunder shall be effected, prior to the application
of any other allocations pursuant to this Section 5.1(e), other than
Section 5.1(e)(i), with respect to such taxable period.
(iii) QUALIFIED INCOME OFFSET. In the event any Limited
Partner unexpectedly receives 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 specifically 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 5.1(e)(i) or 5.1(e)(ii).
(iv) GROSS INCOME ALLOCATIONS. In the event any Partner has a
deficit balance in its Adjusted Capital Account at the end of any
Partnership taxable period, that is in excess of the sum of (A) the
amount such Partner is obligated to restore and (B) the amount such
Partner is deemed to be 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
28
the amount of such excess as quickly as possible; provided, that an
allocation pursuant to this Section 5.1(e)(iv) shall be made only if
and to the extent that such Partner would have a deficit balance in
its Adjusted Capital Account after all other allocations provided in
this Section 5.1 have been tentatively made as if this Section
5.1(e)(iv) was not in this Agreement.
(v) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with
their respective Percentage Interests. If the General Partner
determines in its good faith discretion that the Partnership's
Nonrecourse Deductions must be allocated in a different ratio to
satisfy the safe harbor requirements of the Treasury Regulations
promulgated under Section 704(b) of the Code, the General Partner is
authorized, upon notice to the Limited Partners, to revise the
prescribed ratio to the numerically closest ratio which does satisfy
such requirements.
(vi) PARTNER NONRECOURSE DEDUCTIONS. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the
Partner that bears the Economic Risk of Loss for such Partnership
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.
(f) The Limited Partners holding Class A Common Units will be
allocated gross income during each taxable year of the Partnership that
would otherwise be allocated to the Limited Partners holding Class B
Common Units pursuant to this Agreement (other than Section 5.1(e)), to
the extent such an amount of gross income exists, in accordance with the
following schedule:
YEAR AMOUNT
1995...................................... $ 9 million
1996...................................... 9 million
1997...................................... 9 million
1998...................................... 11 million
1999...................................... 11 million
2000...................................... 13 million
2001...................................... 13 million
2002...................................... 15 million
2003...................................... 15 million
2004...................................... 17 million
2005...................................... 17 million
2006...................................... 19 million
2007...................................... 19 million
2008...................................... 21 million
2009...................................... 21 million
2010...................................... 23 million
29
YEAR AMOUNT
2011...................................... 23 million
2012...................................... 25 million
Thereafter................................ 25 million
Notwithstanding the above, no allocation of gross income shall be made
pursuant to this Section 5.1(f) (or the amount of such allocation shall be
reduced) in any taxable year of the Partnership to the extent that a
purchaser of a Class A Common Unit in the offering made pursuant to the
Registration Statement would be allocated, pursuant to this Agreement, an
amount of federal taxable income with respect to such taxable year that would
exceed 65% of the amount of Available Cash distributed to such a Unitholder
with respect to that taxable year. In addition, no allocation of gross income
shall be made pursuant to this Section 5.1(f) for any taxable year including
or following the change of all Class A Common Units into Class B Common Units
pursuant to Section 5.6.
5.2 ALLOCATIONS FOR TAX PURPOSES.
(a) Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction which is
recognized by the Partnership for federal income tax purposes shall be
allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Section
5.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable
to a Contributed Property or Adjusted Property, items of income, gain,
loss, depreciation, amortization and cost recovery deductions shall be
allocated for federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the
manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property and
its adjusted basis at the time of contribution; and (B) except as
otherwise provided in Section 5.2(b)(iii), any item of Residual Gain
or Residual Loss attributable to a Contributed Property shall be
allocated among the Partners in the same manner as its correlative
item of "book" gain or loss is allocated pursuant to Section 5.1.
(ii) (A) In the case of an Adjusted Property, such items shall
(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 4.6(d)(i)
or (ii), and (2) second, in the event such property was originally a
Contributed Property, be allocated among the Partners in a manner
consistent with Section 5.2(b)(i)(A); and (B) except as otherwise
provided in Section 5.2(b)(iii), any item of Residual Gain or
Residual Loss attributable to an Adjusted Property shall be
allocated among the Partners in the same manner as its correlative
item of "book" gain or loss is allocated pursuant to Section 5.1.
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(iii) Any items of income, gain, loss or deduction otherwise
allocable under Section 5.2(b)(i)(B) or 5.2(b)(ii)(B) shall be
subject to allocation by the General Partner in a manner designed to
eliminate, to the maximum extent possible, Book-Tax Disparities in a
Contributed Property or Adjusted Property otherwise resulting from
the application of the "ceiling" limitation (under Section 704(c) of
the Code or Section 704(c) principles) to the allocations provided
under Section 5.2(b)(i)(A) or 5.2(b)(ii)(A).
(c) For the proper administration of the Partnership or for the
preservation of uniformity of the Units (or any class or classes thereof),
the General Partner shall have sole discretion to (i) adopt such
conventions as it deems appropriate in determining the amount of
depreciation, amortization and cost recovery deductions; (ii) make special
allocations for federal income tax purposes of income (including, without
limitation, gross income) or deductions; and (iii) amend the provisions of
this Agreement as appropriate (x) to reflect the proposal or promulgation
of Treasury Regulations under Section 704(b) or Section 704(c) of the Code
or (y) otherwise to preserve or achieve uniformity of the Units (or any
class or classes thereof). The General Partner may adopt such conventions,
make such allocations and make such amendments to this Agreement as
provided in this Section 5.2(c) only if such conventions, allocations or
amendments would not have a material adverse effect on the Partners, the
holders of any class or classes of Units issued and Outstanding of the
Partnership, and if such allocations are consistent with the principles of
Section 704 of the Code.
(d) The General Partner in its sole discretion may determine to
depreciate the portion of an adjustment under Section 743(b) of the Code
attributable to unrealized appreciation in any Adjusted Property (to the
extent of the unamortized Book-Tax Disparity) using a predetermined rate
derived from the depreciation method and useful life applied to the
Partnership's common basis of such property, despite the inconsistency of
such approach with Treasury Regulation Section 1.167(c)-1(a)(6). If the
General Partner determines that such reporting position cannot reasonably
be taken, the General Partner may adopt a depreciation convention under
which all purchasers acquiring Units in the same month would receive
depreciation, based upon the same applicable rate as if they had purchased
a direct interest in the Partnership's property. If the General Partner
chooses not to utilize such aggregate method, the General Partner may use
any other reasonable depreciation convention to preserve the uniformity of
the intrinsic tax characteristics of any Units that would not have a
material adverse effect on the Limited Partners or the Record Holders of
any class or classes of Units. In addition, for purposes of computing the
adjustments under Section 743(b) of the Code, the General Partner shall be
authorized (but not required) to adopt a convention whereby the price paid
by a transferee of Units will be deemed to be the lowest quoted trading
price of the Units on any National Securities Exchange on which such Units
are traded during the calendar month in which such transfer is deemed to
occur pursuant to Section 5.2(g) without regard to the actual price paid
by such transferee.
(e) Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall, to the extent
possible, after taking into account other required allocations of gain
pursuant to this Section 5.2 be characterized as
31
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 of the General Partner
or to transferred Units shall, for federal income tax purposes, be
determined on an annual basis and prorated on a monthly basis and shall be
allocated to the Partners as of the close of the New York Stock Exchange
on the last day of the preceding month; provided, however, that gain or
loss on a sale or other disposition of any assets of the Partnership other
than in the ordinary course of business shall be allocated to the Partners
as of the opening of the New York Stock Exchange on the first Business Day
of the month in which such gain or loss is recognized for federal income
tax purposes. The General Partner may revise, alter or otherwise modify
such methods of allocation as it determines necessary, to the extent
permitted or required by Section 706 of the Code and the regulations or
rulings promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited Partner
under the provisions of this Article V shall instead be made to the
beneficial owner of Units held by a nominee in any case in which the
nominee has furnished the identity of such owner to the Partnership in
accordance with Section 6031(c) of the Code or any other method acceptable
to the General Partner in its sole discretion.
5.3 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS.
(a) Within 45 days following the end of each calendar quarter the
Partnership shall distribute to the Partners and retain for reinvestment
in its business in accordance with this Article V, an amount equal to 100%
of Available Cash with respect to such quarter. Distributions of Available
Cash by the Partnership to the Partners shall be made as of the Record
Date selected by the General Partner in its reasonable discretion. All
amounts of Available Cash distributed and retained by the Partnership on
any date from any source shall be deemed to be Cash from Operations until
the sum of all amounts of Available Cash theretofore distributed by the
Partnership to the Partners pursuant to Section 5.4 of the Second Amended
and Restated Agreement or any substantially similar provisions of any
other Prior Agreements and Section 5.5 and retained by the Partnership
pursuant to Section 5.5 equals the aggregate amount of all Cash from
Operations of the Partnership from the Partnership Inception through the
end of the calendar quarter immediately preceding such distribution and
retention. Any remaining amounts of Available Cash distributed and
retained by the Partnership on such date shall be deemed to be Cash from
Interim Capital Transactions.
32
(b) Notwithstanding the definitions of Available Cash and Cash from
Operations contained herein, disbursements (including, without limitation,
contributions to any Operating Subsidiary or disbursements on behalf of
any Operating Subsidiary) made or cash reserves established after the end
of any quarter shall be deemed to have been made or established, for
purposes of determining Available Cash and Cash from Operations, within
such quarter if the General Partner so determines. Notwithstanding the
foregoing, in the event of the dissolution and liquidation of the
Partnership, all proceeds of such liquidation shall be applied and
distributed in accordance with, and subject to the terms and conditions
of, Sections 14.3 and 14.4.
5.4 INTENTIONALLY OMITTED.
5.5 CASH FROM OPERATIONS. Available Cash with respect to any
calendar quarter that is deemed to be Cash from Operations pursuant to the
provisions of Section 5.3 or 5.7 shall be distributed by the Partnership to
the Partners as follows:
(a) FIRST, 98% to all Limited Partners holding Common Units, Pro
Rata, and 2% to the General Partner until the Partnership has distributed
in respect of each Common Unit then Outstanding an amount of cash equal to
the Minimum Quarterly Distribution;
(b) SECOND, 85% to all Limited Partners holding Common Units, Pro
Rata, and 15% to the General Partner until the Partnership has distributed
in respect of each Common Unit then Outstanding an amount of cash equal to
the excess of the First Target Distribution over the Minimum Quarterly
Distribution;
(c) THIRD, 75% to all Limited Partners holding Common Units, Pro
Rata, and 25% to the General Partner until the Partnership has distributed
in respect of each Common Unit then Outstanding an amount of cash equal to
the excess of the Second Target Distribution over the First Target
Distribution; and
(d) FOURTH, 50% to all Limited Partners holding Common
Units, Pro Rata, and 50% to the General Partner;
PROVIDED, HOWEVER, that the Partnership may not make a distribution of
Available Cash to Limited Partners holding Common Units pursuant to this
Section 5.5, unless at the same time that it makes such distribution, the
Partnership shall retain in respect of each I-Unit then Outstanding an amount
of Available Cash equal to the quotient obtained by dividing (i) the cash
distribution then being made on a Common Unit pursuant to this Section 5.5 by
(ii) .98; and
PROVIDED, FURTHER, that if the Minimum Quarterly Distribution, the First
Target Distribution and the Second Target Distribution have been reduced to
zero pursuant to Section 5.9(a)(ii), then distributions of Available Cash
that is deemed to be Cash from Operations with respect to any quarter will be
made 98% to all Limited Partners holding Class A Common Units, Pro Rata, and
2% to the General Partner until there has been distributed in respect of each
Class A Common Unit then Outstanding, pursuant to Section 5.4 of the Second
Amended and Restated Agreement or any substantially similar provisions of any
other Prior Agreements and this Section 5.5 including this proviso, Available
Cash that is deemed to be Cash from Operations since
33
Partnership Inception equal to the Minimum Quarterly Distribution (as from
time to time adjusted) for all periods since Partnership Inception, and
thereafter in accordance with Section 5.5(d).
5.6 CHANGE OF CLASS A COMMON UNITS AND CLASS B COMMON UNITS. At
such time as the General Partner determines, based on advice of counsel, that
all Class B Common Units 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 the Class A
Common Units then Outstanding, all differences and distinctions between Class
A Common Units and Class B Common Units shall automatically cease and all
Class A Common Units and Class B Common Units shall thereafter be one class
of Units called "Common Units."
5.7 CASH FROM INTERIM CAPITAL TRANSACTIONS. Available Cash that
is deemed to be Cash from Interim Capital Transactions shall be distributed,
unless the provisions of Section 5.3 require otherwise, 98% to all Limited
Partners holding Common Units, Pro Rata, and 2% to the General Partner until
a hypothetical holder of a Class A Common Unit acquired at the time of the
Initial Offering has received with respect to each Class A Common Unit, from
Partnership Inception through such date, distributions of Available Cash that
are deemed to be Cash from Interim Capital Transactions in an aggregate
amount per Class A Common Unit equal to the Initial Unit Price; PROVIDED,
HOWEVER, that the Partnership may not make a distribution of Available Cash
to Limited Partners holding Common Units pursuant to this Section 5.7, unless
at the same time that it makes any such distribution, the Partnership shall
retain in respect of each I-Unit then Outstanding an amount of Available Cash
equal to the quotient obtained by dividing (i) the cash distribution then
being made on a Common Unit pursuant to this Section 5.7 by (ii) .98.
Thereafter, all Available Cash shall be distributed as if it were Cash from
Operations and shall be distributed in accordance with Section 5.5.
5.8 DEFINITIONS. As used herein,
(a) "AVAILABLE CASH" means, with respect to any calendar quarter,
(i) the sum of (A) all cash receipts of the Partnership during such
quarter from all sources (including, without limitation, distributions of
any Operating Subsidiary's "Available Cash" (as that term is defined in
the respective Operating Subsidiary Agreement) received by the Partnership
pursuant to the respective Operating Subsidiary Agreement) and (B) any
reduction in cash reserves established in prior quarters (either by
reversal or utilization), less (ii) the sum of (aa) all cash disbursements
of the Partnership during such quarter, and (bb) any cash reserves
established in such quarter in such amounts as the General Partner
determines to be necessary or appropriate in its reasonable discretion (x)
to provide for the proper conduct of the business of the Partnership
(including reserves for possible rate refunds or future capital
expenditures) or (y) to provide funds for distributions with respect to
any of the next four calendar quarters and (cc) any other cash reserves
established in such quarter in such amounts as the General Partner
determines in its reasonable discretion to be necessary because the
distribution of such amounts would be prohibited by applicable law or by
any loan agreement, security agreement, mortgage, debt instrument or other
agreement or obligation to which the Partnership is a party or by which it
is bound or its assets are subject. Taxes paid by the Partnership on
behalf of, or
34
amounts withheld with respect to, all or less than all of the Partners
shall not be considered cash disbursements of the Partnership which
reduce Available Cash, but the payment or withholding thereof shall
be deemed to be a distribution of Available Cash to such Partners.
Alternatively, in the discretion of the General Partner, such taxes (if
pertaining to all Partners) may be considered to be cash disbursements
of the Partnership which reduce Available Cash, but the payment or
withholding thereof shall not be deemed to be a distribution of Available
Cash to such Partners. Notwithstanding the foregoing, Available Cash shall
not include any cash receipts or reductions in reserves or take into
account any disbursements made or reserves established after commencement
of the dissolution and liquidation of the Partnership. For purposes of
determining "Available Cash," the aggregate Equivalent Non-Cash Amount for
all I-Units with respect to any calendar quarter will be disregarded for
purposes of determining "Available Cash" in future quarters.
(b) "CASH FROM INTERIM CAPITAL TRANSACTIONS" means, at any date,
such amounts of Available Cash as are deemed to be Cash from Interim
Capital Transactions pursuant to Section 5.3.
(c) "CASH FROM OPERATIONS" means, at any date but prior to
commencement of the dissolution and liquidation of the Partnership, on a
cumulative basis, the cash balance of the Partnership and any Operating
Subsidiary at Partnership Inception, excluding any such cash proceeds to
the Partnership from the exercise of the Underwriters' over-allotment
option granted in the Underwriting Agreement, plus all cash receipts of
the Partnership and any Operating Subsidiary from their operations
(excluding any cash proceeds from any Interim Capital Transactions) during
the period since the Partnership Inception through such date less the sum
of (i) all cash operating expenditures of the Partnership and any
Operating Subsidiary during such period, including, without limitation,
taxes imposed on the Partnership or any Operating Subsidiary as an entity,
(ii) all cash debt service payments of the Partnership and any Operating
Subsidiary during such period (other than payments or prepayments of
principal and premium required by reason of loan agreements (including
covenants and default provisions therein) or by lenders, in each case in
connection with sales or other dispositions of assets or made in
connection with refinancings or refundings of indebtedness; provided, that
any payment or prepayment of principal, whether or not then due, shall be
determined at the election and in the discretion of the General Partner to
be refunded or refinanced by any indebtedness incurred or to be incurred
by the Partnership or any Operating Subsidiary simultaneously with or
within 180 days prior to or after such payment or prepayment to the extent
of the principal amount of such indebtedness so incurred), (iii) all cash
capital expenditures of the Partnership and any Operating Subsidiary
during such period necessary to maintain the service capability of the
Transportation System, (iv) an amount equal to the incremental revenues
collected pursuant to a rate increase that are, at such date, subject to
possible refund and for which the General Partner has established a cash
reserve, (v) any cash reserves outstanding as of such date which the
General Partner determines in its reasonable discretion to be necessary or
appropriate to provide for the future cash payment of items of the type
referred to in clauses (i) through (iii) of this sentence and (vi) any
cash reserves outstanding as of such date that the General Partner
determines to be necessary or appropriate in its reasonable discretion to
provide funds for
35
distributions with respect to any one or more of the next four calendar
quarters, all as determined on a consolidated basis and after elimination
of intercompany items. Taxes paid by the Partnership on behalf of, or
amounts withheld with respect to, all or less than all of the Partners
shall not be considered cash operating expenditures of the Partnership
which reduce Cash from Operations, but the payment or withholding thereof
shall be deemed to be a distribution of Available Cash to such Partners.
Alternatively, in the discretion of the General Partner, such taxes (if
pertaining to all Partners) may be considered to be cash disbursements of
the Partnership which reduce Cash from Operations, but the payment or
withholding thereof shall not be deemed to be a distribution of Available
Cash to such Partners. For purposes of the foregoing, reserves do not
include reserves outstanding at Partnership Inception.
(d) Intentionally Omitted;
(e) Intentionally Omitted;
(f) Intentionally Omitted;
(g) Intentionally Omitted;
(h) "FIRST TARGET DISTRIBUTION" means $0.70 per Unit per calendar
quarter, subject to adjustment in accordance with Sections 5.9 and 9.6.
(i) "INTERIM CAPITAL TRANSACTIONS" means (i) borrowings and sales of
debt securities (other than for working capital purposes and for items
purchased on open account in the ordinary course of business) by the
Partnership or any Operating Subsidiary, (ii) sales of equity interests by
the Partnership or any Operating Subsidiary and (iii) sales or other
voluntary or involuntary dispositions of any assets of the Partnership or
any Operating Subsidiary (other than (x) sales or other dispositions of
inventory in the ordinary course of business, (y) sales or other
dispositions of other current assets including accounts receivable or (z)
sales or other dispositions of assets as a part of normal retirements or
replacements), in each case prior to the commencement of the dissolution
and liquidation of the Partnership. The General Partner shall have the
right to determine in its reasonable discretion whether inventory
reductions shall be considered in the ordinary course of business or such
a normal retirement.
(j) "MINIMUM QUARTERLY DISTRIBUTION" means $0.59 per Unit per
calendar quarter, subject to adjustment in accordance with Sections 5.9
and 9.6.
(k) "NET INCOME" means, for any taxable period, the excess, if any,
of the Partnership's items of income and gain (other than those items
attributable to dispositions constituting Termination Capital
Transactions) for such taxable period over the Partnership's items of loss
and deduction (other than those items attributable to dispositions
constituting Termination Capital Transactions) for such taxable period.
The items included in the calculation of Net Income shall be determined in
accordance with Section 4.6(b) and shall not include any items specially
allocated under Section 5.1(d) or 5.1(e). Once an item of income, gain,
loss or deduction that has been included in the initial computation of Net
Income is subjected to a Required Allocation or a
36
Discretionary Allocation, the applicable Net Income or Net Loss shall be
recomputed without regard to such item. For purposes of Sections 5.1(a)
and 5.1(b), in determining whether Net Income has been allocated to any
Unit or any Partner (as the case may be) for any previous taxable period,
any Unrealized Gain or Unrealized Loss allocated pursuant to Section
4.6(d) shall be treated as an item of gain or loss in computing Net
Income.
(l) "NET LOSS" means, for any taxable period, the excess, if any, of
the Partnership's items of loss and deduction (other than those items
attributable to dispositions constituting Termination Capital
Transactions) for such taxable period over the Partnership's items of
income and gain (other than those items attributable to dispositions
constituting Termination Capital Transactions) for such taxable period.
The items included in the calculation of Net Loss shall be determined in
accordance with Section 4.6(b) and shall not include any items
specifically allocated under Section 5.1(d) or 5.1(e). Once an item of
income, gain, loss or deduction that has been included in the initial
computation of Net Loss is subjected to a Required Allocation or a
Discretionary Allocation, the applicable Net Income or Net Loss shall be
recomputed without regard to such item. For purposes of Sections 5.1(a)
and 5.1(b), in determining whether Net Losses have been allocated to any
Unit or any Partner (as the case may be) for any previous taxable period,
any Unrealized Gain or Unrealized Loss allocated pursuant to Section
4.6(d) shall be treated as an item of gain or loss in computing Net
Losses.
(m) "NET TERMINATION GAIN" means the sum, if positive, of all items
of income, gain, loss and deduction (as determined in accordance with
Section 4.6(b)) recognized by the Partnership during the period in which
the Partnership has dissolved and can no longer be continued pursuant to
Section 14.2 and all subsequent periods.
(n) "NET TERMINATION LOSS" means the sum, if negative, of all items
of income, gain, loss and deduction (as determined in accordance with
Section 4.6(b)) recognized by the Partnership during the period in which
the Partnership has dissolved and can no longer be continued pursuant to
Section 14.2 and all subsequent periods.
(o) "SECOND TARGET DISTRIBUTION" means $0.99 per Unit per calendar
quarter, subject to adjustment in accordance with Sections 5.9 and 9.6.
5.9 ADJUSTMENT OF MINIMUM QUARTERLY DISTRIBUTION AND TARGET DISTRIBUTION
LEVELS.
(a) Adjustments of the Minimum Quarterly Distribution, First Target
Distribution and Second Target Distribution shall be made in the following
circumstances: (i) the Minimum Quarterly Distribution, First Target
Distribution and Second Target Distribution shall be proportionately
adjusted in the event of any distribution, combination or subdivision
(whether effected by a distribution payable in Units or otherwise) of
Units or other Partnership Securities in accordance with Section 4.11;
provided, however, that no such adjustment shall be made as a result of
any increase in the number of I-Units or fractions of I-Units Outstanding
pursuant to Section 5.10(a); and (ii) in the event of a distribution of
Available Cash that is deemed to
37
be Cash from Interim Capital Transactions, the Minimum Quarterly
Distribution, First Target Distribution and Second Target Distribution
shall be adjusted proportionately downward to equal the product obtained
by multiplying the otherwise applicable Minimum Quarterly Distribution,
First Target Distribution and Second Target Distribution, as the same may
have been previously adjusted, by a fraction of which the numerator is the
Unrecovered Initial Unit Price immediately after giving effect to such
distribution and of which the denominator is the Unrecovered Initial Unit
Price immediately prior to giving effect to such distribution.
(b) The Minimum Quarterly Distribution, First Target Distribution
and Second Target Distribution may also be adjusted under the
circumstances, and in the manner, set forth in Section 9.6.
5.10 SPECIAL PROVISIONS RELATING TO I-UNITS.
(a) Except as otherwise provided by Sections 14.3(b) and 14.3(c),
whenever distributions are made to Limited Partners holding Common Units
pursuant to Sections 5.5 and 5.7, the number of Outstanding I-Units will
be increased in accordance with paragraph (b) of this Section 5.10.
Distributions pursuant to Sections 5.5 and 5.7 to Limited Partners holding
Common Units and to the General Partner will be made in cash and an amount
of Available Cash equal to the quotient obtained by dividing (i) the
Equivalent Non-Cash Amount by (ii) .98 will be retained by the Partnership
in respect of each I-Unit then Outstanding.
(b) Whenever Limited Partners holding Common Units receive
distributions of cash pursuant to Sections 5.5 and 5.7, the number of
Outstanding I-Units will be automatically subdivided, by means of a split
of each Outstanding I-Unit, or fraction thereof, with the result that each
Limited Partner holding I-Units will own a number of additional fractional
I-Units per each I-Unit, or fraction thereof, held by such Limited Partner
immediately prior to the Record Date for the related cash distribution to
Limited Partners holding Common Units, which number shall equal the
Calculated Unit Amount. Each fractional I-Unit that is created pursuant to
this Section 5.10(b) as a result of distributions of cash to Limited
Partners holding Common Units pursuant to Sections 5.5 and 5.7 shall be
equal to and represented by a fraction that is calculated to six decimal
places (without rounding), and any calculation that would result in a
fractional interest in excess of one-millionth (1/1,000,000) of an I-Unit
shall be disregarded without payment or other consideration and shall not
be accumulated. The creation of additional fractional I-Units pursuant to
this Section 5.10(b) will not result in any adjustment to the Capital
Accounts of holders of I-Units.
(c) As used in this Agreement, (i) "EQUIVALENT NON-CASH AMOUNT"
means, for each I-Unit, an amount equal to the cash distribution made on a
Common Unit in accordance with Sections 5.5 and 5.7; (ii) "CALCULATED UNIT
AMOUNT" means a fraction of an I-Unit calculated per I-Unit, or fraction
thereof, by dividing the Equivalent Non-Cash Amount by the Average Market
Price; and (iii) "AVERAGE MARKET PRICE" means the average of the daily
Closing Prices per Listed Share for the ten consecutive Trading Days prior
to the date on which the Listed Shares begin to trade ex-dividend, but not
including
38
that date. For purposes of this Section 5.10(c), the "date on which the
Listed Shares begin to trade ex-dividend" means the date on which
"ex-dividend" trading commences for a Share Distribution on the principal
National Securities Exchange on which the Listed Shares are listed or
admitted to trading.
(d) At any time during which there are any I-Units Outstanding, the
Partnership will not:
(i) make a distribution on a Common Unit other than in cash,
Common Units or a Partnership Security that has in all material
respects the same rights and privileges as the Common Units;
(ii) except pursuant to Section 14.3(b), make a distribution
on an I-Unit other than in additional I-Units or a security that has
in all material respects the same rights and privileges as the
I-Units;
(iii) allow a Limited Partner holding Common Units to receive
any consideration other than cash or Common Units or a security that
has in all material respects the same rights and privileges as the
Common Units or allow a Limited Partner holding I-Units to receive
any consideration other than additional I-Units or a security that
has in all material respects the same rights and privileges as the
I-Units in a (A) merger, if the Limited Partners of the Partnership
immediately prior to the transaction own more than 50% of the
residual common equity securities of the survivor immediately after
the transaction, or (B) recapitalization, reorganization or similar
transaction;
(iv) be a party to a merger, sell substantially all of the
Partnership's assets to another Person or enter into similar
transactions if (A) the survivor of the merger or the other Person
is to be an Affiliate of Enbridge Inc. after the transaction; and
(B) the transaction will result in the occurrence of a Mandatory
Purchase Event;
(v) make a tender offer for Common Units unless the
consideration payable in such tender offer (A) is exclusively cash;
and (B) together with any cash payable in respect of any other
tender offer by the Partnership for Common Units concluded within
the preceding 360 days and the aggregate amount of any cash
distributions to all Limited Partners holding Common Units made
within the preceding 360 days, is less than 12% of the aggregate
market value of all Outstanding Units determined on the Trading Day
immediately preceding the commencement of the tender offer;
(vi) issue any I-Units to any Person other than EEM; or
(vii) take any action that would result in the occurrence of a
Special Event under clause (a) or (b) of the definition of "Special
Event" in Section 1.01 of the Purchase Provisions, unless prior to
the occurrence of such Special Event, the Purchaser has notified the
Company and the Partnership that such Special Event shall constitute
a Mandatory Purchase Event under the Purchase Provisions.
39
(e) In the event of any (i) consolidation or merger of the
Partnership with or into another Person in accordance with Section 16.1
(other than a consolidation or merger in which the Partnership is the
Surviving Business Entity and which does not result in any
reclassification, conversion, exchange or cancellation of Outstanding
Common Units) or (ii) sale or other disposition to another Person of all
or substantially all of the assets of the Partnership (any of the
foregoing, a "TRANSACTION"), lawful provision shall be made such that if
the Limited Partners holding Common Units receive cash in the Transaction,
except as provided in Section 14.3(b), the number of Outstanding I-Units
will be increased automatically by a split of each Outstanding I-Unit, or
fraction thereof, so that the Limited Partners holding such Outstanding
I-Unit, or fraction thereof, own, per Outstanding I-Unit, or fraction
thereof, a number of additional I-Units or fractions of I-Units equal to
the cash received on a Common Unit as a result of the Transaction divided
by the average of the daily Closing Prices per Listed Share for the 10
consecutive Trading Days immediately prior to the effective date of the
Transaction.
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
6.1 MANAGEMENT.
(a) Subject to Section 6.6(c), the General Partner shall conduct,
direct and exercise full control over all activities of the Partnership.
Except as otherwise expressly provided in this Agreement, all management
powers over the business and affairs of the Partnership shall be
exclusively vested in the General Partner, and no Limited Partner or
Assignee shall have any right of control or management power over the
business and affairs of the Partnership. In addition to the powers now or
hereafter granted to a general partner of a limited partnership under
applicable law or which are granted to the General Partner under any other
provision of this Agreement, the General Partner, subject to Section 6.3,
shall have full power and authority to do all things and on such terms as
it, in its sole discretion, may deem necessary or desirable (i) to conduct
the business of the Partnership, to exercise all powers set forth in
Section 3.2 and to effectuate the purposes set forth in Section 3.1,
including, without limitation, (A) the making of any expenditures, the
lending or borrowing of money, the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance of
evidences of indebtedness and the incurring of any other obligations and
the securing of same by mortgage, deed of trust or other lien or
encumbrance; (B) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the Partnership; (C)
the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation
or exchange of any or all of the assets of the Partnership or the merger
or other combination of the Partnership with or into another Person (the
matters described in this clause (C) being subject, however, to any prior
approval that may be required by Section 6.3); (D) the use of the assets
of the Partnership (including, without limitation, cash on hand) for any
purpose consistent with the terms of this Agreement, including, without
limitation, the financing of the conduct of the operations of the
Partnership or any Operating Subsidiary, the lending of funds to other
Persons (including, without limitation, any Operating Subsidiary) and the
repayment of obligations of the Partnership and any Operating
40
Subsidiary and the making of capital contributions to any Operating
Subsidiary; (E) the negotiation, execution and performance of any
contracts, conveyances or other instruments (including, without
limitation, instruments that limit the liability of the Partnership
under contractual arrangements to all or particular assets of the
Partnership, with the other party to the contract to have no recourse
against the General Partner or its assets other than its interest in
the Partnership, even if same results in the terms of the transaction
being less favorable to the Partnership than would otherwise be the
case); (F) the distribution of Partnership cash; (G) the selection and
dismissal of employees (including, without limitation, employees having
titles such as "president," "vice president," "secretary" and "treasurer")
agents, outside attorneys, accountants, consultants and contractors and
the determination of their compensation and other terms of employment or
hiring; (H) the maintenance of insurance for the benefit of the Partners
and the Partnership and any Operating Subsidiary (including, without
limitation, the assets and operations of the Partnership and any Operating
Subsidiary); (I) the formation of, or acquisition of an interest in, and
the contribution of property to, any further limited or general
partnerships, limited liability companies, joint ventures or other
relationships (including, without limitation, the acquisition of interests
in, and the contributions of property to, any Operating Subsidiary from
time to time); (J) the control of any matters affecting the rights and
obligations of the Partnership, including, without limitation, the
bringing and defending of actions at law or in equity and otherwise
engaging in the conduct of litigation and the incurring of legal expense
and the settlement of claims and litigation; (K) the indemnification of
any Person against liabilities and contingencies to the extent permitted
by law; (L) the entering into of listing agreements with the New York
Stock Exchange and any other securities exchange and the delisting of
some or all of the Units from, or requesting that trading be suspended on,
any such exchange (subject to any prior approval that may be required
under Section 1.6); and (M) the purchase, sale or other acquisition or
disposition of Units; and (ii) to undertake any action in connection
with the Partnership's participation in any Operating Subsidiary as a
partner, member, shareholder or other equity interest holder or in
connection with the exercise of the Partnership's rights as a member,
shareholder or other equity interest holder of any Operating General
Partner (including, without limitation, contributions or loans of funds
by the Partnership to any Operating Subsidiary).
(b) Notwithstanding any other provision of this Agreement, any
Operating Subsidiary 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 Units hereby (i) approves, ratifies
and confirms the execution, delivery and performance by the parties
thereto of the First Mortgage Note Agreements, the First Mortgage Notes,
the related mortgage, the revolving credit facility, the Operating
Partnership Agreement, the Underwriting Agreement, the Conveyance
Agreement, the LPL Contribution Agreement, the Distribution Support
Agreement (as each of the foregoing is defined or otherwise described in
the Registration Statement) and the other agreements described in or filed
as part of the Registration Statement; (ii) agrees that the General
Partner 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 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 Units; and
41
(iii) agrees that none of the execution, delivery or performance by the
General Partner, the Partnership, any Operating Subsidiary or any
Affiliate thereof of any agreement authorized or permitted under this
Agreement (including, without limitation, the exercise by the General
Partner or any Affiliate of the General Partner of the rights accorded
pursuant to Article XVII) shall constitute a breach by the General
Partner of any duty that the General Partner may owe the Partnership or
the Limited Partners or the Assignees or any other Persons under this
Agreement or of any duty stated or implied by law or equity.
6.2 CERTIFICATE OF LIMITED PARTNERSHIP. The General Partner has
caused the Certificate of Limited Partnership to be filed with the Secretary of
State of the State of Delaware as required by the Delaware Act and shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be determined by the General Partner in its sole discretion to be reasonable
and necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the extent
that such action is determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws
of the State of Delaware or of any other state in which the Partnership may
elect to do business or own property. Subject to the terms of Section 7.5(a),
the General Partner shall not be required, before or after filing, to deliver or
mail a copy of the Certificate of Limited Partnership, any qualification
document or any amendment thereto to any Limited Partner or Assignee.
6.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY.
(a) The General Partner may not, without written approval of the
specific act by all of the Limited Partners or by other written instrument
executed and delivered by all of the Limited Partners subsequent to the
date of this Agreement, take any action in contravention of this
Agreement, including, without limitation, (i) any act that would make it
impossible to carry on the ordinary business of the Partnership, except as
otherwise provided in this Agreement; (ii) possess Partnership property,
or assign any rights in specific Partnership property, for other than a
Partnership purpose; (iii) admit a Person as a Partner, except as
otherwise provided in this Agreement; (iv) amend this Agreement in any
manner, except as otherwise provided in this Agreement or applicable law;
or (v) transfer its interest as general partner of the Partnership, except
as otherwise provided in this Agreement.
(b) Except as provided in Article XIV, the General Partner may not
sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related
transactions (including by way of merger, consolidation or other
combination with any other Person) or approve on behalf of the Partnership
the sale, exchange or other disposition of all or substantially all of the
assets of Enbridge Energy, Limited Partnership, without the approval of
the holders of at least a majority of the Outstanding Units; provided,
however, that this provision shall not preclude or limit the General
Partner's ability to mortgage, pledge, hypothecate or grant a
42
security interest in all or substantially all of the Partnership's assets
or any Operating Subsidiary's assets and shall not apply to any forced
sale of any or all of the Partnership's assets or any Operating
Subsidiary's assets pursuant to the foreclosure of, or other realization
upon, any such encumbrance. Without the approval of the holders of at
least a majority of the Outstanding Units, the General Partner shall not,
on behalf of the Partnership, consent to any amendment to the partnership
agreement of Enbridge Energy, Limited Partnership or, except as expressly
permitted by Section 6.9(d), take any action permitted to be taken by the
limited partner of Enbridge Energy, Limited Partnership, in either case,
that would adversely affect the Partnership as a limited partner of
Enbridge Energy, Limited Partnership.
(c) Unless approved by the affirmative vote of the holders of at
least 66-2/3% of each class of the Outstanding Units, the General Partner
shall not take any action or refuse to take any reasonable action the
effect of which, if taken or not taken, as the case may be, would be to
cause the Partnership or any Operating Subsidiary to be taxable as a
corporation or otherwise taxed as an entity for federal income tax
purposes.
(d) At all times while serving as the general partner of the
Partnership, the General Partner shall not make any dividend or
distribution on, or repurchase any shares of, its stock or take any other
action within its control if the effect of such dividend, distribution,
repurchase or other action would be to reduce its net worth below an
amount necessary to receive an Opinion of Counsel that the Partnership
will be treated as a partnership for federal income tax purposes.
6.4 REIMBURSEMENT OF THE GENERAL PARTNER.
(a) Except as provided in this Section 6.4 and elsewhere in this
Agreement or in any Operating Subsidiary Agreement, the General Partner
shall not be compensated for its services as general partner of the
Partnership or on behalf of any Operating General Partner or any Operating
Subsidiary.
(b) The General Partner shall be reimbursed on a monthly basis, or
such other basis as the General Partner may determine in its sole
discretion, for (i) all direct and indirect expenses it incurs or payments
it makes on behalf of the Partnership and any Operating Subsidiary
(including, without limitation, amounts paid to any Person to perform
services for the Partnership or for the benefit of the Partnership or to
or on behalf of any Operating Subsidiary or Operating General Partner),
and (ii) that portion of the General Partner's or its Affiliates' legal,
accounting, investor communications, utilities, telephone, secretarial,
travel, entertainment, bookkeeping, reporting, data processing, office
rent and other office expenses (including, without limitation, overhead
charges), salaries, fees and other compensation and benefit expenses of
employees, officers and directors, insurance, other administrative or
overhead expenses and all other expenses, in each such case, necessary or
appropriate to the conduct of the Partnership's business and allocable to
the Partnership or otherwise incurred by the General Partner in connection
with operating the Partnership's business (including, without limitation,
expenses allocated to the General Partner by its Affiliates). Any accruals
by the General Partner of the expected cost of providing all forms of
post-retirement benefits to employees or
43
former employees of the General Partner and their beneficiaries and
qualified dependents will be borne by the Partnership. The General
Partner shall determine the fees and expenses that are allocable to the
Partnership in any reasonable manner determined by the General Partner in
its sole discretion. Such reimbursements shall be in addition to any
reimbursement to the General Partner as a result of indemnification
pursuant to Section 6.7.
(c) Subject to Section 4.4(c), the General Partner in its sole
discretion and without the approval of the Limited Partners may propose
and adopt on behalf of the Partnership employee benefit plans (including,
without limitation, plans involving the issuance of Units, other than
I-Units), for the benefit of employees of the General Partner, any
Operating General Partner, the Partnership, any Operating Subsidiary or
any Affiliate of any of them in respect of services performed, directly or
indirectly, for the benefit of the Partnership or any Operating
Subsidiary.
6.5 OUTSIDE ACTIVITIES.
(a) After the date of this Agreement, the General Partner shall
limit its activities to those required or authorized by this Agreement or
the Omnibus Agreement.
(b) Except as described in the Omnibus Agreement or as provided in
Section 6.5(a), each Indemnitee is free to engage in any business,
including any business that is in competition with the business of the
Partnership. The General Partner and any other Persons affiliated with the
General Partner may acquire Units or other Partnership Securities, in
addition to those acquired by any of such Persons on the Closing Date, and
shall be entitled to exercise all rights of an Assignee or Limited
Partner, as applicable, relating to such Units or Partnership Securities,
as the case may be.
(c) Without limiting Sections 6.5(a) and 6.5(b), but notwithstanding
anything to the contrary in this Agreement, the competitive activities of
Indemnitees described in the Registration Statement are hereby approved by
all Partners, and it shall not be deemed to be a breach of the General
Partner's fiduciary duty for the General Partner to permit an Indemnitee
to engage in a business opportunity in preference to or to the exclusion
of the Partnership, provided such activities are not prohibited by the
Omnibus Agreement.
6.6 LOANS TO AND FROM THE GENERAL PARTNER; CONTRACTS WITH
AFFILIATES.
(a) The General Partner or any Affiliate thereof may lend to the
Partnership or any Operating General Partner or any Operating Subsidiary,
and the Partnership and any Operating General Partner or any Operating
Subsidiary may borrow, funds needed or desired by the Partnership and any
Operating General Partner or any Operating Subsidiary for such periods of
time as the General Partner may determine; provided, however, that the
General Partner or any of its Affiliates may not charge the Partnership or
any Operating General Partner or any Operating Subsidiary interest at a
rate greater than the rate that would be charged the Partnership or any
such Operating General Partner or Operating Subsidiary, as the case may be
(without reference to the General Partner's
44
financial abilities or guarantees), by unrelated lenders on comparable
loans. The Partnership or any Operating General Partner or any Operating
Subsidiary, as the case may be, shall reimburse the General Partner or any
of its Affiliates, as the case may be, for any costs (other than any
additional interest costs) incurred by it in connection with the borrowing
of funds obtained by the General Partner or any of its Affiliates and
loaned to the Partnership or any such Operating General Partner or
Operating Subsidiary.
(b) The Partnership may lend or contribute to any Operating General
Partner or any Operating Subsidiary, and any Operating General Partner or
any Operating Subsidiary may borrow, funds on terms and conditions
established in the sole discretion of the General Partner. The foregoing
authority shall be exercised by the General Partner in its sole discretion
and shall not create any right or benefit in favor of any Operating
General Partner or any Operating Subsidiary or any other Person. The
Partnership may not lend funds to the General Partner or any of its
Affiliates, otherwise than for short-term funds management purposes.
(c) The General Partner may itself, or may enter into an agreement,
including the Delegation of Control Agreement, with any of its Affiliates
to, render services to the Partnership. Any service rendered to the
Partnership by the General Partner or any of its Affiliates shall be on
terms that are fair and reasonable to the Partnership; provided, however,
that the requirements of this Section 6.6(c) shall be deemed satisfied as
to any transaction the terms of which are no less favorable to the
Partnership than those generally being provided to or available from
unrelated third parties. The provisions of Section 6.4 shall apply to the
rendering of services described in this Section 6.6(c).
(d) The Partnership may transfer assets to joint ventures, other
partnerships, corporations or other business entities in which it is or
thereby becomes a participant upon such terms and subject to such
conditions as are consistent with this Agreement and applicable law.
(e) Neither the General Partner nor any of its Affiliates shall
sell, transfer or convey any property to, or purchase any property from,
the Partnership, directly or indirectly, except pursuant to transactions
that are fair and reasonable to the Partnership; provided, however, that
the requirements of this Section 6.6(e) shall be deemed to be satisfied
(i) as to the transactions effected pursuant to Sections 4.2 and 4.3 of
the Second Amended and Restated Agreement or any substantially similar
provisions of any Prior Agreement, the Conveyance Agreement, and any other
transactions described in or contemplated by the Registration Statement,
and (ii) as to any transaction the terms of which are no less favorable to
the Partnership than those generally being provided to or available from
unrelated third parties.
(f) The General Partner and its Affiliates shall have no obligation
to permit the Partnership or any Operating Subsidiary to use any
facilities of the General Partner and its Affiliates, except as may be
provided in contracts entered into from time to time specifically dealing
with such use, nor shall there be any obligation of the General Partner or
its Affiliates to enter into such contracts.
45
6.7 INDEMNIFICATION.
(a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, each Indemnitee shall be
indemnified and held harmless by the Partnership from and against any and
all losses, claims, damages, liabilities (joint or several), expenses
(including, without limitation, legal fees and expenses), judgments,
fines, settlements and other amounts arising from any and all claims,
demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnitee may be involved,
or is threatened to be involved, as a party or otherwise, by reason of its
status as (i) the General Partner, a Departing Partner or any of their
Affiliates, (ii) an officer, director, employee, partner, agent or trustee
of the General Partner, any Departing Partner or any of their Affiliates
or (iii) a Person serving at the request of the Partnership in another
entity in a similar capacity; provided, that in each case the Indemnitee
acted in good faith, in a manner which such Indemnitee believed to be in,
or not opposed to, the best interests of the Partnership and, with respect
to any criminal proceeding, had no reasonable cause to believe its conduct
was unlawful; provided, further, no indemnification pursuant to this
Section 6.7 shall be available to the General Partner or Enbridge Inc.
with respect to their respective obligations incurred pursuant to the
Underwriting Agreement, the Conveyance Agreement or the Contribution
Agreement (other than obligations incurred by the General Partner on
behalf of the Partnership or any Operating Subsidiary). The termination of
any action, suit or proceeding by judgment, order, settlement, conviction
or upon a plea of nolo contendere, or its equivalent, shall not create a
presumption that the Indemnitee acted in a manner contrary to that
specified above. Any indemnification pursuant to this Section 6.7 shall be
made only out of the assets of the Partnership.
(b) To the fullest extent permitted by law, expenses (including,
without limitation, reasonable legal fees and expenses) incurred by an
Indemnitee in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Partnership prior to the
final disposition of such claim, demand, action, suit or proceeding upon
receipt by the Partnership of an undertaking by or on behalf of the
Indemnitee to repay such amount if it shall be determined that the
Indemnitee is not entitled to be indemnified as authorized in this Section
6.7.
(c) The indemnification provided by this Section 6.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under
any agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, both as to actions in the Indemnitees' capacity as (i) the
General Partner, a Departing Partner or an Affiliate thereof, (ii) an
officer, director, employee, partner, agent or trustee of the General
Partner, any Departing Partner or an Affiliate thereof or (iii) a Person
serving at the request of the Partnership in another entity in a similar
capacity, and shall continue as to an Indemnitee who has ceased to serve
in such capacity and as to actions in any other capacity.
(d) The Partnership may purchase and maintain (or reimburse the
General Partner or its Affiliates for the cost of) insurance, on behalf of
the General Partner and such other Persons as the General Partner shall
determine, against any liability that may
46
be asserted against or expense that may be incurred by such Person in
connection with the Partnership's activities, whether or not the
Partnership would have the power to indemnify such Person against such
liabilities under the provisions of this Agreement.
(e) For purposes of this Section 6.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an
employee benefit plan whenever the performance by it of its duties to the
Partnership also imposes duties on, or otherwise involves services by, it
to the plan or participants or beneficiaries of the plan; excise taxes
assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute "fines" within the meaning of
Section 6.7 (a); and action taken or omitted by it with respect to an
employee benefit plan in the performance of its duties for a purpose
reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is in,
or not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth
in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 6.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 6.7 or any
other provision hereof shall in any manner terminate, reduce or impair the
right of any past, present or future Indemnitee to be indemnified by the
Partnership, nor the obligation of the Partnership to indemnify any such
Indemnitee under and in accordance with the provisions of this Section 6.7
as in effect immediately prior to such amendment, modification or repeal
with respect to claims arising from or relating to matters occurring, in
whole or in part, prior to such amendment, modification or repeal,
regardless of when such claims may arise or be asserted.
6.8 LIABILITY OF INDEMNITEES.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partners, the Assignees or any other Persons who
have acquired interests in the Units, for losses sustained or liabilities
incurred as a result of any act or omission if such Indemnitee acted in
good faith.
(b) Subject to its obligations and duties as General Partner set
forth in Section 6.1(a), the General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its agents, and
the General Partner shall not be responsible for any misconduct
47
or negligence on the part of any such agent appointed by the General
Partner in good faith. Notwithstanding the preceding sentence, the General
Partner shall be responsible for any misconduct or negligence on the
part of EEM in performing the Maximum Permitted Delegation.
(c) Any amendment, modification or repeal of this Section 6.8 or any
other 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 Partner, and the Partnership's and General Partner's
and any Operating General Partner's directors, officers and employees
under this Section 6.8 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
6.9 RESOLUTION OF CONFLICTS OF INTEREST.
(a) Unless otherwise expressly provided in this Agreement or any
Operating Subsidiary Agreement or the Omnibus Agreement, whenever a
potential conflict of interest exists or arises between the General
Partner or any of its Affiliates, on the one hand, and the Partnership,
any Operating Subsidiary, any Partner or any Assignee, on the other hand,
any resolution or course of action in respect of such conflict of interest
shall be permitted and deemed approved by all Partners, and shall not
constitute a breach of this Agreement, of any Operating Subsidiary
Agreement, of any agreement contemplated herein or therein, or of any duty
stated or implied by law or equity, if the resolution or course of action
is or, by operation of this Agreement, is deemed to be, fair and
reasonable to the Partnership. The General Partner shall be authorized in
connection with its resolution of any conflict of interest to consider (i)
the relative interests of any party to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interest; (ii) any customary or accepted industry practices and any
customary or historical dealings with a particular Person; (iii) any
applicable generally accepted accounting or engineering practices or
principles; and (iv) such additional factors as the General Partner
determines in its sole discretion to be relevant, reasonable or
appropriate under the circumstances. Nothing contained in this Agreement,
however, is intended to nor shall it be construed to require the General
Partner to consider the interests of any Person other than the
Partnership. In the absence of bad faith by the General Partner, the
resolution, action or terms so made, taken or provided by the General
Partner with respect to such matter shall not constitute a breach of this
Agreement or any other agreement contemplated herein or a breach of any
standard of care or duty imposed herein or therein or under the Delaware
Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated
hereby provides that the General Partner or any of its Affiliates is
permitted or required to make a decision (i) in its "sole discretion" or
"discretion" that it deems "necessary or appropriate" or under a grant of
similar authority or latitude, the General Partner or such Affiliate shall
be entitled to consider only such interests and factors as it desires and
shall have no duty or obligation to give any consideration to any interest
of, or factors affecting, the Partnership, any Operating Subsidiary, any
Limited Partner or any
48
Assignee, or (ii) in "good faith" or under another express standard, the
General Partner or such Affiliate shall act under such express standard
and shall not be subject to any other or different standards imposed by
this Agreement, any Operating Subsidiary Agreement, any other agreement
contemplated hereby or under the Delaware Act or any other law, rule or
regulation. In addition, any actions taken by the General Partner
consistent with the standards of "reasonable discretion" set forth in
the definitions of Available Cash or Cash from Operations shall not
constitute a breach of any duty of the General Partner to the Partnership
or the Limited Partners. The General Partner shall have no duty, express
or implied, to sell or otherwise dispose of any asset of any Operating
Subsidiary or of the Partnership, other than in the ordinary course of
business. No borrowing by the Partnership or any Operating Subsidiary
or the approval thereof by the General Partner shall be deemed to
constitute a breach of any duty of the General Partner to the Partnership
or the Limited Partners by reason of the fact that the purpose or effect
of such borrowing is directly or indirectly to enable the General Partner
to receive incentive distributions.
(c) Whenever a particular transaction, arrangement or resolution of
a conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such
transaction, arrangement or resolution shall be considered in the context
of all similar or related transactions.
(d) The Limited Partners hereby authorize the General Partner, on
behalf of the Partnership as a limited partner or member of any Operating
Subsidiary, to approve actions by any Operating General Partner similar to
those actions permitted to be taken by the General Partner pursuant to
this Section 6.9.
6.10 OTHER MATTERS CONCERNING THE GENERAL PARTNER.
(a) The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond,
debenture, or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any act taken or omitted in
reliance upon the opinion (including, without limitation, an Opinion of
Counsel) of such Persons as to matters that the General Partner reasonably
believes to be within such Person's professional or expert competence
shall be conclusively presumed to have been done or omitted in good faith
and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly
authorized officers and a duly appointed attorney or attorneys-in-fact.
Each such attorney shall, to the extent provided by the General Partner in
the power of attorney, have full power and authority to do and perform
each and every act and duty that is permitted or required to be done by
the General Partner hereunder.
49
(d) Any standard of care and duty imposed by this Agreement or under
the Delaware Act or any applicable law, rule or regulation shall be
modified, waived or limited as required to permit the General Partner to
act under this Agreement or any other agreement contemplated by this
Agreement and to make any decision pursuant to the authority prescribed in
this Agreement, so long as such action is reasonably believed by the
General Partner to be in the best interests of the Partnership.
6.11 TITLE TO PARTNERSHIP ASSETS. Title to Partnership Assets,
whether real, personal or mixed and whether tangible or intangible, shall be
deemed to be owned by the Partnership as an entity, and no Partner or
Assignee, individually or collectively, shall have any ownership interest in
such Partnership Assets or any portion thereof. Title to any or all of the
Partnership Assets may be held in the name of the Partnership, the General
Partner or one or more nominees, as the General Partner may determine. The
General Partner hereby declares and warrants that any Partnership Assets for
which record title is held in the name of the General Partner shall be held
by the General Partner for the exclusive use and benefit of the Partnership
in accordance with the provisions of this Agreement; provided, however, that
the General Partner shall use its reasonable efforts to cause record title to
such assets (other than those assets in respect of which the General Partner
determines that the expense and difficulty of conveyancing makes transfer of
record title to the Partnership impracticable) to be vested in the
Partnership as soon as reasonably practicable. All Partnership Assets shall
be recorded as the property of the Partnership in its books and records,
irrespective of the name in which record title to such Partnership assets are
held.
6.12 PURCHASE OR SALE OF CLASS A COMMON UNITS. Subject to
Section 5.10(d)(v), the General Partner may cause the Partnership to purchase
or otherwise acquire Class A Common Units. As long as Class A Common Units
are held by the Partnership or any Operating Subsidiary, such Class A Common
Units shall not be considered Outstanding for any purpose, except as
otherwise provided herein. The General Partner or any Affiliate of the
General Partner may also purchase or otherwise acquire and sell or otherwise
dispose of Class A Common Units for its own account, subject to the
provisions of Articles XI and XII.
6.13 RELIANCE BY THIRD PARTIES. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any contracts on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if it were
the Partnership's sole party in interest, both legally and beneficially. Each
Limited Partner hereby waives any and all defenses or other remedies that may
be available against such Person to contest, negate or disaffirm any action
of the General Partner in connection with any such dealing. In no event shall
any Person dealing with the General Partner or its representatives be
obligated to ascertain that the terms of this Agreement have been complied
with or to inquire into the necessity or expedience of any act or action of
the General Partner or its representatives. Each and every certificate,
document or other instrument executed on behalf of the Partnership by the
General Partner or its representatives shall be conclusive evidence in favor
of any and every Person relying thereon or claiming thereunder that (a) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (b) the Person
executing and delivering such certificate, document or instrument was duly
authorized and
50
empowered to do so for and on behalf of the Partnership and (c) such
certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
6.14 REGISTRATION RIGHTS OF THE GENERAL PARTNER AND ITS
AFFILIATES.
(a) If (i) the General Partner or any of its Affiliates (including,
for purposes of this Section 6.14, Persons that are Affiliates at the date
hereof notwithstanding that they may later cease to be Affiliates) hold
Units or other Partnership Securities which it desires to sell and (ii)
Rule 144 of the Securities Act (or any successor rule or regulation to
Rule 144) is not available to enable the General Partner or such
Affiliates to dispose of the number of Units or other Partnership
Securities it desires to sell at the time it desires to do so, then upon
the request of the General Partner or any of its Affiliates, the
Partnership shall file with the Securities and Exchange Commission as
promptly as practicable after receiving such request, and use all
reasonable efforts to cause to become effective and remain effective for a
reasonable period following its effective date, a registration statement
or statements under the Securities Act registering the offering and sale
of the number of Units or other Partnership Securities specified in the
request. All registrations requested pursuant to this Section 6.14(a) are
referred to as "DEMAND REGISTRATIONS." The Partnership may postpone for up
to six months the filing or the effectiveness of a registration statement
pursuant to a Demand Registration if (i) the General Partner or, (ii) if
at the time a request for Demand Registration is submitted to the
Partnership the Person requesting registration is an Affiliate of the
General Partner, a majority of the independent directors of the General
Partner, determines in its good faith judgment that a postponement of the
requested registration for up to six months would be in the best interests
of the Partnership and its Partners due to a pending transaction,
investigation or other event. In connection with any Demand Registration,
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 Persons
requesting registration shall reasonably request; provided, however, that
no such qualification shall be required in any jurisdiction where, as a
result thereof, the Partnership would become subject to general service of
process or to taxation or qualification to do business as a foreign
corporation doing business in such jurisdiction, and (y) such documents as
may be necessary to apply for listing or to list the securities subject to
such registration on such National Securities Exchange as the Persons
requesting registration shall reasonably request, and do any and all other
acts and things that may reasonably be necessary or advisable to enable
such Persons to consummate a public sale of such securities in such
states. Except as set forth in subsection (c) below, all costs and
expenses of any such Demand Registration and offering shall be paid by the
Persons requesting registration, without reimbursement by the Partnership.
(b) If the Partnership shall at any time propose to file a
registration statement under the Securities Act for an offering of
securities of the Partnership for cash (other than pursuant to a Demand
Registration or an offering relating solely to an employee benefit plan),
the Partnership shall use its best efforts to include such number or
amount of securities held by the General Partner and any of its Affiliates
in such registration
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statement as the General Partner or any of such Affiliates shall request.
All registrations requested by the Purchaser pursuant to this Section
6.14(b) are referred to herein as "PIGGYBACK REGISTRATIONS." If the
proposed offering shall be an underwritten offering, then, in the event
that the managing underwriter of such offering advises the General Partner
or any of such Affiliates in writing that in its opinion the inclusion of
all or some of the securities of the Persons requesting Piggyback
Registration 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 of the Persons requesting Piggyback
Registration which, in the opinion of the managing underwriter, will
not so adversely and materially affect the offering. In connection with
any Piggyback Registration, the General Partner or any of its Affiliates
requesting registration shall bear the expense of all underwriting
discounts and commissions attributable to the securities sold for their
own respective accounts and shall reimburse the Partnership for all
incremental costs incurred by the Partnership in connection with such
registration resulting from the inclusion of the securities held by the
General Partner or any of its Affiliates.
(c) If underwriters are engaged in connection with any Demand or
Piggyback Registration the Partnership shall provide indemnification,
representations, covenants, opinions and other assurance to the
underwriters in form and substance reasonably satisfactory to such
underwriters. Further, in addition to and not in limitation of the
Partnership's obligation under Section 6.7, the Partnership shall, to the
fullest extent permitted by law, indemnify and hold harmless the General
Partner or such other holder, its officers, directors and each Person who
controls the General Partner or such other holder (within the meaning of
the Securities Act) and any agent thereof (collectively, "INDEMNIFIED
PERSONS") against any losses, claims, demands, actions, causes of action,
assessments, damages, liabilities (joint or several), costs and expenses
(including without limitation, interest, penalties and reasonable
attorneys' fees and disbursements), resulting to, imposed upon, or
incurred by an Indemnified Person, directly or indirectly, under the
Securities Act or otherwise (hereinafter referred to in this Section
6.14(c) as a "claim" and in the plural as "claims"), based upon, arising
out of, or resulting from any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which
any 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 registration
statement current), or arising out of, based upon or resulting from the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements made therein not
misleading; provided, however, that the Partnership shall not be liable to
the extent that any such claim arises out of, is based upon or results
from an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, such preliminary,
summary or final prospectus or such amendment or supplement, in reliance
upon and in conformity with written information furnished to the
Partnership by or on behalf of such Indemnified Person specifically for
use in the preparation thereof.
(d) The provisions of Sections 6.14(a) and 6.14(b) shall continue to
be applicable with respect to the General Partner and any of its
Affiliates after the General
52
Partner 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 General Partner or any of its Affiliates
to sell all of the Units or other Partnership Securities with respect to
which the General Partner or any of its Affiliates have requested during
such two-year period that a registration statement be filed; provided,
however, that the Partnership shall not be required to file successive
registration statements covering the same securities for which
registration was demanded during such two-year period. The provisions of
Section 6.14(c) shall continue in effect thereafter.
(e) Any request to register Partnership Securities pursuant to this
Section 6.14 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.
6.15 DELEGATION TO EEM.
(a) Pursuant to Section 6.6(c) of this Agreement and in accordance
with Section 17-403(c) of the Delaware Act, the General Partner shall
delegate to EEM, to the fullest extent permitted under this Agreement and
Delaware law, all of the General Partner's power and authority to manage
and control the business and affairs of the Partnership under the terms
and conditions of the Delegation of Control Agreement; provided, however,
that such delegation shall not cause the General Partner to cease to be
the sole general partner of the Partnership; and provided further, that
the General Partner shall not be relieved of any of its responsibilities
or obligations to the Partnership or the Limited Partners as a result of
such delegation. The General Partner shall retain all of its Partnership
Interest, Percentage Interest, rights to Incentive Distributions, rights
to allocations of Net Income and Net Losses, rights to allocations of Net
Termination Gains and Net Termination Losses, and rights to distributions
pursuant to Sections 5.3, 5.5, 5.7 and 14.3. The specific terms and
conditions of the delegation to EEM are set forth in the Delegation of
Control Agreement.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, and except to the extent otherwise provided in the Delegation
of Control Agreement, until such date as the Maximum Permitted Delegation
is terminated in accordance with the Delegation of Control Agreement, the
provisions of this Agreement that apply to the management and control of
the Partnership, including, without limitation, Sections 6.1, 6.3, 6.4,
6.9, 6.10 and 6.14, shall apply to EEM to the same extent as such
provisions apply to the General Partner.
(c) Notwithstanding anything to the contrary set forth in this
Agreement, the provisions of Section 6.7 of this Agreement shall apply to
EEM and any Person who is or was a manager, officer or director of EEM to
the same extent as such provisions apply to
53
the General Partner and any Person who is or was an officer or director of
the General Partner.
ARTICLE VII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
7.1 LIMITATION OF LIABILITY. The Limited Partners and the
Assignees shall have no liability under this Agreement except as expressly
provided in this Agreement or the Delaware Act.
7.2 MANAGEMENT OF BUSINESS. No Limited Partner or Assignee
(other than the General Partner, any of its Affiliates or any officer,
director, employee, partner, agent or trustee of the General Partner or any
of its Affiliates, in its capacity as such, if such Person shall also be a
Limited Partner or Assignee) shall take part in the operation, management or
control (within the meaning of the Delaware Act) of the Partnership's
business, transact any business in the Partnership's name or have the power
to sign documents for or otherwise bind the Partnership. The transaction of
any such business by the General Partner, any of its Affiliates or any
officer, director, employee, partner, agent or trustee of the General Partner
or any of its Affiliates, in its capacity as such, shall not affect, impair
or eliminate the limitations on the liability of the Limited Partners or
Assignees under this Agreement.
7.3 OUTSIDE ACTIVITIES. Subject to the provisions of Section
6.5, which shall continue to be applicable to the Persons referred to
therein, regardless of whether such Persons shall also be Limited Partners or
Assignees, any Limited Partner or Assignee shall be entitled to and may have
business interests and engage in business activities in addition to those
relating to the Partnership, including, without limitation, business
interests and activities in direct competition with the Partnership or any
Operating Subsidiary. Neither the Partnership nor any of the other Partners
or Assignees shall have any rights by virtue of this Agreement in any
business ventures of any Limited Partner or Assignee.
7.4 RETURN OF CAPITAL. No Limited Partner shall be entitled to
the withdrawal or return of his Capital Contribution, except to the extent,
if any, that distributions made pursuant to this Agreement or upon
termination of the Partnership may be considered as such by law and then only
to the extent provided for in this Agreement. Except to the extent provided
by Article V or as otherwise expressly provided in this Agreement, no Limited
Partner or Assignee shall have priority over any other Limited Partner or
Assignee either as to the return of Capital Contributions or as to profits,
losses or distributions. Any such return shall be a compromise to which all
Partners and Assignees agree within the meaning of Section 17.502(b) of the
Delaware Act.
7.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP.
(a) In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 7.5(b), each Limited
Partner shall have the right, for a purpose reasonably related to such
Limited Partner's interest as a limited partner in the Partnership, upon
reasonable demand and at such Limited Partner's own expense:
54
(i) to obtain true and full information regarding the
status of the business and financial condition of the
Partnership;
(ii) promptly after becoming available, to obtain a copy of
the Partnership's federal, state and local tax returns for each
year;
(iii) to have furnished to him, upon notification to the
General Partner, a current list of the name and last known business,
residence or mailing address of each Partner;
(iv) to have furnished to him, upon notification to the
General Partner, a copy of this Agreement and the Certificate of
Limited Partnership and all amendments thereto;
(v) to obtain true and full information regarding the amount
of cash and description and statement of the Agreed Value of any
other Capital Contribution by each Partner and which each Partner
has agreed to contribute in the future, and the date on which each
became a Partner; and
(vi) to obtain such other information regarding the affairs of
the Partnership as is just and reasonable.
(b) Notwithstanding any other provision of this Agreement, the
General Partner may keep confidential from the Limited Partners and
Assignees for such period of time as the General Partner deems reasonable,
any information that the General Partner reasonably believes to be in the
nature of trade secrets or other information the disclosure of which the
General Partner in good faith believes is not in the best interests of the
Partnership or could damage the Partnership or any Operating Subsidiary or
that the Partnership or any Operating Subsidiary is required by law or by
agreements with third parties to keep confidential (other than agreements
with Affiliates the primary purpose of which is to circumvent the
obligations set forth in Section 7.5).
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 RECORDS AND ACCOUNTING. The General Partner shall keep or
cause to be kept at the principal office of the Partnership appropriate books
and records with respect to the Partnership's business including, without
limitation, all books and records necessary to provide to the Limited
Partners any information, lists and copies of documents required to be
provided pursuant to Section 7.5(a). Any books and records maintained by or
on behalf of the Partnership in the regular course of its business,
including, without limitation, the record of the Record Holders and Assignees
of Units or other Partnership Securities, books of account and records of
Partnership proceedings, may be kept on, or be in the form of, computer
disks, hard disks, punch cards, magnetic tape, photographs, micrographics or
any other information storage device, provided, that the books and records so
maintained are convertible into clearly legible written form within a
reasonable period of time. The books of the Partnership shall be maintained,
for financial reporting purposes, on an accrual basis in accordance with
generally accepted accounting principles.
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8.2 FISCAL YEAR. The fiscal year of the Partnership shall be the
calendar year.
8.3 REPORTS.
(a) As soon as practicable, but in no event later than 120 days
after the close of each Partnership Year, the General Partner shall cause
to be mailed to each Record Holder of a Unit as of a date selected by the
General Partner in its sole discretion, an annual report containing
financial statements of the Partnership for such Partnership Year,
presented in accordance with generally accepted accounting principles,
including a balance sheet and statements of operations, Partners' equity
and cash flows, such statements to be audited by a firm of independent
public accountants selected by the General Partner.
(b) As soon as practicable, but in no event later than 90 days after
the close of each calendar quarter except the last calendar quarter of
each year, the General Partner shall cause to be mailed to each Record
Holder of a Unit, as of a date selected by the General Partner in its sole
discretion, a report containing unaudited financial statements of the
Partnership and such other information as may be required by applicable
law, regulation or rule of any National Securities Exchange on which the
Units are listed for trading, or as the General Partner determines to be
necessary or appropriate.
ARTICLE IX
TAX MATTERS
9.1 PREPARATION OF TAX RETURNS. The General Partner shall arrange
for the preparation and timely filing of all returns of Partnership income,
gains, deductions, losses and other items required of the Partnership for
federal and state income tax purposes and shall use all reasonable efforts to
furnish, within 90 days of the close of each taxable year of the Partnership,
the tax information reasonably required by Unitholders for federal and state
income tax reporting purposes. The classification, realization and
recognition of income, gain, losses and deductions and other items shall be
on the accrual method of accounting for federal income tax purposes. The
taxable year of the Partnership shall be the calendar year.
9.2 TAX ELECTIONS. Except as otherwise provided herein, the
General Partner shall in its sole discretion, determine whether to make any
available election pursuant to the Code; provided, however, that the General
Partner shall make the election under Section 754 of the Code in accordance
with applicable regulations thereunder. The General Partner shall have the
right to seek to revoke any such election (including, without limitation, the
election under Section 754 of the Code) upon the General Partner's
determination in its sole discretion that such revocation is in the best
interests of the Limited Partners and Assignees.
9.3 TAX CONTROVERSIES. Subject to the provisions hereof, the
General Partner is designated the Tax Matters Partner (as defined in Section
6231 of the Code), and is authorized and required to represent the
Partnership (at the Partnership's expense) in connection with all
examinations of the Partnership's affairs by tax authorities, including,
without limitation, resulting administrative and judicial proceedings, and to
expend Partnership funds for professional services and costs associated
therewith. Each Partner and Assignee agrees to
56
cooperate with the General Partner and to do or refrain from doing any or all
things reasonably required by the General Partner to conduct such proceedings.
9.4 ORGANIZATIONAL EXPENSES. The Partnership shall elect to
deduct expenses, if any, incurred by it in organizing the Partnership ratably
over a 60-month period as provided in Section 709 of the Code.
9.5 WITHHOLDING. Notwithstanding any other provision of this
Agreement, the General Partner is authorized to take any action that it
determines in its sole discretion to be necessary or appropriate to cause the
Partnership and any Operating Subsidiary to comply with any withholding
requirements established under the Code or any other federal, state or local
law, including, without limitation, pursuant to Sections 1441, 1442, 1445 and
1446 of the Code. To the extent that the Partnership is required to withhold
and pay over to any taxing authority any amount resulting from the allocation
or distribution of income to any Partner or Assignee (including, without
limitation, by reason of Section 1446 of the Code), the amount withheld shall
be treated as a distribution of cash for purposes of Section 4.6(a) in the
amount of such withholding from such Partner.
9.6 ENTITY-LEVEL TAXATION. If legislation is enacted which causes
the Partnership to become treated as an association taxable as a corporation
for federal income tax purposes, then with respect to any calendar quarter
thereafter the Minimum Quarterly Distribution, First Target Distribution or
Second Target Distribution, as the case may be, shall be equal to the product
of (i) each such distribution amount multiplied by (ii) 1 minus the sum of
(x) the effective federal income tax rate applicable to the Partnership
(expressed as a percentage) plus (y) the effective overall state and local
income tax rate applicable to the Partnership (expressed as a percentage), in
each case, for the taxable year in which such quarter occurs (after taking
into account the benefit of any deduction allowable for federal income tax
purposes with respect to the payment of state and local income taxes).
9.7 ENTITY-LEVEL DEFICIENCY COLLECTIONS. If the Partnership is
required by applicable law to pay any federal, state or local income tax on
behalf of, or withhold such amount with respect to, any Partner or Assignee
or any former Partner or Assignee (a) the General Partner shall cause the
Partnership to pay such tax on behalf of such Partner or Assignee or former
Partner or Assignee from the funds of the Partnership; (b) any amount so paid
on behalf of, or withheld with respect to, any Partner or Assignee shall be
treated as a distribution of cash to such Partner or Assignee for purposes of
Section 4.6(a); and (c) to the extent any such Partner or Assignee (but not a
former Partner or Assignee) is not then entitled to such distribution under
this Agreement, the General Partner shall be authorized, without the approval
of any Partner or Assignee, to amend this Agreement insofar as is necessary
to maintain the uniformity of intrinsic tax characteristics as to all Units
and to make subsequent adjustments to distributions in a manner which, in the
reasonable judgment of the General Partner, will make as little alteration as
practicable in the priority and amount of distributions otherwise applicable
under this Agreement, and will not otherwise alter the distributions to which
Partners and Assignees are entitled under this Agreement. If the Partnership
is permitted (but not required) by applicable law to pay any such tax on
behalf of any Partner or Assignee or former Partner or Assignee, the General
Partner shall be authorized (but not required) to cause the Partnership to
pay such tax from the funds of the Partnership and to take any action
consistent with this Section
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9.7. The General Partner shall be authorized (but not required) to take all
necessary or appropriate actions to collect all or any portion of a
deficiency in the payment of any such tax that relates to prior periods and
that is attributable to Persons who were Limited Partners or Assignees when
such deficiencies arose, from such Persons.
9.8 OPINIONS OF COUNSEL. Notwithstanding any other provision of
this Agreement, if the Partnership is taxable for federal income tax purposes
as a corporation or otherwise taxed for federal income tax purposes as an
entity at any time and, pursuant to the provisions of this Agreement, an
Opinion of Counsel would otherwise be required to the effect that an action
will not cause the Partnership to become so taxable as a corporation or other
entity or to be treated as an association taxable as a corporation, such
requirement for an Opinion of Counsel shall be deemed automatically waived.
ARTICLE X
UNIT CERTIFICATES
10.1 UNIT CERTIFICATES. Upon the Partnership's issuance of Common
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.
Certificates shall be executed on behalf of the Partnership by the General
Partner. No Class A Common Unit Certificate shall be valid for any purpose
until it has been countersigned by the Transfer Agent. Upon the Partnership's
issuance of I-Units to any Person, or upon an increase of the number of
Outstanding I-Units, the General Partner shall make an entry in the
Partnership's I-Unit register reflecting such issuance or increase, as the
case may be, but no Certificates evidencing the number of I-Units so issued
or increased, as the case may be shall be issued.
10.2 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The General Partner shall cause to be kept on behalf of the
Partnership a register (the "UNIT REGISTER") in which, subject to such
reasonable regulations as it may prescribe and subject to the provisions
of Section 10.2(b), the General Partner will provide for the registration
and the transfer of Class A Common Units. The Transfer Agent is hereby
appointed registrar and transfer agent for the purpose of registering and
transferring Class A Common Units as herein provided. The Partnership
shall not recognize transfers of Certificates representing Class A Common
Units unless same are effected in the manner described in this Section
10.2. Upon surrender for registration of transfer of any Units evidenced
by a Certificate and subject to the provisions of Section 10.2(b), the
General Partner on behalf of the Partnership will execute, and the
Transfer Agent will countersign and deliver, in the name of the holder or
the designated transferee or transferees, as required pursuant to the
holder's instructions, one or more new Certificates evidencing the same
aggregate number of Class A Common Units as was evidenced by the
Certificate so surrendered.
(b) Except as otherwise provided in Section 11.5, the Partnership
shall not recognize any transfer of Class A Common Units until the
Certificates evidencing such Units 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-
58
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 10.2, the General
Partner may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed with respect thereto.
10.3 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
(a) If any mutilated Certificate is surrendered to the Transfer
Agent, the General Partner on behalf of the Partnership shall execute,
and, upon its request, the Transfer Agent shall countersign and deliver in
exchange therefor, a new Certificate evidencing the same number of Units
as the Certificate so surrendered.
(b) The General Partner on behalf of the Partnership shall execute,
and, upon its request, the Transfer Agent shall countersign and deliver a
new Certificate in place of any Certificate previously issued if the
Record Holder of the Certificate:
(i) makes proof by affidavit, in form and substance
satisfactory to the General Partner, that a previously issued
Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate before the
Partnership has received 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 General Partner, delivers to the
Partnership such security or indemnity as may be required by the
General Partner, in form and substance satisfactory to the General
Partner, with surety or sureties and with fixed or open penalty as
the General Partner may direct, in its sole discretion, to indemnify
the Partnership, the General Partner and the Transfer Agent against
any claim that may be made on account of the alleged loss,
destruction or theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed
by the General Partner.
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 Units represented by the Certificate is
registered before the Partnership, the General Partner or the Transfer Agent
receives such notification, the Limited Partner or Assignee shall be precluded
from making any claim against the Partnership, the General Partner or the
Transfer Agent for such transfer or for a new Certificate.
(c) As a condition to the issuance of any Certificate under this
Section 10.3, the General Partner may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including, without
limitation, the fees and expenses of the Transfer Agent) connected
therewith.
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10.4 RECORD HOLDER. In accordance with Section 10.2(b), the
Partnership shall be entitled to recognize the Record Holder as the
Limited Partner or Assignee with respect to any Units and, accordingly,
shall not be bound to recognize any equitable or other claim to or
interest in such Units on the part of any other Person, whether or not
the Partnership shall have actual or other notice thereof, except as
otherwise provided by law or any applicable rule, regulation, guideline
or requirement of any National Securities Exchange on which the Units
are listed for trading. Without limiting the foregoing, when a Person
(such as a broker, dealer, bank, trust company or clearing corporation
or an agent of any of the foregoing) is acting as nominee, agent or in
some other representative capacity for another Person in acquiring
and/or holding Units, as between the Partnership on the one hand and
such other Persons on the other hand, such representative Person (a)
shall be the Limited Partner or Assignee (as the case may be) of record
and beneficially, (b) must execute and deliver a Transfer Application
and (c) shall be bound by this Agreement and shall have the rights and
obligations of a Limited Partner or Assignee (as the case may be)
hereunder and as provided for herein.
ARTICLE XI
TRANSFER OF INTERESTS
11.1 TRANSFER.
(a) The term "transfer," when used in this Article XI with respect
to a Partnership Interest, shall be deemed to refer to an appropriate
transaction by which the General Partner assigns its Partnership Interest
as General Partner to another Person or by which the holder of a Unit
assigns such Unit to another Person who is or becomes an Assignee and
includes a sale, assignment, gift, pledge, encumbrance, hypothecation,
mortgage, exchange or any other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article XI. Any transfer or purported transfer of a Partnership Interest
not made in accordance with this Article XI shall be null and void.
11.2 TRANSFER OF GENERAL PARTNER'S PARTNERSHIP INTEREST.
(a) The General Partner may transfer all, but not less than all, of
its Partnership Interest as the General Partner to a single transferee if,
but only if, (i) at least 66 2/3% of the Outstanding Units (excluding for
purposes of such determination any Common Units held by the General
Partner and its Affiliates and the number of I-Units that equal the number
of Listed Shares and Voting Shares owned by the General Partner and its
Affiliates) and a majority of the Outstanding I-Units voting as a separate
class (excluding for purposes of such determination the number of I-Units
that equal the number of Listed Shares and Voting Shares owned by the
General Partner and its Affiliates) approve of such transfer and of the
admission of such transferee as General Partner, (ii) the transferee
agrees to assume the rights and duties of the General Partner and be bound
by the provisions of this Agreement and (iii) 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 or
member of any Operating Subsidiary or
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cause the Partnership or any Operating Subsidiary to be taxable as a
corporation or otherwise taxed as an entity for federal income tax
purposes.
(b) Neither Section 11.2(a) nor any other provision of this
Agreement shall be construed to prevent (and all Partners do hereby
consent to) (i) the transfer by the General Partner of all of its
Partnership Interest as a General Partner to an Affiliate or (ii) the
transfer by the General Partner of all its Partnership Interest as a
General Partner upon its merger or consolidation with or other combination
into any other Person or the transfer by it of all or substantially all of
its assets to another Person if, in the case of a transfer described in
either clause (i) or (ii) of this sentence, the rights and duties of the
General Partner with respect to the Partnership Interest so transferred
are assumed by the transferee and the transferee agrees to be bound by the
provisions of this Agreement; provided, that, in either such case, such
transferee furnishes to the Partnership an Opinion of Counsel that such
merger, consolidation, combination, transfer or assumption will not result
in a loss of limited liability of any Limited Partner or of any limited
partner or member of any Operating Subsidiary or cause the Partnership or
any Operating Subsidiary to be taxable as a corporation or otherwise taxed
as an entity for federal income tax purposes. In the case of a transfer
pursuant to this Section 11.2(b), the transferee or successor (as the case
may be) shall be admitted to the Partnership as the General Partner
immediately prior to the transfer of the Partnership Interest, and the
business of the Partnership shall continue without dissolution.
11.3 TRANSFER OF UNITS.
(a) Units may be transferred only in the manner described in Section
10.2. The transfer of any Units and the admission of any new Partner shall
not constitute an amendment to this Agreement.
(b) Until admitted as a Substituted Limited Partner pursuant to
Article XII, the Record Holder of a Unit shall be an Assignee in respect
of such Unit. Limited Partners may include custodians, nominees or any
other individual or entity in its own or any representative capacity.
(c) Each distribution in respect of Units shall be paid by the
Partnership, directly or through the Transfer Agent or through any other
Person or agent, only to the Record Holders thereof as of the Record Date
set for the distribution. Such payment shall constitute full payment and
satisfaction of the Partnership's liability in respect of such payment,
regardless of any claim of any Person who may have an interest in such
payment by reason of an assignment or otherwise.
(d) A transferee who has completed and delivered a Transfer
Application shall be deemed to have (i) requested admission as a
Substituted Limited Partner, (ii) agreed to comply with and be bound by
and to have executed this Agreement, (iii) represented and warranted that
such transferee has the capacity and authority to enter into this
Agreement, (iv) made the powers of attorney set forth in this Agreement
and (v) given the consents and made the waivers contained in this
Agreement.
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11.4 RESTRICTIONS ON TRANSFERS. Notwithstanding the other
provisions of this Article XI, no transfer of any Unit or interest
therein of any Limited Partner or Assignee shall be made if such
transfer would (a) violate the then applicable federal or state
securities laws or rules and regulations of the Securities and Exchange
Commission, any state securities commission or any other governmental
authorities with jurisdiction over such transfer, (b) cause the
Partnership to be taxable as a corporation or otherwise taxed as an
entity for federal income tax purposes or (c) affect the Partnership's
existence or qualification as a limited partnership under the Delaware
Act.
11.5 CITIZENSHIP CERTIFICATES; NON-CITIZEN ASSIGNEES.
(a) If the Partnership or any Operating Subsidiary is or becomes
subject to any federal, state or local law or regulation which, in the
reasonable determination of the General Partner, provides for the
cancellation or forfeiture of any property in which the Partnership or any
Operating Subsidiary has an interest based on the nationality, citizenship
or other status of a Limited Partner or Assignee, the General Partner may
request any Limited Partner or Assignee to furnish to the General Partner,
within 30 days after receipt of such request, an executed Citizenship
Certification or such other information concerning his nationality,
citizenship or other status (or, if the Limited Partner or Assignee is a
nominee holding for the account of another Person, the nationality,
citizenship or other status of such Person) as the General Partner may
request. If a Limited Partner or Assignee fails to furnish to the General
Partner within the aforementioned 30-day period such Citizenship
Certification or other requested information or if upon receipt of such
Citizenship Certification or other requested information the General
Partner determines, with the advice of counsel, that a Limited Partner or
Assignee is not an Eligible Citizen, the Units owned by such Limited
Partner or Assignee shall be subject to redemption in accordance with the
provisions of Section 11.6. In addition, the General Partner may require
that the status of any such Limited Partner or Assignee be changed to that
of a Non-citizen Assignee, and, thereupon, the General Partner shall be
substituted for such Non-citizen Assignee as the Limited Partner in
respect of his Units.
(b) The General Partner shall, in exercising voting rights in
respect of Units held by it on behalf of Non-citizen Assignees, distribute
the votes in the same ratios as the votes of Limited Partners in respect
of Units of the same class 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
14.4 but shall be entitled to the cash equivalent thereof, and the General
Partner shall provide cash in exchange for an assignment of the
Non-citizen Assignee's share of the distribution in kind. Such payment and
assignment shall be treated for Partnership purposes as a purchase by the
General Partner from the Non-citizen Assignee of his Partnership Interest
(representing his right to receive his share of such distribution in
kind).
(d) At any time after he can and does certify that he has become an
Eligible Citizen, a Non-citizen Assignee may, upon application to the
General Partner, request
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admission as a Substituted Limited Partner with respect to any Units of
such Non-citizen Assignee not redeemed pursuant to Section 11.6, and
upon the Non-citizen Assignee's admission pursuant to Section 12.2 the
General Partner shall cease to be deemed to be the Limited Partner in
respect of the Non-citizen Assignee's Units.
11.6 REDEMPTION OF INTERESTS.
(a) If at any time a Limited Partner or Assignee fails to furnish a
Citizenship Certification or other information requested within the 30-day
period specified in Section 11.5(a), or if upon receipt of such
Citizenship Certification or other information the General Partner
determines, with the advice of counsel, that a Limited Partner or Assignee
is not an Eligible Citizen, the Partnership may, unless the Limited
Partner or Assignee establishes to the satisfaction of the General Partner
that such Limited Partner or Assignee is an Eligible Citizen or has
transferred his Units to a Person who furnishes a Citizenship
Certification to the General Partner prior to the date fixed for
redemption as provided below, redeem the Partnership Interest of such
Limited Partner or Assignee as follows:
(i) The General Partner shall, not later than the 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 Units, 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 Units 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
Units will accrue or be made.
(ii) The aggregate redemption price for Redeemable Units shall
be an amount equal to the Current Market Price (the date of
determination of which shall be the date fixed for redemption) of
Units of the class to be so redeemed multiplied by the number of
Units of each such class included among the Redeemable Units. The
redemption price shall be paid, in the sole discretion of the
General Partner, in cash or by delivery of a promissory note of the
Partnership in the principal amount of the redemption price, bearing
interest at the rate of 10% annually and payable in three equal
annual installments of principal together with accrued interest,
commencing one year after the redemption date.
(iii) Upon surrender by or on behalf of the Limited Partner or
Assignee, at the place specified in the notice of redemption, of the
Certificate evidencing the Redeemable Units, duly endorsed in blank
or accompanied by an assignment duly executed in blank, the Limited
Partner or Assignee or his duly authorized representative shall be
entitled to receive the payment therefor.
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(iv) After the redemption date, Redeemable Units shall no
longer constitute issued and Outstanding Units.
(b) The provisions of this Section 11.6 shall also be applicable to
Units held by a Limited Partner or Assignee as nominee of a Person
determined to be other than an Eligible Citizen.
(c) Nothing in this Section 11.6 shall prevent the recipient of a
notice of redemption from transferring his Units before the redemption
date if such transfer is otherwise permitted under this Agreement. Upon
receipt of notice of such a transfer, the General Partner shall withdraw
the notice of redemption, provided, the transferee of such Units certifies
in the Transfer Application that he is an Eligible Citizen. If the
transferee fails to make such certification, such redemption shall be
effected from the transferee on the original redemption date.
(d) If the Partnership is or becomes subject to any federal, state
or local law or regulation which, in the reasonable determination of the
General Partner, provides for the cancellation or forfeiture of any
property in which the Partnership or any Operating Subsidiary has an
interest, based on the nationality (or other status) of the General
Partner, whether or not in its capacity as such, the Partnership may,
unless the General Partner has furnished a Citizenship Certification or
transferred its Partnership Interest or Units to a Person who furnishes a
Citizenship Certification prior to the date fixed for redemption, redeem
the Partnership Interest or Interests of the General Partner in the
Partnership, which redemption shall also constitute redemption of the
general partner interest of the general partner of any Operating
Subsidiary. If such redemption includes a redemption of the Combined
Interest, the redemption price thereof shall be equal to the aggregate sum
of the Current Market Price (the date of determination for which shall be
the date fixed for redemption) of each class of Units then Outstanding, in
each such case multiplied by the number of Units of such class into which
the Combined Interest would then be convertible under the terms of Section
13.3(b) if the General Partner were to withdraw or be removed as the
General Partner (the date of determination for which shall be the date
fixed for redemption). The redemption price shall be paid in cash or by
delivery of a promissory note of the Partnership in the principal amount
of the redemption price, bearing interest at the rate of 10% annually and
payable in three equal annual installments of principal, together with
accrued interest, commencing one year after the redemption date.
ARTICLE XII
ADMISSION OF PARTNERS
12.1 INTENTIONALLY OMITTED.
12.2 ADMISSION OF SUBSTITUTED LIMITED PARTNERS. By transfer
of a Unit in accordance with Article XI, 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
shall, however, only have the authority to convey to a purchaser or
other transferee who does not execute and deliver a
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Transfer Application (i) the right to negotiate such Certificate to a
purchaser or other transferee and (ii) the right to transfer the right to
request admission as a Substituted Limited Partner to such purchaser or other
transferee in respect of the transferred Units. Each transferee of a Unit
(including, without limitation, any nominee holder or an agent acquiring such
Unit for the account of another Person) who executes and delivers a Transfer
Application shall, by virtue of such execution and delivery, be an Assignee
and be deemed to have applied to become a Substituted Limited Partner with
respect to the Units so transferred to such Person. Such Assignee shall
become a Substituted Limited Partner (i) at such time as the General Partner
consents thereto, which consent may be given or withheld in the General
Partner's sole discretion, and (ii) when any such admission is shown on the
books and records of the Partnership. If such consent is withheld, such
transferee shall be an Assignee. An Assignee shall have an interest in the
Partnership equivalent to that of a Limited Partner with respect to
allocations and distributions, including, without limitation, liquidating
distributions, of the Partnership. With respect to voting rights attributable
to Units that are held by Assignees, the General Partner shall be deemed to
be the Limited Partner with respect thereto and shall, in exercising the
voting rights in respect of such Units on any matter, vote such Units at the
written direction of the Assignee who is the Record Holder of such Units. If
no such written direction is received, such Units will not be voted. An
Assignee shall have no other rights of a Limited Partner.
12.3 ADMISSION OF SUCCESSOR GENERAL PARTNER. A successor General
Partner approved pursuant to Section 13.1 or the transferee of or successor
to all of the General Partner's Partnership Interest pursuant to Section 11.2
who is proposed to be admitted as a successor General Partner shall be
admitted to the Partnership as the General Partner, effective immediately
prior to the withdrawal or removal of the General Partner pursuant to Section
13.1 or the transfer of the General Partner's Partnership Interest pursuant
to Section 11.2; provided, however, that no such successor shall be admitted
to the Partnership until such successor has complied with the terms of
Sections 11.2(a)(ii) and (a)(iii). Any such successor shall carry on the
business of the Partnership without dissolution. In each case, the admission
shall be subject to the successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to
effect the admission.
12.4 ADMISSION OF ADDITIONAL LIMITED PARTNERS.
(a) A Person (other than the General 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 General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all
of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 1.4, and (ii) such
other documents or instruments as may be required in the discretion of the
General Partner to effect such Person's admission as an Additional Limited
Partner.
(b) Notwithstanding anything to the contrary in this Section 12.4,
no Person shall be admitted as an Additional Limited Partner without the
consent of the General Partner, which consent may be given or withheld in
the General Partner's sole discretion.
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The admission of any Person as an Additional Limited Partner shall
become effective on the date upon which the name of such Person is
recorded on the books and records of the Partnership, following the
consent of the General Partner to such admission.
12.5 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP. To effect the admission to the Partnership of any Partner,
the General Partner shall take all steps necessary and appropriate under
the Delaware Act to amend the records of the Partnership and, if
necessary, to prepare as soon as practical an amendment of this
Agreement and, if required by law, to prepare and file an amendment to
the Certificate of Limited Partnership and may for this purpose, among
others, exercise the power of attorney granted pursuant to Section 1.4.
ARTICLE XIII
WITHDRAWAL OR REMOVAL OF PARTNERS
13.1 WITHDRAWAL OF THE GENERAL PARTNER.
(a) The General Partner shall be deemed to have withdrawn from the
Partnership upon the occurrence of any one of the following events (each
such event herein referred to as an "EVENT OF WITHDRAWAL"):
(i) the General Partner voluntarily withdraws from the
Partnership by giving written notice to the other Partners;
(ii) the General Partner transfers all of its rights as
General Partner pursuant to Section 11.2;
(iii) the General Partner is removed pursuant to Section
13.2;
(iv) the General Partner (A) makes a general assignment for
the benefit of creditors; (B) files a voluntary bankruptcy petition;
(C) files a petition or answer seeking for itself a reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any law; (D) files an answer or other pleading
admitting or failing to contest the material allegations of a
petition filed against the General Partner in a proceeding of the
type described in clauses (A)-(C) of this sentence; or (E) seeks,
consents to or acquiesces in the appointment of a trustee, receiver
or liquidator of the General Partner or of all or any substantial
part of its properties;
(v) a final and non-appealable judgment is entered by a court
with appropriate jurisdiction ruling that the General Partner is
bankrupt or insolvent, or a final and non-appealable order for
relief is entered by a court with appropriate jurisdiction against
the General Partner, in each case under any federal or state
bankruptcy or insolvency laws as now or hereafter in effect; or
(vi) a certificate of dissolution or its equivalent is filed
for the General Partner, or 90 days expire after the date of notice
to the General Partner of revocation of its charter without a
reinstatement of its charter, under the laws of its state of
incorporation.
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In no event shall the Maximum Permitted Delegation pursuant to the terms
and conditions of the Delegation of Control Agreement and this Agreement be
deemed an Event of Withdrawal.
If an Event of Withdrawal specified in this Section 13.1(a)(iv), (v) or
(vi) occurs, the withdrawing General Partner shall give written notice to the
Limited Partners within 30 days after such occurrence. The Partners hereby agree
that only the Events of Withdrawal described in this Section 13.1 shall result
in the withdrawal of the General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal will not constitute a breach of this
Agreement under the following circumstances: (i) at any time that the
General Partner voluntarily withdraws by giving at least 90 days' advance
notice to the Limited Partners, such withdrawal to take effect on the date
specified in such notice; or (ii) at any time that the General Partner
ceases to be a General Partner pursuant to Section 13.1(a)(ii) or is
removed pursuant to Section 13.2. If the General Partner gives a notice of
withdrawal pursuant to Section 13.1(a)(i), holders of at least a majority
of the Outstanding Units (excluding for purposes of such determination
Common Units owned by the General Partner and its Affiliates and the
number of I-Units that equal the number of Listed Shares and Voting Shares
owned by the General Partner and its Affiliates) may, prior to the
effective date of such withdrawal, elect a successor General Partner. If,
prior to the effective date of the General Partner's withdrawal, a
successor is not selected by the Limited Partners as provided herein or
the Partnership does not receive an Opinion of Counsel that following the
election of a successor General Partner, the General Partner's withdrawal
would not result in the loss of limited liability of any Limited Partner
or of any limited partner or member of any Operating Subsidiary or cause
the Partnership or any Operating Subsidiary to be taxable as a corporation
or otherwise taxed as an entity for federal tax purposes (a "WITHDRAWAL
OPINION OF COUNSEL"), the Partnership shall be dissolved in accordance
with Section 14.1. If a successor General Partner is elected and a
Withdrawal Opinion of Counsel is rendered, such successor shall be
admitted (subject to Section 12.3) immediately prior to the effective time
of the withdrawal or removal of the Departing Partner and shall continue
the business of the Partnership without dissolution.
13.2 REMOVAL OF THE GENERAL PARTNER. The General Partner may
be removed with or without Cause if such removal is approved by at least
66 2/3% of the Outstanding Common Units voting as a separate class
(excluding for purposes of such determination Common Units held by the
General Partner and its Affiliates) and a majority of the Outstanding
I-Units voting as a separate class (excluding for purposes of such
determination the number of I-Units that equal the number of Listed
Shares and Voting Shares owned by the General Partner and its
Affiliates). Any such action by the Limited Partners for removal of the
General Partner must also provide for the election and succession of a
new General Partner. Such removal shall be effective immediately
following the admission of the successor General Partner pursuant to
Article XII. The right of the Limited Partners to remove the General
Partner shall not exist or be exercised unless the Partnership has
received an Opinion of Counsel opining as to the matters covered by a
Withdrawal Opinion of Counsel.
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13.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR GENERAL PARTNER.
(a) In the event of (i) withdrawal of the General Partner under
circumstances where such withdrawal does not violate this Agreement or
(ii) removal of the General Partner by the Limited Partners under
circumstances where Cause does not exist, the Departing Partner shall, at
its option exercisable prior to the effective date of the departure of
such Departing Partner, promptly receive from its successor in exchange
for its Partnership Interest as General Partner an amount in cash equal to
the fair market value of the Departing Partner's Partnership Interest as
General Partner, such amount to be determined and payable as of the
effective date of its departure. If the General Partner withdraws under
circumstances where such withdrawal violates this Agreement or if the
General Partner is removed by the Limited Partners under circumstances
where Cause exists, the General Partner's successor shall have the option
described in the immediately preceding sentence, and the Departing Partner
shall not have such option. In either event, the Departing Partner shall
be entitled to receive all reimbursements due such Departing Partner
pursuant to Section 6.4, including, without limitation, any
employee-related liabilities (including, without limitation, severance
liabilities), incurred in connection with the termination of any employees
employed by the General Partner for the benefit of the Partnership or any
Operating Subsidiary. Subject to Section 13.3(b), the Departing Partner
shall, as of the effective date of its departure, cease to share in any
allocations or distributions with respect to its Partnership Interest as
the General Partner and Partnership income, gain, loss, deduction and
credit will be prorated and allocated as set forth in Section 5.2(g).
For purposes of this Section 13.3(a), the fair market value of the
Departing Partner's Partnership Interest as the general partner of the
Partnership herein (the "DEPARTING 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 shall determine the fair market value
of the Departing Interest. In making its determination, such independent
investment banking firm or other independent expert shall consider the then
current trading price of Units on any National Securities Exchange on which
Units are then listed, the value of the Partnership's assets, the rights and
obligations of the General Partner and other factors it may deem relevant.
(b) If the Departing Interest is not acquired in the manner set
forth in Section 13.3(a), the Departing Partner shall become a Limited
Partner and the Departing Interest shall be converted into Class A Common
Units pursuant to a valuation made by an investment banking firm or other
independent expert selected pursuant to Section 13.3(a), without reduction
in such Partnership Interest (but subject to proportionate dilution by
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reason of the admission of its successor). Any successor General Partner
shall indemnify the Departing Partner as to all debts and liabilities of
the Partnership arising on or after the date on which the Departing
Partner becomes a Limited Partner. For purposes of this Agreement,
conversion of the General Partner's Partnership Interest to Class A Common
Units will be characterized as if the General Partner contributed its
Partnership Interest to the Partnership in exchange for the newly-issued
Class A Common Units.
(c) If the option described in Section 13.3(a) is not exercised by
the party entitled to do so, the successor General Partner shall, at the
effective date of its admission to the Partnership, contribute to the
capital of the Partnership cash in an amount such that its Capital
Account, after giving effect to such contribution and any adjustments made
to the Capital Accounts of all Partners pursuant to Section 4.6(d)(i),
shall be equal to that percentage of the Capital Accounts of all Partners
that is equal to its Percentage Interest as the General Partner. In such
event, each successor General Partner shall, subject to the following
sentence, be entitled to such Percentage Interest of all Partnership
allocations and distributions and any other allocations and distributions
to which the Departing Partner was entitled. In addition, such successor
General Partner shall cause this Agreement to be amended to reflect that,
from and after the date of such successor General Partner's admission, the
successor General Partner's interest in all Partnership distributions and
allocations shall be 2%, and that of the holders of Outstanding Units
shall be 98%.
13.4 [INTENTIONALLY OMITTED].
13.5 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 Units becomes a
Record Holder, such transferring Limited Partner shall cease to be a
Limited Partner with respect to the Units so transferred.
ARTICLE XIV
DISSOLUTION AND LIQUIDATION
14.1 DISSOLUTION. The Partnership shall not be dissolved by
the admission of Substituted Limited Partners or Additional Limited
Partners or by the admission of a successor General Partner in
accordance with the terms of this Agreement. Upon the removal or
withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall
dissolve, and its affairs should be wound up, upon:
(a) the expiration of its term as provided in Section 1.5;
(b) an Event of Withdrawal of the General Partner as provided in
Section 13.1 (a), unless a successor is named as provided in Section
13.1(b) or Section 13.2, as the case may be;
(c) an election to dissolve the Partnership by the General
Partner that is approved by at least 66 2/3% of the Outstanding Units
(and all Limited Partners hereby expressly consent that such
approval may be effected upon written consent of at least 66 2/3% of
the Outstanding Units);
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(d) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Delaware Act; or
(e) the sale of all or substantially all of the assets and
properties of the Partnership or Enbridge Energy, Limited
Partnership.
14.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER
DISSOLUTION. Upon (i) dissolution of the Partnership following an Event
of Withdrawal caused by the withdrawal or removal of the General Partner
and a failure of the requisite number of Partners to appoint a successor
General Partner as provided in Section 13.1 or 13.2, as the case may be,
then within an additional 90 days or (ii) dissolution of the Partnership
upon an event constituting an Event of Withdrawal described in Section
13.1(a)(iv), then within 180 days thereafter, at least a majority of the
Outstanding Units may elect to reconstitute the Partnership and continue
its business on the same terms and conditions set forth in this
Agreement by forming a new limited partnership on terms identical to
those set forth in this Agreement and having as a general partner a
Person approved by the holders of at least a majority of the Outstanding
Units. Upon any such election by the holders of at least a majority of
the outstanding Units, all Partners shall be bound thereby and shall be
deemed to have approved thereof. Unless such an election is made with
the applicable time period as set forth above, the Partnership shall
conduct only activities necessary to wind up its affairs. If such an
election is so made, then:
(a) the reconstituted Partnership shall continue until the end of
the term set forth in Section 1.5 unless earlier dissolved in accordance
with this Article XIV;
(b) if the successor General Partner is not the former General
Partner, then the interest of the former General Partner shall be treated
thenceforth as the interest of a Limited Partner and converted into Class
A Common Units in the manner provided in Section 13.3(b); and
(c) all necessary steps shall be taken to cancel this Agreement and
the Certificate of Limited Partnership and to enter into and, as
necessary, to file a new partnership agreement and certificate of limited
partnership, and the successor general partner may for this purpose
exercise the powers of attorney granted the General Partner pursuant to
Section 1.4; provided that the right of at least a majority of Outstanding
Units to approve a successor 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 any Operating Subsidiary would
become taxable as a corporation or otherwise be taxed as an entity for
federal income tax purposes upon the exercise of such right to continue.
14.3 LIQUIDATION. Upon dissolution of the Partnership,
unless the Partnership is continued under an election to reconstitute
and continue the Partnership pursuant to Section 14.2, the General
Partner, or in the event the General Partner has been dissolved or
removed, become bankrupt as set forth in Section 13.1 or withdrawn from
the Partnership, a liquidator or liquidating committee approved by at
least 66 2/3% of the Outstanding Units, shall be the
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Liquidator. The Liquidator (if other than the General Partner) shall be
entitled to receive such compensation for its services as may be
approved by at least 66 2/3% of the Outstanding Units. The Liquidator
shall agree not to resign at any time without 15 days' prior written
notice and (if other than the General Partner) may be removed at any
time, with or without Cause by notice of removal approved by at least 66
2/3% of the Outstanding Units. Upon dissolution, removal or resignation
of the Liquidator, a successor and substitute Liquidator (who shall have
and succeed to all rights, powers and duties of the original Liquidator)
shall within 30 days thereafter be approved by at least 66 2/3% of the
Outstanding Units. The right to approve a successor or substitute
Liquidator in the manner provided herein shall be deemed to refer also
to any such successor or substitute Liquidator approved in the manner
herein provided. Except as expressly provided in this Article XIV, the
Liquidator approved in the manner provided herein shall have and may
exercise, without further authorization or consent of any of the parties
hereto, all of the powers conferred upon the General Partner under the
terms of this Agreement (but subject to all of the applicable
limitations, contractual and otherwise, upon the exercise of such
powers, other than the limitation on sale set forth in Section 6.3(b))
to the extent necessary or desirable in the good faith judgment of the
Liquidator to carry out the duties and functions of the Liquidator
hereunder for and during such period of time as shall be reasonably
required in the good faith judgment of the Liquidator to complete the
winding up and liquidation of the Partnership as provided for herein.
The Liquidator shall liquidate the assets of the Partnership, and apply
and distribute the proceeds of such liquidation in the following order
of priority, unless otherwise required by mandatory provisions of
applicable law:
(a) the payment to creditors of the Partnership, including, without
limitation, Partners who are creditors, in the order of priority provided
by law; and the creation of a reserve of cash or other assets of the
Partnership for contingent liabilities in an amount, if any, determined by
the Liquidator to be appropriate for such purposes;
(b) to all Partners in accordance with the positive balances in
their respective Capital Accounts after taking into account adjustments to
such Capital Accounts pursuant to Section 5.1(c);
(c) to all Partners in accordance with their respective
Percentage Interests.
14.4 DISTRIBUTIONS IN KIND. Notwithstanding the provisions
of Section 14.3, which require the liquidation of the assets of the
Partnership, but subject to the order of priorities set forth therein,
if prior to or upon dissolution of the Partnership the Liquidator
determines that an immediate sale of part or all of the Partnership's
assets would be impractical or would cause undue loss to the Partners,
the Liquidator may, in its absolute discretion, defer for a reasonable
time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including, without limitation, those to
Partners as creditors) or distribute to the Partners, in lieu of cash,
as tenants in common and in accordance with the provisions of Section
14.3, undivided interests in such Partnership assets as the Liquidator
deems not suitable for liquidation. Any such distributions in kind shall
be made only if, in the good faith judgment of the Liquidator, such
distributions in kind are in the best interest of the Limited Partners,
and shall be subject to such conditions relating to the disposition and
management of such properties as the Liquidator deems reasonable and
equitable and to any agreement governing the operation of such
properties at such time. The Liquidator shall determine the fair market
value of any property distributed in
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kind using such reasonable method of valuation as it may adopt.
Notwithstanding the foregoing, the Liquidator may not make distributions in
kind unless all of the Listed Shares are owned by the General Partner and its
Affiliates.
14.5 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP. Upon the
completion of the distribution of Partnership cash and property as provided
in Sections 14.3 and 14.4, the Partnership shall be terminated and the
Certificate of Limited Partnership and all qualifications of the Partnership
as a foreign limited partnership in jurisdictions other than the State of
Delaware shall be canceled and such other actions as may be necessary to
terminate the Partnership shall be taken.
14.6 REASONABLE TIME FOR WINDING UP. A reasonable time shall be
allowed for the orderly winding up of business and affairs of the Partnership
and the liquidation of its assets pursuant to Section 14.3 in order to
minimize any losses otherwise attendant upon such winding up, and the
provisions of this Agreement shall remain in effect between the Partners
during the period of liquidation.
14.7 RETURN OF CAPITAL. The General Partner shall not be
personally liable for the return of the Capital Contributions of the Limited
Partners, or any portion thereof, it being expressly understood that any such
return shall be made solely from Partnership assets.
14.8 CAPITAL ACCOUNT RESTORATION. No Limited Partner shall have
any obligation to restore any negative balance in its Capital Account upon
liquidation of the Partnership. The General Partner shall be obligated to
restore any negative balance in its Capital Account upon liquidation of its
interest in the Partnership by the end of the taxable year of the Partnership
during which such liquidation occurs, or, if later, within 90 days after the
date of such liquidation.
14.9 WAIVER OF PARTITION. Each Partner hereby waives any right
to partition of the Partnership property.
ARTICLE XV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
15.1 AMENDMENT TO BE ADOPTED SOLELY BY GENERAL PARTNER. Each
Limited Partner agrees that the General Partner (pursuant to its powers of
attorney from the Limited Partners and Assignees), without the approval of
any Limited Partner or Assignee, may amend any provision of this Agreement,
and execute, swear to, acknowledge, deliver, file and record whatever
documents may be required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent of
the Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of
Partners in accordance with this Agreement;
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(c) a change that, in the sole discretion of the General Partner, is
reasonable and necessary or appropriate to qualify or continue the
qualification of the Partnership as a limited partnership or a partnership
in which the limited partners have limited liability under the laws of any
state or that is necessary or advisable in the opinion of the General
Partner to ensure that the Partnership will not be taxable as a
corporation or otherwise taxed as an entity for federal income tax
purposes;
(d) a change (i) that, in the sole discretion of the General
Partner, does not adversely affect the Limited Partners in any material
respect, (ii) that is necessary or appropriate to satisfy any
requirements, conditions, guidelines or interpretations contained in any
opinion, interpretative release, directive, order, ruling or regulation of
any federal or state agency or judicial authority or contained in any
federal or state agency or judicial authority or contained in any federal
or state statute (including, without limitation, the Delaware Act) or that
is necessary or appropriate to facilitate the trading of the Units
(including, without limitation, the division of Outstanding Units into
different classes to facilitate uniformity of tax consequences within such
classes of Units) or comply with any rule, regulation, interpretative
release, guideline or requirement of any National Securities Exchange on
which the Units are or will be listed for trading, compliance with any of
which the General Partner determines in its sole discretion to be in the
best interests of the Partnership and the Limited Partners or (iii) that
is required to effect the intent of the provisions of this Agreement or is
otherwise contemplated by this Agreement;
(e) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership or the General Partner or its directors or
officers from in any manner being subjected to the provisions of the
Investment Company Act of 1940, as amended, the Investment Advisers Act of
1940, as amended, or "plan asset" regulations adopted under the Employee
Retirement Income Security Act of 1974, as amended, whether or not
substantially similar to plan asset regulations currently applied or
proposed by the United States Department of Labor;
(f) subject to the terms of Section 4.4, an amendment that the
General Partner determines in its sole discretion to be necessary or
appropriate in connection with the authorization for issuance of any class
or series of Units pursuant to Section 4.4;
(g) Intentionally Omitted;
(h) Intentionally Omitted;
(i) any amendment expressly permitted in this Agreement to
be made by the General Partner acting alone;
(j) an amendment effected, necessitated or contemplated by a
Merger Agreement approved in accordance with Section 16.3; or
(k) any other amendments substantially similar to the
foregoing.
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15.2 AMENDMENT PROCEDURES.
(a) Except as provided in Sections 15.1 and 15.3, all amendments to
this Agreement shall be made in accordance with the following
requirements. Amendments to this Agreement may be proposed solely by the
General Partner. Each such proposal shall contain the text of the proposed
amendment. If an amendment is proposed, the General Partner shall seek the
written approval of the requisite percentage of Outstanding Units or call
a meeting of the Limited Partners to consider and vote on such proposed
amendment. A proposed amendment shall be effective upon its approval by
the holders of at least 66 2/3% of the Outstanding Units unless a greater
or different percentage is required under this Agreement; provided that,
in addition to such approval, if the effect of any amendment would have a
material adverse effect, as determined in the sole discretion of the
General Partner, on the rights or preferences of any class of Outstanding
Units in relation to any other class of Outstanding Units, the approval of
the holders of at least a majority of the Outstanding Units of the class
so affected, voting separately as a class, shall be required to adopt such
amendment (excluding for purposes of such determination, in the case of a
vote of the Record Holders of I-Units, the number of I-Units that equal
the number of Listed Shares and Voting Shares owned by the General Partner
and its Affiliates). The General Partner shall notify all Record Holders
upon final adoption of any proposed amendment.
(b) In addition to any other vote that may be required under the
terms of this Agreement, and without limitation of the General Partner's
authority to adopt amendments to this Agreement as contemplated in Section
15.1, any amendments to Section 5.10(d) shall require the approval of a
majority of the Outstanding I-Units, voting as a separate class (excluding
for purposes of such determination the number of I-Units that equals the
number of Listed Shares and Voting Shares owned by the General Partner and
its Affiliates).
15.3 AMENDMENT REQUIREMENTS.
(a) Notwithstanding the provisions of Sections 15.1 and 15.2, no
provision of this Agreement that establishes a percentage of Outstanding
Units required to take any action shall be amended, altered, changed,
repealed or rescinded in any respect that would have the effect of
reducing such voting requirement unless such amendment is approved by the
written consent or the affirmative vote of Unitholders whose aggregate
percentage of Outstanding Units constitutes not less than the required
percentage of Outstanding Units sought to be reduced.
(b) Notwithstanding the provisions of Sections 15.1 and 15.2, no
amendment to this Agreement may (i) enlarge the obligations of any Limited
Partner without such Limited Partner's consent, which may be given or
withheld in its sole discretion, (ii) modify the amounts distributable to
the General Partner in respect of its general partner interest in the
Partnership or any Operating Subsidiary or modify the amounts reimbursable
or otherwise payable to the General Partner or any of its Affiliates by
the Partnership, (iii) change Section 14.1(a) or (c), (iv) restrict in any
way any action by or rights of the General Partner as set forth in this
Agreement without the General Partner's
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consent (which may be given or withheld in the sole discretion of the
General Partner) or (v) change the term of the Partnership or, except
as set forth in Section 14.1(c), give any Person the right to dissolve
the Partnership.
(c) Except as otherwise provided, and without limitation of the
General Partner's authority to adopt amendments to this Agreement as
contemplated in Section 15.1, the General Partner may amend the
Partnership Agreement without the approval of Unitholders, except that any
amendment that would have a material adverse effect on the holders of any
type or class of Outstanding Units must be approved by the holders of not
less than 66 2/3% of the Outstanding Units of such type or class.
(d) Notwithstanding any other provision of this Agreement, except
for amendments pursuant to Section 6.3 or 15.1, no amendments shall become
effective without the approval of the Record Holders of at least 95% of
the Units unless the Partnership obtains an Opinion of Counsel to the
effect that (a) such amendment will not cause the Partnership or any
Operating Subsidiary to be taxable as a corporation or otherwise taxed as
an entity for federal income tax purposes and (b) such amendment will not
affect the limited liability of any Limited Partner or any limited partner
of Enbridge Energy, Limited Partnership under applicable law.
(e) This Section 15.3 shall only be amended with the approval of the
Record Holders of not less than 95% of the Outstanding Units.
15.4 MEETINGS. All acts of Limited Partners to be taken
hereunder shall be taken in the manner provided in this Article XV. Meetings
of the Limited Partners may be called by the General Partner or by Limited
Partners owning 20% or more of the Outstanding Units of the class for which a
meeting is proposed. Limited Partners shall call a meeting by delivering to
the General Partner one or more requests in writing stating that the signing
Limited Partners wish to call a meeting and indicating the general or
specific purposes for which the meeting is to be called. Within 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 General Partner shall send a notice of the meeting to the
Limited Partners either directly or indirectly through the Transfer Agent. A
meeting shall be held at a time and place determined by the General Partner
on a date not more than 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.
15.5 NOTICE OF A MEETING. Notice of a meeting called pursuant to
Section 15.4 shall be given to the Record Holders in writing by mail or other
means of written communication in accordance with Section 18.1. The notice
shall be deemed to have been given at the time when deposited in the mail or
sent by other means of written communication.
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15.6 RECORD DATE. For purposes of determining the Limited
Partners entitled to notice of or to vote at a meeting of the Limited
Partners or to give approvals without a meeting as provided in Section 15.11,
the General Partner may set a Record Date, which shall not be less than 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 Units are listed for trading,
in which case the rule, regulation, guideline or requirement of such exchange
shall govern) or (b) in the event that approvals are sought without a
meeting, the date by which Limited Partners are requested in writing by the
General Partner to give such approvals.
15.7 ADJOURNMENT. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting and a new Record
Date need not be fixed, if the time and place thereof are announced at the
meeting at which the adjournment is taken, unless such adjournment shall be
for more than 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 XV.
15.8 WAIVER OF NOTICE; APPROVAL OF MEETING; APPROVAL OF MINUTES.
The transactions of any meeting of Limited Partners, however called and
noticed, and whenever held, shall be as valid as if had at a meeting duly
held after regular call and notice, if a quorum is present either in person
or by proxy, and if, either before or after the meeting, each of the Limited
Partners entitled to vote, present in person or by proxy, signs a written
waiver of notice or an approval of the holding of the meeting or an approval
of the minutes thereof. All waivers and approvals shall be filed with the
Partnership records or made a part of the minutes of the meeting. Attendance
of a Limited Partner at a meeting shall constitute a waiver of notice of the
meeting, except when the Limited Partner disapproves, at the beginning of the
meeting, the transaction of any business because the meeting is not lawfully
called or convened, and except that attendance at a meeting is not a waiver
of any right to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, in either case if
the disapproval is expressly made at the meeting.
15.9 QUORUM. The holders of 66 2/3% of the Outstanding Units of
the class for which a meeting has been called represented in person or by
proxy shall constitute a quorum at a meeting of Limited Partners of such
class unless any such action by the Limited Partners requires approval by
holders of a majority in interest of such Units, in which case the quorum
shall be a majority. At any meeting of the Limited Partners duly called and
held in accordance with this Agreement at which a quorum is present, the act
of Limited Partners holding Outstanding Units that in the aggregate represent
at least 66 2/3% of the Outstanding Units entitled to vote and be present in
person or by proxy at such meeting shall be deemed to constitute the act of
all Limited Partners, unless a greater or different percentage is required
with respect to such action under the provisions of this Agreement, in which
case the act of the Limited Partners holding Outstanding Units that in the
aggregate represent at least such greater or different percentage shall be
required. The Limited Partners present at a duly called or held meeting at
which a quorum is present may continue to transact business until
adjournment, notwithstanding the withdrawal of enough Limited Partners to
leave less than a quorum, if any action taken (other than adjournment) is
approved by the required percentage of Outstanding Units specified in this
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Agreement. In the absence of a quorum, any meeting of Limited Partners may be
adjourned from time to time by the affirmative vote of a majority of the
Outstanding Units represented either in person or by proxy, but no other
business may be transacted, except as provided in Section 15.7.
15.10 CONDUCT OF MEETING. The General Partner shall have full
power and authority concerning the manner of conducting any meeting of the
Limited Partners or solicitation of approvals in writing, including, without
limitation, the determination of Persons entitled to vote, the existence of a
quorum, the satisfaction of the requirements of Section 15.4, the conduct of
voting, the validity and effect of any proxies and the determination of any
controversies, votes or challenges arising in connection with or during the
meeting or voting. The General Partner shall designate a Person to serve as
chairman of any meeting and shall further designate a Person to take the
minutes of any meeting, in either case including, without limitation, a
Partner or a director or officer of the General Partner. All minutes shall be
kept with the records of the Partnership maintained by the General Partner.
The General Partner may make such other regulations consistent with
applicable law and this Agreement as it may deem advisable concerning the
conduct of any meeting of the Limited Partners or solicitation of approvals
in writing, including, without limitation, regulations in regard to the
appointment of proxies, the appointment and duties of inspectors of votes and
approvals, the submission and examination of proxies and other evidence of
the right to vote, and the revocation of approvals in writing.
15.11 ACTION WITHOUT A MEETING. Any action that may be taken at a
meeting of the Limited Partners may be taken without a meeting if an approval
in writing setting forth the action so taken is signed by Limited Partners
holding not less than the minimum percentage of the Outstanding Units that
would be necessary to authorize to take such action at a meeting at which all
the Limited Partners were present and voted. Prompt notice of the taking of
action without a meeting shall be given to the Limited Partners who have not
approved in writing. The General Partner may specify that any written ballot
submitted to Limited Partners for the purpose of taking any action without a
meeting shall be returned to the Partnership within the time period, which
shall be not less than 20 days, specified by the General Partner. If a ballot
returned to the Partnership does not vote all of the Units held by the
Limited Partner, the Partnership shall be deemed to have failed to receive a
ballot for the Units that were not voted. If approval of the taking of any
action by the Limited Partners is solicited by any Person other than by or on
behalf of the General Partner, the written approvals shall have no force and
effect unless and until (a) they are deposited with the Partnership in care
of the General Partner, (b) approvals sufficient to take the action proposed
are dated as of a date not more than 90 days prior to the date sufficient
approvals are deposited with the Partnership and (c) an Opinion of Counsel is
delivered to the General Partner to the effect that the exercise of such
right and the action proposed to be taken with respect to any particular
matter (i) will not cause the Limited Partners to be deemed to be taking part
in the management and control of the business and affairs of the Partnership
so as to jeopardize the Limited Partners' limited liability, (ii) will not
jeopardize the status of the Partnership as a partnership, or cause the
Partnership to be taxable as a corporation or otherwise taxed as an entity,
under applicable tax laws and regulations and (iii) is otherwise permissible
under the state statutes then governing the rights, duties and liabilities of
the Partnership and the Partners.
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15.12 VOTING AND OTHER RIGHTS.
(a) Only those Record Holders of Units on the Record Date set
pursuant to Section 15.6 shall be entitled to notice of, and to vote at, a
meeting of Limited Partners or to act with respect to matters as to which
holders of the Outstanding Units have the right to vote or to act. All
references in this Agreement to votes of, or other acts that may be taken
by, the holders of Outstanding Units shall be deemed to be references to
the votes or acts of the Record Holders of such Outstanding Units.
(b) With respect to Units that are held for a Person's account by
another Person (such as a broker, dealer, bank, trust company or clearing
corporation, or an agent of any of the foregoing), in whose name such
Units are registered, such broker, dealer or other agent shall, in
exercising the voting rights in respect of such Units on any matter, and
unless the arrangement between such Persons provides otherwise, vote such
Units in favor of, and at the direction of, the Person who is the
beneficial owner, and the Partnership shall be entitled to assume it is so
acting without further inquiry. The provisions of this Section 15.12(b)
(as well as all other provisions of this Agreement) are subject to the
provisions of Section 10.4.
ARTICLE XVI
MERGER
16.1 AUTHORITY. Subject to Section 5.10(d) and(e), the
Partnership may merge or consolidate with one or more corporations, business
trusts or associations, real estate investment trusts, common law trusts or
unincorporated businesses, including, without limitation, a general
partnership or limited partnership, formed under the laws of the State of
Delaware or any other state of the United States of America, pursuant to a
written agreement of merger or consolidation (a "MERGER AGREEMENT") in
accordance with this Article.
16.2 PROCEDURE FOR MERGER OR CONSOLIDATION. Merger or
consolidation of the Partnership pursuant to this Article XVI requires the
prior approval of the General Partner. If the General Partner shall
determine, in the exercise of its sole discretion, to consent to the merger
or consolidation, the General Partner shall approve the Merger Agreement,
which shall set forth:
(a) The names and jurisdictions of formation or organization
of each of the business entities proposing to merge or consolidate;
(b) The name and jurisdictions of formation or organization of the
business entity that is to survive the proposed merger or consolidation
(hereafter designated as the "SURVIVING BUSINESS ENTITY");
(c) The terms and conditions of the proposed merger or
consolidation;
(d) The manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash,
property or general or limited partnership interests, rights, securities
or obligations of the Surviving Business Entity and (i) if any general or
limited partnership interests, securities or rights of any constituent
business entity are not to be exchanged or converted solely for, or into,
cash, property or
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general or limited partnership interests, rights, securities or
obligations of the Surviving Business Entity, the cash, property or
general or limited partnership interests, rights, securities
or obligations of any limited partnership, corporation, trust or other
entity (other than the Surviving Business Entity) which the holders of
such general or limited partnership interest are to receive in exchange
for, or upon conversion of their securities or rights, and (ii) in the
case of securities represented by certificates, upon the surrender of such
certificates, which cash, property or general or limited partnership
interests, rights, securities or obligations of the Surviving Business
Entity or any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to
be delivered;
(e) A statement of any amendments or other changes in the
constituent documents (the articles or certificate of incorporation,
articles of trust, declaration of trust, certificate or agreement of
limited partnership or other similar charter or governing document), or
the adoption of new constituent documents, in either case as contemplated
in Section 17-211(g) of the Delaware Act, 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 16.4 or a later
date specified in or determinable in accordance with the Merger Agreement;
provided that if the effective time of the merger is to be later than the
date of the filing of the certificate of merger, it shall be fixed no
later than the time of the filing of the certificate of merger and stated
therein; and
(g) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the General
Partner.
16.3 APPROVAL BY LIMITED PARTNERS OF MERGER OR CONSOLIDATION.
(a) The General Partner of the Partnership, upon its approval of the
Merger Agreement, shall direct that the Merger Agreement be submitted to a
vote of Limited Partners whether at a meeting or by written consent, in
either case in accordance with the requirements of Article XV. A copy or a
summary of the Merger Agreement shall be included in or enclosed with the
notice of a meeting or the written consent.
(b) The Merger Agreement shall be approved upon receiving the
affirmative vote or consent of the holders of at least 66 2/3% of the
Outstanding Units, unless the Merger Agreement contains any provision
which, if contained in an amendment to this Agreement, the provisions of
this Agreement or the Delaware Act would require the vote or consent of a
greater percentage of the Outstanding Units of the Limited Partners or of
any class of Limited Partners, in which case such greater percentage vote
or consent shall be required for approval of the Merger Agreement.
(c) After such approval by vote or consent of the Limited Partners,
and at any time prior to the filing of the certificate of merger pursuant
to Section 16.4, the merger or consolidation may be abandoned pursuant to
provisions therefor, if any, set forth in the Merger Agreement.
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16.4 CERTIFICATE OF MERGER. Upon the required approval by the
General Partner and Limited Partners of a Merger Agreement, a certificate of
merger shall be executed and filed with the Secretary of State of the State
of Delaware in conformity with the requirements of the Delaware Act.
16.5 EFFECT OF MERGER.
(a) Upon the effective date of the certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all property,
real, personal and mixed, and all debts due to any of those business
entities and all other things and causes of action belonging to each
of those business entities shall be vested in the Surviving Business
Entity and, after the merger or consolidation, shall be the property
of the Surviving Business Entity to the extent they were part of
each constituent business entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not
revert and shall not be in any way impaired because of the merger or
consolidation;
(iii) all rights of creditors and all liens on or security
interest in property of any of those constituent business entities
shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity, and
may be enforced against it to the same extent as if the debts,
liabilities and duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article XVI
shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another having occurred.
16.6 MERGER WITH EEM UPON TAX STATUS EVENT.
(a) Subject to Section 16.3, upon or at any time following the
occurrence of a Tax Status Event, if the Record Holder of Voting Shares
determines to exercise its right to merge EEM with or into the Partnership
or any Subsidiary, the General Partner shall cause the Partnership or such
Subsidiary to merge with or into EEM in accordance with the provisions of
this Section 16.6.
(b) If the Record Holder of Voting Shares determines to exercise its
right to cause a merger as described in Section 7.03(a) of the LLC
Agreement, the General Partner shall execute and deliver or cause to be
executed and delivered the Merger Agreement and shall execute, deliver
and/or file or cause to be executed, delivered and/or filed, pursuant to
the Delaware Act or other applicable Law, all other documents, instruments
or certificates deemed by it necessary or appropriate to effectuate such
merger and, subject to Section 16.6(c), such merger shall have the effects
provided in the
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Certificate of Merger, the Merger Agreement and under the Delaware Act and
any other applicable Law.
(c) The Merger Agreement executed in connection with any merger of
the EEM pursuant to this Section 16.6 shall provide that, at the effective
time of such merger, each Record Holder of Listed Shares, in exchange for
the total number of Listed Shares owned by such Record Holder shall
receive, and the Partnership shall issue or pay to such Record Holder, as
applicable, a number of whole Class A Common Units and an amount of cash
in lieu of fractional Class A Common Units such that (i) the product of
the number of whole Class A Common Units so received by such Record Holder
and the Closing Price of one Class A Common Unit on the last Trading Day
prior to the effective time of such merger, plus (ii) the amount of cash
received by such Record Holder, is equal to the product of the number of
Listed Shares owned by such Record Holder and the Closing Price of one
Listed Share on the last Trading Day prior to the effective time of such
merger. For purposes of this Section 16.6(c), the term "Class A Common
Units" shall include any other security issued by the Partnership in
exchange for Listed Shares in lieu of Class A Common Units that is in all
respects substantially similar to Class A Common Units.
ARTICLE XVII
RIGHT TO ACQUIRE UNITS
17.1 RIGHT TO ACQUIRE UNITS.
(a) Notwithstanding any provision of this Agreement, if at any time
less than 15% of the aggregate number of Listed Shares then outstanding
plus the aggregate number of Common Units then Outstanding are held by
Persons other than the General Partner and its Affiliates, the General
Partner shall then have the right (which right it may assign and transfer
to the Partnership or any Affiliate of the General Partner) exercisable in
its sole discretion, to purchase all, but not less than all, of the Common
Units then Outstanding held by Persons other than the General Partner and
its Affiliates, at the Optional Purchase Price, but only if Enbridge Inc.
elects to purchase all, but not less than all, of the outstanding Listed
Shares that are not held by Enbridge Inc. and its Affiliates pursuant to
Section 4 of the Purchase Provisions. As used in this Agreement, "OPTIONAL
PURCHASE PRICE" means a price that is equal to the greatest of (A) the
Current Market Price for the Common Units as of the date five days prior
to the date that the notice described in Section 17.1(b) is mailed, (B)
the highest price paid by the General Partner or any of its Affiliates for
a Common Unit purchased during the 90 calendar day period preceding the
date that the notice described in Section 17.1(b) is mailed, (C) the
Current Market Price for the Listed Shares as of the date five days prior
to the date that the notice described in Section 17.1(b) is mailed, and
(D) the highest price paid by the General Partner or any of its Affiliates
for a Listed Share purchased during the 90 calendar day period preceding
the date that the notice described in Section 17.1(b) is mailed. To the
extent that the price paid for Listed Shares or Common Units in clauses
(B) or (D) is paid in securities, the value of such securities shall be
the Closing Price for such securities on the day the purchase of the
Listed Shares or Common Units is effected. To the extent that the price
paid for Listed Shares or Common Units in clauses (B) or (D) is paid other
than
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in cash or securities, the value of such other consideration (and
therefore the price paid for such Listed Shares or Common Units) shall be
determined in good faith by the Board of Directors of the General Partner.
As used in this Agreement, (i) "CURRENT MARKET PRICE" of a security listed
or admitted to trading on any National Securities Exchange means the
average of the daily Closing Prices for such security for the 20
consecutive Trading Days immediately prior to, but not including, such
date; (ii) "CLOSING PRICE" for any day means (1) the last sale price on
such day, regular way, or in case no such sale takes place on such day,
the average of the closing bid and asked prices on such day, regular way,
in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading
on the New York Stock Exchange or, (2) if such securities are not listed
or admitted to trading on the New York Stock Exchange as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal National Securities Exchange on which
such securities are listed or admitted to trading or, if such securities
are not listed or admitted to trading on any National Securities Exchange,
the last quoted price on such day or, (3) if not so quoted, the average of
the high bid and low asked prices on such day in the over-the-counter
market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotation System or such other system then in use, or (4)
if on any such day such securities are not quoted by any such
organization, the average of the closing bid and asked price on such day
as furnished by a professional market maker making a market in such
securities selected by the Board of Directors of the General Partner, or
(5) if on any such day no market maker is making a market in such
securities, the fair value of such securities on such day as determined
reasonably and in good faith by the Board of Directors of the General
Partner; and (iii) "TRADING DAY" means a day on which the principal
National Securities Exchange on which such securities are listed or
admitted to trading is open for the transaction of business or, if such
securities 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. Notwithstanding anything herein to the contrary, the
Current Market Price of one Class B Common Unit shall be deemed to be the
same as the Current Market Price of one Class A Common Unit.
(b) If the General Partner, any Affiliate of the General Partner or
the Partnership elects to exercise the right to purchase Common Units
granted pursuant to Section 17.1(a), the General Partner shall deliver to
the Transfer Agent written notice of such election to purchase (the
"NOTICE OF ELECTION TO PURCHASE") and shall cause the Transfer Agent to
mail a copy of such Notice of Election to Purchase to the Record Holders
of Common Units (as of a Record Date selected by the 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 in daily newspapers
of general circulation printed in the English language and published in
the Borough of Manhattan, New York. The Notice of Election to Purchase
shall specify the Purchase Date and the price (determined in accordance
with Section 17.1(a)) at which Common Units will be purchased and state
that the General Partner, its Affiliate or the Partnership, as the case
may be, elects to purchase such Common Units, upon surrender of
Certificates representing such Common Units in exchange for payment, at
such office or offices of the Transfer Agent as the Transfer Agent may
specify, or as may be required by any National Securities Exchange on
which the Common Units are listed or admitted to trading. Any such Notice
of
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Election to Purchase mailed to a Record Holder of Common Units at his
address as reflected in the records of the Transfer Agent shall be
conclusively presumed to have been given whether or not the owner receives
such notice. On or prior to the Purchase Date, the General Partner, its
Affiliate or the Partnership, as the case may be, shall deposit with the
Transfer Agent cash in an amount sufficient to pay the aggregate purchase
price of all of the Common Units to be purchased in accordance with this
Section 17.1. If the Notice of Election to Purchase shall have been duly
given as aforesaid at least 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 Common Units
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 Common Units (including,
without limitation, any rights pursuant to Articles IV, V and XIV) shall
thereupon cease, except the right to receive the purchase price
(determined in accordance with Section 17.1(a)) for the Common Units
therefor, without interest, upon surrender to the Transfer Agent of the
Certificates representing such Common Units, and such Common Units shall
thereupon be deemed to be transferred to the General Partner, its
Affiliate or the Partnership, as the case may be, on the record books of
the Transfer Agent and the Partnership, and the General Partner or any
Affiliate of the General Partner, or the Partnership, as the case may be,
shall be deemed to be the owner of all such Common Units from and after
the Purchase Date and shall have all rights as the owner of such Common
Units (including, without limitation, all rights as owner pursuant to
Articles IV, V and XIV).
(c) At any time from and after the Purchase Date, a holder of an
Outstanding Common Unit subject to purchase as provided in this Section
17.1 may surrender his Certificate, as the case may be, evidencing such
Common Unit to the Transfer Agent in exchange for payment of the amount
described in Section 17.1(a), therefor without interest thereon.
ARTICLE XVIII
GENERAL PROVISIONS
18.1 ADDRESSES AND NOTICES. Any notice, demand, request or
report required or permitted to be given or made to a Partner or Assignee
under this Agreement shall be in writing and shall be deemed given or made
when delivered in person or when sent by first-class United States mail or by
other means of written communication to the Partner or Assignee at the
address described below. Any notice, payment or report to be given or made to
a Partner or Assignee hereunder shall be deemed conclusively to have been
given or made, and the obligation to give such notice or report or to make
such payment shall be deemed conclusively to have been fully satisfied, upon
sending of such notice, payment or report to the Record Holder of such Unit
at his address as shown on the records of the Transfer Agent or as otherwise
shown on the records of the Partnership, regardless of any claim of any
Person who may have an interest in such Unit or the Partnership Interest of a
General Partner by reason of any assignment or otherwise. An affidavit or
certificate of making of any notice, payment or report in accordance with the
provisions of this Section 18.1 executed by the General Partner, the Transfer
Agent or the mailing organization shall be prima facie evidence of the giving
or making of such notice, payment or report. If any notice, payment or report
addressed to a Record Holder at the address
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of such Record Holder appearing on the books and records of the Transfer
Agent or the Partnership is returned by the United States Post Office marked
to indicate that the United States Postal Service is unable to deliver it,
such notice, payment or report and any subsequent notices, payments and
reports shall be deemed to have been duly given or made without further
mailing (until such time as such Record Holder or another Person notifies the
Transfer Agent or the Partnership of a change in his address) if they are
available for the Partner or Assignee at the principal office of the
Partnership for a period of one year from the date of the giving or making of
such notice, payment or report to the other Partners and Assignees. Any
notice to the Partnership shall be deemed given if received by the General
Partner at the principal office of the Partnership designated pursuant to
Section 1.3. The General Partner may rely and shall be protected in relying
on any notice or other document from a Partner, Assignee or other Person if
believed by it to be genuine.
18.2 TITLES AND CAPTIONS. All article or section titles or
captions in this Agreement are for convenience only. They shall not be deemed
part of this Agreement and in no way define, limit, extend or describe the
scope or intent of any provisions hereof. Except as specifically provided
otherwise, references to "Articles" and "Sections" are to Articles and
Sections of this Agreement.
18.3 PRONOUNS AND PLURALS. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice-versa.
18.4 FURTHER ACTION. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as
may be necessary or appropriate to achieve the purposes of this Agreement.
18.5 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
18.6 INTEGRATION. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof
and supersedes all prior agreements and understandings pertaining thereto.
18.7 CREDITORS. None of the provisions of this Agreement shall
be for the benefit of, or shall be enforceable by, any creditor of the
Partnership.
18.8 WAIVER. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement
or to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, agreement
or condition.
18.9 COUNTERPARTS. This Agreement may be executed in
counterparts, all of which together shall constitute an agreement binding on
all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become
bound by this Agreement immediately upon affixing its signature hereto or, in
the case
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of a Person acquiring a Unit, upon executing and delivering a Transfer
Application as herein described, independently of the signature of any other
party.
18.10 APPLICABLE LAW. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware, without
regard to the principles of conflicts of law.
18.11 INVALIDITY OF PROVISIONS. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
18.12 AMENDMENTS TO REFLECT GP REORGANIZATION AGREEMENT. In
addition to the amendments to this Agreement contained in the GP
Reorganization Agreement and notwithstanding any other provision of this
Agreement to the contrary, this Agreement shall be deemed to be further
amended and modified to the extent necessary, but only to the extent
necessary, to carry out the purposes and intent of the GP Reorganization
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
GENERAL PARTNER:
ENBRIDGE ENERGY COMPANY, INC.
By: ____________________________________
Name: ____________________________________
Title:____________________________________
LIMITED PARTNERS:
All Limited Partners now and hereafter
admitted as limited partners of the
Partnership, pursuant to Powers of Attorney
now and hereafter executed in favor of, and
granted and delivered to, the General
Partner.
By: Enbridge Energy Company, Inc.,
General Partner, as
attorney-in-fact for all Limited
Partners pursuant to the Powers
of Attorney granted pursuant to
Section 1.4.
By: ____________________________________
Name: ____________________________________
Title:____________________________________
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