UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 26, 1999
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 16 OF THE SECURITIES
EXCHANGE ACT OF 1934
for the transition period from to
------ ------
Commission File Number: 1-14222
SUBURBAN PROPANE PARTNERS, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 22-3410353
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
240 ROUTE 10 WEST, WHIPPANY, NJ 07981
- --------------------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
(973) 887-5300
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for each shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of August 10, 1999:
Suburban Propane Partners, L.P. - 22,235,662 Common Units
This Report contains a total of 25 pages.
<PAGE>
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
INDEX TO FORM 10-Q
PAGE
Part 1 Financial Information ----
Item 1 - Financial Statements
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
------------------------------------------------
Condensed Consolidated Balance Sheets as of
June 26, 1999 and September 26, 1998 4
Condensed Consolidated Statements of Operations for
the three months ended June 26, 1999 and June 27, 1998 5
Condensed Consolidated Statements of Operations for
the nine months ended June 26, 1999 and June 27, 1998 6
Condensed Consolidated Statements of Cash Flows for the
three and nine months ended June 26, 1999 and June 27, 1998 7
Condensed Consolidated Statement of Partners' Capital
for the nine months ended June 26, 1999 8
Notes to Condensed Consolidated Financial Statements 9-14
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 15-21
Item 3 - Quantitative and Qualitative Disclosures about
Market Risk 21-22
Part 2 Other Information
Item 4 - Submission of Matters to a Vote of Security Holders 23
Item 6 - Exhibits and Reports on Form 8-K 24
Signatures 25
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
- -----------------------------------------------
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
relating to the Partnership's future business expectations and predictions and
financial condition and results of operations. These forward-looking statements
involve certain risks and uncertainties. Important factors that could cause
actual results to differ materially from those discussed in such forward-looking
statements ("cautionary statements") include, among other things: the impact of
weather conditions on the demand for propane; the impact of fluctuations in the
unit cost of propane; the ability of the Partnership to compete with other
suppliers of propane and other energy sources; the ability of the Partnership to
retain customers; the impact of energy efficiency and technology advances on the
demand for propane; the ability of management to continue to control expenses;
<PAGE>
the impact of regulatory developments on the Partnership's business, including
the resolution of Final Rule HM-225 (49 CFR 171.5) promulgated by the research
and special programs administration of the U.S Department of Transportation; the
impact of legal proceedings on the Partnership's business; and the impact of the
recently completed Recapitalization (including the use of a significant portion
of the Partnership's then cash-on-hand to retire all outstanding Subordinated
Units and Additional Partnership Units and the replacement of the distribution
support arrangement provided by an affiliate of the departed general partner
with a liquidity arrangement provided by the Partnership). All subsequent
written and oral forward-looking statements attributable to the Partnership or
persons acting on its behalf are expressly qualified in their entirety by such
cautionary statements.
<PAGE>
<TABLE>
<CAPTION>
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
JUNE 26, SEPTEMBER 26,
1999 1998
(UNAUDITED) (AUDITED)
----------- -------------
ASSETS
Current assets:
<S> <C> <C>
Cash & cash equivalents .................................. $ 19,634 $ 59,819
Accounts receivable, less allowance for doubtful
accounts of $2,537 and $2,382, respectively ............. 38,297 39,134
Inventories .............................................. 26,155 29,962
Prepaid expenses and other current assets ................ 4,637 3,866
--------- ---------
Total current assets ............................. 88,723 132,781
Property, plant and equipment, net ........................... 328,367 343,828
Net prepaid pension cost ..................................... 33,755 34,556
Goodwill & other intangibles assets, net ..................... 215,767 214,782
Other assets ................................................. 5,907 3,618
--------- ---------
Total assets .................................... $ 672,519 $ 729,565
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable ......................................... $ 31,712 $ 31,315
Accrued employment and benefit costs ..................... 17,415 20,926
Accrued insurance ........................................ 5,520 4,830
Customer deposits and advances ........................... 8,503 16,241
Accrued interest ......................................... 16,036 8,198
Other current liabilities ................................ 9,587 10,040
--------- ---------
Total current liabilities ...................... 88,773 91,550
Long-term debt ............................................... 427,625 427,897
Postretirement benefits obligation ........................... 34,838 35,980
Accrued insurance ............................................ 17,141 16,574
Other liabilities ............................................ 8,328 9,764
--------- ---------
Total liabilities ............................. 576,705 581,765
Partners' capital:
Common Unitholders ..................................... 93,221 84,847
Subordinated Unitholder ................................ 0 49,147
General Partner ........................................ 2,593 24,488
Unearned compensation .................................. 0 (10,682)
Deferred compensation trust ............................ (10,712) 0
Common Units held in trust, at cost .................... 10,712 0
--------- ---------
Total partners' capital ...................... 95,814 147,800
--------- ---------
Total liabilities and partners' capital ...... $ 672,519 $ 729,565
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per Unit amounts)
(unaudited)
THREE MONTHS ENDED
JUNE 26, 1999 JUNE 27, 1998
------------- -------------
Revenues
<S> <C> <C>
Propane ............................... $ 105,874 $ 110,463
Other ................................. 16,031 14,646
--------- ---------
121,905 125,109
Costs and expenses
Cost of sales .......................... 52,347 57,574
Operating .............................. 52,194 52,848
Depreciation and amortization .......... 8,689 9,079
General and administrative expenses .... 7,720 8,533
Recapitalization costs ................. 18,903 0
--------- ---------
139,853 128,034
--------- ---------
(Loss) before interest expense and
provision for income taxes ............. (17,948) (2,925)
Interest expense, net ...................... 7,324 7,306
--------- ---------
(Loss) before provision for income taxes ... (25,272) (10,231)
Provision for income taxes ................. 21 4
--------- ---------
Net (loss) ............................. $ (25,293) $ (10,235)
========= =========
General Partner's interest in net (loss) ... $ (506) $ (205)
--------- ---------
Limited Partners' interest in net (loss) ... $ (24,787) $ (10,030)
========= =========
Basic and diluted net (loss) per Unit ...... $ (0.93) $ (0.35)
Weighted average number of Units outstanding 26,563 28,726
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per Unit amounts)
(unaudited)
NINE MONTHS ENDED
JUNE 26, 1999 JUNE 27, 1998
------------- -------------
Revenues
<S> <C> <C>
Propane ....................................... $ 448,309 $ 507,502
Other ......................................... 56,790 52,922
--------- ---------
505,099 560,424
Costs and expenses
Cost of sales .................................. 217,455 278,582
Operating ...................................... 159,440 161,914
Depreciation and amortization .................. 26,201 27,544
General and administrative expenses ............ 22,308 20,617
Recapitalization costs ......................... 18,903 0
Gain on sale of investment in Dixie Pipeline Co. 0 (5,090)
--------- ---------
444,307 483,567
--------- ---------
Income before interest expense and
provision for income taxes .................... 60,792 76,857
Interest expense, net .............................. 22,507 23,155
--------- ---------
Income before provision for income taxes ........... 38,285 53,702
Provision for income taxes ......................... 47 25
--------- ---------
Net income ..................................... $ 38,238 $ 53,677
========= =========
General Partner's interest in net income ........... $ 765 $ 1,074
--------- ---------
Limited Partners' interest in net income ........... $ 37,473 $ 52,603
========= =========
Basic and diluted net income per Unit .............. $ 1.34 $ 1.83
Weighted average number of Units outstanding ....... 28,005 28,726
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 26, JUNE 27, JUNE 26, JUNE 27,
1999 1998 1999 1998
------------ ------------ ------------ ------------
Cash flows from operating activities:
<S> <C> <C> <C> <C>
Net (loss)/income .............................................. $ (25,293) $ (10,235) $ 38,238 $ 53,677
Adjustments to reconcile net (loss)/income to net cash
provided by operations:
Depreciation .............................................. 6,691 7,296 20,385 22,001
Amortization .............................................. 1,998 1,783 5,816 5,543
(Gain) on disposal of investment ......................... 0 0 0 (5,090)
Loss (gain) on disposal of property, plant and
equipment ............................................... 33 59 (79) (1,348)
Recapitalization costs .................................... 18,903 0 18,903 0
Changes in operating assets and liabilities, net of
acquisitions and dispositions:
Decrease in accounts receivable ........................... 26,201 27,434 837 4,482
(Increase)/decrease in inventories ........................ (886) (1,591) 3,807 8,997
Decrease/(increase) in prepaid expenses and other
current assets ........................................... 2,246 1,498 (771) 1,285
(Decrease)/increase in accounts payable .................. (1,563) (3,257) 397 (10,661)
Increase/(decrease) in accrued employment
and benefit costs ........................................ 1,147 1,763 (3,069) 2,499
Increase in accrued interest .............................. 7,810 7,773 7,838 7,710
Increase/(decrease) in other accrued liabilities .......... 281 (2,208) (7,499) (8,131)
Other noncurrent assets ........................................ (572) (537) (2,058) (1,587)
Deferred credits and other noncurrent liabilities .............. (1,160) 1,425 (1,596) (1,702)
--------- --------- --------- ---------
Net cash provided by operating activities ........... 35,836 31,203 81,149 77,675
--------- --------- --------- ---------
Cash flows from investing activities:
Capital expenditures .......................................... (1,870) (1,557) (7,726) (9,199)
Acquisitions .................................................. (295) (370) (4,631) (4,063)
Proceeds from sale of investment .............................. 0 0 0 13,090
Proceeds from sale of property, plant and equipment, net ...... 1,129 778 3,081 4,882
--------- --------- --------- ---------
Net cash (used in) provided by investing activities . (1,036) (1,149) (9,276) 4,710
--------- --------- --------- ---------
Cash flows from financing activities:
Long-term debt repayments ..................................... (640) (259) (688) (260)
Redemption of subordinated units and APUs ..................... (69,000) 0 (69,000) 0
Payment of recapitalization costs ............................. (9,367) 0 (9,367) 0
Proceeds from General Partner APU contribution ................ 0 0 0 12,000
Partnership distribution ...................................... (11,001) (10,926) (33,003) (32,778)
--------- --------- --------- ---------
Net cash (used in) financing activities ............ (90,008) (11,185) (112,058) (21,038)
--------- --------- --------- ---------
Net (decrease)/increase in cash and cash equivalents .............. (55,208) 18,869 (40,185) 61,347
Cash and cash equivalents at beginning of period .................... 74,842 61,814 59,819 19,336
--------- --------- --------- ---------
Cash and cash equivalents at end of period .......................... $ 19,634 $ 80,683 $ 19,634 $ 80,683
========= ========= ========= =========
Supplemental disclosure of cash flow information:
Cash paid for interest ........................................ $ 298 $ 319 $ 16,581 $ 16,662
========= ========= ========= =========
Non-cash investing and financing activities
Assets acquired by incurring note payable ..................... $ -- $ -- $ -- $ 250
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(in thousands)
(unaudited)
Unearned
Common Deferred Compensation Total
Number of Units General Units Compensation Restricted Partners'
Common Subordinated Common Subordinated Partner in Trust Trust Units Capital
-------- ------------ -------- ------------ ------- -------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at September 26, 1998.. 21,562 7,164 $84,847 $49,147 $24,488 $(10,682) $147,800
Net Grants Issued under
restricted unit plan .......... 1,154 (1,154) --
Partnership Distribution ...... (32,343) (660) (33,003)
Amortization of Restricted
Unit compensation ............. 443 443
Recapitalization transactions.. 674 (7,164) 17,273 (64,330) (22,000) 10,712 (10,712) 11,393 (57,664)
Net income .................... -- -- 22,290 15,183 765 38,238
-------- ------------ -------- ------------ ------- -------- ------------ ------------ ---------
Balance at June 26, 1999 ...... 22,236 -- $93,221 $ -- $ 2,593 $10,712 $ (10,712) $ -- $ 95,814
======== ============ ======== ============ ======= ======== ============ ============ =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 26, 1999
(DOLLARS IN THOUSANDS)
(UNAUDITED)
1. PARTNERSHIP ORGANIZATION AND FORMATION
--------------------------------------
Suburban Propane Partners, L.P. (the "Partnership") and its subsidiary, Suburban
Propane, L.P. (the "Operating Partnership"), were formed on October 19, 1995 to
acquire and operate the propane business and assets of Suburban Propane, a
division of Quantum Chemical Corporation (the "Predecessor Company"). In
addition, Suburban Sales & Service, Inc. (the "Service Company"), a subsidiary
of the Operating Partnership, was formed to acquire and operate the service
work, appliance and parts businesses of the Predecessor Company. The
Partnership, the Operating Partnership, the Service Company and a corporate
operating entity subsequently acquired by the Operating Partnership are
collectively referred to hereinafter as the "Partnership Entities". The
Operating Partnership and the Service Company commenced operations on March 5,
1996 (the "IPO Date") upon consummation of an initial public offering.
From the Closing Date through May 26, 1999, Suburban Propane GP, Inc. (the
"General Partner"), an indirect wholly-owned subsidiary of Millennium Chemicals
Inc. ("Millennium"), served as the general partner of the Partnership and
Operating Partnership owning a 1% general partner interest in the Partnership
and a 1.0101% general partner interest in the Operating Partnership. In
addition, the General Partner owned a 24.4% limited partner interest and a
special limited partner interest in the Partnership. The limited partner
interest was evidenced by 7,163,750 Subordinated Units and the special limited
partner interest was evidenced by 220,000 Additional Partnership Units ("APUs").
On May 26, 1999, the Partnership completed a recapitalization (the
"Recapitalization") which included the redemption of the Subordinated Units and
APUs from the General Partner, and the general partner was replaced with a new
General Partner, Suburban Energy Services Group LLC (the "Successor General
Partner"), owned by certain employees of the Partnership (See Note 7 - The
Recapitalization).
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------
BASIS OF PRESENTATION. The condensed consolidated financial statements include
the accounts of the Partnership Entities. All significant intercompany
transactions and accounts have been eliminated. The accompanying condensed
consolidated financial statements are unaudited and have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission ("SEC"). They include all adjustments which the Partnership considers
necessary for a fair statement of the results for the interim period presented.
Such adjustments consisted only of normal recurring items unless otherwise
disclosed. These condensed financial statements should be read in conjunction
with the Partnership's Annual Report on Form 10-K for the fiscal year ended
September 26, 1998, as amended and restated on Form 10-K/A filed with the SEC on
April 22, 1999. Due to the seasonal nature of the Partnership's propane
business, the results of operations for interim periods are not necessarily
indicative of the results to be expected for a full year.
<PAGE>
FISCAL PERIOD. The Partnership's fiscal periods end on the Saturday nearest the
end of the quarter.
USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
FINANCIAL INSTRUMENTS. The Partnership routinely uses propane futures and
forward contracts to reduce the risk of future price fluctuations and to help
ensure supply during periods of high demand. Gains and losses on futures and
forward contracts designated as hedges are deferred and recognized in cost of
sales as a component of the product cost for the related hedged transaction. In
order for a future or forward contract to be accounted for as a hedge, the item
to be hedged must expose the Partnership to price risk and the future or forward
must reduce such price risk. As the Partnership is subject to propane market
pricing and the propane forwards and futures highly correlate with changes in
the market price of propane, hedge accounting is often utilized. The Partnership
accounts for financial instruments which do not meet the hedge criteria or for
hedging transactions which are terminated, under the mark or market rules which
require gains or losses to be immediately recognized in earnings as a component
of operating expense. In the Consolidated Statement of Cash Flows, cash flows
from qualifying hedges are classified in the same category as the cash flows
from the items being hedged.
INVENTORIES. Inventories are stated at the lower of cost or market. Cost is
determined using a weighted average method for propane and a specific
identification basis for appliances.
PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment are stated at cost.
Depreciation of property, plant and equipment is computed using the
straight-line method over the estimated service lives, which range from three to
forty years.
Accumulated depreciation at June 26, 1999 and September 26, 1998 was $161,973
and $141,669, respectively.
GOODWILL AND OTHER INTANGIBLE ASSETS. Goodwill and other intangible assets are
comprised of the following:
JUNE 26,1999 SEPTEMBER 26, 1998
------------ ------------------
Goodwill $242,226 $237,812
Debt origination costs 8,024 6,224
Other, principally noncompete agreements 5,092 5,076
-------- --------
255,342 249,112
Less: Accumulated amortization 39,575 34,330
-------- --------
$215,767 $214,782
======== ========
INCOME TAXES. As discussed in Note 1, the Partnership Entities consist of two
limited partnerships, the Partnership and the Operating Partnership, and two
corporate entities, including the Service Company. For federal and state income
tax purposes, the earnings attributed to the Partnership and Operating
Partnership are included in the tax returns of the individual partners. As a
result, no recognition of income tax expense has been reflected in the
Partnership's consolidated financial statements relating to the earnings of the
Partnership and Operating Partnership. The earnings attributed to the corporate
<PAGE>
entities are subject to federal and state income taxes. Accordingly, the
Partnership's consolidated financial statements reflect income tax expense
related to the corporate entities' earnings.
NET INCOME (LOSS) PER UNIT. Effective May 26, 1999, the Partnership completed
its Recapitalization and redeemed all 7,163,750 Subordinated Units. In addition,
pursuant to the change of control provisions of the Partnership's 1996
Restricted Unit Award Plan ("Restricted Unit Plan"), all Restricted Units issued
and outstanding on May 26, 1999, totaling 673,165 Units, vested and converted
into Common Units (See Note 6 - Restricted Unit Plan). Basic net income (loss)
per limited partner Unit is computed by dividing net income (loss), after
deducting the General Partner's 2% interest, by the weighted average number of
outstanding Common Units and Subordinated Units. Diluted net income (loss) per
limited partner Unit is computed by dividing net income (loss), after deducting
the General Partner's 2% interest, by the weighted average number of outstanding
Common Units, Subordinated Units, and the time vested Restricted Units granted
under the Restricted Unit Award Plan.
NEW ACCOUNTING STANDARD. In June 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities" ("Statement No. 133").
Statement No. 133 requires entities to record derivatives as assets or
liabilities on the balance sheet and to measure them at fair value. FASB has
delayed this standard's effective date for one year, as such it is effective for
the Partnership's 2001 fiscal year. Management is currently evaluating the
impact this statement may have on the Partnership's financial statements.
RECLASSIFICATIONS. Certain prior period balances have been reclassified to
conform with the current period presentation.
3. DISTRIBUTIONS OF AVAILABLE CASH
-------------------------------
The Partnership makes distributions to its partners 45 days after the end of
each fiscal quarter in an aggregate amount equal to its Available Cash for such
quarter. Available Cash generally means all cash on hand at the end of the
fiscal quarter less the amount of cash reserves established by the Board of
Supervisors in its reasonable discretion for future cash requirements. Effective
with the completion of the Recapitalization (See Note 7 - The Recapitalization),
the Distribution Support Agreement among the Partnership, the General Partner
and Millennium, which was used to enhance the Partnership's ability to
distribute the Minimum Quarterly Distribution on Common Units, was terminated
and replaced by a $22,000 liquidity subfacility provided by the Partnership
under the Partnership's Bank Credit Facilities (See Note 5 - Long-Term Debt and
Bank Credit Facilities). Under the Distribution Support Agreement, the General
Partner had agreed to contribute to the Partnership cash in exchange for APUs.
In connection with the Recapitalization, the Partnership redeemed all the
outstanding APUs representing $22,000 that the General Partner had previously
contributed under the Distribution Support Agreement. On May 11, 1999 the
Partnership paid the Minimum Quarterly Distributions on all outstanding Common
Units for the fiscal quarter ended March 27, 1999. In conjunction with the
completion of the Partnership's Recapitalization, the Partnership has increased
the quarterly distribution to Unitholders from $0.50 to $0.5125 per Unit per
quarter effective for the fiscal quarter ended June 26, 1999. The total amount
consists of the existing Minimum Quarterly Distribution of $0.50 per Unit per
quarter plus an additional $0.0125 per Unit per quarter above the Minimum
Quarterly Distribution.
<PAGE>
4. COMMITMENTS AND CONTINGENCIES
-----------------------------
The Partnership leases certain property, plant and equipment for various periods
under noncancelable leases. Rental expense under operating leases was $13,442
for the nine months ended June 26, 1999.
The Partnership effectively is self-insured for general and product, workers'
compensation and automobile liabilities up to predetermined amounts above which
third party insurance applies. At June 26, 1999, accrued insurance liabilities
amounted to $22,661, representing the total estimated losses under these
self-insurance programs. These liabilities represent the gross estimated losses
as no claims or lawsuits, individually or in the aggregate, were estimated to
exceed the Partnership's deductibles on its insurance policies.
The Partnership is also involved in various legal actions which have arisen in
the normal course of business, including those relating to commercial
transactions and product liability. Although any litigation is inherently
uncertain based on past experience, the information currently available to it
and the amount of self-insurance reserves for known and unasserted claims, the
Partnership does not believe that the ultimate resolution of these matters will
have a material adverse effect on the Partnership's financial position or future
results of operations.
5. LONG-TERM DEBT AND BANK CREDIT FACILITIES
-----------------------------------------
On the Closing Date, the Operating Partnership issued $425,000 of Senior Notes
with an annual interest rate of 7.54%. The Operating Partnership's obligations
under the Senior Note Agreement are unsecured and rank on an equal and ratable
basis with the Operating Partnership's obligations under the Bank Credit
Facilities discussed below. The Senior Notes will mature June 30, 2011, and
require the principal be paid in equal annual installments of $42,500 starting
June 30, 2002.
The Bank Credit Facilities consist of a $75,000 working capital facility and a
$25,000 acquisition facility. The Operating Partnership's obligations under the
Bank Credit Facilities are unsecured on an equal and ratable basis with the
Operating Partnership's obligations under the Senior Notes. Borrowings under the
Bank Credit Facilities bear interest at a rate based upon either LIBOR plus a
margin, First Union National Bank's prime rate or the Federal Funds rate plus
1/2 of 1%. An annual fee ranging from .25% to .50% based upon certain financial
tests is payable quarterly whether or not borrowings occur. As of June 26, 1999,
such fee was .50%.
No amounts were outstanding under the Bank Credit Facilities as of September 26,
1998 and June 26, 1999.
The Senior Note Agreement and Bank Credit Facilities contain various restrictive
and affirmative covenants applicable to the Operating Partnership, including (i)
maintenance of certain financial tests, (ii) restrictions on the incurrence of
additional indebtedness, and (iii) restrictions on certain liens, investments,
guarantees, loans, advances, payments, mergers, consolidations, distributions,
sales of assets and other transactions.
In connection with the Recapitalization (See Note 7 - The Recapitalization), the
Partnership amended the Bank Credit Facilities to, among other things, extend
the maturity date to March 31, 2001, amend certain covenants, increase the
applicable interest rate margins, and provide for a $22,000 liquidity
subfacility for the payment of the Minimum Quarterly Distribution under certain
<PAGE>
circumstances. (See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" for additional information concerning these
amendments.)
The Partnership also amended the Senior Note Agreement in connection with the
Recapitalization. (See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for additional information concerning these
amendments.)
For the nine months ended June 26, 1999, interest expense was $24,518.
6. RESTRICTED UNIT PLAN
--------------------
The Restricted Unit Plan authorizes the issuance of Common Units with an
aggregate value of $15,000 to executives, managers and Elected Supervisors of
the Partnership. Upon issuance of Restricted Units, unearned compensation is
amortized ratably over the applicable vesting periods under the Plan. According
to the change of control provisions of the Restricted Unit Plan, all outstanding
Restricted Units on the closing date of the Recapitalization vested and
converted into Common Units.
Following is a summary of activity in the Restricted Unit Plan:
UNITS VALUE PER UNIT
----- --------------
Outstanding September 26, 1998 621,811 $18.41 - $21.63
Awarded 74,143 $17.88 - $19.06
Forfeited (22,789) $17.88 - $19.91
Vested and converted to Common Units 673,165 $17.88 - $21.63
------- ---------------
Outstanding June 26, 1999 -0- $ -
======= ===============
For the nine months ended June 26, 1999, the Partnership amortized $443 of
unearned compensation and recorded an expense of $11,393 related to the
accelerated vesting on the closing date of the Recapitalization which is
included in recapitalization costs in the accompanying statements of operations.
(See Note 7 - The Recapitalization.) As of June 26, 1999, 58,542 units remain
available for future award under the Restricted Unit Plan.
7. THE RECAPITALIZATION
--------------------
On May 26, 1999, after receiving Unitholder approval, the Partnership completed
the Recapitalization contemplated by its November 27, 1998 Recapitalization
Agreement with Millennium, the General Partner and the Successor General
Partner. The elements of the recapitalization included:
o The redemption by the Partnership of all 7,163,750 Subordinated Units and
220,000 APUs, which were owned by the General Partner, for $69,000 in
cash.
o The substitution of the Successor General Partner as the new general
partner of the Partnership and the Operating Partnership following its
purchase of the combined 2% general partner interests in the Partnership
and the Operating Partnership and the incentive distribution rights in the
Partnership for $6,000 in cash (the "GP Interest Purchase").
<PAGE>
o The amendment of the Senior Note, Bank Credit Facilities and the
partnership agreements of the Partnership and the Operating Partnership to
permit and effect the Recapitalization and to reduce the distribution
levels that apply to the incentive distribution rights of the Successor
General Partner.
o The termination of the Distribution Support Agreement among the
Partnership, the General Partner and Millennium and its replacement with a
liquidity arrangement provided by the Partnership under the Bank Credit
Facilities, as amended.
o An increase in the quarterly distribution to the Partnership's Unitholders
from $0.50 to $0.5125 per Unit per quarter (from $2.00 to $2.05 per Unit
per year), effective for the fiscal quarter ended June 26, 1999. The total
amount consists of the existing Minimum Quarterly Distribution of $0.50
per Unit per quarter plus an additional $0.0125 per Unit per quarter above
the Minimum Quarterly Distribution.
The Partnership incurred expenses of $18,903 in connection with the
Recapitalization transactions. The redemption price and the costs of the
Recapitalization were funded entirely from available cash on hand. (See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" for additional information concerning these expenses.)
The Successor General Partner borrowed the $6,000 purchase price for the GP
Interest Purchase from Mellon Bank, N.A. ("Mellon"). In connection with the loan
(the "GP Loan"), the Operating Partnership entered into a purchase agreement
with Mellon under which the Operating Partnership is required to purchase the
note evidencing the GP Loan in the event of a default under the GP Loan by the
Successor General Partner.
The Successor General Partner is owned by approximately 45 executives and key
employees of the Partnership who had previously been granted Restricted Units
under the Partnership's Restricted Unit Plan. These individuals surrendered
553,896 Restricted Units representing substantially all of their Restricted
Units, before they vested (according to their terms, the Restricted Units vested
and converted into Common Units on completion of the Recapitalization) in
exchange for the right to participate in a new compensation deferral plan of the
Partnership and the Operating Partnership. The Partnership deposited into a
trust on behalf of these individuals 553,896 Common Units. Pursuant to the new
compensation deferral plan, these individuals have deferred receipt of these
Common Units and related distributions by the Partnership until the date the GP
Loan is repaid in full or the seventh anniversary of the date the
Recapitalization is completed, whichever they may choose, but subject to the
earlier distribution and forfeiture provisions of the compensation deferral
plan. The value of the Common Units deposited in the trust and the related
deferred compensation trust liability are reflected in the accompanying
consolidated balance sheet at June 26, 1999 as components of Partners' Capital.
8. SALE OF INVESTMENT
------------------
In December 1997, the Partnership sold its minority interest in the Dixie
Pipeline Company, which owns and operates a propane pipeline, for net cash
proceeds of $13,090 and realized a gain of $5,090.
<PAGE>
9. SUBSEQUENT EVENT - COMMON UNIT DISTRIBUTION
-------------------------------------------
On July 20, 1999, the Partnership announced a quarterly distribution of $0.5125
per Common Unit for the third quarter of fiscal 1999 consisting of $.50 of a
Minimum Quarterly Distribution and an additional distribution of $.0125 per
Common Unit payable on August 10, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 26, 1999
- --------------------------------
COMPARED TO THREE MONTHS ENDED JUNE 27, 1998
- --------------------------------------------
REVENUES
Revenues decreased 2.6% or $3.2 million to $121.9 million for the three months
ended June 26, 1999 as compared to $125.1 million for the three months ended
June 27, 1998. Revenues from retail activities increased $0.7 million or 0.7% to
$97.2 million for the three months ended June 26, 1999 compared to $96.5 million
in the prior period's quarter, due to an increase in retail sales volumes,
offset in part by reduced selling prices resulting from a decline in product
cost. Propane sold to retail customers increased 3.1% or 3.2 million gallons to
103.9 million gallons, as compared to 100.7 million gallons in the prior
period's quarter. The increase in retail gallons is principally due to colder
temperatures during the months of April and May when compared to the prior
period. Revenues from wholesale and hedging activities decreased $5.3 million or
38.1% to $8.7 million for the three months ended June 26, 1999 compared to $14.0
million in the prior period's comparable quarter. This decrease is attributable
to the Partnership's reduced emphasis on wholesale marketing due to the low
margin nature of the wholesale market and a decrease in the Partnership's
product procurement and price risk management activities. Other revenues
increased $1.4 million or 9.5% to $16.0 million as compared to $14.6 million in
the prior period primarily due to increased sales of appliances, parts and
materials.
OPERATING EXPENSES
Operating expenses for the three months ended June 26, 1999 were $52.2 million
which is consistent with $52.8 million for the three months ended June 27, 1998.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses decreased 9.5% or $0.8 million to $7.7
million for the three months ended June 26, 1999 as compared to $8.5 million for
the three months ended June 27, 1998. The decrease is primarily attributable to
a $1.4 million write-off of certain impaired information system assets in the
prior year period. Excluding the write-off, general and administrative expenses
increased $0.6 million or 8.5% principally due to higher information systems
expenditures, including Year 2000 remediation costs.
RECAPITALIZATION COSTS
Results for the three months ended June 26, 1999 reflect expenses of $18.9
million incurred in connection with the Partnership's recapitalization
transactions. Approximately $7.5 million of the recapitalization costs represent
amounts paid for financial advisory fees, proxy solicitation fees, legal,
<PAGE>
accounting and tax service fees and $1.0 million paid to Millennium to extend
the termination date of the Recapitalization Agreement to June 15, 1999. The
$7.5 million includes approximately $0.3 million of expenses paid to complete
the GP Interest Purchase. Approximately $11.4 million of the recapitalization
costs reflect compensation expense recognized upon accelerated vesting of
673,165 issued and outstanding Restricted Units on the closing date of the
Recapitalization pursuant to the change of control provisions of the Restricted
Unit Plan. The Partnership also incurred approximately $1.8 million in fees and
expenses to amend its Senior Note Agreement. Such amount has been deferred and
is being amortized over the remaining term of the Senior Notes (approximately 12
years).
INCOME (LOSS) BEFORE INTEREST EXPENSE AND INCOME TAXES AND EBITDA
(Loss) before interest expense and income taxes increased $15.0 million to
$(17.9) million compared to $(2.9) million in the prior period's third quarter.
EBITDA decreased $15.4 million to $(9.3) million. The current period reflects
$18.9 million of recapitalization costs. The prior period reflects $1.8 million
of asset write-downs.
Excluding these non-recurring costs from both periods, income (loss) before
interest expense and income taxes increased $2.1 million to income of $1.0
million from a loss of $(1.1) million in the prior period. EBITDA, before the
non-recurring costs, increased $1.7 million or 21.2% to $9.6 million as compared
to $7.9 million in the prior period.
Excluding these non-recurring costs from both periods, the increase in income
(loss) before interest expense and income taxes and EBITDA is primarily
attributable to higher overall gross profit of $2.0 million reflecting higher
unit margins and gross profit from other revenues offset in part by higher
general and administrative expenses.
EBITDA (earnings before interest, taxes, depreciation and amortization) should
not be considered as an alternative to net income (as an indicator of operating
performance) or as an alternative to cash flow (as a measure of liquidity or
ability to service debt obligations) and is not in accordance with or superior
to generally accepted accounting principles, but provides additional information
for evaluating the Partnership's ability to distribute the Minimum Quarterly
Distribution or the increased quarterly distribution. Because EBITDA excludes
some, but not all, items that affect net income and this measure may vary among
companies, the EBITDA data presented may not be comparable to similarly titled
measures of other companies.
INTEREST EXPENSE
Net interest expense was $7.3 million for the three months ended June 26, 1999
which is consistent with the prior period's comparable quarter.
NINE MONTHS ENDED JUNE 26, 1999
- -------------------------------
COMPARED TO NINE MONTHS ENDED JUNE 27, 1998
- -------------------------------------------
REVENUES
Revenues decreased 9.9% or $55.3 million to $505.1 million for the nine months
ended June 26, 1999 as compared to $560.4 million for the nine months ended June
27, 1998. Revenues from retail activities decreased 7.5% or $33.3 million to
$410.0 million for the nine months ended June 26, 1999 compared to $442.8
million in the same period in the prior year. The decrease is primarily
<PAGE>
attributable to lower propane costs resulting in lower sales prices to customers
and, to a lesser extent, a decline in retail volumes. Propane sold to retail
customers decreased 0.6% or 2.7 million gallons to 436.5 million gallons, as
compared to 439.2 million gallons in the same period in the prior year. The
decrease in retail gallons is principally due to warmer temperatures which
nationwide were 8% warmer than normal during the nine month period and 1% warmer
than the prior year's period. Revenues from wholesale and hedging activities
decreased 40.1% or $25.9 million to $38.8 million for the nine months ended June
26, 1999 compared to $64.7 million the same period in the prior year. This
decrease is attributable to the Partnership's reduced emphasis on wholesale
marketing due to the low margin nature of the wholesale market.
OPERATING EXPENSES
Operating expenses decreased 1.5% or $2.5 million to $159.4 million for the nine
months ended June 26, 1999 as compared to $161.9 million for the nine months
ended June 27, 1998. The decrease in operating expenses is principally
attributable to lower payroll and benefit costs, vehicle repair costs, general
insurance costs and vehicle fuel expenses resulting from lower propane costs.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased 8.2% or $1.7 million to $22.3
million for the nine months ended June 26, 1999 as compared to $20.6 million for
the nine months ended June 27, 1998. The increase is primarily attributable to
the absence of offsetting dividend income earned in the prior year's period on
the sold investment in the Dixie Pipeline Company of $0.8 million and higher
information systems expenses offset in part by the write-down of certain
information system assets in the prior period of $1.4 million.
INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES AND EBITDA
Results for the current year period include $18.9 million of costs incurred in
connection with the Partnership's Recapitalization. Results for the prior year's
nine month period include a $5.1 million gain from the sale of an investment in
the Dixie Pipeline Company, which the Partnership sold after determining it did
not offer any strategic business advantages, and $1.8 million of write-downs
principally related to information system assets. Excluding these one-time items
from both periods, income before interest expense and income taxes increased
$6.1 million to $79.7 million in the nine months ended June 26, 1999 compared to
$73.6 million in the prior year's comparable period. EBITDA, excluding these
one-time items, increased $4.8 million to $105.9 million. The increase in income
before interest expense and income taxes and EBITDA is primarily attributable to
higher overall gross profit of $5.8 million reflecting higher appliance,
materials and installation revenues and an increase in overall retail unit
margins.
EBITDA should not be considered as an alternative to net income (as an indicator
of operating performance) or as an alternative to cash flow (as a measure of
liquidity or ability to service debt obligations) and is not in accordance with
or superior to generally accepted accounting principles, but provides additional
information for evaluating the Partnership's ability to distribute the Minimum
Quarterly Distribution and increased quarterly distributions. Because EBITDA
excludes some, but not all, items that affect net income and this measure may
vary among companies, the EBITDA data presented may not be comparable to
similarly titled measures of other companies.
<PAGE>
INTEREST EXPENSE
Net interest expense decreased $0.7 million to $22.5 million in the nine months
ended June 26, 1999 compared to $23.2 million in the comparable prior period.
The decrease is attributable to higher interest income on significantly
increased cash investments.
HEDGING
The Partnership engages in hedging transactions to reduce the effect of price
volatility on its product costs and to help ensure the availability of propane
during periods of short supply. The Partnership is currently a party to propane
futures contracts on the New York Mercantile Exchange and enters into agreements
to purchase and sell propane at fixed prices in the future. These activities are
monitored by management through enforcement of the Partnership's Commodity
Trading Policy. Hedging does not always result in increased product margins and
the Partnership does not consider hedging activities to be material to
operations or liquidity for the nine month period ended June 26, 1999.
LIQUIDITY AND CAPITAL RESOURCES
Due to the seasonal nature of the propane business, cash flows from operating
activities are greater during the winter and spring seasons as customers pay for
propane purchased during the heating season. For the nine months ended June 26,
1999, net cash provided by operating activities was $81.1 million compared to
cash provided by operating activities of $77.7 million in the nine months ended
June 27, 1998. The increase of $3.4 million was primarily due to an increase in
net income, net of the gain on disposal of the investment in the Dixie Pipeline
Co. and the current period recapitalization costs, offset in part by payment of
accrued incentive compensation.
Net cash used in investing activities was $9.3 million during the nine months
ended June 26, 1999 consisting of capital expenditures of $7.7 million
(including $2.5 million for maintenance expenditures and $5.2 million to support
the growth of operations) and acquisition payments of $4.6 million, offset by
proceeds from the sales of property, plant and equipment of $3.1 million. Net
cash provided by investing activities was $4.7 million for the nine months ended
June 27, 1998 which included proceeds of $13.1 million from the sale of the
Partnership's minority interest in the Dixie Pipeline Co., $4.9 million from the
sale of property, plant and equipment, offset by business acquisition payments
of $4.1 million and capital expenditures of $9.2 million (including $4.1 million
for maintenance expenditures and $5.1 million to support the growth of
operations).
Net cash used in financing activities for the nine months ended June 26, 1999
was $112.1 million, reflecting $69.0 million paid to the former General Partner
to redeem all outstanding Subordinated Units and APUs, $9.4 million of
recapitalization costs and $33.0 million in Partnership distributions. Net cash
used in financing activities for the nine months ended June 27, 1998 was $21.0
million, reflecting proceeds of the General Partner's APU contributions of $12.0
million offset by the Partnership's distributions of $32.8 million.
The Partnership has announced that it will make a distribution of $.5125 per
Unit to its Common Unitholders on August 10, 1999 for the third fiscal quarter
of 1999 consisting of $.50 in Minimum Quarterly Distribution and an additional
distribution of $.0125 per Common Unit.
<PAGE>
The ability of the Partnership to satisfy its future obligations will depend on
its future performance, which will be subject to prevailing economic, financial,
business and weather conditions and other factors, many of which are beyond its
control. Based on its current cash position, available Bank Credit Facilities
and expected cash flow from operating activities, the Partnership expects to
have sufficient funds to meet its obligations and working capital needs during
the fourth fiscal quarter of 1999 and during fiscal 2000.
In connection with the Recapitalization (See Note 7 - The Recapitalization), the
Operating Partnership amended the Bank Credit Facilities to, among other things,
(i) extend the maturity date to March 31, 2001, (ii) amend the minimum adjusted
consolidated net worth covenant to reduce the required minimum net worth of the
Operating Partnership from $125 to $50 million, (iii) provide for a $22 million
liquidity subfacility to be available to finance certain shortfalls in the
payment of the Minimum Quarterly Distribution, (iv) exclude from the mandatory
prepayment provision an amount sufficient to purchase the $6 million GP Loan if
an event of default occurs under such loan, (v) decrease the maximum ratio of
consolidated total indebtedness to EBITDA (as defined in the Bank Credit
Facilities) from 5.25 to 1.00 to 5.10 to 1.00, (vi) modify certain definitions
and covenants relating to the ownership of the General Partner and the Operating
Partnership, (vii) increase the Applicable Margins (as defined in the Bank
Credit Facilities) and (viii) provide for the lenders' consents to the
amendments to the Partnership Agreement and the Senior Note Agreement
contemplated by the Recapitalization and to the termination of the Distribution
Support Agreement.
In connection with the Recapitalization (See Note 7 - The Recapitalization), the
Senior Note Agreement was amended to, among other things, (i) reduce the minimum
adjusted consolidated net worth requirement from $125 to $50 million, (ii)
create a financial covenant exception for non-recurring, non-cash charges to be
incurred in connection with the Recapitalization, (iii) decrease the maximum
ratio of consolidated total indebtedness to EBITDA from 5.25 to 5.10, with a
further decrease to 5.00 effective as of April 1, 2001, and (iv) include a new
interest coverage maintenance test requiring the Operating Partnership to
maintain a ratio of consolidated EBITDA (as defined in the Senior Note
Agreement) for any four fiscal quarters to consolidated interest expense for
such period of at least 2.50 to 1.0.
READINESS FOR YEAR 2000
Many information technology ("IT") and non-information technology ("non-IT")
systems in use throughout the world today may not be able to properly interpret
date related data from the year 1999 into the year 2000 (the "Y2K" issue). As a
result, the Y2K issue could have adverse consequences upon the operations and
information processing of many companies, including the Partnership.
In the second half of 1997, the Partnership began to identify the Y2K exposure
of its IT systems by focusing upon those systems and applications it considered
critical to its ability to operate its business, supply propane to its
customers, and accurately account for those services. The critical systems
identified were the retail/sales, the human resources/payroll and the general
ledger/ financial accounting systems. Based upon the reasonable assurances of
the software developers and vendors, the Partnership believes that it has
replaced the human resources/payroll and the general ledger/financial accounting
systems with Y2K compliant versions. In addition, the Partnership has, through
the services of a third party vendor, completed the remediation of its
retail/sales system, as well as the majority of the programs supporting this
system.
<PAGE>
The Partnership has also developed and implemented comprehensive Y2K project
plan that has identified and addressed both its non-critical IT and non-IT
systems that could potentially be impacted by Y2K. The Y2K project plan for
non-critical systems is currently on schedule. In conjunction with this plan and
in an effort to improve its business efficiency, the Partnership made the
decision to replace all its computer hardware and PC-based computer software, as
well as to migrate the majority of its network-based software to a server
environment. According to the reasonable representations of the manufacturers,
software developers and vendors, all of the newly purchased IT hardware and PC
software are functionally Y2K compliant with some minor issues outstanding.
The Partnership has assessed the non-IT systems utilized by its field locations
to determine the Y2K compliance of those systems. With limited exceptions which
have been addressed, the safety related devices at the Partnership's field
locations do not incorporate electronic components and, as such, do not require
Y2K remediation. The Partnership does not believe that the failure of any of its
non-IT systems at any field location would have a material adverse impact upon
it.
As of July 27, 1999, the Partnership has incurred approximately $1.2 million to
address its Y2K issues. It is currently estimated that the Partnership will
spend a total of $1.25 million to complete its Y2K compliance program. This
figure does not include the amounts spent to upgrade and replace computer
hardware and PC-based software. The Partnership does not view the foregoing
costs as having a material impact upon its overall financial position and has
not delayed or eliminated any other scheduled computer upgrades or replacements
due to the Y2K compliance project.
The Partnership has completed the testing, as well as any required remediation,
of all its critical IT systems. In addition to testing the individual systems,
the Partnership has conducted an overall IT system Y2K compliance test which was
successful. During the second calendar quarter of 1999, the Partnership
undertook a Business Risk Impact Analysis of its Y2K exposure. Based upon the
results of this analysis, the Partnership determined that there was no need for
a formal contingency plan due to the availability of manual processes and
procedures in response to a Y2K event.
While propane itself is not date-dependent, the supply, transportation and
consumption of propane is dependent upon third parties, beyond the control of
the Partnership, which may have systems potentially impacted by the Y2K issue.
The Partnership has contacted the 344 vendors/suppliers identified as being
significant to its business and to date has received 266 written responses
regarding Y2K from these parties. Within the group of significant
vendors/suppliers, 78 firms have been identified as critical to the
Partnership's business and all have responded in writing to the Partnership's
requests regarding Y2K. The responses received by the Partnership typically
outline Y2K compliance programs in effect at these firms and disclose
anticipated compliance dates ranging from the first to the fourth calendar
quarters of 1999. The Partnership has contacted those vendors/suppliers
identified as critical whose response outlined a Y2K compliance program to
compare the status of the respective program to the deadlines identified. No
vendor/supplier has, to date, indicated that it will not be Y2K compliant by the
fourth quarter of 1999. The Partnership intends to continue to follow up with
vendors/suppliers who have not provided written responses and address potential
issues contained in responses through the third calendar quarter of 1999. The
Partnership believes that by obtaining these responses, it will be able to
minimize any potential business interruption arising out of Y2K's impact upon
these vendors/suppliers. Further, although the Y2K failure of any one customer
will not have a material adverse effect upon the Partnership, if a significant
<PAGE>
percentage of either its customers and/or vendors/suppliers fail in achieving
Y2K compliance, the Y2K issue may have a material adverse impact upon the
Partnership's operations.
Although the Partnership currently believes that its internal mission critical
IT and non-IT systems are Y2K compliant, it has taken steps to identify and
mitigate Y2K compliance issues with its vendors/suppliers and customers and has
adopted a Y2K contingency plan, the failure of a mission critical IT or non-IT
system or the combined failure of vendors/suppliers and/or customers to achieve
Y2K compliance could have a material adverse impact on the Partnership's
operations and financial condition.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of June 26, 1999, the Partnership was party to propane forward contracts with
various third parties and futures traded on the New York Mercantile Exchange
("NYMEX"). Such contracts provide that the Partnership sell or acquire propane
at a fixed price at fixed future dates. At expiration, the contracts are settled
by the delivery of propane to the respective party or are settled by the payment
of a net amount equal to the difference between the then current price of
propane and the fixed contract price. The contracts are entered into for
purposes other than trading in anticipation of market movements, and to manage
and hedge exposure to fluctuating propane prices as well as to help ensure the
availability of propane during periods of high demand.
Market risks associated with the trading of futures and forward contracts are
monitored daily for compliance with the Partnership's trading policy which
includes volume limits for open positions. Open inventory positions are reviewed
and managed daily as to exposures to changing market prices.
MARKET RISK
The Partnership is subject to commodity price risk to the extent that propane
market prices deviate from fixed contract settlement amounts. Futures contracts
traded with brokers of the NYMEX require daily cash settlements in margin
accounts. Forward contracts are generally settled at the expiration of the
contract term.
CREDIT RISK
Futures contracts are guaranteed by the NYMEX and as a result have minimal
credit risk. The Partnership is subject to credit risk with forward contracts to
the extent the counterparties do not perform. The Partnership evaluates the
financial condition of each counterparty with which it conducts business and
establishes credit limits to reduce exposure to credit risk of non-performance.
SENSITIVITY ANALYSIS
In an effort to estimate the exposure of unfavorable market price movements, a
sensitivity analysis of open positions as of June 26, 1999 was performed. Based
on this analysis, a hypothetical 10% adverse change in market prices for each of
the future months for which a future and/or forward contract exists indicates a
potential loss in future earnings of $2.0 million as of June 26, 1999.
<PAGE>
The above hypothetical change does not reflect the worst case scenario. Actual
results may be significantly different depending on market conditions and the
composition of the open position portfolio.
<PAGE>
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
PART II
<TABLE>
<CAPTION>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a Special Meeting of the Common Unitholders held on May 26, 1999,
the Public Common Unitholders approved each of the elements of the
Recapitalization as follows:
BROKER
FOR AGAINST ABSTAIN NONVOTES
--- ------- ------- --------
<S> <C> <C> <C> <C>
1.a. Proposal permitting the Partnership 11,791,397 425,074 291,527 0
to redeem all 7,163,750 outstanding
Subordinated units and all 220,000
outstanding additional limited partner
units from the current general partner
for $69 million.
1.b. Proposal permitting the current general 11,716,445 461,482 330,071 0
partner to sell its combined 2% interest
in the Partnership and the Operating
Partnership (together, the "Partnerships")
and to sell its incentive distribution
rights (as reduced by amendment to the
Partnership Agreement) to a new entity
owned by members of the Partnership's
management for $6 million to be paid by such
entity. Such entity will become the new
general partner of the Partnerships.
1.c. Proposal to amend the partnership 11,751,489 426,545 329,964 0
agreements of the partnerships to
permit and effect the recapitalization.
1.d. Proposal to terminate the Distribution 11,742,564 425,596 339,838 0
Support Agreement dated as of March 5,
1996 among the current general partner,
its affiliate, Millennium America and
the Partnership, and replace it with a
liquidity arrangement provided by the
Partnership.
</TABLE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.(a) Second Amended and Restated Agreement of Limited Partnership
of Suburban Propane Partners, L.P.
3.(b) Second Amended and Restated Agreement of Limited Partnership
of Suburban Propane, L.P.
10.(a) Second Amended and Restated Agreement made and entered into
as of May 26, 1999 by and among the Operating Partnership, as
Borrower, the lenders referred to therein, First Union
National Bank, as Administrative Agent, and the Bank of New
York, as Document Agent.
10.(b) Amendment No. 2 dated March 29, 1999 to Note Agreement for
7.54% Senior Notes due 2011.
10.(c) Amended Employment Agreement of Mark Alexander.
10.(d) Amended Supplemental Executive Retirement Plan.
10.(e) Compensation Deferral Plan of Suburban Propane Partners, L.P.
and Suburban Propane, L.P. (A Nonqualified Plan of Deferred
Compensation) effective May 26, 1999.
10.(f) Benefits Protection Trust made and entered into as of May 26,
1999 by and between Suburban Propane Partners, L.P. and First
Union National Bank.
10.(g) Term Loan Agreement dated May 26, 1999 by and between
Suburban Energy Services Group LLC and Mellon Bank, N.A.
10.(h) Note Purchase Agreement dated May 26, 1999, made by Suburban
Propane, L.P. in favor of Mellon Bank, N.A.
10.(i) Note Call Agreement dated May 26, 1999 by Suburban Energy
Services Group LLC in favor of Mellon Bank.
27 Financial Data Schedule
(b) Reports on Form 8-K
Report on Form 8-K dated May 27, 1999, regarding the completion of
the Partnership's recapitalization.
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1934, THE REGISTRANT HAS
CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY
AUTHORIZED:
SUBURBAN PROPANE PARTNERS, L.P.
DATE: AUGUST 10, 1999 BY /S/ ANTHONY M. SIMONOWICZ
-------------------------
ANTHONY M. SIMONOWICZ
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER
BY /S/ EDWARD J. GRABOWIECKI
-------------------------
EDWARD J. GRABOWIECKI
CONTROLLER AND CHIEF ACCOUNTING
OFFICER
EXECUTION COPY
--------------
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SUBURBAN PROPANE PARTNERS, L.P.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
1.1 Definitions..................................................... 1
1.2 Construction.................................................... 14
ARTICLE II
ORGANIZATION
2.1 Formation....................................................... 14
2.2 Name............................................................ 15
2.3 Registered Office; Registered Agent; Principal Office;
Other Offices................................................. 15
2.4 Purpose and Business............................................ 15
2.5 Powers.......................................................... 16
2.6 Power of Attorney............................................... 16
2.7 Term............................................................ 17
2.8 Title to Partnership Assets..................................... 17
ARTICLE III
RIGHTS OF LIMITED PARTNERS
3.1 Limitation of Liability......................................... 17
3.2 Management of Business.......................................... 17
3.3 Outside Activities of the Limited Partners...................... 18
3.4 Rights of Limited Partners...................................... 18
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS;
REDEMPTION OF PARTNERSHIP INTERESTS
4.1 Certificates.................................................... 19
4.2 Mutilated, Destroyed, Lost or Stolen Certificates............... 19
4.3 Record Holders.................................................. 19
4.4 Transfer Generally.............................................. 20
4.5 Registration and Transfer of Units.............................. 20
4.6 Transfer of a General Partner's Partnership Interest............ 21
4.7 Transfer of Incentive Distribution Rights....................... 21
4.8 [Deleted.]...................................................... 21
4.9 Restrictions on Transfers....................................... 21
4.10 Citizenship Certificates; Non-citizen Assignees................. 22
4.11 Redemption of Partnership Interests of Non-citizen Assignees.... 22
<PAGE>
ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
5.1 Organizational Contributions.................................... 23
5.2 Redemption of Subordinated Units and APUs....................... 24
5.3 Issuance of General Partner Units............................... 24
5.4 Interest and Withdrawal......................................... 24
5.5 Capital Accounts................................................ 24
5.6 Issuances of Additional Partnership Securities.................. 26
5.7 Limitations on Issuance of Additional Partnership Securities.... 26
5.8 Conversion of Incentive Distribution Rights..................... 27
5.9 Limited Preemptive Rights....................................... 28
5.10 Splits and Combinations......................................... 28
5.11 Fully Paid and Non-Assessable Nature of Limited Partner
Interests..................................................... 29
5.12 Loans from Partners............................................. 29
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 Allocations for Capital Account Purposes........................ 29
6.2 Allocations for Tax Purposes.................................... 32
6.3 Requirement and Characterization of Distributions;
Distributions to Record Holders............................... 34
6.4 Distributions of Available Cash from Operating Surplus.......... 35
6.5 Distributions of Available Cash from Capital Surplus............ 35
6.6 Adjustment of Minimum Quarterly Distribution and
Target Distribution........................................... 35
6.7 Liquidity Arrangement........................................... 35
6.8 [Deleted.]...................................................... 36
6.9 Special Provisions Relating to the Holders of
Incentive Distribution Rights................................. 36
6.10 Entity-Level Taxation........................................... 36
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
7.1 Management...................................................... 37
7.2 The Board of Supervisors; Election and Appointment;
Term; Manner of Acting........................................ 39
7.3 Nominations of Elected Supervisors.............................. 39
7.4 Removal of Members of the Board of Supervisors.................. 40
7.5 Resignations of Members of the Board of Supervisors............. 40
7.6 Vacancies on the Board of Supervisors........................... 40
7.7 Meetings; Committees; Chairman.................................. 40
7.8 Officers........................................................ 41
7.9 Compensation.................................................... 42
<PAGE>
7.10 Restrictions on General Partner's and Board of
Supervisors' Authority........................................ 43
7.11 Reimbursement of the General Partner; Employee Benefit Plans.... 43
7.12 Outside Activities of the General Partner....................... 44
7.13 Loans from the General Partner; Contracts with Affiliates;
Certain Restrictions on the General Partner................... 44
7.14 Indemnification................................................. 46
7.15 Liability of Indemnitees........................................ 47
7.16 Resolution of Conflicts of Interest............................. 47
7.17 Other Matters Concerning the General Partner and
the Board of Supervisors...................................... 49
7.18 Purchase or Sale of Units....................................... 49
7.19 Registration Rights of the General Partner and its Affiliates... 49
7.20 Reliance by Third Parties....................................... 51
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 Records and Accounting.......................................... 51
8.2 Fiscal Year..................................................... 52
8.3 Reports......................................................... 52
ARTICLE IX
TAX MATTERS
9.1 Tax Returns and Information..................................... 52
9.2 Tax Elections................................................... 52
9.3 Tax Controversies............................................... 52
9.4 Withholding..................................................... 53
ARTICLE X
ADMISSION OF PARTNERS
10.1 Admission of Initial Limited Partners........................... 53
10.2 Admission of Substituted Limited Partners....................... 53
10.3 Admission of Successor General Partner.......................... 53
10.4 Admission of Additional Limited Partners........................ 54
10.5 Amendment of Agreement and Certificate of Limited Partnership... 54
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
11.1 Withdrawal of the General Partner............................... 54
11.2 Removal of the General Partner.................................. 55
11.3 Interest of Departing Partner and Successor General Partner;
Delegation of Authority to the Board of Supervisors by
Successor General Partner..................................... 56
<PAGE>
11.4 [Deleted.]...................................................... 57
11.5 Withdrawal of Limited Partners.................................. 57
ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 Dissolution..................................................... 57
12.2 Continuation of the Business of the Partnership After
Dissolution................................................... 57
12.3 Liquidator...................................................... 58
12.4 Liquidation..................................................... 58
12.5 Cancellation of Certificate of Limited Partnership.............. 59
12.6 Return of Capital Contributions................................. 59
12.7 Waiver of Partition............................................. 59
12.8 Capital Account Restoration..................................... 59
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
13.1 Amendment to be Adopted Solely by the Board of Supervisors...... 59
13.2 Amendment Procedures............................................ 60
13.3 Amendment Requirements.......................................... 60
13.4 Tri-Annual and Special Meetings................................. 61
13.5 Notice of a Meeting............................................. 61
13.6 Record Date..................................................... 61
13.7 Adjournment..................................................... 62
13.8 Waiver of Notice; Approval of Meeting; Approval of Minutes...... 62
13.9 Quorum.......................................................... 62
13.10 Conduct of a Meeting............................................ 62
13.11 Action Without a Meeting........................................ 63
13.12 Voting and Other Rights......................................... 63
ARTICLE XIV
MERGER
14.1 Authority....................................................... 63
14.2 Procedure for Merger or Consolidation........................... 63
14.3 Approval by Limited Partners of Merger or Consolidation......... 64
14.4 Certificate of Merger........................................... 64
14.5 Effect of Merger................................................ 65
ARTICLE XV
RIGHT TO ACQUIRE UNITS
15.1 Right to Acquire Units.......................................... 65
<PAGE>
ARTICLE XVI
GENERAL PROVISIONS
16.1 Addresses and Notices........................................... 66
16.2 Further Action.................................................. 67
16.3 Binding Effect.................................................. 67
16.4 Integration..................................................... 67
16.5 Creditors....................................................... 67
16.6 Waiver.......................................................... 67
16.7 Counterparts.................................................... 67
16.8 Applicable Law.................................................. 67
16.9 Invalidity of Provisions........................................ 67
16.10 Consent of Partners............................................. 67
Exhibit A -- Form of Certificate Evidencing Common Unit................. 69
<PAGE>
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SUBURBAN PROPANE PARTNERS, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
SUBURBAN PROPANE PARTNERS, L.P. dated as of May 26, 1999, is entered into by and
among SUBURBAN ENERGY SERVICES GROUP LLC, a Delaware limited liability company,
as the General Partner, and those Persons who are or become Partners in the
Partnership or parties hereto as provided herein. In consideration of the
covenants, conditions and agreements contained herein, the parties hereto hereby
agree as follows:
R E C I T A L S :
WHEREAS, Suburban Propane GP, Inc., a Delaware corporation and the initial
general partner of the Partnership (the 'Initial General Partner'), and certain
other parties organized the Partnership as a Delaware limited partnership
pursuant to an Amended and Restated Agreement of Limited Partnership dated as of
March 4, 1996 (the 'Original Agreement'); and
WHEREAS, the Partnership, the Operating Partnership, the Initial General
Partner, Millennium and the General Partner have entered into that Amended and
Restated Recapitalization Agreement dated as of March 15, 1999 (the
'Recapitalization Agreement') providing for a recapitalization of the
Partnership (the 'Recapitalization') that includes, among other things, (i) the
redemption of all outstanding Subordinated Units and APUs, (ii) certain
amendments to the Original Agreement and the Original Operating Partnership
Agreement, (iii) the termination of the Distribution Support Agreement, (iv) the
purchase by the General Partner of the general partner interest in the
Partnership and the Operating Partnership and the Incentive Distribution Rights
pursuant to that Purchase Agreement dated as of November 27, 1998, as amended
(the 'Purchase Agreement'), among the Initial General Partner, Millennium and
the General Partner, and (v) the election of Suburban Energy Services Group LLC
as the successor general partner of the Partnership and the Operating
Partnership; and
WHEREAS, the Recapitalization has been submitted to, and approved by the
requisite vote of, the Limited Partners; and
WHEREAS, the Board of Supervisors has the authority to adopt certain
amendments to this Agreement relating to the Recapitalization without the
approval of any Limited Partner or Assignee to reflect, among other things, a
change that, in the discretion of the Board of Supervisors, does not adversely
affect the Limited Partners in any material respect.
NOW, THEREFORE, the Original Agreement is hereby amended and restated in its
entirety as follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
'ACQUISITION' means any transaction in which any Group Member acquires
(through an asset acquisition, merger, stock acquisition or other form of
investment) control over all or a portion of the assets, properties or business
of another Person for the purpose of increasing the operating capacity of the
Partnership Group from the operating capacity of the Partnership Group existing
immediately prior to such transaction.
'ADDITIONAL BOOK BASIS' means the portion of any remaining Carrying Value of
an Adjusted Property that is attributable to positive adjustments made to such
Carrying Value as a result of Book-Up Events. For purposes of determining the
extent to which Carrying Value constitutes Additional Book Basis:
(i) Any negative adjustment made to the Carrying Value of an Adjusted
Property as a result of either a Book-Down Event or a Book-Up Event shall
first be deemed to offset or decrease that portion of the Carrying Value of
such Adjusted Property that is attributable to any prior positive
adjustments made thereto pursuant to a Book-Up Event or Book-Down Event.
(ii) If Carrying Value that constitutes Additional Book Basis is reduced
as a result of a Book-Down Event and the Carrying Value of other property is
increased as a result of such Book-Down Event, an allocable portion of any
such increase in Carrying Value shall be treated as Additional Book Basis;
provided that the amount treated as Additional Book Basis pursuant hereto as
a result of such Book-Down Event shall not exceed the amount by which the
Aggregate Remaining Net Positive Adjustments after such Book-Down Event
exceeds the remaining Additional Book Basis attributable to all of the
Partnership's Adjusted Property after such Book-Down Event (determined
without regard to the application of this clause (ii) to such Book-Down
Event).
'ADDITIONAL BOOK BASIS DERIVATIVE ITEMS' means any Book Basis Derivative
Items that are computed with reference to Additional Book Basis. To the extent
that the Additional Book Basis attributable to all of the Partnership Adjusted
Property as of the beginning of any taxable period exceeds the Aggregate
Remaining Net Positive Adjustments as of the beginning of such period (the
'Excess Additional Book Basis'), the Additional Book Basis Derivative Items for
such period shall be reduced by the amount that bears the same ratio to the
amount of Additional Book Basis Derivative Items determined without regard to
this sentence as the Excess Additional Book Basis bears to the Additional Book
Basis as of the beginning of such period.
'ADDITIONAL LIMITED PARTNER' means a Person admitted to the Partnership as a
Limited Partner pursuant to Section 10.4 and who is shown as such on the books
and records of the Partnership.
'ADJUSTED CAPITAL ACCOUNT' means the Capital Account maintained for each
Partner as of the end of each fiscal year of the Partnership, (a) increased by
<PAGE>
any amounts that such Partner is obligated to restore under the standards set by
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b)
decreased by (i) the amount of all losses and deductions that, as of the end of
such fiscal year, are reasonably expected to be allocated to such Partner in
subsequent years under Sections 704(e)(2) and 706(d) of the Code and Treasury
Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions
that, as of the end of such fiscal year, are reasonably expected to be made to
such Partner in subsequent years in accordance with the terms of this Agreement
or otherwise to the extent they exceed offsetting increases to such Partner's
Capital Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made (other than
increases as a result of a minimum gain chargeback pursuant to Section 6.1(e)(i)
or 6.1(e)(ii)). The foregoing definition of Adjusted Capital Account is intended
to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. The
'Adjusted Capital Account' of a Partner in respect of a General Partner Unit, a
Common Unit, or an Incentive Distribution Right or any other specified interest
in the Partnership shall be the amount which such Adjusted Capital Account would
be if such General Partner Unit, Common Unit, Incentive Distribution Right or
other interest in the Partnership were the only interest in the Partnership held
by a Partner from and after the date on which such General Partner Unit, Common
Unit, Incentive Distribution Right or other interest was first issued.
'ADJUSTED OPERATING SURPLUS' means, with respect to any period, Operating
Surplus generated during such period as adjusted to (a) exclude Operating
Surplus attributable to (i) any net increase in working capital borrowings
during such period, (ii) any net reduction in cash reserves for Operating
Expenditures during such period not relating to an Operating Expenditure during
such period and (iii) any distributions to the Partnership from the Management
Cash Reserve and (b) include (i) any net decrease in working capital borrowings
during such period and (ii) any net increase in cash reserves for Operating
Expenditures during such period required by any debt instrument for the
subsequent repayment of principal, interest or premium on indebtedness. Adjusted
Operating Surplus does not include that portion of Operating Surplus included in
clause (a)(i) of the definition of Operating Surplus.
'ADJUSTED PROPERTY' means any property the Carrying Value of which has been
adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii).
'AFFILIATE' means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. As used
herein, the term 'control' means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
'AGGREGATE REMAINING NET POSITIVE ADJUSTMENTS' means, as of the end of any
taxable period, the sum of the Remaining Net Positive Adjustments of all the
Partners.
'AGREED ALLOCATION' means any allocation, other than a Required Allocation,
of an item of income, gain, loss or deduction pursuant to the provisions of
Section 6.1, including, without limitation, a Curative Allocation (if
appropriate to the context in which the term 'Agreed Allocation' is used).
'AGREED VALUE' of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution as determined
<PAGE>
by the Board of Supervisors using such reasonable method of valuation as it may
adopt. The Board of Supervisors shall, in its discretion, use such method as it
deems reasonable and appropriate to allocate the aggregate Agreed Value of
Contributed Properties contributed to the Partnership in a single or integrated
transaction among each separate property on a basis proportional to the fair
market value of each Contributed Property.
'AGREEMENT' means this Second Amended and Restated Agreement of Limited
Partnership of Suburban Propane Partners, L.P., as it may be amended,
supplemented or restated from time to time.
'APPOINTED SUPERVISORS' means the two members of the Board of Supervisors
appointed by the General Partner in accordance with the provisions of Article
VII.
'APUs' means the APUs issued to the Initial General Partner in exchange for
a cash contribution pursuant to the Distribution Support Agreement.
'ASSIGNEE' means a Non-citizen Assignee or a Person to whom one or more
Units representing a Limited Partner Interest have been transferred in a manner
permitted under this Agreement and who has executed and delivered a Transfer
Application as required by this Agreement, but who has not been admitted as a
Substituted Limited Partner.
'ASSOCIATE' means, when used to indicate a relationship with any Person, (a)
any corporation or organization of which such Person is a director, officer or
partner or is, directly or indirectly, the owner of 20% or more of any class of
voting stock or other voting interest; (b) any trust or other estate in which
such Person has at least a 20% beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity; and (c) any relative or
spouse of such Person, or any relative of such spouse, who has the same
residence as such Person.
'AUDIT COMMITTEE' means a committee of the Board of Supervisors of the
Partnership composed of two or more of the Elected Supervisors then serving.
'AVAILABLE CASH' means, with respect to any Quarter ending prior to the
Liquidation Date,
(a) the sum of (i) all cash and cash equivalents of the Partnership Group
on hand at the end of such Quarter, and (ii) all additional cash and cash
equivalents of the Partnership Group on hand on the date of determination of
Available Cash with respect to such Quarter resulting from borrowings for
working capital purposes (including pursuant to Section 6.7) and from
distributions from the Management Cash Reserve subsequent to the end of such
Quarter, less
(b) the amount of any cash reserves that is necessary or appropriate in the
reasonable discretion of the Board of Supervisors to (i) provide for the proper
conduct of the business of the Partnership Group (including reserves for future
capital expenditures) subsequent to such Quarter, (ii) comply with applicable
law or any loan agreement, security agreement, mortgage, debt instrument or
other agreement or obligation to which any Group Member is a party or by which
it is bound or its assets are subject or (iii) provide funds for distributions
under Section 6.4 or 6.5 in respect of any one or more of the next four
Quarters; provided, however, that the Board of Supervisors may not establish
cash reserves pursuant to (iii) above if the effect of such reserves would be
that the Partnership is unable to distribute the Minimum Quarterly Distribution
on all Common Units with respect to such Quarter; and, provided further, that
disbursements made by a Group Member or cash reserves established, increased or
<PAGE>
reduced after the end of such Quarter but on or before the date of determination
of Available Cash with respect to such Quarter shall be deemed to have been
made, established, increased or reduced, for purposes of determining Available
Cash, within such Quarter if the Board of Supervisors so determines.
Notwithstanding the foregoing, 'Available Cash' with respect to the Quarter
in which the Liquidation Date occurs and any subsequent Quarter shall equal
zero.
'BOARD OF SUPERVISORS' shall mean the five-member board of supervisors of
the Partnership, composed of the two Appointed Supervisors and three Elected
Supervisors appointed or elected, as the case may be, in accordance with the
provisions of Article VII, to whom the General Partner irrevocably delegates,
and in which is vested, pursuant to Section 7.1, and subject to Section 7.10,
the power to manage the business and activities of the Partnership. The Board of
Supervisors shall constitute a committee with the meaning of Section
17-303(b)(7) of the Delaware Act.
'BOOK BASIS DERIVATIVE ITEMS' means any item of income, deduction, gain, or
loss included in the determination of Net Income or Net Loss that is computed
with reference to the Carrying Value of an Adjusted Property (e.g.,
depreciation, depletion, or gain or loss with respect to an Adjusted Property).
'BOOK-DOWN EVENT' means an event which triggers a negative adjustment to the
Capital Accounts of the Partners pursuant to Section 5.5(d).
'BOOK-TAX DISPARITY' means with respect to any item of Contributed Property
or Adjusted Property, as of the date of any determination, the difference
between the Carrying Value of such Contributed Property or Adjusted Property and
the adjusted basis thereof for federal income tax purposes as of such date. A
Partner's share of the Partnership's Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference
between such Partner's Capital Account balance as maintained pursuant to Section
5.5 and the hypothetical balance of such Partner's Capital Account computed as
if it had been maintained strictly in accordance with federal income tax
accounting principles.
'BOOK-UP EVENT' means an event which triggers a positive adjustment to the
Capital Accounts of the Partners pursuant to Section 5.5(d).
'BUSINESS DAY' means Monday through Friday of each week, except that a legal
holiday recognized as such by the government of the United States of America or
the states of New York or New Jersey shall not be regarded as a Business Day.
'CAPITAL ACCOUNT' means the capital account maintained for a Partner
pursuant to Section 5.5. The 'Capital Account' of a Partner in respect of a
General Partner Unit, a Common Unit, an Incentive Distribution Right or any
other Partnership Interest shall be the amount which such Capital Account would
be if such General Partner Unit, Common Unit, Incentive Distribution Right or
other Partnership Interest were the only interest in the Partnership held by a
Partner from and after the date on which such General Partner Unit, Common Unit,
Incentive Distribution Right or other Interest was first issued.
<PAGE>
'CAPITAL CONTRIBUTION' means any cash, cash equivalents or the Net Agreed
Value of Contributed Property that a Partner contributes or has contributed to
the Partnership pursuant to this Agreement (or the Original Agreement) or the
Contribution and Conveyance Agreement.
'CAPITAL IMPROVEMENTS' means (a) additions or improvements to the capital
assets owned by any Group Member or (b) the acquisition of existing or the
construction of new capital assets (including retail distribution outlets,
propane tanks, pipeline systems, storage facilities and related assets), made to
increase the operating capacity of the Partnership Group from the operating
capacity of the Partnership Group existing immediately prior to such addition,
improvement, acquisition or construction.
'CAPITAL SURPLUS' has the meaning assigned to such term in Section 6.3(a).
'CAPITALIZED LEASE OBLIGATIONS' means obligations to pay rent or other
amounts under any lease of (or other arrangement conveying the right to use)
real and/or personal property, which obligations are accounted for as a capital
lease on a balance sheet under U.S. GAAP; for the purpose hereof the amount of
such obligations shall be the capitalized amount reflected on such balance
sheet.
'CARRYING VALUE' means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' and
Assignees' Capital Accounts in respect of such Contributed Property, and (b)
with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Sections 5.5(d)(i) and 5.5(d)(ii) and to reflect changes,
additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the Board of
Supervisors.
'CAUSE' means a court of competent jurisdiction has entered a final,
non-appealable judgment finding a Person liable for actual fraud, gross
negligence or willful or wanton misconduct in its capacity as general partner of
the Partnership or as a member of the Board of Supervisors, as the case may be.
'CERTIFICATE' means a certificate, (a) substantially in the form of Exhibit
A to this Agreement, (b) issued in global form in accordance with the rules and
regulations of the Depositary or (c) in such other form as may be adopted by the
Board of Supervisors in its discretion, issued by the Partnership evidencing
ownership of one or more Common Units or a certificate, in such form as may be
adopted by the Board of Supervisors in its discretion, issued by the Partnership
evidencing ownership of one or more other Partnership Interests.
'CERTIFICATE OF LIMITED PARTNERSHIP' means the Certificate of Limited
Partnership of the Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section 2.1, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to time.
'CITIZENSHIP CERTIFICATION' means a properly completed certificate in such
form as may be specified by the Board of Supervisors 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.
<PAGE>
'CLAIM' has the meaning assigned to such term in Section 7.19(c).
'CLOSING' has the meaning assigned to such term in the Recapitalization
Agreement.
'CLOSING DATE' means the date on which the Closing occurs.
'CLOSING PRICE' has the meaning assigned to such term in Section 15.1(a).
'CODE' means the Internal Revenue Code of 1986, as amended and in effect
from time to time. Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding provision of
future law.
'COMBINED INTEREST' has the meaning assigned to such term in Section
11.3(a).
'COMMON UNITHOLDER' means a Unitholder holding Common Units.
'COMMISSION' means the United States Securities and Exchange Commission.
'COMMITTED AMOUNT' means the borrowing availability required under the
Liquidity Arrangement determined as follows: (a) with respect to the period
commencing on the Closing Date and ending on the distribution date for the
Quarter ending December 31, 2000, $22.0 million reduced by any amounts
subsequently borrowed under Sections 6.7(b) and (b) with respect to the period
commencing on the day after the distribution date for the Quarter ending
December 31, 2000 and ending on the distribution date for the Quarter ending
March 31, 2001, the lesser of (i) $11.6 million and (ii) $22.0 million, less any
amounts previously borrowed under Section 6.7(b), in each case in this clause
(b), reduced by any amounts subsequently borrowed under Section 6.7(b).
'COMMON 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 Common Units in this Agreement.
'COMMON UNIT ARREARAGE' means, with respect to any Common Unit, whenever
issued, as to any Quarter through the Quarter ending March 31, 2001, the excess,
if any, of (a) the Minimum Quarterly Distribution with respect to such Common
Unit in respect of such Quarter over (b) the sum of all Available Cash
distributed with respect to such Common Unit in respect of such Quarter pursuant
to Section 6.4(a).
'COMPENSATION DEFERRAL PLAN' means the Compensation Deferral Plan of the
Partnership and the Operating Partnership effective as of the date of this
Agreement.
'CONTRIBUTED PROPERTY' means each property or other asset, in such form as
may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership. Once the Carrying Value of a Contributed Property is adjusted
pursuant to Section 5.5(d), such property shall no longer constitute a
Contributed Property, but shall be deemed an Adjusted Property.
'CONTRIBUTION AND CONVEYANCE AGREEMENT' means that certain Contribution,
Conveyance and Assumption Agreement, dated as of March 4, 1996, among the
Initial General Partner, the Partnership, the Operating Partnership and certain
other parties, together with the additional conveyance documents and
instruments contemplated or referenced thereunder.
<PAGE>
'CUMULATIVE COMMON UNIT ARREARAGE' means, with respect to any Common Unit,
whenever issued, and as of the end of any Quarter, the excess, if any, of (a)
the sum resulting from adding together the Common Unit Arrearage as to an
Initial Common Unit for each of the Quarters through the Quarter ending March
31, 2001 ending on or before the last day of such Quarter over (b) the sum of
any distributions theretofore made pursuant to Section 6.4(b) and the second
sentence of Section 6.5 with respect to an Initial Common Unit (including any
distributions to be made in respect of the last of such Quarters).
'CONVERSION NOTICE' has the meaning assigned to such term in Section
5.8(a).
'CURATIVE ALLOCATION' means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 6.1(e)(xi).
'CURRENT MARKET PRICE' has the meaning assigned to such term in Section
15.1(a).
'DELAWARE ACT' means the Delaware Revised Uniform Limited Partnership Act,
6 Del C. 'SS'17-101, et seq., as amended, supplemented or restated from time
to time, and any successor to such statute.
'DEPARTING PARTNER' means a former General Partner from and after the
effective date of any withdrawal or removal of such former General Partner
pursuant to Section 11.1 or 11.2, including the Initial General Partner from and
after the Closing.
'DEPOSITARY' means, with respect to any Units issued in global form, The
Depository Trust Company and its successors and permitted assigns.
'DISTRIBUTION SUPPORT AGREEMENT' means the Distribution Support Agreement
dated as of March 5, 1996 among the Partnership, the Initial General Partner and
Hanson America Inc.
'ECONOMIC RISK OF LOSS' has the meaning set forth in Treasury Regulation
Section 1.752-2(a).
'ELECTED SUPERVISORS' means the three members of the Board of Supervisors
who are elected or appointed as such in accordance with the provisions of
Article VII and who may not be employees, officers or directors of the General
Partner, any Group Member or any Affiliate of the General Partner or any Group
Member.
'ELIGIBLE CITIZEN' means a Person qualified to own interests in real
property in jurisdictions in which any Group Member does business or proposes to
do business from time to time, and whose status as a Limited Partner or Assignee
does not or would not subject such Group Member to a significant risk of
cancellation or forfeiture of any of its properties or any interest therein.
'EVENT OF WITHDRAWAL' has the meaning assigned to such term in Section
11.1(a).
'GENERAL PARTNER' means Suburban Energy Services Group LLC and its
successors as general partner of the Partnership.
'GENERAL PARTNER INTEREST' means the ownership interest of the General
Partner in the Partnership (in its capacity as a general partner without
reference to any Limited Partner Interest held by it) which is evidenced by
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General Partner Units and includes any and all benefits to which the General
Partner is entitled as provided in this Agreement, together with all obligations
of the General Partner to comply with the terms and provisions of this
Agreement.
'GENERAL PARTNER UNIT' means a Unit representing a fractional part of the
General Partner Interest and having the rights and obligations specified with
respect to the General Partner Interest.
'GENERAL PARTNER UNITHOLDER' mean s a Unitholder holding General Partner
Units.
'GROUP' means a Person which, with or through any of its Affiliates or
Associates, has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except voting pursuant to a revocable proxy or
consent given to such Person in response to a proxy or consent solicitation made
to 10 or more Persons) or disposing of any Partnership Securities with any other
Person that beneficially owns, or whose Affiliates or Associates beneficially
own, directly or indirectly, Partnership Securities.
'GROUP MEMBER' means a member of the Partnership Group.
'HOLDER', as used in Section 7.19, has the meaning assigned to such term in
Section 7.19(a).
'INCENTIVE DISTRIBUTION RIGHT' means a non-voting, limited partner
Partnership Interest, which shall confer upon the holder thereof only the rights
and obligations specifically provided in this Agreement with respect to
Incentive Distribution Rights (and no other rights otherwise available to or
other obligations of holders of a Partnership Interest).
'INDEBTEDNESS', as used in Section 7.10(b), means, as applied to any Person,
without duplication, any indebtedness, exclusive of deferred taxes, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof); (ii) evidenced
by bonds, notes, debentures or similar instruments or letters of credit in
support of bonds, notes, debentures or similar instruments; (iii) representing
the balance deferred and unpaid of the purchase price of any property, if and to
the extent such indebtedness would appear as a liability on a balance sheet of
such Person prepared in accordance with U.S. GAAP (but excluding trade accounts
payable arising in the ordinary course of business that are not overdue by more
than 90 days or are being contested by such Person in good faith); (iv) any
Capitalized Lease Obligations of such Person; and (v) Indebtedness of others
guaranteed by such Person, including, without limitation, every obligation of
such Person (A) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or to purchase (or to advance or supply funds
for the purchase of) any security for the payment of such Indebtedness, or (B)
to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness.
'INDEMNIFIED PERSONS' has the meaning assigned to such term in Section
7.19(c).
'INDEMNITEE' means (a) the members of the Board of Supervisors or the
members of the board of supervisors of the Operating Partnership or any other
Group Member, (b) the General Partner, any Departing Partner and any Person who
is or was an Affiliate of the General Partner or any Departing Partner, (c) any
Person who is or was a member, partner, director, officer, employee, agent or
trustee of any Group Member, the General Partner or any Departing Partner or any
Affiliate of any Group Member, the General Partner or any Departing Partner and
(d) any Person who is or was serving at the request of the Board of Supervisors,
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the General Partner or any Departing Partner or any Affiliate of the General
Partner or any Departing Partner as a member, partner, director, officer,
employee, partner, agent, fiduciary or trustee of another Person, in each case,
acting in such capacity; provided, that a Person shall not be an Indemnitee by
reason of providing, on a fee-for-services basis, trustee, fiduciary or
custodial services.
'INITIAL CLOSING DATE' means March 5, 1996.
'INITIAL COMMON UNITS' means the Common Units sold in the Initial Offering.
'INITIAL GENERAL PARTNER' has the meaning assigned to such term in the
Recitals to this Agreement.
'INITIAL LIMITED PARTNERS' means the Initial General Partner (with respect
to the Subordinated Units and Incentive Distribution Rights) and the Initial
Underwriters, in each case admitted to the Partnership in accordance with
Section 10.1.
'INITIAL OFFERING' means the initial offering and sale of Common Units to
the public on March 5, 1996, as described in the Initial Registration Statement.
'INITIAL OPTION CLOSING DATE' means March 21, 1996.
'INITIAL REGISTRATION STATEMENT' means the Registration Statement on Form
S-1 (Registration No. 33-80605) filed by the Partnership with the Commission
under the Securities Act to register the offering and sale of the Initial Common
Units in the Initial Offering as declared effective by the Commission and as
amended or supplemented from time to time.
'INITIAL UNDERWRITER' means each Person named as an underwriter in the
Initial Offering.
'INITIAL UNIT PRICE' means (a) with respect to the Common Units and the
General Partner Units, $20.50, and (b) with respect to any other class or series
of Units, the price per Unit at which such class or series of Units is initially
sold by the Partnership, as determined by the Board of Supervisors, in each case
adjusted as the Board of Supervisors determines to be appropriate to give effect
to any distribution, subdivision or combination of Units.
'INTERIM CAPITAL TRANSACTIONS' means the following transactions if they
occur prior to the Liquidation Date: (a) borrowings, refinancings or refundings
of indebtedness and sales of debt securities (other than for working capital
purposes and other than for items purchased on open account in the ordinary
course of business) by any Group Member, (b) sales of equity interests by any
Group Member, and (c) sales or other voluntary or involuntary dispositions of
any assets of any Group Member other than (i) sales or other dispositions of
inventory, accounts receivable and other current assets in the ordinary course
of business, and (ii) sales or other dispositions of assets as part of normal
retirements or replacements.
'LIMITED PARTNER' means, unless the context otherwise requires, (a) 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 11.3, (b) each holder of
an Incentive Distribution Right and (c) solely for purposes of Articles V, VI,
VII and IX and Sections 12.3 and 12.4, each Assignee.
<PAGE>
'LIMITED PARTNER INTEREST' means the ownership interest of a Limited Partner
in the Partnership which is evidenced by Common Units or Incentive Distribution
Rights or other Partnership Securities and includes any and all benefits to
which a Limited Partner is entitled as provided in this Agreement, together with
all obligations of a Limited Partner to comply with the terms and provisions of
this Agreement.
'LIQUIDATION DATE' means (a) in the case of an event giving rise to the
dissolution of the Partnership of the type described in clauses (a) and (b) of
the first sentence of Section 12.2, the date on which the applicable time period
during which the holders of Outstanding Common Units have the right to elect to
reconstitute the Partnership and continue its business has expired without such
an election being made, and (b) in the case of any other event giving rise to
the dissolution of the Partnership, the date on which such event occurs.
'LIQUIDATION TARGET AMOUNT' means, with respect to each Common Unit, the sum
of (a) its Unrecovered Capital plus (b) the Minimum Quarterly Distribution for
the Quarter during which the Liquidation Date occurs, reduced by any
distribution pursuant to Section 6.4(a) with respect to such Common Unit for
such Quarter plus (c) any then existing Cumulative Common Unit Arrearages plus
(d) the excess of the Target Distribution for each Quarter of the Partnership's
existence over the cumulative per Unit amount of any distributions of Available
Cash from Operating Surplus that was distributed pursuant to Section 6.4(c).
'LIQUIDATOR' means one or more Persons selected by the Board of Supervisors
to perform the functions described in Section 12.3.
'LIQUIDITY ARRANGEMENT' has the meaning assigned to such term in Section
6.7(a).
'MANAGEMENT CASH RESERVE' means any cash distributed to the Partnership by
the Plan Trustee pursuant to Section 9.1(c) of the Compensation Deferral Plan as
in effect on the date hereof.
'MERGER AGREEMENT' has the meaning assigned to such term in Section 14.1.
'MILLENNIUM' means Millennium Petrochemicals Inc., a Virginia corporation
and the sole stockholder of the Initial General Partner.
'MINIMUM QUARTERLY DISTRIBUTION' means $0.50 per Unit per Quarter, subject
to adjustment in accordance with Sections 6.6 and 6.10.
'NATIONAL SECURITIES EXCHANGE' means an exchange registered with the
Commission under Section 6(a) of the Securities Exchange Act of 1934, as
amended, supplemented or restated from time to time, and any successor to such
statute, or the Nasdaq Stock Market or any successor thereto.
'NET AGREED VALUE' means, (a) in the case of any Contributed Property, the
Agreed Value of such property reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
(as adjusted pursuant to Section 5.5(d)(ii)) at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner or
Assignee upon such distribution or to which such property is subject at the time
of distribution, in either case, as determined under Section 752 of the Code.
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'NET INCOME' means, for any taxable year, the excess, if any, of the
Partnership's items of income and gain (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of loss and deduction (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Income shall be determined in accordance with Section 5.5(b) and shall
not include any items specially allocated under Section 6.1(e); provided that
the determination of the items that have been specially allocated under Section
6.1(e) shall be made as if Section 6.1(e)(xii) were not in the Agreement.
'NET LOSS' means, for any taxable year, the excess, if any, of the
Partnership's items of loss and deduction (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of income and gain (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Loss shall be determined in accordance with Section 5.5(b) and shall not
include any items specially allocated under Section 6.1(e); provided that the
determination of the items that have been specially allocated under Section
6.1(e) shall be made as if Section 6.1(e)(xii) were not in the Agreement.
'NET POSITIVE ADJUSTMENTS' means, with respect to any Partner, the excess,
if any, of the total positive adjustments over the total negative adjustments
made to the Capital Account of such Partner pursuant to Book-Up Events and
Book-Down Events.
'NET TERMINATION GAIN' means, for any taxable year, the sum, if positive, of
all items of income, gain, loss or deduction recognized by the Partnership after
the Liquidation Date. The items included in the determination of Net Termination
Gain shall be determined in accordance with Section 5.5(b) and shall not include
any items of income, gain or loss specially allocated under Section 6.1(e).
'NET TERMINATION LOSS' means, for any taxable year, the sum, if negative, of
all items of income, gain, loss or deduction recognized by the Partnership after
the Liquidation Date. The items included in the determination of Net Termination
Loss shall be determined in accordance with Section 5.5(b) and shall not include
any items of income, gain or loss specially allocated under Section 6.1(e).
'NON-CITIZEN ASSIGNEE' means a Person whom the Board of Supervisors has
determined in its 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 4.10.
'NONRECOURSE BUILT-IN GAIN' means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or pledge
securing a Nonrecourse Liability, the amount of any taxable gain that would be
allocated to the Partners pursuant to Sections 6.2(b)(i)(A), 6.2(b)(ii)(A) and
6.2(b)(iii) if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
'NONRECOURSE DEDUCTIONS' means any and all items of loss, deduction or
expenditures (including, without limitation, any expenditure described in
Section 705(a)(2)(B) of the Code) that, in accordance with the principles of
Treasury Regulation Section 1.704-2(b), are attributable to a Nonrecourse
Liability.
'NONRECOURSE LIABILITY' has the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2).
<PAGE>
'NOTICE OF ELECTION TO PURCHASE' has the meaning assigned to such term in
Section 15.1(b).
'OFFICERS' means the Chairman of the Board of Supervisors (unless the Board
of Supervisors provides otherwise), the Vice Chairman of the Board of
Supervisors (unless the Board of Supervisors provides otherwise), the President,
any Vice Presidents, the Secretary, the Treasurer, any Assistant Secretaries or
Assistant Treasurers, and any other officers of the Partnership appointed by the
Board of Supervisors pursuant to Section 7.8.
'OPERATING EXPENDITURES' means all Partnership Group expenditures, including
taxes, reimbursements of the General Partner, debt service payments, and capital
expenditures, subject to the following:
(a) Payments (including prepayments) of principal of and premium on
indebtedness shall not be an Operating Expenditure if the payment is (i)
required in connection with the sale or other disposition of assets or (ii) made
in connection with the refinancing or refunding of indebtedness with the
proceeds from new indebtedness or from the sale of equity interests. For
purposes of the foregoing, at the election and in the reasonable discretion of
the Board of Supervisors, any payment of principal or premium shall be deemed to
be refunded or refinanced by any indebtedness incurred or to be incurred by the
Partnership Group within 180 days before or after such payment to the extent of
the principal amount of such indebtedness.
(b) Operating Expenditures shall not include (i) capital expenditures made
for Acquisitions or for Capital Improvements, (ii) payment of transaction
expenses relating to Interim Capital Transactions, (iii) payment of transaction
fees and expenses related to the Recapitalization or (iv) distributions to
Partners. Where capital expenditures are made in part for Acquisitions or for
Capital Improvements and in part for other purposes, the Board of Supervisors'
good faith allocation among the amounts paid for each shall be conclusive.
'OPERATING PARTNERSHIP' means Suburban Propane, L.P., a Delaware limited
partnership, and any successors thereto.
'OPERATING PARTNERSHIP AGREEMENT' means the Second Amended and Restated
Agreement of Limited Partnership of Suburban Propane, L.P., as it may be
amended, supplemented or restated from time to time.
'OPERATING SURPLUS' means, with respect to any period ending prior to the
Liquidation Date, on a cumulative basis and without duplication,
(a) the sum of (i) $40 million plus all cash and cash equivalents of the
Partnership Group on hand as of the close of business on the Initial Closing
Date as adjusted by the post-closing adjustment pursuant to section 6.1(a) of
the Contribution and Conveyance Agreement to the extent that any such amount is
paid or received by the Partnership after the Initial Closing Date, (ii) all
cash receipts of the Partnership Group for the period beginning on the Initial
Closing Date and ending with the last day of such period, other than cash
receipts from Interim Capital Transactions (except to the extent specified in
Section 6.5) and (iii) all cash receipts of the Partnership Group after the end
of such period but on or before the date of determination of Operating Surplus
<PAGE>
with respect to such period resulting from borrowings for working capital
purposes (including pursuant to Section 6.7) and from distributions from the
Management Cash Reserve, less
(b) the sum of (i) Operating Expenditures for the period beginning on the
Initial Closing Date and ending with the last day of such period and (ii) the
amount of cash reserves that is necessary or advisable in the reasonable
discretion of the Board of Supervisors to provide funds for future Operating
Expenditures, provided, however, that disbursements made (including
contributions to a Group Member or disbursements on behalf of a Group Member) or
cash reserves established, increased or reduced after the end of such period but
on or before the date of determination of Available Cash with respect to such
period shall be deemed to have been made, established, increased or reduced for
purposes of determining Operating Surplus, within such period if the Board of
Supervisors so determines.
Notwithstanding the foregoing, 'Operating Surplus' with respect to the Quarter
in which the Liquidation Date occurs and any subsequent Quarter shall equal
zero.
'OPINION OF COUNSEL' means a written opinion of counsel (who may be regular
counsel to the Partnership or the General Partner or any of their Affiliates)
acceptable to the Board of Supervisors in its reasonable discretion.
'ORGANIZATIONAL LIMITED PARTNER' means Quantum Chemical Corporation, in its
capacity as the organizational limited partner of the Partnership.
'ORIGINAL AGREEMENT' has the meaning assigned to such term in the Recitals
to this Agreement.
'ORIGINAL OPERATING PARTNERSHIP AGREEMENT' means the Amended and Restated
Agreement of Limited Partnership of the Operating Partnership dated as of March
4, 1996.
'OUTSTANDING' means, with respect to Partnership Securities, all Partnership
Securities that are issued by the Partnership and reflected as outstanding on
the Partnership's books and records as of the date of determination; provided,
however, that with respect to Sections 7.2(a)(ii) and 7.4(b), if at any time any
Person or Group beneficially owns more than 20% of all Common Units then
Outstanding, such Common Units so owned in excess of 20% shall not be voted on
any matter pursuant to Section 7.2(a)(ii) or 7.4(b) and shall not be considered
to be Outstanding when sending notices of a meeting of Limited Partners to vote
on any matter pursuant to Section 7.2(a)(ii) or 7.4(b) (unless otherwise
required by law), calculating required votes, determining the presence of a
quorum or for other similar purposes under this Agreement.
'PARITY UNITS' means Common Units and all other Units having rights to
distributions or in liquidation ranking on a parity with the Common Units.
'PARTNER NONRECOURSE DEBT' has the meaning set forth in Treasury Regulation
Section 1.704-2(b)(4).
'PARTNER NONRECOURSE DEBT MINIMUM GAIN' has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
'PARTNER NONRECOURSE DEDUCTIONS' means any and all items of loss, deduction
or expenditure (including, without limitation, any expenditure described in
<PAGE>
Section 705(a)(2)(B) of the Code) that, in accordance with the principles of
Treasury Regulation Section 1.704-2(i), are attributable to a Partner
Nonrecourse Debt.
'PARTNERS' means the General Partner and the Limited Partners.
'PARTNERSHIP' means Suburban Propane Partners, L.P., a Delaware limited
partnership, and any successors thereto.
'PARTNERSHIP GROUP' means the Partnership, the Operating Partnership and any
Subsidiary of either such entity, treated as a single consolidated entity.
'PARTNERSHIP INTEREST' means an interest in the Partnership, which shall
include General Partner Interests and Limited Partner Interests.
'PARTNERSHIP MINIMUM GAIN' means that amount determined in accordance with
the principles of Treasury Regulation Section 1.704-2(d).
'PARTNERSHIP SECURITY' means any class or series of Unit, any option, right,
warrant or appreciation rights relating thereto, or any other type of equity
interest that the Partnership may lawfully issue, or any unsecured or secured
debt obligation of the Partnership that is convertible into any class or series
of equity interests of the Partnership.
'PERCENTAGE INTEREST' means as of the date of such determination, (a) as to
any Partner or Assignee holding Units, the product of (i) 100% less the
percentage applicable to clause (b) multiplied by (ii) the quotient of the
number of Units held by such Partner or Assignee divided by the total number of
all Outstanding Units, and (b) as to the holders of additional Partnership
Securities issued by the Partnership in accordance with Section 5.6, the
percentage established as a part of such issuance. The Percentage Interest with
respect to an Incentive Distribution Right shall at all times be zero.
'PERSON' means an individual or a corporation, limited liability company,
partnership, limited liability partnership, joint venture, trust, unincorporated
organization, association, government agency or political subdivision thereof or
other entity.
'PER UNIT CAPITAL AMOUNT' means, as of any date of determination, the
Capital Account, stated on a per Unit basis, underlying any Unit held by a
Person.
'PLAN TRUSTEE' means the Trustee of the Benefits Protection Trust of the
Partnership that relates to the Compensation Deferral Plan.
'PRO RATA' means (a) when modifying Units or any class thereof, apportioned
equally among all designated Units in accordance with their relative Percentage
Interests, (b) when modifying Partners and Assignees, apportioned among all
Partners and Assignees in accordance with their relative Percentage Interests,
and (c) when modifying holders of Incentive Distribution Rights, apportioned
equally among all holders of Incentive Distribution Rights in accordance with
the relative number of Incentive Distribution Rights held by each such holder.
'PROXY STATEMENT' means the definitive Proxy Statement of the Partnership on
Schedule 14A under the Securities Exchange Act of 1934, as amended, filed with
<PAGE>
the Commission for the purpose of soliciting the votes of the Unitholders with
respect to the Recapitalization, as it has been or as it may be amended or
supplemented from time to time.
'PURCHASE AGREEMENT' has the meaning assigned to such term in the Recitals
to this Agreement.
'PURCHASE DATE' means the date determined by the Board of Supervisors as the
date for purchase of all Outstanding Units of a certain class (other than Units
owned by the General Partner and its Affiliates) pursuant to Article XV.
'QUARTER' means, unless the context requires otherwise, a fiscal quarter of
the Partnership.
'RECAPITALIZATION' has the meaning assigned to such term in the Recitals to
this Agreement.
'RECAPITALIZATION AGREEMENT' has the meaning assigned to such term in the
Recitals to this Agreement.
'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 because it represents the recapture of deductions
previously taken with respect to such property or asset.
'RECORD DATE' means the date established by the Board of Supervisors for
determining (a) the identity of the Record Holders entitled to notice of, or to
vote at, any meeting of Limited Partners or entitled to vote by ballot or give
approval of Partnership action in writing without a meeting or entitled to
exercise rights in respect of any lawful action of Limited Partners or (b) the
identity of Record Holders entitled to receive any report or distribution.
'RECORD HOLDER' means the Person in whose name a Common Unit is registered
on the books of the Transfer Agent as of the opening of business on a particular
Business Day, or with respect to a holder of a General Partner Unit, an
Incentive Distribution Right or other Partnership Interest, the Person in whose
name such General Partner Unit, Incentive Distribution Right or other
Partnership Interest is registered on the books which the Board of Supervisors
has caused to be kept as of the opening of business on such Business Day.
'REDEEMABLE INTERESTS' means any Partnership Interests for which a
redemption notice has been given, and has not been withdrawn, pursuant to
Section 4.11.
'REMAINING NET POSITIVE ADJUSTMENTS' means as of the end of any taxable
period, (i) with respect to the Limited Partners holding Common Units, the
excess of (a) the Net Positive Adjustments of the Limited Partners holding
Common Units as of the end of such period over (b) the sum of those Partners'
Share of Additional Book Basis Derivative Items for each prior taxable period,
(ii) with respect to the Partners holding General Partner Units, the excess of
(a) the Net Positive Adjustments of the Partners holding General Partner Units
as of the end of such period over (b) the sum of those Partners' Share of
Additional Book Basis Derivative Items for each prior taxable period, and (iii)
with respect to the Limited Partners holding Incentive Distribution Rights, the
excess of (a) the Net Positive Adjustments of the Limited Partners holding
Incentive Distribution Rights as of the end of such period over (b) the sum of
the Share of Additional Book Basis Derivative Items of the Limited Partners
holding the Incentive Distribution Rights for each prior taxable period.
<PAGE>
'REQUIRED ALLOCATIONS' means (a) any limitation imposed on any allocation of
Net Losses or Net Termination Losses under Section 6.1(c) and (b) any allocation
of an item of income, gain, loss or deduction pursuant to Section 6.1(e)(i),
6.1(e)(ii), 6.1(e)(iv), 6.1(e)(vii) or 6.1(e)(ix).
'RESIDUAL GAIN' or 'RESIDUAL LOSS' means any item of gain or loss, as the
case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to eliminate
Book-Tax Disparities.
'SECURITIES ACT' means the Securities Act of 1933, as amended, supplemented
or restated from time to time and any successor to such statute.
'SHARE OF ADDITIONAL BOOK BASIS DERIVATIVE ITEMS' means in connection with
any allocation of Additional Book Basis Derivative Items for any taxable period,
(i) with respect to the Limited Partners holding Common Units, the amount that
bears the same ratio to such Additional Book Basis Derivative Items as such
Partner's Remaining Net Positive Adjustments as of the end of such period bears
to the Aggregate Remaining Net Positive Adjustments as of that time, (ii) with
respect to the Partners holding General Partner Units, the amount that bears the
same ratio to such additional Book Basis Derivative Items as such Partners'
Remaining Net Positive Adjustments as of the end of such Period bears to the
Aggregate Remaining Net Positive Adjustment as of that time, and (iii) with
respect to the Limited Partners holding Incentive Distribution Rights, the
amount that bears the same ratio to such Additional Book Basis Derivative Items
as the Remaining Net Positive Adjustments of the Limited Partners holding the
Incentive Distribution Rights as of the end of such period bears to the
Aggregate Remaining Net Positive Adjustments as of that time.
'SPECIAL APPROVAL' means approval by a majority of the members of the Audit
Committee.
'SUBORDINATED UNITS' means the Subordinated Units held by the Initial
General Partner immediately prior to the Closing.
'SUBSIDIARY' means, with respect to any Person, (a) a corporation of which
more than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the directors or
other governing body of such Person.
<PAGE>
'SUBSTITUTED LIMITED PARTNER' means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 10.2 in place of and with all the
rights of a Limited Partner and who is shown as a Limited Partner on the books
and records of the Partnership.
'SURVIVING BUSINESS ENTITY' has the meaning assigned to such term in Section
14.2(b).
'TARGET DISTRIBUTION' means $0.55 per Unit, subject to adjustment in
accordance with Sections 6.6 and 6.10.
'TRADING DAY' has the meaning assigned to such term in Section 15.1(a).
'TRANSFER' has the meaning assigned to such term in Section 4.4(a).
'TRANSFER AGENT' means such bank, trust company or other Person (including
the Partnership, the General Partner or one of its Affiliates) as shall be
appointed from time to time by the Board of Supervisors to act as registrar and
transfer agent for the Common Units or other Partnership Securities.
'TRANSFER APPLICATION' means an application and agreement for transfer of
Units in the form set forth on the back of a Certificate or in a form
substantially to the same effect in a separate instrument.
'TRI-ANNUAL MEETING' means the meeting of Limited Partners to be held every
third year commencing in 1997 to elect the Elected Supervisors as provided in
Section 13.4.
'UNIT' means a Partnership Interest of a Partner or Assignee in the
Partnership and shall include Common Units and General Partner Units but shall
not include Incentive Distribution Rights.
'UNITHOLDERS' means the holders of Common Units and General Partner Units.
'UNREALIZED GAIN' attributable to any item of Partnership property means, as
of any date of determination, the excess, if any, of (a) the fair market value
of such property as of such date (as determined under Section 5.5(d)) over (b)
the Carrying Value of such property as of such date (prior to any adjustment to
be made pursuant to Section 5.5(d) as of such date).
'UNREALIZED LOSS' attributable to any item of Partnership property means, as
of any date of determination, the excess, if any, of (a) the Carrying Value of
such property as of such date (prior to any adjustment to be made pursuant to
Section 5.5(d) as of such date) over (b) the fair market value of such property
as of such date (as determined under Section 5.5(d)).
'UNRECOVERED CAPITAL' means at any time, with respect to a Unit, the Initial
Unit Price less the sum of all distributions constituting Capital Surplus
theretofore made in respect of an Initial Common Unit and any distributions of
cash (or the Net Agreed Value of any distributions in kind) in connection with
the dissolution and liquidation of the Partnership theretofore made in respect
of an Initial Common Unit, adjusted as the Board of Supervisors determines to be
appropriate to give effect to any distribution, subdivision or combination of
such Units.
'U.S. GAAP' means United States Generally Accepted Accounting Principles
consistently applied.
<PAGE>
'WITHDRAWAL OPINION OF COUNSEL' has the meaning assigned to such term in
Section 11.1(b).
'WORKING CAPITAL FACILITY' means the working capital facility of the
Operating Partnership under the Amended and Restated Credit Agreement dated as
of September 30, 1997, as amended to date or as it may be amended in the future,
between the Operating Partnership and the lenders named therein or any working
capital facility under any replacement credit agreement.
1.2 CONSTRUCTION.
Unless the context requires otherwise: (a) any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa; (b) references to Articles and Sections refer to Articles and
Sections of this Agreement; and (c) 'include' or 'includes' means includes,
without limitation, and 'including' means including, without limitation.
ARTICLE II
ORGANIZATION
2.1 FORMATION.
The Initial General Partner and the Organizational Limited Partner
previously formed the Partnership as a limited partnership upon the filing on
December 18, 1995 of the Certificate of Limited Partnership with the Secretary
of State of the State of Delaware pursuant to the provisions of the Delaware
Act. The General Partner and the Limited Partners hereby amend and restate the
Original Agreement in its entirety to continue the Partnership as a limited
partnership pursuant to the provisions of the Delaware Act and to set forth the
rights and obligations of the Partners and certain matters related thereto. This
amendment and restatement shall become effective on the date of this Agreement.
Except as expressly provided to the contrary in this Agreement, the rights and
obligations of the Partners and the administration, dissolution and termination
of the Partnership shall be governed by the Delaware Act. All Partnership
Interests shall constitute personal property of the owner thereof for all
purposes.
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 Board of Supervisors
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,
including an amendment to reflect the admission of the General Partner as a
successor to the Initial General Partner. To the extent that such action is
determined by the Board of Supervisors 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, including in connection with the Recapitalization and the transactions
contemplated thereby. Subject to the provisions of Section 3.4(a), the
<PAGE>
Partnership 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.
2.2 NAME.
The name of the Partnership shall be 'Suburban Propane Partners, L.P.' The
Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the Board of Supervisors, including, if consented to
by the General Partner in its sole discretion, the name of the General Partner.
The words 'Limited Partnership,' 'L.P.,' 'Ltd.' or similar words or letters
shall be included in the Partnership's name where necessary for the purpose of
complying with the laws of any jurisdiction that so requires. The Board of
Supervisors in its discretion may change the name of the Partnership at any time
and from time to time and shall notify the Limited Partners of such change in
the next regular communication to the Limited Partners.
2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE; OTHER OFFICES.
Unless and until changed by the Board of Supervisors, the registered office
of the Partnership in the State of Delaware shall be located at 1209 Orange
Street, New Castle County, Wilmington, Delaware 19801, and the registered agent
for service of process on the Partnership in the State of Delaware at such
registered office shall be CT Corporation System. The principal office of the
Partnership shall be located at One Suburban Plaza, 240 Route 10 West, Whippany,
New Jersey 07981-0206 or such other place as the Board of Supervisors 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 Board of Supervisors deems necessary or appropriate. The address
of the General Partner shall be One Suburban Plaza, 240 Route 10 West, Whippany,
New Jersey 07981-0206 or such other place as the General Partner may from time
to time designate by notice to the Limited Partners.
2.4 PURPOSE AND BUSINESS.
The purpose and nature of the business to be conducted by the Partnership
shall be to (a) serve as a limited partner in the Operating Partnership and, in
connection therewith, to exercise all the rights and powers conferred upon the
Partnership as a limited partner in the Operating Partnership pursuant to the
Operating Partnership Agreement or otherwise, (b) engage directly in, or enter
into or form any corporation, partnership, joint venture, limited liability
company or other arrangement to engage indirectly in, any business activity that
the Operating Partnership is permitted to engage in by the Operating Partnership
Agreement and, in connection therewith, exercise all of the rights and powers
conferred upon the Partnership pursuant to the agreements relating to such
business activity, (c) engage directly in, or enter into or form any
corporation, partnership, joint venture, limited liability company or other
arrangement to engage indirectly in, any business activity that is approved by
the Board of Supervisors and which lawfully may be conducted by a limited
partnership organized pursuant to the Delaware Act and, in connection therewith,
exercise all of the rights and powers conferred upon the Partnership pursuant to
the agreements relating to such business activity, and (d) do anything necessary
or appropriate to the foregoing, including the making of capital contributions
or loans to a Group Member. The Board of Supervisors has no obligation or duty
to the Partnership, the Limited Partners, or the Assignees to propose or
approve, and in its discretion may decline to propose or approve, the conduct by
the Partnership of any business.
<PAGE>
2.5 POWERS.
The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described in Section
2.4 and for the protection and benefit of the Partnership.
2.6 POWER OF ATTORNEY.
(a) Each Limited Partner and each Assignee hereby constitutes and appoints
the Vice Chairman and President of the Partnership and, if a Liquidator shall
have been selected pursuant to Section 12.3, the Liquidator, severally (and any
successor to the Liquidator by merger, transfer, assignment, election or
otherwise) and each of their authorized officers and attorneys-in-fact, as the
case may be, with full power of substitution, as his true and lawful agent and
attorney-in-fact, with full power and authority in his name, place and stead,
to:
(i) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (A) all certificates, documents and other
instruments (including this Agreement and the Certificate of Limited
Partnership and all amendments or restatements thereof) that the Board of
Supervisors 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 Board of Supervisors
or the Liquidator deems necessary or appropriate to reflect, in accordance
with its terms, any amendment, change, modification or restatement of this
Agreement; (C) all certificates, documents and other instruments (including
conveyances and a certificate of cancellation) that the Board of Supervisors
or the Liquidator deems necessary or appropriate to reflect the dissolution
and liquidation of the Partnership pursuant to the terms of this Agreement;
(D) all certificates, documents and other instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to,
or other events described in, Article IV, X, XI or XII; (E) all
certificates, documents and other instruments relating to the determination
of the rights, preferences and privileges of any class or series of
Partnership Securities issued pursuant to Section 5.6; and (F) all
certificates, documents and other instruments (including agreements and a
certificate of merger) relating to a merger or consolidation of the
Partnership pursuant to Article XIV; and
(ii) execute, swear to, acknowledge, deliver, file and record all
ballots, consents, approvals, waivers, certificates, documents and other
instruments necessary or appropriate, in the discretion of the Board of
Supervisors or the Liquidator, to make, evidence, give, confirm or ratify
any vote, consent, approval, agreement or other action that is made or given
by the Partners hereunder or is consistent with the terms of this Agreement
or is necessary or appropriate, in the discretion of the Board of
Supervisors or the Liquidator, to effectuate the terms or intent of this
Agreement; provided, that when required by Section 13.3 or any other
provision of this Agreement that establishes a percentage of the Limited
Partners or of the Limited Partners of any class or series required to take
any action, the Vice Chairman and President of the Partnership and the
Liquidator may exercise the power of attorney made in this Section
2.6(a)(ii) only after the necessary vote, consent or approval of the Limited
Partners or of the Limited Partners of such class or series, as applicable.
Nothing contained in this Section 2.6(a) shall be construed as authorizing the
Board of Supervisors to amend this Agreement except in accordance with Article
XIII or as may be otherwise expressly provided for in this Agreement.
<PAGE>
(b) The foregoing power of attorney is hereby declared to be irrevocable and
a power coupled with an interest, and it shall survive and, to the maximum
extent permitted by law, not be affected by the subsequent death, incompetency,
disability, incapacity, dissolution, bankruptcy or termination of any Limited
Partner or Assignee and the transfer of all or any portion of such Limited
Partner's or Assignee's Partnership Interest and shall extend to such Limited
Partner's or Assignee's heirs, successors, assigns and personal representatives.
Each such Limited Partner or Assignee hereby agrees to be bound by any
representation made by the Vice Chairman or President of the Partnership or the
Liquidator acting in good faith pursuant to such power of attorney; and each
such Limited Partner or Assignee, to the maximum extent permitted by law, hereby
waives any and all defenses that may be available to contest, negate or
disaffirm the action of the Vice Chairman or President of the Partnership or the
Liquidator taken in good faith under such power of attorney. Each Limited
Partner or Assignee shall execute and deliver to the Vice Chairman or President
of the Partnership or the Liquidator, within 15 days after receipt of the
request therefor, such further designation, powers of attorney and other
instruments as the Vice Chairman or President of the Partnership or the
Liquidator deems necessary to effectuate this Agreement and the purposes of the
Partnership.
2.7 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 September 30, 2085, or until the
earlier termination of the Partnership in accordance with the provisions of
Article XII.
2.8 TITLE TO PARTNERSHIP ASSETS.
Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner or Assignee, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner, or one or more nominees, as the Board of Supervisors may
determine. The General Partner hereby declares and warrants that any Partnership
assets for which record title is held in the name of the General Partner or one
or more nominees shall be held by the General Partner or nominee for the use and
benefit of the Partnership in accordance with the provisions of this Agreement;
provided, however, that the General Partner shall use reasonable efforts to
cause record title to such assets (other than those assets in respect of which
the Board of Supervisors determines that the expense and difficulty of
conveyancing makes transfer of record title to the Partnership impracticable) to
be vested in the Partnership as soon as reasonably practicable; provided,
further, that, prior to the withdrawal or removal of the General Partner or as
soon thereafter as practicable, the General Partner shall use reasonable efforts
to effect the transfer of record title to the Partnership and, prior to any such
transfer, will provide for the use of such assets in a manner satisfactory to
the Board of Supervisors. All Partnership assets shall be recorded as the
property of the Partnership in its books and records, irrespective of the name
in which record title to such Partnership assets is held.
<PAGE>
ARTICLE III
RIGHTS OF LIMITED PARTNERS
3.1 LIMITATION OF LIABILITY.
The Limited Partners and the Assignees shall have no liability under this
Agreement except as expressly provided in this Agreement or the Delaware Act.
3.2 MANAGEMENT OF BUSINESS.
No Limited Partner or Assignee (other than the General Partner, or any of
its Affiliates or any member, officer, director, employee, partner, agent or
trustee of the General Partner or any of its Affiliates, or any officer, member
of the board of supervisors or directors, employee or agent of a Group Member,
in its capacity as such, if such Person shall also be a Limited Partner or
Assignee) shall participate in the operation, management or control (within the
meaning of the Delaware Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. Any action taken by any Affiliate of the General
Partner or any member, officer, director, employee, partner, agent or trustee of
the General Partner or any of its Affiliates, or any officer, member of the
board of supervisors or directors, member, partner, employee or agent of a Group
Member, in its capacity as such, shall not be deemed to be participation in the
control of the business of the Partnership by a limited partner of the
Partnership (within the meaning of Section 17-303(a) of the Delaware Act) and
shall not affect, impair or eliminate the limitations on the liability of the
Limited Partners or Assignees under this Agreement.
3.3 OUTSIDE ACTIVITIES OF THE LIMITED PARTNERS.
Subject to the provisions of Section 7.12, which shall continue to be
applicable to the Persons referred to therein, regardless of whether such
Persons shall also be Limited Partners or Assignees, any Limited Partner or
Assignee shall be entitled to and may have business interests and engage in
business activities in addition to those relating to the Partnership, including
business interests and activities in direct competition with the Partnership
Group. Neither the Partnership nor any of the other Partners or Assignees shall
have any rights by virtue of this Agreement in any business ventures of any
Limited Partner or Assignee.
3.4 RIGHTS OF LIMITED PARTNERS.
(a) In addition to other rights provided by this Agreement or by applicable
law, and except as limited by Section 3.4(b), each Limited Partner shall have
the right, for a purpose reasonably related to such Limited Partner's interest
as a limited partner in the Partnership, upon reasonable demand and at such
Limited Partner's own expense:
(i) to obtain true and full information regarding the status of the
business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of the
Partnership's federal, state and local tax returns for each year;
<PAGE>
(iii) to have furnished to such Limited Partner, upon notification to
the Partnership, a current list of the name and last known business,
residence or mailing address of each Partner;
(iv) to have furnished to such Limited Partner, upon notification to
the Partnership, a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with a copy of the executed
copies of all powers of attorney pursuant to which this Agreement, the
Certificate of Limited Partnership and all amendments thereto have been
executed;
(v) to obtain true and full information regarding the amount of cash
and a description and statement of the Net Agreed Value of any other Capital
Contribution by each Partner and which each Partner has agreed to contribute
in the future, and the date on which each became a Partner; and
(vi) to obtain such other information regarding the affairs of the
Partnership as is just and reasonable.
(b) The Board of Supervisors may keep confidential from the Limited Partners
and Assignees, for such period of time as the Board of Supervisors deems
reasonable, (i) any information that the Board of Supervisors reasonably
believes to be in the nature of trade secrets or (ii) other information the
disclosure of which the Board of Supervisors in good faith believes (A) is not
in the best interests of the Partnership Group, (B) could damage the Partnership
Group or (C) that any Group Member is required by law or by 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 this
Section 3.4).
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS;
REDEMPTION OF PARTNERSHIP INTERESTS
4.1 CERTIFICATES.
Upon the Partnership's issuance of Common Units or General Partner Units to
any Person, the Partnership shall issue one or more Certificates in the name of
such Person evidencing the number of such Common Units or General Partner Units
being so issued. In addition, upon the request of any Person owning Incentive
Distribution Rights, the Partnership shall issue to such Person one or more
certificates evidencing such Incentive Distribution Rights. Certificates shall
be executed on behalf of the Partnership by the Vice Chairman, President or any
Vice President and the Secretary or any Assistant Secretary of the Partnership.
No Common Unit Certificate shall be valid for any purpose until it has been
countersigned by the Transfer Agent; provided, however, that if the Board of
Supervisors elects to issue Common Units in global form, the Common Unit
Certificates shall be valid upon receipt of a certificate from the Transfer
Agent certifying that the Common Units have been duly registered in accordance
with the directions of the Partnership.
<PAGE>
4.2 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
(a) If any mutilated Certificate is surrendered to the Transfer Agent, the
appropriate Officers of the Partnership shall execute, and 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 appropriate Officers of the Partnership shall execute, and the
Transfer Agent shall countersign and deliver (or, in the case of Common Units
issued in global form, register in accordance with the rules and regulations of
the Depositary), 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 Partnership, that a previously issued Certificate has been lost,
destroyed or stolen;
(ii) requests the issuance of a new Certificate before the Partner has
notice that the Certificate has been acquired by a purchaser for value in
good faith and without notice of an adverse claim;
(iii) if requested by the Partnership, delivers to the Partnership a
bond, in form and substance satisfactory to the Partnership, with surety or
sureties and with fixed or open penalty as the Partnership may reasonably
direct, in its sole discretion, to indemnify the Partnership, the Partners,
the Board of Supervisors, the Partnership's officers, employees, agents and
other representatives and the Transfer Agent against any claim that may be
made on account of the alleged loss, destruction or theft of the
Certificate; and
(iv) satisfies any other reasonable requirements imposed by the
Partnership.
If a Limited Partner or Assignee fails to notify the Partnership within a
reasonable time after such Person has notice of the loss, destruction or theft
of a Certificate, and a transfer of the Limited Partner Interests represented by
the lost, destroyed or stolen Certificate is registered before the Partnership,
the Board of Supervisors or the Transfer Agent receives such notification, the
Limited Partner or Assignee shall be precluded from making any claim against the
Partnership, the Board of Supervisors and the Transfer Agent for such transfer
or for a new Certificate.
(c) As a condition to the issuance of any new Certificate under this Section
4.2, the Partnership may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Transfer Agent)
reasonably connected therewith.
4.3 RECORD HOLDERS.
The Partnership shall be entitled to recognize the Record Holder as the
Partner or Assignee with respect to any Partnership Interest and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such Partnership Interest on the part of any other Person, regardless of whether
the Partnership shall have actual or other notice thereof, except as otherwise
provided by law or any applicable rule, regulation, guideline or requirement of
any National Securities Exchange on which 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
<PAGE>
hand, and such other Persons on the other, 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.
4.4 TRANSFER GENERALLY.
(a) The term 'transfer,' when used in this Agreement with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which the
General Partner assigns its General Partner Interest to another Person or by
which the holder of a Limited Partner Interest assigns such Limited Partner
Interest to another Person who is or becomes a Limited Partner or an Assignee,
and includes a sale, assignment, gift, pledge, encumbrance, hypothecation,
mortgage, exchange or any other disposition by law or otherwise, in whole or in
part.
(b) No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article IV.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article IV shall be null and void.
(c) Nothing contained in this Agreement shall be construed to prevent a
disposition by any securityholder of the General Partner of any or all of the
issued and outstanding equity interests in the General Partner.
(d) Nothing contained in this Agreement shall preclude the settlement of any
transactions involving Partnership Interests entered into through the facilities
of any National Securities Exchange on which such Partnership Interests are
listed for trading.
4.5 REGISTRATION AND TRANSFER OF UNITS.
(a) The Partnership shall keep or cause to be kept on behalf of the
Partnership a register in which, subject to such reasonable regulations as it
may prescribe and subject to the provisions of Section 4.5(b), the Partnership
will provide for the registration and transfer of Units. The Transfer Agent is
hereby appointed registrar and transfer agent for the purpose of registering
Common Units and transfers of such Common Units as herein provided. The
Partnership shall not recognize transfers of Certificates representing Units
unless such transfers are effected in the manner described in this Section 4.5.
Upon surrender for registration of transfer of any Units evidenced by a
Certificate, and subject to the provisions of Section 4.5(b), the appropriate
officers on behalf of the Partnership shall execute, and in the case of Common
Units, the Transfer Agent shall countersign and deliver (or, in the case of
Common Units issued in global form, register in accordance with the rules and
regulations of the Depositary), 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 Units as
was evidenced by the Certificate so surrendered.
(b) Except as otherwise provided in Section 4.10, the Partnership shall not
recognize any transfer of 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-fact duly authorized in writing). No charge shall be imposed by the
Partnership for such transfer; provided, that as a condition to the issuance of
any new Certificate under this Section 4.5, the Partnership may require the
<PAGE>
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed with respect thereto.
(c) Units may be transferred only in the manner described in this Section
4.5. The transfer of any Units and the admission of any new Partner shall not
constitute an amendment to this Agreement.
(d) Until admitted as a Substituted Limited Partner pursuant to Section
10.2, the Record Holder of a Common Unit shall be an Assignee in respect of such
Common Unit. Limited Partners may include custodians, nominees, or any other
individual or entity in its own or any representative capacity.
(e) A transferee of a Common Unit who has completed and delivered a Transfer
Application shall be deemed to have (i) requested admission as a Substituted
Limited Partner, (ii) agreed to comply with and be bound by and to have executed
this Agreement, (iii) represented and warranted that such transferee has the
right, power and authority and, if an individual, the capacity to enter into
this Agreement, (iv) granted the powers of attorney set forth in this Agreement
and (v) given the consents and approvals and made the waivers contained in this
Agreement.
4.6 TRANSFER OF A GENERAL PARTNER'S PARTNERSHIP INTEREST.
Except for (a) any pledge by the General Partner of the General Partner
Interest solely for the purpose of securing, directly or indirectly,
indebtedness of the General Partner in connection with the acquisition loan
incurred by the General Partner to purchase the General Partner Interest at the
Closing, (b) any related foreclosure on and resulting sale thereafter of the
General Partner Interest in connection with such pledge and (c) a transfer by
the General Partner of all, but not less than all, of its General Partner
Interest to (i) an Affiliate of the General Partner or (ii) another Person in
connection with the merger or consolidation of the General Partner with or into
another Person or the transfer by the General Partner of all or substantially
all of its assets to another Person, which in any such case, shall only be
limited by the provisions of this Section 4.6, the transfer by the General
Partner of all or any part of its General Partner Interest to a Person prior to
September 30, 2006 shall be subject to the prior approval of holders of at least
a majority of the Outstanding Common Units. Notwithstanding anything herein to
the contrary, no transfer by the General Partner of all or any part of its
General Partner Interest to another Person shall be permitted unless (i) the
transferee agrees to assume the rights and duties of the General Partner under
this Agreement and the Operating Partnership Agreement and to be bound by the
provisions of this Agreement and the Operating Partnership Agreement, (ii) the
Partnership receives an Opinion of Counsel that such transfer would not result
in the loss of limited liability of any Limited Partner or of any limited
partner of the Operating Partnership or cause the Partnership or the Operating
Partnership to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes (to the
extent not already so treated or taxed) and (iii) such transferee also agrees to
purchase all (or the appropriate portion thereof, if applicable) of the
partnership interest of the General Partner as the general partner of each other
Group Member. In the case of a transfer pursuant to and in compliance with this
Section 4.6, the transferee or successor (as the case may be) shall, subject to
compliance with the terms of Section 10.3, be admitted to the Partnership as a
General Partner immediately prior to the transfer of its General Partner
Interest, and the business of the Partner shall continue without dissolution.
<PAGE>
4.7 TRANSFER OF INCENTIVE DISTRIBUTION RIGHTS.
A holder of Incentive Distribution Rights may transfer any or all of the
Incentive Distribution Rights held by such holder without the consent of the
Partnership or any Partner. The Board of Supervisors shall have the authority
(but shall not be required) to adopt such reasonable restrictions on the
transfer of Incentive Distribution Rights and requirements for registering the
transfer of Incentive Distribution Rights as the Board of Supervisors, in its
sole discretion, shall determine are necessary or appropriate (and to modify or
repeal any such reasonable restrictions in like manner); provided that no such
restrictions or requirements that adversely affect the holders of Incentive
Distribution Rights in any material respect may be adopted without the approval
of the holders of at least a majority of the Incentive Distribution Rights.
4.8 [DELETED.]
4.9 RESTRICTIONS ON TRANSFERS.
(a) Notwithstanding the other provisions of this Article IV, no transfer of
any Partnership Interest shall be made if such transfer would (i) violate the
then applicable federal or state securities laws or rules and regulations of the
Commission, any state securities commission or any other governmental
authorities with jurisdiction over such transfer, (ii) terminate the existence
or qualification of the Partnership or the Operating Partnership under the laws
of the jurisdiction of its formation, or (iii) cause the Partnership or the
Operating Partnership to be treated as an association taxable as a corporation
or otherwise to be taxed as an entity for federal income tax purposes (to the
extent not already so treated or taxed).
(b) The Board of Supervisors may impose restrictions on the transfer of
Partnership Interests if a subsequent Opinion of Counsel determines that such
restrictions are necessary to avoid a significant risk of the Partnership or the
Operating Partnership becoming taxable as a corporation or otherwise to be taxed
as an entity for federal income tax purposes. The restrictions may be imposed by
making such amendments to this Agreement as the Board of Supervisors may
determine to be necessary or appropriate to impose such restrictions without the
consent of any Partner; provided, however, that any amendment that the Board of
Supervisors believes, in the exercise of its reasonable discretion, could result
in the delisting or suspension of trading of any class of Units on any National
Securities Exchange on which such class of Units is then traded must be approved
by the holders of at least a majority of the Outstanding Units of such class.
4.10 CITIZENSHIP CERTIFICATES; NON-CITIZEN ASSIGNEES.
(a) If any Group Member is or becomes subject to any federal, state or local
law or regulation that, in the reasonable determination of the Board of
Supervisors, creates a substantial risk of cancellation or forfeiture of any
property in which the Group Member has an interest based on the nationality,
citizenship or other related status of a Limited Partner or Assignee, the Board
of Supervisors may request any Limited Partner or Assignee to furnish to the
Board of Supervisors, within 30 days after receipt of such request, an executed
Citizenship Certification or such other information concerning his nationality,
citizenship or other related status (or, if the Limited Partner or Assignee is a
nominee holding for the account of another Person, the nationality, citizenship
or other related status of such Person) as the Board of Supervisors may request.
If a Limited Partner or Assignee fails to furnish to the Board of Supervisors
within the aforementioned 30-day period such Citizenship Certification or other
requested information or if upon receipt of such Citizenship Certification or
<PAGE>
other requested information the Board of Supervisors determines, with the advice
of counsel, that a Limited Partner or Assignee is not an Eligible Citizen, the
Partnership Interests owned by such Limited Partner or Assignee shall be subject
to redemption in accordance with the provisions of Section 4.11. In addition,
the 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 such Non-citizen Assignee's Units.
(b) The General Partner shall, in exercising voting rights in respect of
Units held by it on behalf of Non-citizen Assignees, distribute the votes in the
same ratios as the votes of Limited Partners in respect of Units other than
those of Non-citizen Assignees are cast, either for, against or abstaining as to
the matter being voted upon.
(c) Upon dissolution of the Partnership, a Non-citizen Assignee shall have
no right to receive a distribution in kind pursuant to Section 12.4 but shall be
entitled to the cash equivalent thereof as determined in the sole discretion of
the Board of Supervisors, and the Partnership shall provide cash in exchange for
an assignment of the Non-citizen Assignee's share of the distribution in kind.
Such payment and assignment shall be treated for Partnership purposes as a
purchase by the Partnership from the Non-citizen Assignee of his Partnership
Interest (representing his right to receive his share of such distribution in
kind).
(d) At any time after a Non-citizen Assignee can and does certify that it
has become an Eligible Citizen, a Non-citizen Assignee may, upon application to
the Board of Supervisors, request admission as a Substituted Limited Partner
with respect to any Units of such Non-citizen Assignee not redeemed pursuant to
Section 4.11, and upon admission pursuant to Section 10.2, the General Partner
shall cease to be deemed to be the Limited Partner in respect of the Non-citizen
Assignee's Units.
4.11 REDEMPTION OF PARTNERSHIP INTERESTS OF NON-CITIZEN ASSIGNEES.
(a) If at any time a Limited Partner or Assignee fails to furnish a
Citizenship Certification or other information requested within the 30-day
period specified in Section 4.9(a), or if upon receipt of such Citizenship
Certification or other information the Board of Supervisors 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 Board of Supervisors that such Limited Partner or
Assignee is an Eligible Citizen or has transferred its Partnership Interests to
a Person who is an Eligible Citizen and who furnishes a Citizenship
Certification to the Board of Supervisors prior to the date fixed for redemption
as provided below, redeem the Partnership Interest of such Limited Partner or
Assignee as follows:
(i) The Board of Supervisors shall, not later than the 30th day before
the date fixed for redemption, give notice of redemption to the Limited
Partner or Assignee, at its last address designated on the records of the
Partnership or the Transfer Agent, by registered or certified mail, postage
prepaid. The notice shall be deemed to have been given when so mailed. The
notice shall specify the Redeemable Interests, the date fixed for
redemption, the place of payment, that payment of the redemption price will
be made upon surrender of the Certificate evidencing the Redeemable
Interests and that on and after the date fixed for redemption no further
<PAGE>
allocations or distributions to which the Limited Partner or Assignee would
otherwise be entitled in respect of the Redeemable Interests will accrue or
be made.
(ii) The aggregate redemption price for Redeemable Interests shall be
an amount equal to the Current Market Price (the date of determination of
which shall be the date fixed for redemption) of Partnership Interests of
the class to be so redeemed multiplied by the number of Partnership
Interests of each such class included among the Redeemable Interests. The
redemption price shall be paid, in the discretion of the Board of
Supervisors, in cash or by delivery of a promissory note of the Partnership
in the principal amount of the redemption price, bearing interest at the
rate of 10% annually and payable in three equal annual installments of
principal together with accrued interest, commencing one year after the
redemption date.
(iii) Upon surrender by or on behalf of the Limited Partner or Assignee,
at the place specified in the notice of redemption, of the Certificate
evidencing the Redeemable Interests, duly endorsed in blank or accompanied
by an assignment duly executed in blank, the Limited Partner or Assignee or
his duly authorized representative shall be entitled to receive the payment
therefor.
(iv) After the redemption date, Redeemable Interests shall no longer
constitute issued and Outstanding Partnership Interests.
(b) The provisions of this Section 4.11 shall also be applicable to
Partnership Interests held by a Limited Partner or Assignee as nominee of a
Person determined to be other than an Eligible Citizen.
(c) Nothing in this Section 4.11 shall prevent the recipient of a notice of
redemption from transferring such Person's Partnership Interests before the
redemption date if such transfer is otherwise permitted under this Agreement.
Upon receipt of notice of such a transfer, the Board of Supervisors shall
withdraw the notice of redemption, provided the transferee of such Partnership
Interests 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.
ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
5.1 ORGANIZATIONAL CONTRIBUTIONS.
(a) In connection with the formation of the Partnership under the Delaware
Act, the Initial General Partner made an initial Capital Contribution to the
Partnership and was admitted as the general partner of the Partnership, and the
Organizational Limited Partner made an initial Capital Contribution to the
Partnership and was admitted as a Limited Partner of the Partnership.
(b) On the Initial Closing Date, the Initial Underwriters contributed cash
to the Partnership in exchange for 18,750,000 Common Units and the Initial
General Partner contributed its interests in the Operating Partnership to the
Partnership in exchange for 9,976,250 Subordinated Units and the Incentive
Distribution Rights. Immediately after these contributions, the interest of the
Organizational Limited Partner was terminated and the Organizational Limited
Partner ceased to be a Limited Partner. On the Initial Option Closing Date, the
Initial Underwriters contributed cash to the Partnership in exchange for
<PAGE>
2,812,500 Common Units, the proceeds of which were used to redeem 2,812,500
Subordinated Units from the General Partner.
5.2 REDEMPTION OF SUBORDINATED UNITS AND APUS.
On the Closing Date and pursuant to the Recapitalization Agreement,
notwithstanding any other provision of this Agreement but subject to Section
17-607 of the Delaware Act, the Partnership is redeeming all 7,163,750
Outstanding Subordinated Units and all 220,000 Outstanding APUs from the Initial
General Partner for $69 million in cash. Upon such redemption, the Outstanding
Subordinated Units and APUs are being canceled.
5.3 ISSUANCE OF GENERAL PARTNER UNITS.
(a) On the Closing Date, the Partnership will issue to the General Partner
224,625 General Partner Units to represent the 1.0% General Partner Interest
held by the General Partner.
(b) Upon the making of any Capital Contribution to the Partnership by any
Person, the General Partner, in its sole discretion, may make an additional
Capital Contribution only to the extent necessary such that after taking into
account the additional Capital Contribution made by such Person and the General
Partner pursuant to this Section 5.3 the General Partner will have a Capital
Account equal to at least 1.0% of the sum of the Capital Accounts of all
Partners.
5.4 INTEREST AND WITHDRAWAL.
No interest shall be paid by the Partnership on Capital Contributions. No
Partner or Assignee shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent, if any, that distributions made pursuant to
this Agreement or upon termination of the Partnership may be considered by
applicable law to be withdrawals or returns of Capital Contributions and then
only to the extent provided for in this Agreement. Except to the extent
expressly provided in this Agreement, no Partner or Assignee shall have priority
over any other Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses or distributions. Any such return shall
be a compromise to which all Partners and Assignees agree within the meaning of
17-502(b) of the Delaware Act.
5.5 CAPITAL ACCOUNTS.
(a) The Partnership shall maintain for each Partner (or a beneficial owner
of Partnership Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the Board of
Supervisors in its sole discretion) owning a Partnership Interest a separate
Capital Account with respect to such Partnership Interest in accordance with the
rules of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account
shall be increased by (i) the amount of all Capital Contributions made to the
Partnership with respect to such Partnership Interest pursuant to this Agreement
(or the Original Agreement) and (ii) all items of Partnership income and gain
(including, without limitation, income and gain exempt from tax) computed in
accordance with Section 5.5(b) and allocated with respect to such Partnership
Interest pursuant to Section 6.1, and decreased by (x) the amount of cash or the
Net Agreed Value of all actual and deemed distributions of cash or property made
with respect to such Partnership Interest pursuant to this Agreement (or the
Original Agreement) and (y) all items of Partnership deduction and loss computed
<PAGE>
in accordance with Section 5.5(b) and allocated with respect to such Partnership
Interest pursuant to Section 6.1.
(b) For purposes of computing the amount of any item of income, gain, loss
or deduction which is to be allocated pursuant to Article VI and is to be
reflected in the Partners' Capital Accounts, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes (including,
without limitation, any method of depreciation, cost recovery or amortization
used for that purpose), provided, that:
(i) Solely for purposes of this Section 5.5, the Partnership shall be
treated as owning directly its proportionate share (as determined by the
Board of Supervisors based upon the provisions of the Operating Partnership
Agreement) of all property owned by the Operating Partnership or any other
Subsidiary that is classified as a partnership 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 6.1.
(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. To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Section 734(b) or 743(b) of the Code is
required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m) to be
taken into account in determining Capital Accounts, the amount of such
adjustment in the Capital Accounts shall be treated as an item of gain or
loss.
(iv) Any income, gain or loss attributable to the taxable disposition
of any Partnership property shall be determined as if the adjusted basis of
such property as of such date of disposition were equal in amount to the
Partnership's Carrying Value with respect to such property as of such date.
(v) In accordance with the requirements of Section 704(b) of the Code,
any deductions for depreciation, cost recovery or amortization attributable
to any Contributed Property shall be determined as if the adjusted basis of
such property on the date it was acquired by the Partnership were equal to
the Agreed Value of such property. Upon an adjustment pursuant to Section
5.5(d) to the Carrying Value of any Partnership property subject to
depreciation, cost recovery or amortization, any further deductions for such
depreciation, cost recovery or amortization attributable to such property
shall be determined (A) as if the adjusted basis of such property were equal
to the Carrying Value of such property immediately following such adjustment
and (B) using a rate of depreciation, cost recovery or amortization derived
from the same method and useful life (or, if applicable, the remaining
useful life) as is applied for federal income tax purposes; provided,
however, that, if the asset has a zero adjusted basis for federal income tax
<PAGE>
purposes, depreciation, cost recovery or amortization deductions shall be
determined using any reasonable method that the Board of Supervisors may
adopt.
(vi) If the Partnership's adjusted basis in a depreciable or cost
recovery property is reduced for federal income tax purposes pursuant to
Section 48(q)(1) or 48(q)(3) of the Code, the amount of such reduction
shall, solely for purposes hereof, be deemed to be an additional
depreciation or cost recovery deduction in the year such property is placed
in service and shall be allocated among the Partners pursuant to Section
6.1. Any restoration of such basis pursuant to Section 48(q)(2) of the Code
shall, to the extent possible, be allocated in the same manner to the
Partners to whom such deemed deduction was allocated.
(c) A transferee of a Partnership Interest shall succeed to a pro rata
portion of the Capital Account of the transferor relating to the Partnership
Interest so transferred.
(d) (i) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f),
on an issuance of additional Units for cash or Contributed Property or the
conversion of the General Partner's Combined Interest to Common Units pursuant
to Section 11.3(b) or the conversion of Incentive Distribution Rights to Common
Units pursuant to Section 5.8, the Capital Account of all Partners and the
Carrying Value of each Partnership property immediately prior to such issuance
shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as if such Unrealized
Gain or Unrealized Loss had been recognized on an actual sale of each such
property immediately prior to such issuance and had been allocated to the
Partners at such time pursuant to Section 6.1. In determining such Unrealized
Gain or Unrealized Loss, the aggregate cash amount and fair market value of all
Partnership assets (including, without limitation, cash or cash equivalents)
immediately prior to the issuance of additional Units shall be determined by the
Board of Supervisors using such reasonable method of valuation as it may adopt;
provided, however, that the Board of Supervisors, in arriving at such valuation,
must take fully into account the fair market value of the Partnership Interests
of all Partners at such time. The Board of Supervisors shall allocate such
aggregate value among the assets of the Partnership (in such manner as it
determines in its discretion to be reasonable) to arrive at a fair market value
for individual properties.
(ii) In accordance with Treasury Regulation Section 1.704-1
(b)(2)(iv)(f), immediately prior to any actual or deemed distribution to a
Partner of any Partnership property (other than a distribution of cash that is
not in redemption or retirement of a Partnership Interest), the Capital Accounts
of all Partners and the Carrying Value of all Partnership property shall be
adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized Gain or
Unrealized Loss had been recognized in a sale of such property immediately prior
to such distribution for an amount equal to its fair market value, and had been
allocated to the Partners, at such time, pursuant to Section 6.1. In determining
such Unrealized Gain or Unrealized Loss the aggregate cash amount and fair
market value of all Partnership assets (including, without limitation, cash or
cash equivalents) immediately prior to a distribution shall (A) in the case of
an actual distribution which is not made pursuant to Section 12.4, be determined
and allocated in the same manner as that provided in Section 5.5(d)(i) or (B) in
the case of a liquidating distribution pursuant to Section 12.4, be determined
and allocated by the Liquidator using such reasonable method of valuation as it
may adopt.
<PAGE>
5.6 ISSUANCES OF ADDITIONAL PARTNERSHIP SECURITIES.
(a) Subject to Section 5.7, the Partnership may issue additional Partnership
Securities for any Partnership purpose at any time and from time to time to such
Persons for such consideration and on such terms and conditions as shall be
established by the Board of Supervisors in its sole discretion, all without the
approval of any Limited Partners.
(b) Each additional Partnership Security authorized to be issued by the
Partnership pursuant to Section 5.6(a) may be issued in one or more classes, or
one or more series of any such classes, with such designations, preferences,
rights, powers and duties (which may be senior to existing classes and series of
Partnership Securities), as shall be fixed by the Board of Supervisors in the
exercise of its sole discretion, including (i) the right to share Partnership
profits and losses or items thereof; (ii) the right to share in Partnership
distributions; (iii) the rights upon dissolution and liquidation of the
Partnership; (iv) whether, and the terms and conditions upon which, the
Partnership may redeem the Partnership Security; (v) whether such Partnership
Security is issued with the privilege of conversion and, if so, the terms and
conditions of such conversion; (vi) the terms and conditions upon which each
Partnership Security will be issued, evidenced by certificates and assigned or
transferred; and (vii) the right, if any, of each such Partnership Security to
vote on Partnership matters, including matters relating to the relative rights,
preferences and privileges of such Partnership Security.
(c) The Board of Supervisors is hereby authorized and directed to take all
actions that it deems necessary or appropriate in connection with each issuance
of Partnership Securities pursuant to this Section 5.6 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. The Board of Supervisors
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
compliance with any statute, rule, regulation or guideline of any federal, state
or other governmental agency or any National Securities Exchange on which the
Units or other Partnership Securities are listed for trading.
5.7 LIMITATIONS ON ISSUANCE OF ADDITIONAL PARTNERSHIP SECURITIES
The issuance of Partnership Securities pursuant to Section 5.6 shall be subject
to the following restrictions and limitations:
(a) Prior to the record date for the quarter ending March 31, 2001, the
Partnership shall not issue (i) an aggregate of more than 9,375,000 additional
Parity Units or (ii) any other Partnership Securities having rights to
distributions or in liquidation ranking on a parity with or prior or senior to
the Common Units, in either case, without the prior approval of the holders of a
majority of the Outstanding Common Units. In applying this limitation, there
shall be excluded Common Units issued (A) in accordance with Sections 5.7(b) and
5.7(c) or (B) in the event of a combination or subdivision of Common Units.
(b) The Partnership may also issue an unlimited number of Parity Units prior
to the record date for the quarter ending March 31, 2001 and without the
approval of the Unitholders if such issuance occurs (i) in connection with an
<PAGE>
Acquisition or a Capital Improvement or (ii) within 365 days of, and the net
proceeds from such issuance are used to repay debt incurred in connection with,
an Acquisition or a Capital Improvement, in each case where such Acquisition or
Capital Improvement involves assets that, if acquired by the Partnership as of
the date that is one year prior to the first day of the Quarter in which such
Acquisition is to be consummated or such Capital Improvement is to be completed,
would have resulted in an increase in:
(i) the amount of Adjusted Operating Surplus generated by the
Partnership on a per-Unit basis (for all Outstanding Units) with respect to
each of the four most recently completed Quarters (on a pro forma basis)
over
(ii) the actual amount of Adjusted Operating Surplus generated by the
Partnership on a per-Unit basis (for all Outstanding Units) (excluding
Adjusted Operating Surplus attributable to the Acquisition or the Capital
Improvement) with respect to each of such four Quarters.
The amount in clause (i) shall be determined on a pro forma basis assuming
that (A) all of the Parity Units to be issued in connection with or within 365
days of such Acquisition or Capital Improvement had been issued and outstanding,
(B) all indebtedness for borrowed money to be incurred or assumed in connection
with such Acquisition or Capital Improvement (other than any such indebtedness
that is to be repaid with the proceeds of such offering) had been incurred or
assumed, in each case as of the commencement of such four-Quarter period, (C)
the personnel expenses that would have been incurred by the Partnership in the
operation of the acquired assets are the personnel expenses for employees to be
retained by the Partnership in the operation of the acquired assets, and (D) the
non-personnel costs and expenses are computed on the same basis as those
incurred by the Partnership in the operation of the Partnership's business at
similarly situated Partnership facilities.
(c) The Partnership may also issue an unlimited number of Parity Units prior
to the record date for the quarter ending March 31, 2001 without the approval of
the Unitholders if the proceeds from such issuance are used exclusively to repay
up to $75 million of indebtedness of a Group Member where the aggregate amount
of distributions that would have been paid with respect to such newly issued
Units, plus the related distributions on the general partner interest in the
Partnership in respect of the four-Quarter period ending prior to the first day
of the Quarter in which the issuance is to be consummated (assuming such
additional Units had been Outstanding throughout such period and that
distributions equal to the distributions that were actually paid on the
Outstanding Units during the period were paid on such additional Units) did not
exceed the interest costs actually incurred during such period on the
indebtedness that is to be repaid (or, if such indebtedness was not outstanding
throughout the entire period, would have been incurred had such indebtedness
been outstanding for the entire period).
(d) No fractional Units shall be issued by the Partnership.
5.8 CONVERSION OF INCENTIVE DISTRIBUTION RIGHTS.
(a) At any time after the fifth anniversary of the Closing Date, upon 30
days prior written notice (the 'Conversion Notice'), the Board of Supervisors
(with Special Approval) will have the option to cause all, but not less than
all, of the Incentive Distribution Rights to be converted into that number of
Common Units having a value equal to the fair market value of such Incentive
Distribution Rights on the day immediately prior to the day specified for
conversion in the Conversion Notice.
<PAGE>
(b) For purposes of this Section 5.8, the fair market value of the Incentive
Distribution Rights shall be determined by agreement between the Board of
Supervisors (with Special Approval) and the holders of at least a majority of
the Incentive Distribution Rights or, failing agreement within 30 days after the
Conversion Notice has been given by the Board of Supervisors, by an independent
investment banking firm or other independent expert selected by the Board of
Supervisors (with Special Approval) and the holders of at least a majority of
the Incentive Distribution Rights, 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 Conversion Notice has been given by
the Board of Supervisors, then the Board of Supervisors (with Special Approval)
shall designate an independent investment banking firm or other independent
expert, the holders of at least a majority of the Incentive Distribution Rights
shall designate an independent investment banking firm or other independent
expert, and such firms or experts shall mutually select a third independent
investment banking firm or independent expert, which third independent
investment banking firm or other independent expert shall determine the fair
market value of the Incentive Distribution Rights. The conversion of Incentive
Distribution Rights into Common Units pursuant to this Section 5.8 shall occur
on the 10th Business Day following the determination of their fair market value.
(c) In making its determination of fair market value, the determining
independent investment banking firm or other independent expert shall consider
the then current price of Common Units on any National Securities Exchange on
which the Common 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.
(d) For purposes of this Agreement, conversion of the Incentive Distribution
Rights to Common Units will be characterized as if the holders of Incentive
Distribution Rights contributed their Incentive Distribution Rights to the
Partnership in exchange for the newly issued Common Units, and each such Common
Unit shall have a Capital Account equal to the Capital Account of
each other Common Unit.
(e) In connection with any merger, consolidation or sale of all or
substantially all of the assets of the Partnership or the Operating Partnership
in which the Common Unitholders are entitled to receive cash, securities or
other property in exchange for their Common Units, the holders of the Incentive
Distribution Rights shall be entitled to receive in exchange for such rights
that amount of cash, securities or other property that such holder would have
been entitled to receive had the Incentive Distribution Rights been converted
into Common Units immediately prior to the consummation of such transaction in
accordance with the terms of this Section 5.8.
5.9 LIMITED PREEMPTIVE RIGHTS.
Except as provided in this Section 5.9 and Section 5.3, no Person shall have
any preemptive, preferential or other similar right with respect to the issuance
of any Partnership Security, whether unissued, held in the treasury or hereafter
created. The General Partner shall have the right, which it may from time to
time assign in whole or in part to any of its Affiliates, to purchase
Partnership Securities from the Partnership whenever, and on the same terms
that, the Partnership issues Partnership Securities to Persons other than the
General Partner and its Affiliates, to the extent necessary to maintain the
Percentage Interests of the General Partner and its Affiliates equal to that
which existed immediately prior to the issuance of such Partnership Securities.
<PAGE>
5.10 SPLITS AND COMBINATIONS.
(a) Subject to Sections 5.10(d), 6.6 and 6.10 (dealing with adjustments of
distribution levels), the Partnership may make a Pro Rata distribution of
Partnership Securities to all Record Holders or may effect a subdivision or
combination of Partnership Securities so long as, after any such event, each
Partner shall have the same Percentage Interest in the Partnership as before
such event, and any amounts calculated on a per Unit basis (including any Common
Unit Arrearage or Cumulative Common Unit Arrearage) or stated as a number of
Units (including the number of additional Parity Units or Partnership Securities
having rights to distributions or in liquidation ranking on a parity with the
Common Units that may be issued pursuant to Section 5.7 without a Unitholder
vote) are proportionately adjusted retroactive to the beginning of the
Partnership.
(b) Whenever such a distribution, subdivision or combination of Partnership
Securities is declared, the Board of Supervisors shall select a Record Date as
of which the distribution, subdivision or combination shall be effective and
shall send notice thereof at least 20 days prior to such Record Date to each
Record Holder as of the date not less than 10 days prior to the date of such
notice. The Board of Supervisors also may cause a firm of independent public
accountants selected by it to calculate the number of Partnership Securities to
be held by each Record Holder after giving effect to such distribution,
subdivision or combination. The Board of Supervisors shall be entitled to rely
on any certificate provided by such firm as conclusive evidence of the accuracy
of such calculation.
(c) Promptly following any such distribution, subdivision or combination,
the Partnership may issue Certificates to the Record Holders of Partnership
Securities as of the applicable Record Date representing the new number of
Partnership Securities held by such Record Holders, or the Board of Supervisors
may adopt such other procedures as it may deem appropriate to reflect such
changes. If any such combination results in a smaller total number of
Partnership Securities Outstanding, the Partnership shall require, as a
condition to the delivery to a Record Holder of such new Certificate, the
surrender of any Certificate held by such Record Holder immediately prior to
such Record Date.
(d) The Partnership shall not issue fractional Units upon any distribution,
subdivision or combination of Units. If a distribution, subdivision or
combination of Units would result in the issuance of fractional Units but for
the provisions of Section 5.6(d) and this Section 5.10(d), each fractional Unit
shall be rounded to the nearest whole Unit (and a 0.5 Unit shall be rounded to
the next higher Unit).
5.11 FULLY PAID AND NON-ASSESSABLE NATURE OF LIMITED PARTNER INTERESTS.
All Limited Partner Interests issued pursuant to, and in accordance with the
requirements of, this Article V shall be fully paid and non-assessable Limited
Partner Interests, except as such non-assessability may be affected by Section
17-607 of the Delaware Act.
5.12 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
<PAGE>
excess advances shall be a debt obligation of the Partnership to such Partner
and shall be payable or collectible only out of the Partnership assets in
accordance with the terms and conditions upon which such advances are made.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES.
(a) GENERAL. In maintaining the Capital Accounts that determine the rights
of the Partners among themselves, the Partnership's items of income, gain, loss
and deduction (computed in accordance with Section 5.5(b)), including Net
Termination Gain and Net Termination Loss, shall be allocated among the Partners
Pro Rata, except as otherwise provided below.
(b) ALLOCATIONS TO HOLDERS OF INCENTIVE DISTRIBUTION RIGHTS. The gross
income of the Partnership for each taxable period prior to the Liquidation Date
shall be allocated to the extent of such gross income to the holders of the
Incentive Distribution Rights, Pro Rata, until the amount so allocated equals
the sum of (i) the amount of distributions made to such holders pursuant to
Section 6.4(d) for such period and (ii) any amounts distributed to such holders
pursuant to Section 6.4(d) in prior periods in excess of gross income allocated
to them pursuant to this Section 6.1(b) in prior periods.
(c) LIMITATION ON LOSSES. Any deduction otherwise allocable to a Common
Unitholder that would create or add to a deficit in his loss or Adjusted Capital
Account shall instead be allocated to the General Partner Unitholders, Pro Rata.
Thereafter, any income that would otherwise be allocable to such Common
Unitholder shall be allocated to the General Partner Unitholders, Pro Rata,
until the aggregate amount so allocated under this sentence equals the aggregate
amount of losses and deductions previously allocated to the General Partner
Unitholders under the preceding sentence.
(d) NET TERMINATION GAIN. Any Net Termination Gain realized by the
Partnership shall first be allocated to all Unitholders, Pro Rata, to the extent
required to entitle the Common Unitholders to receive liquidating distributions
equal to the Liquidation Target Amount, and any remaining Net Termination Gain
shall be allocated 85.8673% to the Unitholders, Pro Rata, and 13.1327% to the
holders of Incentive Distribution Rights, Pro Rata.
(e) SPECIAL ALLOCATIONS. Notwithstanding any other provision of this Section
6.1, the following special allocations shall be made for such taxable period:
(i) PARTNERSHIP MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Section 6.1, if there is a net decrease in Partnership
Minimum Gain during any Partnership taxable period, each Partner shall be
allocated items of Partnership income and gain for such period (and, if
necessary, subsequent periods) in the manner and amounts provided in
Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and
1.704-2(j)(2)(i), or any successor provision. For purposes of this Section
6.1(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
6.1(e) with respect to such taxable period (other than an allocation
pursuant to Sections 6.1(e)(vi) and 6.1(e)(vii)). This Section 6.1(e)(i) is
intended to comply with the Partnership Minimum Gain chargeback requirement
in Treasury Regulation Section 1.704-2(f) and shall be interpreted
consistently therewith.
<PAGE>
(ii) CHARGEBACK OF PARTNER NONRECOURSE DEBT MINIMUM GAIN.
Notwithstanding the other provisions of this Section 6.1 (other than Section
6.1(e)(i)), except as provided in Treasury Regulation Section 1.704-2(i)(4),
if there is a net decrease in Partner Nonrecourse Debt Minimum Gain during
any Partnership taxable period, any Partner with a share of Partner
Nonrecourse Debt Minimum Gain at the beginning of such taxable period shall
be allocated items of Partnership income and gain for such period (and, if
necessary, subsequent periods) in the manner and amounts provided in
Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any
successor provisions. For purposes of this Section 6.1(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 6.1(e), other
than Section 6.1(e)(i) and other than an allocation pursuant to Sections
6.1(e)(vi) and 6.1(e)(vii), with respect to such taxable period. This
Section 6.1(e)(ii) is intended to comply with the chargeback of items of
income and gain requirement in Treasury Regulation Section 1.704-2(i)(4) and
shall be interpreted consistently therewith.
(iii) [DELETED.]
(iv) QUALIFIED INCOME OFFSET. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be
specially allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations promulgated
under Section 704(b) of the Code, the deficit balance, if any, in its
Adjusted Capital Account created by such adjustments, allocations or
distributions as quickly as possible unless such deficit balance is
otherwise eliminated pursuant to Section 6.1(e)(i) or (ii).
(v) GROSS INCOME ALLOCATIONS. In the event any Partner has a deficit
balance in its Capital Account at the end of any Partnership taxable period
in excess of the sum of (A) the amount such Partner is required to restore
pursuant to the provisions of this Agreement and (B) the amount such Partner
is deemed obligated to restore pursuant to Treasury Regulation Sections
1.704-2(g) and 1.704-2(i)(5), such Partner shall be specially allocated
items of Partnership gross income and gain in the amount of such excess as
quickly as possible; provided, that an allocation pursuant to this Section
6.1(e)(v) shall be made only if and to the extent that such Partner would
have a deficit balance in its Capital Account as adjusted after all other
allocations provided for in this Section 6.1 have been tentatively made as
if this Section 6.1(e)(v) were not in this Agreement.
(vi) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any taxable
period shall be allocated to the Partners Pro Rata. If the Board of
Supervisors 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 Board of Supervisors is authorized, upon
notice to the Limited Partners, to revise the prescribed ratio to the
numerically closest ratio that does satisfy such requirements.
(vii) PARTNER NONRECOURSE DEDUCTIONS. Partner Nonrecourse Deductions for
any taxable period shall be allocated 100% to the Partner that bears the
Economic Risk of Loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in accordance with
Treasury Regulation Section 1.704-2(i). If more than one Partner bears the
Economic Risk of Loss with respect to a Partner Nonrecourse Debt, such
<PAGE>
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.
(viii)NONRECOURSE LIABILITIES. For purposes of Treasury Regulation
Section 1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of
the Partnership in excess of the sum of (A) the amount of Partnership
Minimum Gain and (B) the total amount of Nonrecourse Built-in Gain shall be
allocated among the Partners Pro Rata.
(ix) CODE SECTION 754 ADJUSTMENTS. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or
743(c) of the Code is required, pursuant to Treasury Regulation Section
1.704-l(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis), and such item of
gain or loss shall be specially allocated to the Partners in a manner
consistent with the manner in which their Capital Accounts are required to
be adjusted pursuant to such Section of the Treasury Regulations.
(x) ALLOCATIONS UPON CONVERSION OF INCENTIVE DISTRIBUTION RIGHTS. If
and when the Incentive Distribution Rights are converted into Common Units
pursuant to Section 5.8 or 11.3, no gain, income or loss will be allocated
to the holders thereof, and any difference between a holder's tax basis
attributable to the Incentive Distribution Rights surrendered and the fair
market value of the Common Units received upon conversion will be accounted
for pursuant to the provisions of Section 6.2 in a manner that will make
such Common Units tax-fungible with every other Common Unit; provided,
however, if counsel to the Partnership advises the Board of Supervisors that
there is not substantial authority to report taxable income and deductions
in accordance with the foregoing, allocations shall be made in the manner
selected by the Board of Supervisors for which counsel advises that there is
at least substantial authority.
(xi) CURATIVE ALLOCATION.
(A) Notwithstanding any other provision of this Section 6.1, other
than the Required Allocations, the Required Allocations shall be taken
into account in making the Agreed Allocations so that, to the extent
possible, the net amount of items of income, gain, loss and deduction
allocated to each Partner pursuant to the Required Allocations and the
Agreed Allocations, together, shall be equal to the net amount of such
items that would have been allocated to each such Partner under the
Agreed Allocations had the Required Allocations and the related Curative
Allocation not otherwise been provided in this Section 6.1.
Notwithstanding the preceding sentence, Required Allocations relating to
(1) Nonrecourse Deductions shall not be taken into account except to the
extent that there has been a decrease in Partnership Minimum Gain and (2)
Partner Nonrecourse Deductions shall not be taken into account except to
the extent that there has been a decrease in Partner Nonrecourse Debt
Minimum Gain. Allocations pursuant to this Section 6.1(e)(xi)(A) shall
only be made with respect to Required Allocations to the extent the
General Partner reasonably determines that such allocations will
otherwise be inconsistent with the economic agreement among the Partners.
Further, allocations pursuant to this Section 6.1(e)(xi)(A) shall be
deferred with respect to allocations pursuant to clauses (1) and (2)
hereof to the extent the Board of Supervisors reasonably determines that
such allocations are likely to be offset by subsequent Required
Allocations.
<PAGE>
(B) The Board of Supervisors shall have reasonable discretion, with
respect to each taxable period, to (1) apply the provisions of Section
6.1(e)(xi)(A) in whatever order is most likely to minimize the economic
distortions that might otherwise result from the Required Allocations,
and (2) divide all allocations pursuant to Section 6.1(e)(xi)(A) among
the Partners in a manner that is likely to minimize such economic
distortions.
(xii) CORRECTIVE ALLOCATIONS. In the event of any allocation of
Additional Book Basis Derivative Items or any Book-Down Event or any
recognition of a Net Termination Loss, the following rules shall apply:
(A) In the case of any allocation of Additional Book Basis
Derivative Items (other than an allocation of Unrealized Gain or
Unrealized Loss under Section 5.5(d) hereof), the Board of Supervisors
shall allocate additional items of gross income and gain away from the
Limited Partners holding Incentive Distribution Rights to the
Unitholders, or additional items of deduction and loss away from the
Unitholders to the Limited Partners holding Incentive Distribution
Rights, Pro Rata, to the extent that the Additional Book Basis
Derivative Items allocated to the Unitholders exceeds their Share of
those Additional Book Basis Derivative Items. For this purpose, the
Unitholders shall be treated as being allocated Additional Book Basis
Derivative Items to the extent that such Additional Book Basis
Derivative Items have reduced the amount of income that would
otherwise have been allocated to the Unitholders under this Agreement
(e.g., Additional Book Basis Derivative Items taken into account in
computing cost of goods sold would reduce the amount of book income
otherwise available for allocation among the Partners). Any allocation
made pursuant to this Section 6.1(e)(xii)(A) shall be made after all
of the other Agreed Allocations have been made as if this Section
6.1(e)(xii) were not in this Agreement and, to the extent necessary,
shall require the reallocation of items that have been allocated
pursuant to such other Agreed Allocations.
(B) In the case of any negative adjustments to the Capital
Accounts of the Partners resulting from a Book-Down Event or from the
recognition of a Net Termination Loss, such negative adjustment (1)
shall first be allocated, to the extent of the Aggregate Remaining Net
Positive Adjustments, in such a manner, as reasonably determined by
the Board of Supervisors, that to the extent possible the aggregate
Capital Accounts of the Limited Partners holding Incentive
Distribution Rights will equal the amount which would have been the
Capital Account balance of the Limited Partners holding Incentive
Distribution Rights if no prior Book-Up Events had occurred, and (2)
any negative adjustment in excess of the Aggregate Remaining Net
Positive Adjustments shall be allocated pursuant to Section 6.1(d)
hereof.
(C) In making the allocations required under this Section
6.1(e)(xii), the Board of Supervisors, in its sole discretion, may
apply whatever conventions or other methodology it deems reasonable to
satisfy the purpose of this Section 6.1(e)(xii).
(xiii)[DELETED.]
(xiv) GENERAL ECONOMIC CORRECTIVE ALLOCATION. Notwithstanding any other
provision of this Section 6.1 (other than the Required Allocations), the
General Partner may allocate items of income, gain, loss and deduction for
<PAGE>
any taxable year in such manner as it determines, in its reasonable
discretion, is necessary so that, when made, distributions in liquidation of
the Partnership in accordance with Section 12.4 shall correspond as closely
as possible to the economic arrangement reflected in Section 6.1(d).
6.2 ALLOCATIONS FOR TAX PURPOSES.
(a) GENERAL. Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated among
the Partners in the same manner as its correlative item of 'book' income, gain,
loss or deduction is allocated pursuant to Section 6.1.
(b) CONTRIBUTED PROPERTY. In an attempt to eliminate Book-Tax Disparities
attributable to a Contributed Property or Adjusted Property, items of income,
gain, loss, depreciation, amortization and cost recovery deductions shall be
allocated for federal income tax purposes among the Partners as follows:
(i)(A) In the case of a Contributed Property, such items attributable
thereto shall be allocated among the Partners in the manner provided under
Section 704(c) of the Code that takes into account the variation between the
Agreed Value of such property and its adjusted basis at the time of
contribution; and (B) any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall be allocated among the Partners
in the same manner as its correlative item of 'book' gain or loss is
allocated pursuant to Section 6.1.
(ii)(A) In the case of an Adjusted Property, such items shall (1) first,
be allocated among the Partners in a manner consistent with the principles
of Section 704(c) of the Code to take into account the Unrealized Gain or
Unrealized Loss attributable to such property and the allocations thereof
pursuant to Section 5.5(d)(i) or (ii), and (2) second, in the event such
property was originally a Contributed Property, be allocated among the
Partners in a manner consistent with Section 6.2(b)(i)(A); and (B) any item
of Residual Gain or Residual Loss attributable to an Adjusted Property shall
be allocated among the Partners in the same manner as its correlative item
of 'book' gain or loss is allocated pursuant to Section 6.1.
(iii) The Board of Supervisors shall apply the principles of Treasury
Regulation Section 1.704-3(d) to eliminate Book-Tax Disparities.
(c) DISCRETIONARY ALLOCATION AUTHORITY. For the proper administration of the
Partnership and for the preservation of uniformity of the Units (or any class or
classes thereof), the Board of Supervisors 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 Board of Supervisors may adopt such conventions, make such
allocations and make such amendments to this Agreement as provided in this
Section 6.2(c) only if such conventions, allocations or amendments would not
have a material adverse effect on the Partners, the holders of any class or
classes of Units issued and outstanding or the Partnership, and if such
allocations are consistent with the principles of Section 704 of the Code.
(d) DISCRETIONARY AMORTIZATION AUTHORITY. The Board of Supervisors in its
discretion may determine to depreciate or amortize the portion of an adjustment
<PAGE>
under Section 743(b) of the Code attributable to unrealized appreciation in any
Adjusted Property (to the extent of the unamortized Book-Tax Disparity) using a
predetermined rate derived from the depreciation or amortization method and
useful life applied to the Partnership's common basis of such property, despite
any inconsistency of such approach with Treasury Regulation Section
1.167(c)-1(a)(6) and Proposed Treasury Regulation Section 1.197-2(g)(3). If the
Board of Supervisors determines that such reporting position cannot reasonably
be taken, the Board of Supervisors may adopt depreciation and amortization
conventions under which all purchasers acquiring Units in the same month would
receive depreciation and amortization deductions, based upon the same applicable
rate as if they had purchased a direct interest in the Partnership's property.
If the Board of Supervisors chooses not to utilize such aggregate method, the
Board of Supervisors may use any other reasonable depreciation and amortization
conventions to preserve the uniformity of the intrinsic tax characteristics of
any Units that would not have a material adverse effect on the Limited Partners
or the Record Holders of any class or classes of Units.
(e) RECAPTURE INCOME. Any gain allocated to the Partners upon the sale or
other taxable disposition of any Partnership asset shall, to the extent
possible, after taking into account other required allocations of gain pursuant
to this Section 6.2, be characterized as Recapture Income in the same
proportions and to the same extent as such Partners (or their predecessors in
interest) have been allocated any deductions directly or indirectly giving rise
to the treatment of such gains as Recapture Income.
(f) EFFECT OF SECTION 754 ELECTION. 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) ASSIGNOR/ASSIGNEE PRORATION. Each item of Partnership income, gain, loss
and deduction attributable to transferred Units or Incentive Distribution Rights
shall, for federal income tax purposes, be determined on an annual basis and
prorated on a monthly basis and shall be allocated to the Partners as of the
opening of the New York Stock Exchange on the first Business Day of each month;
provided, 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 Board of Supervisors 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) NOMINEE. Allocations that would otherwise be made to a Limited Partner
under the provisions of this Article VI shall instead be made to the beneficial
owner of 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 Board of Supervisors in its
sole discretion.
<PAGE>
6.3 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS; DISTRIBUTIONS TO
RECORD HOLDERS.
(a) Within 45 days following the end of each Quarter commencing with the
Quarter ending on June 29, 1996, an amount equal to 100% of Available Cash with
respect to such Quarter shall be distributed in accordance with this Article VI
by the Partnership to the Partners as of the Record Date selected by the Board
of Supervisors in its reasonable discretion. All amounts of Available Cash
distributed by the Partnership on any date from any source shall be deemed to be
Operating Surplus until the sum of all amounts of Available Cash theretofore
distributed by the Partnership to the Partners pursuant to Section 6.4 equals
the Operating Surplus from the Initial Closing Date through the close of the
immediately preceding Quarter. Any remaining amounts of Available Cash
distributed by the Partnership on such date shall, except as otherwise provided
in Section 6.5, be deemed to be 'Capital Surplus.' All distributions required to
be made under this Agreement shall be made subject to Section 17-607 of the
Delaware Act.
(b) In the event of the dissolution and liquidation of the Partnership, all
receipts received during or after the Quarter in which the Liquidation Date
occurs, except as otherwise provided in (a)(ii) of the definition of Available
Cash, shall be applied and distributed solely in accordance with, and subject to
the terms and conditions of, Section 12.4.
(c) The Board of Supervisors shall have the discretion to treat taxes paid
by the Partnership on behalf of, or amounts withheld with respect to, all or
less than all of the Partners, as a distribution of Available Cash to such
Partners.
(d) Each distribution in respect of a Partnership Interest shall be paid by
the Partnership, directly or through the Transfer Agent or through any other
Person or agent, only to the Record Holder of such Partnership Interest as of
the Record Date set for such distribution. Such payment shall constitute full
payment and satisfaction of the Partnership's liability in respect of such
payment, regardless of any claim of any Person who may have an interest in such
payment by reason of an assignment or otherwise.
6.4 DISTRIBUTIONS OF AVAILABLE CASH FROM OPERATING SURPLUS.
Available Cash with respect to any Quarter that is deemed to be Operating
Surplus pursuant to the provisions of Section 6.3 or 6.5 shall be distributed as
follows, except as otherwise required by Section 5.6(b) in respect of additional
Partnership Securities issued pursuant thereto:
(a) First, to the Unitholders, Pro Rata, until there has been distributed
in respect of each Common Unit then Outstanding an amount equal to the Minimum
Quarterly Distribution;
(b) Second, with respect to any quarter through the quarter ending March
31, 2001, to the Unitholders, Pro Rata, until there has been distributed in
respect of each Common Unit then outstanding an amount equal to the Cumulative
Common Unit Arrearages existing with respect to such quarter;
(c) Third, to the Unitholders, Pro Rata, until there has been distributed
in respect of each Common Unit then Outstanding an amount equal to the excess of
the Target Distribution over the Minimum Quarterly Distribution; and
<PAGE>
(d) Thereafter, 86.8673% to the Unitholders, Pro Rata, and 13.1327% to the
holders of the Incentive Distribution Rights, Pro Rata;
provided, however, if the Minimum Quarterly Distribution and the Target
Distribution have been reduced to zero pursuant to the second sentence of
Section 6.6, the distribution of Available Cash that is deemed to be Operating
Surplus with respect to any Quarter will be made in accordance with Section
6.4(d).
6.5 DISTRIBUTIONS OF AVAILABLE CASH FROM CAPITAL SURPLUS.
Available Cash that is deemed to be Capital Surplus pursuant to the
provisions of Section 6.3 shall be distributed, unless the provisions of Section
6.3 require otherwise, to the Unitholders, Pro Rata, until a hypothetical holder
of a Common Unit acquired on the Initial Closing Date has received with respect
to such Common Unit, during the period since the Initial Closing Date through
such date, distributions of Available Cash that are deemed to be Capital Surplus
in an aggregate amount equal to the Initial Unit Price. Available Cash that is
deemed to be Operating Surplus shall then be distributed 100% to all Units, Pro
Rata, until there has been distributed in respect of each Common Unit then
Outstanding an amount equal to the Cumulative Common Unit Arrearage. Thereafter,
all Available Cash shall be distributed as if it were Operating Surplus and
shall be distributed in accordance with Section 6.4.
6.6 ADJUSTMENT OF MINIMUM QUARTERLY DISTRIBUTION AND TARGET DISTRIBUTION.
(a) The Minimum Quarterly Distribution and 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 5.10. In the
event of a distribution of Available Cash that is deemed to be from Capital
Surplus, the Minimum Quarterly Distribution and Target Distribution shall be
adjusted proportionately downward to equal the product obtained by multiplying
the otherwise applicable Minimum Quarterly Distribution and Target Distribution,
as the case may be, by a fraction of which the numerator is the Unrecovered
Capital of the Common Units immediately after giving effect to such distribution
and of which the denominator is the Unrecovered Capital of the Common Units
immediately prior to giving effect to such distribution.
(b) The Minimum Quarterly Distribution and Target Distribution shall also be
subject to adjustment pursuant to Section 6.10.
6.7 LIQUIDITY ARRANGEMENT.
(a) The Partnership will cause the Operating Partnership to maintain
borrowing availability under the Working Capital Facility in an amount equal to
the Committed Amount from the Closing Date through the distribution date for the
Quarter ending March 31, 2001 (the 'Liquidity Arrangement').
(b) If the amount of Available Cash from Operating Surplus (including
distributions from the Management Cash Reserve but excluding borrowings under
the Working Capital Facility) with respect to any quarter through the Quarter
ending March 31, 2001 is less than the aggregate Minimum Quarterly Distribution
on all Common Units and General Partner Units Outstanding on the Record Date
with respect to such Quarter (such deficit hereinafter referred to as the
'Distribution Shortfall') and either (i) Adjusted Operating Surplus for the
preceding four-quarter period (including such Quarter) is less than the sum of
the aggregate Minimum Quarterly Distribution on all Common Units and General
Partner Units and the general partner interest in the Operating Partnership for
such four-quarter period or (ii)(A) Adjusted Operating Surplus for the preceding
<PAGE>
four-quarter period (including such Quarter) is equal to or greater than the sum
of the aggregate Minimum Quarterly Distribution on all Common Units and General
Partner Units and the general partner interest in the Operating Partnership for
such four-quarter period and (B) the amount unborrowed under the Working Capital
Facility (excluding the Liquidity Arrangement) is less than the amount of the
Distribution Shortfall, then the Partnership will cause the Operating
Partnership to borrow under the Liquidity Arrangement, to the extent borrowings
are otherwise permitted under the Working Capital Facility, an amount equal to
the lesser of (i) the Distribution Shortfall and (ii) the Committed Amount. Any
such borrowing shall be deemed to be Available Cash and will be distributed to
Unitholders in accordance with Section 6.4. For purposes of this Section 6.7
only, any determination of Adjusted Operating Surplus shall disregard all net
changes in operating balance sheet accounts during the applicable four-quarter
period, including net changes in borrowings under the Working Capital Facility,
other than such borrowings that are distributed to Unitholders. Nothing
contained in this Section 6.7 shall in any way limit the ability of the Board of
Supervisors to borrow funds under the Working Capital Facility to increase
Available Cash from Operating Surplus.
6.8 [DELETED.]
6.9 SPECIAL PROVISIONS RELATING TO THE HOLDERS OF INCENTIVE DISTRIBUTION RIGHTS.
(a) Notwithstanding anything to the contrary set forth in this Agreement,
the holders of the Incentive Distribution Rights (a) shall (i) possess the
rights and obligations provided in this Agreement with respect to a Limited
Partner pursuant to Articles III and VII and (ii) have a Capital Account as a
Partner pursuant to Section 5.5 and all other provisions related thereto and (b)
shall not (i) be entitled to vote on any matters requiring the approval or vote
of the holders of Outstanding Units, (ii) be entitled to any distributions other
than as provided in Sections 6.4(d) and 12.4 or (iii) be allocated items of
income, gain, loss or deduction other than as specified in this Article VI;
provided, however, that immediately upon the conversion of Incentive
Distribution Rights into Common Units pursuant to Section 5.8, the holders of
Incentive Distribution Rights shall possess all of the rights and obligations of
a Limited Partner holding Common Units hereunder, including the right to vote as
a Common Unitholder and the right to participate in allocations of income, gain,
loss and deduction and distributions made with respect to Common Units;
provided, however, that such converted Incentive Distribution Rights shall
remain subject to the provisions of Sections 6.1(e)(x) and 6.9(b).
(b) A holder of Incentive Distribution Rights that have converted into
Common Units pursuant to Section 5.8 shall not be issued a Common Unit
Certificate, and shall not be permitted to transfer its converted Incentive
Distribution Rights to a Person which is not an Affiliate of the holder, until
such time as the Board of Supervisors determines, based on advice of counsel,
that converted Incentive Distribution Rights should have, as a substantive
matter, like intrinsic economic and federal income tax characteristics, in all
material respects, to the intrinsic economic and federal income tax
characteristics of an Initial Common Unit. In connection with the condition
imposed by this Section 6.9(b), the Board of Supervisors may take whatever
reasonable steps are required to provide economic uniformity to the converted
Incentive Distribution Rights in preparation for a transfer of such converted
Incentive Distribution Rights, including the application of Section 6.1(e)(x);
provided, however, that no such steps may be taken that would have a material
adverse effect on the class of Limited Partners holding Common Units represented
by Common Unit Certificates.
<PAGE>
6.10 ENTITY-LEVEL TAXATION.
If legislation is enacted or the interpretation of existing language is
modified by the relevant governmental authority which causes the Partnership or
the Operating Partnership to be treated as an association taxable as a
corporation or otherwise subjects the Partnership or the Operating Partnership
to entity-level taxation for federal income tax purposes, the Minimum Quarterly
Distribution and Target Distribution shall be equal to the product obtained by
multiplying (a) the amount thereof by (b) one minus the sum of (i) the highest
marginal federal corporate (or other entity, as applicable) income tax rate of
the Partnership for the taxable year of the Partnership in which such Quarter
occurs (expressed as a percentage) plus (ii) the effective overall state and
local income tax rate (expressed as a percentage) applicable to the Partnership
for the calendar year next preceding the calendar year in which such Quarter
occurs (after taking into account the benefit of any deduction allowable for
federal income tax purposes with respect to the payment of state and local
income taxes), but only to the extent of the increase in such rates resulting
from such legislation or interpretation. Such effective overall state and local
income tax rate shall be determined for the taxable year next preceding the
first taxable year during which the Partnership or the Operating Partnership is
taxable for federal income tax purposes as an association taxable as a
corporation or is otherwise subject to entity-level taxation by determining such
rate as if the Partnership or the Operating Partnership had been subject to such
state and local taxes during such preceding taxable year.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
7.1 MANAGEMENT.
(a) Except as otherwise expressly provided in this Agreement, all management
powers over the business and affairs of the Partnership shall be vested
exclusively in the Board of Supervisors and, subject to the direction of the
Board of Supervisors and in accordance with the provisions of Section 7.10, the
Officers. Neither the General Partner (except as otherwise expressly provided in
this Agreement) nor any Limited Partner or Assignee shall have any management
power or control over the business and affairs of the Partnership. Thus, except
as otherwise expressly provided in this Agreement, the business and affairs of
the Partnership shall be managed by or under the direction of the Board of
Supervisors, and the day-to-day activities of the Partnership shall be conducted
on the Partnership's behalf by the Officers, who shall be agents of the
Partnership. In order to enable the Board of Supervisors to manage the business
and affairs of the Partnership, the General Partner, except as otherwise
expressly provided in this Agreement, hereby irrevocably delegates to the Board
of Supervisors all management powers over the business and affairs of the
Partnership that it may now or hereafter possess under applicable law. The
General Partner further agrees to take any and all action necessary and
appropriate, in the sole discretion of the Board of Supervisors, to effect any
duly authorized actions by the Board of Supervisors or any Officer, including
executing or filing any agreements, instruments or certificates, delivering all
documents, providing all information and taking or refraining from taking action
as may be necessary or appropriate to achieve the effective delegation of power
described in this Section 7.1(a). Each of the Partners and Assignees and each
Person who may acquire an interest in a Partnership Interest hereby approves,
consents to, ratifies and confirms such delegation. The delegation by the
General Partner to the Board of Supervisors of management powers over the
<PAGE>
business and affairs of the Partnership pursuant to the provisions of this
Agreement shall not cause the General Partner to cease to be a general partner
of the Partnership nor shall it cause the Board of Supervisors or any member
thereof to be a general partner of the Partnership or to have or be subject to
the liabilities of a general partner of the Partnership. Except as otherwise
specifically provided in Sections 7.14, 7.15, 7.16 and 7.17, the authority,
functions, duties and responsibilities of the Board of Supervisors and of the
Officers shall be identical to the authority, functions, duties and
responsibilities of the board of directors and officers, respectively, of a
corporation organized under the Delaware General Corporation Law.
(b) Consistent with the management powers delegated to the Board of
Supervisors pursuant to the provisions of this Agreement, the Board of
Supervisors shall have the powers now or hereafter granted a general partner of
a limited partnership under the Delaware Act or any other applicable law and,
except as otherwise expressly provided in this Agreement, shall have full power
and authority to do all things and on such terms as it may deem necessary or
appropriate to conduct the business of the Partnership, to exercise all powers
set forth in Section 2.5 and to effectuate the purposes set forth in Section
2.4, including the following:
(i) the making of any expenditures, the lending or borrowing of money,
the assumption or guarantee of, or other contracting for, indebtedness and
other liabilities, the issuance of evidences of indebtedness and the
incurring of any other obligations;
(ii) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership;
(iii) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the Partnership or
the merger or other combination of the Partnership with or into another
Person;
(iv) the use of the assets of the Partnership (including cash on hand)
for any purpose consistent with the terms of this Agreement, including the
financing of the conduct of the operations of a Group Member, the lending of
funds to other Persons (including the Operating Partnership), the repayment
of obligations of a Group Member and the making of capital contributions to
a Group Member;
(v) the negotiation, execution and performance of any contracts,
conveyances or other instruments (including instruments that limit the
liability of the Partnership under contractual arrangements to all or
particular assets of the Partnership, with the other party to the contract
to have no recourse against the General 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);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including employees who
are Officers) and agents, outside attorneys, accountants, consultants and
contractors and the determination of their compensation and other terms of
employment or hiring;
(viii)the maintenance of such insurance for the benefit of the
Partnership Group and the Partners as it deems necessary or appropriate;
<PAGE>
(ix) the formation of, or acquisition of an interest in, and the
contribution of property and the making of loans to, any further limited or
general partnerships, joint ventures, corporations, limited liability
companies or other relationships (including the acquisition of interests in,
and the contributions of property to, the Operating Partnership from time to
time);
(x) the control of any matters affecting the rights and obligations of
the Partnership, including the bringing and defending of actions at law or
in equity and otherwise engaging in the conduct of litigation and the
incurring of legal expense and the settlement of claims and litigation;
(xi) the indemnification of any Person against liabilities and
contingencies to the extent permitted by law;
(xii) the entering into of listing agreements with any National
Securities Exchange and the delisting of some or all of the Units from, or
requesting that trading be suspended on, any such exchange (subject to any
prior approval that may be required under Section 4.9);
(xiii)the purchase, sale or other acquisition or disposition of Units;
and
(xiv) the undertaking of any action in connection with the Partnership's
participation in the Operating Partnership as the limited partner.
(c) Notwithstanding any other provision of this Agreement and the Operating
Partnership Agreement, and to the fullest extent permitted by applicable law,
each of the Partners and Assignees and each other Person who may acquire an
interest in a Partnership Interest hereby (i) approves, consents to, ratifies
and confirms the General Partner's delegation of management powers to the Board
of Supervisors pursuant to paragraph (a) of this Section 7.1; (ii) approves,
consents to, ratifies and confirms the execution, delivery and performance by
the parties thereto of the Operating Partnership Agreement, the Recapitalization
Agreement, the Purchase Agreement and the other agreements described in or filed
as a part of the Proxy Statement; (iii) agrees that the Partnership (through any
duly authorized Officer of the Partnership) is authorized to execute, deliver
and perform the agreements referred to in clause (i) of this sentence and the
other agreements, acts, transactions and matters described in or contemplated by
the Proxy Statement without any further act, approval or vote of the Partners or
the Assignees or the other Persons who may acquire an interest in a Partnership
Interest; and (iv) agrees that the execution, delivery or performance by the
General Partner, the Board of Supervisors or any member thereof, any duly
authorized Officer of the Partnership, any Group Member or any Affiliate of any
of them, of this Agreement or any agreement authorized or permitted under this
Agreement (including the exercise by the General Partner or any Affiliate of the
General Partner of the rights accorded pursuant to Article XV), shall not
constitute a breach by any such Person of any duty that any of such Persons may
owe the Partnership or the Limited Partners or the Assignees or any other
Persons under this Agreement (or any other agreements) or of any duty stated or
implied by law or equity.
7.2 THE BOARD OF SUPERVISORS; ELECTION AND APPOINTMENT; TERM; MANNER OF ACTING.
(a) The Board of Supervisors shall consist of five individuals, two of whom
shall be Appointed Supervisors and three of whom shall be Elected Supervisors.
The Board of Supervisors upon Closing shall consist of the following
individuals, each of whom shall hold office until the next Tri-Annual Meeting
<PAGE>
and until his successor is duly elected or appointed, as the case may be, and
qualified, or until his earlier death, resignation or removal: Appointed
Supervisors: Mark A. Alexander and Michael J. Dunn, Jr.; Elected Supervisors:
John Hoyt Stookey, Harold R. Logan, Jr. and Dudley C. Mecum. At each Tri-Annual
Meeting, the members of the Board of Supervisors shall be appointed or elected,
as the case may be, as follows:
(i) The Appointed Supervisors shall be appointed by the General
Partner on the date of the Tri-Annual Meeting; and
(ii) The Elected Supervisors shall be elected at the Tri-Annual Meeting
by a plurality of the votes of the Outstanding Common Units present in
person or represented by proxy at the Tri-Annual Meeting with each
Outstanding Common Unit having one vote.
(b) Each member of the Board of Supervisors appointed or elected, as the
case may be, at a Tri-Annual Meeting shall hold office until the next Tri-Annual
Meeting and until his successor is duly elected or appointed, as the case may
be, and qualified, or until his earlier death, resignation or removal.
(c) Each member of the Board of Supervisors shall have one vote. The vote of
the majority of the members of the Board of Supervisors present at a meeting at
which a quorum is present shall be the act of the Board of Supervisors. A
majority of the number of members of the Board of Supervisors then in office
shall constitute a quorum for the transaction of business at any meeting of the
Board of Supervisors, but if less than a quorum is present at a meeting, a
majority of the members of the Board of Supervisors present at such meeting may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
7.3 NOMINATIONS OF ELECTED SUPERVISORS.
The Board of Supervisors shall be entitled to nominate individuals to stand
for election as Elected Supervisors at a Tri-Annual Meeting. In addition, any
Limited Partner or Group of Limited Partners that beneficially owns 10% or more
of the Outstanding Common Units shall be entitled to nominate one or more
individuals to stand for election as Elected Supervisors at a Tri-Annual Meeting
by providing written notice thereof to the Board of Supervisors not more than
120 days and not less than 90 days prior to the date of such Tri-Annual Meeting;
provided, however, that in the event that the date of the Tri-Annual Meeting was
not publicly announced by the Partnership by mail, press release or otherwise
more than 100 days prior to the date of such meeting, such notice, to be timely,
must be delivered to the Board of Supervisors not later than the close of
business on the tenth day following the date on which the date of the Tri-Annual
Meeting was announced. Such notice shall set forth (i) the name and address of
the Limited Partner or Limited Partners making the nomination or nominations,
(ii) the number of Units beneficially owned by such Limited Partner or Limited
Partners, (iii) such information regarding the nominee(s) proposed by the
Limited Partner or Limited Partners as would be required to be included in a
proxy statement relating to the solicitation of proxies for the election of
directors filed pursuant to the proxy rules of the Commission had the nominee(s)
been nominated or intended to be nominated to the Board of Supervisors, (iv) the
written consent of each nominee to serve as a member of the Board of Supervisors
if so elected and (v) a certification that such nominee(s) qualify as Elected
Supervisors.
<PAGE>
7.4 REMOVAL OF MEMBERS OF THE BOARD OF SUPERVISORS.
Members of the Board of Supervisors may only be removed as follows:
(a) Any Appointed Supervisor may be removed by the General Partner at any
time, with or without Cause, only by the General Partner.
(b) Any and all of the Elected Supervisors may be removed at any time, with
Cause, only by the affirmative vote of a majority of the Elected Supervisors
and, with or without Cause, at a properly called meeting of the Limited Partners
only by the affirmative vote of the holders of a majority of the Outstanding
Common Units.
7.5 RESIGNATIONS OF MEMBERS OF THE BOARD OF SUPERVISORS.
Any member of the Board of Supervisors may resign at any time by giving
written notice to the Board of Supervisors. Such resignation shall take effect
at the time specified therein.
7.6 VACANCIES ON THE BOARD OF SUPERVISORS.
Vacancies on the Board of Supervisors may be filled only as follows:
(a) If any Appointed Supervisor is removed, resigns or is otherwise unable
to serve as a member of the Board of Supervisors, the General Partner shall, in
its sole discretion, appoint an individual to fill the vacancy.
(b) If any Elected Supervisor is removed, resigns or is unable to serve as a
member of the Board of Supervisors, the vacancy shall be filled by a majority of
the Elected Supervisors then serving or, if no Elected Supervisors are then
serving, by a majority of the members of the Board of Supervisors then serving.
(c) A supervisor appointed or elected pursuant to this Section 7.6 to fill a
vacancy shall be appointed or elected, as the case may be, for the unexpired
term of his predecessor in office.
7.7 MEETINGS; COMMITTEES; CHAIRMAN.
(a) Regular meetings of the Board of Supervisors shall be held at such times
and places as shall be designated from time to time by resolution of the Board
of Supervisors. Notice of such regular meetings shall not be required. Special
meetings of the Board of Supervisors may be called by the Chairman of the Board
of Supervisors or the Vice Chairman of the Board of Supervisors and shall be
called by the Secretary upon the written request of two members of the Board of
Supervisors, on at least 48 hours prior written notice to the other members. Any
such notice, or waiver thereof, need not state the purpose of such meeting
except as may otherwise be required by law. Attendance of a member of the Board
of Supervisors at a meeting (including pursuant to the penultimate sentence of
this Section 7.7(a)) shall constitute a waiver of notice of such meeting, except
where such member attends the meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not lawfully
called or convened. Any action required or permitted to be taken at a meeting of
the Board of Supervisors may be taken without a meeting, without prior notice
and without a vote if a consent or consents in writing, setting forth the action
so taken, is signed by all the members of the Board of Supervisors. Members of
the Board of Supervisors may participate in and hold meetings by means of
<PAGE>
conference telephone, videoconference or similar communications equipment by
means of which all Persons participating in the meeting can hear each other, and
participation in such meetings shall constitute presence in person at the
meeting. The Board of Supervisors may establish any additional rules governing
the conduct of its meetings that are not inconsistent with the provisions of
this Agreement.
(b) The Board of Supervisors shall appoint the Audit Committee to consist
solely of two or more of the Elected Supervisors then in office. The Audit
Committee shall perform the functions delegated to it pursuant to the terms of
this Agreement and such other matters as may be delegated to it from time to
time by resolution of the Board of Supervisors. The Board of Supervisors, by a
majority of the whole Board of Supervisors, may appoint one or more additional
committees of the Board of Supervisors to consist of one or more members of the
Board of Supervisors, which committee(s) shall have and may exercise such of the
powers and authority of the Board of Supervisors (including in respect of
Section 7.1) with respect to the management of the business and affairs of the
Partnership as may be provided in a resolution of the Board of Supervisors. Any
committee designated pursuant to this Section 7.7(b) shall choose its own
chairman, shall keep regular minutes of its proceedings and report the same to
the Board of Supervisors when requested, shall fix its own rules or procedures
and shall meet at such times and at such place or places as may be provided by
such rules or by resolution of such committee or resolution of the Board of
Supervisors. At every meeting of any such committee, the presence of a majority
of all the members thereof shall constitute a quorum and the affirmative vote of
a majority of the members present shall be necessary for the taking of any
action. Subject to the first sentence of this Section 7.7(b), the Board of
Supervisors may designate one or more members of the Board of Supervisors as
alternate members of any committee who may replace any absent or disqualified
member at any meeting of such committee. Subject to the first sentence of this
Section 7.7(b), in the absence or disqualification of a member of a committee,
the member or members present at any meeting and not disqualified from voting,
whether or not constituting a quorum, may unanimously appoint another member of
the Board of Supervisors to act at the meeting in the place of the absent or
disqualified member.
(c) The Board of Supervisors may elect one of its members as Chairman of the
Board of Supervisors. The Chairman of the Board of Supervisors, if any, and if
present and acting, shall preside at all meetings of the Board of Supervisors.
In the absence of the Chairman of the Board of Supervisors, the Vice Chairman of
the Board of Supervisors, if any, and if present and acting, shall preside at
all meetings of the Board of Supervisors. In the absence of the Chairman of the
Board of Supervisors and the Vice Chairman of the Board of Supervisors, the
President, if present, acting and a member of the Board of Supervisors, or any
other member of the Board of Supervisors chosen by the Board of Supervisors
shall preside.
7.8 OFFICERS.
(a) GENERALLY. The Board of Supervisors, as set forth below, shall appoint
agents of the Partnership, referred to as 'Officers' of the Partnership as
described in this Section 7.8. Unless provided otherwise by resolution of the
Board of Supervisors, the Officers shall have the titles, power, authority and
duties described below in this Section 7.8.
(b) TITLES AND NUMBER. The Officers shall be the Chairman of the Board of
Supervisors (unless the Board of Supervisors provides otherwise), the Vice
Chairman of the Board of Supervisors (unless the Board of Supervisors provides
otherwise), the President, any and all Vice Presidents, the Secretary and any
<PAGE>
and all Assistant Secretaries and any Treasurer and any and all Assistant
Treasurers and any other Officers appointed pursuant to Section 7.8(j). There
shall be appointed from time to time, in accordance with this Section 7.8, such
Vice Presidents, Secretaries, Assistant Secretaries, Treasurers and Assistant
Treasurers as the Board of Supervisors may desire. Any person may hold two or
more offices.
(c) APPOINTMENT AND TERM OF OFFICE. The Officers shall be appointed by the
Board of Supervisors at such time and for such terms as the Board of Supervisors
shall determine. Any Officer may be removed, with or without Cause, only by the
Board of Supervisors. Vacancies in any office may be filled only by the Board of
Supervisors.
(d) CHAIRMAN OF THE BOARD OF SUPERVISORS. The Board of Supervisors may elect
one of its members as the Chairman of the Board of Supervisors. Unless the Board
of Supervisors provides otherwise, the Chairman of the Board of Supervisors
shall be an Officer and shall have the powers, duties and authority assigned by
the Board of Supervisors.
(e) VICE CHAIRMAN. The Board of Supervisors may elect one of its members as
Vice Chairman of the Board of Supervisors. Unless the Board of Supervisors
provides otherwise, the Vice Chairman of the Board of Supervisors shall be an
Officer and shall have the powers, duties and authority of the chief executive
officer of the Partnership and, as such, shall be responsible for the general
and active management and direction of the Partnership and shall see that all
orders and resolutions of the Board of Supervisors are carried into effect.
(f) PRESIDENT. Subject to the limitations imposed by this Agreement, any
employment agreement, any employee plan or any determination of the Board of
Supervisors, the President, subject to the direction of the Board of
Supervisors, shall have the powers, duties and authority of the chief operating
officer of the Partnership and, as such, shall be responsible for the management
and direction of the day-to-day business and affairs of the Partnership, its
other Officers, employees and agents, shall supervise generally the affairs of
the Partnership and shall have full authority to execute all documents and take
all actions that the Partnership may legally take. The President shall exercise
such other powers and perform such other duties as may be assigned to him by
this Agreement or the Board of Supervisors, including any duties and powers
stated in any employment agreement approved by the Board of Supervisors.
(g) VICE PRESIDENTS. In the absence of the President, each Vice President
appointed by the Board of Supervisors shall have all of the powers and duties
conferred upon the President, including the same power as the President to
execute documents on behalf of the Partnership. Each such Vice President shall
perform such other duties and may exercise such other powers as may from time to
time be assigned to him by the Board of Supervisors or the President.
(h) SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall record or cause
to be recorded in books provided for that purpose the minutes of the meetings or
actions of the Board of Supervisors and Partners, shall see that all notices are
duly given in accordance with the provisions of this Agreement and as required
by law, shall be custodian of all records (other than financial), shall see that
the books, reports, statements, certificates and all other documents and records
required by law are properly kept and filed, and, in general, shall perform all
duties incident to the office of Secretary and such other duties as may, from
time to time, be assigned to him by this Agreement, the Board of Supervisors or
the President. The Assistant Secretaries shall exercise the powers of the
Secretary during that Officer's absence or inability or refusal to act.
<PAGE>
(i) TREASURER AND ASSISTANT TREASURERS. The Treasurer shall keep or cause to
be kept the books of account of the Partnership and shall render statements of
the financial affairs of the Partnership in such form and as often as required
by this Agreement, the Board of Supervisors or the President. The Treasurer,
subject to the order of the Board of Supervisors, shall have the custody of all
funds and securities of the Partnership. The Treasurer shall perform all other
duties commonly incident to his office and shall perform such other duties and
have such other powers as this Agreement, the Board of Supervisors or the
President, shall designate from time to time. The Assistant Treasurers shall
exercise the power of the Treasurer during that Officer's absence or inability
or refusal to act. Each of the Assistant Treasurers shall possess the same power
as the Treasurer to sign all certificates, contracts, obligations and other
instruments of the Partnership. If no Treasurer or Assistant Treasurer is
appointed and serving or in the absence of the appointed Treasurer and Assistant
Treasurer, the Vice President and Chief Financial Officer, or such other Officer
as the Board of Supervisors shall select, shall have the powers and duties
conferred upon the Treasurer.
(j) OTHER OFFICERS AND AGENTs. The Board of Supervisors may appoint such
other Officers and agents as may from time to time appear to be necessary or
advisable in the conduct of the affairs of the Partnership, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Supervisors.
(k) POWERS OF ATTORNEY. The Board of Supervisors may grant powers of
attorney or other authority as appropriate to establish and evidence the
authority of the Officers and other Persons.
(l) OFFICERS' DELEGATION OF AUTHORITY. Unless otherwise provided by
resolution of the Board of Supervisors, no Officer shall have the power or
authority to delegate to any Person such Officer's rights and powers as an
Officer to manage the business and affairs of the Partnership.
7.9 COMPENSATION.
The Officers shall receive such compensation for their services as may be
designated by the Board of Supervisors. In addition, the Officers shall be
entitled to be reimbursed for out-of-pocket costs and expenses incurred in the
course of their service hereunder. The members of the Board of Supervisors who
are not employees of the Partnership or its Affiliates shall receive such
compensation for their services as members of the Board of Supervisors or
members of a committee of the Board of Supervisors as the Board of Supervisors
shall determine. In addition, the members of the Board of Supervisors shall be
entitled to be reimbursed for out-of-pocket costs and expenses incurred in the
course of their service hereunder.
7.10 RESTRICTIONS ON GENERAL PARTNER'S AND BOARD OF SUPERVISORS' AUTHORITY.
(a) Except as provided in Articles XII and XIV, neither the General Partner
nor the Board of Supervisors may sell, exchange or otherwise dispose of all or
substantially all of the Partnership's assets in a single transaction or a
series of related transactions or approve on behalf of the Partnership the sale,
exchange or other disposition of all or substantially all of the assets of the
Operating Partnership, without the approval of the holders of at least a
majority of the Outstanding Common Units; provided, however that this provision
shall not preclude or limit the Board of Supervisors' ability to mortgage,
pledge, hypothecate or grant a security interest in all or substantially all of
the assets of the Partnership Group and shall not apply to any forced sale of
<PAGE>
any or all of the assets of the Partnership Group 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 Common Units, neither the
General Partner nor the Board of Supervisors shall, on behalf of the
Partnership, (i) consent to any amendment to the Operating Partnership Agreement
or, except as expressly permitted by Section 7.16(d), take any action permitted
to be taken by a partner of the Operating Partnership, in either case, that
would have a material adverse effect on the Partnership as a partner of the
Operating Partnership or (ii) except as permitted under Sections 4.6, 11.1 and
11.2, elect or cause the Partnership to elect a successor general partner of the
Operating Partnership.
(b) The Board of Supervisors may not cause the Partnership to incur any
Indebtedness that is recourse to the General Partner or any of its Affiliates
without the approval of the General Partner, which approval may be given or
withheld in the General Partner's sole discretion.
7.11 REIMBURSEMENT OF THE GENERAL PARTNER; EMPLOYEE BENEFIT PLANS.
(a) Except as provided in this Section 7.11 and elsewhere in this Agreement
or in the Operating Partnership Agreement, the General Partner shall not be
compensated for its services as general partner of any Group Member.
(b) The General Partner shall be reimbursed on a monthly basis, or such
other basis as the Board of Supervisors may determine, for (i) all direct and
indirect expenses it incurs or payments it makes on behalf of the Partnership
(including salary, bonus, incentive compensation and other amounts paid to any
Person to perform services for the Partnership or for the General Partner or the
Board of Supervisors in the discharge of its duties to the Partnership), and
(ii) all other necessary or appropriate expenses allocable to the Partnership or
otherwise reasonably incurred by the General Partner in connection with
operating the Partnership's business (including expenses allocated to the
General Partner by its Affiliates). Reimbursements pursuant to this Section 7.11
shall be in addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.14.
(c) Subject to Section 5.7, the Board of Supervisors, without the approval
of the Limited Partners (who shall have no right to vote in respect thereof),
may propose and adopt on behalf of the Partnership employee benefit plans,
employee programs and employee practices (including plans, programs and
practices involving the issuance of Units), or issue Partnership Securities
pursuant to any employee benefit plan, employee program or employee practice
maintained or sponsored by the Partnership, the General Partner or any of their
Affiliates, in each case for the benefit of the members of the Board of
Supervisors, employees of the Partnership or the Operating Partnership,
employees of the General Partner, any Group Member or any Affiliate, or any of
them, in respect of services performed, directly or indirectly, for the benefit
of the Partnership Group. The Partnership agrees to issue and sell to the
General Partner or any of its Affiliates any Units or other Partnership
Securities that the General Partner or any of its Affiliates are obligated to
provide to any employees pursuant to any such employee benefit plans, employee
programs or employee practices. Expenses incurred by the General Partner in
connection with any such plans, programs and practices (including the net cost
to the General Partner or any of its Affiliates of Units or other Partnership
Securities purchased by the General Partner or any of its Affiliates from the
Partnership to fulfill options or awards under such plans, programs and
practices) shall be reimbursed in accordance with Section 7.11(b). Any and all
obligations of the General Partner under any employee benefit plans, employee
programs or employee practices adopted by the Board of Supervisors as permitted
by this Section 7.11(c) shall constitute obligations of the General Partner
hereunder and shall be assumed by any successor General Partner approved
<PAGE>
pursuant to Section 11.1 or 11.2 or the transferee of or successor to all of the
General Partner Interest pursuant to Section 4.6.
7.12 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER.
(a) After the Initial Closing Date, the General Partner, for so long as it
is the general partner of the Partnership, (i) agrees that its sole business
will be to act as a general partner of the Partnership, the Operating
Partnership, and any other partnership of which the Partnership or the Operating
Partnership is, directly or indirectly, a partner and to undertake activities
that are ancillary or related thereto (including being a Limited Partner in the
Partnership), and (ii) shall not enter into or conduct any business or incur any
debts or liabilities except in connection with or incidental to (A) its
performance of the activities required or authorized by this Agreement or the
Operating Partnership Agreement or described in or contemplated by the Initial
Registration Statement or the Proxy Statement and (B) the acquisition, ownership
or disposition of Partnership Interests or partnership interests in the
Operating Partnership or any other partnership of which the Partnership or the
Operating Partnership is, directly or indirectly, a partner; provided that
notwithstanding the foregoing, employees of the General Partner may perform
limited services for other Affiliates of the General Partner in addition to the
Partnership and the Operating Partnership (it being understood that full time
employees of the General Partner shall devote substantially all their employment
services to the Partnership and the Operating Partnership).
(b) Except as described in Section 7.12(a), each Indemnitee (other than the
General Partner) shall have the right to engage in businesses of every type and
description and other activities for profit and to engage in and possess an
interest in other business ventures of any and every type or description,
independently or with others, whether in the businesses engaged in by the
Partnership or the Operating Partnership or anticipated to be engaged in by the
Partnership, the Operating Partnership or otherwise, including, without
limitation, in the case of any Affiliates of the General Partner, business
interests and activities in direct competition with the business and activities
of the Partnership or the Operating Partnership, and none of the same shall
constitute a breach of this Agreement or any duty to the Partnership, the
Operating Partnership or any Partner or Assignee. Neither the Partnership, the
Operating Partnership, any Limited Partner nor any other Person shall have any
rights by virtue of this Agreement, the Operating Partnership Agreement or the
partnership relationship established hereby or thereby in any business ventures
of any Indemnitee and such Indemnitees shall have no obligation to offer any
interest in any such business ventures to the Partnership, the Operating
Partnership, any Limited Partner or any other Person. The General Partner and
any Affiliates of the General Partner may acquire Units or other Partnership
Securities, and, except as otherwise provided in this Agreement, shall be
entitled to exercise all rights of an Assignee, Limited Partner or holder of
another Partnership Security, as applicable, relating to such Units or
Partnership Securities, as the case may be.
(c) Subject to the terms of Sections 7.12(a) and (b) but otherwise
notwithstanding anything to the contrary in this Agreement, (i) the engaging in
competitive activities by any of the Indemnitees (other than the General
Partner) in accordance with Section 7.12(b) is hereby approved by the
Partnership and all Partners and (ii) it shall be deemed not to be a breach of
the General Partner's fiduciary duties or any other obligation of any type
whatsoever of the General Partner for the General Partner to permit its
Affiliates to engage, or for any such Affiliate to engage, in business interests
and activities in preference to or to the exclusion of the Partnership.
<PAGE>
(d) The term 'Affiliates' when used in this Section 7.12 with respect to the
General Partner shall not include any Group Member.
7.13 LOANS FROM THE GENERAL PARTNER; CONTRACTS WITH AFFILIATES; CERTAIN
RESTRICTIONS ON THE GENERAL PARTNER.
(a) The General Partner or any Affiliate of the General Partner may lend to
any Group Member, and any Group Member may borrow from the General Partner and
any Affiliate of the General Partner, funds needed or desired by the Group
Member for such periods of time and in such amounts as the General Partner may
determine; provided, however, that in any such case the lending party may not
charge the borrowing party interest at a rate greater than the rate that would
be charged the borrowing party or impose terms less favorable on the borrowing
party than would be charged or imposed on the borrowing party by unrelated
lenders on comparable loans made on an arms-length basis (without reference to
the lending party's financial abilities or guarantees). The borrowing party
shall reimburse the lending party for any costs (other than any additional
interest costs) incurred by the lending party in connection with the borrowing
of such funds. For purposes of this Section 7.13(a) and Section 7.13(b), the
term 'Group Member' shall include any Affiliate of the Group Member that is
controlled by the Group Member. No Group Member may lend funds to the General
Partner or any of its Affiliates (other than another Group Member).
(b) The Partnership may lend or contribute to any Group Member, and any
Group Member may borrow from the Partnership, funds on terms and conditions
established by the Board of Supervisors; provided, however, that the Partnership
may not charge a Group Member interest at a rate greater than the rate that
would be charged to such Group Member (without reference to the General
Partner's financial abilities or guarantees), by unrelated lenders on comparable
loans. The foregoing authority shall be exercised by the Board of Supervisors
and shall not create any right or benefit in favor of any Group Member or any
other Person.
(c) The General Partner may itself, or may enter into an agreement with any
of its Affiliates to, render services to a Group Member. Any services rendered
to a Group Member 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 7.13(c) shall be deemed satisfied as to (i) any
transaction approved by Special Approval, (ii) any transaction, the terms of
which are no less favorable to the Partnership Group than those generally being
provided to or available from unrelated third parties or (iii) any transaction
that, taking into account the totality of the relationships between the parties
involved (including other transactions that may be particularly favorable or
advantageous to the Partnership Group), is equitable to the Partnership Group.
The provisions of Section 7.11 shall apply to the rendering of services
described in this Section 7.13(c).
(d) The Partnership may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(e) Neither the General Partner nor any of its Affiliates shall sell,
transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the requirements
of this Section 7.13(e) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to Sections 5.1, and 5.3, the Contribution and
Conveyance Agreement and any other transactions described in or contemplated by
the Initial Registration Statement or the Proxy Statement, (ii) any transaction
approved by Special Approval, (iii) any transaction, the terms of which are no
<PAGE>
less favorable to the Partnership than those generally being provided to or
available from unrelated third parties, or (iv) any transaction that, taking
into account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or advantageous
to the Partnership), is equitable to the Partnership. With respect to any
contribution of assets to the Partnership in exchange for Units, the Audit
Committee, in determining whether the appropriate number of Units are being
issued, shall take into account, among other things, the fair market value of
the assets, the liquidated and contingent liabilities assumed, the tax basis in
the assets, the extent to which tax-only allocations to the transferor will
protect the existing partners of the Partnership against a low tax basis, and
such other factors as the Audit Committee deems relevant under the
circumstances.
(f) The General Partner and its Affiliates will have no obligation to permit
any Group Member to use any facilities or assets 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 on
the part of the General Partner or its Affiliates to enter into such contracts.
(g) Without limitation of Sections 7.13(a) through 7.13(f), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Initial Registration Statement or the
Proxy Statement are hereby approved by all Partners.
7.14 INDEMNIFICATION.
(a) To the fullest extent permitted by law but subject to the limitations
expressly provided in this Agreement, all Indemnitees shall be indemnified and
held harmless by the Partnership from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including legal fees, expenses
and other disbursements), judgments, fines, penalties, interest, settlements or
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
any Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as an Indemnitee, provided, that in each case
the Indemnitee acted in good faith and in a manner that such Indemnitee
reasonably believed to be in, or not opposed to, the best interests of the
Partnership and, with respect to any criminal proceeding, had no reasonable
cause to believe its conduct was unlawful; provided, further, that no
indemnification pursuant to this Section 7.14 shall be available to the Initial
General Partner with respect to its obligations incurred pursuant to the
Underwriting Agreement, the Conveyance and Contribution Agreement, the Purchase
Agreement or the Recapitalization Agreement or otherwise in connection with the
Recapitalization (other than obligations incurred by the General Partner on
behalf of the Partnership or the Operating Partnership). The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
the Indemnitee acted in a manner contrary to that specified above. Any
indemnification pursuant to this Section 7.14 shall be made only out of the
assets of the Partnership, it being agreed that the General Partner shall not be
personally liable for such indemnification and shall have no obligation to
contribute or loan any monies or property to the Partnership to enable it to
effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including legal fees,
expenses and other disbursements) incurred by an Indemnitee who is indemnified
pursuant to Section 7.14(a) in defending any claim, demand, action, suit or
proceeding shall, from time to time, be advanced by the Partnership prior to the
final disposition of such claim, demand, action, suit or proceeding upon receipt
<PAGE>
by the Partnership of any undertaking by or on behalf of the Indemnitee to repay
such amount if it shall be determined by a final, non-appealable order of a
court of competent jurisdiction that the Indemnitee is not entitled to be
indemnified as authorized in this Section 7.14.
(c) The indemnification provided by this Section 7.14 shall be in addition
to any other rights to which an Indemnitee may be entitled under any agreement,
pursuant to any vote of the holders of Outstanding Common Units, as a matter of
law or otherwise, both as to actions in the Indemnitee's capacity as an
Indemnitee and as to actions in any other capacity (including any capacity under
the Underwriting Agreement), and shall continue as to an Indemnitee who has
ceased to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the members of
the Board of Supervisors, the General Partner or its Affiliates for the cost of)
insurance, on behalf of the General Partner and the members of the Board of
Supervisors and such other Persons as the Board of Supervisors shall determine,
against any liability that may be asserted against or expense that may be
incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
(e) For purposes of this Section 7.14, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute 'fines'
within the meaning of Section 7.14(a); and action taken or omitted by it with
respect to any employee benefit plan in the performance of its duties for a
purpose reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is in, or
not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.14 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.14 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 7.14 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Partnership, nor
the obligations of the Partnership to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 7.14 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.
<PAGE>
7.15 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 errors in
judgment or any act or omission if such Indemnitee acted in good faith pursuant
to authority granted in this Agreement.
(b) To the maximum extent permitted by law, the General Partner and its
Affiliates shall not be responsible for any act or omission by the Board of
Supervisors, any member of the Board of Supervisors, or any Officers of the
Partnership.
(c) To the maximum extent permitted by law, the members of the Board of
Supervisors and the Officers of the Partnership shall not be responsible for any
act or omission by the General Partner and its Affiliates.
(d) Subject to its obligations and duties set forth in Section 7.1(a), the
Board of Supervisors 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 the Officers or other agents of the Partnership, and,
to the maximum extent permitted by law, the Board of Supervisors shall not be
responsible for any misconduct or negligence on the part of any such Officer or
agent appointed by the Board of Supervisors in good faith.
(e) It will not constitute a breach of fiduciary or other duty for an
Officer or member of the Board of Supervisors to engage attorneys, accountants,
engineers and other advisors on behalf of the Partnership, its Board of
Supervisors, or any committee thereof, even though such persons may also be
retained from time to time by the General Partner or any of its Affiliates, and
such persons may be engaged with respect to any matter in which the interests of
the Partnership and the General Partner or any of its Affiliates may differ, or
may be engaged by both the Partnership and the General Partner or any of its
Affiliates with respect to a matter, as long as such Officer or member of the
Board of Supervisors reasonably believes that any conflict between the
Partnership and the General Partner or any of its Affiliates with respect to
such matter is not material.
(f) Any amendment, modification or repeal of this Section 7.15 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Partnership and the Limited Partners, of the
General Partner, its directors, officers and employees and any other Indemnitees
under this Section 7.15 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when such claims may arise or be asserted.
7.16 RESOLUTION OF CONFLICTS OF INTEREST.
(a) Unless otherwise expressly provided in this Agreement or the Operating
Partnership Agreement, whenever a potential conflict of interest exists or
arises between the General Partner or any of its Affiliates, or any Officer or
member of the Board of Supervisors, on the one hand, and the Partnership, the
Operating Partnership, any Partner or any Assignee, on the other, any resolution
or course of action in respect of such conflict of interest shall be permitted
and deemed approved by all Partners, and shall not constitute a breach of this
Agreement, of the Operating Partnership Agreement, of any agreement contemplated
<PAGE>
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 Board of Supervisors shall be
authorized but not required in connection with its resolution of such conflict
of interest to seek Special Approval of a resolution of such conflict or course
of action. Any conflict of interest and any resolution of such conflict of
interest shall be conclusively deemed fair and reasonable to the Partnership if
such conflict of interest or resolution is (i) approved by Special Approval (as
long as the material facts known to the General Partner or any of its Affiliates
or such Officer or member of the Board of Supervisors regarding any proposed
transaction were disclosed to the Audit Committee at the time it gave its
approval), (ii) on terms no less favorable to the Partnership than those
generally being provided to or available from unrelated third parties or (iii)
fair to the Partnership, taking into account the totality of the relationships
between the parties involved (including other transactions that may be
particularly favorable or advantageous to the Partnership). The Board of
Supervisors may also adopt a resolution or course of action that has not
received Special Approval. The Board of Supervisors (including the Audit
Committee in connection with Special Approval) shall be authorized in connection
with its determination of what is fair and reasonable to the Partnership and in
connection with its resolution of any conflict of interest to consider (A) the
relative interests of any party to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interest; (B) any
customary or accepted industry practices and any customary or historical
dealings with a particular Person; (C) any applicable generally accepted
accounting practices or principles; and (D) such additional factors as the Board
of Supervisors (including the Audit Committee) determines in its 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 Board of Supervisors (including the Audit Committee) to consider
the interests of any Person other than the Partnership. In the absence of bad
faith by the Board of Supervisors, the resolution, action or terms so made,
taken or provided by the Board of Supervisors with respect to such matter shall
not constitute a breach of this Agreement or any other agreement contemplated
herein or a breach of any standard of care or duty imposed herein or therein or,
to the extent permitted by law, under the Delaware Act or any other law, rule or
regulation.
(b) Whenever this Agreement or any other agreement contemplated hereby
provides that the Board of Supervisors is permitted or required to make a
decision (i) in its 'sole discretion' or 'discretion' that it deems 'necessary
or appropriate' or 'necessary or advisable' or under a grant of similar
authority or latitude, except as otherwise provided herein, the Board of
Supervisors shall make such decision in its sole discretion (regardless of
whether there is a reference to 'sole discretion' or 'discretion') unless
another express standard is provided for, or (ii) in 'good faith' or under
another express standard, the Board of Supervisors shall act under such express
standard and shall not be subject to any other or different standards imposed by
this Agreement, the Operating Partnership Agreement, any other agreement
contemplated hereby or under the Delaware Act or any other law, rule or
regulation. In addition, any actions taken by the Board of Supervisors
consistent with the standards of 'reasonable discretion' set forth in the
definitions of Available Cash or Operating Surplus shall not constitute a breach
of any duty of the Board of Supervisors to the Partnership or the Limited
Partners. The Board of Supervisors shall have no duty, express or implied, to
sell or otherwise dispose of any asset of the Partnership Group. No borrowing by
any Group Member or the approval thereof by the Board of Supervisors shall be
deemed to constitute a breach of any duty of the Board of Supervisors 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 distributions to be
made to the holders of the Incentive Distribution Rights.
<PAGE>
(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 Board of Supervisors on behalf
of the Partnership as a partner of a Group Member, to approve of actions by the
general partner or the board of supervisors of such Group Member similar to
those actions permitted to be taken by the Board of Supervisors pursuant to this
Section 7.16.
7.17 OTHER MATTERS CONCERNING THE GENERAL PARTNER AND THE BOARD OF SUPERVISORS.
(a) The General Partner and the Board of Supervisors 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 and the Board of Supervisors may consult with legal
counsel, accountants, appraisers, management consultants, investment bankers and
other consultants and advisers selected by either of them, and any act taken or
omitted to be taken in reliance upon the opinion (including an Opinion of
Counsel) of such Persons as to matters that the General Partner or the Board of
Supervisors 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, a duly appointed attorney or attorneys-in-fact or the duly authorized
Officers of the Partnership.
(d) The Board of Supervisors shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of the duly authorized
Officers of the Partnership or a duly appointed attorney or attorneys-in-fact.
(e) Any standard of care and duty imposed by this Agreement or under the
Delaware Act or any applicable law, rule or regulation shall be modified, waived
or limited, to the maximum extent permitted by law, as required to permit the
General Partner and the Board of Supervisors 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 or the Board of Supervisors to be in,
or not inconsistent with, the best interests of the Partnership.
(f) The General Partner or other holder of Partnership Securities that have
voting rights, when voting its interest in the Partnership on any matter shall
not be acting in a fiduciary capacity and therefore shall be entitled to
consider only such interests and factors as it desires and shall have no duty or
obligation to give any consideration to any interest of, or factors affecting,
the Partnership or any Limited Partner.
<PAGE>
7.18 PURCHASE OR SALE OF UNITS.
The Partnership may purchase or otherwise acquire Units. As long as Units
are held by any Group Member, such Units shall not be considered Outstanding for
any purpose, except as otherwise provided herein. The General Partner or any
Affiliate of the General Partner may also purchase or otherwise acquire and sell
or otherwise dispose of Units for its own account, subject to the provisions of
Articles IV and X.
7.19 REGISTRATION RIGHTS OF THE GENERAL PARTNER AND ITS AFFILIATES.
(a) If (i) the General Partner or any Affiliate of the General Partner
(including for purposes of this Section 7.19, any Person that is an Affiliate of
the General Partner at the date hereof notwithstanding that it may later cease
to be an Affiliate of the General Partner) holds Units or other Partnership
Securities that it desires to sell and (ii) Rule 144 of the Securities Act (or
any successor rule or regulation to Rule 144) or another exemption from
registration is not available to enable such holder of Units (the 'Holder') to
dispose of the number of Units or other securities it desires to sell at the
time it desires to do so without registration under the Securities Act, then
upon the request of the General Partner or any of its Affiliates, the
Partnership shall file with the Commission as promptly as practicable after
receiving such request, and use all reasonable efforts to cause to become
effective and remain effective for a period of not less than six months
following its effective date or such shorter period as shall terminate when all
Units or other Partnership Securities covered by such registration statement
have been sold, a registration statement under the Securities Act registering
the offering and sale of the number of Units or other securities specified by
the Holder; provided, however, that the Partnership shall not be required to
effect more than three registrations pursuant to this Section 7.19(a); and
provided, further, however, that if the Audit Committee determines in its good
faith judgment that a postponement of the requested registration for up to six
months would be in the best interests of the Partnership and its Partners due to
a pending transaction, investigation or other event, the filing of such
registration statement or the effectiveness thereof may be deferred for up to
six months, but not thereafter. In connection with any registration pursuant to
the immediately preceding sentence, the Partnership shall promptly prepare and
file (x) such documents as may be necessary to register or qualify the
securities subject to such registration under the securities laws of such states
as the Holder shall reasonably request; provided, however, that no such
qualification shall be required in any jurisdiction where, as a result thereof,
the Partnership would become subject to general service of process or to
taxation or qualification to do business as a foreign corporation or partnership
doing business in such jurisdiction, 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 Holder shall reasonably request, and do
any and all other acts and things that may reasonably be necessary or advisable
to enable the Holder to consummate a public sale of such Units in such states.
Except as set forth in Section 7.19(c), all costs and expenses of any such
registration and offering (other than the underwriting discounts and
commissions) shall be paid by the Partnership, without reimbursement by the
Holder.
(b) If the Partnership shall at any time propose to file a registration
statement under the Securities Act for an offering of equity securities of the
Partnership for cash (other than an offering relating solely to an employee
benefit plan), the Partnership shall use all reasonable efforts to include such
number or amount of securities held by the Holder in such registration statement
as the Holder shall request. If the proposed offering pursuant to this Section
7.19(b) shall be an underwritten offering, then, in the event that the managing
underwriter of such offering advises the Partnership and the Holder in writing
<PAGE>
that in its opinion the inclusion of all or some of the Holder's securities
would adversely and materially affect the success of the offering, the
Partnership shall include in such offering only that number or amount, if any,
of securities held by the Holder which, in the opinion of the managing
underwriter, will not so adversely and materially affect the offering. Except as
set forth in Section 7.19(c), all costs and expenses of any such registration
and offering (other than the underwriting discounts and commissions) shall be
paid by the Partnership, without reimbursement by the Holder.
(c) If underwriters are engaged in connection with any registration referred
to in this Section 7.19, the Partnership shall provide indemnification,
representations, covenants, opinions and other assurance to the underwriters in
form and substance reasonably satisfactory to such underwriters. Further, in
addition to and not in limitation of the Partnership's obligation under Section
7.14, the Partnership shall, to the fullest extent permitted by law, indemnify
and hold harmless the Holder, its officers, directors and each Person who
controls the Holder (within the meaning of the Securities Act) and any agent
thereof (collectively, 'Indemnified Persons') against any losses, claims,
demands, actions, causes of action, assessments, damages, liabilities (joint or
several), costs and expenses (including interest, penalties and reasonable
attorneys' fees and disbursements), resulting from, imposed upon, or incurred by
the Indemnified Persons, directly or indirectly, under the Securities Act or
otherwise (hereinafter referred to in this Section 7.19(c) as a 'claim' and in
the plural as 'claims') based upon, arising out of or resulting from any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which any Units were registered under the
Securities Act or any state securities or Blue Sky laws, in any preliminary
prospectus (if used prior to the effective date of such registration statement),
or in any summary or final prospectus or in any amendment or supplement thereto
(if used during the period the Partnership is required to keep the registration
statement current), or arising out of, based upon or resulting from the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements made therein not misleading;
provided, however, that the Partnership shall not be liable to any Indemnified
Person to the extent that any such claim arises out of, is based upon or results
from an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, such preliminary, summary or final
prospectus or such amendment or supplement, in reliance upon and in conformity
with written information furnished to the Partnership by or on behalf of such
Indemnified Person specifically for use in the preparation thereof.
(d) The provisions of Section 7.19(a) and 7.19(b) shall continue to be
applicable with respect to the General Partner (and any of its Affiliates) after
it ceases to be a Partner of the Partnership, during a period of two years
subsequent to the effective date of such cessation and for so long thereafter as
is required for the Holder to sell all of the Units or other securities of the
Partnership with respect to which it has requested during such two-year period
that a registration statement be filed; provided, however, that the Partnership
shall not be required to file successive registration statements covering the
same securities for which registration was demanded during such two-year period.
The provisions of Section 7.19(c) shall continue in effect thereafter.
(e) Any request to register Partnership Securities pursuant to this Section
7.19 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
<PAGE>
with all applicable requirements in connection with the registration of such
Partnership Securities.
7.20 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 Board of
Supervisors and any Officer of the Partnership authorized by the Board of
Supervisors to act on behalf of and in the name of the Partnership (including
the General Partner, acting pursuant to the direction of the Board of
Supervisors in accordance with Section 7.1(a)) 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 Board of Supervisors or any such
Officer (including the General Partner, acting pursuant to the direction of the
Board of Supervisors in accordance with Section 7.1(a)) as if it were the
Partnership's sole party in interest, both legally and beneficially. Each
Limited Partner hereby waives, to the maximum extent permitted by law, any and
all defenses or other remedies that may be available against such Person to
contest, negate or disaffirm any action of the Board of Supervisors or any such
Officer (including the General Partner, acting pursuant to the direction of the
Board of Supervisors in accordance with Section 7.1(a)) in connection with any
such dealing. In no event shall any Person dealing with the Board of Supervisors
or its representatives or any such Officer (including the General Partner,
acting pursuant to the direction of the Board of Supervisors in accordance with
Section 7.1(a)) be obligated to ascertain that the terms of the Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the Board of Supervisors or its representatives or any such Officer
(including the General Partner, acting pursuant to the direction of the Board of
Supervisors in accordance with Section 7.1(a)). Each and every certificate,
document or other instrument executed on behalf of the Partnership by the Board
of Supervisors or its representatives or any such Officer (including the General
Partner, acting pursuant to the direction of the Board of Supervisors in
accordance with Section 7.1(a)) shall be conclusive evidence in favor of any and
every Person relying thereon or claiming thereunder that (a) at the time of the
execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 RECORDS AND ACCOUNTING.
The Partnership shall keep or cause to be kept at the principal office of
the Partnership appropriate books and records with respect to the Partnership's
business, including all books and records necessary to provide to the Limited
Partners any information required to be provided pursuant to Section 3.4(a). Any
books and records maintained by or on behalf of the Partnership in the regular
course of its business, including the record of the Record Holders and Assignees
of Units or other Partnership Securities, books of account and records of
Partnership proceedings, may be kept on, or be in the form of, computer disks,
hard drives, punch cards, magnetic tape, photographs, micrographics or any other
information storage device, provided, that the books and records so maintained
are convertible into clearly legible written form within a reasonable period of
<PAGE>
time. The books of the Partnership shall be maintained, for financial reporting
purposes, on an accrual basis in accordance with U.S. GAAP.
8.2 FISCAL YEAR.
The fiscal year of the Partnership shall be a 52-53 week fiscal year
concluding on the Saturday nearest to September 30.
8.3 REPORTS.
(a) As soon as practicable, but in no event later than 120 days after the
close of each fiscal year of the Partnership, the Board of Supervisors shall
cause to be mailed or furnished to each Record Holder of a Unit as of a date
selected by the Board of Supervisors in its discretion, an annual report
containing financial statements of the Partnership for such fiscal year of the
Partnership, presented in accordance with U.S. GAAP, including a balance sheet
and statements of operations, Partners equity and cash flows, such statements to
be audited by a firm of independent public accountants selected by the Board of
Supervisors.
(b) As soon as practicable, but in no event later than 90 days after the
close of each Quarter except the last Quarter of each year, the Board of
Supervisors shall cause to be mailed or furnished to each Record Holder of a
Unit, as of a date selected by the Board of Supervisors in its discretion, a
report containing unaudited financial statements of the Partnership and such
other information as may be required by applicable law, regulation or rule of
any National Securities Exchange on which the Units are listed for trading, or
as the Board of Supervisors determines to be necessary or appropriate.
ARTICLE IX
TAX MATTERS
9.1 TAX RETURNS AND INFORMATION.
The Partnership shall timely file all returns of the Partnership that are
required for federal, state and local income tax purposes on the basis of the
accrual method and a taxable year ending on December 31. The tax information
reasonably required by Record Holders for federal and state income tax reporting
purposes with respect to a taxable year shall be furnished to them within 90
days of the close of the calendar year in which the Partnership's taxable year
ends. The classification, realization and recognition of income, gain, losses
and deductions and other items shall be on the accrual method of accounting for
federal income tax purposes.
9.2 TAX ELECTIONS.
(a) The Partnership has made the election under Section 754 of the Code in
accordance with applicable regulations thereunder, subject to the reservation of
the right to seek to revoke such election upon the Board of Supervisors'
determination that such revocation is in the best interests of the Limited
Partners. For the purposes of computing the adjustments under Section 743(b) of
the Code, the Board of Supervisors 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 closing price of the Units on any National
Securities Exchange on which such Units are traded during the calendar month in
<PAGE>
which such transfer is deemed to occur pursuant to Section 6.2(g) without regard
to the actual price paid by such transferee.
(b) The Partnership has elected to deduct expenses incurred in organizing
the Partnership ratably over a sixty-month period as provided in Section 709 of
the Code.
(c) Except as otherwise provided herein, the Board of Supervisors shall
determine whether the Partnership should make any other elections permitted by
the Code.
9.3 TAX CONTROVERSIES.
Subject to the provisions hereof, the General Partner is designated as the
Tax Matters Partner (as defined in Section 6231(a)(7) 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 resulting administrative and judicial proceedings, and to
expend Partnership funds for professional services and costs associated
therewith. Each Partner agrees to cooperate with the General Partner and to do
or refrain from doing any or all things reasonably required by the General
Partner to conduct such proceedings.
9.4 WITHHOLDING.
Notwithstanding any other provision of this Agreement, the Board of
Supervisors is authorized to take any action that it determines in its
discretion to be necessary or appropriate to cause the Partnership and the
Operating Partnership to comply with any withholding requirements established
under the Code or any other federal, state or local law including, without
limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the
extent that the Partnership is required or elects to withhold and pay over to
any taxing authority any amount resulting from the allocation or distribution of
income to any Partner or Assignee (including, without limitation, by reason of
Section 1446 of the Code), the amount withheld may be treated as a distribution
of cash pursuant to Section 6.3 in the amount of such withholding from such
Partner.
ARTICLE X
ADMISSION OF PARTNERS
10.1 ADMISSION OF INITIAL LIMITED PARTNERS.
Upon the issuance by the Partnership of Subordinated Units and Incentive
Distribution Rights to the Initial General Partner as described in Section 5.1,
the Initial General Partner was admitted to the Partnership as a Limited
Partner. Upon the issuance by the Partnership of Initial Common Units to the
Initial Underwriters as described in Section 5.1 in connection with the Initial
Offering and the execution by each Initial Underwriter of a Transfer
Application, the Initial Underwriters were admitted to the Partnership as
Initial Limited Partners.
10.2 ADMISSION OF SUBSTITUTED LIMITED PARTNERS.
By transfer of a Unit representing a Limited Partner Interest in accordance
with Article IV, the transferor shall be deemed to have given the transferee the
right to seek admission as a Substituted Limited Partner subject to the
conditions of, and in the manner permitted under, this Agreement. A transferor
of a Certificate representing a Limited Partner Interest shall, however, only
<PAGE>
have the authority to convey to a purchaser or other transferee who does not
execute and deliver a Transfer Application (a) the right to negotiate such
Certificate to a purchaser or other transferee and (b) the right to transfer the
right to request admission as a Substituted Limited Partner to such purchaser or
other transferee in respect of the transferred Units. Each transferee of a Unit
representing a Limited Partner Interest (including 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 (x) at such time as the Board of
Supervisors consents thereto, which consent may be given or withheld in the
Board of Supervisors' discretion, and (y) when any such admission is shown on
the books and records of the Partnership. If such consent is withheld, such
transferee shall be an Assignee. An Assignee shall have an interest in the
Partnership equivalent to that of a Limited Partner with respect to allocations
and distributions, including liquidating distributions, of the Partnership. With
respect to voting rights attributable to 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.
10.3 ADMISSION OF SUCCESSOR GENERAL PARTNER.
On the date hereof and simultaneously with the Closing, the General Partner
is being admitted to the Partnership as the successor to the Initial General
Partner. A successor General Partner approved pursuant to Section 11.1 or 11.2
or the transferee of or successor to all of the General Partner Interest
pursuant to Section 4.6 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 11.1 or 11.2 or the transfer of the General Partner Interest pursuant
to Section 4.6; provided, however, that no such successor shall be admitted to
the Partnership until compliance with the terms of Section 4.6 has occurred and
such successor has executed and delivered such other documents or instruments as
may be required to effect such admission. Any such successor shall, subject to
the terms hereof, carry on the business of the Partnership and the Operating
Partnership without dissolution. The admission of a successor General Partner
shall not be deemed to have affected in any manner the irrevocable delegation of
all management powers over the business and affairs of the Partnership to the
Board of Supervisors pursuant to Section 7.1(a).
10.4 ADMISSION OF ADDITIONAL LIMITED PARTNERS.
(a) A Person (other than the General Partner, an Initial Limited Partner or
a Substituted Limited Partner) who makes a Capital Contribution to the
Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the Board
of Supervisors (i) evidence of acceptance in form satisfactory to the Board of
Supervisors of all of the terms and conditions of this Agreement, including the
granting of the power of attorney granted in Section 2.6, and (ii) such other
documents or instruments as may be required in the discretion of the Board of
Supervisors to effect such Person's admission as an Additional Limited Partner.
<PAGE>
(b) Notwithstanding anything to the contrary in this Section 10.4, no Person
shall be admitted as an Additional Limited Partner without the consent of the
Board of Supervisors, which consent may be given or withheld in the Board of
Supervisors' discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such Person is
recorded as such in the books and records of the Partnership, following the
consent of the Board of Supervisors to such admission.
10.5 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP.
To effect the admission to the Partnership of any Partner, the Board of
Supervisors shall take all steps necessary and appropriate under the Delaware
Act to amend the records of the Partnership to reflect such admission and, if
necessary, to prepare as soon as practicable an amendment to this Agreement and,
if required by law, the General Partner shall prepare and file an amendment to
the Certificate of Limited Partnership, and the Vice Chairman and President may
for this purpose, among others, exercise the power of attorney granted pursuant
to Section 2.6.
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
11.1 WITHDRAWAL OF THE GENERAL 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 (of
which event the General Partner shall give written notice to the other
Partners) (and it shall be deemed that the General Partner has withdrawn
pursuant to this Section 11.1(a)(i) if the General Partner voluntarily
withdraws as general partner of the Operating Partnership);
(ii) the General Partner transfers all of its rights as General Partner
pursuant to Section 4.6;
(iii) the General Partner is removed pursuant to Section 11.2;
(iv) the General Partner (A) makes a general assignment for the
benefit of creditors; (B) files a voluntary bankruptcy petition for relief
under Chapter 7 of the United States Bankruptcy Code; (C) files a petition
or answer seeking for itself a liquidation, dissolution or similar relief
(but not a reorganization) under any law; (D) files an answer or other
pleading admitting or failing to contest the material allegations of a
petition filed against the General Partner in a proceeding of the type
described in clauses (A)-(C) of this Section 11.1(a)(iv); or (E) seeks,
consents to or acquiesces in the appointment of a trustee (but not a debtor
in possession), receiver or liquidator of the General Partner or of all or
any substantial part of its properties;
(v) a final and non-appealable order of relief under Chapter 7 of the
United States Bankruptcy Code is entered by a court with appropriate
jurisdiction pursuant to a voluntary or involuntary petition by or against
the General Partner;
<PAGE>
(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 or formation; or
(vii) (A) in the event the General Partner is a corporation, 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; (B) in the event the General
Partner is a partnership or limited liability company, the dissolution and
commencement of winding up of the General Partner; (C) in the event the
General Partner is acting in such capacity by virtue of being a trustee of
a trust, the termination of the trust; (D) in the event the General Partner
is a natural person, his death or adjudication of incompetency; and (E)
otherwise in the event of the termination of the General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv), (v), (vi) or
(vii)(A), (B), (C) or (E) occurs, the withdrawing General Partner shall give
notice to the Limited Partners within 30 days after such occurrence. The
Partners hereby agree that only the Events of Withdrawal described in this
Section 11.1 shall result in the withdrawal of the General Partner from the
Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following circumstances: (i) at any time during the period
beginning on the Initial Closing Date and ending at 12:00 midnight, Eastern
Standard Time, on September 30, 2006, the General Partner voluntarily withdraws;
provided that prior to the effective date of such withdrawal, the withdrawal is
approved by Unitholders holding at least a majority of the Outstanding Common
Units and the General Partner delivers to the Partnership an Opinion of Counsel
('Withdrawal Opinion of Counsel') that such withdrawal (following the selection
of the successor General Partner) would not result in the loss of the limited
liability of any Limited Partner or of a limited partner of the Operating
Partnership or cause the Partnership or the Operating Partnership to be treated
as an association taxable as a corporation or otherwise to be taxed as an entity
for federal income tax purposes; (ii) at any time after 12:00 midnight, Eastern
Standard Time, on September 30, 2006, 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; (iii) at any
time that the General Partner ceases to be the General Partner pursuant to
Section 11.1(a)(ii) or is removed pursuant to Section 11.2; or (iv)
notwithstanding clause (i) of this sentence, at any time that the General
Partner voluntarily withdraws by giving at least 90 days' advance notice of its
intention to withdraw to the Limited Partners, such withdrawal to take effect on
the date specified in the notice, if at the time such notice is given one Person
and its Affiliates (other than the General Partner and its Affiliates) own
beneficially or of record or control at least 50% of the Outstanding Common
Units. The withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall also constitute the withdrawal of the
General Partner as general partner of the other Group Members. If the General
Partner gives a notice of withdrawal pursuant to Section 11.1(a)(i), the holders
of at least a majority of the Outstanding Common Units, may, prior to the
effective date of such withdrawal, elect a successor General Partner. The Person
so elected as successor General Partner shall automatically become the successor
general partner of the other Group Members. If prior to the effective date of
the General Partner's withdrawal, a successor is not selected by the Limited
<PAGE>
Partners as provided herein or the Partnership does not receive a Withdrawal
Opinion of Counsel, the Partnership shall be dissolved in accordance with
Section 12.1. Any successor General Partner elected in accordance with the terms
of this Section 11.1 shall be subject to the provisions of Section 10.3.
11.2 REMOVAL OF THE GENERAL PARTNER.
The General Partner may be removed if such removal is approved by the
holders of at least a majority of the Outstanding Common Units. Any such action
by such holders for removal of the General Partner must also provide for the
election of a successor General Partner by the holders of at least a majority of
the Outstanding Common Units. Such removal shall be effective immediately
following the admission of a successor General Partner pursuant to Section 10.3.
The removal of the General Partner shall also automatically constitute the
removal of the General Partner as general partner of the other Group Members. If
a Person is elected as a successor General Partner in accordance with the terms
of this Section 11.2, such Person shall, upon admission pursuant to Section
10.3, automatically become the successor general partner of the other Group
Members. The right of the holders of Outstanding Common Units to remove the
General Partner shall not exist or be exercised unless the Partnership has
received an opinion as to the matters covered by a Withdrawal Opinion of
Counsel. Any successor General Partner elected in accordance with the terms of
this Section 11.2 shall be subject to the provisions of Section 10.3.
11.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR GENERAL PARTNER; DELEGATION OF
AUTHORITY TO THE BOARD OF SUPERVISORS BY 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 holders of Outstanding Common Units under
circumstances where Cause does not exist, if a successor General Partner is
elected in accordance with the terms of Section 11.1 or 11.2, the Departing
Partner shall have the option exercisable prior to the effective date of the
departure of such Departing Partner to require its successor to purchase its
General Partner Interest and its partnership interest as the general partner in
the other Group Members and the Incentive Distribution Rights (collectively, the
'Combined Interest') in exchange for an amount in cash equal to the fair market
value of such Combined Interest, such amount to be determined and payable as of
the effective date of its departure. If the General Partner is removed by the
holders of Common Units under circumstances where Cause exists or if the General
Partner withdraws under circumstances where such withdrawal violates this
Agreement or the Operating Partnership Agreement, and if a successor General
Partner is elected in accordance with the terms of Section 11.1 or 11.2, such
successor shall have the option, exercisable prior to the effective date of the
departure of such Departing Partner, to purchase the Combined Interest of the
Departing Partner for such fair market value of such Combined Interest. In
either event, the Departing Partner shall be entitled to receive all
reimbursements due such Departing Partner pursuant to Section 7.11, including
any employee-related liabilities (including severance liabilities), incurred in
connection with the termination of any employees employed by the General Partner
for the benefit of the Partnership or the other Group Members.
For purposes of this Section 11.3(a), the fair market value of the Departing
Partner's Combined Interest shall be determined by agreement between the
Departing Partner and its successor or, failing agreement within 30 days after
the effective date of such Departing Partner's departure, by an independent
investment banking firm or other independent expert selected by the Departing
Partner and its successor, which, in turn, may rely on other experts, and the
determination of which shall be conclusive as to such matter. If such parties
<PAGE>
cannot agree upon one independent investment banking firm or other independent
expert within 45 days after the effective date of such departure, then the
Departing Partner shall designate an independent investment banking firm or
other independent expert, the Departing Partner's successor shall designate an
independent investment banking firm or other independent expert, and such firms
or experts shall mutually select a third independent investment banking firm or
independent expert, which third independent investment banking firm or other
independent expert shall determine the fair market value of the Combined
Interest. In making its determination, such third independent investment banking
firm or other independent expert shall consider the then current price of Units
on any National Securities Exchange on which Units are then listed, the value of
the Partnership's assets, the rights and obligations of the General Partner and
other factors it may deem relevant.
(b) If the Combined Interest is not purchased in the manner set forth in
Section 11.3(a), the Departing Partner will have the right to convert the
Combined Interest into Common Units or to receive cash in exchange for such
Combined Interest. The Departing Partner's Combined Interest shall be converted
into Common Units pursuant to a valuation made by an investment banking firm or
other independent expert selected pursuant to Section 11.3(a), without reduction
in such Partnership Interest (but subject to proportionate dilution by reason of
the admission of its successor). Any successor General Partner shall indemnify
the Departing Partner as to all debts and liabilities of the Partnership arising
on or after the date on which the Departing Partner becomes a Limited Partner.
For purposes of this Agreement, conversion of the General Partner's Combined
Interest to Common Units will be characterized as if the General Partner
contributed its Combined Interest to the Partnership in exchange for the newly
issued Common Units.
(c) If a successor General Partner is elected in accordance with the terms
of Section 11.1 or 11.2 and the option described in Section 11.3(a) is not
exercised by the party entitled to do so, the successor General Partner shall,
at the effective date of its admission to the Partnership, contribute to the
Partnership cash in an amount equal to the fair market value of the General
Partner Units on such date. In such event, such 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.
(d) Any successor General Partner will be deemed to have delegated
irrevocably to the Board of Supervisors all management powers over the business
and affairs of the Partnership to the same extent that the General Partner
delegated such management power to the Board of Supervisors pursuant to Section
7.1 of this Agreement.
11.4 [DELETED.]
11.5 WITHDRAWAL OF LIMITED PARTNERS.
No Limited Partner shall have any right to withdraw from the Partnership;
provided, however, that when a transferee of a Limited Partner's Common Units or
Incentive Distribution Rights becomes a Record Holder of the Common Units or
Incentive Distribution Rights so transferred, such transferring Limited Partner
shall cease to be a Limited Partner with respect to the Common Units or
Incentive Distribution Rights so transferred.
<PAGE>
ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 DISSOLUTION.
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the General Partner, if a successor General Partner
is elected pursuant to Section 10.3, 11.1 or 11.2, the Partnership shall not be
dissolved and such successor General Partner shall continue the business of the
Partnership. The Partnership shall dissolve, and (subject to Section 12.2) its
affairs shall be wound up, upon:
(a) the expiration of its term as provided in Section 2.7;
(b) an Event of Withdrawal of the General Partner as provided in Section
11.1(a) (other than Section 11.l(a)(ii)), unless a successor is elected and an
Opinion of Counsel is received as provided in Section 11.1(b) or 11.2 and such
successor is admitted to the Partnership pursuant to Section 10.3;
(c) an election to dissolve the Partnership by the General Partner that is
approved by the holders of at least a majority of the Outstanding Common Units;
(d) entry of a decree of judicial dissolution of the Partnership pursuant to
the provisions of the Delaware Act; or
(e) the sale of all or substantially all of the assets and properties of the
Partnership Group.
12.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER DISSOLUTION.
Upon (a) dissolution of the Partnership following an Event of Withdrawal
caused by the withdrawal or removal of the General Partner as provided in
Section 11.1(a)(i) or (iii) and the failure of the Partners to select a
successor to such Departing Partner pursuant to Section 11.1 or 11.2, then
within 90 days thereafter, or (b) dissolution of the Partnership upon an event
constituting an Event of Withdrawal as defined in Section 11.1(a)(iv), (v) or
(vi), then, to the maximum extent permitted by law, within 180 days thereafter,
the holders of at least a majority of the Outstanding Common 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 the successor
general partner a Person approved by the holders of at least a majority of the
Outstanding Common Units. Unless such an election is made within the applicable
time period as set forth above, the Partnership shall conduct only those
activities necessary to wind up its affairs. If such an election is so made,
then:
(i) the reconstituted Partnership shall continue until the end of the
term set forth in Section 2.7 unless earlier dissolved in accordance with
this Article XII;
(ii) if the successor General Partner is not the former General
Partner, then the interest of the former General Partner shall be treated in
the manner provided in Section 11.3(b); and
<PAGE>
(iii) all necessary steps shall be taken to cancel this Agreement and
the Certificate of Limited Partnership and to enter into and, as necessary,
to file a new partnership agreement and certificate of limited partnership,
and the successor General Partner may for this purpose exercise the powers
of attorney granted the Vice Chairman and President pursuant to Section
2.6; provided, that the right of the holders of at least a majority of the
Outstanding Common 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 other Group
Member would be treated as an association taxable as a corporation or
otherwise be taxable as an entity for federal income tax purposes upon the
exercise of such right to continue.
12.3 LIQUIDATOR.
Upon dissolution of the Partnership, unless the Partnership is continued
under an election to reconstitute and continue the Partnership pursuant to
Section 12.2, the Board of Supervisors shall select one or more Persons to act
as Liquidator. The Liquidator shall be entitled to receive such compensation for
its services as may be approved by holders of at least a majority of the
Outstanding Common Units. The Liquidator shall agree not to resign at any time
without 15 days' prior notice and may be removed at any time, with or without
cause, by notice of removal approved by holders of at least a majority of the
Outstanding Common Units. Upon dissolution, removal or resignation of the
Liquidator, a successor and substitute Liquidator (who shall have and succeed to
all rights, powers and duties of the original Liquidator) shall within 30 days
thereafter be approved by holders of at least a majority of the Outstanding
Common Units. The right to approve a successor or substitute Liquidator in the
manner provided herein shall be deemed to refer also to any such successor or
substitute Liquidator approved in the manner herein provided. Except as
expressly provided in this Article XII, the Liquidator approved in the manner
provided herein shall have and may exercise, without further authorization or
consent of any of the parties hereto, all of the powers conferred upon the Board
of Supervisors under the terms of this Agreement (but subject to all of the
applicable limitations, contractual and otherwise, upon the exercise of such
powers, other than the limitation on sale set forth in Section 7.10(a)) to the
extent necessary or desirable in the good faith judgment of the Liquidator to
carry out the duties and functions of the Liquidator hereunder for and during
such period of time as shall be reasonably required in the good faith judgment
of the Liquidator to complete the winding up and liquidation of the Partnership
as provided for herein.
12.4 LIQUIDATION.
The Liquidator shall proceed to dispose of the assets of the Partnership,
discharge its liabilities, and otherwise wind up its affairs in such manner and
over such period as the Liquidator determines to be in the best interest of the
Partners, subject to Section 17-804 of the Delaware Act and the following:
(a) DISPOSITION OF ASSETS. The assets may be disposed of by public or
private sale or by distribution in kind to one or more Partners on such terms as
the Liquidator and such Partner or Partners may agree. If any property is
distributed in kind, the Partner receiving the property shall be deemed for
purposes of Section 12.4(c) to have received cash equal to its fair market
value; and contemporaneously therewith, appropriate cash distributions must be
made to the other Partners. Under certain circumstances and subject to certain
<PAGE>
limitations, the Liquidator may defer liquidation or distribution of the
Partnership's assets for a reasonable time or distribute assets to the Partners
in kind if it determines that a sale would be impractical or would cause undue
loss to the Partners.
(b) DISCHARGE OF LIABILITIES. Liabilities of the Partnership include amounts
owed to Partners otherwise than in respect of their distribution rights under
Article VI. With respect to any liability that is contingent or is otherwise not
yet due and payable, the Liquidator shall either settle such claim for such
amount as it thinks appropriate or establish a reserve of cash or other assets
to provide for its payment. When paid, any unused portion of the reserve shall
be distributed as additional liquidation proceeds.
(c) LIQUIDATION DISTRIBUTIONS. All property and all cash in excess of that
required to discharge liabilities as provided in Section 12.4(b) shall be
distributed to the Partners in accordance with, and to the extent of, the
positive balances in their respective Capital Accounts, as determined after
taking into account all Capital Account adjustments (other than those made by
reason of distributions pursuant to this Section 12.4(c)) for the taxable year
of the Partnership during which the liquidation of the Partnership occurs (with
such date of occurrence being determined pursuant to Treasury Regulation,
Section 1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of
such taxable year (or, if later, within 90 days after said date of such
occurrence).
12.5 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP.
Upon the completion of the distribution of Partnership cash and property as
provided in Section 12.4 in connection with the liquidation of the Partnership,
the Partnership shall be terminated and the Certificate of Limited Partnership
and all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be canceled and such other
actions as may be necessary to terminate the Partnership shall be taken.
12.6 RETURN OF CAPITAL CONTRIBUTIONS.
The General Partner shall not be personally liable for, and shall have no
obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate, the return of the Capital Contributions of the Limited
Partners, or any portion thereof, it being expressly understood that any such
return shall be made solely from Partnership assets.
12.7 WAIVER OF PARTITION.
To the maximum extent permitted by law, each Partner hereby waives any right
to partition of the Partnership property.
12.8 CAPITAL ACCOUNT RESTORATION.
No Limited Partner shall have any obligation to restore any negative balance
in its Capital Account upon liquidation of the Partnership. 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.
<PAGE>
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
13.1 AMENDMENT TO BE ADOPTED SOLELY BY THE BOARD OF SUPERVISORS.
Each Limited Partner agrees that the Board of Supervisors, without the
approval of any Limited Partner or Assignee, may amend any provision of this
Agreement, and may authorize any Officer (pursuant to the powers of attorney
granted in Section 2.6) to execute, swear to, acknowledge, deliver, file and
record whatever documents may be required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the principal
place of business of the Partnership, the registered agent of the Partnership or
the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners in accordance
with this Agreement;
(c) a change that, in the discretion of the Board of Supervisors, is
necessary or advisable to qualify or continue the qualification of the
Partnership as a limited partnership or a partnership in which the Limited
Partners have limited liability under the laws of any state or to ensure that
neither the Partnership nor the Operating Partnership will be treated as an
association taxable as a corporation or otherwise taxed as an entity for federal
income tax purposes;
(d) a change that, in the discretion of the Board of Supervisors, (i) does
not adversely affect the Limited Partners in any material respect, (ii) is
necessary or advisable to (A) satisfy any requirements, conditions or guidelines
contained in any opinion, directive, order, ruling or regulation of any federal
or state agency or judicial authority or contained in any federal or state
statute (including the Delaware Act) or (B) facilitate the trading of the Units
(including the division of Outstanding Units into different classes to
facilitate uniformity of tax consequences within such classes of Units) or
comply with any rule, regulation, guideline or requirement of any National
Securities Exchange on which the Units are or will be listed for trading,
compliance with any of which the Board of Supervisors determines in its
discretion to be in the best interests of the Partnership and the Limited
Partners, (iii) is necessary or advisable in connection with action taken by the
Partnership pursuant to Section 5.10, or (iv) is required to effect the intent
expressed in the Initial Registration Statement or the Proxy Statement or the
intent of the provisions of this Agreement or is otherwise contemplated by this
Agreement;
(e) a change in the fiscal year or taxable year of the Partnership and any
changes that, in the discretion of the Board of Supervisors, are necessary or
advisable as a result of a change in the fiscal year or taxable year of the
Partnership including, if the Board of Supervisors shall so determine, a change
in the definition of 'Quarter' and the dates on which distributions are to be
made by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to prevent
the Partnership or the members of the Board of Supervisors or the Officers, or
the General Partner or its directors, officers, trustees or agents from in any
manner being subjected to the provisions of the Investment Company Act of 1940,
as amended, the Investment Advisers Act of 1940, as amended, or 'plan asset'
regulations adopted under the Employee Retirement Income Security Act of 1974,
<PAGE>
as amended, regardless of whether such are substantially similar to plan asset
regulations currently applied or proposed by the United States Department of
Labor;
(g) subject to the terms of Section 5.7, an amendment that, in the
discretion of the Board of Supervisors, is necessary or advisable in connection
with the authorization of issuance of any class or series of Partnership
Securities pursuant to Section 5.6 or the conversion of Incentive Distribution
Rights into Common Units pursuant to Section 5.8 or Section 11.3;
(h) any amendment expressly permitted in this Agreement to be made by the
Board of Supervisors acting alone;
(i) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 14.3;
(j) an amendment that, in the discretion of the Board of Supervisors, is
necessary or advisable to reflect, account for and deal with appropriately the
formation by the Partnership of, or investment by the Partnership in, any
corporation, partnership, joint venture, limited liability company or other
entity other than the Operating Partnership, in connection with the conduct by
the Partnership of activities permitted by the terms of Section 2.4;
(k) an amendment that, in the discretion of the Board of Supervisors, is
necessary or advisable to effect or continue the irrevocable delegation by the
General Partner to the Board of Supervisors of all management powers over the
business and affairs of the Partnership; or
(l) any other amendments substantially similar to the foregoing.
13.2 AMENDMENT PROCEDURES.
Except as provided in Sections 13.1 and 13.3, all amendments to this
Agreement shall be made in accordance with the following requirements.
Amendments to this Agreement may be proposed only by or with the consent of the
Board of Supervisors. A proposed amendment shall be effective upon its approval
by the holders of at least a majority of the Outstanding Common Units, unless a
greater or different percentage is required under this Agreement or by Delaware
law. Each proposed amendment that requires the approval of the holders of a
specified percentage of Outstanding Units shall be set forth in a writing that
contains the text of the proposed amendment. If such an amendment is proposed,
the Board of Supervisors shall seek the written approval of the requisite
percentage of Outstanding Common Units or call a meeting of the Limited Partners
to consider and vote on such proposed amendment. The Board of Supervisors shall
notify all Record Holders upon final adoption of any such proposed amendments.
13.3 AMENDMENT REQUIREMENTS.
(a) Notwithstanding the provisions of Sections 13.1 and 13.2, no provisions
of this Agreement that establishes a percentage of Outstanding Common 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
percentage unless such amendment is approved by the written consent or the
affirmative vote of holders of Outstanding Common Units whose aggregate
Outstanding Common Units constitute not less than the voting requirement sought
to be reduced.
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(b) Notwithstanding the provisions of Sections 13.1 and 13.2, no amendment
to this Agreement may (i) enlarge the obligations of any Limited Partner without
its consent, unless such shall be deemed to have occurred as a result of an
amendment approved pursuant to Section 13.3(c), (ii) enlarge the obligations of,
restrict in any way any action by or rights of, or reduce in any way the amounts
distributable, reimbursable or otherwise payable to the General Partner or any
of its Affiliates without its consent, which may be given or withheld in its
sole discretion, (iii) change Section 12.1(a) or (c), or (iv) change the term of
the Partnership or, except as set forth in Section 12.1(c), give any Person the
right to dissolve the Partnership.
(c) Except as provided in Section 14.3, and except as otherwise provided,
and without limitation of the Board of Supervisor's authority to adopt
amendments to this Agreement as contemplated in Section 13.1, any amendment that
would have a material adverse effect on the rights or preferences of any class
of Partnership Interests in relation to other classes of Partnership Interests
must be approved by the holders of not less than a majority of the Partnership
Interests of the class affected.
(d) Notwithstanding any other provision of this Agreement, except for
amendments pursuant to Section 7.10(a) or 13.1 and except as otherwise provided
by Section 14.3(b), no amendments shall become effective without the approval of
the holders of at least 90% of the Outstanding Common Units unless the
Partnership obtains an Opinion of Counsel to the effect that such amendment will
not affect the limited liability of any Limited Partner or any limited partner
of the other Group Members under applicable law.
(e) This Section 13.3 shall only be amended with the approval of the holders
of at least 90% of the Outstanding Common Units.
13.4 TRI-ANNUAL AND SPECIAL MEETINGS.
All acts of Limited Partners to be taken pursuant to this Agreement shall be
taken in the manner provided in this Article XIII and, in the case of Tri-Annual
Meetings, in the manner provided in Sections 7.2(a)(ii) and 7.3 and this Article
XIII. Tri-Annual Meetings to elect the Elected Supervisors and to transact such
other business as may be properly brought before the Tri-Annual Meeting shall be
held in the second calendar quarter of every third year at such time and place
as the Board of Supervisors may specify in the notice of the meeting, which
shall be delivered to each Limited Partner at least 10 and not more than 60 days
prior to such meeting. The first Tri-Annual Meeting was held in 1997. Special
meetings of the Limited Partners may be called by the Board of Supervisors or by
Limited Partners owning 20% or more of the Outstanding Common Units of the class
or classes for which a meeting is proposed. Limited Partners shall call a
special meeting by delivering to the Board of Supervisors one or more requests
in writing stating that the signing Limited Partners wish to call a special
meeting and indicating the general or specific purposes for which the special
meeting is to be called. Within 60 days after receipt of such a call from
Limited Partners or within such greater time as may be reasonably necessary for
the Partnership to comply with any statutes, rules, regulations, listing
agreements or similar requirements governing the holding of a meeting or the
solicitation of proxies for use at such a meeting, the Board of Supervisors
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 Board of Supervisors on a date not less than 10 days nor
more than 60 days after the mailing of notice of the meeting. The Chairman of
the Board of Supervisors, if any, and if present and acting, shall preside at
all meetings of the Limited Partners. In the absence of the Chairman of the
Board of Supervisors, the Vice Chairman of the Board of Supervisors, as chosen
by the Board of Supervisors, shall preside, and in their absence, the President
shall preside. Limited Partners shall not vote on matters that would cause the
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Limited Partners to be deemed to be taking part in the management and control of
the business and affairs of the Partnership so as to jeopardize the Limited
Partners' limited liability under the Delaware Act or the law of any other state
in which the Partnership is qualified to do business.
13.5 NOTICE OF A MEETING.
Notice of a meeting called pursuant to Section 13.4 shall be given to the
Record Holders in writing by mail or other means of written communication in
accordance with Section 16.1. 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.
13.6 RECORD DATE.
For purposes of determining the Limited Partners entitled to notice of or to
vote at a meeting of the Limited Partners or to give approvals without a meeting
as provided in Section 13.11, the Board of Supervisors 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 Board of Supervisors to give such approval.
13.7 ADJOURNMENT.
When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting and a new Record Date need not be fixed, if the
time and place thereof are announced at the meeting at which the adjournment is
taken, unless such adjournment shall be for more than 45 days. At the adjourned
meeting, the Partnership may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than 45 days
or if a new Record Date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given in accordance with this Article XIII.
13.8 WAIVER OF NOTICE; APPROVAL OF MEETING; APPROVAL OF MINUTES.
The transactions of any meeting of Limited Partners, however called and
noticed, and whenever held, shall be as valid as if occurred at a meeting duly
held after regular call and notice, if a quorum is present either in person or
by proxy, and if, either before or after the meeting, Limited Partners
representing such quorum who were present in person or by proxy and entitled to
vote, sign a written waiver of notice or an approval of the holding of the
meeting or an approval of the minutes thereof. All waivers and approvals shall
be filed with the Partnership records or made a part of the minutes of the
meeting. Attendance of a Limited Partner at a meeting shall constitute a waiver
of notice of the meeting, except when the Partner does not approve, at the
beginning of the meeting, of the transaction of any business because the meeting
is not lawfully called or convened; and except that attendance at a meeting is
not a waiver of any right to disapprove the consideration of matters required to
be included in the notice of the meeting, but not so included, if the
disapproval is expressly made at the meeting.
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13.9 QUORUM.
The holders of a majority of the Outstanding Units of the class or classes
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 or classes
unless any such action by the Limited Partners requires approval by holders of a
greater percentage of such Units, in which case the quorum shall be such greater
percentage (excluding, in either case, if such are to be excluded from the vote,
Outstanding Units owned by the General Partner and its Affiliates). 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 a majority of the Outstanding
Units entitled to vote and be present in person or by proxy at such meeting
shall be deemed to constitute the act of all Limited Partners, unless a greater
or different percentage is required with respect to such action under the
provisions of this Agreement, in which case the act of the Limited Partners
holding Outstanding Units that in the aggregate represent at least such greater
or different percentage shall be required. The Limited Partners present at a
duly called or held meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Limited Partners to leave less than a quorum, if any action taken (other than
adjournment) is approved by the required percentage of Outstanding Units
specified in this Agreement. In the absence of a quorum any meeting of Limited
Partners may be adjourned from time to time by the affirmative vote of holders
of at least 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
13.7.
13.10 CONDUCT OF A MEETING.
The Chairman of the Board of Supervisors, or in his absence, the Vice
Chairman or, in his absence, the President, or in his absence, any Vice
President, shall have full power and authority concerning the manner of
conducting any meeting of the Limited Partners or solicitation of approvals in
writing, including the determination of Persons entitled to vote, the existence
of a quorum, the satisfaction of the requirements of Section 13.4, the conduct
of voting, the validity and effect of any proxies and the determination of any
controversies, votes or challenges arising in connection with or during the
meeting or voting. The presiding Officer shall designate a Person to take the
minutes of any meeting. All minutes shall be kept with the records of the
Partnership maintained by the Board of Supervisors. The Board of Supervisors 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 regulations in
regard to the appointment of proxies, the appointment and duties of inspectors
of votes and approvals, the submission and examination of proxies and other
evidence of the right to vote, and the revocation of approvals in writing.
13.11 ACTION WITHOUT A MEETING.
If authorized by the Board of Supervisors, 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 Partners owning not less
than the minimum percentage of the Outstanding Units that would be necessary to
authorize or take such action at a meeting at which all the Limited Partners
were present and voted (unless such provision conflicts with any rule, regular
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). Prompt notice of the taking of
<PAGE>
action without a meeting shall be given to the Limited Partners who have not
approved in writing. The Board of Supervisors 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 Board of Supervisors. 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 Board of Supervisors, the written approvals shall have no force
and effect unless and until (a) they are deposited with the Partnership in care
of the Board of Supervisors, (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 Board of Supervisors to the effect that the exercise
of such right and the action proposed to be taken with respect to any particular
matter (i) will not cause the Limited Partners to be deemed to be taking part in
the management and control of the business and affairs of the Partnership so as
to jeopardize the Limited Partners' limited liability, and (ii) is otherwise
permissible under the state statutes then governing the rights, duties and
liabilities of the Partnership and the Partners.
13.12 VOTING AND OTHER RIGHTS.
(a) Only those Record Holders of the Units on the Record Date set pursuant
to Section 13.6 (and also subject to the limitations contained in the definition
of 'Outstanding') shall be entitled to notice of, and to vote at, a meeting of
Limited Partners or to act with respect to matters as to which the holders of
the Outstanding Units have the right to vote or to act. All references in this
Agreement to votes of, or other acts that may be taken by, the Outstanding Units
shall be deemed to be references to the votes or acts of the Record Holders of
such Outstanding Units.
(b) With respect to Units that are held for a Person's account by another
Person (such as a broker, dealer, bank, trust company or clearing corporation,
or an agent of any of the foregoing), in whose name such Units are registered,
such other Person 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 13.12(b) (as
well as all other provisions of this Agreement) are subject to the provisions of
Section 4.3.
ARTICLE XIV
MERGER
14.1 AUTHORITY.
The Partnership may merge or consolidate with one or more corporations,
business trusts or associations, real estate investment trusts, common law
trusts or unincorporated businesses, including a general partnership, limited
partnership, limited liability company or limited liability partnership formed
under the laws of the State of Delaware or any other state of the United States
of America, pursuant to a written agreement of merger or consolidation ('Merger
Agreement') in accordance with this Article XIV.
<PAGE>
14.2 PROCEDURE FOR MERGER OR CONSOLIDATION.
Merger or consolidation of the Partnership pursuant to this Article XIV
requires the prior approval of the Board of Supervisors. If the Board of
Supervisors shall determine, in the exercise of its discretion,
to consent to the merger or consolidation, the Board of Supervisors 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 (the 'Surviving
Business Entity');
(c) The terms and conditions of the proposed merger or consolidation;
(d) The manner and basis of exchanging or converting the equity securities
of each constituent business entity for, or into, cash, property or general or
limited partner interests, rights, securities or obligations of the Surviving
Business Entity; and (i) if any general or limited partner interests, securities
or rights of any constituent business entity are not to be exchanged or
converted solely for, or into, cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving Business Entity,
the cash, property or general or limited partner interests, rights, securities
or obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) which the holders of such general or
limited partner interests, securities or rights are to receive in exchange for,
or upon conversion of their general or limited partner interests, securities or
rights, and (ii) in the case of securities represented by certificates, upon the
surrender of such certificates, which cash, property or general or limited
partner interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;
(e) A statement of any changes in the constituent documents or the adoption
of new constituent documents (the articles or certificate of incorporation,
articles of trust, declaration of trust, certificate or agreement of limited
partnership, certificate of formation or agreement of limited liability company
or other similar charter or governing document) of the Surviving Business Entity
to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date of the filing
of the certificate of merger pursuant to Section 14.4 or a later date specified
in or determinable in accordance with the Merger Agreement (provided, that if
the effective time of the merger is to be later than the date of the filing of
the certificate of merger, the effective time shall be filed 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 Board of
Supervisors.
14.3 APPROVAL BY LIMITED PARTNERS OF MERGER OR CONSOLIDATION.
(a) The Board of Supervisors, upon its approval of the Merger Agreement,
shall direct that the Merger Agreement be submitted to a vote of Limited
Partners, whether at a special meeting or by written consent, in either case in
<PAGE>
accordance with the requirements of Article XIII. A copy or a summary of the
Merger Agreement shall be included in or enclosed with the notice of a special
meeting or the written consent.
(b) The Merger Agreement shall be approved upon receiving the affirmative
vote or consent of the holders of at least a majority of the Outstanding Common
Units unless the Merger Agreement contains any provision that, if contained in
an amendment to this Agreement, the provisions of this Agreement or the Delaware
Act would require the vote or consent of a greater percentage of the Outstanding
Common Units 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
14.4, the merger or consolidation may be abandoned pursuant to provisions
therefor, if any, set forth in the Merger Agreement.
14.4 CERTIFICATE OF MERGER.
Upon the required approval by the Board of Supervisors and the Limited
Partners of a Merger Agreement, a certificate of merger shall be executed and
filed with the Secretary of State of the State of Delaware in conformity with
the requirements of the Delaware Act.
14.5 EFFECT OF MERGER.
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the business
entities that has merged or consolidated, and all property, real, personal
and mixed, and all debts due to any of those business entities and all other
things and causes of action belonging to each of those business entities
shall be vested in the Surviving Business Entity and after the merger or
consolidation shall be the property of the Surviving Business Entity to the
extent they were of each constituent business entity;
(ii) the title to any real property vested by deed or otherwise in any
of those constituent business entities shall not revert and is not in any
way impaired because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security interests in
property of any of those constituent business entities shall be preserved
unimpaired; and
(iv) all debts, liabilities and duties of those constituent business
entities shall attach to the Surviving Business Entity, and may be enforced
against it to the same extent as if the debts, liabilities and duties had
been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article shall not be
deemed to result in a transfer or assignment of assets or liabilities from one
entity to another.
<PAGE>
ARTICLE XV
RIGHT TO ACQUIRE UNITS
15.1 RIGHT TO ACQUIRE UNITS.
(a) Notwithstanding any other provision of this Agreement, if at any time
not more than 20% of the total Units of any class 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 in whole or in
part to the Partnership or any Affiliate of the General Partner, exercisable in
its sole discretion, to purchase all, but not less than all, of the Units of
such class then Outstanding held by Persons other than the General Partner and
its Affiliates, at the greater of (x) the Current Market Price as of the date
three days prior to the date that the notice described in Section 15.1(b) is
mailed and (y) the highest price paid by the General Partner or any of its
Affiliates for any such Unit purchased during the 90-day period preceding the
date that the notice described in Section 15.1(b) is mailed. As used in this
Agreement, (i) 'Current Market Price' as of any date of any class of Units
listed or admitted to on any National Securities Exchange means the average of
the daily closing Prices (as hereinafter defined) per Unit of such class for the
20 consecutive Trading Days (as hereinafter defined) immediately prior to such
date; (ii) 'Closing Price' for any day means the last sale price on such day,
regular way, or in case no such sale takes place on such day, the average of the
closing bid and asked prices on such day, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted for trading on the principal National
Securities Exchange (other than the Nasdaq Stock Market) on which the Units of
such class are listed or admitted to trading or, if the Units of such class are
not listed or admitted to trading on any National Securities Exchange (other
than the Nasdaq Stock Market), the last quoted price on such day or, if not so
quoted, the average of the high bid and low asked prices on such day in the
over-the-counter market, as reported by the Nasdaq Stock Market or such other
system then in use, or, if on any such day the Units of such class are not
quoted by any such organization, the average of the closing bid and asked prices
on such day as furnished by a professional market maker making a market in the
Units of such class selected by the Board of Supervisors, or if on any such day
no market maker is making a market in the Units of such class, the fair value of
such Units on such day as determined reasonably and in good faith by the Board
of Supervisors; and (iii) 'Trading Day' means a day on which the principal
National Securities Exchange on which the Units of any class are listed or
admitted to trading is open for the transaction of business or, if Units of a
class are not listed or admitted to trading on any National Securities Exchange,
a day on which banking institutions in New York City generally are open.
(b) If the General Partner, any Affiliate of the General Partner or the
Partnership elects to exercise the right to purchase Units pursuant to Section
15.1(a), the General Partner shall deliver to the Transfer Agent notice of such
election to purchase (the 'Notice of Election to Purchase') and shall cause the
Transfer Agent to mail a copy of such Notice of Election to Purchase to the
Record Holders of 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 for a period of at least three
consecutive days in at least two daily newspapers of general circulation printed
in the English language and published in the Borough of Manhattan, New York. The
Notice of Election to Purchase shall specify the Purchase Date and the price
(determined in accordance with Section 15.1(a)) at which Units will be purchased
and state that the General Partner, its Affiliate or the Partnership, as the
case may be, elects to purchase such Units, upon surrender of Certificates
representing such Units in exchange for payment, at such office or offices of
<PAGE>
the Transfer Agent as the Transfer Agent may specify, or as may be required by
any National Securities Exchange on which the Units are listed or admitted to
trading. Any such Notice of Election to Purchase mailed to a Record Holder of
Units at his address as reflected in the records of the Transfer Agent shall be
conclusively presumed to have been given regardless of whether the owner
receives such notice. On or prior to the Purchase Date, the General Partner, its
Affiliate or the Partnership, as the case may be, shall deposit with the
Transfer Agent cash in an amount sufficient to pay the aggregate purchase price
of all of the Units to be purchased in accordance with this Section 15.1. If the
Notice of Election to Purchase shall have been duly given as aforesaid at least
10 days prior to the Purchase Date, and if on or prior to the Purchase Date the
deposit described in the preceding sentence has been made for the benefit of the
holders of 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 Units (including any
rights pursuant to Articles IV, V, VI, and XII) shall thereupon cease, except
the right to receive the purchase price (determined in accordance with Section
15.1(a)) for Units therefor, without interest, upon surrender to the Transfer
Agent of the Certificates representing such Units, and such Units shall
thereupon be deemed to be transferred to the General Partner, its Affiliate or
the Partnership, as the case may be, on the record books of the Transfer Agent
and the Partnership, and the General Partner or any Affiliate of the General
Partner, or the Partnership, as the case may be, shall be deemed to be the owner
of all such Units from and after the Purchase Date and shall have all rights as
the owner of such Units (including all rights as owner of such Units pursuant to
Articles IV, V, VI and XII).
(c) At any time from and after the Purchase Date, a holder of an Outstanding
Unit subject to purchase as provided in this Section 15.1 may surrender his
Certificate evidencing such Unit to the Transfer Agent in exchange for payment
of the amount described in Section 15.1(a), therefor, without interest thereon.
ARTICLE XVI
GENERAL PROVISIONS
16.1 ADDRESSES AND NOTICES.
Any notice, demand, request, report or proxy materials required or permitted
to be given or made to a Partner or Assignee under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent
by first class United States mail or by other means of written communication to
the Partner or Assignee at the address described below. Any notice, payment or
report to be given or made to a Partner or Assignee hereunder shall be deemed
conclusively to have been given or made, and the obligation to give such notice
or report or to make such payment shall be deemed conclusively to have been
fully satisfied, upon sending of such notice, payment or report to the Record
Holder of such 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 16.1 executed by the Board of Supervisors, the
Transfer Agent or the mailing organization shall be prima facie evidence of the
giving or making of such notice, payment or report. If any notice, payment or
report addressed to a Record Holder at the address of such Record Holder
appearing on the books and records of the Transfer Agent or the Partnership is
returned by the United States Postal Service marked to indicate that the United
States Postal Service is unable to deliver it, such notice, payment or report
<PAGE>
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 2.3. The Board of Supervisors may rely and shall be
protected in relying on any notice or other document from a Partner, Assignee or
other Person if believed by it to be genuine.
16.2 FURTHER ACTION.
The parties shall execute and deliver all documents, provide all information
and take or refrain from taking action as may be necessary or appropriate to
achieve the purposes of this Agreement.
16.3 BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
16.4 INTEGRATION.
This Agreement constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.
16.5 CREDITORS.
None of the provisions of this Agreement shall be for the benefit of, or
shall be enforceable by, any creditor of the Partnership.
16.6 WAIVER.
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach of any other covenant, duty, agreement or condition.
16.7 COUNTERPARTS.
This Agreement may be executed in counterparts, all of which together shall
constitute an agreement binding on all the parties hereto, notwithstanding that
all such parties are not signatories to the original or the same counterpart.
Each party shall become bound by this Agreement immediately upon affixing its
signature hereto or, in the case of a Person acquiring a Unit, upon accepting
the certificate evidencing such Unit or executing and delivering a Transfer
Application as herein described, independently of the signature of any other
party.
16.8 APPLICABLE LAW.
This Agreement shall be construed in accordance with and governed by the
laws of the State of Delaware, without regard to the principles of conflicts of
law.
<PAGE>
16.9 INVALIDITY OF PROVISIONS.
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
16.10 CONSENT OF PARTNERS.
Each Partner hereby expressly consents and agrees that, whenever in this
Agreement it is specified that an action may be taken upon the affirmative vote
or consent of less than all of the Partners, such action may be so taken upon
the concurrence of less than all of the Partners and each Partner shall be bound
by the results of such action.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
GENERAL PARTNER:
SUBURBAN ENERGY SERVICES GROUP LLC
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
Board of Supervisors.
By: Mark A. Alexander, President of Suburban
Propane Partners, LP., as attorney-in-fact for
all Limited Partners pursuant to the Power of
Attorney granted pursuant to Section 2.6
-------------------------------------------
Mark A. Alexander
Attorney-in-Fact
<PAGE>
EXHIBIT A TO THE SECOND AMENDED AND
RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
SUBURBAN PROPANE PARTNERS, L.P.
CERTIFICATE EVIDENCING COMMON UNITS
REPRESENTING LIMITED PARTNER INTERESTS
SUBURBAN PROPANE PARTNERS, L.P.
No. Common Units
In accordance with Section 4.1 of the Second Amended and Restated Agreement of
Limited Partnership of Suburban Propane Partners, L.P., as amended, supplemented
or restated from time to time (the 'PARTNERSHIP AGREEMENT'), SUBURBAN PROPANE
PARTNERS, L.P., a Delaware limited partnership (the 'PARTNERSHIP'), hereby
certifies that (the 'HOLDER') is the registered owner of
Common Units representing limited partner interests in the Partnership (the
'COMMON UNITS') transferable on the books of the Partnership, in person or by
duly authorized attorney, upon surrender of this Certificate properly endorsed
and accompanied by a properly executed application for transfer of the Common
Units represented by this Certificate. The rights, preferences and limitations
of the Common Units are set forth in, and this Certificate and the Common Units
represented hereby are issued and shall in all respects be subject to the terms
and provisions of, the Partnership Agreement. Copies of the Partnership
Agreement are on file at, and will be furnished without charge on delivery of
written request to the Partnership at, the principal office of the Partnership
located at One Suburban Plaza, 240 Route 10 West, Whippany, New Jersey
07981-0206. Capitalized terms used herein but not defined shall have the meaning
given them in the Partnership Agreement.
The Holder, by accepting this Certificate, is deemed to have (i) requested
admission as, and agreed to become, a Limited Partner and to have agreed to
comply with and be bound by and to have executed the Partnership Agreement, (ii)
represented and warranted that the Holder has all right, power and authority
and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (iii) granted the powers of attorney provided for in the Partnership
Agreement and (iv) made the waivers and given the consents and approvals
contained in the Partnership Agreement.
This Certificate shall not be valid for any purpose unless it has been
countersigned and registered by the Transfer Agent and Registrar.
Dated: ................................... SUBURBAN PROPANE PARTNERS, L.P.
Countersigned and Registered by:
First Chicago Trust Company of By: ............................
New York, as Transfer Agent and PRESIDENT
Registrar
By: ...................................... By: ............................
AUTHORIZED SIGNATURE SECRETARY
<PAGE>
[Reverse of Certificate]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as follows according to applicable laws or
regulations:
TEN COM -- as tenants in common UNIF GIFT MIN ACT --
TEN ENT -- as tenants by the entireties ............ Custodian ...........
JT TEN -- as joint tenants with right (CUST) (MINOR)
of survivorship and not as under Uniform Gifts to Minors
tenants in common Act...............................
STATE
Additional abbreviations, though not in the above list, may also be used.
ASSIGNMENT OF COMMON UNITS
IN
SUBURBAN PROPANE PARTNERS, L.P.
IMPORTANT NOTICE REGARDING INVESTOR RESPONSIBILITIES DUE TO TAX
SHELTER STATUS OF SUBURBAN PROPANE PARTNERS, L.P.
You have acquired an interest in Suburban Propane Partners, L.P., One
Suburban Plaza, 240 Route 10 West, Whippany, New Jersey 07981-0206, whose
taxpayer identification number is 22-3410353. The Internal Revenue Service has
issued Suburban Propane Partners, L.P. the following tax shelter registration
number: .
YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL REVENUE SERVICE IF
YOU CLAIM ANY DEDUCTION, LOSS, CREDIT, OR OTHER TAX BENEFIT OR REPORT ANY INCOME
BY REASON OF YOUR INVESTMENT IN SUBURBAN PROPANE PARTNERS, L.P.
You must report the registration number as well as the name and taxpayer
identification number of SUBURBAN PROPANE PARTNERS, L.P on Form 8271. FORM 8271
MUST BE ATTACHED TO THE RETURN ON WHICH YOU CLAIM THE DEDUCTION, LOSS, CREDIT,
OR OTHER TAX BENEFIT OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT IN
SUBURBAN PROPANE PARTNERS, L.P.
If you transfer your interest in Suburban Propane Partners, L.P. to another
person, you are required by the Internal Revenue Service to keep a list
containing (a) that person's name, address and taxpayer identification number,
(b) the date on which you transferred the interest and (c) the name, address and
tax shelter registration number of Suburban Propane Partners, LP. If you do not
want to keep such a list, you must (1) send the information specified above to
the Partnership, which will keep the list for this tax shelter, and (2) give a
copy of this notice to the person to whom you transfer your interest. Your
failure to comply with any of the above-described responsibilities could result
in the imposition of a penalty under Section 6707(b) or 6708(a) of the Internal
Revenue Code of 1986, as amended, unless such failure is shown to be due to
reasonable cause.
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS INVESTMENT
OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED, OR APPROVED BY THE
INTERNAL REVENUE SERVICE.
<PAGE>
FOR VALUE RECEIVED, hereby assigns,
conveys, sells and transfers unto
..................................... ........................................
(Please print or typewrite name (Please insert Social Security or other
and address of Assignee) identifying number of Assignee)
Common Units representing limited partner interests evidenced
by this Certificate, subject to the Partnership Agreement, and does hereby
irrevocably constitute and appoint ............ .................... as its
attorney-in-fact with full power of substitution to transfer the same on the
books of Suburban Propane Partners, L.P.
Date: ..................... NOTE: The signature to any endorsement hereon
must correspond with the name as written
upon the face of this Certificate in
every particular, without alteration,
enlargement or change.
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER FIRM OF THE NATIONAL ASSOCIATION
OF SECURITIES DEALERS, INC. OR BY A COMMERCIAL BANK OR TRUST COMPANY.
.........................................
(Signature)
.........................................
(Signature)
SIGNATURE(S) GUARANTEED
No transfer of the Common Units evidenced hereby will be registered on the
books of the Partnership, unless the Certificate evidencing the Common Units to
be transferred is surrendered for registration or transfer and an Application
for Transfer of Common Units has been executed by a transferee either (a) on the
form set forth below or (b) on a separate application that the Partnership will
furnish on request without charge. A transferor of the Common Units shall have
no duty to the transferee with respect to execution of the transfer application
in order for such transferee to obtain registration of the transfer of the
Common Units.
<PAGE>
APPLICATION FOR TRANSFER OF COMMON UNITS
The undersigned ('Assignee') hereby applies for transfer to the name of the
Assignee of the Common Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited Partner and
agrees to comply with and be bound by, and hereby executes, the Amended and
Restated Agreement of Limited Partnership of Suburban Propane Partners, L.P.
(the 'Partnership'), as amended, supplemented or restated to the date hereof
(the 'Partnership Agreement'), (b) represents and warrants that the Assignee has
all right, power and authority and, if an individual, the capacity necessary to
enter into the Partnership Agreement, (c) appoints, the Vice Chairman and the
President of the Partnership and, if a Liquidator shall be appointed, the
Liquidator of the Partnership as the Assignee's attorney-in-fact to execute,
swear to, acknowledge and file any document, including, without limitation, the
Partnership Agreement and any amendment thereto, and the Certificate of Limited
Partnership of the Partnership and any amendment thereto, necessary or
appropriate for the Assignee's admission as a Substituted Limited Partner and as
a party to the Partnership Agreement, (d) gives the power of attorney provided
for in the Partnership Agreement, and (e) makes the waivers and gives the
consents and approvals contained in the Partnership Agreement. Capitalized terms
not defined herein have the meanings assigned to such terms in the Partnership
Agreement.
Date: ............................
.................................. ...................................
SOCIAL SECURITY OR OTHER SIGNATURE OF ASSIGNEE
IDENTIFYING NUMBER OF ASSIGNEE
.................................. ...................................
PURCHASE PRICE INCLUDING NAME AND ADDRESS OF ASSIGNEE
COMMISSIONS, IF ANY
Type of Entity (check one):
[ ] Individual [ ] Partnership [ ] Corporation
[ ] Trust [ ] Other (specify) ..............
Nationality (check one):
[ ] U.S. Citizen, Resident or Domestic Entity
[ ] Foreign Corporation [ ] Non-resident Alien
If the U.S. Citizen, Resident or Domestic Entity box is checked, the
following certification must be completed.
<PAGE>
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the
'Code'), the Partnership must withhold tax with respect to certain transfers of
property if a holder of an interest in the Partnership is a foreign person. To
inform the Partnership that no withholding is required with respect to the
undersigned interestholder's interest in it, the undersigned hereby certifies
the following (or, if applicable, certifies the following on behalf of the
interestholder).
Complete Either A or B:
A. Individual Interestholder
1. I am not a non-resident alien for purposes of U.S. income taxation.
2. My U.S. taxpayer identification number (Social Security Number) is .
3. My home address is .
B. Partnership, Corporation or Other Interestholder
1. ..................................................... is not a foreign
NAME OF INTERESTHOLDER
corporation, foreign partnership, foreign trust or foreign estate (as those
terms are defined in the Code and Treasury Regulations).
2. The interestholder's U.S. employer identification number is .
3. The interestholder's office address and place of incorporation (if
applicable) is
.
The interestholder agrees to notify the Partnership within sixty (60) days
of the date the interestholder becomes a foreign person.
The interestholder understands that this certificate may be disclosed to
the Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete and, if applicable, I further declare that I have authority to sign
this document on behalf of
.....................................
NAME OF INTERESTHOLDER
.....................................
SIGNATURE AND DATE
.....................................
TITLE (IF APPLICABLE)
Note: If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee holder or an agent of any of the foregoing, and is
holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or, in the case of any other nominee holder, a person performing a similar
function. If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee owner or an agent of any of the foregoing, the above
certification as to any person for whom the Assignee will hold the Common Units
shall be made to the best of the Assignee's knowledge.
EXECUTION COPY
--------------
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SUBURBAN PROPANE, L.P.
<PAGE>
TABLE OF CONTENTS
PAGE
----
R E C I T A L S:............................................................13
ARTICLE I DEFINITIONS.....................................................2
1.1 DEFINITIONS...................................................2
1.2 CONSTRUCTION.................................................11
ARTICLE II ORGANIZATION...................................................11
2.1 FORMATION....................................................11
2.2 NAME.........................................................12
2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE;
OTHER OFFICES...........................................12
2.4 PURPOSE AND BUSINESS.........................................13
2.5 POWERS.......................................................13
2.6 POWER OF ATTORNEY............................................13
2.7 TERM.........................................................14
2.8 TITLE TO PARTNERSHIP ASSETS..................................14
ARTICLE III RIGHTS OF THE LIMITED PARTNERS.................................15
3.1 LIMITATION OF LIABILITY......................................15
3.2 MANAGEMENT OF BUSINESS.......................................15
3.3 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP.......16
3.4 OUTSIDE ACTIVITIES OF THE LIMITED PARTNERS...................16
ARTICLE IV TRANSFER OF PARTNERSHIP INTERESTS..............................17
4.1 TRANSFER GENERALLY...........................................17
4.2 TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST.......17
4.3 TRANSFER OF THE LIMITED PARTNERS'PARTNERSHIP INTERESTS.......17
4.4 RESTRICTIONS ON TRANSFERS....................................18
ARTICLE V CONTRIBUTIONS AND INITIAL TRANSFERS............................18
5.1 ORGANIZATIONAL CONTRIBUTIONS.................................18
5.2 CONTRIBUTIONS AND TRANSFERS ON THE INITIAL CLOSING DATE
AND THE CLOSING DATE....................................18
5.3 ADDITIONAL CAPITAL CONTRIBUTIONS.............................19
5.4 INTEREST AND WITHDRAWAL......................................19
5.5 CAPITAL ACCOUNTS.............................................19
5.6 LOANS FROM PARTNERS..........................................21
5.7 LIMITED PREEMPTIVE RIGHTS....................................22
5.8 FULLY PAID AND NON-ASSESSABLE NATURE OF LIMITED PARTNER
PARTNERSHIP INTERESTS...................................22
<PAGE>
ARTICLE VI ALLOCATIONS AND DISTRIBUTIONS..................................22
6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES.....................22
6.2 ALLOCATIONS FOR TAX PURPOSES.................................25
6.3 SPECIAL DISTRIBUTION.........................................27
6.4 GENERAL DISTRIBUTIONS........................................27
ARTICLE VII MANAGEMENT AND OPERATION OF BUSINESS...........................28
7.1 MANAGEMENT...................................................28
7.2 THE BOARD OF SUPERVISORS; APPOINTMENT; MANNER OF ACTING......30
7.3 REMOVAL OF MEMBERS OF THE BOARD OF SUPERVISORS...............30
7.4 RESIGNATIONS OF MEMBERS OF THE BOARD OF SUPERVISORS..........31
7.5 VACANCIES ON THE BOARD OF SUPERVISORS........................31
7.6 MEETINGS; COMMITTEES; CHAIRMAN...............................31
7.7 OFFICERS.....................................................32
7.8 COMPENSATION.................................................34
7.9 RESTRICTIONS ON GENERAL PARTNER'S AND BOARD OF
SUPERVISORS' AUTHORITY..................................34
7.10 REIMBURSEMENT OF THE GENERAL PARTNER; EMPLOYEE BENEFIT
PLANS...................................................35
7.11 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER....................36
7.12 LOANS FROM THE GENERAL PARTNER; CONTRACTS WITH
AFFILIATES; CERTAIN RESTRICTIONS ON THE GENERAL
PARTNER.................................................37
7.13 INDEMNIFICATION..............................................38
7.14 LIABILITY OF INDEMNITEES.....................................40
7.15 RESOLUTION OF CONFLICTS OF INTEREST..........................41
7.16 OTHER MATTERS CONCERNING THE GENERAL PARTNER AND THE
BOARD OF SUPERVISORS.........................................42
7.17 RELIANCE BY THIRD PARTIES....................................43
ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS.........................44
8.1 RECORDS AND ACCOUNTING.......................................44
8.2 FISCAL YEAR..................................................44
ARTICLE IX TAX MATTERS....................................................44
9.1 TAX RETURNS AND INFORMATION..................................44
9.2 TAX ELECTIONS................................................45
9.3 TAX CONTROVERSIES............................................45
9.4 WITHHOLDING..................................................45
ARTICLE X ADMISSION OF PARTNERS..........................................45
10.1 INITIAL ADMISSION OF PARTNERS................................45
10.2 ADMISSION OF SUBSTITUTED LIMITED PARTNERS....................46
10.3 ADMISSION OF SUCCESSOR GENERAL PARTNER.......................46
10.4 ADMISSION OF ADDITIONAL LIMITED PARTNERS.....................46
10.5 AMENDMENT OF AGREEMENT AND CERTIFICATE OF
LIMITED PARTNERSHIP.....................................47
ARTICLE XI WITHDRAWAL OR REMOVAL OF PARTNERS..............................47
11.1 WITHDRAWAL OF THE GENERAL PARTNER............................47
<PAGE>
11.2 REMOVAL OF THE GENERAL PARTNER...............................49
11.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR GENERAL
PARTNER; DELEGATION OF AUTHORITY TO THE BOARD OF
SUPERVISORS BY SUCCESSOR GENERAL PARTNER................49
11.4 WITHDRAWAL OF THE LIMITED PARTNER............................50
ARTICLE XII DISSOLUTION AND LIQUIDATION....................................50
12.1 DISSOLUTION..................................................50
12.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP
AFTER DISSOLUTION.......................................50
12.3 LIQUIDATOR...................................................51
12.4 LIQUIDATION..................................................52
12.5 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP...........52
12.6 RETURN OF CAPITAL CONTRIBUTIONS..............................53
12.7 WAIVER OF PARTITION..........................................53
12.8 CAPITAL ACCOUNT RESTORATION..................................53
ARTICLE XIII AMENDMENT OF PARTNERSHIP AGREEMENT.............................53
13.1 AMENDMENT TO BE ADOPTED SOLELY BY THE BOARD OF SUPERVISORS...53
13.2 AMENDMENT PROCEDURES.........................................53
ARTICLE XIV MERGER.........................................................55
14.1 AUTHORITY....................................................55
14.2 PROCEDURE FOR MERGER OR CONSOLIDATION........................55
14.3 APPROVAL BY LIMITED PARTNERS OF MERGER OR CONSOLIDATION......56
14.4 CERTIFICATE OF MERGER........................................56
14.5 EFFECT OF MERGER.............................................56
ARTICLE XV GENERAL PROVISIONS.............................................57
15.1 ADDRESSES AND NOTICES........................................57
15.2 REFERENCES...................................................57
15.3 FURTHER ACTION...............................................57
15.4 BINDING EFFECT...............................................57
15.5 INTEGRATION..................................................58
15.6 CREDITORS....................................................58
15.7 WAIVER.......................................................58
15.8 COUNTERPARTS.................................................58
15.9 APPLICABLE LAW...............................................58
15.10 INVALIDITY OF PROVISIONS.....................................58
<PAGE>
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SUBURBAN PROPANE, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF SUBURBAN PROPANE, L.P. dated as of May 26, 1999, is entered into
by and among Suburban Energy Services Group LLC, a Delaware limited liability
company, as the General Partner, and Suburban Propane Partners, L.P., as the
Limited Partner, together with any other Persons who become Partners in the
Partnership or parties hereto as provided herein. In consideration of the
covenants, conditions and agreements contained herein, the parties hereto hereby
agree as follows:
R E C I T A L S:
WHEREAS, Suburban Propane GP, Inc., a Delaware corporation and
the initial general partner of the Partnership (the "Initial General Partner"),
and certain other parties organized the Partnership as a Delaware limited
partnership pursuant to an Amended and Restated Agreement of Limited Partnership
dated as of March 4, 1996 (the "Original Agreement"); and
WHEREAS, the Partnership, the MLP, the Initial General
Partner, Millennium and the General Partner have entered into that Amended and
Restated Recapitalization Agreement dated as of March 15, 1999 (the
"Recapitalization Agreement") providing for a recapitalization of the MLP (the
"Recapitalization") that includes, among other things, (i) the redemption by the
MLP of all of its outstanding Subordinated Units and APUs, (ii) certain
amendments to the Original Agreement and the Original Partnership Agreement,
(iii) the termination of the Distribution Support Agreement, (iv) the purchase
by the General Partner of the general partner interest in the MLP and the
Partnership and the Incentive Distribution Rights pursuant to that Purchase
Agreement dated as of November 27, 1998, as amended (the "Purchase Agreement"),
among the Initial General Partner, Millennium and the General Partner and (v)
the election of Suburban Energy Services Group LLC as the successor general
partner of the MLP and the Partnership; and
WHEREAS, the Recapitalization has been submitted to, and
approved by the requisite vote of, the Limited Partner and the limited partners
of the MLP; and
WHEREAS, the Board of Supervisors has the authority to adopt
certain amendments to this Agreement relating to the Recapitalization without
the approval of any Limited Partner or any limited partner of the MLP to
reflect, among other things, a change that, in the discretion of the Board of
Supervisors, does not adversely affect the Limited Partner in any material
respect.
NOW, THEREFORE, the Original Agreement is hereby amended and
restated in its entirety as follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement. Capitalized terms used herein but not otherwise defined shall have
the meanings assigned to such terms in the MLP Agreement.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 10.4 and who is shown as
such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account
maintained for each Partner as of the end of each fiscal year of the
Partnership, (a) increased by any amounts that such Partner is obligated to
restore under the standards set by Treasury Regulation Section
1.704-1(b)(2)(ii)(c) (or is deemed obligated to restore under Treasury
Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b) decreased by (i) the
amount of all losses and deductions that, as of the end of such fiscal year, are
reasonably expected to be allocated to such Partner in subsequent years under
Sections 704(e)(2) and 706(d) of the Code and Treasury Regulation Section
1.751-1(b)(2)(ii), and (ii) the amount of all distributions that, as of the end
of such fiscal year, are reasonably expected to be made to such Partner in
subsequent years in accordance with the terms of this Agreement or otherwise to
the extent they exceed offsetting increases to such Partner's Capital Account
that are reasonably expected to occur during (or prior to) the year in which
such distributions are reasonably expected to be made (other than increases as a
result of a minimum gain chargeback pursuant to Section 6.1(c)(i) or
6.1(c)(ii)). The foregoing definition of Adjusted Capital Account is intended to
comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.
"Adjusted Property" means any property the Carrying Value of
which has been adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii).
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly through one or more intermediaries controls,
is controlled by or is under common control with, the Person in question. As
used herein, the term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"Agreed Allocation" means any allocation, other than a
Required Allocation, of an item of income, gain, loss or deduction pursuant to
the provisions of Section 6.1, including, without limitation, a Curative
Allocation (if appropriate to the context in which the term "Agreed Allocation"
is used).
<PAGE>
"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 Board of Supervisors using such reasonable method of
valuation as it may adopt. The Board of Supervisors shall, in its discretion,
use such method as it deems reasonable and appropriate to allocate the aggregate
Agreed Value of Contributed Properties contributed to the Partnership in a
single or integrated transaction among each separate property on a basis
proportional to the fair market value of each Contributed Property.
"Agreement" means this Second Amended and Restated Agreement
of Limited Partnership of Suburban Propane, L.P., as it may be amended,
supplemented or restated from time to time.
"Audit Committee" means a committee of the Board of
Supervisors of the Partnership composed of the same individuals who serve as the
audit committee of the MLP.
"Available Cash," means, with respect to any Quarter ending
prior to the Liquidation Date,
(a) the sum of (i) all cash and cash equivalents of the
Partnership Group on hand at the end of such Quarter, and (ii) all additional
cash and cash equivalents of the Partnership Group on hand on the date of
determination of Available Cash with respect to such Quarter resulting from
borrowings for working capital purposes, in each case subsequent to the end of
such Quarter, less
(b) the amount of any cash reserves that is necessary or
appropriate in the reasonable discretion of the Board of Supervisors to (i)
provide for the proper conduct of the business of the Partnership Group
(including reserves for future capital expenditures) subsequent to such Quarter,
(ii) comply with applicable law or any loan agreement, security agreement,
mortgage, debt instrument or other agreement or obligation to which any Group
Member is a party or by which it is bound or its assets are subject or (iii)
provide funds for distributions under Section 6.4 or 6.5 of the MLP Agreement in
respect of any one or more of the next four Quarters; provided, however, that
the Board of Supervisors may not establish cash reserves pursuant to (iii) above
if the effect of such reserves would be that the MLP is unable to distribute the
Minimum Quarterly Distribution on all Common Units with respect to such Quarter;
and, provided further, that disbursements made by a Group Member or cash
reserves established, increased or reduced after the end of such Quarter but on
or before the date of determination of Available Cash with respect to such
Quarter shall be deemed to have been made, established, increased or reduced,
for purposes of determining Available Cash, within such Quarter if the Board of
Supervisors so determines.
Notwithstanding the foregoing, "Available Cash" with respect
to the Quarter in which the Liquidation Date occurs and any subsequent Quarter
shall equal zero.
"Board of Supervisors" shall mean the board of supervisors of
the Partnership, composed of the five individuals who serve as members of the
MLP's board of supervisors, to whom the General Partner irrevocably delegates,
and in which is vested, pursuant to Section 7.1, and subject to Section 7.9, the
<PAGE>
power to manage the business and activities of the Partnership. The Board of
Supervisors shall constitute a committee with the meaning of Section
17-303(b)(7) of the Delaware Act.
"Book-Tax Disparity" means with respect to any item of
Contributed Property or Adjusted Property, as of the date of any determination,
the difference between the Carrying Value of such Contributed Property or
Adjusted Property and the adjusted basis thereof for federal income tax purposes
as of such date. A Partner's share of the Partnership's Book-Tax Disparities in
all of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Section 5.5 and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"Business Day" means Monday through Friday of each week,
except that a legal holiday recognized as such by the government of the United
States of America or the states of New York or New Jersey shall not be regarded
as a Business Day.
"Capital Account" means the capital account maintained for a
Partner pursuant to Section 5.5.
"Capital Contribution" means any cash, cash equivalents or the
Net Agreed Value of Contributed Property that a Partner contributes or has
contributed to the Partnership pursuant to this Agreement (or the Original
Agreement) or the Contribution and Conveyance Agreement.
"Capitalized Lease Obligations" means obligations to pay rent
or other amounts under any lease of (or other arrangement conveying the right to
use) real and/or personal property, which obligations are accounted for as a
capital lease on a balance sheet under U.S. GAAP; for the purpose hereof the
amount of such obligations shall be the capitalized amount reflected on such
balance sheet.
"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 in respect of such Contributed Property, and (b) with respect
to any other Partnership property, the adjusted basis of such property for
federal income tax purposes, all as of the time of determination. The Carrying
Value of any property shall be adjusted from time to time in accordance with
Sections 5.5(d)(i) and 5.5(d)(ii) and to reflect changes, additions or other
adjustments to the Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the Board of Supervisors.
"Cause" means a court of competent jurisdiction has entered a
final, non-appealable judgment finding a Person liable for actual fraud, gross
negligence or willful or wanton misconduct in its capacity as general partner of
the Partnership or as a member of the Board of Supervisors, as the case may be.
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"Certificate of Limited Partnership" means the Certificate of
Limited Partnership of the Partnership filed with the Secretary of State of the
State of Delaware as referenced in Section 2.1, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to time.
"Closing" has the meaning assigned to such term in the
Recapitalization Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time. Any reference herein to a specific section or
sections of the Code shall be deemed to include a reference to any corresponding
provision of future law.
"Commission" means the United States Securities and Exchange
Commission.
"Contributed Property" means each property or other asset, in
such form as may be permitted by the Delaware Act, but excluding cash,
contributed to the Partnership. Once the Carrying Value of a Contributed
Property is adjusted pursuant to Section 5.5(d), such property shall no longer
constitute a Contributed Property, but shall be deemed an Adjusted Property.
"Contribution and Conveyance Agreement" means that certain
Contribution, Conveyance and Assumption Agreement, dated as of March 4, 1996,
among the Initial General Partner, the MLP, the Partnership and certain other
parties, together with the additional conveyance documents and instruments
contemplated or referenced thereunder.
"Curative Allocation" means any allocation of an item of
income, gain, deduction, loss or credit pursuant to the provisions of Section
6.1(c)(ix).
"Delaware Act" means the Delaware Revised Uniform Limited
Partnership Act, 6 Del C. ss.17-101, ET SEQ., as amended, supplemented or
restated from time to time, and any successor to such statute.
"Departing Partner" means a former General Partner from and
after the effective date of any withdrawal or removal of such former General
Partner pursuant to Section 11.1 or 11.2, including the Initial General Partner
from and after the Closing..
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"Event of Withdrawal" has the meaning assigned to such term in
Section 11.1(a).
"General Partner" means Suburban Energy Services Group LLC and
its successors as general partner of the Partnership.
"Group Member" means a member of the Partnership Group.
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"Indebtedness," as used in Section 7.9(b), means, as applied
to any Person, without duplication, any indebtedness, exclusive of deferred
taxes, (i) in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof); (ii) evidenced by bonds, notes, debentures or similar instruments or
letters of credit in support of bonds, notes, debentures or similar instruments;
(iii) representing the balance deferred and unpaid of the purchase price of any
property, if and to the extent such indebtedness would appear as a liability on
a balance sheet of such Person prepared in accordance with U.S. GAAP (but
excluding trade accounts payable arising in the ordinary course of business that
are not overdue by more than 90 days or are being contested by such Person in
good faith); (iv) any Capitalized Lease Obligations of such Person; and (v)
Indebtedness of others guaranteed by such Person, including, without limitation,
every obligation of such Person (A) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or to purchase (or to
advance or supply funds for the purchase of) any security for the payment of
such Indebtedness, or (B) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness.
"Indemnitee" means (a) the members of the Board of Supervisors
or the members of the board of supervisors of the MLP or any other Group Member,
(b) the General Partner, any Departing Partner and any Person who is or was an
Affiliate of the General Partner or any Departing Partner, (c) any Person who is
or was a member, partner, director, officer, employee, agent or trustee of the
MLP, any Group Member, the General Partner or any Departing Partner or any
Affiliate or the MLP, any Group Member, the General Partner or any Departing
Partner and (e) any Person who is or was serving at the request of the Board of
Supervisors, the General Partner or any Departing Partner or any Affiliate of
the General Partner or any Departing Partner as a member, partner, director,
officer, employee, partner, agent, fiduciary or trustee of another Person, in
each case, acting in such capacity; PROVIDED, that a Person shall not be an
Indemnitee by reason of providing, on a fee-for-services basis, trustee,
fiduciary or custodial services.
"Initial Closing Date" means March 5, 1996.
"Initial General Partner" has the meaning assigned to such
term in the Recitals to this Agreement.
"Initial Offering" means the initial offering and sale of
Common Units to the public on March 5, 1996, as described in the Initial
Registration Statement.
"Initial Registration Statement" means the Registration
Statement on Form S-1 (Registration No. 33-80605) filed by the MLP with the
Commission under the Securities Act to register the offering and sale of the
Common Units in the Initial Offering as declared effective by the Commission and
as amended or supplemented from time to time.
"Limited Partner" means, unless the context otherwise
requires, the MLP, 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 11.3.
<PAGE>
"Liquidation Date" means (a) in the case of an event giving
rise to the dissolution of the Partnership of the type described in clauses (a)
and (b) of the first sentence of Section 12.2, the date on which the applicable
time period during which the Partners have the right to elect to reconstitute
the Partnership and continue its business has expired without such an election
being made, and (b) in the case of any other event giving rise to the
dissolution of the Partnership, the date on which such event occurs.
"Liquidator" means one or more Persons selected by the Board
of Supervisors to perform the functions described in Section 12.3.
"Merger Agreement" has the meaning assigned to such term in
Section 14.1.
"Millennium" means Millennium Petrochemicals Inc., a Virginia
corporation and the sole stockholder of the Initial General Partner.
"MLP" means Suburban Propane Partners, L.P., a Delaware
limited partnership.
"MLP Agreement" means the Second Amended and Restated
Agreement of Limited Partnership of the MLP, as it may be amended, supplemented
or restated from time to time.
"Net Agreed Value" means, (a) in the case of any Contributed
Property, the Agreed Value of such property reduced by any liabilities either
assumed by the Partnership upon such contribution or to which such property is
subject when contributed, and (b) in the case of any property distributed to a
Partner by the Partnership, the Partnership's Carrying Value of such property
(as adjusted pursuant to Section 5.5(d)(ii)) at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution, in either case, as determined under Section 752 of the Code.
"Net Income" means, for any taxable year, the excess, if any,
of the Partnership's items of income and gain (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of loss and deduction (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Income shall be determined in accordance with Section 5.5(b) and shall
not include any items specially allocated under Section 6.1(c).
"Net Loss" means, for any taxable year, the excess, if any, of
the Partnership's items of loss and deduction (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of income and gain (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Loss shall be determined in accordance with Section 5.5(b) and shall not
include any items specially allocated under Section 6.1(c).
<PAGE>
"Net Termination Gain" means, for any taxable year, the sum,
if positive, of all items of income, gain, loss or deduction recognized by the
Partnership after the Liquidation Date. The items included in the determination
of Net Termination Gain shall be determined in accordance with Section 5.5(b)
and shall not include any items of income, gain or loss specially allocated
under Section 6.1(c).
"Net Termination Loss" means, for any taxable year, the sum,
if negative, of all items of income, gain, loss or deduction recognized by the
Partnership after the Liquidation Date. The items included in the determination
of Net Termination Loss shall be determined in accordance with Section 5.5(b)
and shall not include any items of income, gain or loss specially allocated
under Section 6.1(c).
"Nonrecourse Built-in Gain" means, with respect to any
Contributed Properties or Adjusted Properties that are subject to a mortgage or
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Sections 6.2(b)(i)(A),
6.2(b)(ii)(A) and 6.2(b)(iii) if such properties were disposed of in a taxable
transaction in full satisfaction of such liabilities and for no other
consideration.
"Nonrecourse Deductions" means any and all items of loss,
deduction or expenditures (including, without limitation, any expenditure
described in Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of Treasury Regulation Section 1.704-2(b), are attributable to a
Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
"OLP Subsidiary" means a Subsidiary of the Partnership.
"Officers" means the Chairman of the Board of Supervisors
(unless the Board of Supervisors provides otherwise), the Vice Chairman of the
Board of Supervisors (unless the Board of Supervisors provides otherwise), the
President, any Vice Presidents, the Secretary, the Treasurer, any Assistant
Secretaries or Assistant Treasurers and any other officers of the Partnership
appointed by the Board of Supervisors pursuant to Section 7.7.
"Opinion of Counsel" means a written opinion of counsel (who
may be regular counsel to the Partnership or the General Partner or any of their
Affiliates) acceptable to the Board of Supervisors in its reasonable discretion.
"Original Agreement" has the meaning assigned to such term in
the Recitals to this Agreement.
"Original Partnership Agreement" means the Amended and
Restated Agreement of Limited Partnership of the MLP dated as of March 4, 1996.
"Partner Nonrecourse Debt" has the meaning set forth in
Treasury Regulation Section 1.704-2(b)(4).
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"Partner Nonrecourse Debt Minimum Gain" has the meaning set
forth in Treasury Regulation Section 1.704-2(i)(2).
"Partner Nonrecourse Deductions" means any and all items of
loss, deduction or expenditure (including, without limitation, any expenditure
described in Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of Treasury Regulation Section 1.704-2(i), are attributable to a
Partner Nonrecourse Debt.
"Partners" means the General Partner and the Limited Partners.
"Partnership" means Suburban Propane, L.P., a Delaware limited
partnership, and any successors thereto.
"Partnership Group" means the Partnership and the OLP
Subsidiaries, treated as a single consolidated entity.
"Partnership Interest" means the interest of a Partner in the
Partnership.
"Partnership Minimum Gain" means that amount determined in
accordance with the principles of Treasury Regulation Section 1.704-2(d).
"Percentage Interest" means (a) as to the General Partner (in
its capacity as General Partner without reference to any limited partner
interests held by it), 1.0101%, and (b) as to the Limited Partner, 98.9899%.
"Person" means an individual or a corporation, limited
liability company, partnership, limited liability partnership, joint venture,
trust, unincorporated organization, association, government agency or political
subdivision thereof or other entity.
"Purchase Agreement" has the meaning assigned to such term in
the Recitals to this Agreement.
"QCC" means Quantum Chemical Corporation, a Virginia
corporation.
"Quarter" means, unless the context requires otherwise, a
fiscal quarter of the Partnership.
"Recapitalization" has the meaning assigned to such term in
the Recitals to this Agreement.
"Recapitalization Agreement" has the meaning assigned to such
term in the Recitals to this Agreement.
"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
<PAGE>
Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to such
property or asset.
"Required Allocations" means (a) any limitation imposed on any
allocation of Net Losses or Net Termination Losses under Section 6.1(b) and (b)
any allocation of an item of income, gain, loss or deduction pursuant to Section
6.1(c)(i), 6.1(c)(ii), 6.1(c)(iii), 6.1(c)(vi) or 6.1(c)(viii).
"Residual Gain" or "Residual Loss" means any item of gain or
loss, as the case may be, of the Partnership recognized for federal income tax
purposes resulting from a sale, exchange or other disposition of a Contributed
Property or Adjusted Property, to the extent such item of gain or loss is not
allocated pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to
eliminate Book-Tax Disparities.
"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such statute.
"Special Approval" means approval by a majority of the members
of the Audit Committee.
"Subsidiary" means, with respect to any Person, (a) a
corporation of which more than 50% of the voting power of shares entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person or a combination thereof, (b) a partnership (whether
general or limited) in which such Person or a Subsidiary of such Person is, at
the date of determination, a general or limited partner of such partnership, but
only if more than 50% of the partnership interests of such partnership
(considering all of the partnership interests of the partnership as a single
class) is owned, directly or indirectly, at the date of determination, by such
Person, by one or more Subsidiaries of such Person or a combination thereof, or
(c) any other Person (other than a corporation or a partnership) in which such
Person, one or more Subsidiaries of such Person, or a combination thereof,
directly or indirectly, at the date of determination, has (i) at least a
majority ownership interest or (ii) the power to elect or direct the election of
a majority of the directors or other governing body of such Person.
"Substituted Limited Partner" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 10.2 in place of and
with all the rights of a Limited Partner and who is shown as a Limited Partner
on the books and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such
term in Section 14.2(b).
"Transfer" has the meaning assigned to such term in Section
4.1(a).
<PAGE>
"Underwriting Agreement" means the Underwriting Agreement
dated February 29, 1996, among the MLP, the underwriters named therein and
certain other parties, providing for the purchase of the Common Units by the
underwriters named therein.
"Unrealized Gain" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (a) the
fair market value of such property as of such date (as determined under Section
5.5(d)) over (b) the Carrying Value of such property as of such date (prior to
any adjustment to be made pursuant to Section 5.5(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (a) the
Carrying Value of such property as of such date (prior to any adjustment to be
made pursuant to Section 5.5(d) as of such date) over (b) the fair market value
of such property as of such date (as determined under Section 5.5(d)).
"U.S. GAAP" means United States Generally Accepted Accounting
Principles consistently applied.
"Withdrawal Opinion of Counsel" has the meaning assigned to
such term in Section 11.1(b).
1.2 CONSTRUCTION.
Unless the context requires otherwise: (a) any pronoun used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns, pronouns and verbs shall include the
plural and vice versa; (b) references to Articles and Sections refer to Articles
and Sections of this Agreement; and (c) "include" or "includes" means includes,
without limitation, and "including" means including, without limitation.
ARTICLE II
ORGANIZATION
2.1 FORMATION.
The Initial General Partner and the MLP previously formed the
Partnership as a limited partnership upon the filing on December 19, 1995 of the
Certificate of Limited Partnership with the Secretary of State of the State of
Delaware pursuant to the provisions of the Delaware Act. The General Partner and
the MLP hereby amend and restate the Original Agreement in its entirety to
continue the Partnership as a limited partnership pursuant to the provisions of
the Delaware Act and to set forth the rights and obligations of the Partners and
certain matters related thereto. This amendment and restatement shall become
effective on the date of this Agreement. Except as expressly provided to the
contrary in this Agreement, the rights and obligations of the Partners and the
administration, dissolution and termination of the Partnership shall be governed
by the Delaware Act. All Partnership Interests shall constitute personal
property of the owner thereof for all purposes.
<PAGE>
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 Board of
Supervisors 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, including an amendment to reflect the admission of the General
Partner as a successor to the Initial General Partner. To the extent that such
action is determined by the Board of Supervisors 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, including in connection with the Recapitalization and the transactions
contemplated thereby. Subject to the provisions of Section 3.4(a), the
Partnership 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.
2.2 NAME.
The name of the Partnership shall be "Suburban Propane, L.P."
The Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the Board of Supervisors, including, if consented to
by the General Partner in its sole discretion, the name of the General Partner.
The words "Limited Partnership," "L.P.," "Ltd." or similar words or letters
shall be included in the Partnership's name where necessary for the purpose of
complying with the laws of any jurisdiction that so requires. The Board of
Supervisors in its discretion may change the name of the Partnership at any time
and from time to time and shall notify the Limited Partners of such change in
the next regular communication to the Limited Partners.
2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE; OTHER
OFFICES.
Unless and until changed by the Board of Supervisors, the
registered office of the Partnership in the State of Delaware shall be located
at 1209 Orange Street, New Castle County, Wilmington, Delaware 19801, and the
registered agent for service of process on the Partnership in the State of
Delaware at such registered office shall be CT Corporation System. The principal
office of the Partnership shall be located at One Suburban Plaza, 240 Route 10
West, Whippany, New Jersey 07981-0206 or such other place as the Board of
Supervisors may from time to time designate by notice to the Limited Partner.
The Partnership may maintain offices at such other place or places within or
outside the State of Delaware as the Board of Supervisors deems necessary or
appropriate. The address of the General Partner shall be One Suburban Plaza, 240
Route 10 West, Whippany, New Jersey 07981-0206 or such other place as the
General Partner may from time to time designate by notice to the Limited
Partners.
<PAGE>
2.4 PURPOSE AND BUSINESS.
The purpose and nature of the business to be conducted by the
Partnership shall be to (a) acquire, manage and operate the assets held by the
Partnership on the Initial Closing Date and any similar assets or properties,
(b) engage directly in, or enter into or form any corporation, partnership,
joint venture, limited liability company or other arrangement to engage
indirectly in, any business activity that is approved by the Board of
Supervisors and which may lawfully be conducted by a limited partnership
organized pursuant to the Delaware Act and, in connection therewith, to exercise
all of the rights and powers conferred upon the Partnership pursuant to the
agreements relating to such business activity and (c) do anything necessary or
appropriate to the foregoing, including the making of capital contributions or
loans to any Group Member, the MLP or any Subsidiary of the MLP. The Board of
Supervisors has no obligation or duty to the Partnership or the Limited Partners
to propose or approve, and in its discretion may decline to propose or approve,
the conduct by the Partnership of any business.
2.5 POWERS.
The Partnership shall be empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or convenient
for the furtherance and accomplishment of the purposes and business described in
Section 2.4 and for the protection and benefit of the Partnership.
2.6 POWER OF ATTORNEY.
(a) The Limited Partners hereby constitute and appoint the
Vice Chairman and President of the Partnership and, if a Liquidator shall have
been selected pursuant to Section 12.3, the Liquidator, severally (and any
successor to the Liquidator by merger, transfer, assignment, election or
otherwise) and each of their authorized officers and attorneys-in-fact, as the
case may be, with full power of substitution, as his true and lawful agent and
attorney-in-fact, with full power and authority in his name, place and stead,
to:
(i) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (A) all certificates, documents and
other instruments (including this Agreement and the Certificate of
Limited Partnership and all amendments or restatements thereof) that
the Board of Supervisors 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 Board of Supervisors or the Liquidator deems
necessary or appropriate to reflect, in accordance with its terms, any
amendment, change, modification or restatement of this Agreement; (C)
all certificates, documents and other instruments (including
conveyances and a certificate of cancellation) that the Board of
Supervisors 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,
<PAGE>
Article IV, X, XI or XII; (E) all certificates, documents and other
instruments relating to the determination of the rights, preferences
and privileges of any class or series of Partnership Interests; and (F)
all certificates, documents and other instruments (including agreements
and a certificate of merger) relating to a merger or consolidation of
the Partnership pursuant to Article XIV; and
(ii) execute, swear to, acknowledge, deliver, file and record
all ballots, consents, approvals, waivers, certificates, documents and
other instruments necessary or appropriate, in the discretion of the
Board of Supervisors or the Liquidator, to make, evidence, give,
confirm or ratify any vote, consent, approval, agreement or other
action that is made or given by the Partners hereunder or is consistent
with the terms of this Agreement or is necessary or appropriate, in the
discretion of the Board of Supervisors or the Liquidator, to effectuate
the terms or intent of this Agreement; PROVIDED, that when the approval
of the Limited Partners is required by any provision of this Agreement,
the Vice Chairman and President of the Partnership and the Liquidator
may exercise the power of attorney made in this Section 2.6(a)(ii) only
after the necessary consent or approval of the Limited Partners is
obtained.
Nothing contained in this Section 2.6(a) shall be construed as authorizing the
Board of Supervisors to amend this Agreement except in accordance with Article
XIII or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and, to
the maximum extent permitted by law, not be affected by the subsequent death,
incompetency, disability, incapacity, dissolution, bankruptcy or termination of
the Limited Partners and the transfer of all or any portion of the Limited
Partner's Partnership Interest and shall extend to the Limited Partner's heirs,
successors, assigns and personal representatives. The Limited Partners hereby
agree to be bound by any representation made by the Vice Chairman or President
of the Partnership or the Liquidator acting in good faith pursuant to such power
of attorney; and the Limited Partners hereby waive, to the maximum extent
permitted by law, any and all defenses that may be available to contest, negate
or disaffirm the action of the Vice Chairman or President of the Partnership or
the Liquidator taken in good faith under such power of attorney. The Limited
Partners shall execute and deliver to the Vice Chairman or President of the
Partnership or the Liquidator, within 15 days after receipt of the request
therefor, such further designation, powers of attorney and other instruments as
the Vice Chairman or President of the Partnership or the Liquidator deems
necessary to effectuate this Agreement and the purposes of the Partnership.
2.7 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 September 30, 2085, or
until the earlier termination of the Partnership in accordance with the
provisions of Article XII.
2.8 TITLE TO PARTNERSHIP ASSETS.
<PAGE>
Title to Partnership assets, whether real, personal or mixed
and whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partner individually or collectively, shall
have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the Board of
Supervisors may determine. The General Partner hereby declares and warrants that
any Partnership assets for which record title is held in the name of the General
Partner or one or more nominees shall be held by the General Partner or nominee
for the use and benefit of the Partnership in accordance with the provisions of
this Agreement; PROVIDED, HOWEVER, that the General Partner shall use reasonable
efforts to cause record title to such assets (other than those assets in respect
of which the Board of Supervisors determines that the expense and difficulty of
conveyancing makes transfer of record title to the Partnership impracticable) to
be vested in the Partnership as soon as reasonably practicable; PROVIDED,
FURTHER, that, prior to the withdrawal or removal of the General Partner or as
soon thereafter as practicable, the General Partner shall use reasonable efforts
to effect the transfer of record title to the Partnership and, prior to any such
transfer, will provide for the use of such assets in a manner satisfactory to
the Board of Supervisors. All Partnership assets shall be recorded as the
property of the Partnership in its books and records, irrespective of the name
in which record title to such Partnership assets is held.
ARTICLE III
RIGHTS OF THE LIMITED PARTNERS
3.1 LIMITATION OF LIABILITY.
The Limited Partners shall have no liability under this
Agreement except as expressly provided in this Agreement or the Delaware Act.
3.2 MANAGEMENT OF BUSINESS.
No Limited Partner (other than the General Partner, or any of
its Affiliates or any member, officer, director, employee, partner, agent or
trustee of the General Partner or any of its Affiliates, or any officer, member
of the board of supervisors or directors, employee or agent of a Group Member,
in its capacity as such, if such Person shall also be a Limited Partner) shall
participate in the operation, management or control (within the meaning of
Section 17-303(a) of the Delaware Act) of the Partnership's business, transact
any business in the Partnership's name or have the power to sign documents for
or otherwise bind the Partnership. Any action taken by any Affiliate of the
General Partner or any member, officer, director, employee, partner, agent or
trustee of the General Partner or any of its Affiliates, or any officer, member
of the board of supervisors or directors, member, partner, employee or agent of
a Group Member, the MLP or any Subsidiary of the MLP, in its capacity as such,
shall not be deemed to be participation in the control of the business of the
Partnership by a limited partner of the Partnership (within the meaning of
Section 17-303(a) of the Delaware Act) and shall not affect, impair or eliminate
the limitations on the liability of the Limited Partners under this Agreement.
<PAGE>
3.3 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 3.3(b), each of the Limited
Partners 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 the Limited Partner's own expense:
(i) to obtain true and full information regarding the status
of the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of
the Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to it, upon notification to the
Partnership, a current list of the name and last known business,
residence or mailing address of each Partner;
(iv) to have furnished to it, upon notification to the
Partnership, a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with a copy of the
executed copies of all powers of attorney pursuant to which this
Agreement, the Certificate of Limited Partnership and all amendments
thereto have been executed;
(v) to obtain true and full information regarding the amount
of cash and a description and statement of the Net Agreed Value of any
other Capital Contribution by each Partner and which each Partner has
agreed to contribute in the future, and the date on which each became a
Partner; and
(vi) to obtain such other information regarding the affairs
of the Partnership as is just and reasonable.
(b) The Board of Supervisors may keep confidential from the
Limited Partners, for such period of time as the Board of Supervisors deems
reasonable, (i) any information that the Board of Supervisors reasonably
believes to be in the nature of trade secrets or (ii) other information the
disclosure of which the Board of Supervisors in good faith believes (A) is not
in the best interests of the Partnership Group, (B) could damage the Partnership
Group or (C) that any Group Member is required by law or by 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 this
Section 3.3).
3.4 OUTSIDE ACTIVITIES OF THE LIMITED PARTNERS.
Subject to the provisions of Section 7.11, which shall
continue to be applicable to the Persons referred to therein, regardless of
whether such Person shall also be a Limited Partner, any Limited Partner shall
be entitled to and may have business interests and engage in business activities
in addition to those relating to the Partnership, including business interests
and activities in direct competition with the Partnership Group.
<PAGE>
ARTICLE IV
TRANSFER OF PARTNERSHIP INTERESTS
4.1 TRANSFER GENERALLY.
(a) The term "transfer," when used in this Agreement with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which a Partner assigns its Partnership Interest to another Person, and includes
a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange
or any other disposition by law or otherwise, in whole or in part.
(b) No Partnership Interest shall be transferred, in whole or
in part, except in accordance with the terms and conditions set forth in this
Article IV. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article IV shall be null and void.
(c) Nothing contained in this Agreement shall be construed to
prevent a disposition by any securityholder of the General Partner of any or all
of the issued and outstanding equity interests in the General Partner.
4.2 TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST.
If the General Partner transfers its partnership interest as
the general partner of the MLP to any Person in accordance with the provisions
of the MLP Agreement, the General Partner shall contemporaneously therewith
transfer all, but not less than all, of its Partnership Interest as the general
partner of the Partnership to such Person, and the Limited Partner hereby
expressly consents to such transfer. Except as set forth in the immediately
preceding sentence and except in connection with any pledge of the General
Partner's Partnership Interest as the general partner of the Partnership solely
for the purpose of securing, directly or indirectly, indebtedness of the General
Partner in connection with the acquisition loan incurred by the General Partner
to purchase the general partner interests in the Partnership at the Closing and
any related foreclosure on or sale thereafter of the General Partner's
Partnership Interest, the General Partner may not transfer all or any part of
its Partnership Interest as the general partner of the Partnership. Any
transferee of the Partnership Interests of the General Partner pursuant to this
Section 4.2 shall be deemed to be a successor to the General Partner for
purposes of this Agreement.
4.3 TRANSFER OF THE LIMITED PARTNERS' PARTNERSHIP INTERESTS.
Any Limited Partner may transfer all, but not less than all,
of its Partnership Interest as a limited partner of the Partnership in
connection with the merger, consolidation or other combination of any of the
Limited Partners with or into any other Person or the transfer by any of the
Limited Partners of all or substantially all of its assets to another Person,
and following any such transfer such Person may become a Substituted Limited
<PAGE>
Partner pursuant to Article X. Except as set forth in the immediately preceding
sentence, or in connection with any pledge of (or any related foreclosure on)
the Limited Partner's Partnership Interest as a limited partner of the
Partnership solely for the purpose of securing, directly or indirectly,
indebtedness of the Partnership or the MLP, and a Limited Partner may not
transfer all or any part of its Partnership Interest or withdraw from the
Partnership.
4.4 RESTRICTIONS ON TRANSFERS.
(a) Notwithstanding the other provisions of this Article IV,
no transfer of any Partnership Interest shall be made if such transfer would (i)
violate the then applicable federal or state securities laws or rules and
regulations of the Commission, any state securities commission or any other
governmental authorities with jurisdiction over such transfer, (ii) terminate
the existence or qualification of the Partnership or the MLP under the laws of
the jurisdiction of its formation or (iii) cause the Partnership or the MLP to
be treated as an association taxable as a corporation or otherwise to be taxed
as an entity for federal income tax purposes (to the extent not already so
treated or taxed).
(b) The Board of Supervisors may impose restrictions on the
transfer of Partnership Interests if a subsequent Opinion of Counsel determines
that such restrictions are necessary to avoid a significant risk of the
Partnership or the MLP becoming taxable as a corporation or otherwise to be
taxed as an entity for federal income tax purposes. The restrictions may be
imposed by making such amendments to this Agreement as the Board of Supervisors
may determine to be necessary or appropriate to impose such restrictions.
ARTICLE V
CONTRIBUTIONS AND INITIAL TRANSFERS
5.1 ORGANIZATIONAL CONTRIBUTIONS.
In connection with the formation of the Partnership under the
Delaware Act, the Initial General Partner made an initial Capital Contribution
to the Partnership and was admitted as the general partner of the Partnership,
and the MLP made an initial Capital Contribution to the Partnership and was
admitted as a limited partner of the Partnership.
5.2 CONTRIBUTIONS AND TRANSFERS ON THE INITIAL CLOSING DATE AND
THE CLOSING DATE.
On the Initial Closing Date, (i) the MLP transferred cash to
the Partnership in exchange for a limited partner interest in the Partnership
and a certain amount of cash and (ii) QCC transferred certain assets to the
Partnership in exchange for a limited partner interest and a general partner
interest in the Partnership, which QCC contributed to the capital of the Initial
General Partner. The Initial General Partner then transferred the limited
partner interest contributed to it by QCC to the MLP. As a result of the
formation transactions, the Initial General Partner's Percentage Interest was
1.0101% and the MLP's Percentage Interest was 98.9899%.
<PAGE>
5.3 ADDITIONAL CAPITAL CONTRIBUTIONS.
With the consent of the Board of Supervisors, any Limited
Partner may, but shall not be obligated to, make additional Capital
Contributions to the Partnership. Contemporaneously with the making of any
Capital Contributions by a Limited Partner, the General Partner may, but shall
not be obligated to, make an additional Capital Contribution to the Partnership
in an amount equal to 1.0101 / 98.9899 of the Net Agreed Value of the additional
Capital Contribution then made by such Limited Partner. Except as set forth in
the immediately preceding sentence and Article XII, the General Partner shall
not be obligated to make any additional Capital Contributions to the
Partnership.
5.4 INTEREST AND WITHDRAWAL.
No interest shall be paid by the Partnership on Capital
Contributions, and no Partner shall be entitled to withdrawal or return of any
part of its Capital Contributions or to receive any distribution from the
Partnership, except as provided in Articles VI, XI and XII.
5.5 CAPITAL ACCOUNTS.
(a) The Partnership shall maintain for each Partner owning a
Partnership Interest a separate Capital Account with respect to such Partnership
Interest in accordance with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of
all Capital Contributions made to the Partnership with respect to such
Partnership Interest pursuant to this Agreement (or the Original Agreement) and
(ii) all items of Partnership income and gain (including, without limitation,
income and gain exempt from tax) computed in accordance with Section 5.5(b) and
allocated with respect to such Partnership Interest pursuant to Section 6.1, and
decreased by (x) the amount of cash or the Net Agreed Value of all actual and
deemed distributions of cash or property made with respect to such Partnership
Interest pursuant to this Agreement (or the Original Agreement) and (y) all
items of Partnership deduction and loss computed in accordance with Section
5.5(b) and allocated with respect to such Partnership Interest pursuant to
Section 6.1.
(b) For purposes of computing the amount of any item of
income, gain, loss or deduction which is to be allocated pursuant to Article VI
and is to be reflected in the Partners' Capital Accounts, the determination,
recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes
(including, without limitation, any method of depreciation, cost recovery or
amortization used for that purpose), provided, that:
(i) Solely for purposes of this Section 5.5, the Partnership
shall be treated as owning directly its proportionate share (as
determined by the Board of Supervisors) of all property owned by any
OLP Subsidiary that is classified as a partnership 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
<PAGE>
any, shall, for purposes of Capital Account maintenance, be treated as
an item of deduction at the time such fees and other expenses are
incurred and shall be allocated among the Partners pursuant to Section
6.1.
(iii) Except as otherwise provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any election
under Section 754 of the Code which may be made by the Partnership and,
as to those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of
the Code, without regard to the fact that such items are not includable
in gross income or are neither currently deductible nor capitalized for
federal income tax purposes. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b)
or 743(b) of the Code is required, pursuant to Treasury Regulation
Section 1.704-2(b)(2)(iv)(m) to be taken into account in determining
Capital Accounts, the amount of such adjustment in the Capital Accounts
shall be treated as an item of gain or loss.
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition were
equal in amount to the Partnership's Carrying Value with respect to
such property as of such date.
(v) In accordance with the requirements of Section 704(b) of
the Code, any deductions for depreciation, cost recovery or
amortization attributable to any Contributed Property shall be
determined as if the adjusted basis of such property on the date it was
acquired by the Partnership were equal to the Agreed Value of such
property. Upon an adjustment pursuant to Section 5.5(d) to the Carrying
Value of any Partnership property subject to depreciation, cost
recovery or amortization, any further deductions for such depreciation,
cost recovery or amortization attributable to such property shall be
determined (A) as if the adjusted basis of such property were equal to
the Carrying Value of such property immediately following such
adjustment and (B) using a rate of depreciation, cost recovery or
amortization derived from the same method and useful life (or, if
applicable, the remaining useful life) as is applied for federal income
tax purposes; PROVIDED, HOWEVER, that, if the asset has a zero adjusted
basis for federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable method
that the Board of Supervisors may adopt.
(vi) If the Partnership's adjusted basis in a depreciable or
cost recovery property is reduced for federal income tax purposes
pursuant to Section 48(q)(1) or 48(q)(3) of the Code, the amount of
such reduction shall, solely for purposes hereof, be deemed to be an
additional depreciation or cost recovery deduction in the year such
property is placed in service and shall be allocated among the Partners
pursuant to Section 6.1. Any restoration of such basis pursuant to
Section 48(q)(2) of the Code shall, to the extent possible, be
allocated in the same manner to the Partners to whom such deemed
deduction was allocated.
<PAGE>
(c) A transferee of a Partnership Interest shall succeed to a
pro rata portion of the Capital Account of the transferor relating to the
Partnership Interest so transferred.
(d) (i) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership
Interests for cash or Contributed Property, the Capital Account of all
Partners and the Carrying Value of each Partnership property
immediately prior to such issuance shall be adjusted upward or downward
to reflect any Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as if such Unrealized Gain or Unrealized Loss had
been recognized on an actual sale of each such property immediately
prior to such issuance and had been allocated to the Partners at such
time pursuant to Section 6.1. In determining such Unrealized Gain or
Unrealized Loss, the aggregate cash amount and fair market value of all
Partnership assets (including, without limitation, cash or cash
equivalents) immediately prior to the issuance of additional
Partnership Interests shall be determined by the Board of Supervisors
using such reasonable method of valuation as it may adopt; PROVIDED,
HOWEVER, that the Board of Supervisors, in arriving at such valuation,
must take fully into account the fair market value of the Partnership
Interests of all Partners at such time. The Board of Supervisors shall
allocate such aggregate value among the assets of the Partnership (in
such manner as it determines in its discretion to be reasonable) to
arrive at a fair market value for individual properties.
(ii) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed
distribution to a Partner of any Partnership property (other than a
distribution of cash that is not in redemption or retirement of a
Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of all Partnership property shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable
to such Partnership property, as if such Unrealized Gain or Unrealized
Loss had been recognized in a sale of such property immediately prior
to such distribution for an amount equal to its fair market value, and
had been allocated to the Partners, at such time, pursuant to Section
6.1. In determining such Unrealized Gain or Unrealized Loss the
aggregate cash amount and fair market value of all Partnership assets
(including, without limitation, cash or cash equivalents) immediately
prior to a distribution shall (A) in the case of an actual distribution
which is not made pursuant to Section 12.4, be determined and allocated
in the same manner as that provided in Section 5.5(d)(i) or (B) in the
case of a liquidating distribution pursuant to Section 12.4, be
determined and allocated by the Liquidator using such reasonable method
of valuation as it may adopt.
5.6 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
<PAGE>
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.
5.7 LIMITED PREEMPTIVE RIGHTS.
Except as provided in Section 5.3, no Person shall have any
preemptive, preferential or other similar rights with respect to (a) additional
Capital Contributions; (b) issuance or sale of any class or series of
Partnership Interests, whether unissued, held in the treasury or hereafter
created; (c) issuance of any obligations, evidences of indebtedness or other
securities of the Partnership convertible into or exchangeable for, or carrying
or accompanied by any rights to receive, purchase or subscribe to, any such
partnership Interests; (d) issuance of any right of subscription to or right to
receive, or any warrant or option for the purchase of, any such Partnership
Interests; or (e) issuance or sale of any other securities that may be issued or
sold by the Partnership.
5.8 FULLY PAID AND NON-ASSESSABLE NATURE OF LIMITED PARTNER
PARTNERSHIP INTERESTS.
All Limited Partner Partnership Interests issued pursuant to,
and in accordance with the requirements of, this Article V shall be fully paid
and non-assessable Partnership Interests in the Partnership, except as such
non-assessability may be affected by Section 17-607 of the Delaware Act.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES.
(a) General. In maintaining the Capital Accounts that
determine the rights of the Partners among themselves, the Partnership's items
of income, gain, loss and deduction (computed in accordance with Section
5.5(b)), including Net Termination Gain and Net Termination Loss, shall be
allocated among the Partners in accordance with their relative Percentage
Interests, except as otherwise provided below.
(b) Limitation on Losses. Any deduction otherwise allocable to
a Limited Partner that would create or add to a deficit in its Adjusted Capital
Account shall instead be allocated to the General Partner. Thereafter, any
income that would otherwise be allocable to such Limited Partner shall be
allocated to the General Partner until the aggregate amount so allocated under
this sentence equals the aggregate deductions previously allocated to the
General Partner under the preceding sentence.
(c) Special Allocations. Notwithstanding any other provision
of this Section 6.1, the following special allocations shall be made for such
taxable period:
(i) PARTNERSHIP MINIMUM GAIN CHARGEBACK. Notwithstanding any
other provision of this Section 6.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period, each
<PAGE>
Partner shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in the manner and
amounts provided in Treasury Regulation Sections 1.704-2(f)(6),
1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor provision. For
purposes of this Section 6.1(c), each Partner's Adjusted Capital
Account balance shall be determined, and the allocation of income or
gain required hereunder shall be effected, prior to the application of
any other allocations pursuant to this Section 6.1(c) with respect to
such taxable period (other than an allocation pursuant to Sections
6.1(c)(v) and 6.1(c)(vi)). This Section 6.1(c)(i) is intended to comply
with the Partnership Minimum Gain chargeback requirement in Treasury
Regulation Section 1.704-2(f) and shall be interpreted consistently
therewith.
(ii) CHARGEBACK OF PARTNER NONRECOURSE DEBT MINIMUM GAIN.
Notwithstanding the other provisions of this Section 6.1 (other than
Section 6.l(c)(i)), except as provided in Treasury Regulation Section
1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain during any Partnership taxable period, any Partner with a
share of Partner Nonrecourse Debt Minimum Gain at the beginning of such
taxable period shall be allocated items of Partnership income and gain
for such period (and, if necessary, subsequent periods) in the manner
and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions. For purposes of this
Section 6.1(c), each Partner's Adjusted Capital Account balance shall
be determined, and the allocation of income or gain required hereunder
shall be effected, prior to the application of any other allocations
pursuant to this Section 6.1(c), other than Section 6.1(c)(i) and other
than an allocation pursuant to Sections 6.1(c)(v) and 6.1(c)(vi), with
respect to such taxable period. This Section 6.1(c)(ii) is intended to
comply with the chargeback of items of income and gain requirement in
Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(iii) QUALIFIED INCOME OFFSET. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of
Partnership income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations promulgated under Section 704(b)
of the Code, the deficit balance, if any, in its Adjusted Capital
Account created by such adjustments, allocations or distributions as
quickly as possible unless such deficit balance is otherwise eliminated
pursuant to Section 6.1(c)(i) or (ii).
(iv) GROSS INCOME ALLOCATIONS. In the event any Partner has a
deficit balance in its Capital Account at the end of any Partnership
taxable period in excess of the sum of (A) the amount such Partner is
required to restore pursuant to the provisions of this Agreement and
(B) the amount such Partner is deemed obligated to restore pursuant to
Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Partner
<PAGE>
shall be specially allocated items of Partnership gross income and gain
in the amount of such excess as quickly as possible; provided, that an
allocation pursuant to this Section 6.1(c)(iv) shall be made only if
and to the extent that such Partner would have a deficit balance in its
Capital Account as adjusted after all other allocations provided for in
this Section 6.1 have been tentatively made as if this Section
6.1(c)(iv) were not in this Agreement.
(v) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with
their respective Percentage Interests. If the Board of Supervisors
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 Board of Supervisors
is authorized, upon notice to the Limited Partners, to revise the
prescribed ratio to the numerically closest ratio that does satisfy
such requirements.
(vi) PARTNER NONRECOURSE DEDUCTIONS. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the
Partner that bears the Economic Risk of Loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable in accordance with Treasury Regulation Section
1.704-2(i). If more than one Partner bears the Economic Risk of Loss
with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse
Deductions attributable thereto shall be allocated between or among
such Partners in accordance with the ratios in which they share such
Economic Risk of Loss.
(vii) NONRECOURSE LIABILITIES. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (A) the amount
of Partnership Minimum Gain and (B) the total amount of Nonrecourse
Built-in Gain shall be allocated among the Partners in accordance with
their respective Percentage Interests.
(viii)CODE SECTION 754 ADJUSTMENTS. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant
to Section 734(b) or 743(c) of the Code is required, pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into
account in determining Capital Accounts, the amount of such adjustment
to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to
such Section of the Treasury Regulations.
(ix) CURATIVE ALLOCATION.
(A) Notwithstanding any other provision of this
Section 6.1, other than the Required Allocations, the Required
Allocations shall be taken into account in making the Agreed
Allocations so that, to the extent possible, the net amount of
items of income, gain, loss and deduction allocated to each
Partner pursuant to the Required Allocations and the Agreed
Allocations, together, shall be equal to the net amount of
such items that would have been allocated to each such Partner
<PAGE>
under the Agreed Allocations had the Required Allocations and
the related Curative Allocation not otherwise been provided in
this Section 6.1. Notwithstanding the preceding sentence,
Required Allocations relating to (1) Nonrecourse Deductions
shall not be taken into account except to the extent that
there has been a decrease in Partnership Minimum Gain and (2)
Partner Nonrecourse Deductions shall not be taken into account
except to the extent that there has been a decrease in Partner
Nonrecourse Debt Minimum Gain. Allocations pursuant to this
Section 6.1(c)(ix)(A) shall only be made with respect to
Required Allocations to the extent the General Partner
reasonably determines that such allocations will otherwise be
inconsistent with the economic agreement among the Partners.
Further, allocations pursuant to this Section 6.1(c)(ix)(A)
shall be deferred with respect to allocations pursuant to
clauses (1) and (2) hereof to the extent the Board of
Supervisors reasonably determines that such allocations are
likely to be offset by subsequent Required Allocations.
(B) The Board of Supervisors shall have reasonable
discretion, with respect to each taxable period, to (1) apply
the provisions of Section 6.1(c)(ix)(A) in whatever order is
most likely to minimize the economic distortions that might
otherwise result from the Required Allocations, and (2) divide
all allocations pursuant to Section 6.1(c)(ix)(A) among the
Partners in a manner that is likely to minimize such economic
distortions.
(x) GENERAL ECONOMIC CORRECTIVE ALLOCATION. Notwithstanding
any other provision of this Section 6.1 (other than the Required
Allocations), the General Partner may allocate items of income, gain,
loss and deduction for any taxable year in such manner as it
determines, in its reasonable discretion, is necessary so that, when
made, distributions in liquidation of the Partnership in accordance
with Section 12.4 shall correspond as closely as possible to the
economic arrangement reflected in Section 6.1(a).
6.2 ALLOCATIONS FOR TAX PURPOSES.
(a) GENERAL. Except as otherwise provided herein, for federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Section 6.1.
(b) CONTRIBUTED PROPERTY. In an attempt to eliminate Book-Tax
Disparities attributable to a Contributed Property or Adjusted Property, items
of income, gain, loss, depreciation, amortization and cost recovery deductions
shall be allocated for federal income tax purposes among the Partners as
follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the
manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property and its
adjusted basis at the time of contribution; and (B) any item of
Residual Gain or Residual Loss attributable to a Contributed Property
<PAGE>
shall be allocated among the Partners in the same manner as its
correlative item of "book" gain or loss is allocated pursuant to
Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items shall
(1) first, be allocated among the Partners in a manner consistent with
the principles of Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and
the allocations thereof pursuant to Section 5.5(d)(i) or (ii), and (2)
second, in the event such property was originally a Contributed
Property, be allocated among the Partners in a manner consistent with
Section 6.2(b)(i)(A); and (B) any item of Residual Gain or Residual
Loss attributable to an Adjusted Property shall be allocated among the
Partners in the same manner as its correlative item of "book" gain or
loss is allocated pursuant to Section 6.1.
(iii) The Board of Supervisors shall apply the principles of
Treasury Regulation Section 1.704-3(d) to eliminate Book-Tax
Disparities.
(c) DISCRETIONARY ALLOCATION AUTHORITY. For the proper
administration of the Partnership and for the preservation of uniformity of the
Units of the MLP (or any class or classes thereof), the Board of Supervisors
shall have sole discretion to (i) adopt such conventions as it deems appropriate
in determining the amount of depreciation, amortization and cost recovery
deductions; (ii) make special allocations for federal income tax purposes of
income (including, without limitation, gross income) or deductions; and (iii)
amend the provisions of this Agreement as appropriate (x) to reflect the
proposal or promulgation of Treasury Regulations under Section 704(b) or Section
704(c) of the Code or (y) otherwise to preserve or achieve uniformity of the
Units of the MLP (or any class or classes thereof). The Board of Supervisors may
adopt such conventions, make such allocations and make such amendments to this
Agreement as provided in this Section 6.2(c) only if such conventions,
allocations or amendments would not have a material adverse effect on the
Partners, the holders of any class or classes of Units issued and outstanding or
the Partnership, and if such allocations are consistent with the principles of
Section 704 of the Code.
(d) DISCRETIONARY AMORTIZATION AUTHORITY. The Board of
Supervisors in its discretion may determine to depreciate or amortize the
portion of an adjustment under Section 743(b) of the Code attributable to
unrealized appreciation in any Adjusted Property (to the extent of the
unamortized Book-Tax Disparity) using a predetermined rate derived from the
depreciation or amortization method and useful life applied to the Partnership's
common basis of such property, despite any inconsistency of such approach with
Treasury Regulation Section 1.167(c)-1(a)(6) and Proposed Treasury Regulation
Section 1.197-2(g)(3). If the Board of Supervisors determines that such
reporting position cannot reasonably be taken, the Board of Supervisors may
adopt depreciation and amortization conventions under which all purchasers
acquiring Units of the MLP in the same month would receive depreciation and
amortization deductions, based upon the same applicable rate as if they had
purchased a direct interest in the Partnership's property. If the Board of
Supervisors chooses not to utilize such aggregate method, the Board of
Supervisors may use any other reasonable depreciation and amortization
<PAGE>
conventions to preserve the uniformity of the intrinsic tax characteristics of
any Units that would not have a material adverse effect on any Limited Partner
or the holders of any class or classes of Units.
(e) RECAPTURE INCOME. Any gain allocated to the Partners upon
the sale or other taxable disposition of any Partnership asset shall, to the
extent possible, after taking into account other required allocations of gain
pursuant to this Section 6.2, be characterized as Recapture Income in the same
proportions and to the same extent as such Partners (or their predecessors in
interest) have been allocated any deductions directly or indirectly giving rise
to the treatment of such gains as Recapture Income.
(f) EFFECT OF SECTION 754 ELECTION. 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) PRORATION. The Board of Supervisors may adopt such methods
of allocation of income, gain, loss or deduction between a transferor and a
transferee of a Partnership Interest as it determines necessary, to the extent
permitted or required by Section 706 of the Code and the regulations or rulings
promulgated thereunder.
6.3 SPECIAL DISTRIBUTION.
At the Closing, the Partnership shall, subject to Section
17-607 of the Delaware Act, distribute to the MLP, without a corresponding
distribution to the Initial General Partner, $69.0 million in cash to fund the
Redemption.
6.4 GENERAL DISTRIBUTIONS.
(a) Within 45 days following the end of each Quarter
commencing with the Quarter ending on June 29, 1996, an amount equal to 100% of
Available Cash with respect to such Quarter shall be distributed in accordance
with this Article VI by the Partnership to the Partners in accordance with their
respective Percentage Interests. The immediately preceding sentence shall not
require any distribution of cash if and to the extent such distribution would be
prohibited by applicable law or by any loan agreement, security agreement,
mortgage, debt instrument or other agreement or obligation to which the
Partnership is a party or by which it is bound or its assets are subject. All
distributions required to be made under this Agreement shall be made subject to
Section 17-607 of the Delaware Act.
(b) In the event of the dissolution and liquidation of the
Partnership, all receipts received during or after the Quarter in which the
Liquidation Date occurs, except as otherwise provided in (a)(ii) of the
definition of Available Cash, shall be applied and distributed solely in
accordance with, and subject to the terms and conditions of, Section 12.4.
<PAGE>
(c) The Board of Supervisors shall have the discretion to
treat taxes paid by the Partnership on behalf of, or amounts withheld with
respect to, all or less than all of the Partners, as a distribution of Available
Cash to such Partners.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
7.1 MANAGEMENT.
(a) Except as otherwise expressly provided in this Agreement,
all management powers over the business and affairs of the Partnership shall be
vested exclusively in the Board of Supervisors, and subject to the direction of
the Board of Supervisors and in accordance with the provisions of Section 7.9,
the Officers. Neither the General Partner (except as otherwise expressly
provided in this Agreement) nor any Limited Partner shall have any management
power or control over the business and affairs of the Partnership. Thus, except
as otherwise expressly provided in this Agreement, the business and affairs of
the Partnership shall be managed by or under the direction of the Board of
Supervisors, and the day-to-day activities of the Partnership shall be conducted
on the Partnership's behalf by the Officers, who shall be agents of the
Partnership. In order to enable the Board of Supervisors to manage the business
and affairs of the Partnership, the General Partner, except as otherwise
expressly provided in this Agreement, hereby irrevocably delegates to the Board
of Supervisors all management powers over the business and affairs of the
Partnership that it may now or hereafter possess under applicable law. The
General Partner further agrees to take any and all action necessary and
appropriate, in the sole discretion of the Board of Supervisors, to effect any
duly authorized actions by the Board of Supervisors or any Officer, including
executing or filing any agreements, instruments or certificates, delivering all
documents, providing all information and taking or refraining from taking action
as may be necessary or appropriate to achieve the effective delegation of power
described in this Section 7.1(a). Each of the Partners and each Person who may
acquire an interest in a Partnership Interest hereby approves, consents to,
ratifies and confirms such delegation. The delegation by the General Partner to
the Board of Supervisors of management powers over the business and affairs of
the Partnership pursuant to the provisions of this Agreement shall not cause the
General Partner to cease to be a general partner of the Partnership nor shall it
cause the Board of Supervisors or any member thereof to be a general partner of
the Partnership or to have or be subject to the liabilities of a general partner
of the Partnership. Except as otherwise specifically provided in Sections 7.13,
7.14, 7.15 and 7.16, the authority, functions, duties and responsibilities of
the Board of Supervisors and of the Officers shall be identical to the
authority, functions, duties and responsibilities of the board of directors and
officers, respectively, of a corporation organized under the Delaware General
Corporation Law.
(b) Consistent with the management powers delegated to the
Board of Supervisors pursuant to the provisions of this Agreement, the Board of
Supervisors shall have the powers now or hereafter granted a general partner of
a limited partnership under the Delaware Act or any other applicable law and,
except as otherwise expressly provided in this Agreement, shall have full power
and authority to do all things and on such terms as it may deem necessary or
<PAGE>
appropriate to conduct the business of the Partnership, to exercise all powers
set forth in Section 2.5 and to effectuate the purposes set forth in Section
2.4, including the following:
(i) the making of any expenditures, the lending or
borrowing of money, the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance of
evidences of indebtedness and the incurring of any other obligations;
(ii) the making of tax, regulatory and other
filings, or rendering of periodic or other reports to governmental or
other agencies having jurisdiction over the business or assets of the
Partnership;
(iii) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of
the Partnership or the merger or other combination of the Partnership
with or into another Person;
(iv) the use of the assets of the Partnership
(including cash on hand) for any purpose consistent with the terms of
this Agreement, including the financing of the conduct of the
operations of any Group Member, the lending of funds to other Persons
(including the MLP or any Subsidiary of the MLP), the repayment of
obligations of any Group Member, the MLP or any Subsidiary of the MLP
and the making of capital contributions to any Group Member, the MLP or
any Subsidiary of the MLP.
(v) the negotiation, execution and performance of
any contracts, conveyances or other instruments (including instruments
that limit the liability of the Partnership under contractual
arrangements to all or particular assets of the Partnership, with the
other party to the contract to have no recourse against the General
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);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees
(including employees who are Officers) and agents, outside attorneys,
accountants, consultants and contractors and the determination of their
compensation and other terms of employment or hiring;
(viii)the maintenance of such insurance for the
benefit of the Partnership Group and the Partners (including the assets
of the Partnership) as it deems necessary or appropriate,
(ix) the formation of, or acquisition of an interest
in, and the contribution of property and the making of loans to, any
further limited or general partnerships, joint ventures, corporations,
limited liability companies or other relationships;
<PAGE>
(x) the control of any matters affecting the rights
and obligations of the Partnership, including the bringing and
defending of actions at law or in equity and otherwise engaging in the
conduct of litigation and the incurring of legal expense and the
settlement of claims and litigation; and
(xi) the indemnification of any Person against
liabilities and contingencies to the extent permitted by law.
(c) Notwithstanding any other provision of this Agreement and
the MLP Agreement, and to the fullest extent permitted by applicable law, each
of the Partners hereby (i) approves, consents to, ratifies and confirms the
General Partner's delegation of management powers to the Board of Supervisors
pursuant to paragraph (a) of this Section 7.1; (ii) approves, consents to,
ratifies and confirms the execution, delivery and performance by the parties
thereto of the MLP Agreement, the Recapitalization Agreement, the Purchase
Agreement and the other agreements described in or filed as a part of the Proxy
Statement; (iii) agrees that the Partnership (through any duly authorized
Officer of the Partnership) is authorized to execute, deliver and perform the
agreements referred to in clause (i) of this sentence and the other agreements,
acts, transactions and matters described in or contemplated by the Proxy
Statement without any further act, approval or vote of the Partners; and (iv)
agrees that the execution, delivery or performance by the General Partner, the
MLP, the Board of Supervisors or any member thereof, any duly authorized Officer
of the Partnership, any Group Member or any Affiliate of any of them, of this
Agreement or any agreement authorized or permitted under this Agreement, shall
not constitute a breach by any such Person of any duty that any of such Persons
may owe the Partnership, a Limited Partner or any other Persons under this
Agreement (or any other agreements) or of any duty stated or implied by law or
equity.
7.2 THE BOARD OF SUPERVISORS; APPOINTMENT; MANNER OF ACTING.
(a) The Board of Supervisors shall consist of the five
individuals who serve as members of the board of supervisors of the MLP.
(b) Each member of the Board of Supervisors shall have one
vote. The vote of the majority of the members of the Board of Supervisors
present at a meeting at which a quorum is present shall be the act of the Board
of Supervisors. A majority of the number of members of the Board of Supervisors
then in office shall constitute a quorum for the transaction of business at any
meeting of the Board of Supervisors, but if less than a quorum is present at a
meeting, a majority of the members of the Board of Supervisors present at such
meeting may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
7.3 REMOVAL OF MEMBERS OF THE BOARD OF SUPERVISORS. .
Any member of the Board of Supervisors may be removed with or
without Cause, by the affirmative vote of the majority of the members of the
Board of Supervisors of the MLP, but only if such person is also removed as a
member of the MLP's board of supervisors; PROVIDED that his or her successor on
<PAGE>
the MLP's board of supervisors is elected or appointed in the manner set forth
in the MLP Agreement. If an individual who is a member of the board of
supervisors of the MLP is removed from such board, such individual will
automatically be removed from the Board of Supervisors.
7.4 RESIGNATIONS of MEMBERS OF THE BOARD OF SUPERVISORS. .
Any member of the Board of Supervisors may resign at any time
by giving written notice to the Board of Supervisors. Such resignation shall
take effect at the time specified therein, but only if such person also resigns
from the MLP's board of supervisors. If an individual who is a member of the
board of supervisors of the MLP resigns from such board, such individual will
automatically be deemed to have resigned from the Board of Supervisors.
7.5 VACANCIES ON THE BOARD OF SUPERVISORS. .
If any Supervisor is removed, resigns or is otherwise unable
to serve as a member of the Board of Supervisors, the Board of Supervisors of
the MLP shall in its sole discretion, appoint an individual to fill the vacancy
for the unexpired term of such Supervisor's predecessor in office, who is the
same individual appointed to fill the corresponding vacancy on the MLP's board
of supervisors.
7.6 MEETINGS; COMMITTEES; CHAIRMAN. .
(a) Regular meetings of the Board of Supervisors shall be held
at such times and places as shall be designated from time to time by resolution
of the Board of Supervisors. Notice of such regular meetings shall not be
required. Special meetings of the Board of Supervisors may be called by written
request of a majority of the members of the Board of Supervisors, on at least 48
hours prior written notice to the other members. Any such notice, or waiver
thereof, need not state the purpose of such meeting except as may otherwise be
required by law. Attendance of a member of the Board of Supervisors at a meeting
(including pursuant to the penultimate sentence of this Section 7.6(a)) shall
constitute a waiver of notice of such meeting, except where such member attends
the meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened. Any
action required or permitted to be taken at a meeting of the Board of
Supervisors may be taken without a meeting, without prior notice and without a
vote if a consent or consents in writing, setting forth the action so taken, is
signed by all the members of the Board of Supervisors. Members of the Board of
Supervisors may participate in and hold meetings by means of conference
telephone, videoconference or similar communications equipment by means of which
all Persons participating in the meeting can hear each other, and participation
in such meetings shall constitute presence in person at the meeting. The Board
of Supervisors may establish any additional rules governing the conduct of its
meetings that are not inconsistent with the provisions of this Agreement.
(b) The Board of Supervisors shall appoint the Audit Committee
to consist solely of the individuals who serve as the audit committee of the
MLP. The Audit Committee shall perform the functions delegated to it pursuant to
the terms of this Agreement and such other matters as may be delegated to it
from time to time by resolution of the Board of Supervisors. The Board of
<PAGE>
Supervisors, by a majority of the whole Board of Supervisors, may appoint one or
more additional committees of the Board of Supervisors to consist of one or more
members of the Board of Supervisors, which committee(s) shall have and may
exercise such of the powers and authority of the Board of Supervisors (including
in respect of Section 7.1) with respect to the management of the business and
affairs of the Partnership as may be provided in a resolution of the Board of
Supervisors. Any committee designated pursuant to this Section 7.6(b) shall
choose its own chairman, shall keep regular minutes of its proceedings and
report the same to the Board of Supervisors when requested, shall fix its own
rules or procedures and shall meet at such times and at such place or places as
may be provided by such rules or by resolution of such committee or resolution
of the Board of Supervisors. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a quorum and
the affirmative vote of a majority of the members present shall be necessary for
the taking of any action. Subject to the first sentence of this Section 7.6(b),
the Board of Supervisors may designate one or more members of the Board of
Supervisors as alternate members of any committee who may replace any absent or
disqualified member at any meeting of such committee. Subject to the first
sentence of this Section 7.6(b), in the absence or disqualification of a member
of a committee, the member or members present at any meeting and not
disqualified from voting, whether or not constituting a quorum, may unanimously
appoint another member of the Board of Supervisors to act at the meeting in the
place of the absent or disqualified member.
(c) The Board of Supervisors may elect one of its members as
Chairman of the Board of Supervisors. The Chairman of the Board of Supervisors,
if any, and if present and acting, shall preside at all meetings of the Board of
Supervisors. In the absence of the Chairman of the Board of Supervisors, the
Vice Chairman of the Board of Supervisors if any, and if present and acting,
shall preside at all meetings of the Board of Supervisors. In the absence of the
Chairman of the Board of Supervisors and the Vice Chairman of the Board of
Supervisors, the President, if present, acting and a member of the Board of
Supervisors, or any other member of the Board of Supervisors chosen by the Board
of Supervisors shall preside.
7.7 OFFICERS .
(a) GENERALLY. The Board of Supervisors, as set forth below,
shall appoint agents of the Partnership, referred to as "Officers" of the
Partnership as described in this Section 7.7. Unless provided otherwise by
resolution of the Board of Supervisors, the Officers shall have the titles,
power, authority and duties described below in this Section 7.7.
(b) TITLES AND NUMBER. The Officers shall be the Chairman of
the Board of Supervisors (unless the Board of Supervisors provides otherwise),
the Vice Chairman of the Board of Supervisors (unless the Board of Supervisors
provides otherwise), the President, any and all Vice Presidents, the Secretary
and any and all Assistant Secretaries and any Treasurer and any and all
Assistant Treasurers and any other Officers appointed pursuant to Section
7.7(i). There shall be appointed from time to time, in accordance with this
Section 7.7, such Vice Presidents, Secretaries, Assistant Secretaries,
Treasurers and Assistant Treasurers as the Board of Supervisors may desire. Any
person may hold two or more offices.
<PAGE>
(c) APPOINTMENT AND TERM OF OFFICE. The Officers shall be
appointed by the Board of Supervisors at such time and for such terms as the
Board of Supervisors shall determine. Any Officer may be removed, with or
without Cause, only by the Board of Supervisors. Vacancies in any office may be
filled only by the Board of Supervisors.
(d) CHAIRMAN OF THE BOARD OF SUPERVISORS. The Board of
Supervisors may elect one of its members as the Chairman of the Board of
Supervisors. Unless the Board of Supervisors provides otherwise, the Chairman of
the Board of Supervisors shall be an Officer, and shall have the powers, duties
and authority assigned by the Board of Supervisors.
(e) VICE CHAIRMAN. The Board of Supervisors may elect one of
its members as Vice Chairman of the Board of Supervisors. Unless the Board of
Supervisors provides otherwise, the Vice Chairman of the Board of Supervisors
shall be an Officer and shall have the powers, duties and authority of the chief
executive officer of the Partnership and, as such, shall be responsible for the
general and active management and direction of the Partnership and shall see
that all orders and resolutions of the Board of Supervisors are carried into
effect.
(f) PRESIDENT. Subject to the limitations imposed by this
Agreement, any employment agreement, any employee plan or any determination of
the Board of Supervisors, the President, subject to the direction of the Board
of Supervisors, shall have the powers, duties and authority of the chief
operating officer of the Partnership and, as such, shall be responsible for the
management and direction of the day-to-day business and affairs of the
Partnership, its other Officers, employees and agents, shall supervise generally
the affairs of the Partnership and shall have full authority to execute all
documents and take all actions that the Partnership may legally take. The
President shall exercise such other powers and perform such other duties as may
be assigned to him by this Agreement or the Board of Supervisors, including any
duties and powers stated in any employment agreement approved by the Board of
Supervisors.
(g) VICE PRESIDENTS. In the absence of the President, each
Vice President appointed by the Board of Supervisors shall have all of the
powers and duties conferred upon the President, including the same power as the
President to execute documents on behalf of the Partnership. Each such Vice
President shall perform such other duties and may exercise such other powers as
may from time to time be assigned to him by the Board of Supervisors or the
President.
(h) SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall
record or cause to be recorded in books provided for that purpose the minutes of
the meetings or actions of the Board of Supervisors and of the Partners, shall
see that all notices are duly given in accordance with the provisions of this
Agreement and as required by law, shall be custodian of all records (other than
financial), shall see that the books, reports, statements, certificates and all
other documents and records required by law are properly kept and filed, and, in
general, shall perform all duties incident to the office of Secretary and such
other duties as may, from time to time, be assigned to him by this Agreement,
the Board of Supervisors or the President. The Assistant Secretaries shall
exercise the powers of the Secretary during that Officer's absence or inability
or refusal to act.
<PAGE>
(i) TREASURER AND ASSISTANT TREASURERS. The Treasurer shall
keep or cause to be kept the books of account of the Partnership and shall
render statements of the financial affairs of the Partnership in such form and
as often as required by this Agreement, the Board of Supervisors or the
President. The Treasurer, subject to the order of the Board of Supervisors,
shall have the custody of all funds and securities of the Partnership. The
Treasurer shall perform all other duties commonly incident to his office and
shall perform such other duties and have such other powers as this Agreement,
the Board of Supervisors or the President, shall designate from time to time.
The Assistant Treasurers shall exercise the power of the Treasurer during that
Officer's absence or inability or refusal to act. Each of the Assistant
Treasurers shall possess the same power as the Treasurer to sign all
certificates, contracts, obligations and other instruments of the Partnership.
If no Treasurer or Assistant Treasurer is appointed and serving or in the
absence of the appointed Treasurer and Assistant Treasurer, the Vice President
and Chief Financial Officer, or such other Officer as the Board of Supervisors
shall select, shall have the powers and duties conferred upon the Treasurer.
(j) OTHER OFFICERS AND AGENTS. The Board of Supervisors may
appoint such other Officers and agents as may from time to time appear to be
necessary or advisable in the conduct of the affairs of the Partnership, who
shall hold their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by the Board of
Supervisors.
(k) POWERS OF ATTORNEY. The Board of Supervisors may grant
powers of attorney or other authority as appropriate to establish and evidence
the authority of the Officers and other Persons.
(l) OFFICERS' DELEGATION OF AUTHORITY. Unless otherwise
provided by resolution of the Board of Supervisors, no Officer shall have the
power or authority to delegate to any Person such Officer's rights and powers as
an Officer to manage the business and affairs of the Partnership.
7.8 COMPENSATION .
The Officers shall receive such compensation for their
services as may be designated by the Board of Supervisors. In addition, the
Officers shall be entitled to be reimbursed for out-of-pocket costs and expenses
incurred in the course of their service hereunder. The members of the Board of
Supervisors who are not employees of the Partnership or its Affiliates shall
receive such compensation for their services as members of the Board of
Supervisors or members of a committee of the Board of Supervisors as the Board
of Supervisors shall determine. In addition, the members of the Board of
Supervisors shall be entitled to be reimbursed for out-of-pocket costs and
expenses incurred in the course of their service hereunder.
7.9 RESTRICTIONS ON GENERAL PARTNER'S AND BOARD OF SUPERVISORS'
AUTHORITY .
(a) Except as provided in Articles XII and XIV, neither the
General Partner nor the Board of Supervisors may sell, exchange or otherwise
dispose of all or substantially all of the Partnership's assets in a single
<PAGE>
transaction or a series of related transactions without written approval of the
specific act by the Limited Partners or by other written instrument executed and
delivered by the Limited Partners subsequent to the date of this Agreement;
PROVIDED, HOWEVER that this provision shall not preclude or limit either the
General Partner's or the Board of Supervisors' ability to mortgage, pledge,
hypothecate or grant a security interest in all or substantially all of the
assets of the Partnership Group and shall not apply to any forced sale of any or
all of the Partnership's assets pursuant to the foreclosure of, or other
realization upon, any such encumbrance.
(b) The Board of Supervisors may not cause the Partnership to
incur any Indebtedness that is recourse to the General Partner or any of its
Affiliates without the approval of the General Partner, which approval may be
given or withheld in the General Partner's sole discretion.
7.10 REIMBURSEMENT OF THE GENERAL PARTNER; EMPLOYEE BENEFIT PLANS .
(a) Except as provided in this Section 7.10 and elsewhere in
this Agreement or in the MLP Agreement, the General Partner shall not be
compensated for its services as general partner of any Group Member.
(b) The General Partner shall be reimbursed on a monthly
basis, or such other basis as the Board of Supervisors may determine, for (i)
all direct and indirect expenses it incurs or payments it makes on behalf of the
Partnership (including salary, bonus, incentive compensation and other amounts
paid to any Person to perform services for the Partnership or for the General
Partner or the Board of Supervisors in the discharge of its duties to the
Partnership) and (ii) all other necessary or appropriate expenses allocable to
the Partnership or otherwise reasonably incurred by the General Partner in
connection with operating the Partnership's business (including expenses
allocated to the General Partner by its Affiliates). Reimbursements pursuant to
this Section 7.10 shall be in addition to any reimbursement to the General
Partner as a result of indemnification pursuant to Section 7.13.
(c) The Board of Supervisors, in its sole discretion and
without the approval of the Limited Partners (who shall have no right to vote in
respect thereof), may propose and adopt on behalf of the Partnership employee
benefit plans, employee programs and employee practices for the benefit of the
members of the Board of Supervisors, employees of the Partnership, employees of
the General Partner, any Group Member or any Affiliate, or any of them, in
respect of services performed, directly or indirectly, for the benefit of the
Partnership Group. Expenses incurred by the General Partner in connection with
any such plans, programs and practices shall be reimbursed in accordance with
Section 7.10(b). Any and all obligations of the General Partner under any
employee benefit plans, employee programs or employee practices adopted by the
Board of Supervisors as permitted by this Section 7.10(c) shall constitute
obligations of the General Partner hereunder and shall be assumed by any
successor General Partner approved pursuant to Section 11.1 or 11.2 or the
transferee of or successor to all of the General Partner's Partnership Interest
as a general partner in the Partnership pursuant to Section 4.2.
<PAGE>
7.11 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER .
(a) After the Initial Closing Date, the General Partner, for
so long as it is the general partner of the Partnership, (i) agrees that its
sole business will be to act as a general partner of the Partnership and the
MLP, and any other partnership of which the Partnership or the MLP is, directly
or indirectly, a partner and to undertake activities that are ancillary or
related thereto (including being a limited partner in the MLP), and (ii) shall
not enter into or conduct any business or incur any debts or liabilities except
in connection with or incidental to (A) its performance of the activities
required or authorized by this Agreement or the MLP Agreement or described in or
contemplated by the Initial Registration Statement or the Proxy Statement and
(B) the acquisition, ownership or disposition of Partnership Interests or
partnership interests in the MLP or any other partnership of which the
Partnership or the MLP is, directly or indirectly, a partner; PROVIDED, HOWEVER,
that notwithstanding the foregoing, employees of the General Partner may perform
limited services for other Affiliates of the General Partner in addition to the
Partnership and the MLP (it being understood that full time employees of the
General Partner shall devote substantially all their employment services to the
Partnership and the MLP).
(b) Except as described in Section 7.11(a), each Indemnitee
(other than the General Partner) shall have the right to engage in businesses of
every type and description and other activities for profit and to engage in and
possess an interest in other business ventures of any and every type or
description, independently or with others, whether in the businesses engaged in
by or anticipated to be engaged in by the Partnership, the MLP, any Subsidiary
of the MLP, any Group Member or otherwise, including, without limitation, in the
case of any Affiliates of the General Partner, business interests and activities
in direct competition with the business and activities of the MLP, any
Subsidiary of the MLP or any Group Member, and none of the same shall constitute
a breach of this Agreement the MLP Agreement or any duty to the MLP, any
Subsidiary of the MLP, any Group Member or any Partner. Neither the MLP, any
Subsidiary of the MLP, any Group Member, any Limited Partner nor any other
Person shall have any rights by virtue of this Agreement, the MLP Agreement or
the partnership relationship established hereby or thereby in any business
ventures of any Indemnitee and such Indemnitees shall have no obligation to
offer any interest in any such business ventures to the MLP, any Subsidiary of
the MLP, any Group Member, any Limited Partner or any other Person. The General
Partner and any Affiliates of the General Partner may acquire Partnership
Interests, and except as otherwise provided in this Agreement, shall be entitled
to exercise all rights of a Limited Partner relating to such Partnership
Interests.
(c) Subject to the terms of Sections 7.11 (a) and (b) but
otherwise notwithstanding anything to the contrary in this Agreement, (i) the
engaging in competitive activities by any of the Indemnitees (other than the
General Partner) in accordance with Section 7.11(b) is hereby approved by the
Partnership and all Partners and (ii) it shall be deemed not to be a breach of
the General Partner's fiduciary duties or any other obligation of any type
whatsoever of the General Partner for the General Partner to permit its
Affiliates to engage, or for any such Affiliate to engage, in business interests
and activities in preference to or to the exclusion of the Partnership.
<PAGE>
(d) The term "Affiliates" when used in this Section 7.11 with
respect to the General Partner shall not include the MLP, any Subsidiary of the
MLP, or any Group Member.
7.12 LOANS FROM THE GENERAL PARTNER; CONTRACTS WITH AFFILIATES;
CERTAIN RESTRICTIONS ON THE GENERAL PARTNER .
(a) The General Partner or any Affiliate of the General
Partner may lend to any Group Member, and any Group Member may borrow from the
General Partner and any Affiliate of the General Partner, funds needed or
desired by the Group Member, for such periods of time and in such amounts as the
General Partner may determine; PROVIDED, HOWEVER, that in any such case the
lending party may not charge the borrowing party interest at a rate greater than
the rate that would be charged the borrowing party or impose terms less
favorable on the borrowing party than would be charged or imposed on the
borrowing party by unrelated lenders on comparable loans made on an arms-length
basis (without reference to the lending party's financial abilities or
guarantees). The borrowing party shall reimburse the lending party for any costs
(other than any additional interest costs) incurred by the lending party in
connection with the borrowing of such funds. For purposes of this Section
7.12(a) and Section 7.12(b), the term "Group Member" shall include any Affiliate
of the Group Member that is controlled by the Group Member. No Group Member may
lend funds to the General Partner or any of its Affiliates; PROVIDED, HOWEVER,
that notwithstanding the foregoing, any Group Member may lend funds to the MLP,
any Subsidiary of the MLP or another Group Member.
(b) The Partnership may lend or contribute to the MLP, any
Subsidiary of the MLP, or any Group Member, and any Group Member may borrow from
the MLP, any Subsidiary of the MLP or the Partnership, funds on terms and
conditions established by the Board of Supervisors; PROVIDED, HOWEVER, that the
Partnership may not charge the MLP, any Subsidiary of the MLP or a Group Member
interest at a rate greater than the rate that would be charged to the MLP, any
Subsidiary of the MLP or such Group Member (without reference to the General
Partner's financial abilities or guarantees), by unrelated lenders on comparable
loans. The foregoing authority shall be exercised by the Board of Supervisors
and shall not create any right or benefit in favor of the MLP, any Subsidiary of
the MLP, any Group Member or any other Person.
(c) The General Partner may itself, or may enter into an
agreement with any of its Affiliates to, render services to a Group Member. Any
services rendered to a Group Member 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 7.12(c) shall be deemed
satisfied as to (i) any transaction approved by Special Approval, (ii) any
transaction, the terms of which are no less favorable to the Partnership Group
than those generally being provided to or available from unrelated third parties
or (iii) any transaction that, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the Partnership Group), is
equitable to the Partnership Group. The provisions of Section 7.10 shall apply
to the rendering of services described in this Section 7.12(c).
<PAGE>
(d) The Partnership may transfer assets to joint ventures,
other partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(e) Neither the General Partner nor any of its Affiliates
shall sell, transfer or convey any property to, or purchase any property from,
the Partnership, directly or indirectly, except pursuant to transactions that
are fair and reasonable to the Partnership; PROVIDED, HOWEVER, that the
requirements of this Section 7.12(e) shall be deemed to be satisfied as to (i)
the transactions effected pursuant to Section 5.2, the Contribution and
Conveyance Agreement and any other transactions described in or contemplated by
the Initial Registration Statement or the Proxy Statement, (ii) any transaction
approved by Special Approval, (iii) any transaction, the terms of which are no
less favorable to the Partnership than those generally being provided to or
available from unrelated third parties, or (iv) any transaction that, taking
into account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or advantageous
to the Partnership), is equitable to the Partnership.
(f) The General Partner and its Affiliates will have no
obligation to permit any Group Member to use any facilities or assets 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 on the part of the General Partner or its Affiliates to
enter into such contracts.
(g) Without limitation of Sections 7.12(a) through 7.12(f),
and notwithstanding anything to the contrary in this Agreement, the existence of
the conflicts of interest described in the Initial Registration Statement or the
Proxy Statement are hereby approved by all Partners.
7.13 INDEMNIFICATION .
(a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, all Indemnitees shall be
indemnified and held harmless by the Partnership from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
legal fees, expenses and other disbursements), judgments, fines, penalties,
interest, 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 an Indemnitee,
PROVIDED, that in each case the Indemnitee acted in good faith and in a manner
that such Indemnitee reasonably believed to be in, or not opposed to, the best
interests of the Partnership and, with respect to any criminal proceeding, had
no reasonable cause to believe its conduct was unlawful; PROVIDED, FURTHER, that
no indemnification pursuant to this Section 7.13 shall be available to the
Initial General Partner with respect to its obligations incurred pursuant to the
Underwriting Agreement or the Contribution and Conveyance Agreement (other than
obligations incurred by the General Partner on behalf of the Partnership or the
MLP). The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere, or its equivalent,
<PAGE>
shall not create a presumption that the Indemnitee acted in a manner contrary to
that specified above. Any indemnification pursuant to this Section 7.13 shall be
made only out of the assets of the Partnership, it being agreed that the General
Partner shall not be personally liable for such indemnification and shall have
no obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses
(including legal fees, expenses and other disbursements) incurred by an
Indemnitee who is indemnified pursuant to Section 7.13(a) in defending any
claim, demand, action, suit or proceeding shall, from time to time, be advanced
by the Partnership prior to the final disposition of such claim, demand, action,
suit or proceeding upon receipt by the Partnership of any undertaking by or on
behalf of the Indemnitee to repay such amount if it shall be determined by a
final, non-appealable order of a court of competent jurisdiction that the
Indemnitee is not entitled to be indemnified as authorized in this Section 7.13.
(c) The indemnification provided by this Section 7.13 shall be
in addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, both as to actions in the Indemnitee's capacity as an Indemnitee and
as to actions in any other capacity (including any capacity under the
Underwriting Agreement), and shall continue as to an Indemnitee who has ceased
to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse
the members of the Board of Supervisors, the General Partner or its Affiliates
for the cost of) insurance, on behalf of the General Partner and the members of
the Board of Supervisors and such other Persons as the Board of Supervisors
shall determine, against any liability that may be asserted against or expense
that may be incurred by such Person in connection with the Partnership's
activities, regardless of whether the Partnership would have the power to
indemnify such Person against such liability under the provisions of this
Agreement.
(e) For purposes of this Section 7.13, the Partnership shall
be deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of Section 7.13(a); and action taken
or omitted by it with respect to any employee benefit plan in the performance of
its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject any Limited Partner
to personal liability by reason of the indemnification provisions set forth in
this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole
or in part under this Section 7.13 because the Indemnitee had an interest in the
<PAGE>
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.13 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 7.13
or any provision hereof shall in any manner terminate, reduce or impair the
right of any past, present or future Indemnitee to be indemnified by the
Partnership, nor the obligations of the Partnership to indemnify any such
Indemnitee under and in accordance with the provisions of this Section 7.13 as
in effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
7.14 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, any Limited Partner or any other Persons who have acquired
interests in the Partnership, for losses sustained or liabilities incurred as a
result of errors in judgment or any act or omission if such Indemnitee acted in
good faith pursuant to authority granted in this Agreement.
(b) To the maximum extent permitted by. law, the General
Partner and its Affiliates shall not be responsible for any act or omission by
the Board of Supervisors, any member of the Board of Supervisors, or any
Officers of the Partnership.
(c) To the maximum extent permitted by law, the members of the
Board of Supervisors and the Officers of the Partnership shall not be
responsible for any act or omission by the General Partner and its Affiliates.
(d) Subject to its obligations and duties set forth in Section
7.1(a), the Board of Supervisors 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 the Officers or other agents of the Partnership, and,
to the maximum extent permitted by law, the Board of Supervisors shall not be
responsible for any misconduct or negligence on the part of any such Officer or
agent appointed by the Board of Supervisors in good faith.
(e) It will not constitute a breach of fiduciary or other duty
for an Officer or member of the Board of Supervisors to engage attorneys,
accountants, engineers and other advisors on behalf of the Partnership, its
Board of Supervisors, or any committee thereof, even though such persons may
also be retained from time to time by the General Partner or any of its
Affiliates, and such persons may be engaged with respect to any matter in which
the interests of the Partnership and the General Partner or any of its
Affiliates may differ, or may be engaged by both the Partnership and the General
Partner or any of its Affiliates with respect to a matter, as long as such
Officer or member of the Board of Supervisors reasonably believes that any
<PAGE>
conflict between the Partnership and the General Partner or any of its
Affiliates with respect to such matter is not material; and
(f) Any amendment, modification or repeal of this Section 7.14
or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the liability to the Partnership and the Limited
Partner, of the General Partner, its directors, officers and employees and any
other Indemnitees under this Section 7.14 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
7.15 RESOLUTION OF CONFLICTS OF INTEREST .
(a) Unless otherwise expressly provided in this Agreement or
the MLP Agreement, whenever a potential conflict of interest exists or arises
between the General Partner or any of its Affiliates, or any Officer or member
of the Board of Supervisors, on the one hand, and the Partnership, the MLP, or
any Partner, on the other, any resolution or course of action in respect of such
conflict of interest shall be permitted and deemed approved by the Limited
Partners, and shall not constitute a breach of this Agreement, of the MLP
Agreement, or 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 Board of Supervisors shall be authorized but not required in
connection with its resolution of such conflict of interest to seek Special
Approval of a resolution of such conflict or course of action. Any conflict of
interest and any resolution of such conflict of interest shall be conclusively
deemed fair and reasonable to the Partnership if such conflict of interest or
resolution is (i) approved by Special Approval (as long as the material facts
known to the General Partner or any of its Affiliates or such Officer or member
of the Board of Supervisors regarding any proposed transaction were disclosed to
the Audit Committee at the time it gave its approval), (ii) on terms no less
favorable to the Partnership than those generally being provided to or available
from unrelated third parties or (iii) fair to the Partnership, taking into
account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or advantageous
to the Partnership). The Board of Supervisors may also adopt a resolution or
course of action that has not received Special Approval. The Board of
Supervisors (including the Audit Committee in connection with Special Approval)
shall be authorized in connection with its determination of what is "fair and
reasonable" to the Partnership and in connection with its resolution of any
conflict of interest to consider (A) the relative interests of any party to such
conflict, agreement, transaction or situation and the benefits and burdens
relating to such interest; (B) any customary or accepted industry practices and
any customary or historical dealings with a particular Person; (C) any
applicable generally accepted accounting practices or principles; and (D) such
additional factors as the Board of Supervisors (including the Audit Committee)
determines in its 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 Board of Supervisors (including the Audit
Committee) to consider the interests of any Person other than the Partnership.
<PAGE>
In the absence of bad faith by the Board of Supervisors, the resolution, action
or terms so made, taken or provided by the Board of Supervisors with respect to
such matter shall not constitute a breach of this Agreement, the MLP Agreement
or any other agreement contemplated herein or therein or a breach of any
standard of care or duty imposed herein or therein or, to the extent permitted
by law, under the Delaware Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement
contemplated hereby provides that the Board of Supervisors is permitted or
required to make a decision (i) in its "sole discretion," or "discretion" that
it deems "necessary or appropriate" or "necessary or advisable" or under a grant
of similar authority or latitude, except as otherwise provided herein, the Board
of Supervisors shall make such decision in its sole discretion (regardless of
whether there is a reference to "sole discretion" or "discretion") unless
another express standard is provided for or (ii) in "good faith" or under
another express standard, the Board of Supervisors shall act under such express
standard and shall not be subject to any other or different standards imposed by
this Agreement, the MLP 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 Board of Supervisors consistent with the standards of
"reasonable discretion" set forth in the definition of Available Cash shall not
constitute a breach of any duty of the Board of Supervisors to the Partnership,
the Limited Partners or any partner of the MLP. The Board of Supervisors shall
have no duty, express or implied, to sell or otherwise dispose of any asset of
the Partnership Group. No borrowing by any Group Member or the approval thereof
by the Board of Supervisors shall be deemed to constitute a breach of any duty
of the Board of Supervisors to the Partnership, the Limited Partners or any
partner of the MLP by reason of the fact that the purpose or effect of such
borrowing is directly or indirectly to enable distributions to be made to the
holders of the Incentive Distribution Rights.
(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 Board of
Supervisors on behalf of the Partnership as a partner of a Group Member, to
approve of actions by the general partner or the board of supervisors of such
Group Member similar to those actions permitted to be taken by the Board of
Supervisors pursuant to this Section 7.15.
7.16 OTHER MATTERS CONCERNING THE GENERAL PARTNER AND THE BOARD OF
SUPERVISORS .
(a) The General Partner and the Board of Supervisors 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 and the Board of Supervisors may
consult with legal counsel, accountants, appraisers, management consultants,
investment bankers and other consultants and advisers selected by either of
them, and any act taken or omitted to be taken in reliance upon the opinion
<PAGE>
(including an Opinion of Counsel) of such Persons as to matters that the General
Partner or the Board of Supervisors 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, a duly appointed attorney or attorneys-in-fact or the duly
authorized Officers of the Partnership.
(d) The Board of Supervisors shall have the right, in respect
of any of its powers or obligations hereunder, to act through any of the duly
authorized Officers of the Partnership or a duly appointed attorney or
attorneys-in-fact.
(e) Any standard of care and duty imposed by this Agreement or
under the Delaware Act or any applicable law, rule or regulation shall be
modified, waived or limited, to the maximum extent permitted by law, as required
to permit the General Partner and the Board of Supervisors 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 or the Board of Supervisors
to be in, or not inconsistent with, the best interests of the Partnership.
7.17 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
Board of Supervisors and any Officer of the Partnership authorized by the Board
of Supervisors to act on behalf of and in the name of the Partnership (including
the General Partner, acting pursuant to the direction of the Board of
Supervisors in accordance with Section 7.1(a)) 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 Board of Supervisors or any such
Officer (including the General Partner, acting pursuant to the direction of the
Board of Supervisors in accordance with Section 7.1(a)) as if it were the
Partnership's sole party in interest, both legally and beneficially. The Limited
Partner hereby waives, to the maximum extent permitted by law, any and all
defenses or other remedies that may be available against such Person to contest,
negate or disaffirm any action of the Board of Supervisors or any such Officer
(including the General Partner, acting pursuant to the direction of the Board of
Supervisors in accordance with Section 7.1(a)) in connection with any such
dealing. In no event shall any Person dealing with the Board of Supervisors or
its representatives or any such Officer (including the General Partner, acting
pursuant to the direction of the Board of Supervisors in accordance with Section
7.1(a)) be obligated to ascertain that the terms of the Agreement have been
complied with or to inquire into the necessity or expedience of any act or
action of the Board of Supervisors or its representatives or any such Officer
(including the General Partner, acting pursuant to the direction of the Board of
Supervisors in accordance with Section 7.1(a)). Each and every certificate,
document or other instrument executed on behalf of the Partnership by the Board
of Supervisors or its representatives or any such Officer (including the General
Partner, acting pursuant to the direction of the Board of Supervisors in
accordance with Section 7.1 (a)) or shall be conclusive evidence in favor of any
<PAGE>
and every Person relying thereon or claiming thereunder that (a) at the time of
the execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 RECORDS AND ACCOUNTING .
The Partnership shall keep or cause to be kept at the
principal office of the Partnership appropriate books and records with respect
to the Partnership's business, including all books and records necessary to
provide to the Limited Partners any information required to be provided pursuant
to Section 3.3(a). Any books and records maintained by or on behalf of the
Partnership in the regular course of its business, including books of account
and records of Partnership proceedings, may be kept on, or be in the form of,
computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device, provided, that the books
and records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial reporting purposes, on an accrual basis in accordance
with U.S. GAAP.
8.2 FISCAL YEAR .
The fiscal year of the Partnership shall be a 52-53 week
fiscal year concluding on the Saturday nearest to September 30.
ARTICLE IX
TAX MATTERS
9.1 TAX RETURNS AND INFORMATION .
The Partnership shall timely file all returns of the
Partnership that are required for federal, state and local income tax purposes
on the basis of the accrual method and a taxable year ending on December 31. The
tax information reasonably required by the Partners for federal and state income
tax reporting purposes with respect to a taxable year shall be furnished to them
within 90 days of the close of the calendar year in which the Partnership's
taxable year ends. The classification, realization and recognition of income,
gain, losses and deductions and other items shall be on the accrual method of
accounting for federal income tax purposes.
<PAGE>
9.2 TAX ELECTIONS .
(a) The Partnership has made the election under Section 754 of
the Code in accordance with applicable regulations thereunder, subject to the
reservation of the right to seek to revoke such election upon the Board of
Supervisors' determination that such revocation is in the best interests of the
Limited Partners.
(b) The Partnership has elected to deduct expenses incurred in
organizing the Partnership ratably over a sixty-month period as provided in
Section 709 of the Code.
(c) Except as otherwise provided herein, the Board of
Supervisors shall determine whether the Partnership should make any other
elections permitted by the Code.
9.3 TAX CONTROVERSIES .
Subject to the provisions hereof, the General Partner is
designated as the Tax Matters Partner (as defined in Section 6231(a)(7) 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 resulting administrative and judicial
proceedings, and to expend Partnership funds for professional services and costs
associated therewith. Each Partner agrees to cooperate with the General Partner
and to do or refrain from doing any or all things reasonably required by the
General Partner to conduct such proceedings.
9.4 WITHHOLDING .
Notwithstanding any other provision of this Agreement, the
Board of Supervisors is authorized to take any action that it determines in its
discretion to be necessary or appropriate to cause the Partnership to comply
with any withholding requirements established under the Code or any other
federal, state or local law including, without limitation, pursuant to Sections
1441, 1442, 1445 and 1446 of the Code. To the extent that the Partnership is
required or elects to withhold and pay over to any taxing authority any amount
resulting from the allocation or distribution of income to any Partner
(including, without limitation, by reason of Section 1446 of the Code), the
amount withheld may be treated as a distribution of cash pursuant to Section 6.4
in the amount of such withholding from such Partner.
ARTICLE X
ADMISSION OF PARTNERS
10.1 INITIAL ADMISSION OF PARTNERS .
(a) On the Initial Closing Date, upon consummation of the
transactions contemplated by the Contribution and Conveyance Agreement, the
Initial General Partner was admitted to the Partnership as the general partner
of the Partnership and the MLP was admitted to the Partnership as a limited
partner of the Partnership.
<PAGE>
10.2 ADMISSION OF Substituted LIMITED PARTNERS .
Any person that is the successor in interest to a Limited
Partner as described in Section 4.3 shall be admitted to the Partnership as a
Limited Partner upon (a) furnishing to the Board of Supervisors (i) acceptance
in form satisfactory to the Board of Supervisors of all of the terms and
conditions of this Agreement and (ii) such other documents or instruments as may
be required to effect its admission as a Limited Partner in the Partnership and
(b) obtaining the consent of the Board of Supervisors, which consent may be
given or withheld in the Board of Supervisors' sole discretion. Such Person
shall be admitted to the Partnership as a Limited Partner immediately prior to
the transfer of the Partnership Interest, and the business of the Partnership
shall continue without dissolution.
10.3 ADMISSION OF Successor GENERAL PARTNER .
On the date hereof and simultaneous with the Closing, the
General Partner is being admitted to the Partnership as the successor to the
Initial General Partner. A successor General Partner approved pursuant to
Section 11.1 or 11.2 or the transferee of or successor to all of the General
Partner's Partnership Interest as a general partner in the Partnership pursuant
to Section 4.2 who is proposed to be admitted as a successor General Partner
shall, subject to compliance with the terms of Section 11.3, if applicable, be
admitted to the Partnership as the General Partner, effective immediately prior
to the withdrawal or removal of the General Partner pursuant to Section 11.1 or
11.2 or the transfer of the General Partner's Partnership Interest as a general
partner in the Partnership pursuant to Section 4.2; PROVIDED, HOWEVER, that no
such successor shall be admitted to the Partnership until compliance with the
terms of Section 4.2 has occurred and such successor has executed and delivered
such other documents or instruments as may be required to effect such admission.
Any such successor shall, subject to the terms hereof, carry on the business of
the Partnership without dissolution. The admission of a successor General
Partner shall not be deemed to have affected in any manner the irrevocable
delegation of all management powers over the business and affairs of the
Partnership to the Board of Supervisors pursuant to Section 7.1(a).
10.4 ADMISSION OF ADDITIONAL LIMITED PARTNERS .
(a) A Person (other than the General Partner, the MLP or a
Substituted Limited Partner) who makes a Capital Contribution to the Partnership
in accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the Board of Supervisors (i)
evidence of acceptance in form satisfactory to the Board of Supervisors of all
of the terms and conditions of this Agreement, including the granting of the
power of attorney granted in Section 2.6, and (ii) such other documents or
instruments as may be required in the discretion of the Board of Supervisors to
effect such Person's admission as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section
10.4, no Person shall be admitted as an Additional Limited Partner without the
consent of the Board of Supervisors, which consent may be given or withheld in
the Board of Supervisors' discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded as such in the books and records of the
<PAGE>
Partnership, following the consent of the Board of Supervisors to such
admission.
10.5 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP.
To effect the admission to the Partnership of any Partner, the
Board of Supervisors shall take all steps necessary and appropriate under the
Delaware Act to amend the records of the Partnership to reflect such admission
and, if necessary, to prepare as soon as practicable an amendment to this
Agreement and, if required by law, the General Partner shall prepare and file an
amendment to the Certificate of Limited Partnership, and the Vice Chairman and
President may for this purpose, among others, exercise the power of attorney
granted pursuant to Section 2.6.
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
11.1 WITHDRAWAL OF THE GENERAL 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 (of which event the General Partner shall give written
notice to the Limited Partners);
(ii) the General Partner transfers all of its rights as
General Partner pursuant to Section 4.2;
(iii) the General Partner is removed pursuant to Section 11.2;
(iv) the general partner of the MLP withdraws from, or is
removed as the general partner of, the MLP;
(v) the General Partner (A) makes a general assignment for the
benefit of creditors; (B) files a voluntary bankruptcy petition for
relief under Chapter 7 of the United States Bankruptcy Code; (C) files
a petition or answer seeking for itself a liquidation, dissolution or
similar relief (but not a reorganization) under any law; (D) files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the General Partner in a
proceeding of the type described in clauses (A)-(C) of this Section
11.1(a)(v); or (E) seeks, consents to or acquiesces in the appointment
of a trustee (but not a debtor in possession), receiver or liquidator
of the General Partner or of all or any substantial part of its
properties;
<PAGE>
(vi) a final and non-appealable order of relief under Chapter
7 of the United States Bankruptcy Code is entered by a court with
appropriate jurisdiction pursuant to a voluntary or involuntary
petition by or against the General Partner;
(vii) 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 or formation; or
(viii) (A) in the event the General Partner is a corporation,
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; (B) in the event
the General Partner is a partnership or a limited liability company,
the dissolution and commencement of winding up of the General Partner;
(C) in the event the General Partner is acting in such capacity by
virtue of being a trustee of a trust, the termination of the trust; (D)
in the event the General Partner is a natural person, his death or
adjudication of incompetency; and (E) otherwise in the event of the
termination of the General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv) (with respect to
withdrawal), (v), (vi), (vii) or (viii) (A), (B), (C) or (E) occurs, the
withdrawing General Partner shall give notice to the Limited Partners within 30
days after such occurrence. The Partners hereby agree that only the Events of
Withdrawal described in this Section 11.1 shall result in the withdrawal of the
General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership
upon the occurrence of an Event of Withdrawal shall not constitute a breach of
this Agreement under the following circumstances: (i) at any time during the
period beginning on the Initial Closing Date and ending at 12:00 midnight,
Eastern Standard Time, on September 30, 2006, the General Partner voluntarily
withdraws by giving at least 90 days advance notice of its intention to withdraw
to the Limited Partners; PROVIDED that prior to the effective date of such
withdrawal, the Limited Partners approve such withdrawal and the General Partner
delivers to the Partnership an Opinion of Counsel ("Withdrawal Opinion of
Counsel") that such withdrawal (following the selection of the successor General
Partner) would not result in the loss of the limited liability of any Limited
Partner or of any limited partner of the MLP, limited partner of any Group
Member or cause the MLP or the Partnership to be treated as an association
taxable as a corporation or otherwise to be taxed as an entity for federal
income tax purposes; (ii) at any time after 12:00 midnight, Eastern Standard
Time, on September 30, 2006, 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 (iii) at any time that the
General Partner ceases to be the General Partner pursuant to Section 11.1
(a)(ii), (iii) or (iv). If the General Partner gives a notice of withdrawal
pursuant to Section 11.1 (a)(i) or Section 11.1 (a)(i) of the MLP Agreement, the
Limited Partners may, prior to the effective date of such withdrawal or removal,
elect a successor General Partner; PROVIDED, HOWEVER, that such successor shall
be the same Person, if any, that is elected by the limited partners of the MLP
pursuant to Section 11.1 of the MLP Agreement as the successor to the General
Partner in its capacity as general partner of the MLP. If, prior to the
<PAGE>
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 a
Withdrawal Opinion of Counsel, the Partnership shall be dissolved in accordance
with Section 12.1. Any successor General Partner elected in accordance with the
terms of this Section 11.1 shall be subject to the provisions of Section 10.3.
11.2 REMOVAL OF THE GENERAL PARTNER .
The General Partner shall be removed if such General Partner
is removed as a general partner of the MLP pursuant to Section 11.2 of the MLP
Agreement. Such removal shall be effective concurrently with the effectiveness
of the removal of such General Partner as the general partner of the MLP
pursuant to the terms of the MLP Agreement. If a successor General Partner is
elected in connection with the removal of such General Partner as a general
partner of the MLP, such successor General Partner shall, upon admission
pursuant to Article X, automatically become a successor General Partner of the
Partnership. The admission of any such successor General Partner to the
Partnership shall be subject to the provisions of Section 10.3.
11.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR GENERAL PARTNER;
DELEGATION OF AUTHORITY TO THE BOARD OF SUPERVISORS BY SUCCESSOR GENERAL PARTNER
.
(a) The Partnership Interest of a Departing Partner departing
as a result of withdrawal or removal pursuant to Section 11.1 or 11.2 shall
(unless it is otherwise required to be converted into Common Units pursuant to
Section 11.3(b) of the MLP Agreement) be purchased by the successor to the
Departing Partner for cash in the manner specified in the MLP Agreement. Such
purchase (or conversion into Common Units, as applicable) shall be a condition
to the admission to the Partnership of the successor as the General Partner. Any
successor General Partner shall indemnify the Departing General Partner as to
all debts and liabilities of the Partnership arising on or after the effective
date of the withdrawal or removal of the Departing Partner.
(b) The Departing Partner shall be entitled to receive all
reimbursements due such Departing Partner pursuant to Section 7.10, including
any employee-related liabilities (including severance liabilities), incurred in
connection with the termination of any employees employed by such Departing
Partner for the benefit of the Partnership or the other Group Members.
(c) Any successor General Partner will be deemed to have
delegated irrevocably to the Board of Supervisors all management powers over the
business and affairs of the Partnership to the same extent that the General
Partner delegated such management power to the Board of Supervisors pursuant to
Section 7.1 of this Agreement.
<PAGE>
11.4 WITHDRAWAL OF THE LIMITED PARTNER .
Without the prior written consent of the General Partner,
which may be granted or withheld in its sole discretion, and except as provided
in Section 10.1, no Limited Partner shall have the right to withdraw from the
Partnership.
ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 DISSOLUTION .
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the removal or withdrawal of the General Partner, if a successor General
Partner is elected pursuant to Section 10.3, 11.1 or 11.2, the Partnership shall
not be dissolved and such successor General Partner shall continue the business
of the Partnership. The Partnership shall dissolve, and (subject to Section
12.2) its affairs shall be wound up, upon:
(a) the expiration of its term as provided in Section 2.7;
(b) an Event of Withdrawal of the General Partner as
provided in Section 11.1(a) (other than Section 11.1(a)(ii)), unless a successor
is elected and an Opinion of Counsel is received as provided in Section 11.1(b)
or 11.2 and such successor is admitted to the Partnership pursuant to Section
10.3;
(c) an election to dissolve the Partnership by the General
Partner that is approved by the Limited Partners;
(d) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Delaware Act;
(e) the sale of all or substantially all of the assets and
properties of the Partnership Group; or
(f) the dissolution of the MLP.
12.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER
DISSOLUTION .
Upon (a) dissolution of the Partnership following an Event of
Withdrawal caused by the withdrawal or removal of the General Partner as
provided in Section 11.1(a)(i) or (iii) and the failure of the Limited Partners
to select a successor General Partner pursuant to Section 11.1 or 11.2, then
within 90 days thereafter or (b) dissolution of the Partnership upon an event
constituting an Event of Withdrawal as defined in Section 11.1(a)(iv), (v), (vi)
<PAGE>
or (vii) of the MLP Agreement, then, to the maximum extent permitted by law,
within 180 days thereafter, all of the Limited Partners may elect to
reconstitute the Partnership and continue its business on the same terms and
conditions set forth in this Agreement by forming a new limited partnership on
terms identical to those set forth in this Agreement and having as the successor
general partner a Person approved by the majority of the Limited Partners. In
addition, upon dissolution of the Partnership pursuant to Section 12.1(f), if
the MLP is reconstituted pursuant to Section 13.2 of the MLP Agreement, the
reconstituted MLP may, within 180 days after such event of dissolution, as the
Limited Partners, elect to reconstitute the Partnership in accordance with the
immediately preceding sentence. Upon any such election by the Limited Partners,
all Partners shall be bound thereby and shall be deemed to have approved same.
Unless such an election is made within the applicable time period as set forth
above, the Partnership shall conduct only those activities necessary to wind up
its affairs. If such an election is so made, then:
(i) the reconstituted Partnership shall continue until the
end of the term set forth in Section 2.7 unless earlier dissolved in
accordance with this Article XII;
(ii) if the successor General Partner is not the former
General Partner, then the interest of the former General Partner shall
be purchased by the successor General Partner or converted into Common
Units of the MLP as provided in the MLP Agreement; and
(iii) all necessary steps shall be taken to cancel this
Agreement and the Certificate of Limited Partnership and to enter into
and, as necessary, to file a new partnership agreement and certificate
of limited partnership, and the successor General Partner may for this
purpose exercise the powers of attorney granted the Vice Chairman and
President pursuant to Section 2.6; PROVIDED, that the right 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 the Limited Partners or any limited partner of the MLP and (y)
neither the Partnership, the reconstituted limited partnership nor any
other Group Member would be treated as an association taxable as a
corporation or otherwise be taxable as an entity for federal income tax
purposes upon the exercise of such right to continue.
12.3 LIQUIDATOR .
Upon dissolution of the Partnership, unless the Partnership is
continued under an election to reconstitute and continue the Partnership
pursuant to Section 12.2, the Board of Supervisors shall select one or more
Persons to act as Liquidator. The Liquidator shall be entitled to receive such
compensation for its services as may be approved by the Limited Partners. The
Liquidator shall agree not to resign at any time without 15 days' prior notice
and may be removed at any time, with or without cause, by notice of removal
approved by the Limited Partners. Upon dissolution, removal or resignation of
the Liquidator, a successor and substitute Liquidator (who shall have and
succeed to all rights, powers and duties of the original Liquidator) shall
within 30 days thereafter be approved by the Limited Partners. The right to
approve a successor or substitute Liquidator in the manner provided herein shall
be deemed to refer also to any such successor or substitute Liquidator approved
in the manner herein provided. Except as expressly provided in this Article XII,
<PAGE>
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 Board of Supervisors under the terms of
this Agreement (but subject to all of the applicable limitations, contractual
and otherwise, upon the exercise of such powers, other than the limitation on
sale set forth in Section 7.9(a)) to the extent necessary or desirable in the
good faith judgment of the Liquidator to carry out the duties and functions of
the Liquidator hereunder for and during such period of time as shall be
reasonably required in the good faith judgment of the Liquidator to complete the
winding up and liquidation of the Partnership as provided for herein.
12.4 LIQUIDATION .
The Liquidator shall proceed to dispose of the assets of the
Partnership, discharge its liabilities, and otherwise wind up its affairs in
such manner and over such period as the Liquidator determines to be in the best
interest of the Partners, subject to Section 17-804 of the Delaware Act and the
following:
(a) DISPOSITION OF ASSETS. The assets may be disposed of by
public or private sale or by distribution in kind to one or more Partners on
such terms as the Liquidator and such Partner or Partners may agree. If any
property is distributed in kind, the Partner receiving the property shall be
deemed for purposes of Section 12.4(c) to have received cash equal to its fair
market value; and contemporaneously therewith, appropriate cash distributions
must be made to the other Partners. Under certain circumstances and subject to
certain limitations, the Liquidator may defer liquidation or distribution of the
Partnership's assets for a reasonable time or distribute assets to the Partners
in kind if it determines that a sale would be impractical or would cause undue
loss to the Partners.
(b) DISCHARGE OF LIABILITIES. Liabilities of the Partnership
include amounts owed to Partners otherwise than in respect of their distribution
rights under Article VI. With respect to any liability that is contingent or is
otherwise not yet due and payable, the Liquidator shall either settle such claim
for such amount as it thinks appropriate or establish a reserve of cash or other
assets to provide for its payment. When paid, any unused portion of the reserve
shall be distributed as additional liquidation proceeds.
(c) LIQUIDATION DISTRIBUTIONS. All property and all cash in
excess of that required to discharge liabilities as provided in Section 12.4(b)
shall be distributed to the Partners in accordance with, and to the extent of,
the positive balances in their respective Capital Accounts, as determined after
taking into account all Capital Account adjustments (other than those made by
reason of distributions pursuant to this Section 12.4(c)) for the taxable year
of the Partnership during which the liquidation of the Partnership occurs (with
such date of occurrence being determined pursuant to Treasury Regulation,
Section 1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of
such taxable year (or, if later, within 90 days after said date of such
occurrence).
12.5 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP .
<PAGE>
Upon the completion of the distribution of Partnership cash
and property as provided in Section 12.4 in connection with the liquidation of
the Partnership, the Partnership shall be terminated and the Certificate of
Limited Partnership and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Delaware shall be
canceled and such other actions as may be necessary to terminate the Partnership
shall be taken.
12.6 RETURN OF CAPITAL CONTRIBUTIONS .
The General Partner shall not be personally liable for, and
shall have no obligation to contribute or loan any monies or property to the
Partnership to enable it to effectuate, the return of the Capital Contributions
of any Limited Partner, or any portion thereof, it being expressly understood
that any such return shall be made solely from Partnership assets.
12.7 WAIVER OF PARTITION .
To the maximum extent permitted by law, each Partner hereby
waives any right to partition of the Partnership property.
12.8 CAPITAL ACCOUNT RESTORATION .
No Limited Partner shall have any obligation to restore any
negative balance in its Capital Account upon liquidation of the Partnership. 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.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT
13.1 AMENDMENT TO BE ADOPTED SOLELY BY THE BOARD OF SUPERVISORS .
The Limited Partners agree that the Board of Supervisors,
without the approval of the Limited Partners, may amend any provision of this
Agreement, and may authorize any Officer (pursuant to the powers of attorney
granted in Section 2.6) to 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;
<PAGE>
(c) a change that, in the discretion of the Board of
Supervisors, is necessary or advisable to qualify or continue the qualification
of the Partnership as a limited partnership or a partnership in which the
Limited Partners have limited liability under the laws of any state or to ensure
that neither the Partnership nor the MLP will be treated as an association
taxable as a corporation or otherwise be taxed as an entity for federal income
tax purposes;
(d) a change that, in the discretion of the Board of
Supervisors, (i) does not adversely affect the Limited Partners in any material
respect, (ii) is necessary or advisable to satisfy any requirements, conditions
or guidelines contained in any opinion, directive, order, ruling or regulation
of any federal or state agency or judicial authority or contained in any federal
or state statute (including the Delaware Act), compliance with any of which the
Board of Supervisors determines in its discretion to be in the best interests of
the Partnership and the Limited Partners, (iii) is required to effect the intent
expressed in the Initial Registration Statement or the Proxy Statement or the
intent of the provisions of this Agreement or is otherwise contemplated by this
Agreement or (iv) is required to conform the provisions of this Agreement with
the provisions of the MLP Agreement as the provisions of the MLP Agreement may
be amended, supplemented or restated from time to time.
(e) a change in the fiscal year or taxable year of the
Partnership and any changes that, in the discretion of the Board of Supervisors,
are necessary or advisable as a result of a change in the fiscal year or taxable
year of the Partnership including, if the Board of Supervisors shall so
determine, a change in the definition of "Quarter" and the dates on which
distributions are to be made by the Partnership;
(f) an amendment that is necessary, in the Opinion of
Counsel, to prevent the Partnership or the members of the Board of Supervisors
or the Officers, or the General Partner or its directors, officers, trustees or
agents from in any manner being subjected to the provisions of the Investment
Company Act of 1940, as amended, the Investment Advisers Act of 1940, as
amended, or "plan asset" regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, regardless of whether such are
substantially similar to plan asset regulations currently applied or proposed by
the United States Department of Labor;
(g) any amendment expressly permitted in this Agreement to
be made by the Board of Supervisors acting alone;
(h) an amendment effected, necessitated or contemplated by a
Merger Agreement approved in accordance with Section 14.3;
(i) an amendment that, in the discretion of the Board of
Supervisors, is necessary or advisable to reflect, account for and deal with
appropriately the formation by the Partnership of, or investment by the
Partnership in, any corporation, partnership, joint venture, limited liability
company or other entity in connection with the conduct by the Partnership of
activities permitted by the terms of Section 2.4;
<PAGE>
(j) an amendment that, in the discretion of the Board of
Supervisors, is necessary or advisable to effect or continue the irrevocable
delegation by the General Partner to the Board of Supervisors of all management
powers over the business and affairs of the Partnership; or
(k) any other amendments substantially similar to the
foregoing.
13.2 AMENDMENT PROCEDURES .
Except with respect to amendments of the type described in
Section 13.1, all amendments to this Agreement shall be made in accordance with
the following requirements. Amendments to this Agreement may be proposed only by
or with the consent of the Board of Supervisors. A proposed amendment shall be
effective upon its approval by all of the Limited Partners.
ARTICLE XIV
MERGER
14.1 AUTHORITY .
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 a general partnership,
limited partnership, limited liability company or limited liability partnership
formed under the laws of the State of Delaware or any other state of the United
States of America, pursuant to a written agreement of merger or consolidation
("Merger Agreement") in accordance with this Article XIV.
14.2 PROCEDURE FOR MERGER OR CONSOLIDATION .
Merger or consolidation of the Partnership pursuant to this
Article XIV requires the prior approval of the Board of Supervisors. If the
Board of Supervisors shall determine, in the exercise of its discretion, to
consent to the merger or consolidation, the Board of Supervisors 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
(the "Surviving Business Entity");
(c) The terms and conditions of the proposed merger or
consolidation;
(d) The manner and basis of exchanging or converting the
equity securities of each constituent business entity for, or into, cash,
property or general or limited partner interests, rights, securities or
obligations of the Surviving Business Entity; and (i) if any general or limited
<PAGE>
partner interests, securities or rights of any constituent business entity are
not to be exchanged or converted solely for, or into, cash, property or general
or limited partner interests, rights, securities or obligations of the Surviving
Business Entity, the cash, property or general or limited partner interests,
rights, securities or obligations of any limited partnership, corporation, trust
or other entity (other than the Surviving Business Entity) which the holders of
such general or limited partner interests, securities or rights are to receive
in exchange for, or upon conversion of their general or limited partner
interests, securities or rights, and (ii) in the case of securities represented
by certificates, upon the surrender of such certificates, which cash, property
or general or limited partner interests, rights, securities or obligations of
the Surviving Business Entity or any general or limited partnership,
corporation, trust or other entity (other than the Surviving Business Entity),
or evidences thereof, are to be delivered;
(e) A statement of any changes in the constituent documents
or the adoption of new constituent documents (the articles or certificate of
incorporation, articles of trust, declaration of trust, certificate or agreement
of limited partnership, certificate of formation or agreement of limited
liability company or other similar charter or governing document) of the
Surviving Business Entity to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date
of the filing of the certificate of merger pursuant to Section 14.4 or a later
date specified in or determinable in accordance with the Merger Agreement
(provided, that if the effective time of the merger is to be later than the
date of the filing of the certificate of merger, the effective time shall be
filed 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 Board of
Supervisors.
14.3 APPROVAL BY LIMITED PARTNERS OF MERGER OR CONSOLIDATION .
(a) The Board of Supervisors, upon its approval of the
Merger Agreement, shall direct that the Merger Agreement be submitted to the
Limited Partners for their approval.
(b) The Merger Agreement shall be approved upon receiving
the approval of all of the Limited Partners.
(c) After such approval by the Limited Partners, and at any
time prior to the filing of the certificate of merger pursuant to Section 14.4,
the merger or consolidation may be abandoned pursuant to provisions therefor, if
any, set forth in the Merger Agreement.
14.4 CERTIFICATE OF MERGER .
Upon the required approval by the Board of Supervisors and the
Limited Partners of a Merger Agreement, a certificate of merger shall be
executed and filed with the Secretary of State of the State of Delaware in
conformity with the requirements of the Delaware Act.
14.5 EFFECT OF MERGER .
<PAGE>
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of
each of the business entities that has merged or consolidated, and all
property, real, personal and mixed, and all debts due to any of those
business entities and all other things and causes of action belonging
to each of those business entities shall be vested in the Surviving
Business Entity and after the merger or consolidation shall be the
property of the Surviving Business Entity to the extent they were of
each constituent business entity;
(ii) the title to any real property vested by deed
or otherwise in any of those constituent business entities shall not
revert and is not in any way impaired because of the merger or
consolidation;
(iii) all rights of creditors and all liens on or
security interests in property of any of those constituent business
entities shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those
constituent business entities shall attach to the Surviving Business
Entity, and may be enforced against it to the same extent as if the
debts, liabilities and duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this
Article XIV shall not be deemed to result in a transfer or assignment of assets
or liabilities from one entity to another.
ARTICLE XV
GENERAL PROVISIONS
15.1 ADDRESSES AND NOTICES .
Any notice, demand, request, report or proxy materials
required or permitted to be given or made to a Partner under this Agreement
shall be in writing and shall be deemed given or made when received by it at the
principal office of the Partnership referred to in Section 2.3.
15.2 REFERENCES .
Except as specifically provided as otherwise, references to
"Articles" and "Sections" are to Articles and Sections of this Agreement.
15.3 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.
15.4 BINDING EFFECT .
<PAGE>
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.
15.5 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.
15.6 CREDITORS .
None of the provisions of this Agreement shall be for the
benefit of, or shall be enforceable by, any creditor of the Partnership.
15.7 WAIVER .
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach of any other covenant, duty, agreement or condition.
15.8 COUNTERPARTS .
This Agreement may be executed in counterparts, all of which
together shall constitute an agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto, independently of the signature of any other
party.
15.9 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.
15.10 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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
SUBURBAN ENERGY SERVICES GROUP LLC
By:
--------------------------------------
Name: Mark A. Alexander
Title: [Authorized Person]
LIMITED PARTNER:
SUBURBAN PROPANE PARTNERS, L.P.
By:
--------------------------------------
Name:
Title:
EXHIBIT 10.(a)
--------------
EXECUTION COPY
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SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of May 26, 1999
by and among
SUBURBAN PROPANE, L.P.,
as Borrower,
the Lenders referred to herein,
FIRST UNION NATIONAL BANK,
as Administrative Agent,
and
THE BANK OF NEW YORK,
as Documentation Agent
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of the 26th day
of May, 1999, by and among SUBURBAN PROPANE, L.P., a limited partnership
organized under the laws of Delaware (the "Borrower"), the Lenders who are or
may become a party to this Agreement, FIRST UNION NATIONAL BANK, as
Administrative Agent for the Lenders and THE BANK OF NEW YORK, as Documentation
Agent.
STATEMENT OF PURPOSE
--------------------
Pursuant to a Credit Agreement, dated as of February 28, 1996 (as
amended by the First Amendment, dated as of as of September 23, 1996, the
"ORIGINAL CREDIT AGREEMENT"), among the Borrower, the lenders party thereto (the
"ORIGINAL LENDERS") and The Chase Manhattan Bank, formerly known as Chemical
Bank, as Administrative Agent for the Original Lenders, the Original Lenders
have extended certain credit facilities to the Borrower. The Original Credit
Agreement was amended and restated pursuant to an Amended and Restated Credit
Agreement, dated as of September 30, 1997, by and among the Borrower, the
Lenders party thereto, First Union National Bank as Administrative Agent and The
Bank of New York as Documentation Agent (as amended by the First Amendment to
Amended and Restated Credit Agreement, dated as of February 25, 1998, the
"EXISTING CREDIT AGREEMENT"). The Borrower has requested, and the Lenders have
agreed, to amend and restate the Existing Credit Agreement on the terms and
conditions of this Agreement to provide for, among other things, (1) the
addition of a letter of credit facility, (2) the addition of a liquidity
facility and (3) the consent of the Lenders to the recapitalization of the
Borrower and the Parent (as defined herein) and the sale of their general
partnership interests of the Borrower and the Parent.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. The following terms when used in this
Agreement shall have the meanings assigned to them below:
"ACQUISITION COMMITMENT" means, (a) as to any Lender, the obligation of
such Lender to make Acquisition Loans to the Borrower hereunder in an aggregate
principal amount at any time outstanding not to exceed the amount so designated
opposite such Lender's name on SCHEDULE 1 hereto, as the same may be reduced or
modified at any time or from time to time pursuant to the terms hereof, and (b)
as to all Lenders, the aggregate commitment of all Lenders to make Acquisition
Loans, as such amount may be reduced at any time from time to time pursuant to
the terms hereof. The Acquisition Commitment of all Lenders on the Closing Date
shall be Twenty-Five Million Dollars ($25,000,000).
<PAGE>
"ACQUISITION COMMITMENT PERCENTAGE" means, as to any Lender at anytime,
the ratio of (a) the amount of the Acquisition Commitment of such Lender to (b)
the Acquisition Commitment of all of the Lenders.
"ACQUISITION FACILITY" means the acquisition loan facility established
pursuant to Article II hereof.
"ACQUISITION LOAN" means any of the acquisition loans made by the
Lenders to the Borrower pursuant to Section 2.4 and all such loans collectively
as the context requires.
"ACQUISITION NOTES" means the separate Acquisition Notes made by the
Borrower payable to the order of each Lender, substantially in the form of
EXHIBIT A-2 hereto, evidencing the Acquisition Facility, and any amendments and
modifications thereto, any substitutes therefor, and any replacements,
restatements, renewals or extension thereof, in whole or in part; "ACQUISITION
NOTE" means any of such Acquisition Notes.
"ADJUSTED CONSOLIDATED NET WORTH" means, with respect to the Borrower
and its Subsidiaries on a Consolidated basis at any time, the sum at such time
of (a) Consolidated Net Worth of the Borrower and its Subsidiaries at such time
and (b) the aggregate amount of goodwill amortization recorded from and after
the Effective Date, determined on a Consolidated basis in accordance with GAAP.
"ADJUSTED OPERATING SURPLUS" has the meaning assigned thereto in the
Parent Partnership Agreement, as in effect on the date hereof.
"ADMINISTRATIVE AGENT" means First Union in its capacity as
Administrative Agent hereunder, and any successor thereto appointed pursuant to
SECTION 13.9.
"ADMINISTRATIVE AGENT'S OFFICE" means the office of the Administrative
Agent specified in or determined in accordance with the provisions of SECTION
14.1.
"AFFILIATE" means, with respect to any Person, any other Person (other
than a Subsidiary) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such first Person or any of its Subsidiaries. The term "control" means the
possession, directly or indirectly, of any other power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"AGGREGATE COMMITMENT" means the aggregate amount of the Lenders'
Commitments hereunder, as such amount may be reduced or modified at any time or
from time to time pursuant to the terms hereof. On the Closing Date, the
Aggregate Commitment shall be One Hundred Million Dollars ($100,000,000).
"AGREEMENT" means this Second Amended and Restated Credit Agreement, as
amended, restated, supplemented or otherwise modified from time to time.
<PAGE>
"APPLICABLE LAW" means all applicable provisions of constitutions,
statutes, laws, ordinances, rules, treaties, regulations, permits, licenses,
approvals, interpretations and orders of all Governmental Authorities and all
orders and decrees of all courts and arbitrators.
"APPLICABLE MARGIN" shall have the meaning assigned thereto in SECTION
4.7(C).
"APPLICATION" means an application, in the form specified by the
Issuing Lender from time to time, requesting the Issuing Lender to issue a
Letter of Credit.
"ARBITRATION RULES" shall have the meaning assigned thereto in SECTION
14.6(A).
"ASSIGNMENT AND ACCEPTANCE" shall have the meaning assigned thereto in
SECTION 14.10.
"AVAILABLE CASH" means, with respect to any fiscal quarter of the
Borrower:
(a) the sum of (i) all cash and cash equivalents of the
Borrower and its Subsidiaries on hand at the end of such quarter and (ii) all
additional cash and cash equivalents of the Borrower and its Subsidiaries on
hand on the date of determination of Available Cash with respect to such quarter
resulting from borrowings hereunder, less
(b) the amount of cash reserves that is necessary or
appropriate in the reasonable discretion of the Board of Supervisors of the
Borrower to (i) provide for the proper conduct of the business of the Borrower
and its Subsidiaries (including reserves for future capital expenditures)
subsequent to such quarter, (ii) comply with Applicable Law or any loan
agreement (including, but not limited to, this Agreement), security agreement,
mortgage, debt instrument or other agreement or obligation to which the Borrower
or any Subsidiary is a party or by which it is bound or its assets are subject
and which is permitted by the terms hereof or (iii) provide funds for
distributions to partners of the Parent and the General Partner in respect of
any one or more of the next four fiscal quarters; PROVIDED that the Board of
Supervisors shall not establish cash reserves pursuant to clause (iii) if the
effect of such reserves would be that the Parent is unable to distribute the
Minimum Quarterly Distribution on the Common Units with respect to such quarter;
and PROVIDED, FURTHER, that disbursements made or cash reserves established,
increased or reduced after the end of such quarter but on or before the date of
determination of Available Cash with respect to such quarter shall be deemed to
have been made, established, increased or reduced, for purposes of determining
Available Cash, within such quarter if the Board of Supervisors of the Borrower
so determines.
In addition, without limitation or duplication of the foregoing,
Available Cash for any fiscal quarter shall reflect reserves equal to (A) 50% of
the interest projected to be paid on the Senior Notes, the Refinancing Notes and
any Loans outstanding or projected to be outstanding hereunder in the next
succeeding fiscal quarter and (B) beginning with a date three fiscal quarters
before a scheduled principal payment date on the Senior Notes, the Refinancing
Notes or the Loans, 25% of the aggregate principal amount thereof due on any
such payment date in the third succeeding fiscal quarter, 50% of the aggregate
principal amount due on any such quarterly payment date in the second succeeding
fiscal quarter and 75% of the aggregate principal amount due on any quarterly
payment date in the next succeeding fiscal quarter and (C) the aggregate amount
<PAGE>
deemed not to constitute Designated Net Proceeds pursuant to the further proviso
contained in the definition of "Designated Net Proceeds". The foregoing reserves
for amounts to be paid at any time shall be reduced by the amount of the Blocked
Portion then in effect.
"BASE RATE" means, at any time, the higher of (a) the Prime Rate or (b)
the Federal Funds Rate plus 1/2 of 1%; each change in the Base Rate shall take
effect simultaneously with the corresponding change or changes in the Prime Rate
or the Federal Funds Rate.
"BASE RATE LOAN" means any Loan bearing interest at a rate based upon
the Base Rate as provided in SECTION 4.7(A).
"BENEFITED LENDER" shall have the meaning assigned thereto in SECTION
4.12.
"BLOCKED PORTION" shall have the meaning assigned thereto in SECTION
2.1(B).
"BOARD OF SUPERVISORS" means, with respect to the Parent or the
Borrower, as the case may be, such Board of Supervisors as defined in the
Agreement of Limited Partnership of the Parent or the Agreement of Limited
Partnership of the Borrower, as applicable.
"BORROWER" means Suburban Propane, L.P. in its capacity as borrower
hereunder.
"BUSINESS" means the propane business, assets and liabilities of the
Borrower and its Subsidiaries.
"BUSINESS DAY" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Charlotte, North Carolina and New York, New York, are open for
the conduct of their commercial banking business, and (b) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, any LIBOR Rate Loan, any day that is a Business Day described in
clause (a) and that is also a day for trading by and between banks in Dollar
deposits in the London interbank market.
"CAPITAL ASSET" means, with respect to the Borrower and its
Subsidiaries, any asset that should, in accordance with GAAP, be classified and
accounted for as a capital asset on a Consolidated balance sheet of the Borrower
and its Subsidiaries.
"CAPITAL LEASE" means, with respect to the Borrower and its
Subsidiaries, any lease of any property that should, in accordance with GAAP, be
classified and accounted for as a capital lease on a Consolidated balance sheet
of the Borrower and its Subsidiaries.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any preferred stock, any limited or general partnership interest and
any limited liability company membership interest.
<PAGE>
"CHANGE IN OWNERSHIP" means the occurrence, at any time prior to the
Termination Date, of any of the following events: (a) any Person or group of
Persons, other than those Persons owning Capital Stock of the General Partner on
the Closing Date, shall acquire, directly or indirectly, (i) more than 50% of
the outstanding Capital Stock of the General Partner entitled to vote in the
election or removal of the members of the Board of Supervisors or (ii)
outstanding Capital Stock of the General Partner entitled to more than 50% of
the assets of the General Partner upon the dissolution or liquidation thereof,
(b) the General Partner shall fail to own directly or indirectly, beneficially
and of record, 100% of the general partner interests in each of the Parent and
the Borrower, (c) a majority of the seats (excluding vacant seats) on the Board
of Supervisors of the Parent or the Borrower should at any time after the
Closing Date be occupied by Persons who were not nominated by the General
Partner, by a majority of the Board of Supervisors of the Parent or the Borrower
or by Persons so nominated or (d) a change in control with respect to the
General Partner, the Parent, or the Borrower (or similar event, however
denominated) should occur under and as defined in any indenture or agreement in
respect of Indebtedness in an aggregate outstanding principal amount in excess
of $10,000,000 to which the General Partner, the Parent, the Borrower or any
Subsidiary is party.
"CLEANDOWN PERIOD" means a period of thirty (30) consecutive days
selected by the Borrower during each Fiscal Year.
"CLOSING DATE" means the date of this Agreement or such later Business
Day upon which each condition described in Article V shall be satisfied or
waived in all respects in a manner acceptable to the Administrative Agent, in
its sole discretion.
"CODE" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented from time to time.
"COMMITMENT" means, as to any Lender, on a collective basis, such
Lender's Acquisition Commitment and Revolving Credit Commitment, as set forth
opposite such Lender's name on SCHEDULE 1 hereto, as the same may be reduced or
modified at any time or from time to time pursuant to the terms hereof.
"COMMITMENT PERCENTAGE" means, as to any Lender at any time, the ratio
of (a) for Revolving Credit Loans, (i) the amount of the Revolving Credit
Commitment of such Lender to (ii) the Revolving Credit Commitment of all of the
Lenders and (b) for Acquisition Loans, (i) the amount of the Acquisition Loan
Commitment of such Lender to (ii) the Acquisition Commitment of all of the
Lenders.
"COMMODITY HEDGING AGREEMENT" means any agreement with respect to a
commodity swap or other agreement regarding the hedging of commodity purchase
and sale exposure executed in connection with hedging the commodity purchase and
sale exposure of the Borrower, and any confirming letter executed pursuant to
such commodity hedging agreement, all as amended, restated or otherwise
modified.
"COMMON UNITS" means Common Units of the Parent representing limited
partner interests in the Parent.
<PAGE>
"COMPENSATION DEFERRAL PLAN" means the Compensation Deferral Plan of
the Parent and the Borrower as in effect on the date hereof and as amended,
restated or supplemented from time to time in accordance with the provisions of
this Agreement.
"CONSOLIDATED" means, when used with reference to financial statements
or financial statement items of the Borrower and its Subsidiaries, such
statements or items on a consolidated basis in accordance with applicable
principles of consolidation under GAAP.
"CONSOLIDATED NET WORTH" means, with respect to any Person and its
Subsidiaries on a Consolidated basis at any time, the lesser at such time of (a)
partners' capital or stockholders' equity, as applicable, of such Person and its
Subsidiaries at such time, determined on a Consolidated basis in accordance with
GAAP, and (b) "Consolidated Net Worth" as defined in the Senior Note Agreement.
"CONTINGENT OBLIGATION" means, with respect to the Borrower and its
Subsidiaries, without duplication, any obligation, contingent or otherwise, of
any such Person pursuant to which such Person has directly or indirectly
guaranteed any Indebtedness or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of any such Person (a) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness or other
obligation (whether arising by virtue of partnership arrangements, by agreement
to keep well, to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement condition or otherwise) or (b) entered into
for the purpose of assuring in any other manner the obligee of such Indebtedness
or other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); PROVIDED, that the term
Contingent Obligation shall not include endorsements for collection or deposit
in the ordinary course of business.
"COVERED PERSONS" shall have the meaning assigned thereto in the
definition of Restricted Payment.
"CREDIT FACILITIES" means the collective reference to the Revolving
Credit Facility, the Acquisition Facility and the L/C Facility.
"DEFAULT" means any of the events specified in SECTION 12.1, which with
the passage of time, the giving of notice or any other condition, would
constitute an Event of Default.
"DESIGNATED NET PROCEEDS" means 100% of all proceeds in cash or cash
equivalents (including cash proceeds subsequently received in respect of noncash
consideration initially received), net of selling expenses (including reasonable
broker's fees or commissions, transfer and similar taxes, the Borrower's good
faith estimate of income taxes incurred in connection with the receipt of such
proceeds and appropriate reserves to be provided by the Borrower or any
Subsidiary as a reserve required in accordance with GAAP against any liabilities
associated with such sale, transfer or other disposition and retained by the
Borrower or such Subsidiary after such sale, transfer or disposition), from any
sale, transfer or other disposition (other than the sale of inventory in the
ordinary course) of any asset or assets of the Borrower or any Subsidiary
<PAGE>
(including the sale or issuance of any Capital Stock of any Subsidiary) to any
Person in any transaction, transactions or related series of transactions;
PROVIDED, that the first $15,000,000 of such net proceeds received in any Fiscal
Year (the "EXEMPT PROCEEDS") shall not constitute Designated Net Proceeds;
PROVIDED FURTHER, that if the Borrower shall deliver a certificate of a
Responsible Officer to the Administrative Agent promptly following receipt of
any such proceeds in any Fiscal Year in excess of the Exempt Proceeds for such
Fiscal Year certifying that the Borrower intends to use any portion of such
excess proceeds to acquire productive assets in the same line of business as the
assets sold within twelve (12) months of receipt thereof, such portion shall not
constitute Designated Net Proceeds except to the extent not so used within such
twelve (12) month period.
"DESIGNATED NET INSURANCE/CONDEMNATION PROCEEDS" means 100% of all
insurance or condemnation proceeds received in cash or cash equivalents, net of
reasonable costs of proceedings in connection therewith and any settlement in
respect thereof, from any damage, destruction, condemnation or other taking
involving insurance or condemnation proceeds in excess of $100,000 with respect
to any single occurrence; PROVIDED, that the first $2,500,000 of such net
proceeds received in any Fiscal Year (the "EXEMPT INSURANCE/CONDEMNATION
PROCEEDS") shall not constitute Designated Net Insurance/Condemnation Proceeds;
PROVIDED FURTHER, that if the Borrower shall deliver a certificate of a
Responsible Officer to the Administrative Agent promptly following receipt of
any such proceeds in any Fiscal Year in excess of the Exempt
Insurance/Condemnation Proceeds for such Fiscal Year certifying that the
Borrower intends to use any portion of such excess proceeds to restore, modify
or replace the properties or assets in respect of which such insurance or
condemnation proceeds were received within twelve (12) months of such receipt,
such portion shall not constitute Designated Net Insurance/Condemnation Proceeds
except to the extent not so used within such twelve (12) month period.
"DISPUTES" shall have the meaning set forth in SECTION 14.6(A).
"DISTRIBUTION SHORTFALL" means, at any time, the amount by which (a)
the Minimum Quarterly Distribution for the most recently ended period of four
fiscal quarters exceeds (b) Adjusted Operating Surplus for such period.
"DOCUMENTATION AGENT" means The Bank of New York.
"DOLLARS" or "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"EBITDA" means, with respect to the Borrower and its Subsidiaries on a
Consolidated basis for any period, the Consolidated net income of the Borrower
and its Subsidiaries for such period, computed in accordance with GAAP, plus, to
the extent deducted in computing such Consolidated net income and without
duplication, the sum of (a) income tax expense, (b) Interest Expense, (c)
depreciation and amortization expense, (d) extraordinary losses during such
period, (e) a one-time expense relating to the fees and expenses (including
non-cash compensation expenses) incurred in connection with the Recapitalization
in an aggregate amount not to exceed $20,000,000, of which not more than
$7,500,000 shall be cash expenses and (f) other cash restructuring charges, in
<PAGE>
an aggregate amount not to exceed $5,000,000 during the term of the Credit
Facilities (including the term of the Existing Credit Agreement) minus, to the
extent added in computing such Consolidated net income and without duplication,
extraordinary gains during such period.
"EFFECTIVE DATE" shall have the meaning set forth in the Original
Credit Agreement.
"ELIGIBLE ASSIGNEE" means, with respect to any assignment of the
rights, interest and obligations of a Lender hereunder, a Person that is at the
time of such assignment (a) a commercial bank organized or licensed under the
laws of the United States or any state thereof, having combined capital and
surplus in excess of $500,000,000, (b) a commercial bank organized under the
laws of any other country that is a member of the Organization of Economic
Cooperation and Development, or a political subdivision of any such country,
having combined capital and surplus in excess of $500,000,000, (c) a finance
company, insurance company or other financial institution which in the ordinary
course of business extends credit of the type extended hereunder and that has
total assets in excess of $1,000,000,000, (d) already a Lender hereunder
(whether as an original party to this Agreement or as the assignee of another
Lender) or an Affiliate or Subsidiary thereof, (e) the successor (whether by
transfer of assets, merger or otherwise) to all or substantially all of the
commercial lending business of the assigning Lender, or (f) any other Person
that has been approved in writing as an Eligible Assignee by the Administrative
Agent and, if no Default or Event of Default exists and is continuing, the
Borrower.
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of the
Borrower or any ERISA Affiliate or (b) has at any time within the preceding six
years been maintained for the employees of the Borrower or any current or former
ERISA Affiliate.
"ENVIRONMENTAL AND SAFETY LAWS" means any and all federal, state and
local laws, statutes, ordinances, rules, regulations, permits, licenses,
approvals, interpretations and orders of courts or Governmental Authorities,
relating to the protection of human health (including, but not limited to
employee health and safety) or the environment, including, but not limited to,
requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, each as amended or modified from time to
time.
"ERISA AFFILIATE" means any Person who together with the Borrower is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"ERISA Event" means (i) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder, with respect to a Pension
Plan; (ii) the adoption of any amendment to a Pension Plan that would require
<PAGE>
the provision of security pursuant to Section 401(a)(29) of the Code or Section
307 of ERISA; (iii) the existence with respect to any Pension Plan of an
"accumulated funding deficiency" (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (iv) the filing pursuant to
Section 412(d) of the Code or Section 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to any Pension Plan; (v) the
incurrence of any liability under Title IV of ERISA with respect to the
termination of any Pension Plan or the withdrawal or partial withdrawal of the
Borrower or any of its ERISA Affiliates from any Pension Plan or Multiemployer
Plan; (vi) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a
plan administrator of any notice relating to the intention to terminate any
Pension Plan or Pension Plans or to appoint a trustee to administer any Pension
Plan; (vii) the receipt by the Borrower or any ERISA Affiliate of any notice
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA or the institution of proceedings to
terminate, or the appointment of a trustee with respect to, any Pension Plan by
the PBGC; (viii) the occurrence of a "prohibited transaction" with respect to
which the Borrower or any of its subsidiaries is a "disqualified person" (within
the meaning of Section 4975 of the Code) and with respect to which the Borrower
or any such subsidiary would be liable for the payment of an excise tax and (ix)
any other event or condition which would constitute grounds under Section
4042(a) of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan.
"EURODOLLAR RESERVE PERCENTAGE" means, for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of Eurocurrency liabilities or any similar category of liabilities for a
member bank of the Federal Reserve System in New York City.
"EVENT OF DEFAULT" means any of the events specified in SECTION 12.1;
PROVIDED that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
"EXEMPT INSURANCE/CONDEMNATION PROCEEDS" shall have the meaning
assigned such term in the definition of Designated Net Insurance/Condemnation
Proceeds.
"EXEMPT PROCEEDS" shall have the meaning assigned such term in the
definition of Designated Net Proceeds.
"EXISTING CREDIT AGREEMENT" shall have the meaning set forth in the
preamble of this Agreement.
"EXTENSIONS OF CREDIT" means, as to any Lender at any time, an amount
equal to the sum of (a) the aggregate principal amount of all Revolving Credit
Loans made by such Lender then outstanding, (b) the aggregate principal amount
of all Liquidity Loans made by such Lender then outstanding, (c) the aggregate
principal amount of all Acquisition Loans made by such Lender then outstanding,
(d) such Lender's Commitment Percentage of the L/C Obligations then outstanding
and (e) such Lender's Commitment Percentage of the Swingline Loans then
outstanding.
<PAGE>
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"FEDERAL FUNDS RATE" means, the rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) representing the daily effective
federal funds rate as quoted by the Administrative Agent and confirmed in
Federal Reserve Board Statistical Release H.15 (519) or any successor or
substitute publication selected by the Administrative Agent. If, for any reason,
such rate is not available, then "Federal Funds Rate" means a daily rate which
is determined, in the opinion of the Administrative Agent, to be the rate at
which federal funds are being offered for sale in the national federal funds
market at 9:00 a.m. (Charlotte time). Rates for weekends or holidays shall be
the same as the rate for the most immediate preceding Business Day.
"FINANCIAL OFFICER" of any Person shall mean the chief financial
officer, the treasurer or the principal accounting officer of such Person.
"FIRST UNION" means First Union National Bank, a national banking
association, and its successors.
"FISCAL YEAR" means the 52-week fiscal year of the Borrower and its
Subsidiaries ending on the last Saturday in September.
"GAAP" means generally accepted accounting principles, as recognized by
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, consistently applied and maintained on a consistent
basis for the Borrower and its Subsidiaries throughout the period indicated and
consistent with the prior financial practice of the Borrower and its
Subsidiaries.
"GENERAL PARTNER" means Suburban Energy Services Group LLC, a Delaware
limited liability company.
"GENERAL PARTNER UNIT" means a unit representing a fractional part of
the General Partner's general partner interest in the Parent (which shall
exclude any limited partner or other interest that the General Partner may have
from time to time in the Parent).
"GOVERNMENTAL APPROVALS" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"GOVERNMENTAL AUTHORITY" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"GUARANTEE" of or by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person (the "primary obligor")
(excluding endorsements of checks for collection or deposit in the ordinary
<PAGE>
course of business) in any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (ii) to purchase property, securities or
services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness or (iii) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
Obligor so as to enable the primary obligor to pay such Indebtedness.
"GUARANTEE AGREEMENT" shall mean the Second Amended and Restated
Guarantee Agreement, substantially in the form of EXHIBIT H, to be entered into
by each Subsidiary of the Borrower (other than any foreign Subsidiary and
Suburban Sales and Service, Inc.) for the benefit of the Lenders and the
Administrative Agent.
"GUARANTOR" means each Subsidiary that is party to the Guarantee
Agreement on the Closing Date together with any Subsidiary who becomes a party
to the Guarantee Agreement after the Closing Date in accordance with the terms
of SECTION 8.7.
"HEDGING AGREEMENT" means any agreement with respect to an interest
rate swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate risk exposure executed in connection with
hedging the interest rate exposure of the Borrower under this Agreement, and any
confirming letter executed pursuant to such hedging agreement, all as amended,
restated or otherwise modified.
"INDEBTEDNESS" means, with respect to any Person, without duplication
(a) all obligations of such Person for borrowed money or with respect to
deposits or advances of any kind (including repurchase obligations), (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments or letters of credit in support of bonds, notes, debentures or
similar instruments, (c) all obligations of such Person upon which interest
charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreement relating to property
purchased by such Person, (e) all obligations of such Person issued or assumed
as the deferred purchase price of property or services, (f) all obligations
under Capital Leases of such Person, (g) all obligations of others secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property or assets owned or acquired
by such Person, whether or not the obligations secured thereby have been
assumed, (h) all Guarantees of such Person, (i) all obligations of such Person
with respect to interest rate protection agreements (including without
limitation Hedging Agreements), foreign currency exchange agreements, Commodity
Hedging Agreements or other hedging arrangements (valued at the termination
value thereof computed in accordance with a method approved by the International
Swap Dealers Association and agreed to by such Person in the applicable Hedging
Agreement, if any), (j) all obligations of such Person as an account party in
respect of letters of credit (i) securing Indebtedness (other than a letter of
credit that would not constitute Indebtedness under clause (ii)) or (ii)
obtained for any purpose not in the ordinary course of business or not
consistent with past practices and (k) all obligations of such Person in respect
of bankers' acceptances; PROVIDED that accounts payable to suppliers incurred in
the ordinary course of business and paid in the ordinary course of business
consistent with past practices shall not constitute Indebtedness.
<PAGE>
"INTEREST EXPENSE" means, with respect to any period, the sum of,
without duplication, gross interest expense and capitalized interest of the
Borrower and its Subsidiaries for such period minus interest income of the
Borrower and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP.
"INTEREST PERIOD" shall have the meaning assigned thereto in SECTION
4.7(B).
"INVESTMENT" means, as applied to any Person, any direct or indirect
purchase or other acquisition by such Person of stock or other securities of any
other Person, or any direct or indirect loan, advance or capital contribution by
such Person to any other Person and any other item which would be classified as
an "investment" on a balance sheet of such Person prepared in accordance with
GAAP, including without limitation any direct or indirect contribution by such
Person of property or assets to a joint venture, partnership or other business
entity in which such Person retains an interest (it being understood that a
direct or indirect purchase or other acquisition by such Person of assets of any
other Person (other than stock or other securities) shall not constitute an
"Investment" for purposes of this Agreement).
"ISP 98" means the International Standby Practices (1998 Revision,
effective January 1, 1999), International Chamber of Commerce Publication No.
590.
"ISSUING LENDER" means First Union, in its capacity as issuer of any
Letter of Credit, or any successor thereto.
"L/C COMMITMENT" means the lesser of (a) Fifteen Million Dollars
($15,000,000) and (b) the Revolving Credit Commitment.
"L/C FACILITY" means the letter of credit facility established pursuant
to Article III.
"L/C OBLIGATIONS" means at any time, an amount equal to the sum of (a)
the aggregate undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit which
have not then been reimbursed pursuant to SECTION 3.5.
"L/C PARTICIPANTS" means the collective reference to all the Lenders
other than the Issuing Lender.
"LENDER" means each Person executing this Agreement as a Lender
(including, without limitation, the Issuing Lender and the Swingline Lender
unless the context otherwise requires) set forth on the signature pages hereto
and each Person that hereafter becomes a party to this Agreement as a Lender
pursuant to SECTION 14.10.
"LENDERS' PORTION" means, with respect to any Designated Net Proceeds
or any Designated Net Insurance/Condemnation Proceeds, the ratio, expressed as a
percentage, in effect as of noon, Charlotte time, on the date on which such
<PAGE>
Designated Net Proceeds or Designated Net Insurance/Condemnation Proceeds, as
applicable, are being applied pursuant to SECTION 4.2(E), of (i) the Aggregate
Commitment to (ii) the sum of (x) the amount referred to in clause (i) and (y)
the aggregate principal amount at such time of the Senior Notes.
"LENDING OFFICE" means, with respect to any Lender, the office of such
Lender maintaining such Lender's Commitment Percentage of the Loans.
"LETTERS OF CREDIT" shall have the meaning assigned thereto in SECTION
3.1.
"LEVERAGE RATIO" means, on any date, the ratio of (a) Total
Indebtedness as of such date to (b) an amount equal to the aggregate amount of
EBITDA of the Borrower and its Subsidiaries for the period of four consecutive
fiscal quarters ended most recently on or prior to such date, determined on a
Consolidated basis in accordance with GAAP.
"LIBOR" means the rate of interest per annum determined on the basis of
the rate for deposits in Dollars in minimum amounts of at least $5,000,000 for a
period equal to the Interest Period selected which appears on the Dow Jones
Market Screen 3750 at approximately 11:00 a.m. London time, two (2) Business
Days prior to the first day of the applicable Interest Period (rounded upward,
if necessary, to the nearest one-sixteenth of one percent (1/16%)). If, for any
reason, such rate does not appear on Dow Jones Market Screen 3750, then "LIBOR"
shall be determined by the Administrative Agent to be the arithmetic average of
the rate per annum at which deposits in Dollars in minimum amounts of at least
$5,000,000 would be offered by first class banks in the London interbank market
to the Administrative Agent at approximately 11:00 a.m. London time, two (2)
Business Days prior to the first day of the applicable Interest Period for
settlement in immediately available funds by leading banks in the London
interbank market for a period equal to the Interest Period selected. Each
calculation by the Administrative Agent of LIBOR shall be conclusive and binding
for all purposes, absent manifest error.
"LIBOR RATE" means a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Administrative Agent pursuant
to the following formula:
LIBOR Rate = LIBOR
---------------
1.00-Eurodollar Reserve Percentage
"LIBOR RATE LOAN" means any Loan bearing interest at a rate based upon
the LIBOR Rate as provided in SECTION 4.7(A).
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, hypothecation or encumbrance of any kind in respect
of such asset. For the purposes of this Agreement, a Person shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, Capital
Lease or other title retention agreement relating to such asset.
"LIQUIDITY LOAN" means any Revolving Credit Loan designated as a
liquidity loan pursuant to SECTION 2.3.
<PAGE>
"LIQUIDITY RESERVE AMOUNT" means:
(a) from the date hereof through December 31, 2000, Twenty Two Million
Dollars ($22,000,000) less the aggregate amount of Distributions Shortfalls that
have occurred from the date of this Agreement through, and including, the date
of determination; and
(b) from and after January 1, 2001, (i) the lesser of (A) Eleven
Million, Six Hundred Thousand Dollars ($11,600,000) and (B) the Liquidity
Reserve Amount on the Closing Date as reduced pursuant to the immediately
preceding clause (a) of this definition less (ii) to the extent not deducted
pursuant to such clause (a), the amount of the Distribution Shortfall, if any,
as of the end of the four fiscal quarter period ending December 31, 2000;
PROVIDED, that in no event shall the Liquidity Reserve Amount be less than zero.
"LOAN" means any Revolving Credit Loan, Acquisition Loan, Liquidity
Loan or Swingline Loan made to the Borrower pursuant to Article II, and all such
Loans collectively as the context requires.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the
Applications, any Hedging Agreement with any Lender (to the extent such Hedging
Agreement is permitted hereunder), the Guarantee Agreement and each other
document, instrument, certificate and agreement executed and delivered by the
Borrower, its Subsidiaries or their counsel in connection with this Agreement or
otherwise referred to herein or contemplated hereby, all as may be amended,
restated, supplemented or otherwise modified from time to time.
"MANAGEMENT CASH RESERVE" means the cash available to be accelerated in
any quarter by the Parent or the Borrower from the Rabbi Trust in accordance
with Section 9.1(c) of the Compensation Deferral Plan to support the payment by
the Parent of the Minimum Quarterly Distribution for such quarter.
"MATERIAL ADVERSE EFFECT" means (a) a materially adverse effect on the
business, assets, operations, prospects or financial condition of the Business,
the General Partner, the Parent, the Borrower or the Borrower and its
Subsidiaries taken as a whole, (b) any material impairment of the ability of the
Borrower or any Subsidiary to perform any of its Obligations under any Loan
Document or (c) any material impairment of the rights of or benefits available
to the Lenders or the Administrative Agent under any of the Loan Documents.
"MELLON LOAN AGREEMENT" means the Term Loan Agreement, dated May 26,
1999, between Mellon Bank, N.A. and the General Partner, as in effect on the
date hereof.
"MELLON NOTE" means that certain promissory note dated May 26, 1999 in
the original principal amount of $6,000,000 from the Borrower payable to the
order of Mellon Bank, N.A.
"MELLON NOTE DOCUMENTS" means the Mellon Note, the Mellon Note Purchase
Agreement, the Mellon Loan Agreement, and each security document or other
document relating thereto.
<PAGE>
"MELLON NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement,
dated May 26, 1999, between the Borrower and Mellon Bank, N.A., as in effect on
the date hereof.
"MINIMUM QUARTERLY DISTRIBUTION" means, with respect to each quarter,
the aggregate amount required by the Parent (a) to pay each holder of Common
Units $0.50 per Common Unit per quarter and (b) to pay the General Partner $0.50
per General Partner Unit per quarter, in each case subject to adjustment in
accordance with the Parent Partnership Agreement.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making, or
is accruing an obligation to make, or has accrued an obligation to make
contributions within the preceding six (6) years.
"NET DISTRIBUTION SHORTFALL" means, at any time, the Distribution
Shortfall as of such date minus the Management Cash Reserve as of such date.
"NOTES" means the collective reference to the Revolving Credit Notes,
the Liquidity Notes, the Acquisition Notes and the Swingline Note; "NOTE" means
any of such Notes.
"NOTICE OF ACCOUNT DESIGNATION" shall have the meaning assigned thereto
in SECTION 4.1(B).
"NOTICE OF BORROWING" shall have the meaning assigned thereto in
SECTION 4.1(A).
"NOTICE OF CONVERSION/CONTINUATION" shall have the meaning assigned
thereto in Section 4.8.
"NOTICE OF PREPAYMENT" shall have the meaning assigned thereto in
SECTION 4.2(C).
"OBLIGATIONS" means, in each case, whether now in existence or
hereafter arising: (a) the principal of and interest on (including interest
accruing after the filing of any bankruptcy or similar petition) the Loans, (b)
the L/C Obligations, (c) all payment and other obligations owing by the Borrower
to any Lender or the Administrative Agent under any Hedging Agreement to which a
Lender is a party which is permitted under this Agreement and (d) all other fees
and commissions (including attorney's fees), charges, indebtedness, loans,
liabilities, financial accommodations, obligations, covenants and duties owing
by the Borrower or any of its Subsidiaries to the Lenders or the Administrative
Agent, in each case under or in respect of this Agreement, any Note, any Letter
of Credit or any of the other Loan Documents of every kind, nature and
description, direct or indirect, absolute or contingent, due or to become due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any note, and whether or not for the payment of money under or in
respect of this Agreement, any Note, any Letter of Credit or any of the other
Loan Documents.
"OFFICER'S COMPLIANCE CERTIFICATE" shall have the meaning assigned
thereto in SECTION 7.2.
<PAGE>
"ORIGINAL CREDIT AGREEMENT" shall have the meaning assigned thereto in
the preamble to this Agreement.
"ORIGINAL LENDERS" shall have the meaning assigned thereto in the
preamble to this Agreement.
"OTHER TAXES" shall have the meaning assigned thereto in SECTION
4.17(B).
"PARENT" means Suburban Propane Partners, L.P., a limited partnership
organized under the laws of the State of Delaware.
"PARENT PARTNERSHIP AGREEMENT" means the Second Amended and Restated
Agreement of Limited Partnership of Suburban Propane Partners, L.P. as in effect
on the date hereof and as it may be amended, supplemented or otherwise modified
from time to time.
"PARENT SIDE LETTER" means that certain side letter agreement by and
between the Parent and the Administrative Agent dated of even date herewith.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"PARTNERSHIP DOCUMENTS" means the Parent Partnership Agreement and the
Second Amended and Restated Agreement of Limited Partnership of the Borrower, in
each case as in effect on the date hereof and as the same may from time to time
be amended, supplemented or otherwise modified in accordance with the terms
hereof and thereof.
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (a) is maintained for employees of the
Borrower or any ERISA Affiliates or (b) has at any time within the preceding six
years been maintained for the employees of the Borrower or any of their current
or former ERISA Affiliates.
"PERMITTED BANKS" shall have the meaning assigned to such term in
SECTION 10.4(C).
"PERMITTED BUSINESS ACQUISITION" means any acquisition of all or
substantially all the assets of, or all the shares or other equity interests in,
a Person or division or line of business of a Person (or any subsequent
investment made in a previously acquired Permitted Business Acquisition) if
immediately after giving effect thereto: (a) no Event of Default or Default or
Senior Note Default shall have occurred and be continuing or would result
therefrom, (b) all transactions related thereto shall be consummated in
accordance with applicable laws, (c) all the Capital Stock of any acquired or
newly formed corporation, partnership, association or other business entity is
owned directly by the Borrower or a domestic Wholly-Owned Subsidiary and such
acquired or newly formed Subsidiary shall have entered into the Guarantee
Agreement, (d) the Borrower and its Subsidiaries shall be in compliance, on a
pro forma basis after giving effect to such acquisition or formation, with the
covenants contained in Article IX recomputed as at the last day of the most
recently ended fiscal quarter of the Borrower and its Subsidiaries as if such
acquisition had occurred on the first day of each relevant period for testing
such compliance, and, in the case of any transaction involving consideration
<PAGE>
(whether cash or property, as valued at the time such transaction is
consummated) in excess of $5,000,000, the Borrower shall have delivered to the
Administrative Agent a certificate of a Responsible Officer to such effect,
together with all relevant financial information for such Subsidiary or assets
and calculations demonstrating such compliance, (e) any acquired or newly formed
Subsidiary shall not be liable for any Indebtedness (except for Indebtedness
permitted by SECTION 10.1) and (f) the Required Lenders shall have given their
prior written consent (which consent shall not be unreasonably withheld, taking
into consideration the merits of the acquisition) in the case of (i) any
acquisition outside the business currently conducted by the Borrower involving
consideration (whether cash or property, as valued at the time each investment
is made) in excess of $5,000,000 and (ii) any acquisition if as a result thereof
the aggregate consideration (whether cash or property, as valued at the time
each investment is made) for all acquisitions (net of return of capital of (but
not return on) investments in such acquisitions) would be in excess of
$25,000,000.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust, business trust, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group thereof.
"PREVIOUS GENERAL PARTNER" means Suburban Propane GP, Inc., a
corporation organized under the laws of the State of Delaware.
"PRIME RATE" means, at any time, the rate of interest per annum
publicly announced from time to time by First Union as its prime rate. Each
change in the Prime Rate shall be effective as of the opening of business on the
day such change in the Prime Rate occurs. The parties hereto acknowledge that
the rate announced publicly by First Union as its Prime Rate is an index or base
rate and shall not necessarily be its lowest or best rate charged to its
customers or other banks.
"PROXY STATEMENT" means the Definitive Proxy Statement of the Parent
filed with the Securities and Exchange Commission on April 22, 1999.
"PURCHASE AGREEMENT" means the Purchase Agreement dated as of November
27, 1998, as amended, by and among the Previous General Partner, Millennium
Petrochemicals, Inc. and the General Partner.
"PUT AMOUNT" shall have the meaning assigned to such term in SECTION
4.1(C).
"RABBI TRUST" means the trust established pursuant to the terms of the
Rabbi Trust Documents.
"RABBI TRUST AGREEMENT" means the Benefits Protection Trust between the
Parent and First Union National Bank, as Trustee thereunder, dated May 26, 1999.
"RABBI TRUST DOCUMENTS" means the Compensation Deferral Plan and the
Rabbi Trust Agreement.
<PAGE>
"RECAPITALIZATION" means the recapitalization of the Parent as
described in the Proxy Statement.
"RECAPITALIZATION AGREEMENT" means the Amended and Restated
Recapitalization Agreement dated as of March 15, 1999 by and among the Borrower,
the Parent, the Previous General Partner, the General Partner and Millennium
Petrochemicals, Inc.
"RECAPITALIZATION DOCUMENTS" means the Recapitalization Agreement,
the Purchase Agreement, the Senior Note Agreement, the Mellon Note Documents and
the Rabbi Trust Documents, together with any additional documents executed with
respect to the Recapitalization.
"REFINANCING NOTE AGREEMENT" means one or more indentures or agreements
pursuant to which Refinancing Notes are issued.
"REFINANCING NOTES" means one or more series of notes issued by the
Borrower, the net proceeds of which are used by the Borrower to redeem Senior
Notes.
"REGISTER" shall have the meaning assigned thereto in SECTION 14.10(D).
"REIMBURSEMENT OBLIGATION" means the obligation of the Borrower to
reimburse the Issuing Lender pursuant to SECTION 3.5 for amounts drawn under
Letters of Credit.
"REQUIRED LENDERS" means, at any date, any combination of Lenders whose
Commitments aggregate at least sixty-six and two thirds percent (66 2/3%) of the
Aggregate Commitment.
"RESERVE ITEMS" shall have the meaning set forth in SECTION 2.1(B).
"RESPONSIBLE OFFICER" means, with respect to any Person, any executive
officer or Financial Officer of such Person and any other officer or similar
official thereof responsible for the administration of the obligations of such
Person in respect of this Agreement.
"RESTRICTED PAYMENT" means with respect to the Borrower and each of its
Subsidiaries (the "COVERED PERSONS"), (a) in the case of any Covered Person that
is a partnership, (i) any payment or other distribution, direct or indirect, in
respect of any partnership interest in such Covered Person, except a
distribution payable solely in additional partnership interests in such Covered
Person, and (ii) any payment, direct or indirect, by such Covered Person on
account of the redemption, retirement, purchase or other acquisition of any
partnership interest in such or any other Covered Person, except to the extent
that such payment consists of additional partnership interests in such Covered
Person; (b) in the case of any Covered Person that is a corporation, (i) any
dividend or other distribution, direct or indirect on account of any shares of
any class of stock of such Covered Person then outstanding, except a dividend
payable solely in shares of stock of such Covered Person, and (ii) any payment,
direct or indirect, by such Covered Person on account of the redemption,
retirement, purchase or other acquisition of any shares of any class of stock of
<PAGE>
such Covered Person then outstanding, or of any warrants, rights or options to
acquire any such shares, except to the extent that such payment consists of
shares of Capital Stock of such Covered Person; and (c) in the case of any other
Covered Person, any payment analogous to the prepayments referred to in clauses
(a) and (b) above.
"REVOLVING CREDIT COMMITMENT" means (a) as to any Lender, the
obligation of such Lender to make Revolving Credit Loans to the Borrower
hereunder in an aggregate principal amount at any time outstanding not to exceed
the amount so designated opposite such Lender's name on SCHEDULE 1 hereto, as
the same may be reduced or modified at any time or from time to time pursuant to
the terms hereof and (b) as to all Lenders, the aggregate commitment of all
Lenders to make Revolving Credit Loans, as such amount may be increased or
reduced at any time or from time to time pursuant to the terms hereof. The
Revolving Credit Commitment of all Lenders on the Closing Date shall be
Seventy-Five Million Dollars ($75,000,000).
"REVOLVING CREDIT COMMITMENT PERCENTAGE" means, as to any Lender at any
time, the ratio of (a) the amount of the Revolving Credit Commitment of such
Lender to (b) the Revolving Credit Commitment of all Lenders.
"REVOLVING CREDIT FACILITY" means the revolving credit facility
established pursuant to SECTION 2.1(A).
"REVOLVING CREDIT LOAN" means any of the revolving credit loans made by
the Lenders to the Borrower pursuant to SECTION 2.1(A) and all such loans
collectively as the context requires.
"REVOLVING CREDIT NOTES" means the collective reference to the
Revolving Credit Notes made by the Borrower payable to the order of each Lender,
substantially in the form of EXHIBIT A-1 hereto, evidencing the Revolving Credit
Facility, and any amendments and modifications thereto, any substitutes
therefor, and any replacements, restatements, renewals or extension thereof, in
whole or in part; "REVOLVING CREDIT NOTE" means any of such Revolving Credit
Notes.
"SENIOR NOTE AGREEMENT" means, collectively, the note agreements
pursuant to which the Senior Notes were issued, dated as of February 28, 1996,
as amended by the Amendment No. 1 thereto, dated May 13, 1998, and the Amendment
No. 2 thereto, dated March 29, 1999, and as amended from time to time in
accordance with SECTION 10.9.
"SENIOR NOTE DEFAULT" means any payment default or any other event or
condition with respect to the Senior Notes or any Refinancing Note the effect of
which is to cause, or permit the holder or holders of the Senior Notes or any
Refinancing Note or a trustee under any Refinancing Note Agreement (with or
without the giving of notice, the lapse of time or both) to cause the Senior
Notes or any Refinancing Note to become due prior to its stated maturity.
"SENIOR NOTES" means the 7.54% Senior Notes, due 2011, of the Borrower.
"SOLVENT" means, as to the Borrower and its Subsidiaries on a
particular date, that any such Person (a) has capital sufficient to carry on its
<PAGE>
business and transactions and all business and transactions in which it is about
to engage and is able to pay its debts as they mature, (b) owns property having
a value, both at fair valuation and at present fair saleable value, greater than
the amount required to pay its probable liabilities (including contingencies),
and (c) does not believe that it will incur debts or liabilities beyond its
ability to pay such debts or liabilities as they mature.
"SUBSIDIARY" means as to any Person, any corporation, partnership,
limited liability company or other entity of which more than fifty percent (50%)
of the outstanding capital stock or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other managers of
such corporation, partnership, limited liability company or other entity is at
the time, directly or indirectly, owned by or the management is otherwise
controlled by such Person (irrespective of whether, at the time, capital stock
or other ownership interests of any other class or classes of such corporation,
partnership, limited liability company or other entity shall have or might have
voting power by reason of the happening of any contingency). Unless otherwise
qualified references to "SUBSIDIARY" or "SUBSIDIARIES" herein shall refer to
those of the Borrower.
"SWINGLINE COMMITMENT" means Seven Million Five Hundred Thousand
Dollars ($7,500,000).
"SWINGLINE FACILITY" means the swingline facility established pursuant
to SECTION 2.2.
"SWINGLINE LENDER" means First Union in its capacity as swingline
lender hereunder.
"SWINGLINE LOAN" means the swingline loans made by the Swingline Lender
to the Borrower pursuant to SECTION 2.2, and all such loans collectively as the
context requires.
"SWINGLINE NOTE" means the Swingline Note made by the Borrower payable
to the order of the Swingline Lender, substantially in the form of EXHIBIT A-3
hereto, evidencing the Swingline Loans, and any amendments, supplements and
modifications thereto, any substitutes therefor, and any replacements,
restatements, renewals or extension thereof, in whole or in part.
"SWINGLINE RATE" means the interest rate applicable to Swingline Loans,
as agreed upon from time to time by the Borrower and the Administrative Agent
pursuant to a written side letter agreement.
"SWINGLINE TERMINATION DATE" means the earlier to occur of (a) the
resignation of First Union as Administrative Agent in accordance with SECTION
13.9 and (b) the Termination Date.
"TAXES" shall have the meaning assigned thereto in SECTION 4.17(A).
"TERMINATION DATE" shall have the meaning assigned thereto in SECTION
4.6.
"TOTAL INDEBTEDNESS" means, at any time, all Indebtedness of the
Borrower and its Subsidiaries at such time (other than Indebtedness described
under clauses (i) and (j) of the definition of "Indebtedness"), determined on a
Consolidated basis in accordance with GAAP.
<PAGE>
"TRUST RESERVES" shall have the meaning assigned to such term in
SECTION 4.4(B).
"UNIFORM CUSTOMS" means the Uniform Customs and Practice for
Documentary Credits (1994 Revision), effective January, 1994, International
Chamber of Commerce Publication No. 500.
"UCC" means the Uniform Commercial Code as in effect in the State of
New York, as amended or modified from time to time.
"UNITED STATES" means the United States of America.
"WHOLLY-OWNED" means, with respect to a Subsidiary, a Subsidiary all of
the shares of Capital Stock or other ownership interests of which are, directly
or indirectly, owned or controlled by the Borrower and/or one or more of its
Wholly-Owned Subsidiaries.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.2 GENERAL. Unless otherwise specified, a reference in
this Agreement to a particular section, subsection, Schedule or Exhibit is a
reference to that section, subsection, Schedule or Exhibit of this Agreement.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and plural, and pronouns stated in
the masculine, feminine or neuter gender shall include the masculine, the
feminine and the neuter. Any reference herein to "Charlotte time" shall refer to
the applicable time of day in Charlotte, North Carolina.
SECTION 1.3 OTHER DEFINITIONS AND PROVISIONS.
(a) Use of Capitalized Terms. Unless otherwise defined therein, all
capitalized terms defined in this Agreement shall have the defined meanings when
used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
(b) Miscellaneous. The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
<PAGE>
ARTICLE II
THE CREDIT FACILITIES
SECTION 2.1 REVOLVING CREDIT LOANS.
(a) Subject to the terms and conditions (including without limitation
Section 4.4) of this Agreement, and in reliance upon the representations and
warranties set forth herein, each Lender severally agrees to make Revolving
Credit Loans to the Borrower from time to time from the Closing Date to, but not
including, the Termination Date as requested by the Borrower in accordance with
the terms of SECTION 4.1; PROVIDED, that (i) the aggregate principal amount of
all outstanding Revolving Credit Loans (after giving effect to any amount
requested) shall not exceed the Revolving Credit Commitment LESS the sum of (A)
all outstanding Swingline Loans and L/C Obligations, (B) the Liquidity Reserve
Amount as of such date and (C) the Blocked Portion as of such date and (ii) the
principal amount of outstanding Revolving Credit Loans from any Lender to the
Borrower shall not at any time exceed such Lender's Revolving Credit Commitment
less such Lender's Revolving Credit Commitment Percentage of L/C Obligations and
outstanding Swingline Loans. Each Revolving Credit Loan by a Lender shall be in
a principal amount equal to such Lender's Revolving Credit Commitment Percentage
of the aggregate principal amount of Revolving Credit Loans requested on such
occasion. Subject to the terms and conditions hereof, the Borrower may borrow,
repay and reborrow Revolving Credit Loans hereunder until the Termination Date.
(b) BLOCKED PORTION OF REVOLVING CREDIT COMMITMENTS. The Borrower may
from time to time deliver a certificate of a Financial Officer of the Borrower
to the Administrative Agent designating a portion of the then-available
Revolving Credit Commitments as being unavailable except for the purpose of
funding items ("RESERVE ITEMS") specified in such certificate that would have
been reserved against pursuant to the definition of "Available Cash" but for the
specification of such amounts in such certificate. The aggregate amount of
Revolving Credit Commitments unavailable as a result of the delivery of such
certificates at any time shall be referred to as the "BLOCKED PORTION" in effect
at such time. The Blocked Portion shall be reduced from time to time upon
receipt by the Administrative Agent of a certificate of a Financial Officer of
the Borrower certifying as to (a) the discharge of any portion of any Reserve
Item, (b) the establishment of a cash reserve in respect of any portion of any
Reserve Item, (c) the determination by the Board of Supervisors of the Borrower
that any reserve contemplated by clause (b) of the definition of "Available
Cash" may be reduced because the amount of the original reserve is no longer
necessary or appropriate by reason of a change in the anticipated timing or
amount of the item reserved against or (d) the delivery of a Notice of Borrowing
for a Revolving Credit Loan to be drawn under the Blocked Portion the proceeds
of which shall be used solely for the purpose of discharging any Reserve Item,
each of which reductions shall be in an amount equal to the amount of such
discharged portion, new cash reserve, adjustment to reserves or Revolving Credit
Loan, as applicable. Notwithstanding any other provision of this Agreement, at
no time shall any Revolving Credit Loan be made or any certificate increasing
the Blocked Portion become effective if as a result of the making of such
Revolving Credit Loan or the effectiveness of such increase the aggregate
principal amount of Revolving Credit Loans outstanding at such time would exceed
the difference between the aggregate amount of the Revolving Credit Commitments
<PAGE>
in effect at such time and the amount of the Blocked Portion in effect at such
time.
SECTION 2.2 SWINGLINE LOANS.
(a) AVAILABILITY. Subject to the terms and conditions (including
without limitation Section 4.4) of this Agreement, the Swingline Lender agrees
to make Swingline Loans to the Borrower from time to time from the Closing Date
through, but not including, the Swingline Termination Date; PROVIDED, that the
aggregate principal amount of all outstanding Swingline Loans (after giving
effect to any amount requested), shall not exceed the lesser of (i) the
Revolving Credit Commitment less the sum of (A) all outstanding Revolving Credit
Loans and the L/C Obligations, (B) the Liquidity Reserve Amount as of such date
and (C) the Blocked Portion as of such date; and (ii) the Swingline Commitment.
Each Lender acknowledges that the aggregate principal amount of all outstanding
Swingline Loans made by the Swingline Lender, when taken together with the
aggregate principal amount of all outstanding Revolving Credit Loans made by the
Swingline Lender, may exceed the Swingline Lender's Revolving Credit Commitment.
(b) REFUNDING.
(i) Swingline Loans shall be reimbursed fully by the Lenders on
demand by the Swingline Lender. Such reimbursements shall be made by the
Lenders in accordance with their respective Revolving Credit Commitment
Percentages and shall thereafter be reflected as Revolving Credit Loans of the
Lenders on the books and records of the Administrative Agent; provided that no
Lender shall be required to reimburse any Swingline Loan if, after giving effect
to such reimbursement, the aggregate principal amount of such Lender's Revolving
Credit Loans outstanding would exceed such Lenders Revolving Credit Commitment.
Each Lender shall fund its respective Revolving Credit Commitment Percentage of
Revolving Credit Loans as required to repay Swingline Loans outstanding to the
Swingline Lender upon demand by the Swingline Lender but in no event later than
2:00 p.m. (Charlotte time) on the next succeeding Business Day after such demand
is made. No Lender's obligation to fund its respective Revolving Credit
Commitment Percentage of a Swingline Loan shall be affected by any other
Lender's failure to fund its Revolving Credit Commitment Percentage of a
Swingline Loan, nor shall any Lender's Revolving Credit Commitment Percentage be
increased as a result of any such failure of any other Lender to fund its
Revolving Credit Commitment Percentage of a Swingline Loan.
(ii) The Borrower shall pay to the Swingline Lender on demand
the amount of such Swingline Loans to the extent amounts received from the
Lenders are not sufficient to repay in full the outstanding Swingline Loans
requested or required to be refunded. In addition, the Borrower hereby
authorizes the Administrative Agent to charge any account maintained by the
Borrower with the Swingline Lender (up to the amount available therein) in order
to immediately pay the Swingline Lender the amount of such Swingline Loans to
the extent amounts received from the Lenders are not sufficient to repay in full
the outstanding Swingline Loans requested or required to be refunded. If any
portion of any such amount paid to the Swingline Lender shall be recovered by or
on behalf of the Borrower from the Swingline Lender in bankruptcy or otherwise,
the loss of the amount so recovered shall be ratably shared among all the
Lenders in accordance with their respective Revolving Credit Commitment
Percentages (unless the amounts so recovered by or on behalf of the Borrower
<PAGE>
pertain to a Swingline Loan extended after the occurrence and during the
continuance of an Event of Default of which the Administrative Agent has
received notice in the manner required pursuant to SECTION 13.5 and which such
Event of Default has not been waived by the Required Lenders or the Lenders, as
applicable).
(iii) Each Lender acknowledges and agrees that its obligation
to refund Swingline Loans in accordance with the terms of this SECTION 2.2 is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, non-satisfaction of the conditions
set forth in Article V. Further, each Lender agrees and acknowledges that if
prior to the refunding of any outstanding Swingline Loans pursuant to this
SECTION 2.2, one of the events described in SECTION 12.1(I) or (J) shall have
occurred, each Lender will, on the date the applicable Revolving Credit Loan
would have been made, purchase an undivided participating interest in the
Swingline Loan to be refunded in an amount equal to its Revolving Credit
Commitment Percentage of the aggregate amount of such Swingline Loan. Each
Lender will immediately transfer to the Swingline Lender, in immediately
available funds, the amount of its participation and upon receipt thereof the
Swingline Lender will deliver to such Lender a certificate evidencing such
participation dated the date of receipt of such funds and for such amount.
Whenever, at any time after the Swingline Lender has received from any Lender
such Lender's participating interest in a Swingline Loan, the Swingline Lender
receives any payment on account thereof, the Swingline Lender will distribute to
such Lender its participating interest in such amount (appropriately adjusted,
in the case of interest payments, to reflect the period of time during which
such Lender's participating interest was outstanding and funded).
SECTION 2.3 LIQUIDITY LOANS. Subject to the terms and conditions
of this Agreement, the Borrower may designate any Revolving Credit Loan at the
time of incurrence thereof as a Liquidity Loan; PROVIDED, that (a) a
Distribution Shortfall exists as of the end of the then most recently ended
fiscal quarter; (b) the Borrower shall have accelerated and obtained the full
amount of the Management Cash Reserve available as of the date of the occurrence
of such Distribution Shortfall; (c) the cumulative aggregate principal amount of
all Liquidity Loans incurred during the life of the Credit Facilities shall not
exceed $22,000,000; (d) the aggregate principal amount of Liquidity Loans
incurred in any fiscal quarter shall not exceed the lesser of (i) the amount of
the Net Distribution Shortfall as of the end of the preceding fiscal quarter and
(ii) $11,600,000 MINUS the relevant Management Cash Reserve; and (e) no
Liquidity Loan may be requested at any time when the Liquidity Reserve Amount is
less than $1.00.
SECTION 2.4 ACQUISITION LOANS. Subject to the terms and conditions
(including without limitation Section 4.4) of this Agreement, and in reliance
upon the representations and warranties set forth herein, each Lender severally
agrees to make Acquisition Loans to the Borrower from time to time from the
Closing Date to, but not including, the Termination Date as requested by the
Borrower in accordance with the terms of SECTION 4.1(A); PROVIDED, that (a) the
aggregate principal amount of all outstanding Acquisition Loans (after giving
effect to any amount requested) shall not exceed the Acquisition Commitment and
(b) the principal amount of outstanding Acquisition Loans from any Lender to the
Borrower shall not at any time exceed such Lender's Acquisition Commitment. Each
Acquisition Loan by a Lender shall be in a principal amount equal to such
Lender's Acquisition Commitment Percentage of the aggregate principal amount of
<PAGE>
Acquisition Loans requested or required on such occasion. Subject to the terms
and conditions hereof, the Borrower may borrow, repay and reborrow Acquisition
Loans hereunder until the Termination Date.
ARTICLE III
LETTER OF CREDIT FACILITY
SECTION 3.1 L/C COMMITMENT. Subject to the terms and conditions
(including without limitation Section 4.4) of this Agreement, the Issuing
Lender, in reliance on the agreements of the other Lenders set forth in SECTION
3.4(A), agrees to issue standby letters of credit ("LETTERS OF CREDIT") for the
account of the Borrower on any Business Day from the Closing Date to, but not
including, the Termination Date in such form as may be approved from time to
time by the Issuing Lender; PROVIDED, that the Issuing Lender shall have no
obligation to issue any Letter of Credit if, after giving effect to such
issuance, (a) the L/C Obligations would exceed the L/C Commitment or (b) the
aggregate principal amount of outstanding Revolving Credit Loans, PLUS the
aggregate principal amount of outstanding Swingline Loans, PLUS the aggregate
amount of L/C Obligations would exceed the Revolving Credit Commitment less the
Liquidity Reserve Amount and the Blocked Portion. Each Letter of Credit shall
(i) be denominated in Dollars in a minimum amount of $1,000,000, (ii) be a
standby letter of credit issued to support obligations of the Borrower or any of
its Subsidiaries, contingent or otherwise, incurred in the ordinary course of
business, (iii) have a term of no more than one year, (iv) expire on a date not
later than the Termination Date and that is otherwise satisfactory to the
Issuing Lender and (v) be subject to the Uniform Customs and/or ISP 98, as set
forth in the Application or as determined by the Issuing Lender and, to the
extent not inconsistent therewith, the laws of the State of North Carolina. The
Issuing Lender shall not at any time be obligated to issue any Letter of Credit
hereunder if such issuance would conflict with, or cause the Issuing Lender or
any L/C Participant to exceed any limits imposed by, any Applicable Law.
References herein to "issue" and derivations thereof with respect to Letters of
Credit shall also include extensions or modifications of any existing Letters of
Credit, unless the context otherwise requires.
SECTION 3.2 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT. The
Borrower may from time to time request that the Issuing Lender issue a Letter of
Credit by delivering to the Issuing Lender at the Administrative Agent's Office
an Application therefor, completed to the satisfaction of the Issuing Lender,
and such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
shall process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall, subject to SECTION 3.1 and Article V, promptly
issue the Letter of Credit requested thereby (but in no event shall the Issuing
Lender be required to issue any Letter of Credit earlier than three (3) Business
Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by the Issuing Lender and the Borrower. The Issuing
Lender shall promptly furnish to the Borrower a copy of such Letter of Credit
and promptly notify each Lender of the issuance and upon request by any Lender,
<PAGE>
furnish to such Lender a copy of such Letter of Credit and the amount of such
Lender's L/C Participation therein.
SECTION 3.3 COMMISSIONS AND OTHER CHARGES.
(a) The Borrower shall pay to the Administrative Agent, for the account
of the Issuing Lender and the L/C Participants, a letter of credit commission
with respect to each Letter of Credit in an amount equal to the product of (i)
the average daily maximum amount available to be drawn during the relevant
quarter under such Letter of Credit and (ii) the Applicable Margin (determined
on a per annum basis). Such commission shall be payable quarterly in arrears on
the last Business Day of each calendar quarter and on the Termination Date. The
Administrative Agent shall, promptly following its receipt thereof, distribute
to the Issuing Lender and the L/C Participants all commissions received pursuant
to this SECTION 3.3(A) in accordance with their respective Revolving Credit
Commitment Percentages.
(b) In addition to the foregoing commission, the Borrower shall pay to
the Administrative Agent, for the account of the Issuing Lender, an issuance fee
with respect to each Letter of Credit in an amount equal to the product of (i)
the face amount of such Letter of Credit and (ii) one eighth of one percent
(0.125%). Such issuance fee shall be payable on the date of issuance of each
Letter of Credit and shall be non-refundable.
(c) In addition to the foregoing fees and commissions, the Borrower
shall pay or reimburse the Issuing Lender for such normal and customary costs
and expenses as are incurred or charged by the Issuing Lender in issuing,
effecting payment under, amending or otherwise administering any Letter of
Credit.
SECTION 3.4 L/C PARTICIPATIONS.
(a) The Issuing Lender irrevocably agrees to grant and hereby grants to
each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk
an undivided interest equal to such L/C Participant's Revolving Credit
Commitment Percentage in the Issuing Lender's obligations and rights under and
in respect of each Letter of Credit issued hereunder and the amount of each
draft paid by the Issuing Lender thereunder. Each L/C Participant
unconditionally and irrevocably agrees with the Issuing Lender that, if a draft
is paid under any Letter of Credit for which the Issuing Lender is not
reimbursed in full by the Borrower through a Revolving Credit Loan or otherwise
in accordance with the terms of this Agreement, such L/C Participant shall pay
to the Issuing Lender upon demand at the Issuing Lender's address for notices
specified herein an amount equal to such L/C Participant's Revolving Credit
Commitment Percentage of the amount of such draft, or any part thereof, which is
not so reimbursed.
(b) Upon becoming aware of any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to SECTION 3.4(A) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any Letter
<PAGE>
of Credit, the Issuing Lender shall notify each L/C Participant of the amount
and due date of such required payment and such L/C Participant shall pay to the
Issuing Lender the amount specified on the applicable due date. If any such
amount is paid to the Issuing Lender after the date such payment is due, such
L/C Participant shall pay to the Issuing Lender on demand, in addition to such
amount, the product of (i) such amount, TIMES (ii) the daily average Federal
Funds Rate as determined by the Administrative Agent during the period from and
including the date such payment is due to the date on which such payment is
immediately available to the Issuing Lender, TIMES (iii) a fraction the
numerator of which is the number of days that elapse during such period and the
denominator of which is 360. A certificate of the Issuing Lender with respect to
any amounts owing under this SECTION 3.4(B) shall be conclusive in the absence
of manifest error. With respect to payment to the Issuing Lender of the
unreimbursed amounts described in this SECTION 3.4(B), if the L/C Participants
receive notice that any such payment is due (A) prior to 1:00 p.m. (Charlotte
time) on any Business Day, such payment shall be due that Business Day, and (B)
after 1:00 p.m. (Charlotte time) on any Business Day, such payment shall be due
on the following Business Day.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its
Revolving Credit Commitment Percentage of such payment in accordance with this
SECTION 3.4, the Issuing Lender receives any payment related to such Letter of
Credit (whether directly from the Borrower or otherwise, or any payment of
interest on account thereof, the Issuing Lender will distribute to such L/C
Participant its PRO RATA share thereof; PROVIDED, that in the event that any
such payment received by the Issuing Lender shall be required to be returned by
the Issuing Lender, such L/C Participant shall return to the Issuing Lender the
portion thereof previously distributed by the Issuing Lender to it.
SECTION 3.5 REIMBURSEMENT OBLIGATION OF THE BORROWER. In the event
of any drawing under any Letter of Credit, the Borrower agrees to reimburse
(either with the proceeds of a Revolving Credit Loan as provided for in this
SECTION 3.5 or with funds from other sources), in same day funds, the Issuing
Lender on each date on which the Issuing Lender notifies the Borrower of the
date and amount of a draft paid under any Letter of Credit for the amount of (a)
such draft so paid and (b) any amounts referred to in SECTION 3.3(C) incurred by
the Issuing Lender in connection with such payment. Unless the Borrower shall
immediately notify the Issuing Lender that the Borrower intends to reimburse the
Issuing Lender for such drawing from other sources or funds, the Borrower shall
be deemed to have timely given a Notice of Borrowing to the Administrative Agent
requesting that the Lenders make a Revolving Credit Loan bearing interest at the
Base Rate on such date in the amount of (a) such draft so paid and (b) any
amounts referred to in SECTION 3.3 (C) incurred by the Issuing Lender in
connection with such payment, and the Lenders shall make a Revolving Credit Loan
bearing interest at the Base Rate in such amount, the proceeds of which shall be
applied to reimburse the Issuing Lender for the amount of the related drawing
and costs and expenses. Each Lender acknowledges and agrees that its obligation
to fund a Revolving Credit Loan in accordance with this SECTION 3.5 to reimburse
the Issuing Lender for any draft paid under a Letter of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, non-satisfaction of the conditions set forth in
SECTION 4.1(A) or Article V. If the Borrower has elected to pay the amount of
such drawing with funds from other sources and shall fail to reimburse the
Issuing Lender as provided above, the unreimbursed amount of such drawing shall
<PAGE>
bear interest in the rate which would be payable on any outstanding Base Rate
Loans which were then overdue from the date such amounts become payable (whether
at stated maturity, by acceleration or otherwise) until payment in full.
SECTION 3.6 OBLIGATIONS ABSOLUTE. The Borrower's obligations under
this Article III (including without limitation the Reimbursement Obligation)
shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender or any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees that the Issuing
Lender and the L/C Participants shall not be responsible for, and the Borrower's
Reimbursement Obligation under SECTION 3.5 shall not be affected by, among other
things, the validity or genuineness of documents or of any endorsements thereon,
even though such documents shall in fact prove to be invalid, fraudulent or
forged, or any dispute between or among the Borrower and any beneficiary of any
Letter of Credit or any other party to which such Letter of Credit may be
transferred or any claims whatsoever of the Borrower against any beneficiary of
such Letter of Credit or any such transferee. The Issuing Lender shall not be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit, except for errors or omissions caused by the Issuing
Lender's gross negligence or willful misconduct. The Borrower agrees that any
action taken or omitted by the Issuing Lender under or in connection with any
Letter of Credit or the related drafts or documents, if done in the absence of
gross negligence or willful misconduct and in accordance with the standards
of care specified in ISP 98 or the Uniform Customs, as the case may be, and, to
the extent not inconsistent therewith, the UCC, shall be binding on the Borrower
and shall not result in any liability of the Issuing Lender or any L/C
Participant to the Borrower.
ARTICLE IV
GENERAL LOAN PROVISIONS
SECTION 4.1 PROCEDURE FOR ADVANCES OF LOANS.
(a) REQUESTS FOR BORROWING. The Borrower shall give the Administrative
Agent irrevocable prior written notice in the form attached hereto as EXHIBIT B
(a "NOTICE OF BORROWING") not later than 11:00 a.m. (Charlotte time) (i) on the
same Business Day as each Base Rate Loan and each Swingline Loan and (ii) at
least three (3) Business Days before each LIBOR Rate Loan, of its intention to
borrow, specifying (A) the date of such borrowing, which shall be a Business
Day, (B) the amount of such borrowing, which shall be (x) with respect to LIBOR
Rate Loans and Base Rate Loans, in an aggregate principal amount of $3,000,000
or a whole multiple of $500,000 in excess thereof, and (y) with respect to
Swingline Loans in an aggregate principal amount of $500,000 or a whole multiple
of $250,000 in excess thereof, (C) whether such Loan is to be a Revolving Credit
Loan, Swingline Loan, Liquidity Loan or Acquisition Loan, (D) in the case of a
Revolving Credit Loan, Liquidity Loan or Acquisition Loan whether the Loans are
to be LIBOR Rate Loans or Base Rate Loans, and (E) in the case of a LIBOR Rate
Loan, the duration of the Interest Period applicable thereto. A Notice of
Borrowing received after 11:00 a.m. (Charlotte time) shall be deemed received on
<PAGE>
the next Business Day. The Administrative Agent shall promptly notify the
Lenders of each Notice of Borrowing.
(b) DISBURSEMENT OF LOANS. Not later than 2:00 p.m. (Charlotte time) on
the proposed borrowing date, (i) each Lender will make available to the
Administrative Agent, for the account of the Borrower, at the office of the
Administrative Agent in funds immediately available to the Administrative Agent,
as applicable, (A) such Lender's Revolving Credit Commitment Percentage of the
Revolving Credit Loans to be made on such borrowing date, and (B) such Lender's
Acquisition Commitment Percentage of the Acquisition Loan to be made on such
borrowing date and (ii) the Swingline Lender will make available to the
Administrative Agent, for the account of the Borrower, at the office of the
Administrative Agent in funds immediately available to the Administrative Agent,
the Swingline Loans to be made to the Borrower on such borrowing date. The
Borrower hereby irrevocably authorizes the Administrative Agent to disburse the
proceeds of each borrowing requested pursuant to this SECTION 4.1 in immediately
available funds by crediting or wiring such proceeds to the deposit account of
the Borrower identified in the most recent notice substantially in the form of
EXHIBIT C hereto (a "NOTICE OF ACCOUNT DESIGNATION") delivered by the Borrower
to the Administrative Agent or may be otherwise agreed upon by the Borrower and
the Administrative Agent from time to time. Subject to SECTION 4.13, the
Administrative Agent shall not be obligated to disburse the portion of the
proceeds of any Revolving Credit Loan, Liquidity Loan or Acquisition Loan
requested pursuant to this SECTION 4.1 to the extent that any Lender has not
made available to the Administrative Agent its Revolving Credit Commitment
Percentage, Liquidity Commitment Percentage or Acquisition Commitment
Percentage, as the case may be, of such Loan. Revolving Credit Loans to be made
for the purpose of refunding Swingline Loans shall be made by the Lenders as
provided in SECTION 2.2(B).
SECTION 4.2 REPAYMENT OF LOANS.
(a) REPAYMENT ON TERMINATION DATE. On the Termination Date, the
Borrower shall repay the outstanding principal amount of (i) all Revolving
Credit Loans, Liquidity Loans and Acquisition Loans in full, and (ii) to the
extent the Swingline Termination Date has not occurred, all Swingline Loans
together, in each case, with all accrued but unpaid interest thereon.
(b) MANDATORY REPAYMENT OF REVOLVING CREDIT LOANS AND ACQUISITION
LOANS. If at any time, as the case may be, (i) the outstanding principal amount
of all Revolving Credit Loans plus the sum of (A) all outstanding Swingline
Loans and L/C Obligations, (B) the Liquidity Reserve Amount as of such date and
(C) the Blocked Portion as of such date exceeds the Revolving Credit Commitment,
the Borrower shall repay immediately upon notice from the Administrative Agent,
by payment to the Administrative Agent for the account of the Lenders, the
aggregate outstanding Revolving Credit Loans, Swingline Loans and L/C
Obligations in an amount equal to such excess with each such repayment applied
FIRST to the principal amount of outstanding Swingline Loans, SECOND to the
principal amount of outstanding Revolving Credit Loans and THIRD, with respect
to any Letters of Credit then outstanding, a payment of cash collateral into a
cash collateral account opened by the Borrower with the Administrative Agent,
for the benefit of the Lenders (such cash collateral to be applied in accordance
with SECTION 12.2(B)), and (ii) the outstanding principal amount of all
<PAGE>
Acquisition Loans exceeds the Acquisition Commitment, the Borrower shall repay
immediately upon notice from the Administrative Agent, by payment to the
Administrative Agent for the account of the Lenders, Acquisition Loans in an
amount equal to such excess. Each such repayment shall be accompanied by any
amount required to be paid pursuant to SECTION 4.15.
(c) OPTIONAL REPAYMENTS. The Borrower may at any time and from time
to time repay the Loans, in whole or in part, upon at least three (3) Business
Days' irrevocable notice to the Administrative Agent with respect to LIBOR Rate
Loans and one (1) Business Day irrevocable notice with respect to Base Rate
Loans and Swingline Loans, in the form attached hereto as EXHIBIT D (a "NOTICE
OF PREPAYMENT") specifying the date and amount of repayment and whether the
repayment is of a Revolving Credit Loan or Acquisition Loan, LIBOR Rate Loans,
Base Rate Loans, Swingline Loans or a combination thereof, and, if of a
combination thereof, the amount allocable to each; PROVIDED, that any repayment
of Revolving Credit Loans shall be applied first to the repayment of any
outstanding Liquidity Loans and then any remaining amounts shall be applied to
repayment of any Revolving Credit Loans that are not Liquidity Loans. Upon
receipt of such notice, the Administrative Agent shall promptly notify each
Lender. If any such notice is given, the amount specified in such notice shall
be due and payable on the date set forth in such notice. Partial repayments
shall be in an aggregate amount of $3,000,000 or a whole multiple of $500,000 in
excess thereof with respect to LIBOR Rate Loans and Base Rate Loans and $500,000
or a whole multiple of $250,000 in excess thereof with respect to Swingline
Loans. Each such repayment shall be accompanied by any amount required to be
paid pursuant to SECTION 4.15.
(d) MANDATORY REPAYMENT OF REVOLVING CREDIT LOANS. The Borrower shall
apply the proceeds of the Management Cash Reserve received pursuant to the terms
of SECTION 4.4(B) to repay outstanding Liquidity Loans, if any, and then any
remaining amounts shall be applied to repayment of any outstanding Revolving
Credit Loans that are not Liquidity Loans.
(e) MANDATORY REPAYMENT OF ACQUISITION LOANS. The Borrower shall apply
the Lender's Portion of the Designated Net Proceeds and the Designated Net
Insurance/Condemnation Proceeds promptly upon receipt thereof by the Borrower or
any Subsidiary or upon the existence thereof, as applicable, to repay the
Acquisition Loans outstanding at the time of such receipt or existence.
(f) LIMITATION ON REPAYMENT OF LIBOR RATE LOANS. The Borrower may not
repay any LIBOR Rate Loan on any day other than on the last day of the Interest
Period applicable thereto unless such repayment is accompanied by any amount
required to be paid pursuant to SECTION 4.15.
SECTION 4.3 NOTES.
(a) REVOLVING CREDIT NOTES. Each Lender's Revolving Credit Loans and
the obligation of the Borrower to repay such Revolving Credit Loans shall be
evidenced by a separate Revolving Credit Note executed by the Borrower payable
to the order of such Lender representing the Borrower's obligation to pay such
Lender's Revolving Credit Commitment or, if less, the aggregate unpaid principal
amount of all Revolving Credit Loans made and to be made by such Lender to the
<PAGE>
Borrower hereunder, plus interest and all other fees, charges and other amounts
due thereon. Each Revolving Credit Note shall be dated the date hereof and shall
bear interest on the unpaid principal amount thereof at the applicable interest
rate per annum specified in SECTION 4.7.
(b) ACQUISITION NOTES. Each Lender's Acquisition Loans and the
obligation of the Borrower to repay such Acquisition Loans shall be evidenced by
an Acquisition Note executed by the Borrower payable to the order of such Lender
representing the Borrowers obligation to pay such Lender's Acquisition Loan
Commitment or, if less, the aggregate unpaid principal amount of all Acquisition
Loans made and to be made by such Lender to the Borrower hereunder, plus
interest and all other fees, charges and other amounts due thereon. Each
Acquisition Note shall be dated the date hereof and shall bear interest on the
unpaid principal amount thereof at the applicable interest rate per annum
specified in SECTION 4.7.
(c) SWINGLINE NOTE. The Swingline Loans and the obligation of the
Borrower to repay such Swingline Loans shall be evidenced by the Swingline Note
executed by the Borrower payable to the order of the Swingline Lender
representing the Borrower's obligation to the Swingline Lender the aggregate
unpaid principal amount of all Swingline Loans made and to be made by the
Swingline Lender to the Borrower hereunder, plus interest and all other fees,
charges and other amounts due thereon. The Swingline Note shall be dated the
date hereof and shall bear interest on the unpaid principal amount thereof at
the applicable Swingline Rate.
SECTION 4.4 LIMITATIONS ON INCURRENCE OF EXTENSIONS OF CREDIT.
Notwithstanding anything else herein to the contrary, the Borrower's ability to
request and incur, and the Lenders' and the Issuing Lender's obligation to make,
Extensions of Credit shall be limited as follows:
(a) SUSPENSION UPON DISTRIBUTION SHORTFALL. Upon the occurrence of any
Distribution Shortfall, the Borrower's right to request, and the Lenders' and
the Issuing Lender's obligation to make, Extensions of Credit under this
Agreement shall be automatically suspended until the Borrower shall have caused
an acceleration of and shall have received the full amount of the Management
Cash Reserve available as of the date of such occurrence.
(b) SUSPENSION UPON EXERCISE OF MELLON PUT RIGHTS. Upon the exercise
of any right under the Mellon Note Purchase Agreement to cause the Borrower to
purchase the Mellon Note, the Borrower's right to request, and the Lenders' and
the Issuing Lender's obligation to make, Extensions of Credit under this
Agreement shall be automatically suspended until the Borrower or the Parent
shall have caused an acceleration of and the Borrower shall have received the
payment of all available accumulated distributions under the Rabbi Trust
Documents as provided in Section 9.1(a) of the Compensation Deferral Plan (the
"TRUST RESERVES") in an amount up to the lesser of (i) the full purchase price
of the Mellon Note, and (ii) the entire amount of the Trust Reserves.
(c) REPAYMENT; LIMITED INCURRENCE DURING CLEANDOWN PERIOD. During each
Fiscal Year, the Borrower shall select a Cleandown Period. On the first day of
each Cleandown Period, the Borrower shall repay the Extensions of Credit then
<PAGE>
outstanding to the extent necessary to reduce the total amount of outstanding
Extensions of Credit to an amount not exceeding the sum of $15,000,000 PLUS (i)
the aggregate principal amount of all outstanding Liquidity Loans plus (ii) the
aggregate principal amount of all outstanding Acquisition Loans. For the
duration of each such Cleandown Period, the Borrower shall not request, create
or incur any Extensions of Credit to the extent that the aggregate principal
amount of all outstanding Extensions of Credit (after giving effect to any
amount requested, created or incurred) would exceed the sum of $15,000,000 PLUS
(i) the aggregate principal amount of all outstanding Liquidity Loans PLUS (ii)
the aggregate principal amount of all outstanding Acquisition Loans.
SECTION 4.5 PERMANENT REDUCTION OF THE REVOLVING CREDIT COMMITMENT
AND THE ACQUISITION COMMITMENT.
(a) VOLUNTARY REDUCTION. The Borrower shall have the right at any time
and from time to time, upon at least three (3) Business Days prior written
notice to the Administrative Agent, to permanently reduce, without premium or
penalty, (i) (A) at any time, the entire Acquisition Commitment or, (B) if the
Liquidity Reserve Amount is less than one dollar ($1.00), the entire Revolving
Credit Commitment or (ii) portions of the (A) Revolving Credit Commitment to an
amount not less than the Liquidity Reserve Amount or (B) the Acquisition
Commitment, from time to time, in each case, in an aggregate principal amount
not less than $2,000,000 or any whole multiple in excess thereof.
(b) MANDATORY PERMANENT REDUCTION OF ACQUISITION LOAN COMMITMENT. The
Acquisition Commitment shall be automatically and permanently reduced by the
Lenders' Portion of the Designated Net Proceeds and the Designated Net
Insurance/Condemnation Proceeds, promptly upon receipt thereof by the Borrower
or any Subsidiary or upon the existence thereof, as applicable, to the extent
that such amounts are not applied to repay Acquisition Loans pursuant to SECTION
4.2(E).
(c) REPAYMENT OF EXCESS LOANS. Each permanent reduction permitted or
required pursuant to this SECTION 4.5 and, as applicable, SECTION 4.6 shall be
(i) with respect to outstanding Revolving Credit Loans and L/C Obligations, be
accompanied by a payment of principal sufficient to reduce the aggregate
outstanding Revolving Credit Loans and L/C Obligations, of the Lenders after
such reduction to the Revolving Credit Commitment as so reduced and if the
Revolving Credit Commitment as so reduced is less than the aggregate amount of
all outstanding L/C Obligations, the Borrower shall be required to deposit in a
cash collateral account opened by the Administrative Agent an amount equal to
the aggregate then undrawn and unexpired amount of such L/C Obligations, and
(ii) with respect to Acquisition Loans be accompanied by a payment of principal
sufficient to reduce the aggregate outstanding Acquisition Loans of the Lenders
after such reduction to the Acquisition Commitment as so reduced. Any reduction
of the Revolving Credit Commitment or the Acquisition Commitment, as the case
may be, to zero shall be accompanied by payment of all outstanding Obligations
(and, with respect to a reduction of the Revolving Credit Commitment, the
furnishing of cash collateral satisfactory to the Administrative Agent for all
L/C Obligations) and shall result in the termination of the Revolving Credit
Commitment and the Revolving Credit Facility and the Liquidity Facility, and the
Acquisition Commitment and the Acquisition Facility, as the case may be. Such
cash collateral shall be applied in accordance with SECTION 12.2(B). If the
<PAGE>
reduction of the Revolving Credit Commitment or the Acquisition Commitment, as
applicable, requires the repayment of any LIBOR Rate Loan, such repayment shall
be accompanied by any amount required to be paid pursuant to SECTION 4.15.
SECTION 4.6 TERMINATION OF CREDIT FACILITIES. The Credit Facilities
shall terminate and each of the Revolving Credit Commitment and the Acquisition
Commitment shall be automatically reduced to zero on the earliest of (i) March
31, 2001, (ii) the date of termination by the Borrower pursuant to SECTION
4.5(A), and (iii) the date of termination by the Administrative Agent on behalf
of the Lenders pursuant to SECTION 12.2(A) (the "TERMINATION DATE"). It is
intended by the parties hereto that the Revolving Credit Facility, the L/C
Facility and the Acquisition Facility shall terminate on the same date.
SECTION 4.7 INTEREST.
(a) INTEREST RATE OPTIONS. Subject to the provisions of this SECTION
4.7, at the election of the Borrower, the aggregate unpaid principal balance of
(i) each Revolving Credit Loan and each Acquisition Loan shall bear interest at
the Base Rate or the LIBOR Rate PLUS the Applicable Margin as set forth below;
PROVIDED that the LIBOR Rate shall not be available until three (3) Business
Days after the Closing Date, and (ii) each Swingline Loan shall bear interest at
the Swingline Rate. The Borrower shall select the rate of interest and Interest
Period, if any, applicable to any LIBOR Rate Loan at the time a Notice of
Borrowing is given pursuant to SECTION 4.1(A) or at the time a Notice of
Conversion/Continuation is given pursuant to SECTION 4.8. Each Loan or portion
thereof bearing interest based on the Base Rate shall be a "BASE RATE LOAN",
each Loan or portion thereof bearing interest based on the LIBOR Rate shall be a
"LIBOR RATE LOAN." Any Loan or any portion thereof as to which the Borrower has
not duly specified an interest rate as provided herein shall be deemed a Base
Rate Loan.
(b) INTEREST PERIODS. In connection with each LIBOR Rate Loan, the
Borrower, by giving notice at the times described in SECTION 4.7(A), shall elect
an interest period (each, an "INTEREST PERIOD") to be applicable to such Loan,
which Interest Period shall be a period of one (1), two (2), three (3), or six
(6) months; PROVIDED that:
(i) the Interest Period shall commence on the date of
advance of or conversion to any LIBOR Rate Loan and, in the case of immediately
successive Interest Periods, each successive Interest Period shall commence on
the date on which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on a
day that is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; PROVIDED, that if any Interest Period with respect to a
LIBOR Rate Loan would otherwise expire on a day that is not a Business Day but
is a day of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(iii) any Interest Period with respect to a LIBOR Rate
Loan that begins on the last Business Day of a calendar month (or on a day for
<PAGE>
which there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of the relevant
calendar month at the end of such Interest Period;
(iv) no Interest Period shall extend beyond the
Termination Date and Interest Periods shall be selected by the Borrower so as to
permit the Borrower to make mandatory reductions of the Acquisition Commitment
pursuant to SECTION 4.4(C), without payment of any amounts pursuant to SECTION
4.15; and
(v) there shall be no more than ten (10) Interest
Periods outstanding at any time.
(c) APPLICABLE MARGIN. The Applicable Margin provided for in SECTION
4.7(A) with respect to the Loans (the "APPLICABLE MARGIN") shall (i) on the
Closing Date be at Level II and (ii) for each fiscal quarter thereafter be
determined by reference to the Leverage Ratio as of the end of the fiscal
quarter immediately preceding the delivery of the applicable Officer's
Compliance Certificate as follows:
- ------- --------------------------------------- -------------- --------------
LEVEL LEVERAGE RATIO LIBOR MARGIN FACILITY FEE
(%)
- ------- --------------------------------------- -------------- --------------
I Greater than or equal to 4.50 to 1.00 1.750 .500
- ------- --------------------------------------- -------------- --------------
II Greater than or equal to 3.75 to 1.00, 1.500 .500
but less than 4.50 to 1.00
- ------- --------------------------------------- -------------- --------------
III Greater than or equal to 3.00 to 1.00, 1.375 .375
but less than 3.75 to 1.00
- ------- --------------------------------------- -------------- --------------
IV Less than 3.00 to 1.00 1.250 .250
- ------- --------------------------------------- -------------- --------------
Adjustments, if any, in the Applicable Margin shall be made by the
Administrative Agent on the third (3rd) Business Day after receipt by the
Administrative Agent of quarterly financial statements for the Borrower and its
Subsidiaries and the accompanying Officer's Compliance Certificate setting forth
the Leverage Ratio of the Borrower and its Subsidiaries as of the most recent
fiscal quarter end. Subject to SECTION 4.7(D), in the event the Borrower fails
to deliver such financial statements and certificate within the time required by
SECTION 7.2, the Applicable Margin shall be the highest Applicable Margin set
forth above until the delivery of such financial statements and certificate.
(d) DEFAULT RATE. Subject to SECTION 12.3, upon the occurrence and
during the continuance of an Event of Default, (i) the Borrower shall no longer
have the option to request LIBOR Rate Loans or Swingline Loans, (ii) all
outstanding LIBOR Rate Loans shall bear interest at a rate per annum two percent
(2%) in excess of the rate then applicable to LIBOR Rate Loans until the end of
the applicable Interest Period and thereafter at a rate equal to two percent
(2%) in excess of the rate then applicable to Base Rate Loans, (iii) all
outstanding Swingline Loans shall bear interest at a rate per annum equal to two
percent (2%) in excess of the rate then applicable to Swingline Loans and (iv)
all outstanding Base Rate Loans shall bear interest at a rate per annum equal to
two percent (2%) in excess of the rate then applicable to Base Rate Loans.
<PAGE>
Interest shall continue to accrue on the Notes after the filing by or against
the Borrower of any petition seeking any relief in bankruptcy or under any act
or law pertaining to insolvency or debtor relief, whether state, federal or
foreign.
(e) INTEREST PAYMENT AND COMPUTATION. Interest on each Base Rate Loan
shall be payable in arrears on the last Business Day of each calendar quarter
commencing June 30, 1999; interest on each LIBOR Rate Loan shall be payable on
the last day of each Interest Period applicable thereto, and if such Interest
Period extends over three (3) months, at the end of each three (3) month
interval during such Interest Period. All interest rates, fees and commissions
provided hereunder shall be computed on the basis of a 360-day year and assessed
for the actual number of days elapsed.
(f) MAXIMUM RATE. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under any of the Notes
charged or collected pursuant to the terms of this Agreement or pursuant to any
of the Notes exceed the highest rate permissible under any Applicable Law which
a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lenders
have charged or received interest hereunder in excess of the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the maximum
rate permitted by Applicable Law and the Lenders shall at the Administrative
Agent's option promptly refund to the Borrower any interest received by Lenders
in excess of the maximum lawful rate or shall apply such excess to the principal
balance of the Obligations. It is the intent hereof that the Borrower not pay or
contract to pay, and that neither the Administrative Agent nor any Lender
receive or contract to receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may be paid by the Borrower under Applicable
Law.
SECTION 4.8 NOTICE AND MANNER OF CONVERSION OR CONTINUATION OF
LOANS. Provided that no Event of Default has occurred and is then continuing,
the Borrower shall have the option to (a) convert at any time all or any portion
of its outstanding Base Rate Loans in a principal amount equal to $3,000,000 or
any whole multiple of $500,000 in excess thereof into one or more LIBOR Rate
Loans or (b) upon the expiration of any Interest Period, (i) convert all or any
part of its outstanding LIBOR Rate Loans in a principal amount equal to
$3,000,000 or a whole multiple of $500,000 in excess thereof into Base Rate
Loans or (ii) continue such LIBOR Rate Loans as LIBOR Rate Loans. Whenever the
Borrower desires to convert or continue Loans as provided above, the Borrower
shall give the Administrative Agent irrevocable prior written notice in the form
attached as EXHIBIT E (a "NOTICE OF CONVERSION/ CONTINUATION") not later than
11:00 a.m. (Charlotte time) three (3) Business Days before the day on which a
proposed conversion or continuation of such Loan is to be effective specifying
(A) the Loans to be converted or continued, and, in the case of any LIBOR Rate
Loan to be converted or continued, the last day of the Interest Period therefor,
(B) the effective date of such conversion or continuation (which shall be a
Business Day), (C) the principal amount of such Loans to be converted or
continued, and (D) the Interest Period to be applicable to such converted or
continued LIBOR Rate Loan. The Administrative Agent shall promptly notify the
Lenders of such Notice of Conversion/Continuation.
<PAGE>
SECTION 4.9 FEES.
(a) FACILITY FEES. The Borrower shall pay to the Administrative Agent,
for the account of the Lenders, a non-refundable facility fee at a rate per
annum equal to the percentage set forth in SECTION 4.7(C) times the Aggregate
Commitment, regardless of usage. The facility fee shall be payable in arrears on
the last Business Day of each calendar quarter during the term of this Agreement
commencing June 30, 1999 and on the Termination Date. Such facility fee shall be
distributed by the Administrative Agent to the Lenders pro rata in accordance
with the Lenders' respective Commitment Percentages.
(b) ADMINISTRATIVE AGENT'S AND OTHER FEES. In order to compensate the
Administrative Agent for structuring and syndicating the Loans and for its
obligations hereunder, the Borrower agrees to pay to the Administrative Agent,
for its account, the fees set forth in the separate fee letter agreement
executed by the Borrower and the Administrative Agent dated April 5, 1999.
SECTION 4.10 MANNER OF PAYMENT. Each payment by the Borrower on
account of the principal of or interest on the Loans or of any fee, commission
or other amounts payable to the Lenders under this Agreement or any Note shall
be made not later than 1:00 p.m. (Charlotte time) on the date specified for
payment under this Agreement to the Administrative Agent at the Administrative
Agent's Office for the account of the Lenders (other than as set forth below)
PRO RATA in accordance with their respective applicable Commitment Percentages,
in Dollars, in immediately available funds and shall be made without any
set-off, counterclaim or deduction whatsoever. Any payment received after such
time but before 2:00 p.m. (Charlotte time) on such day shall be deemed a payment
on such date for the purposes of SECTION 12.1, but for all other purposes shall
be deemed to have been made on the next succeeding Business Day. Any payment
received after 2:00 p.m. (Charlotte time) shall be deemed to have been made on
the next succeeding Business Day for all purposes. Upon receipt by the
Administrative Agent of each such payment, the Administrative Agent shall
distribute to each Lender at its address for notices set forth herein its pro
rata share of such payment in accordance with such Lender's applicable
Commitment Percentage and shall wire advice of the amount of such credit to each
Lender. Each payment to the Administrative Agent of Administrative Agent's fees
or expenses shall be made for the account of the Administrative Agent and any
amount payable to any Lender under SECTIONS 4.14, 4.15, 4.16, 4.17 or 14.2 shall
be paid to the Administrative Agent for the account of the applicable Lender.
SECTION 4.11 CREDITING OF PAYMENTS AND PROCEEDS. In the event that
the Borrower shall fail to pay any of the Obligations when due and the
Obligations have been accelerated pursuant to SECTION 12.2, all payments
received by the Lenders upon the Notes and the other Obligations and all net
proceeds from the enforcement of the Obligations shall be applied first to all
expenses then due and payable by the Borrower hereunder, then to all indemnity
obligations then due and payable by the Borrower hereunder, then to all
Administrative Agent's fees then due and payable, then to all fees and
commissions then due and payable, then to accrued and unpaid interest on the
Swingline Note to the Swingline Lender, then to the unpaid principal amount
outstanding under the Swingline Note to the Swingline Lender, then to accrued
and unpaid interest on the Revolving Credit Notes (applied first to Liquidity
Loans and then to other Revolving Credit Loans), Acquisition Notes and the
<PAGE>
Reimbursement Obligation (pro rata in accordance with all such amounts due),
then to the principal amount of the Revolving Credit Notes, the Acquisition
Notes and Reimbursement Obligation (pro rata in accordance with all such amounts
due) and then to the cash collateral account described in SECTION 12.2(B) to the
extent of any L/C Obligations then outstanding, in that order.
SECTION 4.12 ADJUSTMENTS. If any Lender (a "BENEFITTED LENDER")
shall at any time receive any payment of all or part of the Obligations owing to
it, or interest thereon, or if any Lender shall at any time receive any
collateral in respect to the Obligations owing to it (whether voluntarily or
involuntarily, by set-off or otherwise) in a greater proportion than any such
payment to and collateral received by any other Lender, if any, in respect of
the Obligations owing to such other Lender, or interest thereon, such Benefitted
Lender shall purchase for cash from the other Lenders such portion of each such
other Lender's Extensions of Credit, or shall provide such other Lenders with
the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
PROVIDED, that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned to the extent of such
recovery, but without interest. The Borrower agrees that each Lender so
purchasing a portion of another Lender's Extensions of Credit may exercise all
rights of payment (including, without limitation, rights of set-off) with
respect to such portion as fully as if such Lender were the direct holder of
such portion.
SECTION 4.13 NATURE OF OBLIGATIONS OF LENDERS REGARDING EXTENSIONS
OF CREDIT; ASSUMPTION BY THE ADMINISTRATIVE AGENT. The obligations of the
Lenders under this Agreement to make the Loans and issue or participate in
Letters of Credit are several and are not joint or joint and several. Unless the
Administrative Agent shall have received notice from a Lender prior to a
proposed borrowing date that such Lender will not make available to the
Administrative Agent such Lender's ratable portion of the amount to be borrowed
on such date (which notice shall not release such Lender of its obligations
hereunder), the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the proposed borrowing date in
accordance with SECTION 4.1(B) and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If such amount is made available to the Administrative
Agent on a date after such borrowing date, such Lender shall pay to the
Administrative Agent on demand an amount, until paid, equal to the product of
(a) the amount not made available by such Lender in accordance with the terms
hereof, TIMES (b) the daily average Federal Funds Rate during such period as
determined by the Administrative Agent, TIMES (c) a fraction the numerator of
which is the number of days that elapse from and including such borrowing date
to the date on which such amount not made available by such Lender in accordance
with the terms hereof shall have become immediately available to the
Administrative Agent and the denominator of which is 360. A certificate of the
Administrative Agent with respect to any amounts owing under this SECTION 4.13
shall be conclusive, absent manifest error. If such Lender's Commitment
Percentage of such borrowing is not made available to the Administrative Agent
by such Lender within three (3) Business Days of such borrowing date, the
Administrative Agent shall be entitled to recover such amount made available by
the Administrative Agent with interest thereon at the rate per annum applicable
<PAGE>
to Base Rate Loans hereunder, on demand, from the Borrower. The failure of any
Lender to make available its Commitment Percentage of any Loan requested by the
Borrower shall not relieve it or any other Lender of its obligation, if any,
hereunder to make its Commitment Percentage of such Loan available on such
borrowing date, but no Lender shall be responsible for the failure of any other
Lender to make its Commitment Percentage of such Loan available on the borrowing
date.
SECTION 4.14 CHANGED CIRCUMSTANCES.
(a) CIRCUMSTANCES AFFECTING LIBOR RATE AVAILABILITY. If with respect
to any Interest Period the Administrative Agent or any Lender (after
consultation with Administrative Agent) shall determine that, by reason of
circumstances affecting the foreign exchange and interbank markets generally,
deposits in eurodollars, in the applicable amounts are not being quoted via
Telerate Page 3750 or offered to the Administrative Agent or such Lender for
such Interest Period, then the Administrative Agent shall forthwith give notice
thereof to the Borrower. Thereafter, until the Administrative Agent notifies the
Borrower that such circumstances no longer exist, the obligation of the
Lenders to make LIBOR Rate Loans and the right of the Borrower to convert any
Loan to or continue any Loan as a LIBOR Rate Loan shall be suspended, and the
Borrower shall repay in full (or cause to be repaid in full) the then
outstanding principal amount of each such LIBOR Rate Loans together with accrued
interest thereon, on the last day of the then current Interest Period
applicable to such LIBOR Rate Loan or convert the then outstanding principal
amount of each such LIBOR Rate Loan to a Base Rate Loan as of the last day of
such Interest Period.
(b) LAWS AFFECTING LIBOR RATE AVAILABILITY. If, after the date hereof,
the introduction of, or any change in, any Applicable Law or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any of their respective Lending
Offices) with any request or directive (whether or not having the force of law)
of any such Authority, central bank or comparable agency, shall make it unlawful
or impossible for any of the Lenders (or any of their respective Lending
Offices) to honor its obligations hereunder to make or maintain any LIBOR Rate
Loan, such Lender shall promptly give notice thereof to the Administrative Agent
and the Administrative Agent shall promptly give notice to the Borrower and the
other Lenders. Thereafter, until the Administrative Agent notifies the Borrower
that such circumstances no longer exist, (i) the obligations of the Lenders to
make LIBOR Rate Loans and the right of the Borrower to convert any Loan or
continue any Loan as a LIBOR Rate Loan shall be suspended and thereafter the
Borrower may select only Base Rate Loans hereunder, and (ii) if any of the
Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the end of
the then current Interest Period applicable thereto as a LIBOR Rate Loan, the
applicable LIBOR Rate Loan shall immediately be converted to a Base Rate Loan
for the remainder of such Interest Period.
(c) INCREASED COSTS. If, after the date hereof, the introduction of,
or any change in, any Applicable Law, or in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any of the
Lenders (or any of their respective Lending Offices) with any request or
<PAGE>
directive (whether or not having the force of law) of such Authority, central
bank or comparable agency;
(i) shall subject any of the Lenders (or any of their
respective Lending Offices) to any tax, duty or other charge with respect to any
Note, Letter of Credit or Application or shall change the basis of taxation of
payments to any of the Lenders (or any of their respective Lending Offices) of
the principal of or interest on any Note, Letter of Credit or Application or any
other amounts due under this Agreement in respect thereof (except for changes in
the rate of tax on the overall net income of any of the Lenders or any of their
respective Lending Offices imposed by the jurisdiction in which such Lender is
organized or is or should be qualified to do business or such Lending Office is
located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit, insurance or capital or similar
requirement against assets of, deposits with or for the account of, or credit
extended by any of the Lenders (or any of their respective Lending Offices) or
shall impose on any of the Lenders (or any of their respective Lending Offices)
or the foreign exchange and interbank markets any other condition affecting any
Note;
and the result of any of the foregoing is to increase the costs to any of the
Lenders of maintaining any LIBOR Rate Loan or issuing or participating in
Letters of Credit or to reduce the yield or amount of any sum received or
receivable by any of the Lenders under this Agreement or under the Notes in
respect of a LIBOR Rate Loan or Letter of Credit or Application, then such
Lender shall promptly notify the Administrative Agent, and the Administrative
Agent shall promptly notify the Borrower of such fact and demand compensation
therefor and, within ten (10) Business Days after such notice by the
Administrative Agent, the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender or Lenders for such increased
cost or reduction. The Administrative Agent will promptly notify the Borrower of
any event of which it has knowledge which will entitle such Lender to
compensation pursuant to this SECTION 4.14(C); PROVIDED, that the Administrative
Agent shall incur no liability whatsoever to the Lenders or the Borrower in the
event it fails to do so. The amount of such compensation shall be determined, in
the applicable Lender's sole discretion, based upon the assumption that such
Lender funded its Commitment Percentage of the LIBOR Rate Loans in the London
interbank market and using any reasonable attribution or averaging methods which
such Lender deems appropriate and practical. A certificate of such Lender
setting forth the basis for determining such amount or amounts necessary to
compensate such Lender shall be forwarded to the Borrower through the
Administrative Agent and shall be conclusively presumed to be correct save for
manifest error.
SECTION 4.15 INDEMNITY. The Borrower hereby indemnifies each of the
Lenders against any loss or expense which may arise or be attributable to each
Lender's obtaining, liquidating or employing deposits or other funds acquired to
effect, fund or maintain any Loan (a) as a consequence of any failure by the
Borrower to make any payment when due of any amount due hereunder in connection
with a LIBOR Rate Loan, (b) due to any failure of the Borrower to borrow on a
date specified therefor in a Notice of Borrowing or Notice of
Continuation/Conversion or (c) due to any payment, prepayment or conversion of
any LIBOR Rate Loan on a date other than the last day of the Interest Period
<PAGE>
therefor. The amount of such loss or expense shall be determined, in the
applicable Lender's sole discretion, based upon the assumption that such Lender
funded its Commitment Percentage of the LIBOR Rate Loans in the London interbank
market and using any reasonable attribution or averaging methods which such
Lender deems appropriate and practical. A certificate of such Lender setting
forth the basis for determining such amount or amounts necessary to compensate
such Lender shall be forwarded to the Borrower through the Administrative Agent
and shall be conclusively presumed to be correct save for manifest error.
SECTION 4.16 CAPITAL REQUIREMENTS. If either (a) the introduction
of, or any change in, or in the interpretation of, any Applicable Law or (b)
compliance with any guideline or request from any central bank or comparable
agency or other Governmental Authority (whether or not having the force of law),
has or would have the effect of reducing the rate of return on the capital of,
or has affected or would affect the amount of capital required to be maintained
by, any Lender or any corporation controlling such Lender as a consequence of,
or with reference to the Commitments and other commitments of this type, below
the rate which the Lender or such other corporation could have achieved but for
such introduction, change or compliance, then within five (5) Business Days
after written demand by any such Lender, the Borrower shall pay to such Lender
from time to time as specified by such Lender additional amounts sufficient to
compensate such Lender or other corporation for such reduction. A certificate as
to such amounts submitted to the Borrower and the Administrative Agent by such
Lender, shall, in the absence of manifest error, be presumed to be correct and
binding for all purposes.
SECTION 4.17 TAXES.
(a) PAYMENTS FREE AND CLEAR. Any and all payments by the Borrower
hereunder or under the Notes or the Letters of Credit shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholding, and all liabilities with respect
thereto excluding, (i) in the case of each Lender and the Administrative Agent,
income and franchise taxes imposed by the jurisdiction under the laws of which
such Lender or the Administrative Agent (as the case may be) is organized or is
or should be qualified to do business or any political subdivision thereof and
(ii) in the case of each Lender, income and franchise taxes imposed by the
jurisdiction of such Lender's Lending Office or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "TAXES"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note or Letter of Credit to any Lender or the
Administrative Agent, (A) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this SECTION 4.17) such Lender or the
Administrative Agent (as the case may be) receives an amount equal to the amount
such party would have received had no such deductions been made, (B) the
Borrower shall make such deductions, (C) the Borrower shall pay the full amount
deducted to the relevant taxing authority or other authority in accordance with
applicable law, and (D) the Borrower shall deliver to the Administrative Agent
evidence of such payment to the relevant taxing authority or other authority in
the manner provided in SECTION 4.17(D).
<PAGE>
(b) STAMP AND OTHER TAXES. In addition, the Borrower shall pay any
present or future stamp, registration, recordation or documentary taxes or any
other similar fees or charges or excise or property taxes, levies of the United
States or any state or political subdivision thereof or any applicable foreign
jurisdiction which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Loans, the Letters of Credit, the other Loan Documents, or the perfection of any
rights or security interest in respect thereto (hereinafter referred to as
"OTHER TAXES").
(c) INDEMNITY. The Borrower shall indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this SECTION 4.17) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Such indemnification shall be made within thirty (30) days from the date such
Lender or the Administrative Agent (as the case may be) makes written demand
therefor.
(d) EVIDENCE OF PAYMENT. Within thirty(30) days after the date of any
payment of Taxes or Other Taxes, the Borrower shall furnish to the
Administrative Agent, at its address referred to in SECTION 14.1, the original
or a certified copy of a receipt evidencing payment thereof or other evidence of
payment satisfactory to the Administrative Agent.
(e) DELIVERY OF TAX FORMS. Each Lender organized under the laws of a
jurisdiction other than the United States or any state thereof shall deliver to
the Borrower, with a copy to the Administrative Agent, on the Closing Date or
concurrently with the delivery of the relevant Assignment and Acceptance, as
applicable, (i) two United States Internal Revenue Service Forms 4224 or Forms
1001, as applicable (or successor forms) properly completed and certifying in
each case that such Lender is entitled to a complete exemption from withholding
or deduction for or on account of any United States federal income taxes, and
(ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable form,
as the case may be, to establish an exemption from United States backup
withholding taxes. Each such Lender further agrees to deliver to the Borrower,
with a copy to the Administrative Agent, a Form 1001 or 4224 and Form W-8 or
W-9, or successor applicable forms or manner of certification, as the case may
be, on or before the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower, certifying in the case of a Form
1001 or 4224 that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes (unless in any such case an event (including without limitation any change
in treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders such forms inapplicable or
the exemption to which such forms relate unavailable and such Lender notifies
the Borrower and the Administrative Agent that it is not entitled to receive
payments without deduction or withholding of United States federal income taxes)
and, in the case of a Form W-8 or W-9, establishing an exemption from United
States backup withholding tax. The Borrower shall not be required to pay any
additional amount to any non-U.S. Lender in respect of United States withholding
tax pursuant to SECTION 4.17(A) to the extent that the obligation to withhold
<PAGE>
such tax existed at the time such non-U.S. Lender became a Lender hereunder,
unless such obligation would not have arisen but for a failure by such non-U.S.
Lender to deliver the documents referred to in this SECTION 4.17(E).
(f) Survival. Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 4.17 shall survive the payment in full of the
Obligations and the termination of the Commitments.
SECTION 4.18 DUTY TO MITIGATE; ASSIGNMENT OF COMMITMENTS UNDER
CERTAIN CIRCUMSTANCES.
(a) Any Lender (or Eligible Assignee) claiming any additional amounts
payable pursuant to SECTION 4.14, 4.15 or 4.17 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any certificate or
document requested by the Borrower or to change the jurisdiction of its
applicable lending office if the making of such a filing or change would avoid
the need for or reduce the amount of any such additional amounts which may
thereafter accrue or avoid the circumstances giving rise to such exercise and
would not, in the sole determination of such Lender (or Eligible Assignee), be
otherwise disadvantageous to such Lender (or Eligible Assignee).
(b) In the event that any Lender shall have delivered a notice pursuant
to SECTION 4.14 or 4.16 or the Borrower shall be required to make additional
payments to any Lender under SECTION 4.17, the Borrower shall have the right, at
its own expense (which shall include the assignment fee referred to in SECTION
14.9), upon notice to such Lender and the Administrative Agent, to require such
Lender to transfer and assign without recourse (in accordance with and subject
to the restrictions contained in SECTION 14.9) all interests, rights and
obligations contained hereunder to another financial institution (including any
other Lender) approved by the Administrative Agent (which approval shall not be
unreasonably withheld) which shall assume such obligations; PROVIDED that (i) no
such assignment shall conflict with any law, rule or regulation or order of any
Governmental Authority and (ii) the assignee or the Borrower, as the case may
be, shall pay to the affected Lender in immediately available funds on the date
of such assignment the principal of and interest accrued to the date of payment
on, or transfer of, the Loans made by it hereunder and all other amounts accrued
for its account or owed to it hereunder (including the additional amounts
asserted and payable pursuant to SECTION 4.14, 4.16 or 4.17, if any).
ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 5.1 CLOSING. The closing shall take place at the offices of
Weil, Gotshal & Manges LLP, New York, New York at 9:00 a.m. on May 26, 1999 or
on such other date and at such other place as the parties hereto shall mutually
agree.
<PAGE>
SECTION 5.2 CONDITIONS TO CLOSING AND INITIAL EXTENSIONS OF CREDIT.
The obligations of the Lenders to close this Agreement and to make the initial
Loan and issue the initial Letters of Credit are subject to the satisfaction of
each of the following conditions:
(a) EXECUTED LOAN DOCUMENTS. This Agreement, the Notes, the Guarantee
Agreement and any other Loan Documents shall have been duly authorized, executed
and delivered to the Administrative Agent by the parties thereto, shall be in
full force and effect and no default shall exist thereunder, and the Borrower
shall have delivered original counterparts thereof to the Administrative Agent.
(b) CLOSING CERTIFICATES; ETC.
(i) OFFICER'S CERTIFICATE OF THE BORROWER. The Administrative
Agent shall have received a certificate from the chief executive officer or
chief financial officer of the Borrower, in form and substance satisfactory to
the Administrative Agent, to the effect that all representations and warranties
of the Borrower contained in this Agreement and the other Loan Documents are
true, correct and complete; that the Borrower is not in violation of any of the
covenants contained in this Agreement and the other Loan Documents; that, after
giving effect to the transactions contemplated by this Agreement, no Default or
Event of Default has occurred and is continuing; and that the Borrower has
satisfied each of the closing conditions.
(ii) PARTNERSHIP DOCUMENTS; SECRETARY'S CERTIFICATES. The
Administrative Agent shall have received (A) a copy of each of the Partnership
Documents and the organizational documents of the General Partner and each
Subsidiary, certified by the Secretary or Assistant Secretary of the Borrower,
and such other documents as may be reasonably required to evidence the authority
of each of the General Partner, the Borrower and each Subsidiary to enter into
each Loan Document and Partnership Document to which it is party and to complete
the transactions to which it is a party; (B) a certificate of the Secretary or
Assistant Secretary of the Borrower dated the Closing Date and certifying with
respect to each of the General Partner, the Borrower and each Subsidiary (1)
that attached thereto is a true and complete copy of the by-laws or equivalent
document of each of them in effect on the Closing Date and at all times since a
date prior to the date of the resolutions described in clause (2) below, (2)
that attached thereto is a true and complete copy of resolutions duly adopted by
the respective governing boards of each of them authorizing, as applicable, the
execution, delivery and performance of the Loan Documents to which it is party
and, in the case of the Borrower, the borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full force
and effect, (3) that the organizational documents of each of them have not been
amended since the date of the last amendment thereto shown on the certificate of
good standing attached thereto and (4) as to the incumbency and specimen
signature of each officer executing any Loan Document, Partnership Document or
any other document delivered in connection herewith on its behalf; and (C) a
certificate of another officer as to the incumbency and specimen signature of
such Secretary or Assistant Secretary executing the certificate pursuant to (2)
above.
(iii) CERTIFICATES OF GOOD STANDING. The Administrative Agent
shall have received long-form certificates as of a recent date of the good
standing of the Borrower, the General Partner and each Subsidiary under the laws
<PAGE>
of their respective jurisdictions of organization and each other jurisdiction
where any such Person is qualified to do business and a certificate of the
relevant taxing authorities of such jurisdictions certifying that such Person
has filed required tax returns and owes no delinquent taxes.
(iv) OPINIONS OF COUNSEL. The Administrative Agent shall have
received favorable opinions of counsel to the Borrower addressed to the
Administrative Agent and the Lenders with respect to the Borrower, the
Guarantors, the Loan Documents and such other matters as the Lenders shall
request.
(v) TAX FORMS. The Administrative Agent shall have received
copies of the United States Internal Revenue Service forms required by SECTION
4.17(E).
(vi) INSURANCE CERTIFICATE. The Administrative Agent shall
have received a detailed schedule of the Borrower's insurance then in effect,
stating the names of the insurance companies, the amounts and rates of the
insurance, the dates of the expiration thereof and the properties and risks
covered thereby.
(c) CONSENTS; DEFAULTS.
(i) GOVERNMENTAL AND THIRD PARTY APPROVALS. All necessary
approvals, authorizations and consents, if any be required, of any Person,
including without limitation the holders of the Senior Notes, the unit holders
and board approvals of the Parent and the General Partner, as applicable, and of
all Governmental Authorities and courts having jurisdiction with respect to the
transactions contemplated by this Agreement, the Recapitalization Documents and
the other Loan Documents shall have been obtained.
(ii) NO INJUNCTION,ETC. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain
substantial damages in respect of, or which is related to or arises out of this
Agreement or the other Loan Documents or the consummation of the transactions
contemplated hereby or thereby, or which, in the Administrative Agent's
discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement and such other Loan Documents.
(iii) NO EVENT OF DEFAULT. No Default or Event of Default
shall have occurred and be continuing.
(d) FINANCIAL MATTERS.
(i) FINANCIAL STATEMENTS. The Administrative Agent shall
have received the most recent audited Consolidated financial statements of the
Borrower and its Subsidiaries, all in form and substance satisfactory to the
Administrative Agent.
(ii) FINANCIAL CONDITION CERTIFICATE. The Borrower shall have
delivered to the Administrative Agent a certificate, in form and substance
<PAGE>
satisfactory to the Administrative Agent, and certified as accurate by the chief
executive officer or chief financial officer of the Borrower, that the Borrower
and each of its Subsidiaries are each Solvent.
(iii) PAYMENT AT CLOSING; FEE LETTERS. There shall have been
paid by the Borrower to the Administrative Agent and the Lenders the fees set
forth or referenced in SECTION 4.9 and any other accrued and unpaid fees or
commissions due hereunder (including, without limitation, legal fees and
expenses), and to any other Person such amount as may be due thereto in
connection with the transactions contemplated hereby, including all taxes, fees
and other charges in connection with the execution, delivery, recording, filing
and registration of any of the Loan Documents.
(e) MISCELLANEOUS.
(i) NOTICE OF BORROWING; NOTICE OF ACCOUNT DESIGNATION.
The Administrative Agent shall have received a Notice of Borrowing from the
Borrower in accordance with SECTION 4.1(A), and a Notice of Account Designation
specifying the account or accounts to which the proceeds of any loans made after
the Closing Date are to be disbursed.
(ii) PROCEEDINGS AND DOCUMENTS. All opinions, certificates
and other instruments and all proceedings in connection with the transactions
contemplated by this Agreement shall be satisfactory in form and substance to
the Lenders. The Lenders shall have received copies of all other instruments and
other evidence as the Lender may reasonably request, in form and substance
satisfactory to the Lenders, with respect to the transactions contemplated by
this Agreement and the taking of all actions in connection therewith.
(iii) RECAPITALIZATION DOCUMENTS. The Borrower shall have
entered into each of the Recapitalization Documents to which it is a party on
terms and conditions satisfactory to the Administrative Agent; there shall not
have been any material modification, amendment, supplement or waiver to any
Recapitalization Document without the prior written consent of the
Administrative Agent, including any modification, amendment, supplement or
waiver relating to the amount or type of consideration to be paid in connection
with the transactions contemplated by any Recapitalization Document or the
contents of any disclosure schedules and exhibits; and the Administrative Agent
shall have received a final executed copy of each Recapitalization Document,
together with all exhibits and schedules thereto, certified as such by an
officer of the Borrower.
(iv) POWER OF ATTORNEY; PARENT SIDE LETTER. The Borrower
shall have received a power of attorney from the Parent, in form and substance
acceptable to the Administrative Agent, a copy of which shall have been
delivered to the Administrative Agent, and the Parent shall have executed and
delivered to the Administrative Agent the Parent Side Letter, which such side
letter shall be on terms and conditions satisfactory to the Administrative
Agent.
(v) DUE DILIGENCE AND OTHER DOCUMENTS. The Administrative
Agent shall have completed, to its satisfaction, all legal and business due
diligence with respect to any aspect to the transactions relating to (i) the
Borrower, Parent and the General Partner, (ii) the Recapitalization and (iii)
the ownership, capitalization and structure of any or all of the Borrower,
<PAGE>
Parent and the General Partner, and the Borrower shall have delivered to the
Administrative Agent such other documents, certificates and opinions as the
Administrative Agent reasonably requests, certified by a secretary or assistant
secretary of the Borrower as a true and correct copy thereof. To the extent
requested, the Administrative Agent shall have received, reviewed, and approved
in its reasonable satisfaction any other agreement not specifically referenced
herein, the terms of which such agreements govern the future management and
operations of the Borrower.
(vi) CONSUMMATION OF RECAPITALIZATION DOCUMENTS. The
transactions contemplated by the Recapitalization Documents shall be consummated
prior to or simultaneously with the initial borrowing under this Agreement and
each of the conditions set forth therein shall have been satisfied, without any
waiver or amendment thereof.
SECTION 5.3 CONDITIONS TO ALL EXTENSIONS OF CREDIT. The obligations
of the Lenders to make any Extension of Credit is subject to the satisfaction of
the following conditions precedent on the relevant borrowing or issue date, as
applicable:
(a) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in Article VI or otherwise made by the
Borrower or any Subsidiary in any Loan Document shall be true and correct, in
all material respects, on and as of such borrowing or issuance date with the
same effect as if made on and as of such date.
(b) NO EXISTING DEFAULT. No Default or Event of Default shall have
occurred and be continuing hereunder (i) on the borrowing date with respect to
such Loan or after giving effect to the Loans to be made on such date or (ii) or
the issue date with respect to such Letter of Credit or after giving affect to
such Letters of Credit on such date.
(c) OFFICER'S COMPLIANCE CERTIFICATE; ADDITIONAL DOCUMENTS. The
Administrative Agent shall have received the current Officer's Compliance
Certificate and each additional document, instrument, legal opinion or other
item of information reasonably requested by it.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
SECTION 6.1 REPRESENTATIONS AND WARRANTIES. To induce the
Administrative Agent and Lenders to enter into this Agreement and to induce the
Lenders to make the Extensions of Credit, the Borrower hereby represents and
warrants to the Administrative Agent and Lenders both before and after giving
effect to the transactions contemplated hereunder that:
(a) ORGANIZATION; POWER; QUALIFICATION. Each of the Borrower, its
Subsidiaries, the Parent and the General Partner is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation, has the power and authority to own its properties
and to carry on its business as now being and hereafter proposed to be conducted
and is duly qualified and authorized to do business in each jurisdiction in
<PAGE>
which the character of its properties or the nature of its business requires
such qualification and authorization, except where the failure to so qualify
would not have a Material Adverse Effect. The jurisdictions in which the
Borrower and its Subsidiaries are organized and qualified to do business are
described on SCHEDULE 6.1(A).
(b) OWNERSHIP.
(i) Each Subsidiary of the Borrower is listed on Part I of
SCHEDULE 6.1(B). The capitalization of the Borrower and its Subsidiaries
consists of the number of shares of stock or other ownership interests,
authorized, issued and outstanding, of such classes and series, with or without
par value, described on Part I of SCHEDULE 6.1(B). All outstanding shares or
other ownership interests have been duly authorized and validly issued and are
fully paid and nonassessable. The shareholders or other equity owners of its
Subsidiaries of the Borrower and the number of shares or other ownership
interests owned by each are described on Part I of SCHEDULE 6.1(B). There are no
outstanding warrants, subscriptions, options, securities, instruments or other
rights of any type or nature whatsoever, which are convertible into,
exchangeable for or otherwise provide for or permit the issuance of capital
stock or other ownership interests of the Borrower or its Subsidiaries, except
as described on Part I of SCHEDULE 6.1(B).
(ii) The sole general partner of the Parent is the General
Partner, which owns 224,625 General Partner Units, representing in the aggregate
a 1.0% general partner interest in the Parent. The sole general partner of the
Borrower is the General Partner, which owns a 1.0101% general partner interest
in the Borrower. The only limited partner of the Borrower is the Parent, which
owns a 98.9899% limited partner interest in the Borrower and the Borrower does
not have any partners other than the General Partner and the Parent. Each
General Partner Unit is entitled to share pro rata with the Common Units in all
distributions by the Parent.
(iii) As of the Closing Date, the Capital Stock of the General
Partner is owned by such Persons and in such amounts as listed on Part II of
SCHEDULE 6.1(B).
(iv) The Rabbi Trust owns of record 553,896 Common Units,
free and clear of any Liens.
(c) AUTHORIZATION OF AGREEMENT, LOAN DOCUMENTS AND BORROWING. Each of
the Borrower and its Subsidiaries has the right, power and authority and has
taken all necessary corporate and other action to authorize the execution,
delivery and performance of this Agreement and each of the other Loan Documents
to which it is a party in accordance with their respective terms. This Agreement
and each of the other Loan Documents have been duly executed and delivered by
the duly authorized officers of the Borrower and each of its Subsidiaries party
thereto, and each such document constitutes the legal, valid and binding
obligation of the Borrower or its Subsidiary party thereto, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar state or federal
debtor relief laws from time to time in effect which affect the enforcement of
creditors' rights in general and the availability of equitable remedies.
<PAGE>
(d) COMPLIANCE OF AGREEMENT, LOAN DOCUMENTS AND BORROWING WITH LAWS,
ETC. The execution, delivery and performance by the Borrower and its
Subsidiaries of the Loan Documents to which each such Person is a party, in
accordance with their respective terms, the borrowings hereunder and the
transactions contemplated hereby do not and will not, by the passage of time,
the giving of notice or otherwise, (i) require any Governmental Approval or
violate any Applicable Law relating to the Borrower or any of its Subsidiaries,
(ii) conflict with, result in a breach of or constitute a default under the
articles of incorporation, bylaws or other organizational documents of the
Borrower or any of its Subsidiaries or any indenture, agreement or other
instrument to which such Person is a party or by which any of its properties may
be bound or any Governmental Approval relating to such Person, or (iii) result
in or require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by such Person other than Liens arising
under the Loan Documents.
(e) COMPLIANCE WITH LAW; GOVERNMENTAL APPROVALS. Each of the Borrower
and its Subsidiaries (i) has all Governmental Approvals required by any
Applicable Law for it to conduct its business, each of which is in full force
and effect, is final and not subject to review on appeal and is not the subject
of any pending or, to the best of its knowledge, threatened attack by direct or
collateral proceeding, and (ii) is in compliance with each Governmental Approval
applicable to it and in compliance with all other Applicable Laws relating to it
or any of its respective properties, except, in each case, to the extent such
non-compliance would not have a Material Adverse Effect.
(f) TAX RETURNS AND PAYMENTS. Each of the Borrower, its Subsidiaries,
the General Partner and the Parent has duly filed or caused to be filed all
material federal, state and local tax returns required by Applicable Law to be
filed, and has paid, or made adequate provision for the payment of, all federal,
state, local and other taxes, assessments and governmental charges or levies
upon it and its property, income, profits and assets which are due and payable,
other than those the validity of which the Borrower, any Subsidiary, the General
Partner or the Parent is contesting in good faith by appropriate proceedings and
with respect to which the Borrower, such Subsidiary, the General Partner or the
Parent shall, to the extent required by GAAP, have set aside on its books
adequate reserves. No Governmental Authority has asserted any Lien or other
claim against the Borrower or Subsidiary thereof with respect to unpaid taxes
which has not been discharged or resolved. The charges, accruals and reserves on
the books of the Borrower and any of its Subsidiaries in respect of federal,
state, local and other taxes for all Fiscal Years and portions thereof since the
organization of the Borrower and any of its Subsidiaries are in the judgment of
the Borrower adequate, and the Borrower does not anticipate any additional taxes
or assessments for any of such years.
(g) INTELLECTUAL PROPERTY MATTERS. Each of the Borrower and its
Subsidiaries owns or possesses rights to use all franchises, licenses,
copyrights, copyright applications, patents, patent rights or licenses, patent
applications, trademarks, trademark rights, trade names, trade name rights,
copyrights and rights with respect to the foregoing which are required to
conduct its business. No event has occurred which permits, or after notice or
lapse of time or both would permit, the revocation or termination of any such
rights, and neither the Borrower nor any Subsidiary thereof is liable to any
Person for infringement under Applicable Law with respect to any such rights as
a result of its business operations.
<PAGE>
(h) ENVIRONMENTAL AND SAFETY MATTERS. Each of the Business, the
Borrower, each Subsidiary, the General Partner and the Parent has complied in
all respects with all Environmental and Safety Laws except for violations that
either alone or in the aggregate could not reasonably be expected to result in a
Material Adverse Effect. None of the Business, the Borrower, any Subsidiary, the
General Partner or the Parent has received notice of any failure so to comply
which alone or together with any other such failure could reasonably be expected
to result in a Material Adverse Effect. None of the Business, the Borrower, any
Subsidiary, the General Partner or the Parent manages or handles any hazardous
wastes, hazardous substances, hazardous materials, toxic substances or toxic
pollutants referred to in or regulated by Environmental and Safety Laws in
violation of such laws or of any other applicable law where such violation could
reasonably be expected to result, individually or together with other
violations, in a Material Adverse Effect. To the best knowledge of the Borrower,
none of the Business, the Borrower, any Subsidiary, the General Partner or the
Parent has any liabilities or contingent liabilities relating to environmental
or employee health and safety matters (including on-site or off-site
contamination) which, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.
(i) ERISA.
(i) The Borrower and each ERISA Affiliate is in material
compliance with all applicable provisions of ERISA and the regulations and
published interpretations thereunder and no ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other ERISA
Events could reasonably be expected to result in a Material Adverse Effect.
(ii) Each Employee Benefit Plan that is intended to be
qualified under Section 401(a) of the Code has been determined by the Internal
Revenue Service to be so qualified, and each trust related to such plan has been
determined to be exempt under Section 501(a) of the Code.
(iii) The present value of all benefit liabilities under each
Employee Benefit Plan (based on those assumptions used for purposes of Statement
of Financial Accounting Standards No. 87) did not, as of the last annual
valuation date applicable thereto, exceed by more than $5,000,000 the fair
market value of the assets of such Employee Benefit Plan and the present value
of all underfunded plans (based on those assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the last
annual valuation dates applicable thereto, exceed by more than $5,000,000 the
fair market value of the assets of all such underfunded Employee Benefit Plans.
(j) MARGIN STOCK. Neither the Borrower nor any Subsidiary thereof is
engaged principally or as one of its activities in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" (as each
such term is defined or used in the regulations of the Board of Governors of the
Federal Reserve System). No part of the proceeds of any of the Loans will be
used for purchasing or carrying margin stock in violation of, or for any purpose
which violates, the provisions of Regulation T, U or X of such Board of
Governors.
<PAGE>
(k) GOVERNMENT REGULATION. Neither the Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an "investment
company" (as each such term is defined or used in the Investment Company Act of
1940, as amended) and neither the Borrower nor any Subsidiary thereof is, or
after giving effect to any Extension of Credit will be, subject to regulation
under the Public Utility Holding Company Act of 1935 or the Interstate Commerce
Act, each as amended, or any other Applicable Law which limits its ability to
incur or consummate the transactions contemplated hereby.
(l) AGREEMENTS. (i) None of the Business, the Borrower, any of its
Subsidiaries, the General Partner nor the Parent is a party to any agreement or
instrument or subject to any restriction in its partnership or corporate
organizational documents that (i) will have the effect of prohibiting or
restraining, or will impose adverse conditions upon, any of the transactions
contemplated hereby or the payment of dividends or the making of any loans,
investments or transfers by any Subsidiary to or in the Borrower or (ii) has
resulted or could reasonably be expected to result in a Material Adverse Effect.
(m) NO DEFAULTS. None of the Business, the Borrower, any of its
Subsidiaries, the General Partner or the Parent is in default in any manner, and
there is no event or condition which with notice or lapse of time or both would
constitute such a default or event of default, under any provision of any Senior
Note, any Refinancing Note, the Senior Note Agreement, any Refinancing Note
Agreement, or any indenture or other agreement or instrument evidencing
Indebtedness, any Contingent Obligation set forth on SCHEDULE 6.1(M) or any
other material agreement or instrument to which it is a party or by which it or
any of its properties or assets are or may be bound, where such default could
reasonably be expected to result in a Material Adverse Effect.
(n) EMPLOYEE RELATIONS. None of the Borrower and its Subsidiaries is,
except as set forth on SCHEDULE 6.1(N) party to any collective bargaining
agreement nor has any labor union been recognized as the representative of its
employees. There are no strikes against the Business, the Borrower or any
Subsidiary pending or, to the best knowledge of the Borrower, threatened, other
than strikes which, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. The hours worked and payments
made to employees of the Business, the Borrower, each Subsidiary, the General
Partner and the Parent have not been in violation of the Fair Labor Standards
Act or any other applicable law dealing with such matters except for violations
that either alone or in the aggregate could not reasonably be expected to result
in a Material Adverse Effect. All material payments due from the Business, the
Borrower, any Subsidiary, the General Partner and the Parent, or for which any
claim may be made against the Business, the Borrower, any Subsidiary, the
General Partner or the Parent, on account of wages and employee health and
welfare insurance and other benefits have been paid or accrued as a liability on
the books of the Business, the Borrower, such Subsidiary, the General Partner or
the Parent, as applicable, in compliance with GAAP.
(o) BURDENSOME PROVISIONS. Neither the Borrower nor any Subsidiary
thereof is subject to any Governmental Approval or Applicable Law which is so
unusual or burdensome as in the foreseeable future could be reasonably expected
to have a Material Adverse Effect. The Borrower and its Subsidiaries do not
<PAGE>
presently anticipate that future expenditures needed to meet the provisions of
any statutes, orders, rules or regulations of a Governmental Authority will be
so burdensome as to have a Material Adverse Effect.
(p) FINANCIAL STATEMENTS. The (i) audited Consolidated balance sheets
of the Borrower and its Subsidiaries as of September 26, 1998 and the related
statements of income and retained earnings and cash flows for the Fiscal Years
then ended and (ii) unaudited Consolidated balance sheet of the Borrower and its
Subsidiaries as of March 27, 1999 and related unaudited interim statements of
revenue and retained earnings, copies of which have been furnished to the
Administrative Agent and each Lender, are complete and correct and fairly
present the assets, liabilities and financial position of the Borrower and its
Subsidiaries as at such dates, and the results of the operations and changes of
financial position for the periods then ended. All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP. The Borrower and its Subsidiaries have no Indebtedness,
obligation or other unusual forward or long-term commitment which is not fairly
reflected in the foregoing financial statements or in the notes thereto.
(q) NO MATERIAL ADVERSE CHANGE. Since September 26, 1998, there has
been no material adverse change in the properties, business, operations,
prospects, or condition (financial or otherwise) of the Borrower and its
Subsidiaries, taken as a whole, and no event has occurred or condition arisen
that could reasonably be expected to have a Material Adverse Effect.
(r) SOLVENCY. As of the Closing Date and after giving effect to each
Extension of Credit made hereunder, the Borrower and each of its Subsidiaries
will be Solvent.
(s) TITLES TO PROPERTIES. Each of the Borrower and its Subsidiaries
has such title to the real property owned by it as is necessary or desirable to
the conduct of its business and valid and legal title to all of its material
personal property and assets, including, but not limited to, those reflected on
the balance sheets of the Borrower and its Subsidiaries delivered pursuant to
SECTION 6.1(P), except those which have been disposed of by the Borrower or its
Subsidiaries subsequent to such date which dispositions have been in the
ordinary course of business, of assets or properties no longer used or usable in
the conduct of its business or as otherwise expressly permitted hereunder.
(t) LIENS. None of the properties and assets of the Borrower or any
Subsidiary thereof is subject to any Lien, except Liens permitted pursuant to
SECTION 10.2. No financing statement under the Uniform Commercial Code of any
state which names the Borrower or any Subsidiary thereof or any of their
respective trade names or divisions as debtor and which has not been terminated,
has been filed in any state or other jurisdiction and neither the Borrower nor
any Subsidiary thereof has signed any such financing statement or any security
agreement authorizing any secured party thereunder to file any such financing
statement, except to perfect those Liens permitted by SECTION 10.2. The
Obligations hereunder are senior unsecured obligations of the Borrower which
rank PARI PASSU with the Senior Notes.
(u) INDEBTEDNESS AND CONTINGENT OBLIGATIONS. SCHEDULE 6.1(U) is a
complete and correct listing of all Indebtedness and Contingent Obligations of
the Borrower and its Subsidiaries in excess of $5,000,000.
<PAGE>
(v) LITIGATION. Except as set forth on SCHEDULE 6.1(V), there are no
actions, suits or proceedings pending nor, to the knowledge of the Borrower,
threatened against or in any other way relating adversely to or affecting the
Borrower or any Subsidiary thereof or any of their respective properties in any
court or before any arbitrator of any kind or before or by any Governmental
Authority, except for actions, suits or proceedings that, if adversely
determined, could, individually or in the aggregate, not reasonably be expected
to result in a Material Adverse Effect.
(w) ABSENCE OF DEFAULTS. No event has occurred or is continuing which
constitutes a Default or an Event of Default, or which constitutes, or which
with the passage of time or giving of notice or both would constitute, a default
or event of default by the Borrower or any Subsidiary thereof under any
judgment, decree or order by which the Borrower or its Subsidiaries or any of
their respective properties may be bound or which would require the Borrower or
its Subsidiaries to make any payment thereunder prior to the scheduled maturity
date therefor.
(x) REPRESENTATIONS AND WARRANTIES FROM OTHER DOCUMENTS. As of the
Closing Date, each of the representations and warranties made in the
Recapitalization Documents by the Borrower and, to the Borrower's knowledge, by
each other Person party thereto is true and correct in all respects.
(y) CORPORATE STRUCTURE; PROXY STATEMENT. After giving effect to the
transactions contemplated by the Recapitalization Documents, the ownership,
capital, partnership, tax, organizational and legal structure (including limited
partnership agreements and management) of the Borrower, Parent, the General
Partner and the Rabbi Trust shall be as set forth in the Proxy Statement and the
information set forth in the Proxy Statement with respect to the Borrower, the
Parent, the General Partner and the Rabbi Trust Company, does not as of the date
hereof, contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made therein not misleading.
(z) SENIOR NOTE AGREEMENT. Attached hereto as EXHIBIT I is a true and
correct copy of the Senior Note Agreement. Except as set forth in EXHIBIT I,
there have been no amendments to the Senior Note Agreement and no default or
event of default, or event or condition which with notice or lapse of time or
both would constitute such a default or event of default with respect to the
Borrower exists.
(aa) YEAR 2000 COMPLIANCE. The Borrower and its Subsidiaries have
initiated a review and assessment of all areas within any of their business and
that could be adversely affected by the "Year 2000 Problem" (that is, the risk
that computer applications used by the Borrower and its Subsidiaries may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999) and (ii) developed
a plan and timeline for addressing the Year 2000 Problem on a timely basis.
Based on the foregoing, the Borrower and its Subsidiaries believe that all
computer applications that are material to its or any of its Subsidiaries'
<PAGE>
business and operations are reasonably expected on a timely basis to be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "year 2000 compliant"), except to the extent that a failure
to do so could not reasonably be expected to have Material Adverse Effect.
(bb) ACCURACY AND COMPLETENESS OF INFORMATION. All written information,
reports and other papers and data produced by or on behalf of the Borrower or
any Subsidiary thereof and furnished to the Lenders were, at the time the same
were so furnished, complete and correct in all material respects. No document
furnished or written statement made to the Administrative Agent or the Lenders
by the Borrower or any Subsidiary thereof in connection with the negotiation,
preparation or execution of this Agreement or any of the Loan Documents contains
or will contain any untrue statement of a fact material to the creditworthiness
of the Borrower or its Subsidiaries or omits or will omit to state a fact
necessary in order to make the statements contained therein not misleading. The
Borrower is not aware of any facts which it has not disclosed in writing to the
Administrative Agent having a Material Adverse Effect, or insofar as the
Borrower can now foresee, could reasonably be expected to have a Material
Adverse Effect.
SECTION 6.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
representations and warranties set forth in this Article VI and all
representations and warranties contained in any certificate, or any of the Loan
Documents (including but not limited to any such representation or warranty made
in or in connection with any amendment thereto) shall constitute representations
and warranties made under this Agreement. All representations and warranties
made under this Agreement shall be made or deemed to be made at and as of the
Closing Date, shall survive the Closing Date and shall not be waived by the
execution and delivery of this Agreement, any investigation made by or on behalf
of the Lenders or any borrowing hereunder.
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in SECTION 14.11, the Borrower will furnish or
cause to be furnished to the Administrative Agent and to the Lenders at their
respective addresses as set forth on SCHEDULE 1, or such other office as may be
designated by the Administrative Agent and Lenders from time to time:
SECTION 7.1 FINANCIAL STATEMENTS.
(a) QUARTERLY FINANCIAL STATEMENTS. As soon as practicable and in any
event within fifty (50) days after the end of each of the first three fiscal
quarters, an unaudited Consolidated balance sheet of the Borrower and its
Subsidiaries as of the close of such fiscal quarter and unaudited Consolidated
statements of income, retained earnings and cash flows for the fiscal quarter
then ended and that portion of the Fiscal Year then ended, including the notes
thereto, all in reasonable detail setting forth in comparative form the
corresponding figures for the preceding Fiscal Year and prepared by the Borrower
in accordance with GAAP and, if applicable, containing disclosure of the effect
on the financial position or results of operations of any change in the
application of accounting principles and practices during the period, and
<PAGE>
certified by the chief financial officer of the Borrower to present fairly in
all material respects the financial condition of the Borrower and its
Subsidiaries as of their respective dates and the results of operations of the
Borrower and its Subsidiaries for the respective periods then ended, subject to
normal year end adjustments.
(b) ANNUAL FINANCIAL STATEMENTS. As soon as practicable and in any
event within ninety-five (95) days after the end of each Fiscal Year, an audited
Consolidated balance sheet of the Borrower and its Subsidiaries as of the close
of such Fiscal Year and audited Consolidated statements of income, retained
earnings and cash flows for the Fiscal Year then ended, including the notes
thereto, all in reasonable detail setting forth in comparative form the
corresponding figures for the preceding Fiscal Year and audited by
PricewaterhouseCoopers LLP or other independent certified public accountants
reasonably acceptable to the Administrative Agent in accordance with GAAP and,
if applicable, containing disclosure of the effect on the financial position or
results of operation of any change in the application of accounting principles
and practices during the year, and accompanied by a report thereon by such
certified public accountants that is not qualified with respect to scope
limitations imposed by the Borrower or any of its Subsidiaries or with respect
to accounting principles followed by the Borrower or any of its Subsidiaries not
in accordance with GAAP.
SECTION 7.2 OFFICER'S COMPLIANCE CERTIFICATE. At each time
financial statements are delivered pursuant to SECTIONS 7.1(A) or (B), a
certificate of the chief financial officer or the treasurer of the Borrower in
the form of EXHIBIT F attached hereto (an "OFFICER'S COMPLIANCE CERTIFICATE").
SECTION 7.3 OTHER REPORTS.
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower or its Board of Directors by its independent public
accountants in connection with their auditing function, including, without
limitation, any management report and any management responses thereto;
(b) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
General Partner, the Parent, the Borrower or any Subsidiary with the Securities
and Exchange Commission or any Governmental Authority succeeding to any of or
all the functions of said Commission, or with any national securities exchange,
or distributed to the holders of Common Unit, as the case may be;
(c) concurrently with any delivery of any statement, report,
certificate or other material under Section 5A of the Senior Note Agreement that
has not otherwise been delivered to the Lenders, a copy of each such statement,
report, certificate or other material, which shall in the case of officers' and
accountants' certificates be addressed to the Lenders and provide the analogous
information and certifications in respect of the Loan Documents;
(d) written notice of any action or decision by the Board of
Supervisors of the Parent to change the amount of the Minimum Quarterly
<PAGE>
Distribution or not to pay all or any portion of the Minimum Quarterly
Distribution, which notice shall be delivered within three (3) Business Days
after such action or decision; and
(e) such other information regarding the operations, business affairs
and financial condition of the Borrower or any of its Subsidiaries as the
Administrative Agent or any Lender may reasonably request.
SECTION 7.4 NOTICE OF LITIGATION AND OTHER MATTERS. Prompt (but in
no event later than ten (10) days after an officer of the Borrower obtains
knowledge thereof) telephonic and written notice of:
(a) the commencement of all proceedings and investigations by or
before any Governmental Authority and all actions and proceedings in any court
or before any arbitrator against or involving the Borrower or any Subsidiary
thereof or any of their respective properties, assets or businesses, which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect;
(b) any notice of any violation received by the Borrower or any
Subsidiary thereof from any Governmental Authority including, without
limitation, any notice of violation of Environmental and Safety Laws which in
any such case could reasonably be expected to have a Material Adverse Effect;
(c) any labor controversy that has resulted in a strike or other work
action against the Borrower or any Subsidiary thereof that could reasonably be
expected to have a Material Adverse Effect;
(d) any attachment, judgment, lien, levy or order exceeding
$10,000,000 that may be assessed against the Borrower or any Subsidiary thereof;
(e) any Default, Event of Default or Senior Note Default;
(f) any event which makes any of the representations set forth in
SECTION 6.1 inaccurate in any respect;
(g) any other development that has resulted in, or could reasonably be
expected to result in a Material Adverse Effect; and
(h) any notice received under or in connection with the Mellon Note
Purchase Agreement or any event, known to the Borrower, which constitutes or
which with the passage of time or giving of notice or both would constitute a
default or event of default under any of the Mellon Note Documents.
SECTION 7.5 ACCURACY OF INFORMATION. All written information,
reports, statements and other papers and data furnished by or on behalf of the
Borrower to the Administrative Agent or any Lender (other than financial
forecasts) whether pursuant to this Article VII or any other provision of this
<PAGE>
Agreement, or any of the Security Documents, shall be, at the time the same is
so furnished, complete and correct in all material respects to the extent
necessary to give the Administrative Agent or any Lender complete, true and
accurate knowledge of the subject matter based on the Borrower's knowledge
thereof.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner provided for in SECTION 14.11, the Borrower will, and
will cause each of its Subsidiaries to:
SECTION 8.1 EXISTENCE; BUSINESSES AND PROPERTIES.
(i) Do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its legal existence and qualify and
remain qualified as a foreign entity in each jurisdiction in which the failure
to do so would have a Material Adverse Effect, except as otherwise permitted by
SECTION 10.5.
(ii) Do or cause to be done all things necessary to preserve,
renew and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated; and at
all times maintain and preserve all property material to the conduct of such
business and keep such property in good repair, working order and condition and
from time to time make, or cause to be made, all needed and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times.
SECTION 8.2 INSURANCE. Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers; maintain such
other insurance, to such extent and against such risks, including fire and other
risks insured against by extended coverage, as is customary with similarly
situated companies in the same or similar businesses, including public liability
insurance against claims for personal injury or death or property damage
occurring upon in, about or in connection with the use of any properties owned
occupied or controlled by it and maintain such other insurance as may be
required by Applicable Law; PROVIDED, HOWEVER, that nothing in this SECTION 8.2
shall preclude the Borrower or any Subsidiary from being self-insured to the
extent customary with similarly situated companies in the same or similar
businesses.
SECTION 8.3 TAXES. Pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property, before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise which, if unpaid, would give rise to a Lien upon such
properties or any part thereof; PROVIDED, HOWEVER, that such payment and
<PAGE>
discharge shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and adequate reserves in
respect thereof shall be maintained in accordance with GAAP.
SECTION 8.4 EMPLOYEE BENEFITS. Comply in all material respects with
the applicable provisions of ERISA and the Code and furnish to the
Administrative Agent as soon as possible after, and in any event within 10 days
after any Responsible Officer of the Borrower or any ERISA Affiliate knows or
has reason to know that, any ERISA Event has occurred that, alone or together
with any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower in an aggregate amount exceeding $5,000,000,
a statement of a Financial Officer setting forth details as to such ERISA Event
and the action, if any, that the Borrower proposes to take with respect thereto.
SECTION 8.5 ACCESS TO PREMISES AND RECORDS; CONFIDENTIALITY.
Maintain financial records in accordance with GAAP, and upon reasonable notice
permit representatives of the Lenders to have access to such financial records
and the premises of the Borrower or any Subsidiary at reasonable times and to
make such excerpts from such records as such representatives deem necessary in
connection with their evaluation of the Borrower's ability to repay the Loans or
any Subsidiary's ability to perform its obligations under the Guarantee
Agreement. Each Lender agrees to keep all information obtained by it pursuant to
this Section 8.5 and all other non-public information delivered to it by the
Borrower or any Subsidiary pursuant to this Agreement confidential except to the
extent that (i) disclosure is made, subject to this confidentiality agreement,
to Affiliates, officers, directors, employees, agents and representatives of
such Lender or to the Administrative Agent or any other Lender, (ii) disclosure
of such information is made pursuant to applicable law, regulations, subpoena,
judicial process or the like or at the request of any regulatory authority to
which it is subject or to its counsel or auditors or in any legal proceeding
arising out of this Agreement, (iii) such information is or becomes publicly
available other than by such Lender's breach of this SECTION 8.5, (iv)
disclosure is made to an actual or prospective assignee or participant pursuant
to SECTION 14.10 or (v) such information becomes available to such Lender from a
third party which, by making such information available, has not, to such
Lender's knowledge, breached any obligation of confidentiality it may owe.
SECTION 8.6 COMPLIANCE WITH LAWS. Comply with all applicable laws,
rules and regulations, and all orders of any Governmental Authority, applicable
to it or any of its property, business, operations or transactions (including
ERISA and all Environmental and Safety Laws), except where the failure so to
comply could not reasonably be expected to result in a Material Adverse Effect,
and provide prompt written notice to the Lenders following the receipt of any
notice of any violation of any such laws, rules, regulations or orders from any
Governmental Authority charged with enforcing the same where such violation
could reasonably be expected to result in a Material Adverse Effect.
SECTION 8.7 ADDITIONAL GUARANTORS. Notify the Administrative Agent
if at any time the Borrower or any Subsidiary determines to acquire or form any
Person which would upon such acquisition or formation constitute a Subsidiary
and to cause any such newly acquired or formed Subsidiary to become a guarantor
<PAGE>
under the Guarantee Agreement by the execution of documentation reasonably
satisfactory to the Administrative Agent immediately upon such acquisition or
formation.
SECTION 8.8 USE OF PROCEEDS. Use the proceeds of (a) the Revolving
Credit Loans for working capital and general partnership purposes of the
Borrower and its Subsidiaries, including, without limitation, (i) payment of
fees and expenses incurred in connection with the Recapitalization, in an
aggregate amount not to exceed $7,500,000, (ii) to finance Restricted Payments
to the Parent (and related pro rata Restricted Payments to the General Partner)
to enable the Parent to pay the Minimum Quarterly Distribution and reasonable
expenses of the Parent as set forth in Section 10.6(b) and (iii) to make
required payments under the Mellon Documents to the extent permitted under
Section 10.13 and (b) the Acquisition Loans to finance Permitted Business
Acquisitions.
SECTION 8.9 PARTNERSHIP DOCUMENTS. Perform and comply with, and
cause each of the General Partner and the Parent to perform and comply in all
material respects with all its obligations under each of the Partnership
Documents to which it is a parry and enforce and cause each of the General
Partner and the Parent to enforce, in all material respects, each such
Partnership Document against each other party thereto.
SECTION 8.10 COMPLIANCE WITH ENVIRONMENTAL AND SAFETY LAWS. Comply,
and use reasonable efforts to cause all lessees and other Persons occupying its
properties to comply, in all material respects with all Environmental and Safety
Laws and environmental permits applicable to its operations and properties;
obtain and renew all material environmental permits necessary for its operations
and properties; and conduct any necessary remedial action in accordance with
Environmental and Safety Laws; PROVIDED, however, that neither the Borrower nor
any of its Subsidiaries shall be required to undertake any remedial action to
the extent that its obligation to do so is being contested in good faith and by
proper proceedings and appropriate reserves are being maintained under GAAP with
respect to such circumstances.
SECTION 8.11 PREPARATION OF ENVIRONMENTAL REPORTS. If a Default
caused by reason of a breach of SECTIONS 6.1(H) or 8.10 shall have occurred and
be continuing, at the request of the Required Lenders through the Administrative
Agent, provide to Lenders within forty-five (45) days after such request, at the
expense of the Borrower, an environmental site assessment report for the
properties which are the subject of such Default prepared by an environmental
consulting firm acceptable to the Administrative Agent and consented to by the
Borrower (which consent shall not be unreasonably withheld or delayed),
indicating the presence or absence of hazardous materials and the estimated cost
of any compliance or remedial action in connection with such properties.
SECTION 8.12 CORPORATE IDENTITY. Do or cause to be done (or refrain
from doing or causing to be done, as the case may be) all things necessary to
ensure that the separate legal identity of the Borrower will at all times be
respected and that neither the Borrower nor any of its Subsidiaries will be
liable for any obligations, contractual or otherwise, of the General Partner,
the Parent or any other entity in which the General Partner or the Parent owns
any equity interest, except as permitted under SECTION 10.6(B) or SECTION 10.7.
Without limiting the foregoing, the Borrower will (a) observe, and cause the
General Partner and the Parent to observe, all requirements, procedures and
<PAGE>
formalities necessary or advisable in order that the Borrower will for all
purposes be considered a validly existing partnership separate and distinct from
the General Partner, the Parent and their other subsidiaries, (b) not permit any
commingling of the assets of the General Partner, the Parent or any of their
other subsidiaries with assets of the Borrower or any Subsidiary which would
prevent the assets of the General Partner, the Parent or any of their
subsidiaries from being readily distinguished from the assets of the Borrower
and its Subsidiaries and (c) take reasonable and customary actions to ensure
that creditors of the General Partner, the Parent and their other subsidiaries
are aware that each such Person is an entity separate and distinct from the
Borrower and its Subsidiaries.
SECTION 8.13 FEDERAL RESERVE REGULATIONS. In the event the Borrower
or any Subsidiary shall use any proceeds of Loans to acquire or carry any Margin
Stock, the Borrower will not at any time thereafter permit more than 25% of the
value of the assets of the Borrower and its Subsidiaries subject to the
provisions of SECTION 10.2 or 10.5 to be Margin Stock.
SECTION 8.14 AVAILABLE CASH RESERVES. Maintain an amount of cash
reserves that is necessary or appropriate in the reasonable discretion of the
Board of Supervisors of the Borrower to (i) provide for the proper conduct of
the business of the Borrower and its Subsidiaries (including reserves for future
capital expenditures) subsequent to such quarter, (ii) comply with applicable
law or any loan agreement (including, but not limited to, this Agreement),
security agreement, mortgage, debt instrument or other agreement or obligation
to which the Borrower or any, Subsidiary is a party or by which it is bound or
its assets are subject and (iii) provide funds for distributions to partners of
the Parent and the General Partner in respect of any one or more of the next
four quarters; PROVIDED that the Board of Supervisors need not establish cash
reserves pursuant to clause (iii) if the effect of such reserves would be that
the Parent is unable to distribute the Minimum Quarterly Distribution on the
Common Units with respect to such quarter; and PROVIDED, FURTHER, that
disbursements made or cash reserves established, increased or reduced after the
end of any quarter but on or before the date of determination of Available Cash
with respect to such quarter shall be deemed to have been made, established,
increased or reduced for purposes of determining Available Cash, within such
quarter if the Board of Supervisors of the Company so determines. In addition,
without limitation or duplication of the foregoing, Available Cash for any
fiscal quarter shall reflect an amount of cash reserves equal to the reserves
required pursuant to the last sentence of the definition of "Available Cash".
SECTION 8.15 FURTHER ASSURANCES. Make, execute and deliver all such
additional and further acts, things, deeds and instruments as the Administrative
Agent or any Lender may reasonably require to document and consummate the
transactions contemplated hereby and to vest completely in and insure the
Administrative Agent and the Lenders their respective rights under this
Agreement, the Notes and the other Loan Documents.
SECTION 8.16 YEAR 2000 COMPATIBILITY. Take all action reasonably
necessary to ensure that the computer-based systems of the Borrower and its
Subsidiaries are able to operate and process effectively data that includes
dates on and after January 1, 2000. At the request of the Administrative Agent,
the Borrower shall provide reasonable assurances satisfactory to the
Administrative Agent of the Borrower's Year 2000 compatibility.
<PAGE>
SECTION 8.17 COMMODITY HEDGING POLICY. The Borrower shall not amend
the Borrower's commodity hedging policy previously approved by the Lenders in
any manner that increases the risk exposure of the Borrower (including, without
limitation, any increase of the limits thereunder) without the prior written
consent of the Required Lenders, which consent shall not be unreasonably
withheld.
ARTICLE IX
FINANCIAL COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in SECTION 14.11, the Borrower and its
Subsidiaries on a Consolidated basis will not:
SECTION 9.1 INTEREST COVERAGE RATIO. Permit the ratio of EBITDA to
Interest Expense as of the end of any fiscal quarter for the four-quarter-period
ending as of such date to be less than 2.50 to 1.00.
SECTION 9.2 LEVERAGE RATIO. Permit the Leverage Ratio as of the
end of any fiscal quarter to be greater than 5.10 to 1.00.
SECTION 9.3 ADJUSTED CONSOLIDATED NET WORTH. Permit Adjusted
Consolidated Net Worth at any time to be less than $50,000,000.
ARTICLE X
NEGATIVE COVENANTS
The Borrower covenants and agrees with each Lender that, from and after
the Closing Date so long as this Agreement shall remain in effect and until the
Commitments have been terminated and the principal of and interest on each Loan,
all Fees and all other expenses or amounts payable under any Loan Document have
been paid in full, unless the Required Lenders shall otherwise consent in
writing, the Borrower will not, and will not cause or permit any of its
Subsidiaries to:
SECTION 10.1 INDEBTEDNESS. Incur, create, assume or permit to exist
any Indebtedness, except:
(a) Indebtedness for borrowed money existing on the date hereof in an
aggregate principal amount not in excess of $100,000;
(b) Indebtedness created hereunder and under the other Loan Documents;
<PAGE>
(c) in the case of the Guarantors, the Guarantees under the Guarantee
Agreement and the Senior Note Agreement;
(d) in the case of the Borrower, the Senior Notes and Refinancing
Notes in an aggregate principal amount not in excess of the aggregate principal
amount of the Senior Notes redeemed using the net proceeds of such Refinancing
Notes; PROVIDED that, notwithstanding anything to the contrary in this Agreement
or any other Loan Document, no Refinancing Notes shall be issued (and no
Indebtedness shall be incurred under any Refinancing Note Agreement) unless: (i)
concurrently with the issuance of any Refinancing Notes, Senior Notes in a
principal amount equal to the principal amount of such Refinancing Notes shall
have been redeemed and canceled, at a price not in excess of 100% of the
principal amount thereof (plus any premium in respect of such redemption to the
extent paid with the proceeds of the contemporaneous issuance of Common Units of
the Parent), (ii) the terms of the Refinancing Notes and the Refinancing Note
Agreement shall be reasonably satisfactory to the Required Lenders (PROVIDED,
HOWEVER, that the terms of the Refinancing Notes and the Refinancing Note
Agreement shall be deemed to be satisfactory to the Required Lenders if the
Refinancing Notes are issued with substantially the same terms as the Senior
Notes (other than any changes thereto that are not adverse in any respect to the
interests of the Lenders)), (iii) the interest rate of the Refinancing Notes
shall be a fixed, non-increasing interest rate per annum not in excess of the
rate payable in respect of the Senior Notes, payable on a principal amount of
the Refinancing Notes not in excess of the gross proceeds of the sale thereof
and interest on the Refinancing Notes shall be payable not more frequently
than interest is payable on the Senior Notes and (iv) the Refinancing Notes
shall mature not earlier than the maturity date of the Senior Notes and shall
not have a shorter weighted average maturity than the Senior Notes;
(e) Indebtedness of the Borrower arising out of the Mellon Note
Purchase Agreement as in effect on the date hereof;
(f) Indebtedness of the Borrower and its Subsidiaries for standby
letters of credit relating to obligations described in Sections 10.1(h) and (i),
below, in an aggregate amount at any time not to exceed $35,000,000, exclusive
of any stand by Letters of Credit issued by the Issuing Lender pursuant to the
terms of this Agreement;
(g) Indebtedness of the Borrower or any Wholly-Owned Subsidiary to any
Subsidiary or the Borrower, as the case may be;
(h) Indebtedness of the Borrower and its Subsidiaries owed to any
Person providing worker's compensation, health, disability or other employee
benefits or property, casualty or liability insurance to the Borrower or any
Subsidiary, pursuant to reimbursement or indemnification obligations to such
Person;
(i) Indebtedness of the Borrower or its Subsidiaries in respect of
performance bonds, bid bonds, appeal bonds, surety bonds and similar
obligations, in each case provided in the ordinary course of business, including
those incurred to secure health, safety and environmental obligations in the
ordinary course of business, and any extension, renewal or refinancing thereof
to the extent not provided to secure the repayment of other Indebtedness and to
<PAGE>
the extent that the amount of refinancing Indebtedness is not greater than the
amount of Indebtedness being refinanced;
(j) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business; PROVIDED that such
Indebtedness is extinguished within two (2) Business Days of its incurrence;
(k) Indebtedness of a Subsidiary acquired after the date hereof and
Indebtedness of a corporation merged or consolidated with or into the Borrower
or any Subsidiary after the date hereof, which Indebtedness in each case exists
at the time of such acquisition, merger, consolidation or conversion into a
Subsidiary and is not created in contemplation of such event and where such
acquisition, merger or consolidation is otherwise permitted by this Agreement;
PROVIDED that the aggregate principal amount of Indebtedness under this
paragraph (k) shall not at any time exceed $5,000,000;
(l) Indebtedness incurred, issued or assumed by the Borrower (i) to
finance the acquisitions, improvements or repairs (to the extent such
improvements and repairs may be capitalized on the books of the Borrower in
accordance with GAAP) of, or additions to, the property and assets of the
Borrower, or (ii) to replace, extend, renew, refund or refinance any such
Indebtedness; PROVIDED that:
(i) the aggregate principal amount of Indebtedness incurred
in connection with any such replacement, extension, renewal, refunding or
refinancing shall not exceed the outstanding principal amount of Indebtedness so
replaced, extended, renewed, refunded or refinanced;
(ii) the aggregate principal amount of Indebtedness incurred
under this clause (l) and outstanding at any time shall not exceed (A)
$25,000,000 plus (B) an amount equal to the aggregate net proceeds received by
the Borrower as consideration for the issuance by the Borrower of additional
partnership interests or as a capital contribution in each case for the purpose
of financing such acquisitions, improvements, repairs or additions less (C) any
amount of excess proceeds used to permanently reduce the Commitments pursuant to
SECTION 4.5;
(iii) such Indebtedness is secured by a Lien on the property
or assets so acquired, improved or repaired and does not include a negative
pledge on any other assets of the Borrower or its Subsidiaries;
(m) obligations described under clause (j) of the definition of
"Indebtedness" in an aggregate stated amount at any time outstanding, not in
excess of $5,000,000;
(n) obligations under Commodity Hedging Agreements respecting actual
volumes of propane inventory of the Borrower incurred in accordance with the
Borrower's commodity hedging policy, previously approved by the Lenders; and
<PAGE>
(o) other unsecured Indebtedness of the Borrower in an aggregate
principal amount at any time outstanding not in excess of $5,000,000; PROVIDED,
HOWEVER, that no Indebtedness may be incurred, created, assumed or permitted to
exist if such insurance, creation, assumption or existence would violate the
provisions of the Senior Note Agreement or any Refinancing Note Agreement at the
time in effect.
SECTION 10.2 LIENS. Create, incur, assume or permit to exist any
Lien on any property or assets (including stock or other securities of any
Person, including any Subsidiary) now owned or hereafter acquired by it or any
income or revenues or rights in respect or any thereof, or sell or transfer any
account receivable or any right in respect thereof, except:
(a) Liens on property or assets of the Borrower existing on the date
hereof and set forth in SCHEDULE 10.2; PROVIDED that such Liens shall secure
only those obligations that they secure on the date hereof and shall not apply
to any other property or assets of the Borrower or any Subsidiary;
(b) any Lien arising as a result of a transaction permitted under
SECTION 10.5(E).
(c) any Lien existing on any property or asset of the Borrower or any
Subsidiary prior to the acquisition thereof by the Borrower or any Subsidiary
securing Indebtedness permitted by SECTION 10.1(J); PROVIDED that (i) such Lien
is not created in contemplation of or in connection with such acquisition and
(ii) such Lien does not apply to any other property or asset of the Borrower or
any Subsidiary;
(d) Liens (other than any Lien imposed by ERISA) incurred and pledges
and deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance, old-age pensions, retiree health benefits
and other social security benefits and deposits securing liability to insurance
carriers under insurance or self-insurance arrangements in respect of such
obligations;
(e) Liens securing the performance of bids, tenders, leases, contracts
(other than for the repayment of borrowed money), statutory obligations surety,
customs and appeal bonds and other obligations of a like nature, incurred as an
incident to and in the ordinary course of business;
(f) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's and vendors' liens, incurred in good faith in the
ordinary course of business and securing obligations which are not yet due or
which are being contested in good faith by appropriate proceedings as to which
the Borrower or a Subsidiary, as the case may be, shall have, to the extent
required by GAAP, set aside on its books adequate reserves;
(g) Liens securing the payment of taxes, assessments and governmental
charges or levies, either (i) not delinquent or (ii) being contested in good
faith by appropriate legal or administrative proceedings and as to which the
Borrower or a Subsidiary, as the case may be, shall have, to the extent required
by GAAP, set aside on its books adequate reserves;
<PAGE>
(h) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of property
or irregularities of title (and with respect to leasehold interests, mortgages,
obligations, liens and other encumbrances incurred, created, assumed or
permitted to exist and arising by, through or under a landlord or owner of the
leased property, with or without consent of the lessee) which do not in the
aggregate materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its business;
(i) Liens on the property or assets of any Subsidiary in favor of the
Borrower or any other Wholly-Owned Subsidiary;
(j) extensions, renewals and replacements of Liens referred to in
paragraphs (a) through (i) of this SECTION 10.2; PROVIDED that any such
extension, renewal or replacement Lien shall be limited to the property or
assets (or improvements thereon) covered by the Lien extended, renewed or
replaced and that the obligations secured by any such extension, renewal or
replacement Lien shall be in an amount not greater than the amount of the
obligations secured by the Lien extended, renewed or replaced;
(k) attachment or judgment Liens not giving rise to an Event of
Default and which are being contested in good faith by appropriate proceedings;
(l) leases or subleases of equipment to customers that do not
materially interfere with the conduct of the business of the Borrower and its
Subsidiaries taken as a whole;
(m) Liens consisting of interests of lessors under Capital Leases
permitted hereunder;
(n) any Lien created to secure all or any part of the purchase price,
or to secure Indebtedness incurred or assumed to pay all or any part of the
purchase price or cost of construction, of property acquired or constructed by
the Borrower or a Subsidiary after the date hereof; PROVIDED, that (i) any such
Lien shall be confined solely to the item or items of such property (or
improvement therein) so acquired or constructed and, if required by the terms of
the instrument creating such Lien, other property (or improvement thereon) which
is an improvement to such acquired or constructed property, (ii) any such Lien
shall be created contemporaneously with, or within ten (10) Business Days after,
the acquisition or construction of such property, and (iii) such Lien does not
exceed an amount equal to 85% (100% in the case of Capital Leases) of the fair
market value of such assets (as determined in good faith by the Board of
Supervisors of the Borrower) at the time of acquisition thereof;
(o) Liens securing Indebtedness permitted by SECTION 10.1(L); and
(p) Liens securing Indebtedness (including interests of lessors under
Capital Leases) permitted by SECTION 10.1, so long as immediately after giving
effect thereto, the aggregate amount of the Indebtedness secured by such Liens
shall not exceed 2.5% of Total Assets (as defined in the Senior Note Agreement).
<PAGE>
Notwithstanding the foregoing, the Borrower will not, and will not permit any
Subsidiary to, create, assume or incur any Lien upon or with respect to any of
its proprietary software developed by or on behalf of the Borrower or its
Affiliates and necessary and useful for the conduct of the Business.
SECTION 10.3 SALE AND LEASE-BACK TRANSACTIONS. Enter into any
arrangement, directly or indirectly, with any Person whereby it shall sell or
transfer any property, real or personal used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred, in an aggregate amount not
to exceed $25,000,000; PROVIDED that the Designated Net Proceeds thereof shall
be applied as a prepayment of the Acquisition Loans and/or reduction of the
Acquisition Commitment as required pursuant to SECTION 4.2(E) and 4.5(B).
SECTION 10.4 INVESTMENTS, LOANS AND ADVANCES. Directly or indirectly
purchase or own any stock, obligations or securities of, or any other interest
in, or make any capital contribution to, any Person, or make or permit to remain
outstanding any loan or advance to, or guarantee, endorse or otherwise be or
become contingently liable, directly or indirectly, in connection with the
obligations of any Person, or make any other Investment, except:
(a) Investments (i) arising out of loans and advances to employees
incurred in the ordinary course of business, (ii) arising out of extensions of
trade credit or advances to third parties in the ordinary course of business and
(iii) acquired by reason of the exercise of customary creditors' rights upon
default or pursuant to the bankruptcy, insolvency or reorganization of a debtor;
(b) Guarantees that constitute Indebtedness to the extent permitted by
SECTIONS 9.2, 9.3 and 10.1 and other Guarantees that are not Guarantees of
Indebtedness and are undertaken in the ordinary course of business;
(c) Investments in (collectively, "CASH EQUIVALENTS")
(i) marketable obligations issued or unconditionally
guaranteed by the United States of America, or issued by any agency thereof and
backed by the full faith and credit of the United States of America, in each
case maturing within one year or less from the date of acquisition thereof;
(ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition thereof and having as at such date the highest rating obtainable
from either Standard & Poor's Rating Group or Moody's Investors Service, Inc.;
(iii) commercial paper maturing no more than 270 days from the
date of creation thereof and having as at the date of acquisition thereof one of
the two highest ratings obtainable from either Standard & Poor's Rating Group or
Moody's Investors Service, Inc.;
<PAGE>
(iv) certificates of deposit maturing one year or less from
the date of acquisition thereof issued by commercial banks incorporated under
the laws of the United States of America or any state thereof or the District of
Columbia or Canada or issued by the United States branch of any commercial bank
organized under the laws of any country in Western Europe or Japan, with capital
and stockholders' equity of at least $500,000,000 (or the equivalent in the
currency of such country), (A) the commercial paper or other short term
unsecured debt obligations of which are as at such date rated either A-2 or
better (or comparably if the rating system is changed) by Standard & Poor's
Rating Group or Prime-2 or better (or comparably if the rating system is
changed) by Moody's Investors Service, Inc. or (B) the long-term debt
obligations of which are as at such date rated either A or better (or comparably
if the rating system is changed) by Standard & Poor's Rating Group or A-2 or
better (or comparably if the rating system is changed) by Moody's Investors
Service, Inc. ("PERMITTED BANKS");
(v) Eurodollar time deposits having a maturity of less than
270 days from the date of acquisition thereof purchased directly from any
Permitted Bank;
(vi) bankers' acceptances eligible for rediscount under
requirements of The Board of Governors of the Federal Reserve System and
accepted by Permitted Banks;
(vii) to the extent permitted under the Senior Note Agreement,
money market funds having assets of not less than $500,000,000; and
(viii)obligations of the type described in clauses (i), (ii),
(iii), (iv) or (v) above purchased from a securities dealer designated as a
"primary dealer" by the Federal Reserve Bank of New York or from a Permitted
Bank as counterparty to a written repurchase agreement obligating such
counterparty to repurchase such obligations not later than fourteen (14) days
after the purchase thereof and which provides that the obligations which are the
subject thereof are held for the benefit of the Borrower or a Subsidiary by a
custodian which is a Permitted Bank and which is not a counterparty to the
repurchase agreement in question;
(d) liabilities with respect to any Hedging Agreements or Commodities
Hedging Agreements;
(e) investments made by a Subsidiary in the Borrower; and
(f) the investment existing on the Closing Date of the Borrower in The
Dixie Pipeline Company (a Delaware corporation).
SECTION 10.5 MERGERS, CONSOLIDATIONS, SALES OF ASSETS AND
ACQUISITIONS. Merge into or consolidate with any other Person, or permit any
other Person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions) all or
any substantial part of its assets (whether now owned or hereafter acquired), or
purchase, lease or otherwise acquire (in one transaction or a series of
transactions) all or any substantial part of the assets of, or any division or
line of business of, any other Person, except that this SECTION 10.5 shall not
prohibit;
<PAGE>
(a) the purchase and sale of inventory in the ordinary course of
business by the Borrower or any Subsidiary or the acquisition of facilities and
equipment in the ordinary course of business;
(b) if at the time thereof and immediately after giving effect thereto
no Event of Default or Default shall have occurred and be continuing (i) the
merger of any Subsidiary into the Borrower in a transaction in which the
Borrower is the surviving Person, or the merger or consolidation of any
Subsidiary with and into any other Wholly-Owned domestic Subsidiary, in each
case in a transaction in which no Person other than the Borrower or a Subsidiary
receives any consideration; and (ii) the merger of any other Person with and
into the Borrower or a Subsidiary if the Borrower or such Subsidiary is the
surviving entity and after giving effect to such transaction (A) the
Consolidated Net Worth of the Borrower and its Subsidiaries shall be not less
than the Consolidated Net Worth of the Borrower and its Subsidiaries immediate,
prior to such transaction, (B) substantially all the assets and business of the
Borrower and its Subsidiaries shall be located in the United States and (C) the
Borrower and its Subsidiaries shall be in compliance, on a pro forma basis after
giving effect to such transaction, with the covenants contained in Article IX
recomputed as of the last day of the most recently ended fiscal quarter of the
Borrower and its Subsidiaries as if such transaction had occurred on the first
day of each relevant period for testing such compliance, and the Borrower shall
have delivered to the Administrative Agent an officer's certificate to such
effect, together with all relevant financial information and calculations
demonstrating such compliance;
(c) Permitted Business Acquisitions and other investments permitted by
SECTION 10.4;
(d) sales, leases or other dispositions of equipment or real property
of the Borrower or its Subsidiaries determined by the Board of Supervisors of
the Borrower or senior management of the Borrower to be no longer useful or
necessary in the operation of the business of the Borrower or its Subsidiaries;
PROVIDED that the Designated Net Proceeds shall be applied as a prepayment of
the Acquisition Loans and/or reduction of the Acquisition Commitment as required
pursuant to SECTION 4.2(E) and SECTION 4.5(B); and
(e) sales, leases or other dispositions of property for consideration
(i) at least 80% of which consists of cash and the remainder of which consists
of investments permitted under SECTION 10.4 or (ii) consisting of cash and one
or more Permitted Business Acquisitions which the Board of Supervisors of the
Borrower shall have determined, as evidenced by a resolution thereof, have in
the aggregate a fair market value not less than the fair market value of the
property being sold, leased or otherwise disposed of; PROVIDED that the
Designated Net Proceeds shall be applied as a prepayment of the Acquisition
Loans and/or reduction of the Acquisition Commitment as required pursuant to
SECTION 4.2(E) and SECTION 4.5(B); PROVIDED, FURTHER, that (i) no issuance of
the Capital Stock (or of any warrant, right or option to purchase or otherwise
acquire any such Capital Stock or any security convertible into or exchangeable
for any such Capital Stock) of any Subsidiary may be made to any Person other
than the Borrower or a Wholly-Owned domestic Subsidiary except for the purpose
of qualifying directors or in satisfaction of pre-emptive rights of holders of
minority interests which are triggered by an issuance of Capital Stock to the
Borrower or any Wholly-Owned domestic Subsidiary and (ii) no sale may be made of
<PAGE>
the Capital Stock (or of any warrant, right or option to purchase or otherwise
acquire any such Capital Stock or any security convertible into or exchangeable
for any such Capital Stock) of any Subsidiary except in connection with a sale,
transfer or other disposition in which (i) simultaneously with such sale,
transfer or disposition, all the Capital Stock and Indebtedness of such
Subsidiary at the time owned by the Borrower and any other Subsidiary shall be
sold, transferred or disposed of as an entirety; (ii) in the case of any such
transaction involving value of $1,000,000 or more, the Board of Supervisors of
the Borrower shall have determined, as evidenced by a resolution thereof, that
the proposed sale, transfer or disposition of such Capital Stock and
Indebtedness is in the best interests of the Borrower; (iii) such Capital Stock
and Indebtedness are sold, transferred or otherwise disposed of to a Person for
cash or other consideration that would constitute an investment permitted under
SECTION 10.4 and, in the case of any such transaction involving value of
$1,000,000 or more, on terms reasonably determined by the Board of Supervisors
of the Borrower to be adequate and satisfactory; (iv) the Subsidiary being
disposed of shall not have any continuing investment in the Borrower or any
other Subsidiary not being simultaneously disposed of; and (v) such sale,
transfer or other disposition shall not otherwise be prohibited by this
Agreement.
SECTION 10.6 RESTRICTED PAYMENTS. Directly or indirectly declare,
order, pay, make or set apart any sum for any Restricted Payment, except that
(a) the Borrower may declare or order, and make, pay or set apart, once during
each fiscal quarter, a Restricted Payment in an amount not exceeding the sum of
an amount to be distributed by the Parent to its partners promptly upon receipt
from the Borrower plus an amount equal to the proportionate distribution from
the Borrower to the General Partner in respect of such distribution, and (b) the
Borrower may declare or order, and make, pay or set apart, Restricted Payments
to the General Partner and the Parent to fund the payment by them of tax
liabilities, legal, accounting and other professional fees and expenses,
compensation, fees and expenses of the Elected Supervisors of the Parent (as
defined in the Agreement of Limited of Partnership of the Parent) and
indemnification of and contribution to all Persons entitled to indemnification
or contribution under Section 8.14 of the Agreement of Limited Partnership of
the Parent (as in effect on the Closing Date), any fees and expenses associated
with registration statements filed with the Securities and Exchange Commission
and subsequent ongoing public reporting requirements, and other liabilities,
obligations or costs of the General Partner or the Parent in each case to the
extent actually incurred by the General Partner or the Parent, as applicable, in
connection with, arising from, or relating to the Business or the Parent's
ownership of Capital Stock of the Borrower and its Subsidiaries; provided that
(i) the aggregate amount of Restricted Payments declared or ordered, or made,
paid, or set apart in any fiscal quarter shall not exceed Available Cash for the
immediately preceding fiscal quarter and (ii) no Default or Event of Default
then exists and is continuing, or would be caused by such Restricted Payment,
and the Borrower and it Subsidiaries shall be in compliance, on a pro forma
basis, with the covenants contained in Article IX recomputed as of the last day
of the most recently ended fiscal quarter of the Borrower and its Subsidiaries
as if such action had occurred on the first day of each relevant period for
testing such compliance, and the Borrower shall have delivered to the
Administrative Agent an officer's certificate to such effect, together with all
relevant financial information and calculations demonstrating such compliance.
The Borrower will comply with the reserve provisions required under the
definition of Available Cash. The Borrower will not, in any event, directly or
indirectly declare, order, pay or make any Restricted Payment except in cash.
<PAGE>
The Borrower will not permit any Subsidiary to declare, order, pay or make any
Restricted Payment or to set apart any sum or property for any such purpose
other than to (i) the Borrower or any Wholly-Owned Subsidiary and (ii) so long
as no Default or Event of Default shall have occurred and be continuing or would
be caused thereby, all holders of Capital Stock of or other equity interests in
such Subsidiary on a pro rata basis.
SECTION 10.7 TRANSACTIONS WITH AFFILIATES. Sell or transfer any
assets to, or purchase or acquire any assets from, or otherwise engage in any
material transaction with, any Affiliate except upon fair and reasonable terms
no less favorable to the Borrower or any Subsidiary than those that would
prevail in an arm's-length transaction with a Person which was not an Affiliate
and in a transaction entered into in the ordinary course of business and
pursuant to the reasonable requirements at the time of the Borrower or such
Subsidiary; PROVIDED that this SECTION 10.7 shall not apply to (a) Restricted
Payments permitted under SECTION 10.6, (b) indemnification of and contribution
to all Persons entitled to indemnification or contribution under Section 7.14 of
the Agreement of Limited Partnership of the Borrower (as in effect on the
Closing Date) to the extent such indemnification or contribution arises from
business or activities in connection with the Business (including securities
issuances in connection with funding the Business) or (c) transactions between
the Borrower and any Wholly-Owned domestic Subsidiary, or between Wholly-Owned
domestic Subsidiaries or between Wholly-Owned foreign Subsidiaries.
SECTION 10.8 BUSINESS OF BORROWER AND SUBSIDIARIES. Engage at any
time in any business or business activity other than the business currently
conducted by it and business activities reasonably incidental thereto, except to
the extent resulting from any acquisition permitted under SECTION 10.5.
SECTION 10.9 MATERIAL AGREEMENTS; TAX STATUS.
(a) (i) Directly or indirectly, make any payment, retirement,
repurchase or redemption on account of the principal of or directly or
indirectly prepay or defease any Indebtedness prior to the stated maturity date
of such Indebtedness (other than Indebtedness under the Loan Documents, Senior
Notes redeemed with the proceeds of Refinancing Notes or as required under
Section 4C of the Senior Note Agreement as in effect on the Closing Date or any
analogous provision under any Refinancing Note Agreement to the extent there is
no increase in the amount required to be redeemed), (ii) make any payment or
prepayment of any such Indebtedness that would violate the terms of this
Agreement or of such Indebtedness, any agreement or document evidencing, related
to or securing the payment or performance of such Indebtedness or any
subordination agreement or provision applicable to such Indebtedness or (iii)
pay in cash any amount in respect of any Indebtedness that may at the Borrower's
option be paid in kind.
(b) Amend or modify in any manner adverse to the Lenders, or grant any
waiver or release under (if such action shall be adverse to the Lenders), any
Recapitalization Document, any Partnership Document, the Senior Notes, the
Senior Note Agreement, any Refinancing Notes or any Refinancing Note Agreement,
Section 9 of the Compensation Deferral Plan, Sections 2 or 3 of the Rabbi Trust
<PAGE>
Agreement, or terminate in any manner any Partnership Document, it being
understood, without limitation, that no modification that reduces principal,
interest or fees, premiums, make-wholes or penalty charges, or extends any
scheduled or mandatory payment, prepayment or redemption of principal or
interest, or makes less restrictive any agreement or waives any condition
precedent or default, or entails the incurrence of additional Indebtedness by
the Borrower under the Senior Notes, the Senior Note Agreement, any Refinancing
Notes or any Refinancing Note Agreement shall be adverse to the Lenders for
purposes of this Agreement; PROVIDED, that with respect to the incurrence of
additional Indebtedness, subsequent to such additional Indebtedness, the
Borrower shall remain in compliance with SECTIONS 9.1, 9.2, 9.3 and 10.11 and
such additional Indebtedness shall be on terms and conditions no more
restrictive than the terms and conditions contained in the Senior Note
Agreement.
(c) Permit any Subsidiary to enter into any agreement or instrument
that by its terms restricts the payment of dividends or the making of cash
advances by such Subsidiary to the Borrower or any Subsidiary that is a direct
or indirect parent of such Subsidiary, other than those set forth in the Loan
Documents.
(d) Permit the Parent or the Borrower to be treated as an association
taxable as a corporation or otherwise to be taxed as an entity for Federal
income tax purposes.
SECTION 10.10 LEASE OBLIGATIONS. Permit the aggregate obligations
that are due and payable during any fiscal year of the Borrower and its
Subsidiaries under leases (other than obligations under Capital Leases) to
exceed $30,000,000 during such fiscal year.
SECTION 10.11 PRIORITY INDEBTEDNESS. The Borrower will not permit
Priority Indebtedness (as defined in the Senior Note Agreement) at any time to
exceed 25% of Consolidated Net Worth (as defined in the Senior Note Agreement).
SECTION 10.12 CERTAIN ACCOUNTING CHANGES. Change its Fiscal Year end,
or make any change in its accounting treatment and reporting practices except as
required by GAAP.
SECTION 10.13 MELLON NOTE PURCHASE. Make any payment of or set
aside for payment any cash, property or securities pursuant to the Mellon Note
Purchase Agreement except at such time as (a) no Default or Event of Default
exists or would be caused thereby, (b) an Event of Default (as defined in the
Mellon Loan Agreement) has occurred pursuant to Section 7.01(a), (h) or (i) of
the Mellon Loan Agreement, and (c) (i) the Borrower has received a notice of
exercise from the Lender (as defined in the Mellon Note Purchase Agreement) of
its right to require the Borrower to purchase the Mellon Note thereunder or (ii)
the Borrower desires to purchase the Mellon Note and the Required Lenders have
consented in writing in advance to such purchase.
SECTION 10.14 RESTRICTIVE AGREEMENTS. Enter into any Indebtedness
which contains any covenants (including, without limitation, a negative pledge
on assets) more restrictive than the provisions of Articles VIII, IX and X.
<PAGE>
ARTICLE XI
CONSENT
SECTION 11.1 CONSENTS AND WAIVERS. The Administrative Agent and the
Lenders, by the execution of this Agreement, consent to and waive any Default or
Event of Default resulting from the following:
(a) CHANGE IN OWNERSHIP. The Change in Ownership (as such term is used
and defined in the Existing Credit Agreement) caused by (i) the replacement of
the Previous General Partner by the General Partner and (ii) the removal of the
Qualified Owner (as defined in the Existing Credit Agreement).
(b) AMENDMENTS TO PARTNERSHIP AGREEMENTS AND SENIOR NOTE AGREEMENT.
The amendment to the Partnership Agreements and the Senior Note Agreement, in
each case as described in the Proxy Statement and each in the form as provided
to the Administrative Agent.
(c) TERMINATION OF THE DISTRIBUTION SUPPORT AGREEMENT. The termination
of the Distribution Support Agreement dated as of March 5, 1996 by and among the
Previous General Partner, the Parent and Millennium America, Inc., formerly
known as Hanson America, Inc.
(d) MELLON NOTE PURCHASE AGREEMENT. The incurrence of the Indebtedness
arising under the Mellon Note Purchase Agreement.
SECTION 11.2 EFFECT OF CONSENTS AND WAIVERS. Except as expressly
amended hereby, this Agreement and the Loan Documents shall be and remain in
full force and effect. The consents and waivers granted herein are specific and
limited and shall not constitute a modification, acceptance or waiver of any
other provision of or Default under this Agreement, the Loan Documents or any
other document or instrument entered into in connection herewith or therewith or
a future modification, acceptance or waiver of the provisions set forth herein
and therein (except to the extent necessary to give effect to the specific
consents and waivers set forth herein).
ARTICLE XII
DEFAULT AND REMEDIES
SECTION 12.1 EVENTS OF DEFAULT. Each of the following shall
constitute an Event of Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule or regulation
of any Governmental Authority or otherwise:
(a) DEFAULT IN PAYMENT OF PRINCIPAL OF LOANS AND REIMBURSEMENT
OBLIGATIONS. The Borrower shall default in any payment of principal of any Loan,
Note or Reimbursement Obligation when and as due (whether at maturity, by reason
of acceleration or otherwise).
<PAGE>
(b) OTHER PAYMENT DEFAULT. The Borrower shall default in the payment
when and as due (whether at maturity, by reason of acceleration or otherwise) of
interest on any Loan, Note or Reimbursement Obligation or the payment of any
other Obligation, and such default shall continue unremedied for three (3)
Business Days.
(c) MISREPRESENTATION. Any representation or warranty made or deemed
to be made by the Borrower or any of its Subsidiaries under this Agreement, the
Recapitalization Documents, any Loan Document or any amendment hereto or
thereto, shall prove to have been incorrect or misleading in any material
respect when made or deemed made.
(d) DEFAULT IN PERFORMANCE OF CERTAIN COVENANTS. The Borrower shall
default in the performance or observance of any covenant or agreement contained
in SECTION 7.1, 7.2, 7.4(E) or Articles IX or X of this Agreement.
(e) DEFAULT IN PERFORMANCE OF OTHER COVENANTS AND CONDITIONS. The
Borrower or any Subsidiary thereof shall default in the performance or
observance of any term, covenant, condition or agreement contained in this
Agreement (other than as specifically provided for otherwise in this SECTION
12.1) or any other Loan Document and such default shall continue for a period of
thirty (30) days after written notice thereof has been given to the Borrower by
the Administrative Agent.
(f) INDEBTEDNESS CROSS-DEFAULT. The Borrower or any of its
Subsidiaries shall (i) default in the payment of any Indebtedness (other than
that evidenced by the Notes or any Reimbursement Obligation; but including,
without limitation, the Indebtedness evidenced by the Senior Notes or any
Refinancing Notes), the aggregate outstanding amount of which Indebtedness is in
excess of $10,000,000 beyond the period of grace if any, provided in the
instrument or agreement under which such Indebtedness was created, or (ii)
default in the observance or performance of any other agreement or condition
relating to any Indebtedness (other than that evidenced by the Notes or any
Reimbursement Obligation; but including, without limitation, the Indebtedness
evidenced by the Senior Notes or any Refinancing Notes) the aggregate
outstanding amount of which Indebtedness is in excess of $10,000,000 or
contained in any instrument or agreement evidencing, securing or relating
thereto or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder or
holders of such Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause, with the giving of notice if required, any such Indebtedness
to become due prior to its stated maturity (any applicable grace period having
expired).
(g) OTHER CROSS-DEFAULTS. The Borrower or any of its Subsidiaries
shall default in the payment when due, or in the performance or observance, of
any obligation or condition of any material contract or agreement unless, but
only as long as, the existence of any such default is being contested by the
Borrower or such Subsidiary in good faith by appropriate proceedings and
adequate reserves in respect thereof have been established on the books of the
Borrower or such Subsidiary to the extent required by GAAP.
(h) CHANGE IN OWNERSHIP. A Change in Ownership shall occur.
<PAGE>
(i) VOLUNTARY BANKRUPTCY PROCEEDING. The Borrower or any Subsidiary
thereof shall (i) commence a voluntary case under the federal bankruptcy laws
(as now or hereafter in effect), (ii) file a petition seeking to take advantage
of any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts, (iii) consent
to or fail to contest in a timely and appropriate manner any petition filed
against it in an involuntary case under such bankruptcy laws or other laws, (iv)
apply for or consent to, or fail to contest in a timely and appropriate manner,
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, or liquidator of itself or of a substantial part of its property,
domestic or foreign, (v) admit in writing its inability to pay its debts as they
become due, (vi) make a general assignment for the benefit of creditors, or
(vii) take any corporate action for the purpose of authorizing any of the
foregoing.
(j) INVOLUNTARY BANKRUPTCY PROCEEDING. A case or other proceeding
shall be commenced against the Borrower or any Subsidiary thereof in any court
of competent jurisdiction seeking (i) relief under the federal bankruptcy laws
(as now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or adjustment of
debts, or (ii) the appointment of a trustee, receiver, custodian, liquidator or
the like for the Borrower or any Subsidiary thereof or for all or any
substantial part of their respective assets, domestic or foreign, and such case
or proceeding shall continue undismissed or unstayed for a period of sixty (60)
consecutive days, or an order granting the relief requested in such case or
proceeding (including, but not limited to, an order for relief under such
federal bankruptcy laws) shall be entered.
(k) FAILURE OF AGREEMENTS. Any provision of this Agreement or any
provision of any other Loan Document shall for any reason cease to be valid and
binding on the Borrower or any Subsidiary party thereto or any such Person shall
so state in writing, other than in accordance with the express terms hereof or
thereof.
(l) ERISA EVENT. The occurrence of any ERISA Event that, when taken
together with all other ERISA Events that have occurred, results in or could
reasonably be expected to result in liability of the Borrower and its ERISA
Affiliates in an aggregate amount exceeding $10,000,000.
(m) JUDGMENT. A judgment or order for the payment of money which
causes the aggregate amount of all such judgments to exceed $10,000,000 in any
Fiscal Year shall be entered against the Borrower or any of its Subsidiaries by
any court and such judgment or order shall continue undischarged or unstayed for
a period of thirty (30) days.
SECTION 12.2 REMEDIES. Upon the occurrence of an Event of Default,
with the consent of the Required Lenders, the Administrative Agent may, or upon
the request of the Required Lenders, the Administrative Agent shall, by notice
to the Borrower:
(a) ACCELERATION; TERMINATION OF CREDIT FACILITIES. Declare the
principal of and interest on the Loans, the Notes and the Reimbursement
Obligations at the time outstanding, and all other amounts owed to the Lenders
and to the Administrative Agent under this Agreement or any of the other Loan
<PAGE>
Documents (including, without limitation, all L/C Obligations, whether or not
the beneficiaries of the then outstanding Letters of Credit shall have presented
the documents required thereunder) and all other Obligations, to be forthwith
due and payable, whereupon the same shall immediately become due and payable
without presentment, demand, protest or other notice of any kind, all of which
are expressly waived, anything in this Agreement or the other Loan Documents to
the contrary notwithstanding, and terminate the Credit Facilities and any right
of the Borrower to request borrowings or Letters of Credit thereunder; PROVIDED,
that upon the occurrence of an Event of Default specified in SECTION 12.1(I) or
(j), the Credit Facilities shall be automatically terminated and all Obligations
shall automatically become due and payable without presentment, demand, protest
or other notice of any kind, all of which are expressly waived, anything in this
Agreement or in any other Loan Document to the contrary notwithstanding.
(b) LETTERS OF CREDIT. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to SECTION 12.2(A), require the Borrower at such time to
deposit in a cash collateral account with the Administrative Agent an amount
equal to the aggregate then undrawn and unexpired amount of such Letters of
Credit. Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay the
other Obligations. After all such Letters of Credit shall have expired or been
fully drawn upon, the Reimbursement Obligation shall have been satisfied and all
other Obligations shall have been paid in full, the balance, if any, in such
cash collateral account shall be returned to the Borrower.
(c) RIGHTS OF COLLECTION. Exercise on behalf of the Lenders all of
its other rights and remedies under this Agreement, the other Loan Documents and
Applicable Law, in order to satisfy all of the Borrower's Obligations.
SECTION 12.3 RIGHTS AND REMEDIES CUMULATIVE; NON-WAIVER; ETC. The
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Administrative Agent and the Lenders of any right or remedy
shall not preclude the exercise of any other rights or remedies, all of which
shall be cumulative, and shall be in addition to any other right or remedy given
hereunder or under the Loan Documents or that may now or hereafter exist in law
or in equity or by suit or otherwise. No delay or failure to take action on the
part of the Administrative Agent or any Lender in exercising any right, power or
privilege shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude other or further
exercise thereof or the exercise of any other right, power or privilege or shall
be construed to be a waiver of any Event of Default. No course of dealing
between the Borrower, the Administrative Agent and the Lenders or their
respective agents or employees shall be effective to change, modify or discharge
any provision of this Agreement or any of the other Loan Documents or to
constitute a waiver of any Event of Default.
<PAGE>
ARTICLE XIII
THE ADMINISTRATIVE AGENT
SECTION 13.1 APPOINTMENT. Each of the Lenders hereby irrevocably
designates and appoints First Union as Administrative Agent of such Lender under
this Agreement and the other Loan Documents for the term hereof and each such
Lender irrevocably authorizes First Union as Administrative Agent for such
Lender, to take such action on its behalf under the provisions of this Agreement
and the other Loan Documents and to exercise such powers and perform such duties
as are expressly delegated to the Administrative Agent by the terms of this
Agreement and such other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement or such other Loan Documents, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein and therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or the other Loan Documents or
otherwise exist against the Administrative Agent. Any reference to the
Administrative Agent in this Article XIII shall be deemed to refer to the
Administrative Agent solely in its capacity as Administrative Agent and not in
its capacity as a Lender.
SECTION 13.2 DELEGATION OF DUTIES. The Administrative Agent may
execute any of its respective duties under this Agreement and the other Loan
Documents by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by the Administrative Agent with
reasonable care.
SECTION 13.3 EXCULPATORY PROVISIONS. Neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates shall be (a) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with this
Agreement or the other Loan Documents (except for actions occasioned solely by
its or such Person's own gross negligence or willful misconduct), or (b)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or any of its Subsidiaries or
any officer thereof contained in this Agreement or the other Loan Documents or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Administrative Agent under or in connection with,
this Agreement or the other Loan Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the other Loan Documents or for any failure of the Borrower or any of its
Subsidiaries to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Borrower or any of its Subsidiaries.
SECTION 13.4 RELIANCE BY THE ADMINISTRATIVE AGENT. The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
<PAGE>
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless such
Note shall have been transferred in accordance with SECTION 14.10. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement and the other Loan Documents unless it shall first
receive such advice or concurrence of the Required Lenders (or, when expressly
required hereby or by the relevant other Loan Document, all the Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action except for its own gross
negligence or willful misconduct. The Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
and the Notes in accordance with a request of the Required Lenders (or, when
expressly required hereby, all the Lenders), and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders
and all future holders of the Notes.
SECTION 13.5 NOTICE OF DEFAULT. The Administrative Agent shall not
be deemed to have knowledge or notice of the occurrence of any Default or Event
of Default hereunder unless it has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, it shall promptly give notice
thereof to the Lenders. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders (or, when expressly required hereby, all the Lenders);
PROVIDED that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders, except to the extent that other provisions of this Agreement expressly
require that any such action be taken or not be taken only with the consent and
authorization or the request of the Lenders or Required Lenders, as applicable.
SECTION 13.6 NON-RELIANCE ON THE ADMINISTRATIVE AGENT AND OTHER
LENDERS. Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its respective officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates has made any representations or
warranties to it and that no act by the Administrative Agent hereinafter taken,
including any review of the affairs of the Borrower or any of its Subsidiaries,
shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
<PAGE>
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Borrower and its Subsidiaries and made its own decision
to make its Loans and issue or participate in Letter of Credit hereunder and
enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigation as it deems necessary to inform itself
as to the business, operations, property, financial and other condition and
creditworthiness of the Borrower and its Subsidiaries. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent hereunder or by the other Loan Documents, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, financial and other condition or creditworthiness of the Borrower or
any of its Subsidiaries which may come into the possession of the Administrative
Agent or any of its respective officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates.
SECTION 13.7 INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent in its capacity as such and (to the extent not reimbursed
by the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to the respective amounts of their Commitment Percentages,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Notes or any Reimbursement Obligation) be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or the other Loan Documents, or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; PROVIDED
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Administrative
Agent's bad faith, gross negligence or willful misconduct. The agreements in
this SECTION 13.7 shall survive the payment of the Notes, any Reimbursement
Obligation and all other amounts payable hereunder and the termination of this
Agreement.
SECTION 13.8 THE ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY.
The Administrative Agent and its respective Subsidiaries and Affiliates may make
loans to, accept deposits from and generally engage in any kind of business with
the Borrower as though the Administrative Agent were not an Administrative Agent
hereunder. With respect to any Loans made or renewed by it and any Note issued
to it and with respect to any Letter of Credit issued by it or participated in
by it, the Administrative Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the same
as though it were not an Administrative Agent, and the terms "Lender" and
"Lenders" shall include the Administrative Agent in its individual capacity.
SECTION 13.9 RESIGNATION OF THE ADMINISTRATIVE AGENT; SUCCESSOR
ADMINISTRATIVE AGENT. Subject to the appointment and acceptance of a successor
as provided below, the Administrative Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Administrative
Agent, which successor shall have minimum capital and surplus of at least
$500,000,000. If no successor Administrative Agent shall have been so appointed
by the Required Lenders and shall have accepted such appointment within thirty
<PAGE>
(30) days after the Administrative Agent's giving of notice of resignation, then
the Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which successor shall have minimum capital and surplus of
at least $500,000,000. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this SECTION 13.9 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.
SECTION 13.10 DOCUMENTATION AGENT. The Documentation Agent shall have
no liabilities, duties or responsibilities arising under this Agreement other
than those imposed upon it in its capacity as a Lender.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 NOTICES.
(a) METHOD OF COMMUNICATION. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to be
received by a party hereto (i) on the date of delivery if delivered by hand or
sent by telecopy, (ii) on the next Business Day if sent by recognized overnight
courier service and (iii) on the third Business Day following the date sent by
certified mail, return receipt requested. A telephonic notice to the
Administrative Agent as understood by the Administrative Agent will be deemed to
be the controlling and proper notice in the event of a discrepancy with or
failure to receive a confirming written notice.
(b) ADDRESSES FOR NOTICES. Notices to any party shall be sent to it at
the following addresses, or any other address as to which all the other parties
are notified in writing.
If to the Borrower: Suburban Propane, L.P.
One Suburban Plaza
240 Route 10 West
P.O. Box 206
Whippany, New Jersey 07981-0206
Attention: Robert M. Plante
Telephone No.: 973-503-9110
Telecopy No.: 973-503-9041
<PAGE>
With copies to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Marsha E. Simms, Esq.
Telephone No.: 212-310-8116
Telecopy No.: 212-310-8007
If to First Union as First Union National Bank
Administrative Agent: One First Union Center, TW-4
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Telephone No.: 704-383-0281
Telecopy No.: 704-383-0288
With copies to: Kennedy Covington Lobdell & Hickman, L.L.P.
NationsBank Corporate Center
Suite 4200
100 North Tryon Street
Charlotte, North Carolina 28202-4006
Attention: J. Donnell Lassiter
Telephone No.: 704-331-7444
Telecopy No.: 704-331-7598
If to any Lender: To the Address set forth on SCHEDULE 1 hereto.
(c) ADMINISTRATIVE AGENT'S OFFICE. The Administrative Agent hereby
designates its office located at the address set forth above, or any subsequent
office which shall have been specified for such purpose by written notice to the
Borrower and Lenders, as the Administrative Agent's Office referred to herein,
to which payments due are to be made and at which Loans will be disbursed and
Letters of Credit issued.
SECTION 14.2 EXPENSES; INDEMNITY. The Borrower will (a) pay all
out-of-pocket expenses of the Administrative Agent in connection with: (i) the
preparation, execution and delivery of this Agreement and each other Loan
Document, whenever the same shall be executed and delivered, including without
limitation all out-of-pocket syndication and due diligence expenses and
reasonable fees and disbursements of counsel for the Administrative Agent and
(ii) the preparation, execution and delivery of any waiver, amendment or consent
by the Administrative Agent or the Lenders relating to this Agreement or any
other Loan Document, including without limitation reasonable fees and
disbursements of counsel for the Administrative Agent, (b) pay all out-of-pocket
expenses of the Administrative Agent and the Lenders in connection with the
administration and enforcement of any rights and remedies of the Administrative
Agent and Lenders under the Credit Facilities, including consulting with
appraisers, accountants, engineers, attorneys and other Persons concerning the
nature, scope or value of any right or remedy of the Administrative Agent or any
Lender hereunder or under any other Loan Document or any factual matters in
connection therewith, which expenses shall include without limitation the
reasonable fees and disbursements of such Persons, and (c) defend, indemnify and
<PAGE>
hold harmless the Administrative Agent and the Lenders, and their respective
parents, Subsidiaries, Affiliates, employees, agents, officers and directors,
from and against any losses, penalties, fines, liabilities, settlements,
damages, costs and expenses, suffered by any such Person in connection with any
claim, investigation, litigation or other proceeding (whether or not the
Administrative Agent or any Lender is a party thereto) and the prosecution and
defense thereof, arising out of or in any way connected with the Agreement, any
other Loan Document or the Loans, including without limitation reasonable
attorney's and consultant's fees, except to the extent that any of the foregoing
directly result from the gross negligence or willful misconduct of the party
seeking indemnification therefor.
SECTION 14.3 SET-OFF. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon and after the occurrence of any Event of Default and during the continuance
thereof, the Lenders and any assignee or participant of a Lender in accordance
with SECTION 14.10 are hereby authorized by the Borrower at any time or from
time to time, without notice to the Borrower or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, time or demand, including, but not
limited to, indebtedness evidenced by certificates of deposit, whether matured
or unmatured) and any other indebtedness at any time held or owing by the
Lenders, or any such assignee or participant to or for the credit or the account
of the Borrower against and on account of the Obligations irrespective of
whether or not (a) the Lenders shall have made any demand under this Agreement
or any of the other Loan Documents or (b) the Administrative Agent shall have
declared any or all of the Obligations to be due and payable as permitted by
SECTION 12.2 and although such Obligations shall be contingent or unmatured.
Notwithstanding the preceding sentence, each Lender agrees to notify the
Borrower and the Administrative Agent after any such set-off and application;
provided, that the failure to give such notice shall not affect the validity of
such set-off and application.
SECTION 14.4 GOVERNING LAW. This Agreement, the Notes and the other
Loan Documents, unless otherwise expressly set forth therein, shall be governed
by, construed and enforced in accordance with the laws of the State of New York.
SECTION 14.5 CONSENT TO JURISDICTION. The Borrower hereby
irrevocably consents to the personal jurisdiction of the state and federal
courts located in New York County, New York, in any action, claim or other
proceeding arising out of any dispute in connection with this Agreement, the
Notes and the other Loan Documents, any rights or obligations hereunder or
thereunder, or the performance of such rights and obligations. The Borrower
hereby irrevocably consents to the service of a summons and complaint and other
process in any action, claim or proceeding brought by the Administrative Agent
or any Lender in connection with this Agreement, the Notes or the other Loan
Documents, any rights or obligations hereunder or thereunder, or the performance
of such rights and obligations, on behalf of itself or its property, in the
manner specified in SECTION 14.1. Nothing in this SECTION 14.5 shall affect the
right of the Administrative Agent or any Lender to serve legal process in any
other manner permitted by Applicable Law or affect the right of the
Administrative Agent or any Lender to bring any action or proceeding against the
Borrower or its properties in the courts of any other jurisdictions.
<PAGE>
SECTION 14.6 BINDING ARBITRATION; WAIVER OF JURY TRIAL.
(a) BINDING ARBITRATION. Upon demand of any party, whether made before
or after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to the Notes or any other
Loan Documents ("DISPUTES"), between or among parties to the Notes or any other
Loan Document shall be resolved by binding arbitration as provided herein.
Institution of a judicial proceeding by a party does not waive the right of that
party to demand arbitration hereunder. Disputes may include, without limitation,
tort claims, counterclaims, claims brought as class actions, claims arising from
Loan Documents executed in the future, disputes as to whether a matter is
subject to arbitration, or claims concerning any aspect of the past, present or
future relationships arising out of or connected with the Loan Documents.
Arbitration shall be conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "ARBITRATION RULES") of the American Arbitration
Association and Title 9 of the U.S. Code. All arbitration hearings shall be
conducted in New York, New York. The expedited procedures set forth in Rule 51,
et seq. of the Arbitration Rules shall be applicable to claims of less than
$1,000,000. All applicable statutes of limitation shall apply to any Dispute. A
judgment upon the award may be entered in any court having jurisdiction.
Notwithstanding anything foregoing to the contrary, any arbitration proceeding
demanded hereunder shall begin within ninety (90) days after such demand thereof
and shall be concluded within one-hundred twenty (120) days after such demand.
These time limitations may not be extended unless a party hereto shows cause for
extension and then such extension shall not exceed a total of sixty (60) days.
The panel from which all arbitrators are selected shall be comprised of licensed
attorneys. The single arbitrator selected for expedited procedure shall be a
retired judge from the highest court of general jurisdiction, state or federal,
of the state where the hearing will be conducted, or, if no such judge is
available, a retired judge, with substantial appellate experience, from any
appellate court of general jurisdiction, state or federal, of such state. The
parties hereto do not waive any applicable Federal or state substantive law
except as provided herein. Notwithstanding the foregoing, this paragraph shall
not apply to any Hedging Agreement that is a Loan Document.
(b) JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
ADMINISTRATIVE AGENT, EACH LENDER AND THE BORROWER HEREBY IRREVOCABLY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR
OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT,
THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
(c) PRESERVATION OF CERTAIN REMEDIES. Notwithstanding the preceding
binding arbitration provisions, the parties hereto and the other Loan Documents
preserve, without diminution, certain remedies that such Persons may employ or
exercise freely, either alone, in conjunction with or during a Dispute. Each
such Person shall have and hereby reserves the right to proceed in any court of
proper jurisdiction or by self help to exercise or prosecute the following
remedies: (i) all rights to foreclose against any real or personal property or
other security by exercising a power of sale granted in the Loan Documents or
under applicable law or by judicial foreclosure and sale, (ii) all rights of
<PAGE>
self help including peaceful occupation of property and collection of rents, set
off, and peaceful possession of property, (iii) obtaining provisional or
ancillary remedies including injunctive relief (including, without limitation,
pursuant to SECTION 14.8), sequestration, garnishment, attachment, appointment
of receiver and in filing an involuntary bankruptcy proceeding, and (iv) when
applicable, a judgment by confession of judgment. Preservation of these remedies
does not limit the power of an arbitrator to grant similar remedies that may be
requested by a party in a Dispute.
SECTION 14.7 REVERSAL OF PAYMENTS. To the extent the Borrower makes
a payment or payments to the Administrative Agent for the ratable benefit of the
Lenders or the Administrative Agent receives any payment or proceeds of the
collateral which payments or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds repaid, the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or proceeds had not been received by the Administrative
Agent.
SECTION 14.8 INJUNCTIVE RELIEF; PUNITIVE DAMAGES.
(a) The Borrower recognizes that, in the event the Borrower fails to
perform, observe or discharge any of its obligations or liabilities under this
Agreement, any remedy of law may prove to be inadequate relief to the Lenders.
Therefore, the Borrower agrees that the Lenders, at the Lenders' option, shall
be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
(b) The Administrative Agent, the Lenders and the Borrower (on behalf
of itself and its Subsidiaries) hereby agree that no such Person shall have a
remedy of punitive or exemplary damages against any other party to a Loan
Document and each such Person hereby waives any right or claim to punitive or
exemplary damages that they may now have or may arise in the future in
connection with any Dispute, whether such Dispute is resolved through
arbitration or judicially.
(c) The parties agree that they shall not have a remedy of punitive or
exemplary damages against any other party in any Dispute and hereby waive any
right or claim to punitive or exemplary damages they have now or which may arise
in the future in connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.
SECTION 14.9 ACCOUNTING MATTERS. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by the
Borrower or any Subsidiary thereof to determine compliance with any covenant
contained herein, shall, except as otherwise expressly contemplated hereby or
unless there is an express written direction by the Administrative Agent to the
contrary agreed to by the Borrower, be performed in accordance with GAAP as in
effect on the Closing Date. In the event that changes in GAAP shall be mandated
by the Financial Accounting Standards Board, or any similar accounting body of
comparable standing, or shall be recommended by the Borrower's certified public
<PAGE>
accountants, to the extent that such changes would modify such accounting terms
or the interpretation or computation thereof, such changes shall be followed in
defining such accounting terms only from and after the date the Borrower and the
Required Lenders shall have amended this Agreement to the extent necessary to
reflect any such changes in the financial covenants and other terms and
conditions of this Agreement.
SECTION 14.10 SUCCESSORS AND ASSIGNS; PARTICIPATIONS.
(a) BENEFIT OF AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Administrative Agent and the Lenders,
all future holders of the Notes, and their respective successors and assigns,
except that the Borrower shall not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) ASSIGNMENT BY LENDERS. Each Lender may, with the consent of the
Administrative Agent and the Borrower, which consents shall not be unreasonably
withheld and not required of the Borrower upon the occurrence and continuation
of a Default or Event of Default, assign to one or more Eligible Assignees all
or a portion of its interests, rights and obligations under this Agreement and
the other Loan Documents (including, without limitation, all or a portion of the
Extensions of Credit at the time owing to it and the Notes held by it); PROVIDED
that:
(i) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Lender's rights and obligations under
this Agreement;
(ii) if less than all of the assigning Lender's Commitment is
to be assigned, the Commitment so assigned shall not be less than $5,000,000;
(iii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance in the form of EXHIBIT G attached hereto
(an "ASSIGNMENT AND ACCEPTANCE"), together with any Note or Notes subject to
such assignment;
(iv) such assignment shall not, without the consent of the
Borrower, require the Borrower to file a registration statement with the
Securities and Exchange Commission or apply to or qualify the Loans or the Notes
under the blue sky laws of any state;
(v) no consent of the Borrower or the Administrative Agent
shall be required for an assignment to an Affiliate or Subsidiary of the
assigning Lender; and
(vi) the assigning Lender shall pay to the Administrative
Agent an assignment fee of $3,000 upon the execution by such Lender of the
Assignment and Acceptance; PROVIDED that no such fee shall be payable upon any
assignment by a Lender to an Affiliate thereof.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the execution thereof, (A) the
<PAGE>
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereby
and (B) the Lender thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement.
(c) RIGHTS AND DUTIES UPON ASSIGNMENT. By executing and delivering an
Assignment and Acceptance, the assigning Lender thereunder and the assignee
thereunder confirm to and agree with each other and the other parties hereto as
set forth in such Assignment and Acceptance.
(d) REGISTER. The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders and the amount of the Extensions of
Credit with respect to each Lender from time to time (the "REGISTER"). The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Administrative Agent and the Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by the Borrower
or Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) ISSUANCE OF NEW NOTES. Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an Eligible Assignee together
with any Note or Notes subject to such assignment and the written consent to
such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is substantially in the form of EXHIBIT G:
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the
Register;
(iii) give prompt notice thereof to the Lenders and the
Borrower; and
(iv) promptly deliver a copy of such Assignment and
Acceptance to the Borrower.
Within five (5) Business Days after receipt of notice, the Borrower shall
execute and deliver to the Administrative Agent, in exchange for the surrendered
Note or Notes, a new Note or Notes to the order of such Eligible Assignee in
amounts equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and a new Note or Notes to the order of the assigning Lender in an
amount equal to the Commitment retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of the assigned Notes delivered to the assigning Lender. Each surrendered Note
or Notes shall be canceled and returned to the Borrower.
<PAGE>
(f) PARTICIPATIONS. Each Lender may sell participations to one or more
banks or other entities in all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Extensions of Credit and the Notes held by it); PROVIDED that:
(i) each such participation shall be in an amount not less
than $5,000,000;
(ii) such Lender's obligations under this Agreement
(including, without limitation, its Commitment) shall remain unchanged;
(iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(iv) such Lender shall remain the holder of the Notes held by
it for all purposes of this Agreement;
(v) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement;
(vi) such Lender shall not permit such participant the right
to approve any waivers, amendments or other modifications to this Agreement or
any other Loan Document other than waivers, amendments or modifications which
would reduce the principal of or the interest rate on any Loan or Reimbursement
Obligation, extend the term or increase the amount of the Commitment, reduce the
amount of any fees to which such participant is entitled, extend any scheduled
payment date for principal of any Loan or, except as expressly contemplated
hereby or thereby, release substantially all of the Collateral; and
(vii) any such disposition shall not, without the consent of
the Borrower, require the Borrower to file a registration statement with the
Securities and Exchange Commission to apply to qualify the Loans or the Notes
under the blue sky law of any state.
(g) DISCLOSURE OF INFORMATION; CONFIDENTIALITY. The Administrative
Agent and the Lenders shall hold all non-public information with respect to the
Borrower obtained pursuant to the Loan Documents in accordance with their
customary procedures for handling confidential information; provided, that the
Administrative Agent may disclose information relating to this Agreement to Gold
Sheets and other similar bank trade publications, such information to consist of
deal terms and other information customarily found in such publications and
provided further, that the Administrative Agent and Lenders may disclose any
such information to the extent such disclosure is required by law or requested
by any regulatory authority. Any Lender may, in connection with any assignment,
proposed assignment, participation or proposed participation pursuant to this
SECTION 14.10, disclose to the assignee, participant, proposed assignee or
proposed participant, any information relating to the Borrower furnished to such
Lender by or on behalf of the Borrower; PROVIDED, that prior to any such
disclosure, each such assignee, proposed assignee, participant or proposed
participant shall agree with the Borrower or such Lender to preserve the
confidentiality of any confidential information relating to the Borrower
received from such Lender.
<PAGE>
(h) CERTAIN PLEDGES OR ASSIGNMENTS. Nothing herein shall prohibit any
Lender from pledging or assigning any Note to any Federal Reserve Bank in
accordance with Applicable Law.
SECTION 14.11 AMENDMENTS, WAIVERS AND CONSENTS. Except as set forth
below or as specifically provided in any Loan Document, any term, covenant,
agreement or condition of this Agreement or any of the other Loan Documents may
be amended or waived by the Lenders, and any consent given by the Lenders, if,
but only if, such amendment, waiver or consent is in writing signed by the
Required Lenders (or by the Administrative Agent with the consent of the
Required Lenders) and delivered to the Administrative Agent and, in the case of
an amendment, signed by the Borrower; PROVIDED, that no amendment, waiver or
consent shall (a) increase the amount or extend the time of the obligation of
the Lenders to make Loans or issue or participate in Letters of Credit
(including without limitation pursuant to SECTION 3.5), (b) reduce or forgive
the principal amount of any Loan or Reimbursement Obligation, (c) extend the
originally scheduled time or times of payment of the principal of any Loan or
Reimbursement Obligation or the time or times of payment of interest on any
Loan, (d) reduce the rate of interest or fees payable on any Loan or
Reimbursement Obligation or any fee or commission with respect thereto, (e)
permit any subordination of the principal or interest on any Loan or
Reimbursement Obligation, (f) permit any assignment (other than as specifically
permitted or contemplated in this Agreement) of any of the Borrower's rights and
obligations hereunder, (g) terminate or cancel any Guarantee Agreement or
release any Guarantor from its obligations under a Guarantee Agreement or (h)
amend the provisions of SECTION 14.10(A), this SECTION 14.11 or the definition
of Required Lenders, without the prior written consent of each Lender. In
addition, no amendment, waiver or consent to the provisions of (a) Article XIII
shall be made without the written consent of the Administrative Agent and (b)
Article III without the written consent of the Issuing Lender.
SECTION 14.12 PERFORMANCE OF DUTIES. The Borrower's obligations under
this Agreement and each of the Loan Documents shall be performed by the Borrower
at its sole cost and expense.
SECTION 14.13 ALL POWERS COUPLED WITH INTEREST. All powers of
attorney and other authorizations granted to the Lenders, the Administrative
Agent and any Persons designated by the Administrative Agent or any Lender
pursuant to any provisions of this Agreement or any of the other Loan Documents
shall be deemed coupled with an interest and shall be irrevocable so long as any
of the Obligations remain unpaid or unsatisfied or the Credit Facilities have
not been terminated.
SECTION 14.14 SURVIVAL OF INDEMNITIES. Notwithstanding any
termination of this Agreement, the indemnities to which the Administrative Agent
and the Lenders are entitled under the provisions of this Article XIV and any
other provision of this Agreement and the Loan Documents shall continue in full
force and effect and shall protect the Administrative Agent and the Lenders
against events arising after such termination as well as before.
<PAGE>
SECTION 14.15 TITLES AND CAPTIONS. Titles and captions of Articles,
Sections and subsections in, and the table of contents of, this Agreement are
for convenience only, and neither limit nor amplify the provisions of this
Agreement.
SECTION 14.16 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 14.17 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
SECTION 14.18 TERM OF AGREEMENT. This Agreement shall remain in
effect from the Closing Date through and including the date upon which all
Obligations shall have been indefeasibly and irrevocably paid and satisfied in
full. No termination of this Agreement shall affect the rights and obligations
of the parties hereto arising prior to such termination or in respect of any
provision of this Agreement which survives such termination.
SECTION 14.19 INCONSISTENCIES WITH OTHER DOCUMENTS; INDEPENDENT
EFFECT OF COVENANTS.
(a) In the event there is a conflict or inconsistency between this
Agreement and any other Loan Document, the terms of this Agreement shall
control.
(b) The Borrower expressly acknowledges and agrees that each covenant
contained in Articles VIII, IX or X shall be given independent effect.
Accordingly, the Borrower shall not engage in any transaction or other act
otherwise permitted under any covenant contained in Articles VIII, IX or X if,
before or after giving effect to such transaction or act, the Borrower shall or
would be in breach of any other covenant contained in Articles VIII, IX or X.
[Signature pages to follow]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, all as of the day and year first
written above.
SUBURBAN PROPANE, L.P.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
FIRST UNION NATIONAL BANK,
as Administrative Agent, as Lender,
as Swingline Lender and as Issuing
Lender
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE>
THE BANK OF NEW YORK,
as Documentation Agent and as Lender
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE>
ABN AMRO BANK N.V.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS......................................................1
SECTION 1.1 Definitions.................................................1
SECTION 1.2 General.....................................................21
SECTION 1.3 Other Definitions and Provisions............................21
ARTICLE II THE CREDIT FACILITIES...........................................22
SECTION 2.1 Revolving Credit Loans......................................22
SECTION 2.2 Swingline Loans.............................................23
SECTION 2.3 Liquidity Loans.............................................24
SECTION 2.4 Acquisition Loans...........................................24
ARTICLE III LETTER OF CREDIT FACILITY......................................25
SECTION 3.1 L/C Commitment..............................................25
SECTION 3.2 Procedure for Issuance of Letters of Credit.................25
SECTION 3.3 Commissions and Other Charges...............................26
SECTION 3.4 L/C Participations..........................................26
SECTION 3.5 Reimbursement Obligation of the Borrower....................27
SECTION 3.6 Obligations Absolute........................................28
ARTICLE IV GENERAL LOAN PROVISIONS.........................................28
SECTION 4.1 Procedure for Advances of Loans.............................28
SECTION 4.2 Repayment of Loans..........................................29
SECTION 4.3 Notes.......................................................30
SECTION 4.4 Limitations on Incurrence of Extensions of Credit...........31
SECTION 4.5 Permanent Reduction of the Revolving Credit Commitment
and the Acquisition Commitment..............................32
SECTION 4.6 Termination of Credit Facilities............................33
SECTION 4.7 Interest....................................................33
SECTION 4.8 Notice and Manner of Conversion or Continuation of Loans....35
SECTION 4.9 Fees........................................................36
SECTION 4.10 Manner of Payment...........................................36
SECTION 4.11 Crediting of Payments and Proceeds..........................36
SECTION 4.12 Adjustments.................................................37
SECTION 4.13 Nature of Obligations of Lenders Regarding Extensions
of Credit; Assumption by the Administrative Agent...........37
<PAGE>
SECTION 4.14 Changed Circumstances.......................................38
SECTION 4.15 Indemnity...................................................39
SECTION 4.16 Capital Requirements........................................40
SECTION 4.17 Taxes.......................................................40
SECTION 4.18 Duty to Mitigate; Assignment of Commitments Under
Certain Circumstances.......................................42
ARTICLE V CLOSING; CONDITIONS OF CLOSING AND BORROWING.....................42
SECTION 5.1 Closing.....................................................42
SECTION 5.2 Conditions to Closing and Initial Extensions of Credit......43
SECTION 5.3 Conditions to All Extensions of Credit......................46
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BORROWER..................46
SECTION 6.1 Representations and Warranties..............................46
SECTION 6.2 Survival of Representations and Warranties, Etc.............53
ARTICLE VII FINANCIAL INFORMATION AND NOTICES..............................53
SECTION 7.1 Financial Statements........................................53
SECTION 7.2 Officer's Compliance Certificate............................54
SECTION 7.3 Other Reports...............................................54
SECTION 7.4 Notice of Litigation and Other Matters......................55
SECTION 7.5 Accuracy of Information.....................................55
ARTICLE VIII AFFIRMATIVE COVENANTS.........................................56
SECTION 8.1 Existence; Businesses and Properties........................56
SECTION 8.2 Insurance...................................................56
SECTION 8.3 Taxes.......................................................56
SECTION 8.4 Employee Benefits...........................................57
SECTION 8.5 Access to Premises and Records; Confidentiality.............57
SECTION 8.6 Compliance with Laws........................................57
SECTION 8.7 Additional Guarantors.......................................57
SECTION 8.8 Use of Proceeds.............................................58
SECTION 8.9 Partnership Documents.......................................58
SECTION 8.10 Compliance with Environmental and Safety Laws...............58
SECTION 8.11 Preparation of Environmental Reports........................58
SECTION 8.12 Corporate Identity..........................................58
SECTION 8.13 Federal Reserve Regulations.................................59
SECTION 8.14 Available Cash Reserves.....................................59
SECTION 8.15 Further Assurances..........................................59
SECTION 8.16 Year 2000 Compatibility.....................................59
SECTION 8.17 Commodity Hedging Policy....................................60
ARTICLE IX FINANCIAL COVENANTS.............................................60
SECTION 9.1 Interest Coverage Ratio.....................................60
SECTION 9.2 Leverage Ratio..............................................60
<PAGE>
SECTION 9.3 Adjusted Consolidated Net Worth.............................60
ARTICLE X NEGATIVE COVENANTS...............................................60
SECTION 10.1 Indebtedness................................................60
SECTION 10.2 Liens.......................................................63
SECTION 10.3 Sale and Lease-Back Transactions............................65
SECTION 10.4 Investments, Loans and Advances.............................65
SECTION 10.5 Mergers, Consolidations, Sales of Assets and Acquisitions...66
SECTION 10.6 Restricted Payments.........................................68
SECTION 10.7 Transactions with Affiliates................................69
SECTION 10.8 Business of Borrower and Subsidiaries.......................69
SECTION 10.9 Material Agreements; Tax Status.............................69
SECTION 10.10 Lease Obligations...........................................70
SECTION 10.11 Priority Indebtedness.......................................70
SECTION 10.12 Certain Accounting Changes..................................70
SECTION 10.13 Mellon Note Purchase........................................70
SECTION 10.14 Restrictive Agreements......................................70
ARTICLE XI CONSENT.........................................................71
SECTION 11.1 Consents and Waivers........................................71
SECTION 11.2 Effect of Consents and Waivers..............................71
ARTICLE XII DEFAULT AND REMEDIES...........................................71
SECTION 12.1 Events of Default...........................................71
SECTION 12.2 Remedies....................................................73
SECTION 12.3 Rights and Remedies Cumulative; Non-Waiver; etc.............74
ARTICLE XIII THE ADMINISTRATIVE AGENT......................................75
SECTION 13.1 Appointment.................................................75
SECTION 13.2 Delegation of Duties........................................75
SECTION 13.3 Exculpatory Provisions......................................75
SECTION 13.4 Reliance by the Administrative Agent........................75
SECTION 13.5 Notice of Default...........................................76
SECTION 13.6 Non-Reliance on the Administrative Agent and Other Lenders..76
SECTION 13.7 Indemnification.............................................77
SECTION 13.8 The Administrative Agent in Its Individual Capacity.........77
SECTION 13.9 Resignation of the Administrative Agent; Successor
Administrative Agent........................................77
SECTION 13.10 Documentation Agent.........................................78
ARTICLE XIV MISCELLANEOUS..................................................78
SECTION 14.1 Notices.....................................................78
SECTION 14.2 Expenses; Indemnity.........................................79
SECTION 14.3 Set-off.....................................................80
SECTION 14.4 Governing Law...............................................80
<PAGE>
SECTION 14.5 Consent to Jurisdiction.....................................80
SECTION 14.6 Binding Arbitration; Waiver of Jury Trial...................81
SECTION 14.7 Reversal of Payments........................................82
SECTION 14.8 Injunctive Relief; Punitive Damages.........................82
SECTION 14.9 Accounting Matters..........................................82
SECTION 14.10 Successors and Assigns; Participations......................83
SECTION 14.11 Amendments, Waivers and Consents............................86
SECTION 14.12 Performance of Duties.......................................86
SECTION 14.13 All Powers Coupled with Interest............................86
SECTION 14.14 Survival of Indemnities.....................................86
SECTION 14.15 Titles and Captions.........................................87
SECTION 14.16 Severability of Provisions..................................87
SECTION 14.17 Counterparts................................................87
SECTION 14.18 Term of Agreement...........................................87
SECTION 14.19 Inconsistencies with Other Documents; Independent
Effect of Covenants.........................................87
<PAGE>
EXHIBITS
Exhibit A-1 - ........Form of Revolving Credit Note
Exhibit A-2 - ........Form of Acquisition Note
Exhibit A-3 - ........Form of Swingline Note
Exhibit B - ........Form of Notice of Borrowing
Exhibit C - ........Form of Notice of Account Designation
Exhibit D - ........Form of Notice of Prepayment
Exhibit E - ........Form of Notice of Conversion/Continuation
Exhibit F - ........Form of Officer's Compliance Certificate
Exhibit G - ........Form of Assignment and Acceptance
Exhibit H - ........Form of Amended and Restated Guarantee Agreement
Exhibit I - ........Senior Note Agreement
SCHEDULES
Schedule 1 - .......Lenders and Commitments
Schedule 6.1(a) - .......Jurisdictions of Organization and Qualification
Schedule 6.1(b) - .......Subsidiaries and Capitalization
Schedule 6.1(m) - .......Contingent Obligations
Schedule 6.1(n) - .......Employee Relations
Schedule 6.1(u) - .......Indebtedness and Contingent Obligations
Schedule 6.1(v) - .......Litigation
Schedule 10.2 - .......Existing Liens
EXHIBIT 10.(b)
--------------
AMENDMENT NO. 2
TO NOTE AGREEMENT FOR
7.54% SENIOR NOTES DUE 2011
SUBURBAN PROPANE, L.P.
March 29, l999
To each of the Holders of the 7.54%
Senior Notes due 2011 of Suburban
Propane, L.P.
Ladies and Gentlemen:
Suburban Propane, L.P. (the "Company") has heretofore issued its 7.54%
Senior Notes due June 30, 2011 (the "Notes") in the aggregate principal amount
of $425,000,000 under and pursuant to the Note Agreement, dated as of February
28, 1996, among the Company and the original purchasers of the Notes, as amended
by Amendment No. 1 dated May 5, 1998 (such agreement, as so amended, the "Note
Agreement"). Terms used herein which are defined in the Note Agreement are used
herein as so defined.
Suburban Propane Partners, L.P., a Delaware limited partnership (which
is the "Partnership" as defined in the Note Agreement), proposes to enter into a
series of transactions that will include, INTER ALIA, (i) replacing the current
General Partner of the Company (Suburban Propane GP, Inc.) with a new General
Partner (Suburban Energy Services Group LLC) which will be wholly-owned by
members of management of the Partnership and the Company (the "General Partner
Change"), (ii) amending the Partnership Agreement of the Company in certain
respects to admit the new General Partner and delete the requirement in the
Partnership Agreement that the General Partner take no action which would cause
its net worth to be less than $28 million (the "Partnership Amendments"), (iii)
terminating the Distribution Support Agreement dated as of March 6, 1996 (the
"Distribution Support Termination") and (iv) effecting a distribution to the
Partnership of up to $69,000,000 to permit the Partnership to redeem the
Subordinated Units and APU's (each as defined in the Partnership Agreement of
the Partnership) currently held by Suburban Propane Partners, L.P. (the
"Redemption Distribution"), each of the General Partner Change, the Partnership
Amendments, the Distribution Support Termination and the Redemption Distribution
being as more particularly described in the Preliminary Proxy Statement of the
Partnership (filed with the Securities and Exchange Commission on March 26,
1999) a copy of which has been delivered to each holder of Notes (the "Proxy
Statement").
In connection with the foregoing the Company is requesting certain
amendments to, and consents and waivers under and in respect of, the Note
Agreement and, subject to the terms and provisions hereof, each undersigned
<PAGE>
holder of Notes is agreeable thereto. Accordingly, the Company agrees with you
as follows:
1. CONSENTS AND WAIVERS. Each undersigned holder of Notes hereby
consents to the consummation of (i) the General Partner Change and waives
compliance by the Company with the provisions of paragraph 5K (OPERATIVE
AGREEMENTS) and paragraph 6I (TRANSACTIONS WITH AFFILIATES) of the Note
Agreement in connection therewith, (ii) the Partnership Amendments and hereby
waives compliance by the Company with the provisions of paragraph 5K (OPERATIVE
AGREEMENTS) and paragraph 6I (TRANSACTIONS WITH AFFILIATES) of the Note
Agreement in connection therewith, (iii) the Distribution Support Termination
and hereby waives compliance by the Company with the provisions of paragraph 6I
(TRANSACTIONS WITH AFFILIATES) and paragraph 6M (MATERIAL AGREEMENTS; TAX
STATUS) of the Note Agreement in connection therewith, and (iv) the Redemption
Distribution and hereby waives compliance by the Company with the provisions of
paragraph 6I (TRANSACTIONS WITH AFFILIATES) and paragraph 6F (RESTRICTED
PAYMENTS) of the Note Agreement in connection therewith (it being understood
that the Redemption Distribution shall not constitute a Restricted Payment
within the meaning of the Note Agreement), PROVIDED that the foregoing
transactions shall be consummated substantially on the terms described in, and
in the context of the consummation of the "Recapitalization" substantially as
provided in, the Proxy Statement. The effectiveness of this Agreement shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of any of the holders of the Notes under this Agreement or the Note
Agreement, nor constitute a waiver of any other provision of this Agreement or
the Note Agreement.
2. PARAGRAPH 5U. The Note Agreement is hereby amended by adding a new
paragraph 5U thereto reading as follows:
5U. INCORPORATED DEBT PROVISIONS. If the Company shall enter
into, assume or otherwise be or become liable under (a "Debt
Incurrence") any agreement or instrument executed and delivered in
connection with any outstanding Indebtedness (or pursuant to any
revolving credit or similar arrangement under which Indebtedness may
be outstanding) (herein called an "Other Debt Agreement") containing
one or more Additional Covenants or Additional Defaults (the
"Incorporated Debt Provisions"), such Incorporated Debt Provisions
shall IPSO FACTO be incorporated herein as if fully set forth at this
place with such changes MUTATIS MUTANDIS to make such Incorporated
Debt Provisions applicable to this Agreement and the Notes without any
further requirement for notice or action on the part of the Company or
any holder of a Note. The Company agrees that upon any such Debt
Incurrence it will (x) give notice thereof, together with a copy of
the applicable Incorporated Debt Provisions, to the holders of the
Notes and (y) execute and deliver at its expense (including, without
limitation, the fees and expenses of counsel for the holders of the
Notes) an amendment to this Agreement evidencing the amendment of this
Agreement to include such Incorporated Debt Provisions, PROVIDED that
<PAGE>
such execution and delivery shall not be necessary for or a condition
to the incorporation of the Incorporated Debt Provisions as provided
in the preceding sentence. Any amendment or deletion of any Additional
Covenant or Additional Default arising out of any amendment to, or
termination of, the relevant Other Debt Document shall become
effective to effect the same amendment to (or deletion of) such
Additional Covenant or Additional Default, as the case may be, on the
180th day following the Company's giving notice thereof to the holders
of the Notes; PROVIDED, that no Default or Event of Default shall have
occurred and be continuing on such 180th day.
3. PARAGRAPH 6A. Paragraph 6A of the Note Agreement is amended in its
entirety to read as follows:
6A. FINANCIAL RATIOS. The Company will not permit:
(i) ADJUSTED CONSOLIDATED NET WORTH. Adjusted Consolidated
Net Worth at any time to be less than $50,000,000.
(ii) RATIO OF CONSOLIDATED TOTAL INDEBTEDNESS TO EBITDA. The
ratio of Consolidated Total Indebtedness at the end of any fiscal
quarter to exceed (x) 5.10 times Consolidated EBITDA for any
period of four fiscal quarters ending on or prior to March 31,
2001 or (y) 5.00 times Consolidated EBITDA for any period of four
fiscal quarters ending after March 31, 2001.
(iii) RATIO OF EBITDA TO INTEREST EXPENSE. The ratio of
Consolidated EBITDA for any period of four fiscal quarters to
Consolidated Interest Expense for such period (minus interest
income included in Consolidated Net Income for such period) to be
less than 2.50 to 1.0.
Notwithstanding any of the provisions of this Agreement, the
Company will not, and will not permit any Restricted Subsidiary to,
enter into any transaction pursuant to paragraph 5O, paragraph 6B,
clauses (vii) and (viii) of paragraph 6C, paragraph 6F, clauses
(i)(b), (i)(c), (ii)(b) and (iii) of paragraph 6G and paragraph 6I, if
the consummation of any such transaction would result in a violation
of clause (ii) or (iii) of this paragraph 6A, calculated for such
purpose as of the date on which such transaction were to be
consummated, both immediately before and after giving effect to the
consummation of such transaction. All such calculations shall be made
on a PRO FORMA basis in accordance with GAAP after giving effect to
any such transaction, with the ratio recomputed as at the last day of
the most recently ended fiscal quarter of the Company as if such
transaction had occurred on the first day of the relevant four quarter
period. In computing Consolidated EBITDA for the purposes of clauses
(ii) and (iii) of this paragraph 6A there shall be added to
Consolidated Net Income (in addition to the other adjustments provided
<PAGE>
for in the definition of Consolidated EBITDA) for the relevant period
the sum of all non-recurring charges taken in connection with the
Recapitalization Transaction to the extent such non-recurring charges
were deducted in determining Consolidated Net Income for such period
(but limited to an aggregate amount of not more than $20,000,000 for
all periods of which not more than $7,500,000 of such charges shall be
cash charges).
4. PARAGRAPH 6B. Subparagraphs 6B(ii) and 6B(iv) of the Note Agreement
are amended in their entirety to read, respectively, as follows:
(ii) the Company may become and remain liable with respect
to Indebtedness incurred under the Revolving Credit Facility and
for any purpose permitted by the Revolving Credit Facility and
any Indebtedness incurred for any such permitted purpose which
replaces, extends, renews, refunds or refinances any such
Indebtedness, in whole or in part; PROVIDED that (x) the
aggregate principal amount of Indebtedness permitted under this
clause (ii) shall not at any time exceed $75,000,000 and (y)
there shall be a period of 30 consecutive days in the period of
four consecutive fiscal quarters ending on September 30 in each
year when no such Indebtedness shall be outstanding in an amount
exceeding the sum of (x) $15,000,000, (y) amounts borrowed as
permitted under this clause (ii) for the purpose of making
acquisitions (not exceeding $25,000,000 in the aggregate) and (z)
until March 31, 2001, amounts borrowed to finance the minimum
quarterly distributions to the Partnership's limited partnership
unitholders (not exceeding $22,000,000 in the aggregate);
(iv) the Company and any Restricted Subsidiary may become
and remain liable with respect Indebtedness, in addition to that
otherwise permitted by the other clauses of this paragraph 6B, if
on the date the Company or any Restricted Subsidiary becomes
liable with respect to any such additional Indebtedness and
immediately after giving effect thereto and to the substantially
concurrent repayment of any other Indebtedness (a) the ratio of
Consolidated Cash Flow for the period of the four most recent
fiscal quarters ending on or prior to the date of determination
("Measurement Cash Flow") to Consolidated Debt Service is equal
to or greater than 2.50 to 1.0 and (b) the ratio of Measurement
Cash Flow to Consolidated Pro Forma Maximum Debt Service is equal
to or greater than 1.25 to 1.0;
5. PARAGRAPH 7A. Clause (v) of paragraph 7A of the Note Agreement is
hereby amended in its entirety to read as follows:
(v) the Company fails to perform, observe or comply with any
agreement contained in paragraph 6 or in any Additional Covenant
incorporated herein as provided in paragraph 5U, or any event
constituting an Additional Default incorporated herein as
provided in paragraph 5U shall have occurred and be continuing;
<PAGE>
6. PARAGRAPH 10B. (a) The definition of General Partner set forth in
paragraph 10B of the Note Agreement is amended in its entirety to read as
follows:
"GENERAL PARTNER" shall mean Suburban Energy Services Group
LLC, a Delaware limited liability company.
(b) Paragraph 10B of the Note Agreement is further amended by adding
thereto the following additional terms in proper alphabetical order:
"ADDITIONAL COVENANT" shall mean any affirmative or negative
covenant or similar restriction applicable to the Company or any
Restricted Subsidiary (regardless of whether such provision is labeled
or otherwise characterized as a covenant) the subject matter of which
either (i) is similar to that of the covenants in paragraphs 5 and 6 of
this Agreement, or related definitions in paragraph 10 of this
Agreement, but contains one or more percentages, amount or formulas
that is more restrictive than those set forth herein or more beneficial
to the holder or holders of the Indebtedness created or evidenced by
the document in which such covenant or similar restriction is contained
(and such covenant or similar restriction shall be deemed an
"Additional Covenant" only to the extent that it is more restrictive or
more beneficial) or (ii) provides for (x) restrictions on the
incurrence of Indebtedness, sales of assets or the making of Restricted
Payments or (y) the maintenance of financial ratios or of any balance
sheet item at any particular level in a manner which is different from
the subject matter of the covenants in paragraph 5 and 6 of this
Agreement, or related definitions in paragraph 10 of this Agreement.
"ADDITIONAL DEFAULT" shall mean any provision contained in any
document or instrument creating or evidencing Indebtedness of the
Company which permits the holder or holders of Indebtedness to
accelerate (with the passage of time or giving of notice or both) the
maturity thereof or otherwise requires the Company or any Restricted
Subsidiary to purchase such Indebtedness prior to the stated maturity
thereof and which either (i) is similar to the Defaults and Events of
Default contained in paragraph 7 of this Agreement, or related
definitions in paragraph 10 of this Agreement, but contains one or more
percentages, amounts or formulas that is more restrictive or has a
shorter grace period than those set forth herein or is more beneficial
to the holder or holders of such other Indebtedness (and such provision
shall be deemed an "Additional Default" only to the extent that it is
more restrictive, has a shorter grace period or is more beneficial) or
(ii) is different from the subject matter of the Defaults and Events of
Default contained in paragraph 7 of this Agreement, or related
definitions in paragraph 10 of this Agreement; PROVIDED, HOWEVER that
no such provision that arises solely as the result of a violation of
any affirmative or negative covenant or similar restriction contained
in such document or instrument (whether or not the same is an
<PAGE>
Additional Covenant) shall be an Additional Default.
"RECAPITALIZATION TRANSACTION" shall mean and include all
transactions effected in connection with the consummation of the
"Recapitalization" substantially in the manner and substantially on the
terms described in the Preliminary Proxy Statement of the Partnership
filed with the Securities and Exchange Commission on March 26, 1999.
7. EFFECTIVENESS. The consents and waivers under, and the amendments
to, the Note Agreement set forth above shall become effective upon (i) receipt
by the Company of counterparts of this letter executed by the Required Holders,
(ii) payment by the Company of a fee to each holder of outstanding Notes in an
amount equal to 0.375% of the outstanding principal amount of Notes held by such
holder and (iii) the consummation of the Recapitalization substantially as
described in the Proxy Statement. The Company represents and warrants to the
holders of the Notes that no Default or Event of Default exists (nor will any
such Default or Event of Default exist after giving effect to the effectiveness
of this Agreement and the consummation of the Recapitalization as described in
the Proxy Statement) and that in connection with this solicitation of the
consents of the holders of the Notes it is in compliance with the provisions of
paragraph 11C of the Note Agreement. The Company shall give notice of the
effectiveness hereof to all of the holders of the Notes as provided in the Note
Agreement.
8. NOTE AGREEMENT. Except as expressly amended hereby, the Note
Agreement shall continue in full force and effect in accordance with the
provisions thereof.
[Balance of this page is blank. Next page is the signature page.]
<PAGE>
If you are in agreement with the foregoing, please sign the
form of acceptance on an enclosed counterpart of this letter and return the same
to the Company, whereupon this letter shall become a binding agreement between
us (subject to effectiveness as aforesaid).
SUBURBAN PROPANE, L.P.
By:
---------------------------------
Title:
The foregoing letter
is hereby accepted:
- ---------------------------
(Name of Institution)
By:
------------------------
Title:
EXHIBIT 10.(c)
--------------
SECOND AMENDMENT
----------------
The Employment Agreement dated March 5, 1996, and the First Amendment thereto
dated October 23, 1997, between Mark A. Alexander (the "Executive") and Suburban
Propane, L.P. (the "Partnership") (collectively the "Employment Agreement") are
hereby modified and amended this 14th day of April, 1999, as follows:
RECITALS
--------
WHEREAS, Suburban Propane Partners, L.P., the sole limited partner of
the Partnership ("Suburban"), has entered into an Amended and
Restated Recapitalization Agreement dated as of March 15, 1999
(the "Recapitalization Agreement") with the Partnership, the
general partner of the Partnership and of Suburban (the
"General Partner"), the General Partner's parent and Suburban
Energy Services Group LLC, a new entity in which the Executive
will hold equity interests (the "LLC"); and
WHEREAS, pursuant to the Recapitalization Agreement, among other
things, the LLC will purchase from the General Partner all of
the general partner interests held by the General Partner in
the Partnership and Suburban and the LLC will become the new
general partner of Suburban (the "Substitution Transaction");
and
WHEREAS, the Substitution Transaction constitutes a "Change of Control"
for purposes of section 6.1 of the Employment Agreement; and
WHEREAS, the Executive entered into a letter agreement dated December
18, 1998 (the "Letter Agreement") under which the Executive
agreed (i) to waive certain rights under the Employment
Agreement that would become exercisable upon the consummation
of the Substitution Transaction insofar as it constitutes a
"Change of Control" and (ii) to modify the definition of
"Change of Control" in the Employment Agreement to exclude
therefrom any sale or transfer of the General Partner interest
that might occur after the consummation of the Substitution
Transaction; and
WHEREAS, the Partnership and the Executive wish to enter into this
Second Amendment to amend the Employment Agreement as provided
in the Letter Agreement and to replace and supersede the
Letter Agreement in all respects, upon the terms and subject
to the conditions herein.
NOW THEREFORE, In consideration of foregoing recitals, the terms and conditions
of this Second Amendment, the Partnership's payment of one dollar ($1) to the
Executive, and other valuable consideration, receipt of which are hereby
acknowledged, the parties agree as follows:
AGREEMENT
---------
1. RECITALS. The foregoing recitals are incorporated into this Amendment
by reference, as if fully set forth herein at length, and shall be
considered terms of the Amendment.
2. WAIVER OF RIGHTS EXERCISED ON SUBSTITUTION TRANSACTION. The Executive
hereby waives his right to receive any payments described in section
6.1(a) of the Employment Agreement that would otherwise become payable
if he were to terminate his employment under such section other than
with "Good Reason" (as defined in the Employment Agreement) during the
six-month period commencing on the six-month anniversary of the date of
the Substitution Transaction. Nothing in this section 2 is intended or
shall be construed to limit in any manner the right of the Executive to
terminate his employment other than with Good Reason during such
six-month period and any other right that the Executive may have with
<PAGE>
respect to a termination of his employment under such section 6.1(a) by
the Partnership without Cause or by the Executive with Good Reason
following the consummation of the Substitution Transaction.
3. AMENDMENT OF DEFINITION OF CHANGE OF CONTROL. The parties agree that
upon the completion of the Recapitalization, the definition of "Change
of Control" set forth in section 6.5(c) of the Employment Agreement
shall be amended and restated in its entirety as follows:
"CHANGE OF CONTROL" means the occurrence during the Employment
Term of:
(i) an acquisition (other than directly from the MLP) of
Common Units or voting equity interests of the MLP
("VOTING SECURITIES") by any "PERSON" (as the term is
used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT")), other than the MLP, Suburban Energy
Services Group LLC or any of their affiliates,
immediately after which such Person has "BENEFICIAL
OWNERSHIP" (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than
twenty five percent (25%) of the combined voting
power of the MLP's then outstanding Units; PROVIDED,
HOWEVER, that in determining whether a Change of
Control has occurred, Units which are acquired in a
`Non-Control Acquisition' (as hereinafter defined)
shall not constitute an acquisition which would cause
a Change of Control. A "NON-CONTROL ACQUISITION"
shall mean an acquisition by (i) an employee benefit
plan (or a trust forming a part thereof) maintained
by (A) the MLP or the Partnership or (B) any
corporation, partnership or other Person of which a
majority of its voting power or its voting equity
securities or equity interest is owned, directly or
indirectly, by the MLP (for the purposes of this
definition, a "SUBSIDIARY"), (ii) the MLP or its
Subsidiaries, or (iii) any Person in connection with
a "NON-CONTROL TRANSACTION" (as hereinafter defined);
or
(ii) approval by the partners of the MLP of (A) a merger,
consolidation or reorganization involving the MLP,
unless (x) the holders of Units immediately before
such merger, consolidation or reorganization own,
directly or indirectly immediately following such
merger, consolidation or reorganization, at least
sixty percent (60%) of the combined voting power of
the outstanding Units of the entity resulting from
such merger, consolidation or reorganization (the
"SURVIVING ENTITY") in substantially the same
proportion as their ownership of the Units
immediately before such merger, consolidation or
reorganization, and (y) no person or entity (other
than the MLP, any Subsidiary, any employee benefit
plan (or any trust forming a part thereof) maintained
by the MLP, the Partnership, the Surviving Entity, or
any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial
Ownership of more than twenty five percent (25%) of
the then outstanding Units), has Beneficial Ownership
of more than twenty five percent (25%) of the
combined voting power of the Surviving Entity's then
outstanding voting securities; (B) a complete
liquidation or dissolution of the MLP; or (C) the
sale or other disposition of fifty percent (50%) or
<PAGE>
more of the net assets of the MLP to any Person
(other than a transfer to a Subsidiary). A
transaction described in clause (x) or (y) of
subsection (a) hereof shall be referred to as a
"NON-CONTROL TRANSACTION".
Notwithstanding the foregoing, a Change of Control
shall not be deemed to occur solely because any
Person (the "SUBJECT PERSON") acquired Beneficial
Ownership of more than the permitted amount of the
outstanding Voting Securities as a result of the
acquisition of Voting Securities by the MLP which, by
reducing the number of Voting Securities outstanding,
increases the proportional number of units
Beneficially Owned by the Subject Person, provided
that if a Change of Control would occur (but for the
operation of this sentence) as a result of the
acquisition of the Voting Securities by the MLP, and
after such acquisition of Voting Securities by the
MLP, the Subject Person becomes the Beneficial Owner
of any additional Voting Securities which increases
the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Person,
than a Change of Control shall occur.
4. CONTINUED FORCE AND EFFECT OF EMPLOYMENT AGREEMENT. The Parties agree
that the terms and conditions of the Employment Agreement remain in
full force and effect except as amended herein.
5. SECTION HEADINGS. The section headings utilized in this Amendment are
only to be used for reference and organization. The headings are not to
be considered terms of this Amendment nor should they be utilized when
interpreting the terms and conditions of this Amendment.
IN WITNESS WHEREOF, the Parties hereto have caused this three (3) page
Amendment, inclusive of this signature page, to be duly executed as of the
effective date noted above.
Mark A. Alexander Suburban Propane, L.P.
(Executive) (Partnership)
By: By:
---------------------------- ---------------------------------
Title:
------------------------------
EXHIBIT 10.(d)
--------------
RESOLUTION OF THE COMPENSATION COMMITTEE
----------------------------------------
OF THE BOARD OF SUPERVISORS OF SUBURBAN PROPANE, L.P.
-----------------------------------------------------
WHEREAS, Suburban Propane Partners, L.P. ("Suburban"), the sole limited
partner of Suburban Propane, L.P. (the "Partnership"), has
entered into an Amended and Restated Recapitalization
Agreement dated as of March 15, 1999 (the "Recapitalization
Agreement") with the Partnership, the general partner of the
Partnership and of Suburban (the "General Partner"), the
General Partner's parent and Suburban Energy Services Group
LLC (the "LLC"); and
WHEREAS, pursuant to the Recapitalization Agreement, among other
things, the LLC will purchase from the General Partner all of
the general partner interests held by the General Partner in
the Partnership and in Suburban and the LLC will become the
new general partner of Suburban (the "Substitution
Transaction"); and
WHEREAS, the Substitution Transaction would constitute a "Change of
Control" for purposes of section 11.3 of the March 5, 1996,
Suburban Propane, L.P. Supplemental Executive Retirement Plan
(the "Plan"); and
WHEREAS, the Compensation Committee of the Board of Supervisors of the
Partnership (the "Compensation Committee"), solely in
anticipation of the consummation of the Recapitalization and
the Substitution Transaction, wishes to exercise its right
pursuant to section 12.1 of the Plan to modify or amend the
definition of "Change of Control" in the Plan to exclude
therefrom any sale or transfer of the General Partner prior to
the consummation of the Substitution Transaction.
NOW THEREFORE, it is
RESOLVED, that upon the completion of the Recapitalization, but prior to the
consummation of the Substitution Transaction, the definition of "Change of
Control" set forth in section 11.3 of the Plan, which definition begins "For
purposes of this Section . . .", shall be amended and restated in its entirety
as follows:
For purposes of this Section 11.3 "CHANGE OF CONTROL" means the
occurrence during the term of the Plan of:
(i) an acquisition (other than directly from the MLP) of Common
Units or voting equity interests of the MLP ("VOTING
SECURITIES") by any "PERSON" (as the term is used for purposes
of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT")), other than the MLP,
Suburban Energy Services Group LLC or any of their affiliates,
immediately after which such Person has "BENEFICIAL OWNERSHIP"
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than twenty five percent (25%) of the
combined voting power of the MLP's then outstanding Units;
PROVIDED, HOWEVER, that in determining whether a Change of
Control has occurred, Units which are acquired in a
`Non-Control Acquisition' (as hereinafter defined) shall not
constitute an acquisition which would cause a Change of
Control. A "NON-CONTROL ACQUISITION" shall mean an acquisition
by (i) an employee benefit plan (or a trust forming a part
thereof) maintained by (A) the MLP or the Partnership or
<PAGE>
(B) any corporation, partnership or other Person of which a
majority of its voting power or its voting equity securities
or equity interest is owned, directly or indirectly, by the
MLP (for the purposes of this definition, a "SUBSIDIARY"),
(ii) the MLP or its Subsidiaries, or (iii) any Person in
connection with a "NON-CONTROL TRANSACTION" (as hereinafter
defined); or
(ii) approval by the partners of the MLP of (A) a merger,
consolidation or reorganization involving the MLP, unless (x)
the holders of Units immediately before such merger,
consolidation or reorganization own, directly or indirectly
immediately following such merger, consolidation or
reorganization, at least sixty percent (60%) of the combined
voting power of the outstanding Units of the entity resulting
from such merger, consolidation or reorganization (the
"SURVIVING ENTITY") in substantially the same proportion as
their ownership of the Units immediately before such merger,
consolidation or reorganization, and (y) no person or entity
(other than the MLP, any Subsidiary, any employee benefit plan
(or any trust forming a part thereof) maintained by the MLP,
the Partnership, the Surviving Entity, or any Person who,
immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of more than twenty
five percent (25%) of the then outstanding Units), has
Beneficial Ownership of more than twenty five percent (25%) of
the combined voting power of the Surviving Entity's then
outstanding voting securities; (B) a complete liquidation or
dissolution of the MLP; or (C) the sale or other disposition
of fifty percent (50%) or more of the net assets of the MLP to
any Person (other than a transfer to a Subsidiary). A
transaction described in clause (x) or (y) of subsection (a)
hereof shall be referred to as a "NON-CONTROL TRANSACTION".
Notwithstanding the foregoing, a Change of Control shall not be deemed
to occur solely because any Person (the "SUBJECT PERSON") acquired
Beneficial Ownership of more than the permitted amount of the
outstanding Voting Securities as a result of the acquisition of Voting
Securities by the MLP which, by reducing the number of Voting
Securities outstanding, increases the proportional number of units
Beneficially Owned by the Subject Person, provided that if a Change of
Control would occur (but for the operation of this sentence) as a
result of the acquisition of the Voting Securities by the MLP, and
after such acquisition of Voting Securities by the MLP, the Subject
Person becomes the Beneficial Owner of any additional Voting Securities
which increases the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Person, than a Change of
Control shall occur.
BY:
------------------------------------
John Hoyt Stookey
Chairman of the Board of Supervisors
BY:
------------------------------------
Harold R. Logan, Jr.
BY:
------------------------------------
George H. Hempstead, III
Dated: April 14, 1999
EXHIBIT 10.(e)
--------------
COMPENSATION DEFERRAL PLAN
OF
SUBURBAN PROPANE PARTNERS, L.P.
AND
SUBURBAN PROPANE, L.P.
(A Nonqualified Plan of Deferred Compensation)
Effective May 26, 1999
<PAGE>
COMPENSATION DEFERRAL PLAN
SECTION 1: PURPOSE
-------
The purpose of the Compensation Deferral Plan sponsored by
Suburban Propane Partners, L.P. and Suburban Propane, L.P. (the "Deferral Plan")
is to allow Eligible Employees to surrender their right to receive all or a
portion of their unvested Common Units granted under the Suburban Propane
Partners, L.P. 1996 Restricted Unit Plan ("Restricted Unit Plan") prior to the
time their Common Units are substantially certain to vest in exchange for the
right to participate in and receive certain payments under the Deferral Plan.
The Deferral Plan also allows Eligible Employees to defer receipt of Special
Common Units that may be granted by the Partnership prior or subsequent to the
effective date of the Deferral Plan. The Deferral Plan shall be effective for
amounts payable on or after May 26, 1999. The Deferral Plan is intended to be a
nonqualified "top-hat" plan; that is, an unfunded plan of deferred compensation
maintained for certain employees of a select group of management or highly
compensated employees pursuant to Sections 201(2), 30l(a)(3), and 40l(a)(l) of
ERISA, and an unfunded plan of deferred compensation under the Code.
SECTION 2: DEFINITIONS
-----------
2.1: "Acquisition Loan Note" means the promissory note of even date
herewith of the General Partner in favor of Mellon Bank, N.A. in the original
aggregate principal amount of $6,000,000.
2.2: "Acquisition Loan Termination Date" means the date on which all
amounts due and owing under the Acquisition Loan Note are repaid in full,
whether upon maturity, acceleration, prepayment or otherwise.
<PAGE>
2.3: "Beneficiary" means the individual, individuals or estate entitled
(as determined under Section 7) to receive payment under the Deferral Plan
following a Participant's death.
2.4: "Board" means the Board of Supervisors of the Partnership from time
to time established in accordance with the Second Amended and Restated Agreement
of Limited Partnership of the Partnership of even date herewith, as in effect
from time to time.
2.5: "Change in Control" means:
(i) an acquisition (other than directly from the MLP) of Common Units or
voting equity interests of the MLP ("Voting Securities") by any
"Person" (as the term person is used for purposes of Section 13(d) or
14(d) of the Exchange Act), other than the MLP, the Partnership, the
General Partner or any affiliate of the General Partner, immediately
after which such Person has "Beneficial Ownership" (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of more than thirty
three and one-third percent (33-1/3%) of the combined voting power of
the MLP's then outstanding Units; PROVIDED, HOWEVER, that in
determining whether a Change in Control has occurred, Units which are
acquired in a "Non-Control Acquisition" shall not constitute an
acquisition which would cause a Change in Control. For purposes of this
definition of Change in Control, a "Non-Control Acquisition" means an
acquisition by (i) an employee benefit plan (or trust forming a part
thereof) maintained by (A) the MLP, the Partnership or any of its
affiliates or (B) any corporation, partnership or other Person of which
a majority of its voting power or its voting equity securities or
equity interests is owned, directly or indirectly, by the MLP (for
<PAGE>
purposes of this definition of Non-Control Acquisition, any such
corporation, partnership or other person, a "Subsidiary"), (ii) the MLP
or its Subsidiaries, or (iii) any Person in connection with a
"Non-Control Transaction" (as defined in clause (ii) of this definition
of Change in Control); or
(ii) approval by the requisite percentage of the partners of the MLP of (A)
a merger, consolidation or reorganization involving the MLP, unless
(x) the holders of Units immediately before such merger, consolidation
or reorganization own, directly or indirectly immediately following
such merger, consolidation or reorganization, at least sixty percent
(60%) of the combined voting power of the outstanding Units of the
entity resulting from such merger, consolidation or reorganization
(the "Surviving Entity") in substantially the same proportion as their
ownership of the Units immediately before such merger, consolidation
or reorganization, and (y) no person or entity (other than the MLP,
any Subsidiary, any employee benefit plan (or any trust forming a part
thereof) maintained by the Partnership, the MLP, the Surviving Entity,
or any person who, immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of more than thirty three and
one-third percent (33-1/3%) of the then outstanding Units), has
Beneficial Ownership of more than thirty three and one-third percent
(33-1/3%) of the combined voting power of the Surviving Entity's then
outstanding voting securities (any such merger or consolidation under
the immediately preceding subclauses (x) and (y) of this clause (A), a
"Non-Control Transaction"); (B) a complete liquidation or dissolution
of the MLP; or (C) the sale or other disposition of 50% or more of the
net assets of the MLP to any Person (other than a transfer to a
Subsidiary).
<PAGE>
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the MLP which,
by reducing the number of Voting Securities outstanding, increases the
proportional number of units Beneficially Owned by the Subject Person, provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of Voting Securities by the MLP, and after such
acquisition by the MLP, the Subject Person becomes the Beneficial Owner of any
additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
2.6: "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
2.7: "Committee" means a committee consisting of at least two (2) members
of the Board appointed by the Board to administer the Plan and to perform the
functions set forth herein. Each of such member shall be a "non-employee"
director within the meaning of Section 16b-3 of the Exchange Act.
2.8: "Common Units" means the common units representing limited
partnership interests of the MLP and, where applicable, Special Common Units.
<PAGE>
2.9: "Date of Deferral" means (i) the date the MLP deposits Common Units
into the Trust pursuant to a Participant's election to surrender the right to
receive Common Units under the Restricted Unit Plan and (ii) with respect to
Special Common Units only, the date on which the MLP deposits such Special
Common Units into the trust on behalf of the Eligible Employee.
2.10: "Deferral Election Form" means the written agreement of a
Participant, in such form as may be prescribed by the Committee, filed with the
Partnership according to procedures and at such times as established by the
Committee.
2.11: "Deferral Plan" has the meaning set forth in Section 1.
2.12: "Employee" means a person who is an employee of the Partnership or
one of its affiliates and "Eligible Employee" means a person who is a
participant in the Restricted Unit Plan designated by the Committee or any other
employee so designated by the Committee.
2.13: "Equity Investment Fund Rate" means the difference between the value
of the equity fund (designated on Schedule 2.13 attached hereto) determined as
of (i) the later of the Date of Deferral or the effective date of a
Participant's election under Section 8.2(c), and (ii) the relevant valuation
date for determining the amount of earnings of such investment fund in
accordance with Section 8. Such value shall include any hypothetical dividends
and hypothetical capital gains distributions paid on such investment fund during
the period for which the Equity Investment Fund Rate is being determined, as if
such hypothetical dividends or hypothetical capital gains distributions are
reinvested when payable in additional shares of such fund. The value of such
<PAGE>
investment fund for purposes of this Section 2.13 shall mean the net asset value
of such investment fund as reported by such fund.
2.14: "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.15: "Fixed Income Fund Rate" means the difference between the value of
the fixed income fund (designated on Schedule 2.15 attached hereto) as of (i)
the later of the Date of Deferral or the effective date of a Participant's
election under Section 8.2(c), and (ii) the relevant valuation date for
determining the amount of earnings of such investment fund in accordance with
Section 8. Such value shall include any hypothetical dividends and hypothetical
capital gains distributions paid on such investment fund during the period for
which the Fixed Income Rate is being determined, as if such hypothetical
dividends or hypothetical capital gains distributions are reinvested when
payable in additional shares of such fund. The value of such investment fund for
purposes of this Section 2.15 shall mean the net asset value of such investment
fund as reported by such fund.
2.16: "General Partner" means Suburban Energy Services Group LLC, a
Delaware limited liability company, as general partner of the MLP and the
Partnership.
2.17: "MLP" means Suburban Propane Partners, L.P., a Delaware limited
partnership.
2.18: "MLP Partnership Agreement" means the Second Amended and Restated
Partnership Agreement of the MLP of even date herewith, as in effect from time
to time.
<PAGE>
2.19: "Note Purchase Agreement" means the Note Purchase Agreement between
the Partnership and Mellon Bank, N.A. relating to the Acquisition Loan Note.
2.20: "Operating Agreement" means the Operating Agreement of the General
Partner of even date herewith, as in effect from time to time.
2.21: "Participant" means an Eligible Employee who participates in the
Deferral Plan under Section 4.
2.22: "Partnership" means Suburban Propane, L.P., a Delaware limited
partnership, and its successors.
2.23: "Percentage Interest" means a Participant's membership interest in
the General Partner as determined in accordance with the Operating Agreement.
2.24: "Special Common Units" means Common Units subject to forfeiture as
described in Section 5.2.
2.25: "Quarterly Distribution" means any quarterly distribution on the
Common Units and on the General Partner's general partner interest in the MLP
made by the MLP from time to time pursuant to the MLP Partnership Agreement.
2.26: "Trust Agreement" means the Benefits Protection Trust Agreement
entered into by the MLP with First Union National Bank, as trustee, effective as
of May 26, 1999.
2.27: "Trust" means the Trust established under the Trust Agreement.
<PAGE>
2.28: "Trustee" means First Union National Bank, as trustee, or its
successor as designated under the Trust Agreement.
2.29: "Unforeseen Emergency" means an event beyond the control of the
Participant that would result in severe financial hardship to the Participant if
early withdrawal of all or a portion of the Participant's account balance (as
provided for in Section 6.1(b)) were not permitted. Whether a Participant has an
Unforeseen Emergency shall be determined by the Committee.
SECTION 3: ADMINISTRATION
--------------
3.1: The Committee shall supervise the administration and interpretation
of the Deferral Plan, may establish administrative regulations to further the
purpose of the Deferral Plan and shall take any other action necessary to the
proper operation of the Deferral Plan. The Committee has the discretion to take
any action or make any decision it deems necessary in the administration of the
Deferral Plan. All decisions and acts of the Committee shall be final and
binding upon all Participants, their Beneficiaries and all other persons.
3.2: The Committee shall provide each Participant, semi-annually, a
statement of the Participant's account balance under the Deferral Plan.
SECTION 4: ELIGIBILITY TO PARTICIPATE
--------------------------
4.1: An Eligible Employee shall become a Participant in the Deferral Plan
by the completion of a timely filing and acceptance by the Partnership of the
Deferral Election Form, in such form and according to the terms and conditions
established by the Committee. A Participant (or any Beneficiary who becomes
entitled) remains a Participant as to his account until his account balance is
fully distributed under the terms of the Deferral Plan.
<PAGE>
SECTION 5: PARTICIPATION
-------------
5.1: EFFECTIVE DATE OF PARTICIPATION. Participation under the Deferral
Plan shall become effective only on the Date of Deferral.
5.2: PARTICIPATION AS TO SPECIAL COMMON UNITS. The Partnership shall
deposit Special Common Units in the Trust with respect to the Eligible Employees
set forth on Schedule 1 attached hereto (as such schedule may be amended by the
Partnership from time to time to reflect additional Eligible Employees). Upon a
Participant's termination of employment, Special Common Units shall be forfeited
in accordance with Section 6.3(b).
SECTION 6: PAYMENTS TO PARTICIPANTS AND BENEFICIARIES
------------------------------------------
6.1: TIME OF PAYMENT. (a) Subject to subsections (b) and (c) of this
Section 6.1, a Participant shall make an irrevocable election to commence
receipt of payments under this Deferral Plan upon a specific future payment date
as set forth in the Deferral Election Form following the Date of Deferral;
PROVIDED, HOWEVER, distributions may be accelerated in accordance with Section
9. A Participant making such an election shall receive his or her lump sum
payment in the January next following his or her future payment date; or, if
applicable, such Participant shall receive installment payments in accordance
with Sections 6.2 or 6.3.
(b) A Participant who has not yet terminated employment, but who has an
Unforeseen Emergency, may receive any or all of his or her account
balance on or after the Acquisition Loan Termination Date; PROVIDED
that the Participant may not receive an amount greater than the amount
necessary to meet the Unforeseen Emergency and any amounts necessary
for the Participant to pay his or her federal, state and local income
taxes with respect to the amount received that are reasonably
anticipated to result from the withdrawal of such amount under this
Section 6.1.
<PAGE>
(c) Notwithstanding any provision in this Deferral Plan to the contrary, a
Participant may, prior to a Change in Control, elect to receive payment
of his or her account balance under this Deferral Plan at such time as
the Board determines that a Change in Control has occurred. Such
payment shall be made in a lump sum within 45 days after the Change in
Control.
6.2: FORM OF PAYMENTS. (a) A Participant may elect to receive payment
under this Deferral Plan in a lump sum or in annual or quarterly installments
over a period not to exceed twenty years, in accordance with terms of his or her
Deferral Election Form. Installment payments must commence as described in
Section 6.1, and must be completed by the calendar year in which the Participant
attains age 85. If a Participant does not elect the form of his or her payments,
such payments shall be made in a lump sum payment.
(b) A Participant may elect to receive installment payments either (i)
annually, with payment made each January or (ii) quarterly, with
payment commencing in the January that payment was otherwise due in
accordance with Section 6.1. If a Participant does not elect the form
of his her installment payments, such installment payments shall be
made annually each January.
<PAGE>
(c) A Participant may change the form of payment previously elected to
another form only one time; provided, however, that such election is
made at least six months prior to the Participant's scheduled
commencement of distributions pursuant to his or her Deferral Election
Form and the election is subject to the consent of the Committee.
(d) Subject to Section 6.3, if a Participant dies at any time before having
received any portion of his or her account balance under this Deferral
Plan, payment of the remaining amounts shall be made to the
Participant's Beneficiary as follows:
(1) If the Participant's Beneficiary is his or her surviving spouse,
such Participant's entire account balance under this Deferral
Plan shall be paid as follows:
(i) ten annual installments or a shorter schedule, if so
elected by the surviving spouse, or
(ii) a lump sum payment payable as soon as practicable but
in no event later than on or about the January 1st
following the Participant's death.
(2) If the Participant's Beneficiary is someone other than his or
her surviving spouse, such Participant's entire account balance
under this Deferral Plan shall be paid in a lump sum payment as
soon as practical following the Participant's death.
(3) If a Participant dies at any time after payment of his or her
account balance under this Deferral Plan has begun, such
Participant's Beneficiary shall continue to receive payment of
the Participant's account in the same manner as the Participant
elected, or such shorter payment schedule as elected by the
Beneficiary.
<PAGE>
(e) If any lump sum distribution otherwise payable under this Deferral Plan
would be disallowed in any part as a deduction to the Partnership in
accordance with Section l62(m) (or a successor section) of the Code,
the Committee may determine to distribute the amount of such benefit in
installments such that the Participant or Beneficiary shall receive the
maximum amount permissible in each installment and still preserve the
Partnership's full tax deduction.
6.3: TERMINATION OF EMPLOYMENT. (a) Distribution of a Participant's
deferral account shall commence as soon as practicable following the date of
distribution elected by the Participant pursuant to the Deferral Election Form,
regardless of whether a Participant has terminated employment for any reason
prior to such date; provided, however, if a Participant dies prior to the
distribution date elected on the Deferral Election Form, distribution shall
commence to the Participant's Beneficiary as soon as practicable following the
Acquisition Loan Termination Date.
(b) Notwithstanding anything to the contrary in this Plan, with respect to
Special Common Units, upon a Participant's termination of employment
from the Partnership for any reason prior to the fifth anniversary of
the Date of Deferral, the Participant shall forfeit any Special Common
Units as follows: (i) if termination of employment is prior to the
third anniversary of the Date of Deferral, 100% of the Participant's
Special Common Units, (ii) if termination of employment is prior to the
fourth anniversary of the Date of Deferral, 75% of the Participant's
Special Common Units, and (iii) if termination of the employment is
prior to the fifth anniversary, 50% of the Participant's Special Common
Units. Special Common Units granted to new employees shall be subject
to the forfeiture provisions of this Section 6.3(b). Any forfeited
Special Common Units shall be cancelled.
<PAGE>
6.4: PAYMENT IN U.S. DOLLARS. All payments under this Deferral Plan shall
be made in U.S. dollars or Common Units, as applicable.
6.5: REDUCTION OF PAYMENTS. All payments under this Deferral Plan shall
be reduced by any and all amounts that the Partnership is required to withhold
pursuant to applicable law.
6.6: ADDITIONAL DEFERRALS. Notwithstanding Section 6.1, a Participant who
has made an election deferral in accordance with Section 5 hereof, may make an
election to further defer such amounts; PROVIDED such election is made in
accordance with the following provisions:
(a) The additional deferral election must be made no later than (i)
six months prior to the scheduled date of distribution as set
forth on the Deferral Election Form and (ii) during the tax year
immediately preceding the year the Participant would otherwise
receive payments pursuant to Section 6.1 hereof;
(b) There may be only one additional deferral election made pursuant
to this Section 6.6.
SECTION 7: BENEFICIARIES
-------------
A Participant may at any time and from time to time prior to
death designate one or more Beneficiaries to receive any payments to be made
following the Participant's death. If no such designation is on file with the
Partnership at the time of a Participant's death, the Participant's Beneficiary
shall be the beneficiary or beneficiaries named in the beneficiary designation
most recently filed by the Participant with the Partnership. If the Participant
has not effectively designated a beneficiary, or if no beneficiary so designated
has survived the Participant, the Participant's Beneficiary shall be the
Participant's surviving spouse, or, if no spouse has survived the Participant,
<PAGE>
the estate of the deceased Participant. If an individual Beneficiary cannot be
located for a period of one year following the Participant's death, despite mail
notification to the Beneficiary's last known address, and if the Beneficiary has
not made a written claim for benefits within such period to the Committee, the
Beneficiary shall be treated as having predeceased the Participant. The
Committee may require such proof of death and such evidence of the right of any
person to receive all or part of the benefit of a deceased Participant as the
Committee may consider to be appropriate. The Committee may rely upon any
direction by the legal representatives of the estate of a deceased Participant,
without liability to any other person.
SECTION 8: EARNINGS ACCRUALS
-----------------
8.1: GENERAL. Each Participant's account balance shall be credited with
Quarterly Distributions plus earnings from the Date of Deferral through the date
such deferral is paid out, or withdrawn pursuant to Section 6, Section 8.3 or
Section 9. Earnings under this Section 8.1 shall accrue at the rate elected in
accordance with Section 8.2.
8.2: EARNINGS ACCRUAL RATE.
----------------------
(a) ACCRUAL RATES. Earnings accruing in accordance with Section 8.1 shall
accrue at (i) the Fixed Income Fund Rate, (ii) the Equity Investment
Fund Rate, or (iii) a combination of the two rates.
(b) INITIAL ELECTION. A Participant shall designate at the time of the
election to surrender the right to receive Common Units granted under
the Restricted Unit Plan which accrual rate or rates shall apply to the
Quarterly Distribution with respect to his or her deferral of Common
Units, provided that such designation must be in 10% increments,
effective as of the date the Acquisition Loan Note has been satisfied
in full. For all periods prior to the full repayment of the Acquisition
Loan Note, the Fixed Income Fund Rate shall apply.
(c) ELECTION CHANGES. Following the Acquisition Loan Termination Date, a
Participant may, as of each June 30th and December 31st, elect to
change the accrual rate under this Section 8.2 with respect to any or
all previous deferrals under the Deferral Plan.
SECTION 9: ACCELERATION OF PAYMENTS
------------------------
9.1: ACCELERATION. Notwithstanding any other provision of this Deferral
Plan to the contrary, pursuant to the Participant's acknowledgment in his or her
Deferral Election Form:
(a) the Partnership or the MLP may, in its sole discretion, if the
Partnership elects or is required to make any payment on the
Acquisition Loan Note under the Note Purchase Agreement, (i)
accelerate a Participant's rights to receive distributions under
this Deferral Plan of up to all of the Common Units and all
Quarterly Distributions accumulated in the Participant's
deferral account necessary to satisfy the Participant's pro rata
<PAGE>
share of the amount of the Partnership's payment on the
Acquisition Loan Note, where the Participant's pro rata share
of such amount is determined based on the Participant's
Percentage Interest (or deemed Percentage Interest under the
Operating Agreement), subject, in any event, to Section 9.2 with
respect to such accelerated payment, and also (ii) cause a
forfeiture of up to all of the Participants' rights to receive
distributions of all remaining Common Units and any future
Quarterly Distributions otherwise payable on such remaining
Common Units under this Deferral Plan; PROVIDED that if the
Partnership elects to cause a forfeiture under this subclause
(ii) of less than all of the Participants' rights to receive
distributions of all such remaining Common Units and any future
Quarterly Distributions on such remaining Common Units, then the
amount forfeited by each Participant shall be determined based
on the Participant's pro rata share of the total amount
forfeited, where the Participant's pro rata share of such total
amount is determined based on the Participant's Percentage
Interest (or deemed Percentage Interest under the Operating
Agreement);
(b) the Trustee shall, in the event it receives notice from the
General Partner of a capital call required to be made by the
Participants pursuant to the Operating Agreement, accelerate
distribution of each Participant's right to receive
distributions of all Quarterly Distributions accumulated in the
Participants deferral account to pay such capital call, with
each Participant's share of the capital call to be determined
based on the Participant's Percentage Interest (or deemed
Percentage Interest under the Operating Agreement), but subject
to the following:
<PAGE>
(i) for each fiscal quarter through the last day of the
fiscal quarter ending on March 31, 2001, the Trustee
may accelerate, as necessary to satisfy the capital
call, up to all amounts in excess of $232,500 of the
Quarterly Distributions deposited in the Participant's
deferral account during such quarter, plus all amounts
in excess of $232,500 of the Quarterly Distributions
deposited in the Participant's deferral account for
any previous fiscal quarter that were not already
distributed under this clause (i); and
(ii) at any time on or after the last day of the of the
fiscal quarter ending on March 31, 2001, the Trustee
may accelerate, as necessary to satisfy the capital
call, the sum of all accumulations, including
Quarterly Distributions, not previously distributed,
plus one-hundred percent (100%) of any or all the
accumulation of Quarterly Distributions and
accumulations thereon thereafter deposited in the
Participant's deferral account;
(c) if Adjusted Operating Surplus (as defined in the MLP Partnership
Agreement, but determined as set forth in the last proviso of
this Section 9.1(c))for any four fiscal-quarter period ending on
or prior to March 31, 2001 is less than the sum of the aggregate
<PAGE>
Minimum Quarterly Distribution (as defined in the MLP
Partnership Agreement) for such four fiscal-quarter period (a
"Distribution Shortfall"), then the MLP shall have the right to
cause the Trustee to accelerate a Participant's rights to
receive distributions under this Deferral Plan of all Quarterly
Distributions accumulated in the Participant's deferral account
as and to the extent necessary to pay the Participant's pro rata
share of the Distribution Shortfall with respect to the fiscal
quarter in which it occurs, but only with respect to any such
fiscal quarter ending on or prior to March 31, 2001, where the
Participant's pro rata share of the Distribution Shortfall is
determined based on the Participant's Percentage Interest (or
deemed Percentage Interest under the Operating Agreement);
PROVIDED that the accelerated payment for any such fiscal
quarter shall not exceed, in the aggregate, (i) $232,500 times
the number of fiscal quarters from and including the quarter
ending September 30, 1999 less (ii) any amounts previously
applied pursuant to this Section 9.1(c) and; PROVIDED FURTHER,
for all purposes of the definition of Adjusted Operating Surplus
under the MLP Partnership Agreement and this Section 9.1(c), any
net changes in operating balance sheet accounts during the
applicable four fiscal-quarter period, including net changes in
working capital borrowings, other than borrowings distributed to
Suburban's unitholders, shall be disregarded.
<PAGE>
Distributions pursuant to Sections 9.1(a) and (b), to the extent used to pay the
Acquisition Loan Note, shall be directly applied as capital contributions of the
Participant under the Operating Agreement.
If at any time any of the MLP, the Partnership or the General Partner shall make
simultaneous requests for distribution under this Section 9.1, the MLP's request
shall receive first priority, with the Partnership's and the General Partner's
requests to receive second and third priority, respectively.
9.2: SPECIAL DISTRIBUTION TO PARTICIPANT. In the event of any
acceleration of a Participant's benefits under Section 9.1(a) (i) or under
Section 9.1(b), the Participant shall receive a distribution in cash or, to the
extent necessary, Common Units (at their fair market value), in the amount of
the Participant's federal, state and local taxes, payable with respect to the
full amount of the accelerated distribution (computed as provided in the
Operating Agreement).
In the event a determination is made by the MLP that amounts held by the Trust
with respect to the Participants' deferral accounts are treated as income
realized by the Participants, the MLP, in its discretion, may direct the Trustee
to distribute an amount necessary to satisfy all income tax obligations payable
by the Participant (computed as provided in the Operating Agreement) on such
income, plus applicable interest and penalties, if any, on the amount of such
income.
SECTION 10: GENERAL PROVISIONS
------------------
10.1: PROHIBITION OF ASSIGNMENT OF TRANSFER. Any assignment,
hypothecation, pledge or transfer of a Participant's or Beneficiary's right to
receive payments under the Deferral Plan shall be null and void and shall be
disregarded.
<PAGE>
10.2: DEFERRAL PLAN NOT TO BE FUNDED. The Partnership is not required to,
and will not, for the purpose of funding the Deferral Plan, segregate any monies
from its general funds, create any trusts, other than the Trust, or make any
special deposits, and the right of a Participant or Beneficiary to receive a
payment under the Deferral Plan shall be no greater than the right of an
unsecured general creditor of the Partnership.
10.3: EFFECT OF PARTICIPATION. Neither selection as an Eligible Employee,
nor an election to participate or participation in the Deferral Plan, shall
affect the Partnership's right to discharge an Eligible Employee or a
Participant.
10.4: COMMUNICATIONS TO BE IN WRITING. All elections, requests and
communications to the Committee from Participants and Beneficiaries, and all
communications to such persons from the Committee, shall be in writing, and in
such form and manner, and within such time, as the Committee shall determine.
10.5: ABSENCE OF LIABILITY. No officer, director or employee of the
Partnership shall be personally liable for any act or omission to act, under the
Deferral Plan, of any other person, or, except in circumstances involving bad
faith, for such officer's, director's or employee's own act or omission to act.
10.6: TITLES FOR REFERENCE ONLY. The titles given herein to Sections and
subsections are for reference only and are not to be used to interpret the
provisions of the Deferral Plan.
10.7: NEW YORK LAW TO GOVERN. All questions pertaining to the
construction, regulation, validity and effect of the provisions of the Deferral
Plan shall be determined in accordance with New York law, without regard to the
principles or policies of conflicts of law thereof.
<PAGE>
10.8: AMENDMENT. The Committee may amend the Deferral Plan at any time,
but no amendment may be adopted which alters the payments due Participants or
Beneficiaries, as of the date of the amendment, or the times at which payments
are due, without the consent of each Participant affected by the amendment and
of each Beneficiary (of a then deceased Participant) affected by the amendment.
10.9: PLAN TERMINATION. The Committee may terminate the Deferral Plan at
any time, but such termination may not alter the payments due Participants or
Beneficiaries, as of the date of such termination, without the consent of each
Participant affected by the termination and of each Beneficiary (of a then
deceased Participant) affected by the termination. In the event of such
termination, all amounts under this Deferral Plan shall become immediately
payable in accordance with Section 6.2, PROVIDED that the Committee, in its
discretion, upon Deferral Plan termination or at any time thereafter, may decide
to make lump sum payments in lieu of annual payments.
SUBURBAN PROPANE PARTNERS, L.P.
By:
----------------------------------
Name:
Title:
SUBURBAN PROPANE, L.P.
By:
----------------------------------
Name:
Title:
<PAGE>
TABLE OF CONTENTS
PAGE
----
SECTION 1:......................................................PURPOSE 1
SECTION 2:..................................................DEFINITIONS 1
SECTION 3:...............................................ADMINISTRATION 8
SECTION 4:...................................ELIGIBILITY TO PARTICIPATE 8
SECTION 5:................................................PARTICIPATION 8
SECTION 6:...................PAYMENTS TO PARTICIPANTS AND BENEFICIARIES 9
SECTION 7:................................................BENEFICIARIES 14
SECTION 8:............................................EARNINGS ACCRUALS 15
SECTION 9:.....................................ACCELERATION OF PAYMENTS 16
SECTION 10:..........................................GENERAL PROVISIONS 18
EXHIBIT 10.(f)
--------------
BENEFITS PROTECTION TRUST
-------------------------
<PAGE>
BENEFITS PROTECTION TRUST
This Agreement made this 26th day of May, 1999 by and between Suburban
Propane Partners, L.P. (the "MLP") and First Union National Bank ("Trustee");
WHEREAS, the MLP and Suburban Propane, L.P. (the "Partnership") have
adopted the Compensation Deferral Plan of Suburban Propane Partners, L.P. and
Suburban Propane, L.P. as attached as Appendix A (the "Deferral Plan");
WHEREAS, the MLP and Partnership have incurred or expect to incur liability
under the terms of such Deferral Plan with respect to the individuals
participating in such Deferral Plan;
WHEREAS, the MLP wishes to establish a trust (hereinafter called "Trust")
and to contribute to the Trust assets that shall be held herein, subject to the
claims of the MLP's creditors in the event of the MLP's Insolvency, as herein
defined, until paid to Deferral Plan participants and their beneficiaries in
such manner and at such times as specified in the Deferral Plan;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Deferral Plan as an unfunded plan maintained for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees for purposes of Title I of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA");
WHEREAS, it is the intention of the MLP to make contributions to the Trust
to provide itself with a source of funds to assist it in the meeting of its
liabilities under the Deferral Plan;
WHEREAS, Suburban Energy Services Group, LLC will execute a $6,000,000 note
payable to Mellon Bank, N.A. in connection with the recapitalization of the MLP
(the "LLC Note");
NOW, THEREFORE, the parties do hereby establish the Trust and agree that
the Trust shall be comprised, held and disposed of as follows:
Section 1. ESTABLISHMENT OF TRUST.
-----------------------
(a) The MLP hereby deposits with the Trustee in trust certain common
units and may deposit additional common units which, along with distributions
thereon, shall become the principal of the Trust to be held, administered and
disposed of by the Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable, until such
time as the Board of Supervisors of the MLP delivers a certification to the
Trustee that all of the liabilities incurred under the Deferral Plan have been
satisfied in full.
<PAGE>
(c) The Trust is intended to be a grantor trust, of which the MLP is
the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon, shall be
held separate and apart from other funds of the MLP and shall be available to
the MLP exclusively for the uses and purposes of the Deferral Plan and general
creditors as herein set forth. Deferral Plan participants and their
beneficiaries shall have no preferred claim on, or any beneficial ownership
interest in, any assets of the Trust. Any rights created under the Deferral Plan
and this Trust Agreement shall be mere unsecured contractual rights of
Deferral Plan participants and their beneficiaries against the MLP. Any assets
held by the Trust will be subject to the claims of the MLP's general creditors
under federal and state law in the event of Insolvency, as defined in Section
3(a) herein.
(e) The MLP, in its sole discretion, may at any time, or from time
to time, make additional deposits of cash or other property in trust with the
Trustee to augment the principal to be held, administered and disposed of by the
Trustee as provided in this Trust Agreement. Neither the Trustee nor any
Deferral Plan participant or beneficiary shall have any right to compel such
additional deposits.
(f) The Trustee may conclusively rely upon directions from the MLP
in taking any action with respect to this Trust Agreement, including the making
of payments from Trust assets and the investment of Trust assets pursuant to
this Trust Agreement.
(g) The Trustee shall have no liability for actions taken, or for
failure to act, on the direction of the MLP. Moreover, the Trustee shall have no
liability for failure to act in the absence of proper written directions.
(h) Defined terms used in this Trust Agreement shall have the
meaning ascribed to them in the Deferral Plan unless another meaning is clearly
indicated by the context.
Section 2. PAYMENTS TO DEFERRAL PLAN PARTICIPANTS AND THEIR BENEFICIARIES.
---------------------------------------------------------------
(a) The MLP shall deliver to the Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each Deferral Plan
participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to the Trustee for determining the amounts so payable,
the form in which such amount is to be paid (as provided for or available under
the Deferral Plan), and the time of commencement for payment of such amounts.
Except as otherwise provided herein, and to the extent the Trustee is in
possession of sufficient assets, the Trustee shall make payments to the Deferral
Plan participants and their beneficiaries in accordance with such Payment
Schedule. If the Trustee is not in possession of sufficient assets to make all
payments in accordance with the Payment Schedule, the Trustee will pay each
<PAGE>
participant or beneficiary a proportionate share of the Trust assets in its
possession. The MLP shall instruct the Trustee concerning any withholding of
federal, state or local taxes that may be required to be withheld with respect
to the payment of benefits pursuant to the terms of the Deferral Plan and the
Trustee shall pay those amounts withheld to the MLP for reporting and payment by
the MLP to appropriate taxing authorities.
(b) The entitlement of a Deferral Plan participant or his or her
beneficiaries to benefits under the Deferral Plan shall be determined by the
Partnership or such party as it shall designate under the Deferral Plan, and any
claim for such benefits shall be considered and reviewed under the procedures
set out in the Deferral Plan. In the event of a Change in Control, the
Partnership's authority to determine the entitlement of a Deferral Plan
participant or his or her beneficiaries to benefits under the Deferral Plan
shall cease and the Trustee shall have complete authority to make this
determination.
(c) The MLP may make payment of benefits directly to Deferral Plan
participants or their beneficiaries as they become due under the terms of the
Deferral Plan. The MLP shall notify the Trustee of its decision to make payment
of benefits directly prior to the time amounts are payable to participants or
their beneficiaries. In addition, if the principal of the Trust, and any
earnings thereon, are not sufficient to make payments in accordance with the
terms of the Deferral Plan, the Trustee shall make payments in accordance with
subparagraph (a) of this Section, and the MLP shall make the balance of each
payment as it falls due. The Trustee shall notify the MLP whenever principal
and earnings are not sufficient.
(d) In the event that the Partnership elects or is required to make
any payment on the LLC Note and either the Partnership or the MLP exercises its
respective right under Section 9.1(a) of the Deferral Plan to cause the Trustee
to accelerate the Participants' rights to receive distributions under the
Deferral Plan or to cause a forfeiture of participants' rights to receive
distributions under the Deferral Plan, the Trustee shall pay over to the MLP
those assets in the Trust requested by the Partnership or the MLP in accordance
with Section 9.1(a) of the Deferral Plan. In the event the Trustee receives
notice from the General Partner of a capital call required to be made by the
Participants pursuant to the Operating Agreement, the Trustee shall distribute
assets from the Trust to the General Partner in accordance with Section 9.1(b)
of the Deferral Plan. If Adjusted Operating Surplus (as defined in the MLP
Partnership Agreement, but determined as set forth in the last proviso of
Section 9.1(c) of the Deferral Plan) for any four fiscal-quarter period ending
on or prior to March 31, 2001 is less than the sum of the aggregate Minimum
Quarterly Distribution (as defined in the MLP Partnership Agreement) for such
<PAGE>
four fiscal-quarter period and the MLP exercises its right under Section 9.1(c)
of the Deferral Plan to cause the Trustee to apply assets toward the payment of
the Minimum Quarterly Distribution, the Trustee shall distribute assets from the
Trust to the MLP in accordance with and subject to the limitations of Section
9.1(c) of the Deferral Plan. The amount of any such distribution of the Trust
Assets shall be calculated by reference to the percentages specified in Exhibit
A (which may be amended from time to time by the Partnership) to the Deferral
Plan and in accordance with Section 9 of the Deferral Plan. The Trustee shall
make the accelerated payments required by Section 9.1 of the Deferral Plan as
promptly as practicable in accordance with the Deferral Plan but in no event no
later than five (5) business days after receipt of notice requesting such
payment.
(e) The MLP shall also have the right to direct the Trustee that
certain trust assets indicated on the Grant Schedule attached hereto as Exhibit
A relating to the individual(s) in question (which trust assets consist of
common units) resulting from restricted unit grants to certain individuals in
November 1998 or, which may result from grants of common units to employees who
are subsequently designated by the MLP to participate in the Deferral Plan)
shall be forfeited in the event that any of the individuals listed on Exhibit A
have a termination of their employment with the Partnership prior to the time
such forfeiture provision with respect to their common units has lapsed. In
addition, the Trustee shall have the right to distribute assets in the event of
an unforeseen emergency (as defined in Section 6.1(b) of the Deferral Plan) as
determined by the Compensation Committee under the Deferral Plan.
(f) In the event a determination is made by the MLP that amounts
held under this Trust are treated as income realized by the participants in the
Deferral Plan, the MLP, in its discretion, may direct the Trustee to distribute
an amount necessary to satisfy all income tax obligations payable by such
participant (computed as provided in the Operating Agreement of Suburban Energy
Services Group LLC) on such income, plus applicable interest and penalties, if
any, on the amount of such income.
(g) Except as provided above, and in Sections 1(b), 2(b) or 2(d)
hereof, the MLP shall have no right or power to direct the Trustee to return to
the MLP or to divert to others any of the Trust assets before all payment of
benefits have been made to Deferral Plan participants and their beneficiaries
pursuant to the terms of the Deferral Plan.
Section 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY
---------------------------------------------------------------
WHEN MLP IS INSOLVENT.
- ----------------------
(a) The Trustee shall cease payment of benefits to Deferral Plan
participants and their beneficiaries if the MLP is Insolvent. The MLP shall be
considered "Insolvent" for purposes of this Trust Agreement if (i) the MLP is
unable to pay its debts as they become due, or (ii) the MLP is subject to a
pending proceeding as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided
in Section 1(d) hereof, the principal and income of the Trust shall be subject
to claims of general creditors of the MLP under federal and state law as set
forth below.
(1) The Board of Supervisors and the Chief Executive Officer of
the MLP shall have the duty to inform the Trustee in writing of the MLP's
Insolvency. If a person claiming to be a creditor of the MLP alleges in writing
to the Trustee that the MLP has become Insolvent, the Trustee shall determine
<PAGE>
whether the MLP is Insolvent (in accordance with the procedure set forth in
subparagraph (2) and (3) below) and, pending such determination, the Trustee
shall discontinue payment of benefits to Deferral Plan participants or their
beneficiaries pursuant to Section 9 of the Deferral Plan.
(2) Unless the Trustee has actual knowledge of the MLP's
Insolvency, or has received notice from the MLP or a person claiming to be a
creditor alleging that the MLP is Insolvent, the Trustee shall have no duty to
inquire whether the MLP is Insolvent. The Trustee may in all events rely on such
evidence concerning the MLP's solvency as may be furnished to the Trustee and
that provides the Trustee with a reasonable basis for making a determination
concerning the MLP's solvency.
(3) Upon receipt of notice of the MLP's Insolvency from any
person other than the Board of Supervisors and the Chief Executive Officer, the
Trustee shall seek in writing a determination of the Board of Supervisors and
Chief Executive Officer or any appropriate court as to the Insolvency of the
MLP. The Trustee may conclusively rely upon a determination of the Board of
Supervisors and Chief Executive Officer as to the MLP's Insolvency.
(4) If at any time the Trustee has determined that the MLP is
Insolvent, the Trustee shall discontinue payments to Deferral Plan participants
or their beneficiaries and shall hold the assets of the Trust for the benefit of
the MLP's general creditors. Nothing in this Trust Agreement shall in any way
diminish any rights as general creditors of the MLP with respect to benefits of
Deferral Plan participants or their beneficiaries to pursue their rights due
under the Deferral Plan or otherwise.
(5) The Trustee shall resume the payment of benefits to Deferral
Plan participants or their beneficiaries in accordance with Section 2 of this
Trust Agreement only after the Trustee has determined in accordance with
subsection (b) (2) hereof that the MLP is not Insolvent (or is no longer
Insolvent).
(6) Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3(b)
hereof and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to
Deferral Plan participants or their beneficiaries under the terms of the
Deferral Plan for the period of such discontinuance, less the aggregate amount
of any payments made to Deferral Plan participants or their beneficiaries by the
MLP in lieu of the payments provided for hereunder during any such period of
discontinuance.
Section 4. INVESTMENT AUTHORITY.
---------------------
(a) Except as provided in subsection (b) below, the MLP shall
provide the Trustee with all investment instructions. As provided for in the
Deferral Plan, the MLP shall establish two (2) investment accounts: the Fixed
Income Rate and the Equity Investment Fund Rate. The Trustee shall neither
<PAGE>
affect nor change investments of Trust assets, except as directed in writing by
the MLP, and shall have no right, duty or responsibility to recommend investment
or investment changes; provided, that the Trustee may deposit cash on hand from
time to time in any account in its own banking department without prior
directions.
(b) In the event of a Change in Control, the authority of the MLP to
direct investments of the Trust shall cease and the Trustee shall have complete
authority to direct investments.
(c) The Trustee acting hereunder, except to the extent reserved to
the MLP under subsection (a) hereof, shall be permitted to exercise the
following powers hereinafter set forth, all of which are intended to be in
addition to and not in limitation of the powers conferred by the State of New
York or other applicable law, (except as modified herein) and all of which may
be exercised as a matter of sole and nonreviewable discretion without the
permission or order of any court:
(1) All rights associated with assets of the Trust shall be
exercised by the Trustee or the person designated by the Trustee, and shall in
no event be exercisable by or rest with Deferral Plan participants;
(2) To retain any investment and property which may be received
by it for such length of time as to them may seem proper, without liability by
reason of such retention;
(3) To make such investments and reinvestment of principal and
accumulated income as it may consider proper, without limitation to what are
known as legal or trust investments. Any such investments may be held in bearer
form, or in the name of the Trustee, or in the name of a nominee or nominees;
(4) To retain cash or the proceeds from the sale of any assets
until such time or times as it receives direction from the MLP regarding the
appropriate investments of such funds;
(5) To hold uninvested cash awaiting investment or distribution,
and such additional cash balances as it shall deem reasonable or necessary,
without incurring any liability for the payment of interest thereon,
notwithstanding the Trustee's receipt of "float" from such uninvested cash;
(6) With respect to any securities forming part of the trust
created hereunder: to exercise all voting rights, either in person or by proxy;
to exercise conversion, subscription, option and similar rights; to enter or
refuse to enter into any dissolution, liquidation, consolidation,
recapitalization, reorganization, merger or other change in capital structure,
and in connection therewith, to make exchanges of securities and to enter into
<PAGE>
agreements on such terms and conditions as it may deem advisable; and to enter
into voting trusts and agreements with other stockholders, and other holders of
securities, and the corporations which shall have issued such stock or
securities, any one or more of such persons, for such purposes and for such
period of time (whether or not the same extends beyond the actual or probable
duration of the trusts created hereunder), and upon such terms and conditions as
it shall deem advisable;
(7) To enter into any lease or leases, without application to any
court of any or all real or personal property held hereunder, for such period
(whether or not the same expires prior to or extends beyond the actual or
probable duration of the trusts created hereunder), and upon such terms and
conditions as it shall deem advisable;
(8) To borrow money or property, either upon the security of any
or all of the assets of the trusts created hereunder, or without security or
otherwise, upon such terms and conditions and for such purposes in connection
with the administration of the trusts as it shall deem proper; to borrow money
or issue a guaranty for any loan which benefits the participants in the Deferral
Plan or an entity in which the participants in the Deferral Plan have an
interest, and to issue a security interest as security for such loan or
guaranty;
(9) To grant, bargain, sell, exchange, mortgage, grant options to
buy, or otherwise dispose of any or all personal property, at any time held
hereunder, either at public or private sale, for cash or on credit, or partly
for cash and partly on credit, upon such terms and conditions, in such manner
and for such purposes, and either in whole or in part, as it may deem proper;
and to make, execute, acknowledge and deliver good and sufficient instruments
for that purpose. No purchaser, upon any sale or other disposition, shall be
bound to see to the application of the moneys or property arising therefrom or
to inquire into the validity, expediency or propriety of any such sale or
disposition;
(10)To adjust, compromise or arbitrate claims or demands of, or
against, the trust created hereunder, whether such claims are due or shall
become due in the future, including without limitation any overpayment or refund
claim, or any deficiency, additional assessment or other liability, relating to
any Federal, state, county, municipal or other tax, irrespective of the nature
thereof;
(11)In any case where the applicable law is unclear or uncertain,
to allocate to income or to principal, or to apportion between income and
principal, receipts, disbursements, depletion and depreciation in such manner as
it shall deem proper;
(12)To execute and deliver all documents, contracts, and
instruments necessary or advisable in connection with the administration of the
trusts created hereunder;
<PAGE>
(13)To invest in any investment company for which the Trustee or
any affiliate of the Trustee receives a fee for investment advisory, custodial
services or other services the Trustee is permitted to perform for said
investment company and which said fee is in addition to the fees payable
hereunder; and
(14)Subject to the provisions of Section 4(b), notwithstanding
anything in this Section to the contrary, the MLP reserves the authority to
direct the Trustee as to the investment of all or any part of the assets held in
the Trust, the Trustee shall not have any obligation to investigate the prudence
of any such investments and shall be indemnified and held harmless by the MLP
for any act or failure to act made pursuant to such direction.
Section 5. DISPOSITION OF INCOME.
----------------------
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested. Notwithstanding the
foregoing, any income derived from MLP securities held by the Trust shall be
paid out in accordance with the terms of the Deferral Plan. All federal, state
and local taxes imposed upon the income of the Trust shall be paid by the MLP.
Section 6. ACCOUNTING BY TRUSTEE.
----------------------
The Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions required to be
made, including such specific records as shall be agreed upon in writing between
the MLP and the Trustee. Within sixty (60) days following the close of each
calendar year and within sixty (60) days after the removal or resignation of the
Trustee, the Trustee shall deliver to the MLP a written account of its
administration of the Trust during such year or during the period from the close
of the last preceding year to the date of such removal or resignation, setting
forth all investments, receipts, disbursements and other transactions effected
by it, including a description of all securities and investments purchased and
sold with the cost or net proceeds of such purchases or sales (accrued interest
paid or receivable being shown separately), and showing all cash, securities and
other property held in the Trust at the end of such year or as of the date of
such removal or resignation, as the case may be. If objections to specific items
in such account are filed with the Trustee within one hundred eighty (180) days
after the account has been furnished and the Trustee believes such objections to
be valid, the Trustee may adjust the account in such manner as it deems
equitable under the circumstances. If:
(a) The MLP approves such account; or
(b) No objections to specific items in the account or any
adjusted account are filed with the Trustee within ninety days after such
account has been furnished; or
<PAGE>
(c) The Trustee shall give notice of an adjustment of the account
and no objections to specific items in such account, as adjusted, are filed with
the Trustee within ninety days after notice of such adjustment has been
furnished; then and in any of said events, the account of the Trustee with
respect to all matters contained therein (as originally furnished if no
adjustment was made, or as adjusted if an adjustment was made), shall be deemed
to have been approved with the same effect as though judicially approved by a
court of competent jurisdiction in a proceeding in which all persons interested
were made parties and were properly represented before such court. Upon the
approval of the account rendered in good faith, where such approval is in
writing or by failure to file timely exceptions or objections by a person to
whom an account is submitted pursuant to this Section, the Trustee shall to the
extent permitted by applicable law, be relieved and discharged of and from all
liability to anyone with respect to its acts or failure to act described by such
account during the period covered thereby.
Section 7. RESPONSIBILITY OF TRUSTEE.
--------------------------
(a) The Trustee shall act with care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person acting
in like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that the
Trustee shall incur no liability to any person and shall be indemnified and held
harmless for any action taken, pursuant to a direction, request or approval
given by the MLP in writing by the MLP, other than pursuant to the Trustee's
negligence or misconduct. In the event of a dispute between the MLP and a party,
the Trustee may apply to a court of competent jurisdiction to resolve the
dispute.
(b) If the Trustee wishes to undertake or defend any litigation
arising in connection with this Trust, provided that the Trustee first obtains
the written consent of the MLP to enter into such undertaking or defense (which
consent shall not be withheld unreasonably), the MLP agrees to indemnify the
Trustee on a current basis against the Trustee's costs, expenses and liabilities
(including, without limitation, attorneys' fees and expenses) relating thereto
and to not be primarily liable for such payments. If the MLP does not pay such
costs, expenses and liabilities within sixty (60) days of presentation, the
Trustee may obtain payment from the Trust. The Trustee shall be under no
obligation to take or defend any legal action of whatever nature unless it is
first indemnified against expenses by the MLP or there shall not be sufficient
property in the Trust to indemnify the Trustee with respect to the expenses or
losses to which it may not be subjected.
(c) The Trustee may consult with legal counsel (who may also not
be counsel for the MLP generally) with respect to any of its duties or
obligations hereunder.
(d) The Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants, counsel, or other professionals to
assist it in performing any of its duties or obligations hereunder and to pay
their expenses from the Trust, provided, however, that the Trustee may not hire
<PAGE>
counsel without the written consent thereto by the MLP (which consent shall not
be withheld unreasonably).
(e) The Trustee shall have, without exclusion, all powers
conferred on the Trustee by applicable law, unless expressly provided otherwise
herein, provided, however, that if an insurance policy is held as an asset of
the Trust, the Trustee shall have no power to name a beneficiary of the policy
other than the Trust, to assign the policy (as distinct from conversion of the
policy to a different form) other than to a successor the Trustee, or to loan to
any person the proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to the Trustee pursuant to
this Trust Agreement or to applicable law, the Trustee shall not have any power
that could give this Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of section 301.7701-2 of the Procedure
and Administrative Regulations promulgated pursuant to the Internal Revenue
Code.
(g) The Trustee shall not be liable for making or withholding any
payments as may be required by a order of a court of competent jurisdiction.
Section 8. COMPENSATION AND EXPENSES OF TRUSTEE.
-------------------------------------
The Trustee shall be entitled to reasonable compensation for its
services as from time to time agreed upon between the Trustee and the MLP. If,
after a Change in Control, the Trustee and the MLP fail to agree upon
compensation, the Trustee shall be entitled to compensation at a rate equal to
the rate charged by the Trustee for similar services rendered by it for other
trusts similar to the Trust. The MLP shall pay all administrative costs and the
Trustee's fees and expenses, including taxes levied upon the Trust. If not so
paid, the fees and expenses shall be paid from the Trust.
Section 9. RESIGNATION AND REMOVAL OF TRUSTEE.
-----------------------------------
(a) The Trustee may resign at any time by written notice to the
MLP, which shall be effective sixty (60) days after receipt of such notice
unless the MLP and the Trustee agree otherwise.
(b) Subject to Section 10(c), the Trustee may be removed by MLP
on sixty (60) days notice or upon shorter notice accepted by the Trustee.
(c) Notwithstanding Section 10(b), upon a Change in Control, the
Trustee may not be removed by the MLP for five (5) years thereafter.
(d) Notwithstanding Section 10(a), the Trustee may not resign
within five (5) years after a Change in Control.
(e) Upon resignation or removal of the Trustee and appointment of
a successor Trustee, all assets shall subsequently be transferred to the
successor Trustee. The transfer shall be completed within sixty (60) days after
<PAGE>
receipt of notice of resignation, removal or transfer, unless the MLP extends
the time limit.
(f) If the Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective date of
resignation or removal under paragraphs (a) or (b) of this section. If no such
appointment has been made, the Trustee may apply to a court of competent
jurisdiction for appointment of a successor or for instructions. All expenses of
the Trustee in connection with the proceeding shall be allowed as administrative
expenses of the Trust.
Section 10. APPOINTMENT OF SUCCESSOR.
-------------------------
(a) If prior to a Change in Control, the Trustee resigns or is
removed in accordance with Section 10(b), the MLP may appoint any third party as
a successor to replace the Trustee. If the Trustee resigns in accordance with
Section 10(d) or is removed in accordance with Section 10(c), the MLP shall
appoint as a successor to replace the Trustee a bank having assets of at least
Five Billion Dollars ($5,000,000,000). The appointment shall be effective when
accepted in writing by the new Trustee, who shall have all of the rights and
powers of the former Trustee, including ownership rights in the Trust assets.
The former Trustee shall execute any instruments necessary or reasonably
requested by the MLP or the successor Trustee to evidence the transfer.
(b) The successor Trustee need not examine the records and acts
of any prior Trustee and may retain or dispose of existing Trust assets, subject
to Sections 7 and 8 hereof. The successor Trustee shall not be responsible for
and the MLP shall indemnify and defend the successor Trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event, or any condition existing at the time it becomes successor
Trustee.
Section 11. AMENDMENT OR TERMINATION.
-------------------------
(a) This Trust Agreement may be amended by a written instrument
executed by the Trustee and the MLP. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Deferral Plan or shall make the
Trust revocable after it has become irrevocable in accordance with Section 1(b)
hereof.
(b) The Trustee is not a party to the Deferral Plan except
insofar as the Trustee has assumed duties specifically provided in this
Agreement. The Partnership retains the right to amend any provisions of the
Deferral Plan; provided, however, that the allocation of responsibilities to the
Trustee shall not be amended, altered or modified without the prior written
consent of the Trustee.
(c) The Trust shall not terminate until the date on which
Deferral Plan participants and their beneficiaries are no longer entitled to
<PAGE>
benefits pursuant to the terms of the Deferral Plan. Upon termination of the
Trust any assets remaining in the Trust shall be returned to the MLP.
(d) Upon written approval of participants or beneficiaries
entitled to payment of benefits pursuant to the terms of the Deferral Plan, the
MLP may terminate this Trust prior to the time all benefit payments under the
Deferral Plan have been made. All assets in the Trust at termination shall be
returned to the MLP.
(e) This Trust Agreement may not be amended by the MLP for five
(5) years following a Change in Control.
Section 12. MISCELLANEOUS.
--------------
(a) Any provision of this Trust Agreement prohibited by law shall
be ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Notwithstanding any Qualified Domestic Relations order, as
that term is defined in ERISA, and subject to any Internal Revenue Service levy,
no benefits payable to Deferral Plan participants and their beneficiaries under
this Trust Agreement may be anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(d) For purposes of this Trust Agreement, Change in Control shall
be given the meaning as set forth in the Deferral Plan. The Chief Executive
Officer of the MLP shall notify the Trustee in writing when a Change in Control
has occurred. The Trustee has no duty to inquire whether a Change in Control has
occurred and may rely on notification by the Chief Executive Officer of MLP of a
Change in Control; provided, however, that if any officer, former officer,
director or former director of the MLP or any Subsidiary (other than the Chief
Executive Officer), or any Participant notified the Trustee that there has been
or there may not be a Change in Control, the Trustee shall have the duty to
satisfy itself as to whether a Change in Control has in fact occurred. The
Trustee will satisfy itself as to whether a Change in Control has occurred by
seeing a written certification from the Chief Executive Officer. The MLP and the
Subsidiaries shall indemnify and hold harmless the Trustee for any damages or
costs (including counsel fees and expenses) that may be incurred because of
reliance on the Chief Executive Officer's notice or lack thereof.
(e) Any person dealing with the Trustee may rely upon a copy of
this Trust Agreement and any amendments thereto certified to not be true by the
Trustee.
<PAGE>
(f) No notice given or representation made by the MLP to the
Trustee pertaining to the provisions of this Trust Agreement or the Deferral
Plan shall be effective unless such notice is given or representation made in
writing by the Board of Supervisors or the Secretary of the MLP.
Section 13. EFFECTIVE DATE.
---------------
The effective date of this Trust Agreement shall be May 26, 1999
SUBURBAN PROPANE PARTNERS, L.P.
BY:
------------------------------------
Name
Title
FIRST UNION NATIONAL BANK
BY:
------------------------------------
Name
Title
<PAGE>
APPENDIX A
1. Compensation Deferral Plan of Suburban Propane Partners, L.P. and Suburban
Propane, L.P., a Nonqualified Plan of Deferred Compensation.
<PAGE>
TABLE OF CONTENTS
PAGE
----
Section 1. Establishment of Trust........................................1
Section 2. Payments to Deferral Plan Participants and Their
Beneficiaries.................................................2
Section 3. Trustee Responsibility Regarding Payments To Trust
Beneficiary When MLP Is Insolvent.............................4
Section 4. Investment Authority..........................................5
Section 5. Disposition of Income.........................................8
Section 6. Accounting by Trustee.........................................8
Section 7. Responsibility of Trustee.....................................9
Section 8. Compensation and Expenses of Trustee..........................10
Section 9. Resignation and Removal of Trustee............................10
Section 10. Appointment of Successor......................................11
Section 11. Amendment or Termination......................................11
Section 12. Miscellaneous.................................................12
Section 13. Effective Date................................................12
EXHIBIT 10.(g)
--------------
EXECUTION COPY
TERM LOAN AGREEMENT
This TERM LOAN AGREEMENT is made and entered into this 26th day of May,
1999, by and between Suburban Energy Services Group LLC, a Delaware limited
liability company (the "Borrower"), and Mellon Bank, N.A., a national banking
association (the "Bank");
PRELIMINARY STATEMENTS:
WHEREAS, the Borrower has requested the Bank to extend a term loan to the
Borrower and the Bank has agreed to make available to the Borrower a term loan
upon all of the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth
and intending to be legally bound hereby, the Borrower and the Bank agree as
follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
-------------------------
1.01. CERTAIN DEFINITIONS. In addition to other words and terms defined
elsewhere in this Agreement, as used herein the following words and terms shall
have the following meanings, respectively, unless the context hereof otherwise
clearly requires:
"Agreement" shall mean this Term Loan Agreement, as amended, modified or
supplemented from time to time.
"Business Day" shall mean any day other than a Saturday, Sunday, public holiday
under the laws of the Commonwealth of Pennsylvania or the State of New Jersey,
or other day on which banking institutions are authorized or obligated to close
in Pittsburgh, Pennsylvania or Whippany, New Jersey.
"Closing Date" shall mean May 26, 1999.
"Credit Agreement" shall mean that certain Second Amended and Restated Credit
Agreement dated as of May 26, 1999, by and among the OLP, First Union National
Bank, as Administrative Agent, and the lenders party thereto, as amended or
supplemented from time to time.
<PAGE>
"Event of Default" shall mean any of the events of default described in Article
VII.
"Final Maturity Date" shall mean May 26, 2004.
"GAAP" shall mean generally accepted accounting principles in effect in the
United States, applied consistently.
"Indebtedness" shall mean, with respect to any person, without duplication (a)
all obligations of such person for borrowed money or with respect to deposits or
advances of any kind (including repurchase obligations), (b) all obligations of
such person evidenced by bonds, debentures, notes or similar instruments or
letters of credit in support of bonds, notes, debentures or similar instruments,
(c) all obligations of such person upon which interest charges are customarily
paid, (d) all obligations of such person under conditional sale or other title
retention agreement relating to property purchased by such person, (e) all
obligations of such person issued or assumed as the deferred purchase price of
property or services, (f) all obligations under Capital Leases (as defined in
the Credit Agreement) of such person, (g) all obligations of others secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property or assets owned or acquired
by such person, whether or not the obligations secured thereby have been
assumed, (h) all Guarantees (as defined in the Credit Agreement) of such person,
(i) all obligations of such person with respect to interest rate protection
agreements (including, without limitation, Hedging Agreements (as defined in the
Credit Agreement), foreign currency exchange agreements, Commodity Hedging
Agreements (as defined in the Credit Agreement) or other hedging arrangements
(valued at the termination value thereof computed in accordance with a method
approved by the International Swap Dealers Association and agreed to by such
person in the applicable Hedging Agreement, if any), (j) all obligations of such
person as an account party in respect of letters of credit (i) securing
Indebtedness (other than a letter of credit that would not constitute
Indebtedness under clause (ii)) or (ii) obtained for any purpose not in the
ordinary course of business or not consistent with past practices and (k) all
obligations of such person in respect of bankers' acceptances; provided that
accounts payable to suppliers incurred in the ordinary course of business and
paid in the ordinary course of business consistent with past practices shall not
constitute Indebtedness.
"Interests" shall mean the OLP GP Interest and the MLP GP Interest, which
Interests are evidenced by general partner units and are the subject of the
Pledge Agreement, together with any and all substitutions therefor, replacements
thereof and/or additions thereto.
"Law" shall mean any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, order, injunction, writ, decree or award of any
Official Body.
"Libor Rate Interest Period" shall mean a period commencing on the Closing Date
or the expiration of the next preceding interest period and ending on the date
which is 1, 2, 3 or 6 months thereafter, as the Borrower shall select, during
<PAGE>
which period the Loan shall bear interest at the Libor Rate Option provided that
each Libor Rate Interest Period which would otherwise end on a day which is not
a Business Day shall end on the next succeeding Business Day and provided
further that the Borrower may not select a Libor Rate Interest Period which
would end after the Final Maturity Date.
"Libor Rate" for any day shall mean a rate per annum (based on a year of 360
days and actual days elapsed) for each day equal to the rate determined by the
Bank (which determination shall be conclusive) to be the average of the rates
per annum for deposits in dollars offered to the Bank (or other banks as the
Bank deems necessary or desirable) in the London interbank market reasonably
prior to the first day of the proposed Libor Rate Interest Period and
corresponding to the amount of the Loan and the proposed Libor Rate Interest
Period applicable thereto, divided by a number equal to 1.00 minus the Reserve
Percentage. The "Reserve Percentage" for any day is the maximum effective
percentage (expressed as a decimal fraction, rounded upward to the nearest 1/100
of 1%), as determined in good faith by the Bank (which determination shall be
conclusive absent manifest error), which is in effect on such day as prescribed
by the Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including, without limitation,
supplemental, marginal and emergency reserve requirements) with respect to
eurocurrency funding of a member bank in such System but only to the extent
actually incurred by the Bank, the Bank's determination thereof to be presumed
correct in the absence of obvious error. The Libor Rate shall be adjusted
automatically as of the effective date of each change in the Reserve Percentage.
"Lien" shall mean any mortgage, deed of trust, pledge, lien, security interest,
charge or other encumbrance or security arrangement of any nature whatsoever,
including but not limited to any conditional sale or title retention
arrangement, and any assignment, deposit arrangement or lease intended as, or
having the effect of, security.
"Loan" shall mean the term loan made by the Bank to the Borrower under this
Agreement.
"MLP" shall mean Suburban Propane Partners, LP, a Delaware limited partnership.
"MLP GP Interest" shall mean the 1.0% general partnership interest in the MLP
owned by the Borrower.
"Note" shall mean the promissory note of the Borrower executed and delivered
pursuant to this Agreement substantially in the form attached hereto as Exhibit
A, or any note executed and delivered pursuant hereto, together with all
extensions, renewals, refinancings or refundings in whole or part.
"Note Purchase Agreement" shall mean the Note Purchase Agreement substantially
in the form attached hereto as Exhibit B, setting forth the Put as additional
security for the Loan.
<PAGE>
"Office," when used in connection with the Bank, shall mean its office located
at Three Mellon Bank Center, Pittsburgh, Pennsylvania, or at such other location
as may be designated in writing from time to time by the Bank to the Borrower.
"Official Body" shall mean any government or political subdivision or any
agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"OLP" shall mean Suburban Propane, LP, a Delaware limited partnership.
"OLP GP Interest" shall mean the 1.0101% general partnership interest in the OLP
owned by the Borrower.
"Partnerships" shall mean the OLP and the MLP.
"person" shall mean an individual, corporation, partnership, limited liability
company, trust, unincorporated association, joint venture, joint-stock company,
government (including political subdivisions), governmental authority or agency,
or any other entity.
"Pledge Agreement" shall mean the Pledge and Security Agreement substantially in
the form attached hereto as Exhibit C, pledging the Interests to the Bank as
collateral for the Loan.
"Potential Default" shall mean any event or condition referenced in Article VII
which, with notice, passage of time or any combination of the foregoing, would
constitute an Event of Default.
"Put" shall mean the put of the Note set forth in the Note Purchase Agreement.
"Transaction Documents" shall mean this Agreement, the Pledge Agreement, the
Note Purchase Agreement and the Note.
"U.S. Dollars" and the symbol "U.S. $" shall mean the lawful money of the United
States of America.
1.02. CONSTRUCTION. Unless the context of this Agreement otherwise clearly
requires, "or" has the inclusive meaning represented by the phrase "and/or."
References in this Agreement to a "determination" by the Bank include good faith
estimates by the Bank (in the case of quantitative determinations) and good
faith belief of the Bank (in the case of qualitative determinations). The words
"hereof," "herein," "hereunder" and similar terms in this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement.
The section and other headings contained in this Agreement are for reference
purposes only and shall not control or affect the construction of this Agreement
<PAGE>
or the interpretation hereof in any respect. Section, subsection and exhibit
references are to this Agreement unless otherwise specified.
ARTICLE II
THE LOAN
--------
2.01. THE LOAN. Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, the Bank shall, on the Closing
Date, make a term loan (the "Loan") to the Borrower in the principal amount of
U.S. $6,000,000.
2.02. THE NOTE. The obligation of the Borrower to repay the aggregate unpaid
principal amount of the Loan shall be evidenced in part by the Note of the
Borrower dated on or prior to the Closing Date in substantially the form
attached hereto as Exhibit A, with the blanks appropriately filled and payable
to the order of the Bank by the Borrower. The executed Note shall be delivered
by the Borrower to the Bank on or prior to the Closing Date.
2.03. INTEREST RATE. (a) INTEREST. The Loan shall bear interest for each day
until due at a rate per annum for each such day equal to the Libor Rate plus 2%.
(b) INTEREST AFTER MATURITY. After any principal payment shall have
become due (by acceleration or otherwise), such payment shall bear interest for
each day until paid (before and after judgment) at a rate per annum (based on a
year of 365 or 366 days, as the case may be) equal to the interest rate
announced as the Bank's prime interest rate from time to time plus 2%,
calculated for each day until paid.
2.04. PREPAYMENTS. The Borrower shall have the right at its option from time to
time to prepay the Loan in whole or in part, subject to the provisions hereof,
including, but not limited to, any breakfunding fees and expenses. Any partial
prepayment shall be in an amount of $100,000 or an integral multiple of $100,000
and any partial or complete prepayment shall be made together with interest
accrued thereon to and including the date of prepayment. All prepayments shall
be applied to installments of the Loan in the order of maturity as set forth on
Schedule I hereto.
2.05. PAYMENT DATES. (a) Interest on the Loan shall be payable on the last day
of the Libor Rate Interest Period in effect therefor, provided that, if any
Libor Rate Interest Period is longer than three months, also every third month
during such Libor Rate Interest Period.
(b) Any interest payment which is due and payable hereunder on a day
which is not a Business Day shall be due and payable on the next succeeding
Business Day. After maturity of the Loan (by acceleration or otherwise),
interest on the Loan shall be due and payable on demand.
<PAGE>
(c) The principal amount of the Loan shall be paid in accordance with
the Amortization Schedule set forth as Schedule I hereto. The remaining balance
of the outstanding principal amount of the Loan, if any, together with all
interest accrued thereon shall be due and payable on the Final Maturity Date.
2.06. PAYMENTS. All payments and prepayments to be made in respect of
principal, interest or other amounts due from the Borrower hereunder or under
the Note shall be payable by 12:00 o'clock noon, Pittsburgh time, on the day
when due without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived, and an action therefor shall accrue on and as
of the expiration of any grace period. Unless otherwise agreed by Bank, such
payments shall be made to the Bank at its Office in U.S. Dollars in funds
immediately available at such Office. Such payments shall be made without
setoff, counterclaim or other deduction of any nature. To the extent permitted
by law, after there shall have become due (by acceleration or otherwise)
interest, or any other amounts due from the Borrower hereunder or under the
Note, such amounts shall bear interest for each day until paid (before and after
judgment), payable on demand, at a rate per annum which shall be equal to the
interest rate set forth in Section 2.03(b), calculated for each day until paid.
2.07. ADDITIONAL COMPENSATION IN CERTAIN CIRCUMSTANCES.
-------------------------------------------------
(a) INCREASED COSTS OR REDUCED RETURN RESULTING FROM, TAXES, RESERVES,
CAPITAL ADEQUACY REQUIREMENTS, EXPENSES, ETC. If any now existing or hereafter
adopted Law or guideline or interpretation or application thereof by any
Official Body charged with the interpretation or administration thereof or
compliance with any request or directive of any Official Body (whether or not
having the force of law) hereafter:
(i) subjects the Bank or the Borrower to any tax or changes the
basis of taxation with respect to any of the Transaction Documents or payments
by the Borrower of principal, interest or other amounts due from the Borrower
hereunder or under the Note (except for taxes on the overall net income of the
Bank),
(ii) imposes, modifies or deems applicable any reserve, special
deposit or similar requirement against assets held by, credit extended by,
deposits with or for the account of, or other acquisition of funds by, the Bank,
(iii) imposes, modifies or deems applicable any capital adequacy or
similar requirement (A) against assets (funded or contingent) of, or credits by,
the Bank, or (B) otherwise applicable to the obligations of the Bank under this
Agreement, or
(iv) imposes upon the Bank any other condition or expense with
respect to this Agreement, the Note held by the Bank, or its making, maintenance
or funding of the Loan, and the result of any of the foregoing is to increase
the cost to, reduce the income receivable by, or impose any expense (including
loss of margin) upon the Bank with respect to this Agreement, the Note or the
making, maintenance or funding of any part of the Loan or, in the case of any
capital adequacy or similar requirement, to have the effect of reducing the
return on the Bank's capital (taking into account the Bank's policies with
respect to capital adequacy) by an amount which the Bank deems to be material,
the Bank shall from time to time notify the Borrower of the amount determined
<PAGE>
(using any averaging and attribution methods) by the Bank in good faith (which
determination shall be conclusive) to be necessary to compensate the Bank for
such increase in cost, reduction in income or additional expense reasonably
allocable to the making, maintenance or funding of the Loan hereunder. Such
amount shall be due and payable by the Borrower to the Bank 10 Business Days
after such notice is given.
(b) INDEMNITY. In addition to the compensation required by subsection
(a) of this Section 2.07, the Borrower shall indemnify the Bank against any loss
or expense (including loss of margin) which the Bank has sustained or incurred
as a consequence of any
(i) payment or prepayment of any part of the Loan on a day other
than the last day of the Libor Rate Interest Period applicable thereto,
(ii) attempt by the Borrower to revoke (expressly, by later
inconsistent notices or otherwise) in whole or part any notice stated herein to
be irrevocable (the Bank having in its discretion the options (A) to give effect
to any such attempted revocation and obtain indemnity under this Section 2.07(b)
or (B) to treat such attempted revocation as having no force or effect, as if
never made), or
(iii) default by the Borrower in the performance or observance of
any covenant or condition contained in this Agreement or the Note, including
without limitation any failure of the Borrower to pay when due (by acceleration
or otherwise) any principal, interest or any other amount due hereunder or under
the Note, or
(iv) claims, demands, losses or expenses incurred by or asserted
against the Bank in connection with the Borrower's use of the proceeds of the
Loan and/or the Bank's role as a lender hereunder except to the extent caused by
the Bank's gross negligence or willful misconduct.
If the Bank sustains or incurs any such loss or expense it shall from time to
time notify the Borrower of the amount determined by the Bank in good faith
(which determination shall be conclusive) to be necessary to indemnify the Bank
for such loss or expense. Such amount shall be due and payable by the Borrower
to the Bank 10 Business Days after such notice is given.
<PAGE>
2.08. FUNDING BY BRANCH, SUBSIDIARY OR AFFILIATE. The Bank shall have the right
from time to time, prospectively or retroactively, without notice to the
Borrower, to deem any branch, subsidiary or affiliate of the Bank to have made,
maintained or funded the Loan.
2.09. NATURE OF CREDIT. The Borrower may not reborrow and the Bank shall have
no obligation to re-lend, amounts repaid, whether by prepayment or otherwise, in
respect of the Loan.
2.10. FEES. The Borrower agrees to pay to the Bank a one-time fee in the amount
of U.S. $30,000 (50 basis points). Such fee shall be payable in U.S. Dollars to
the Bank on the Closing Date. In the event that the Closing Date is not the date
of this Agreement, the Borrower agrees to pay to the Bank a commitment fee based
on the amount of the Loan at a rate of 50/100 of 1% (50 basis points) per annum
(based on a year of 360 and actual days elapsed), payable quarterly in arrears
on the last day of each calendar quarter for the quarter then ended for the
period commencing on the date of this Agreement and ending on the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrowers represent and warrant that:
3.01. ORGANIZATION AND QUALIFICATION. The Borrower is a limited liability
company duly organized, validly existing and in good standing under the laws of
Delaware; the Borrower has the power and authority to own its properties and
assets, and to carry on its business as presently conducted and is qualified to
do business in those jurisdictions in which its ownership of property or the
nature of its business activities is such that failure to receive or retain such
qualification would have a material adverse effect upon the business, operations
or condition (financial or otherwise) of the Borrower.
3.02. POWER AND AUTHORIZATION. The Borrower has the power and authority to make
and carry out this Agreement, to make the borrowings provided for herein, to
execute and deliver the Note and to perform its obligations hereunder and under
the Note and Pledge Agreement; and all such action has been duly authorized by
all necessary corporate proceedings on its part.
3.03. FINANCIAL STATEMENTS. [Left blank intentionally.]
3.04. LITIGATION. Except as disclosed to the Bank in writing prior to the
Closing Date, there is no litigation or governmental proceeding by or against
the Borrower pending or, to its knowledge, threatened, which in the reasonable
<PAGE>
judgment of the Borrower, involves or could involve any material adverse effect
on the business, operations or condition (financial or otherwise) of the
Borrower.
3.05. NO CONFLICTING LAWS OR AGREEMENTS;CONSENTS AND APPROVALS. (a) Neither the
execution and delivery of this Agreement, the consummation of the transactions
herein contemplated, nor compliance with the terms and provisions hereof or of
the Note will conflict with or result in a breach of any of the terms,
conditions or provisions of the articles or statement of organization or the
operating agreement of the Borrower or of any Law or of any agreement or
instrument to which the Borrower is a party or by which it is bound or to which
it is subject, or constitute a default thereunder or result in the creation or
imposition of any Lien of any nature whatsoever upon any of the property of the
Borrower pursuant to the terms of any such agreement or instrument.
(b) No authorization, consent, approval, license, exemption or other
action by, and no registration, qualification, designation, declaration or
filing with, any Official Body is or will be necessary or advisable in
connection with execution and delivery of this Agreement, of the Note,
consummation of the transactions herein or therein contemplated, performance of
or compliance with the terms and conditions hereof or thereof.
3.06. EXECUTION AND BINDING EFFECT. This Agreement, the Pledge Agreement and
the Note have been duly and validly executed and delivered by the Borrower and
the Note Purchase Agreement has been duly and validly executed and delivered by
the OLP. This Agreement constitutes, and the Pledge Agreement and the Note when
executed and delivered hereunder will constitute, legal, valid and binding
obligations of the Borrower, enforceable in accordance with the terms hereof and
thereof except for (i) limitations imposed by bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting the enforcement of
creditors' rights generally including, without limitation, Laws with respect to
fraudulent conveyance, (ii) Laws limiting the right of specific performance or
(iii) general principles of equity. The Note Purchase Agreement constitutes a
legal, valid and binding obligation of the OLP, enforceable in accordance with
the terms thereof except for (i) limitations imposed by bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting the enforcement of
creditors' rights generally including, without limitation, Laws with respect to
fraudulent conveyance, (ii) Laws limiting the right of specific performance or
(iii) general principles of equity.
3.07. TAXES. All tax returns required to be filed by the Borrower have been
properly prepared, executed and filed. All taxes, assessments, fees and other
governmental charges upon the Borrower or upon its properties, income or sales
which are due and payable have been paid. The reserves and provisions for taxes
on the books of the Borrower are adequate for all open years and for their
current fiscal period.
3.08. REGULATION U. The Borrower is not borrowing hereunder for the purpose of
buying or carrying any "margin stock" as such term is used in Regulation U of
<PAGE>
the Board of Governors of the Federal Reserve System. The Borrower is not
engaged in the business of extending credit to others for the purposes of buying
or carrying any "margin stock."
3.09. COMPLIANCE WITH LAWS. As of the Closing Date, the Borrower is in
compliance with all material applicable Laws.
3.10. PATENTS, LICENSES, FRANCHISES. The Borrower owns or possesses all the
patents, trademarks, service marks, trade names, copyrights, licenses,
franchises, permits and rights with respect to the foregoing necessary to own
and operate its properties and to carry on its business as presently conducted
and presently planned to be conducted without conflict with the rights of
others.
3.11. INVESTMENT COMPANY; PUBLIC UTILITY HOLDING COMPANY. The Borrower: (a) is
not and is not controlled by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended; (b) is not a "holding company" or an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended; and (c) is not a registered bank holding company under the Bank
Holding Company Act of 1956, as amended.
3.12. ACCURATE AND COMPLETE DISCLOSURE. To the best of the Borrower's
knowledge, the Borrower has disclosed to the Bank in writing every fact which
materially and adversely affects, or which, so far as the Borrower can
reasonably foresee, would materially and adversely affect the business,
operations or financial condition of the Borrower or its ability to perform its
obligations under this Agreement and the Note.
3.13. SUBSIDIARIES. The Borrower has no subsidiaries.
3.14. THE INTERESTS. The Interests constitute all of the outstanding general
partnership interests in the Partnerships.
ARTICLE IV
CONDITIONS OF THE LOAN
----------------------
The obligations of the Bank to make the Loan hereunder are subject to the
performance by the Borrower of its obligations to be performed hereunder on or
before the date of the Loan and to the satisfaction of each of the following
further conditions:
4.01. AGREEMENT; NOTES. This Agreement, the Pledge Agreement and the Note shall
have been duly executed by the Borrower and delivered to the Bank.
4.02. REPRESENTATIONS AND WARRANTIES; EVENTS OF DEFAULT AND POTENTIAL DEFAULTS.
The representations and warranties contained in Article III shall be true on and
<PAGE>
as of the Closing Date and as of such date no Event of Default and no Potential
Default shall have occurred and be continuing or shall occur or exist after
giving effect to the Loan. Failure of the Bank to receive notice from the
Borrower to the contrary upon or prior to the Closing Date shall constitute the
Borrower's certification as to the foregoing.
4.03. PROCEEDINGS, INCUMBENCY AND CORPORATE DOCUMENTS. There shall have been
delivered to the Bank a certificate in form and substance satisfactory to the
Bank dated the Closing Date and signed on behalf of the Borrower by a duly
authorized officer of the Borrower, certifying as to (a) true copies of all
action taken by the Borrower relative to this Agreement, the Pledge Agreement
and the Note, including but not limited to that described in Section 3.02, (b)
the names, true signatures and incumbency of the officer or officers of the
Borrower authorized to execute and deliver this Agreement, the Pledge Agreement
and the Note, and (c) copies of the organizational documents of the Borrower.
The Bank may conclusively rely on such certificate unless and until a later
certificate revising the prior certificate has been furnished to the Bank.
4.04. OPINION OF BORROWER'S COUNSEL. There shall have been delivered to the
Bank a written opinion addressed to the Bank, dated the Closing Date, of Weil,
Gotshal & Manges LLP, legal counsel to the Borrower, in form and substance
satisfactory to the Bank, as to (a) the matters referred to in Sections 3.01,
3.02, 3.04, 3.05 and 3.06 (except that as to the matters referred to in Sections
3.04 and 3.05 such opinion may be limited to the knowledge of such counsel), (b)
the enforceability of Sections 8.07, 8.10 and 8.11, and (c) the enforceability
of the Pledge Agreement and the Note Purchase Agreement.
4.05. OPINION OF BORROWER'S GENERAL COUNSEL. There shall have been delivered to
the Bank a written legal opinion addressed to the Bank, dated the Closing Date,
of Janice Meola, General Counsel of the Borrower, in form and substance
satisfactory to the Bank, as to the matters referred to in Section 3.2 of the
Pledge Agreement.
4.06. OTHER DOCUMENTS. The Note Purchase Agreement shall have been delivered to
the Bank, such Note Purchase Agreement to be duly executed by the OLP, together
with a certificate signed on behalf of the OLP by its duly authorized officer
certifying as to: (i) all partnership action taken authorizing the Note Purchase
Agreement; and (ii) the names, true signatures and incumbency of the officer or
officers authorized to execute and deliver the Note Purchase Agreement.
4.07. PAYMENT OF FEES. On the Closing Date, all costs, fees and expenses
payable to the Bank shall have been paid to the extent then due.
4.08. DETAILS, PROCEEDINGS AND DOCUMENTS. All legal details and proceedings in
connection with the transactions contemplated by this Agreement shall be
satisfactory to the Bank, and the Bank shall have received all such counterpart
<PAGE>
originals or certified or other copies of such documents and proceedings in
connection with such transactions, in form and substance satisfactory to it, as
the Bank may from time to time reasonably request.
ARTICLE V
AFFIRMATIVE COVENANTS
---------------------
The Borrower hereby covenants to the Bank as follows:
5.01. FINANCIAL STATEMENTS AND INFORMATION. (a) ANNUAL FINANCIAL STATEMENTS. As
soon as practicable, and in any event within 120 days after the close of each
fiscal year of the Borrower, the Borrower shall deliver to the Bank a copy of
the annual financial statements for such year for the Borrower including herein
a balance sheet of the Borrower as of the close of such fiscal year and
statements of income, retained earnings and cash flow of the Borrower for such
fiscal year as of the close of such fiscal year, and notes to each, all in
reasonable detail and prepared in accordance with GAAP, setting forth in
comparative form the corresponding figures for the preceding fiscal year, with
such consolidated statements and balance sheets to be certified by independent
certified public accountants selected by the Borrower and acceptable to the Bank
as presenting fairly the financial position of the Borrower as of the end of
such fiscal year.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as practicable and, in any
event, within 60 days after the end of each of the first three quarters of each
fiscal year of the Borrower, the Borrower shall deliver to the Bank an unaudited
balance sheet and unaudited statements of income, retained earnings and cash
flow for the Borrower for such fiscal quarter and for the period from the
beginning of such fiscal year to the end of such quarter, as of the close of
such fiscal quarter, all in reasonable detail and in accordance with GAAP,
subject to year end audit adjustments.
(c) COMPLIANCE CERTIFICATE. Within 45 days after the end of each
quarter of each fiscal year of the Borrower, the Borrower shall deliver to the
Bank a certificate, dated as of the end of such fiscal quarter, signed on behalf
of the Borrower by its chief financial officer, stating that, as of the date
thereof, the Borrower is in compliance with the terms and conditions of this
Agreement, or if it is not so in compliance, specifying in detail the nature and
period of such failure and any action with respect thereto taken or contemplated
to be taken by the Borrower.
(d) FURTHER INFORMATION. Promptly following the Bank's request
therefor, the Borrower shall furnish to the Bank such other information and in
such form as the Bank may reasonably request.
(e) NOTICE OF EVENT OF DEFAULT. Immediately upon becoming aware of any
Event of Default or Potential Default, the Borrower shall give the Bank notice
thereof, together with a written statement of the chief executive or the
<PAGE>
principal financial officer of the Borrower setting forth the details thereof
and any action with respect thereto taken or contemplated to be taken by the
Borrower.
(f) NOTICE OF MATERIAL PROCEEDINGS. Promptly upon becoming aware
thereof, the Borrower shall give the Bank notice of the commencement, existence
or threat of any proceeding by or before any Official Body against or affecting
the Borrower or the OLP which, if adversely decided, would have a material
adverse effect on the business, operations or financial condition of the
Borrower or the OLP or on the ability of either of them to perform their
obligations under the Transaction Documents to which they are a party.
(g) VISITATION. The Borrower shall permit such persons as the Bank may
designate to visit and inspect the properties of the Borrower, if any, to
discuss its affairs with its financial management, and provide such other
information relating to the business and financial condition of the Borrower at
such times as the Bank may reasonably request and the Borrower may reasonably
agree. The Borrower hereby authorizes its financial management to discuss with
the Bank the affairs of the Borrower.
5.02. PRESERVATION OF EXISTENCE AND FRANCHISES. The Borrower shall maintain its
existence, rights and franchises in full force and effect in its jurisdiction of
formation. The Borrower shall qualify and remain qualified as a foreign entity
in each jurisdiction in which failure to receive or retain such qualification
would have a material adverse effect on its business.
5.03. PAYMENT OF TAXES AND OTHER POTENTIAL CHARGES AND PRIORITY CLAIMS; PAYMENT
OF OTHER CURRENT LIABILITIES. The Borrower shall pay or discharge:
(a) on or prior to the date on which penalties attach thereto, all
taxes, assessments and other governmental charges or levies imposed upon it or
any of its properties or income;
(b) on or prior to the date when due, all lawful claims of materialmen,
mechanics, carriers, warehousemen, landlords and other like persons which, if
unpaid, might result in the creation of a Lien upon any such property; and
(c) on or prior to the date when due, all other lawful claims which, if
unpaid, might result in the creation of a Lien upon any such property or which,
if unpaid, might give rise to a claim entitled to priority over general
creditors of the Borrower in a case under Title 11 (Bankruptcy) of the United
States Code, as amended, or in any receivership, insolvency proceeding or
dissolution or winding-up involving the Borrower; provided that, unless and
until foreclosure, distraint, levy, sale or similar proceedings shall have been
commenced, the Borrower need not pay or discharge any such tax, assessment,
charge, levy or claim so long as the validity thereof is contested in good faith
and by appropriate proceedings diligently conducted
<PAGE>
and so long as such reserves or other appropriate provisions as may be required
by GAAP shall have been made therefor and so long as such failure to pay or
discharge does not have a material adverse effect on the business, operations or
financial condition of the Borrower.
5.04. FINANCIAL ACCOUNTING PRACTICES. The Borrower shall make and keep books,
records and accounts which, in reasonable detail, accurately and fairly reflect
its transactions and dispositions of its assets and maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
transactions are recorded as necessary to permit preparation of financial
statements required under Section 5.01 in conformity with GAAP and to maintain
accountability for assets.
5.05 COMPLIANCE WITH LAWS. The Borrower shall comply with all applicable Laws
in all respects; provided that, the Borrower shall not be deemed to be in
violation of this Section 5.05 as a result of any failure to comply which would
not result in fines, penalties, injunctive relief or other civil or criminal
liabilities which, in the aggregate, would materially adversely affect the
business, operations or condition (financial or otherwise) of the Borrower or
its ability to perform its obligations under this Agreement, the Pledge
Agreement or the Note.
5.06. USE OF PROCEEDS. The Borrower shall use the proceeds of the Loan
hereunder solely to purchase the Interests.
ARTICLE VI
NEGATIVE COVENANTS
------------------
The Borrower covenants to the Bank as follows:
6.01. MERGER. The Borrower shall not merge with or into or consolidate with any
other person, or agree to do any of the foregoing.
6.02. DISPOSITIONS/ACQUISITIONS OF ASSETS. The Borrower shall not sell, convey,
assign, lease, abandon or otherwise transfer or dispose of, voluntarily or
involuntarily (any of the foregoing being referred to in this Section 6.02 as a
"transaction" and any series of related transactions constituting but a single
transaction), any of its properties or assets, tangible or intangible (including
but not limited to sale, assignment, discount or other disposition of accounts,
contract rights, chattel paper or general intangibles with or without recourse),
except transactions in the ordinary course of business. The Borrower shall not
acquire by purchase or otherwise, the business or assets of, or stock or other
ownership interests of, another person, other than the Interests.
6.03. BUSINESS. The Borrower shall not engage (directly or indirectly) in any
businesses other than holding the Interests.
<PAGE>
6.04. NEGATIVE PLEDGE. The Borrower shall not incur, create, assume or permit
to exist, any mortgage, pledge, lien, charge or other encumbrance of any nature
whatsoever on any of its assets, now or hereafter owned, other than (i) security
interests granted in favor of the Bank, (ii) tax liens which are being contested
in good faith and by appropriate proceedings diligently conducted (unless and
until foreclosure, sale or other similar proceedings have been commenced) and
provided that such reserve or other appropriate provisions, if any, as shall be
required by GAAP shall have been made therefor, and (iii) any unfiled
materialmen's, mechanic's, workmen's and repairman's liens (provided that, if
such a lien shall be perfected, it shall be discharged of record immediately
upon payment, bond or otherwise).
6.05. PROHIBITION OF NEGATIVE PLEDGE. The Borrower shall not agree, covenant,
warrant, represent, pledge or otherwise commit with or to any entity other than
the Bank through a negative pledge or other similar arrangement, not to incur,
create, assume or permit to exist, any mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on all or any of its assets, now or
hereafter owned.
6.06. OTHER INDEBTEDNESS. The Borrower shall not incur any Indebtedness other
than the Loan.
ARTICLE VII
EVENTS OF DEFAULT
-----------------
7.01 EVENTS OF DEFAULT If one or more of the following described Events of
Default shall occur, that is to say:
(a) The Borrower shall default in the payment when due of the
principal, or the Borrower shall default in the payment when due of any interest
or any other amount payable hereunder which default shall continue for a period
of 5 Business Days from the due date thereof;
(b) The OLP shall default in the performance of the Note Purchase
Agreement in any respect and such default shall remain in effect past any
applicable grace period provided therein;
(c) One or more judgments for the payment of money shall have been
entered against the Borrower which judgment/s exceed U.S. $10,000,000 in the
aggregate and such judgment/s shall remain undischarged or uncontested or
appealed in good faith for a period of 45 consecutive days;
<PAGE>
(d) Any representation or warranty herein made by the Borrower, or any
certificate or financial statement furnished pursuant to the provisions hereof,
shall prove to have been false or misleading in any material respect as of the
time made or furnished;
(e) The Borrower shall default in the observance, performance or
fulfillment of any covenant, condition or provision hereof and such default
shall not be remedied for a period of 20 Business Days after written notice
thereof to the Borrower from the Bank or any holder of the Note issued
hereunder;
(f) Any Transaction Document for any reason shall be nullified or not
be effective or enforceable;
(g) The occurrence of any default, event or condition which causes or
which would permit any person or persons to cause or, for which would with the
giving of notice or the passage of time or both would permit any person or
persons to cause, all or any part of the Credit Agreement to become due (by
acceleration, mandatory repayment or repurchase, or otherwise) before its
otherwise stated maturity, or failure to pay all or part of any obligation
thereunder at its stated maturity;
(h) The OLP, the Borrower or any Subsidiary (as defined in the Credit
Agreement) thereof shall (i) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect), (ii) file a petition seeking to
take advantage of any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or composition for adjustment of debts,
(iii) consent to or fail to contest in a timely and appropriate manner any
petition filed against it in an involuntary case under such bankruptcy laws or
other laws, (iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by, a
receiver, custodian, trustee, or liquidator of itself or of a substantial part
of its property, domestic or foreign, (v) admit in writing its inability to pay
its debts as they become due, (vi) make a general assignment for the benefit of
creditors, or (vii) take any corporate action for the purpose of authorizing any
of the foregoing; or
(i) A case or other proceeding shall be commenced against the OLP, the
Borrower or any Subsidiary thereof in any court of competent jurisdiction
seeking (i) relief under the federal bankruptcy laws (as now or hereafter in
effect) or under any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or adjustment of debts, or (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like for the
OLP, the Borrower or any Subsidiary thereof or for all or any substantial part
of their respective assets, domestic or foreign, and such case or proceeding
shall continue undismissed or unstayed for a period of sixty (60) consecutive
days, or an order granting the relief requested in such case or proceeding
(including, but not limited to, an order for relief under such federal
bankruptcy laws) shall be entered; then, (i) as to any Event of Default
<PAGE>
specified under subsections (a) through (g) of this Article VII, the Bank may,
by written notice to the Borrower, declare the unpaid balance of the Loan then
outstanding and interest accrued thereon and all other liabilities of the
Borrower hereunder to be forthwith due and payable, and the same shall thereupon
become and be immediately due and payable, without presentment, demand, protest
or notice or any kind, all of which are hereby expressly waived; and (ii) as to
any Event of Default specified under subsections (h) or (i) of this Article VII,
the unpaid balance of the Loan and interest accrued thereon and all other
liabilities of the Borrower hereunder shall be immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived.
ARTICLE VIII
MISCELLANEOUS
-------------
8.01. NO IMPLIED WAIVER ETC. No delay or failure of the Bank, or any holder of
the Note in exercising any right, power or privilege hereunder shall affect such
right, power or privilege; and no single or partial exercise thereof or any
abandonment or discontinuance of steps to enforce such a right, power or
privilege shall preclude any further exercise thereof or of any other right,
power or privilege. The rights and remedies hereunder of the Bank and any holder
of the Note are cumulative and not exclusive of any rights or remedies which it
or they would otherwise have. Any amendment, waiver, permit, consent or approval
of any kind or character on the part of the Bank of any breach or default under
this Agreement or any such waiver of any provision or condition of this
Agreement must be in writing and shall be effective only to the extent in such
writing specifically set forth.
8.02. SET-OFF. In case any one or more of the Events of Default described in
Article VII shall occur, or upon the happening of any Potential Default, the
holder of any Note shall have the right, in addition to all other rights and
remedies available to it, to set-off against the unpaid balance of the Note held
by it any debt owing by such holder to the Borrower, including without
limitation any funds in any deposit account maintained by the Borrower with such
holder, and such holder shall have and there is hereby created in favor of such
holder a security interest in all deposit accounts maintained by the Borrower
with such holder. Nothing in this Agreement shall be deemed any waiver or
prohibition of any right of banker's lien or set-off under applicable Law.
8.03. SURVIVAL OF PROVISIONS. All representations, warranties, covenants and
agreements of the Borrower contained herein or made in writing in connection
herewith shall survive the execution and delivery of this Agreement, the making
of Loan hereunder and the issuance of the Note.
<PAGE>
8.04. EXPENSES AND FEES; INDEMNITY. The Borrower agrees to pay, and save the
Bank harmless against liability for the payment of, all expenses of the Bank
(including the reasonable fees and expenses of counsel for the Bank which for
all purposes hereof shall include counsel employed by the Bank) arising in
connection with the preparation and negotiation of the Transaction Documents,
enforcement or collection thereof and relating to consents, amendments and
waivers hereof or thereof. Unless caused by the Bank's gross negligence or
willful misconduct, the Borrower further agrees to indemnify, defend and hold
the Bank, its officers, directors and employees harmless from and against all
claims, losses, causes of action, damages, liabilities, expenses and costs of
any kind which are in any way sustained by the Bank and which arise out of or
are incident to the breach by the Borrower of any of its representations
hereunder.
8.05. HOLIDAYS. Unless otherwise specified herein, whenever any payment or
action to be made or taken hereunder or under the Note shall be stated to be due
on any day other than a Business Day, such payment or action shall be made or
taken on the next succeeding Business Day and such extension of time shall in
such case be included in computing interest, if any, in connection with such
payment or action.
8.06. NOTICES, ETC. Any notice or other communication in connection with this
Agreement or the Note shall be deemed to have been given or made when received
by the party to whom directed. All such notices and other communications shall
be in writing unless otherwise provided herein and shall be directed to the
party to receive the same to the address set forth by its signature hereto, or
in accordance with the latest unrevoked written direction from any party to the
other party hereto given in accordance with this Section 8.06.
8.07. GOVERNING LAW. This Agreement and the Note issued hereunder shall be
deemed to be contracts under the laws of the State of New York and for all
purposes shall be construed in accordance with the laws of said State, without
reference to conflict of laws principles.
8.08. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto on separate counterparts, each of which,
when so executed and delivered, shall be an original, but all such counterparts
shall together constitute one and the same instrument.
8.09. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not assign or otherwise
transfer any of its rights or duties under this Agreement without the prior
written consent of the Bank. The Bank may, with the prior consent of the
Borrower, which consent shall not be unreasonably withheld or delayed, assign
all or part of its rights and duties under this Agreement to one or more
financial institutions or other entities, provided, however, that the consent of
the Borrower to any assignment of some or all of the Bank's rights and duties
hereunder shall not be required at any time during the occurrence, continuance,
or existence of any Event of Default or Potential Default, and provided further,
<PAGE>
that the consent of the Borrower shall not be required for any assignment to a
subsidiary or an affiliate of the Bank. The Bank may grant participations in the
Agreement and the Loan without the consent of the Borrower, but the Bank shall
notify the Borrower of any such participation.
8.10. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY (A) SUBMITS, IN
ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT, TO THE NON-EXCLUSIVE IN
PERSONAM JURISDICTION OF ANY STATE OR UNITED STATES COURT OF COMPETENT
JURISDICTION SITTING IN THE STATE OF NEW YORK AND AGREES TO SUIT BEING BROUGHT
IN ANY SUCH COURT; (B) WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF SUCH PROCEEDING IN ANY SUCH COURT OR THAT SUCH PROCEEDING WAS
BROUGHT IN AN INCONVENIENT COURT; (C) AGREES TO SERVICE OF PROCESS IN ANY LEGAL
PROCEEDING BY MAILING OF COPIES THEREOF (BY REGISTERED OR CERTIFIED MAIL, IF
PRACTICABLE) POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH HEREIN OR
SUCH OTHER ADDRESS OF WHICH THE BANK SHALL HAVE BEEN NOTIFIED IN WRITING IN
ACCORDANCE HEREWITH; (D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE BANK'S
RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, AND
THAT THE BANK SHALL HAVE THE RIGHT TO BRING ANY LEGAL PROCEEDINGS (INCLUDING A
PROCEEDING FOR ENFORCEMENT OF A JUDGMENT ENTERED BY ANY OF THE AFOREMENTIONED
COURTS) AGAINST THE BORROWER IN ANY OTHER COURT OR JURISDICTION IN ACCORDANCE
WITH APPLICABLE LAW.
8.11. WAIVER OF JURY TRIAL. THE BANK AND THE BORROWER AGREE THAT NEITHER OF THEM
NOR ANY SUCCESSOR OR ASSIGNEE SHALL (A) SEEK A JURY TRIAL IN ANY LAWSUIT,
PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED UPON, OR ARISING OUT OF, THIS
AGREEMENT, ANY RELATED INSTRUMENTS, ANY COLLATERAL OF THE DEALINGS OR THE
RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO CONSOLIDATE ANY SUCH
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF
THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE BANK AND THE BORROWER, AND THESE
PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NEITHER THE BANK NOR THE BORROWER
HAS AGREED WITH OR REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS
PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
<PAGE>
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have duly executed this Agreement as of the day and year first above
written.
SUBURBAN ENERGY SERVICES GROUP LLC
By:
---------------------------
(Signature)
Name: Robert M. Plante
-------------------------
Title: Treasurer
------------------------
MELLON BANK, N.A.
By:
---------------------------
(Signature)
Name:
-------------------------
Title:
------------------------
BORROWER'S ADDRESS FOR NOTICE: BANK'S ADDRESS FOR NOTICE:
- ------------------------------ --------------------------
Suburban Energy Services Group LLC Mellon Bank, N.A.
One Suburban Plaza Three Mellon Bank Center
240 Route 10 West Pittsburgh, PA 15259
Whippany, NJ 07981-0206 Attn: Loan Administration
WITH A COPY TO:
---------------
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Attn.: John Sabroske
<PAGE>
SCHEDULE I
TO TERM LOAN AGREEMENT
AMORTIZATION SCHEDULE
QUARTERLY PAYMENT
NUMBER DATE DUE (15TH OF MONTH) PRINCIPAL PAID (000'S)
- ----------------- ------------------------ ----------------------
1 Aug-99 115
2 Nov-99 115
3 Feb-00 115
4 May-00 115
5 Aug-00 115
6 Nov-00 115
7 Feb-01 115
8 May-01 400
9 Aug-01 400
10 Nov-01 400
11 Feb-02 400
12 May-02 400
13 Aug-02 400
14 Nov-02 400
15 Feb-03 400
16 May-03 400
17 Aug-03 400
18 Nov-03 400
19 Feb-04 400
20 May-04 395
<PAGE>
EXHIBIT A
TO TERM LOAN AGREEMENT
SUBURBAN ENERGY SERVICES GROUP LLC
PROMISSORY NOTE
---------------
U.S. $6,000,000 Pittsburgh, Pennsylvania
May 26, 1999
FOR VALUE RECEIVED, the undersigned, SUBURBAN ENERGY SERVICES GROUP LLC, a
Delaware limited liability company (the "Borrower"), hereby promises to pay to
the order of Mellon Bank, N.A. (the "Bank") on the Final Maturity Date and at
such earlier dates as may be required under the Agreement (as defined below) the
principal sum of Six Million U.S. Dollars (U.S. $6,000,000). The Borrower
further promises to pay to the order of the Bank interest on the unpaid
principal amount hereof from time to time outstanding at the rate or rates per
annum determined pursuant to Section 2.03 of, or as otherwise provided in, the
Agreement, payable on the dates set forth in the Agreement.
This Promissory Note is the Note referred to in the Term Loan Agreement dated as
of May 26, 1999, between the Borrower and the Bank (as the same may from time to
time be amended or modified, the "Agreement"), which Agreement, among other
things, contains provisions for prepayments on account of principal hereof prior
to the maturity hereof and also for acceleration of the maturity hereof upon the
happening of certain stated events, upon the terms and conditions therein
specified. Terms defined in the Agreement shall have the same meanings herein.
The Borrower hereby expressly waives presentment, demand, protest, and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note and the Agreement, and an action for amounts
due hereunder or thereunder shall immediately accrue upon the expiration of any
grace period.
This Note shall be governed by, construed and enforced in accordance with the
laws of the Commonwealth of Pennsylvania, without reference to principles of
conflict of laws.
SUBURBAN ENERGY SERVICES GROUP LLC
By:
---------------------------
(Signature)
Name: Robert M. Plante
Title: Treasurer
<PAGE>
EXHIBIT B
Note Purchase Agreement
Omitted
See Exhibit (10)(h) to 10-Q
<PAGE>
EXHIBIT C
Pledge and Security Agreement
<PAGE>
EXECUTION COPY
--------------
EXHIBIT C
TO TERM LOAN AGREEMENT
PLEDGE AND SECURITY AGREEMENT
THIS AGREEMENT, dated as of May 26, 1998, made by Suburban Energy
Services Group LLC, a limited liability company organized under the laws of the
State of Delaware (the "Pledgor"), in favor of Mellon Bank, N.A., a national
banking association (the "Bank").
RECITALS:
A. The Pledgor has entered into a Credit Agreement dated as of the date
hereof (as amended from time to time, the "Credit Agreement") with the Bank.
B. It is a condition precedent to the extension of credit under the
Credit Agreement that the Pledgor execute and deliver this Agreement. This
Agreement is made by the Pledgor among other things to induce the Bank to enter
into the Loan Documents (as defined below), and to induce the Bank to extend
credit under the Credit Agreement.
NOW, THEREFORE, in consideration of the premises, and intending to be
legally bound, the Pledgor hereby agrees as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. Capitalized terms not otherwise defined herein shall
have the meanings given in the Credit Agreement. In addition to the other terms
defined elsewhere in this Agreement, as used herein the following terms shall
have the following meanings:
"Secured Obligations" shall mean all obligations from time to
time of the Pledgor to the Bank under or in connection with any Loan
Document, including all obligations to pay principal, interest, fees,
indemnities or other amounts, in each case whether such obligations are
direct or indirect, secured or unsecured, joint or several, absolute or
contingent, due or to become due, whether for payment or performance,
now existing or hereafter arising.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of New Jersey from time to time.
1.2. UCC DEFINITIONS. Unless otherwise defined herein, terms defined in
the UCC shall have the same meanings in this Agreement.
<PAGE>
ARTICLE II
THE SECURITY
2.1. GRANT OF SECURITY. As security for the full and timely payment and
performance of the Secured Obligations, the Pledgor hereby assigns and pledges
to the Bank, and grants to the Bank a security interest in, all right, title and
interest of the Pledgor in, to and under the following, whether now or hereafter
existing or acquired (the "Collateral"):
(a) All of Pledgor's right, title and interest in and to the
1.0% general partnership interest in Suburban Propane Partners, LP, a
Delaware limited partnership, as evidenced by general partner units,
together with any and all substitutions therefor, replacements thereof
and/or additions thereto; and
(b) All of Pledgor's right, title and interest in and to the
1.0101% general partnership interest in Suburban Propane, LP, a
Delaware limited partnership, as evidenced by general partner units,
together with any and all substitutions therefor, replacements thereof
and/or additions thereto; and
(c) All proceeds of any of the foregoing or whatever is
received when any of the foregoing is sold, exchanged or otherwise
disposed of (including, without limitation, proceeds which constitute
property of the type described in the foregoing clauses (a) and (b).
2.2. PLEDGOR REMAINS LIABLE. Notwithstanding anything to the contrary
herein or in any other Loan Document, the Pledgor shall remain liable under the
contracts and agreements which create and/or govern the Collateral to the extent
set forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed.
2.3. CONTINUING AGREEMENT. This Agreement creates a continuing security
interest in the Collateral and shall continue in full force and effect until all
Secured Obligations have been paid in cash and performed in full, and all
commitments to extend credit under the Loan Documents have terminated. Upon the
payment in cash and performance in full of all Secured Obligations and
termination of all commitments to extend credit under the Loan Documents, the
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the Pledgor. Upon any such termination, the Bank
will, at the Pledgor's request and expense, return to the Pledgor, without any
representations, warranties or recourse of any kind whatsoever, such of the
Collateral as then may be held by the Bank hereunder, and execute and deliver to
the Pledgor such documents as the Pledgor may reasonably request to evidence
such termination.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Pledgor hereby represents and warrants to the Bank as follows:
3.1. TITLE. The Pledgor is the legal and beneficial owner of the
Collateral, free and clear of any lien, security interest, option or other
charge or encumbrance, except for liens in favor of the Bank. No effective
<PAGE>
financing statement or other item similar in effect covering any Collateral is
on file in any recording office, except such as may be filed in favor of the
Bank.
3.2. VALIDITY, PERFECTION AND PRIORITY. This Agreement creates a valid
security interest in the Collateral in favor of the Bank securing the Secured
Obligations, which security interest has been duly perfected and is prior to all
other liens, security interests, options or other charges or encumbrances (other
than those in favor of the Bank). All filings and other actions necessary or
desirable to perfect and protect such security interest in favor of the Bank
have been duly made and taken.
3.3. GOVERNMENTAL APPROVALS AND FILINGS. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is or will be necessary (a) for the grant by the Pledgor of the
security interest in the Collateral hereunder or for the execution, delivery or
performance of this Agreement by the Pledgor, (b) to ensure the validity,
perfection or priority of the security interest in the Collateral granted
hereunder, or (c) for the exercise by the Bank of any of its rights or remedies
hereunder, EXCEPT for the filing of financing statements and continuation
statements in appropriate jurisdictions pursuant to the Uniform Commercial Code
as in effect in such jurisdictions.
3.4. OFFICES, ETC. Schedule 3.4 identifies as of the date hereof the
address of the chief executive office of the Pledgor, of each office (whether
maintained by the Pledgor or otherwise) where books and records relating to the
Collateral are kept and of each place of business of the Pledgor. Schedule 3.4
also identifies all changes in the foregoing information during the one year
period ending on the date hereof. Schedule 3.4 also identifies the state of
organization of the Pledgor.
3.5. NAMES, ETC. During the one year period ending on the date hereof,
neither the Pledgor nor any of its direct or indirect predecessors by merger,
consolidation or other reorganization is or has been known by or used any other
or fictitious name or trade name (other than the name of the Pledgor as of the
date hereof), nor has the Pledgor or any such predecessor been the subject of
any merger, consolidation or other reorganization, nor has the Pledgor or any
such predecessor otherwise changed its name, identity or organizational
structure, except as set forth in Schedule 3.5. For each such direct and
indirect predecessor of the Pledgor, Schedule 3.5 also identifies the respective
addresses referred to in Section 3.4 for all times during such period.
3.6. REPRESENTATIONS AND WARRANTIES REMADE AT EACH EXTENSION OF CREDIT.
Each request (including any deemed request) by the Borrower for any extension of
credit under any Loan Document shall be deemed to constitute a representation
and warranty by the Pledgor to the Bank that the representations and warranties
made by the Pledgor in this Article III (exclusive of Sections 3.4 and 3.5) are
true and correct on and as of the date of such request with the same effect as
though made on and as of such date. Failure by the Bank to receive notice from
the Pledgor to the contrary before the Bank makes any extension of credit under
any Loan Document shall constitute a further representation and warranty by the
Pledgor to the Bank that the representations and warranties made by the Pledgor
in this Article III are true and correct on and as of the date of such extension
of credit with the same effect as though made on and as of such date.
<PAGE>
ARTICLE IV
COVENANTS
4.1. BOOKS AND RECORDS; INSPECTION; NOTATION. The Pledgor shall (a)
keep complete and accurate books and records concerning the Collateral and, at
the request of the Bank from time to time, permit the Bank or its
representatives to inspect and copy such books and records, (b) furnish to the
Bank such information and reports in connection with the Collateral at such
times and in such form as the Bank may reasonably request, and (c) place in the
appropriate books and records of the Pledgor and on the certificate(s), if any,
representing any of the Collateral, a notation or legend satisfactory to the
Bank indicating the existence of this Agreement and the Bank's interest in the
Collateral. The Bank shall have the right to verify the Collateral from time to
time, and the Pledgor shall cooperate with the Bank in such verification.
4.2. TRANSFERS AND OTHER LIENS, ETC.
(a) TRANSFERS. The Pledgor shall not sell, assign, transfer or
otherwise dispose of any Collateral (voluntarily or involuntarily, by
operation of law or otherwise).
(b) OTHER LIENS. The Pledgor shall not create or permit to
exist any lien, security interest, option or other charge or
encumbrance on any Collateral (voluntarily or involuntarily, by
operation of law or otherwise) except in favor of the Bank.
4.3. CHANGE IN NAME, OFFICES, ETC. The Pledgor shall (a) not have, use
or be known by any other or fictitious name or trade name (other than its name
as of the date hereof and names set forth in Schedule 3.5), nor be the subject
of any merger, consolidation or other reorganization, nor otherwise change its
name, identity or organizational structure, except, upon 60 days' prior written
notice to the Bank (specifically referring to this Section 4.3), and after all
actions referred to in Section 4.4(a) have been completed, (b) keep its chief
executive office, the offices (whether maintained by the Pledgor or otherwise)
where books and records relating to the Collateral are kept and each place of
business of the Pledgor at the respective addresses identified in Schedule 3.4
or, upon 60 days' prior written notice (specifically referring to this Section
4.3) to the Bank, at such other locations in jurisdictions where all actions
referred to in Section 4.4(a) have been completed, and (c) maintain its chief
executive office in the United States.
4.4. FURTHER ASSURANCES.
(a) GENERAL. The Pledgor shall from time to time, at its
expense, promptly execute and deliver all further instruments and
agreements, and take all further actions, that may be necessary or
appropriate, or that the Bank may reasonably request, in order to
perfect or protect any assignment, pledge or security interest granted
or purported to be granted hereby or to enable the Bank to exercise or
enforce its rights and remedies hereunder. Without limiting the
generality of the foregoing, the Pledgor will (i) if any Collateral
shall be evidenced by a certificate or other indicia of ownership,
immediately deliver to the Bank such certificate or other indicia of
ownership duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to the
Bank, and (ii) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Bank may request,
<PAGE>
in order to perfect and preserve any assignment, pledge or security
interest granted or purported to be granted hereby.
(b) FINANCING STATEMENTS, ETC. The Pledgor hereby authorizes
the Bank to file one or more financing or continuation statements, and
amendments thereto, relating to any Collateral without the signature of
the Pledgor where permitted by law. A photocopy or other reproduction
of this Agreement or any financing statement covering any Collateral
shall be sufficient as a financing statement where permitted by law.
4.5. TAXES, ETC. The Pledgor will promptly pay all taxes, fees and
charges of whatever nature with respect to the Collateral.
ARTICLE V
CERTAIN RIGHTS AND REMEDIES OF THE BANK
5.1. BANK MAY PERFORM. If the Pledgor fails to perform any obligation
under or in connection with this Agreement, the Bank may (but shall have no duty
to) itself perform or cause performance of such obligation, and the reasonable
expenses of the Bank incurred in connection therewith shall be payable by the
Pledgor pursuant to Section 6.4. The Bank may from time to time take any other
action which the Bank deems necessary or appropriate for the maintenance,
preservation or protection of any of the Collateral or of its security interest
therein.
5.2. NO DUTY TO EXERCISE POWERS. The powers of the Bank under and in
connection with this Agreement are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
5.3. DUTIES OF BANK. Except for exercise of reasonable care in the
custody and preservation of any Collateral in its possession and accounting for
moneys received by it pursuant to this Agreement, the Bank shall have no duty as
to any Collateral. In any event the Bank (a) shall have no duty to take any
steps to preserve rights against prior parties or any other rights pertaining to
any Collateral, (b) shall have no duty as to ascertaining or taking action with
respect to calls, conversions, exchanges, tenders, maturities or other matters
pertaining to any Collateral, whether or not the Bank has any knowledge of such
matters, and (c) shall not be liable for any action, omission, insolvency or
default on the part of any agent or custodian (other than the Bank) appointed by
the Bank in good faith other than the gross negligence or willful misconduct of
such agent or custodian. The Bank shall be deemed to have exercised reasonable
care in the custody and preservation of Collateral in its possession if it takes
such action for such purpose as the Pledgor requests in writing from time to
time (but failure to take any such action shall not in itself be deemed a
failure to exercise reasonable care or evidence of such failure). Subject only
to the performance by the Bank of its duties set forth in this Section 5.3, risk
of loss, damage and diminution in value of the Collateral, of whatever nature
and however caused, shall be on the Pledgor.
5.4. POWER OF ATTORNEY. The Pledgor hereby irrevocably appoints the
Bank, with full power of substitution, to be the attorney-in-fact of the
Pledgor, with full authority in the place and stead of the Pledgor and in the
name of the Pledgor or otherwise, from time to time in the Bank's discretion, to
<PAGE>
take any action and to execute any instruments and agreements which the Bank may
deem necessary or advisable to accomplish the purposes of this Agreement,
including the following:
(a) to demand, collect, enforce, file claims for, sue for,
recover, compromise, release, and take any action or institute any
proceedings to collect or enforce, all rights to payments due or to
become due and all other rights of the Pledgor under or in connection
with any Collateral,
(b) to receive, endorse and collect any checks, notes or other
instruments, documents, chattel paper or any other payment media in
connection with the foregoing clause (a), and
(c) to perform all obligations of the Pledgor hereunder;
PROVIDED, that except for taking actions referred to in Section 4.4(a), such
power of attorney may be exercised only so long as an Event of Default or
Potential Event of Default has occurred and is continuing. Such power of
attorney is irrevocable and coupled with an interest. All third parties are
entitled to rely conclusively on a representation by the Bank that it is
entitled to exercise such power of attorney.
5.5. CERTAIN REMEDIES. If any Event of Default shall have occurred and
be continuing, the Bank may exercise all rights and remedies which it may have
under this Agreement, any other agreement, at law or otherwise, and in addition,
the following provisions shall apply:
(a) The Bank may exercise all rights and remedies with respect
to the Collateral and each part thereof as are provided by the UCC to a
secured party on default (whether or not the UCC applies to the
affected Collateral). To the extent, if any, the Bank does not
otherwise have the right to do so, the Bank may (i) take absolute
possession and control of the Collateral or any part thereof, (ii)
transfer any Collateral into the name of the Bank or its nominees,
(iii) notify the parties obligated on the Collateral to make to the
Bank any payments due or to become due, (iv) receive any payments made
under or in connection with the Collateral, (v) exercise all rights and
remedies of the Pledgor under or in connection with the Collateral,
(vi) demand, collect, enforce, file claims for, sue for, recover,
compromise, release, and take any action or institute any proceedings
to collect or enforce, all rights to payments due or to become due and
all other rights of the Pledgor under or in connection with any
Collateral, and (vii) otherwise deal in and act with respect to the
Collateral in all respects as though it were the outright owner
thereof;
(b) All payments received by the Pledgor in respect of any
Collateral shall be received in trust for the benefit of the Bank,
shall be segregated from other funds of the Pledgor and shall be
forthwith paid over to the Bank in the same form as so received (with
any necessary endorsement); and
(c) The Bank may, without notice except to the extent required
by law, sell the Collateral or any part thereof, at public or private
sale, at any of the Bank's offices or elsewhere, for cash, on credit or
for future delivery, and upon such other terms as the Bank may deem
commercially reasonable. The Pledgor agrees that, to the extent notice
of sale is required by law, at least ten days' notice to the Pledgor of
the time and place of any public sale or the time after which any
<PAGE>
private sale is to be made, shall constitute reasonable notification.
The Bank shall not be obligated to make any sale, regardless of notice
of sale having been given. The Bank may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
5.6. APPLICATION OF PAYMENTS. All cash held by the Bank as Collateral
and all cash proceeds received by the Bank in respect of any sale of, collection
from, or other realization upon any of the Collateral, may in the discretion of
the Bank be held by the Bank as collateral for the Secured Obligations, or then
or at any time thereafter applied (after payment of any amounts payable to the
Bank pursuant to Section 6.4) in whole or part by the Bank to the Secured
Obligations in such order as the Bank may elect. If and when all Secured
Obligations shall have been paid in cash in full and all commitments to extend
credit under the Loan Documents shall have terminated, any surplus of such cash
or cash proceeds held by the Bank shall be paid over to the Pledgor or as
otherwise required by law. The Pledgor shall remain liable for any deficiency.
ARTICLE VI
MISCELLANEOUS
6.1. AMENDMENTS, ETC. No amendment to or waiver of any provision of
this Agreement, and no consent to any departure by the Pledgor herefrom, shall
in any event be effective unless in a writing manually signed by or on behalf of
the Bank. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
6.2. NO IMPLIED WAIVER; REMEDIES CUMULATIVE. No delay or failure of the
Bank in exercising any right or remedy under this Agreement shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right or
remedy preclude any other or further exercise thereof or the exercise of any
other right or remedy. The rights and remedies of the Bank under this Agreement
are cumulative and not exclusive of any other rights or remedies available
hereunder, under any other agreement, at law, or otherwise.
6.3. NOTICES. Except to the extent, if any, otherwise expressly
provided herein, all notices and other communications (collectively, "notices")
under this Agreement shall be given, shall be effective, and may be relied upon,
in the same way as notices under the Credit Agreement.
6.4. INDEMNITY AND EXPENSES.
(a) INDEMNITY. The Pledgor agrees to indemnify the Bank from
and against any and all claims, losses, liabilities and expenses
(including reasonable attorney's fees) arising out of or resulting from
this Agreement (including enforcement of this Agreement), except
claims, losses, liabilities and expenses resulting from the gross
negligence or willful misconduct of the Bank.
(b) EXPENSES. The Pledgor will upon demand pay to the Bank the
amount of all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Bank
<PAGE>
may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of,
collection of or other realization upon, any Collateral, (iii) the
exercise or enforcement of any of the rights of the Bank hereunder, or
(iv) the failure by the Pledgor to perform or observe any of the
provisions hereof.
6.5. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof and supersedes
all prior and contemporaneous understandings and agreements.
6.6. SURVIVAL. The obligations of the Pledgor under Section 6.4 shall
survive termination of this Agreement and all other events and conditions
whatever. All representations and warranties of the Pledgor contained in or made
in connection with this Agreement shall survive, and shall not be waived by, the
execution and delivery of this Agreement, any investigation by or knowledge of
the Bank, any extension of credit, termination of this Agreement, or any other
event or circumstance whatever.
6.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute but one and the same agreement.
6.8. CONSTRUCTION. In this Agreement, unless the context otherwise
clearly requires, references to the plural include the singular, the singular
the plural, and the part the whole; the neuter case includes the masculine and
feminine cases; and "or" is not exclusive. In this Agreement, any references to
property (and similar terms) include an interest in such property (or other item
referred to); "include," "includes," "including" and similar terms are not
limiting; "hereof," "herein," "hereunder" and similar terms refer to this
Agreement as a whole and not to any particular provision; and "expenses,"
"costs," "out-of-pocket expenses" and similar terms include the charges of
in-house counsel, auditors and other professionals of the relevant Person to the
extent that such amounts are routinely identified and charged under such
Person's cost accounting system. Section and other headings in this Agreement,
and any table of contents herein, are for reference only and shall not affect
the interpretation of this Agreement in any respect. Section and other
references in this Agreement are to this Agreement unless otherwise specified.
This Agreement has been fully negotiated between the applicable parties, each
party having the benefit of legal counsel, and accordingly neither any doctrine
of construction of security agreements in favor of the Pledgor, nor any doctrine
of construction of ambiguities against the party controlling the drafting, shall
apply to this Agreement.
6.9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Pledgor and its successors and assigns, and shall inure to the benefit of and be
enforceable by the Bank and its successors and assigns. Without limitation of
the foregoing, the Bank (and any successive assignee or transferee) from time to
time may assign or otherwise transfer all or any portion of its rights or
obligations under the Loan Documents (including all or any portion of any
commitment to extend credit), or any Secured Obligations, to any other Person,
and such Secured Obligations (including any Secured Obligations resulting from
extension of credit by such other Person under or in connection with the Loan
Documents) shall be and remain Secured Obligations entitled to the benefit of
this Agreement, and to the extent of its interest in such Secured Obligations
<PAGE>
such other Person shall be vested with all the benefits in respect thereof
granted to the Bank in this Agreement or otherwise.
6.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCLUSIVE OF CHOICE OF LAW
PRINCIPLES.
IN WITNESS WHEREOF, the Pledgor has executed and delivered this
Security Agreement as of the date first above written.
SUBURBAN ENERGY SERVICES GROUP LLC
By:
-------------------------------
Name: Robert M. Plante
Title: Treasurer
<PAGE>
SCHEDULE 3.4
TO
SECURITY AGREEMENT
LOCATION OF OFFICES, ETC.
A. Address (including street address and county) of the chief executive office
of the Pledgor:
Suburban Energy Services Group LLC Morris County
One Suburban Plaza
240 Route 10 West
Whippany, NJ 07981-0206
B. Address (including street address and county) of each office (whether
maintained by the Pledgor or otherwise) where books and records relating to
Collateral are kept:
Suburban Energy Services Group LLC Morris County
One Suburban Plaza
240 Route 10 West
Whippany, NJ 07981-0206
C. Address (including street address and county) of each place of business of
the Pledgor:
Suburban Energy Services Group LLC Morris County
One Suburban Plaza
240 Route 10 West
Whippany, NJ 07981-0206
D. Changes in the foregoing information during the one year period ending on the
date of the Security Agreement:
Not applicable.
E. State of organization of the Pledgor:
Delaware
<PAGE>
SCHEDULE 3.5
TO
SECURITY AGREEMENT
NAMES, ETC.
Suburban Successor GP, LLC
EXHIBIT 10.(h)
--------------
EXECUTION COPY
--------------
NOTE PURCHASE AGREEMENT
THIS AGREEMENT, dated as of May 26, 1999, made by Suburban Propane,
L.P., a limited partnership organized under the laws of the State of Delaware
(the "Purchaser"), in favor of Mellon Bank, N. A., a national banking
association (the "Lender").
RECITALS:
A. Suburban Energy Services Group LLC, a limited liability company
organized under the laws of the State of Delaware (the "Borrower"), has entered
into a Term Loan Agreement, dated as of May 26, 1999 (as amended from time to
time, the "Loan Agreement") with the Lender. The Purchaser will derive
substantial direct and indirect benefit from the transactions contemplated by
the Loan Agreement.
B. It is a condition precedent to the extension of credit under the
Loan Agreement that the Purchaser execute and deliver this Agreement. This
Agreement is made by the Purchaser among other things to induce the Lender to
enter into the Loan Documents (as defined below) and to induce the Lender to
extend credit under the Loan Agreement.
C. The Purchaser acknowledges that the Lender has relied and will rely
on this Agreement in entering into the Loan Documents and extending credit under
the Loan Agreement. The Purchaser further acknowledges that it has,
independently and without reliance upon the Lender or any representation by or
other information from the Lender, made its own credit analysis and decision to
enter into this Agreement.
NOW, THEREFORE, in consideration of the premises, and intending to be
legally bound, the Purchaser hereby agrees as follows:
Article I
Definitions
1.1. DEFINITIONS.
(a) CERTAIN DEFINITIONS. Capitalized terms not otherwise
defined herein shall have the meanings given in the Loan Agreement. In addition
to the other terms defined elsewhere in this Agreement, as used herein the
following terms shall have the following meanings:
"Borrower Obligations" shall mean any and all of the
obligations of the Borrower under the Loan Agreement, the Note or the
other Loan Documents to which the Borrower is a party or by which it is
bound.
"Loan Documents" shall mean the Loan Agreement, this
Agreement, and all agreements and instruments from time to time
delivered under or in connection with any of the foregoing, in each
case as the same may be amended from time to time.
"Note" shall mean the promissory note of the Borrower, dated
May 26, 1999 issued under the Loan Agreement and any replacement
therefor.
"Purchase Date" shall mean such date, not less than 5 business
days after the date on which an Event of Default arising under Sections
7.01(a), (h) or (i) of the Loan Agreement as in effect on the date
hereof has occurred, as shall be specified in written notice from the
Lender to the Purchaser as the "Purchase Date" hereunder.
"Purchaser Credit Agreement" shall mean the Second Amended and
Restated Credit Agreement, dated as of May 26, 1999, among the
Purchaser, First Union National Bank, as Administrative Agent, and the
lenders party thereto, as the same may be amended, restated, renewed or
supplemented, from time to time and any credit agreement or loan
agreement that refinances, replaces or is substituted for the Purchase
Credit Agreement or any refinancing, replacement or substitute credit
or loan agreement.
Article II
Note Purchase
2.1. NOTE PURCHASE. The Purchaser hereby absolutely,
unconditionally and irrevocably agrees to purchase from the Lender, on the
Purchase Date, the Note for a purchase price equal to the then outstanding
unpaid principal amount of and accrued interest on the Note, together with all
other amounts then due and payable by the Borrower to the Lender under the Loan
Agreement. Such payment shall be made against delivery by the Lender to the
Purchaser of an Assignment of Note in substantially the form of Exhibit A to
this Agreement. The sale of the Note by the Lender shall be without
representation, warranty or recourse of any kind to the Lender, other than the
representation that the Lender is transferring the Note free and clear of any
lien, charge or other encumbrance created by the Lender. The obligation of the
Purchaser hereunder is in no way conditioned upon any attempt to collect from or
proceed against the Borrower or any other Person or any other event or
circumstance. The obligations of the Purchaser under this Agreement are direct
and primary obligations of the Purchaser and are independent of the Borrower
Obligations, and a separate action or actions may be brought against the
Purchaser regardless of whether action is brought against the Borrower or any
other Person or whether the Borrower or any other Person is joined in any such
action or actions.
2.2. OBLIGATIONS ABSOLUTE. The Purchaser agrees that, to the
fullest extent permitted by law, its obligation to purchase the Note and pay the
purchase price therefor will be performed and paid strictly in accordance with
the terms of the Loan Documents, regardless of any law, regulation or order now
or hereafter in effect in any jurisdiction affecting the Borrower Obligations,
any of the terms of the Loan Documents or the rights of the Lender or any other
Person with respect thereto. To the fullest extent permitted by law, the
obligations of the Purchaser under this Agreement shall be absolute,
unconditional and irrevocable, irrespective of any of the following:
(a) any lack of legality, validity, enforceability,
allowability (in a bankruptcy, insolvency, reorganization, dissolution or
similar proceeding, or otherwise), or any avoidance or subordination, in whole
or in part, of any Loan Document or any of the Borrower Obligations;
(b) any change in the amount, nature, time, place or manner of
payment or performance of, or in any other term of, any of the Borrower
Obligations (whether or not such change is contemplated by the Loan Documents as
presently constituted, and specifically including any increase in the Borrower
Obligations, whether resulting from the extension of additional credit to the
Borrower or otherwise), any execution of any additional Loan Documents, or any
amendment or waiver of or any consent to departure from any Loan Document;
(c) any taking, impairment or nonperfection of any collateral,
or any taking, release, impairment or amendment or waiver of or consent to
departure from any guaranty or other direct or indirect security for any of the
Borrower Obligations;
(d) any manner of application of collateral or other direct or
indirect security for any of the Borrower Obligations, or proceeds thereof, to
any of the Borrower Obligations or to other obligations secured thereby, or any
manner of sale or other disposition of any collateral for any of the Borrower
Obligations or any other assets of the Borrower;
<PAGE>
(e) any impairment by the Lender or any other Person of any
recourse of the Purchaser against the Borrower or any other Person, or any other
impairment by the Lender or any other Person of any suretyship status of the
Purchaser;
(f) any bankruptcy, insolvency, reorganization, dissolution or
similar proceedings with respect to, or any change, restructuring or termination
of the corporate or other organizational structure or existence of, the
Borrower, the Purchaser or any other Person;
(g) any failure of the Lender or any other Person to disclose
to the Purchaser any information pertaining to the business, operations,
condition (financial or other) or prospects of the Borrower or any other Person,
or to give any other notice, disclosure or demand; or any other event or
circumstance (including any defense of failure of consideration, breach of
representation or warranty, statute of frauds, bankruptcy, lack of capacity,
statute of limitations, release, accord and satisfaction or usury, and excluding
only the defense of full, strict and indefeasible payment and performance) that
might otherwise constitute a defense available to, a discharge of, or a
limitation on the obligations of, the Borrower, the Purchaser or a guarantor or
surety.
2.3. WAIVERS, ETC. To the fullest extent permitted by law, the
Purchaser hereby irrevocably waives any defense to or limitation on its
obligations under this Agreement arising out of or based upon any matter
referred to in Section 2.2 and, without limiting the generality of the
foregoing, any requirement of promptness, diligence or notice of acceptance, any
other notice, disclosure or demand with respect to any of the Borrower
Obligations and this Agreement, any requirement of acceptance hereof, reliance
hereon or knowledge hereof by the Lender, and any requirement that the Lender
protect, secure, perfect or insure any lien or any property subject thereto or
exhaust any right or take any action against the Borrower or any other Person or
any collateral or other direct or indirect security for any of the Borrower
Obligations.
2.4. REINSTATEMENT. This Agreement shall continue to be effective,
or be automatically reinstated, as the case may be, if at any time payment of
any of the Borrower Obligations is avoided, rescinded or must otherwise be
returned by the Lender for any reason, all as though such payment had not been
made.
2.5. PAYMENTS. All payments to be made by the Purchaser pursuant to
this Agreement shall be made in funds immediately available at the Lender's
office at One Mellon Bank Center, Pittsburgh, Pennsylvania 15258, without
setoff, counterclaim, withholding or other deduction of any nature. All payments
made by the Purchaser pursuant to this Agreement may be applied to the Borrower
Obligations and all other amounts payable under this Agreement in such order as
the Lender may elect
2.6. CONTINUING AGREEMENT. This Agreement shall continue in full
force and effect until all Borrower Obligations and all other amounts payable
under this Agreement have been paid in cash, and all commitments to extend
credit under the Loan Documents have terminated, subject in any event to
reinstatement in accordance with Section 2.4. Without limiting the generality of
the foregoing, the Purchaser hereby irrevocably waives any right to terminate or
revoke this Agreement.
2.7. RELEASE OF COLLATERAL. The Lender agrees with the Purchaser
that it will not release or exchange any collateral securing the Note except in
connection with the exercise of its remedies under the Pledge Agreement.
Article III
Representations and Warranties
The Purchaser hereby represents and warrants to the Lender as follows:
<PAGE>
3.1 PARTNERSHIP STATUS. The Purchaser is a limited partnership
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization. The Purchaser has the power to own its property
and to transact the business in which it is engaged or proposes to engage. The
Purchaser is duly qualified to do business as a foreign partnership and is in
good standing in all jurisdictions in which the ownership of its properties or
the nature of its activities or both makes such qualification necessary or
advisable.
3.2. POWER AND AUTHORIZATION. The Purchaser has the power to
execute, deliver and perform its obligations under this Agreement and each other
Loan Document to which it is a party, and the Purchaser has taken all necessary
partnership action to authorize such execution, delivery and performance.
3.3. EXECUTION AND BINDING EFFECT. This Agreement and each other
Loan Document to which the Purchaser is a party have been duly executed and
delivered by the Purchaser and constitutes the legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with their respective terms.
3.4. GOVERNMENTAL APPROVALS AND FILINGS. No authorization, approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body is or will be necessary or advisable in connection with
execution, delivery or performance by the Purchaser of this Agreement or any
other Loan Document to which it is a party, or to ensure the legality, validity,
binding effect, enforceability or admissibility in evidence thereof.
3.5. ABSENCE OF CONFLICTS. The execution, delivery and performance
by the Purchaser of this Agreement and the other Loan Documents does not and
will not
(a) violate or conflict with any law, regulation or ordinance
or any order of any court or other governmental authority or regulatory
body, or
(b) violate, conflict with or constitute a default under, OR
result in (or give rise to any right of any Person to cause) any
termination, cancellation, prepayment or acceleration of performance
of, OR result in the creation or imposition of (or give rise to any
obligation to create or impose) any lien, security interest, option or
other charge or encumbrance upon any of the property of the Purchaser
pursuant to, OR otherwise result in (or give rise to any right,
contingent or otherwise, of any Person to cause) any change in any
right, power, privilege, duty or obligation of the Purchaser under or
in connection with,
(i) the certificate of limited partnership or
partnership agreement (or other constituent documents)
of the Purchaser, or
(ii) any agreement or instrument binding on or affecting
the Purchaser or any of its properties (now owned or hereafter
acquired).
3.6. PROCEEDINGS. The ultimate determination of all proceedings
pending or, to the best of its knowledge, threatened against the Purchaser or
any of its affiliates at law or in equity or before any governmental
instrumentality or in any arbitration will not, in the aggregate, materially
impair its ability to perform its obligations under this Agreement or any Loan
Document to which the Purchaser is a party, and no such proceeding purports or
is likely to affect the legality, validity or enforceability of this Agreement
or any Loan Document to which the Purchaser is a party.
3.7. INFORMATION. All information furnished by the Purchaser or on
its behalf in connection with this Agreement is true, accurate and complete in
all material respects.
<PAGE>
Article IV
Covenants
4.1. COVENANTS GENERALLY. Reference is hereby made to the
provisions of Sections 8.1, 8.5, 8.6, 8.12, 10.5, 10.7, and 10.8 of the
Purchaser Credit Agreement (together with all related definitions and
cross-references). To the extent such provisions impose upon the Purchaser (or a
Subsidiary of the Purchaser) a duty to do or refrain from doing certain acts or
things or to meet or refrain from meeting certain conditions, the Purchaser
shall (or shall cause such Subsidiary of the Purchaser to, as the case may be)
do or refrain from doing such acts or things, or meet or refrain from meeting
such conditions, as the case may be. Any reference to the Administrative Agent
or the Lender(s) therein shall be deemed to be a reference to the Lender for
purposes hereof.
4.2. MAINTENANCE OF BORROWING AVAILABILITY UNDER CREDIT AGREEMENT.
The Purchaser shall at all times cause there to be available under the Purchaser
Credit Agreement an aggregate amount of unborrowed commitments thereunder at
least equal to the outstanding principal amount of and accrued interest on the
Note.
4.3. FURTHER ASSURANCES. The Purchaser will make, execute and
deliver all such additional and further acts, things, deeds and instruments as
the Lender may reasonably require to carry out the purposes of this Agreement
and insure the Lender's rights hereunder.
Article V
Limitations on Payment and Remedies
5.1. PROHIBITION ON PAYMENT UPON PURCHASER LOAN DEFAULT. No direct
or indirect payment (in cash, property, securities or by set-off or otherwise)
shall be made of or on account of the obligations of the Purchaser under this
Agreement and the Lender shall not accept (whether in cash, property or
securities or by set-off or otherwise) from the Purchaser any payment of or on
account of such obligations except at such time as no Default or Event of
Default (each as defined in the Purchaser Credit Agreement, and herein a
"Purchaser Credit Default") exists or would be caused by such payment.
5.2. LIMITATION ON REMEDIES. At any time that a Purchaser Credit
default exists, the Lender shall not take or cause to be taken any action
against the Purchaser (including, without limitation, commencing any legal
action against the Purchaser or filing or joining in the filing of any
insolvency petition against the Purchaser) with respect to the Purchaser's
failure to perform its obligations hereunder, whether permitted by the
provisions of this Article V or otherwise, until (a) the expiration of the 180
day period commencing on the date a notice of intention to exercise remedies
hereunder, following a failure by the Purchaser to timely pay the purchase price
set forth in Section 2.1, shall have been given by the Lender to the Purchaser
and to the Administrative Agent (as defined in the Purchaser Credit Agreement),
or (b) such sooner time that (i) the holders of Purchaser Indebtedness (as
defined below) exercise any acceleration remedies in respect of a Purchase
Credit Default pursuant to the Purchaser Credit Agreement, (ii) an automatic
acceleration occurs pursuant to the Purchase Credit Agreement, or (iii) the
holders of the Purchaser Indebtedness, or any of them individually or through
the Administrative Agent shall file or join in filing any insolvency petition
against the Purchaser. Lender agrees that it will rescind any action that it has
<PAGE>
taken pursuant to (b) above if the action of the holders of the Purchaser
Indebtedness enabling the Lender to take such action has been rescinded by such
holders.
5.3. PAYMENTS AND DISTRIBUTIONS RECEIVED. If the Lender shall have
received any payment from, or distribution of assets of, the Purchaser in
respect of any of the Purchaser's obligations hereunder in contravention of the
terms of this Article V, then and in such event such payment or distribution
shall be received and held in trust for, and shall be paid over or delivered to,
the holders of the indebtedness arising under the Purchaser Credit Agreement
(the "Purchaser Indebtedness"), or to the applicable agent on their behalf, for
application to the Purchaser Indebtedness, to the extent necessary to pay all
such Purchaser Indebtedness in full in the form received (except for the
endorsement or assignment of the Lender where necessary).
5.4. RELATIVE RIGHTS. This Article V defines the relative rights of
the Lender and the holders of the Purchaser Indebtedness. Nothing in this
Article V shall impair, as between the Purchaser and the Lender, the obligations
of the Purchaser, which are absolute and unconditional, to pay the purchase
price set forth in Section 2.1 in accordance with the provisions hereof.
5.5. COVENANTS OF THE LENDER. The Lender shall not take any
security or collateral to secure the obligations of the Purchaser hereunder or
any part thereof unless any security or collateral is granted to holders of the
Purchaser Indebtedness. The Lender further acknowledges and consents that,
without notice to or assent by the Lender, and without affecting the rights and
benefits of the holders of the Purchaser Indebtedness set forth in this Article
V:
(a) The obligations and liabilities of the Purchaser for the
Purchaser Indebtedness may, from time to time, be increased, renewed,
refinanced, extended, modified, amended, restated, compromised, supplemented,
terminated, waived or released;
(b) The holders of the Purchaser Indebtedness, and any
representative or representatives acting on behalf thereof, may exercise or
refrain from exercising any right, remedy or power granted by or in connection
with any agreements relating to the Purchaser Indebtedness and the provisions of
this Article V; and
(c) Any balance or balances of funds with any holder of the
Purchaser Indebtedness at any time outstanding to the credit of the Purchaser
may, from time to time, in whole or in part, be surrendered or released;
all as the holders of the Purchaser Indebtedness, and any representative or
representatives acting on behalf thereof, may deem advisable, and all without
impairing, abridging, diminishing, releasing or affecting the limitations
provided for herein.
5.6. MISCELLANEOUS. To the extent permitted by applicable law, the
Lender and the Purchaser hereby waive (a) notice of acceptance hereof and
reliance hereon by the holders of the Purchaser Indebtedness and (b) all
diligence in the collection or protection of or realization upon the Purchaser
<PAGE>
Indebtedness. The Lender and the Purchaser hereby expressly acknowledge and
agree that (i) the holders of the Purchaser Indebtedness are intended
third-party beneficiaries of the provisions of Article V of this Agreement and
any provisions specifically made subject thereto and may enforce any and all
rights derived herein by suit, either in equity or law, for specific performance
of any agreement contained in this Article V or for judgment at law and an other
relief whatsoever appropriate to such action or procedure and (ii) the foregoing
provisions are, and are intended to be, an inducement and a consideration to
each holder of the Purchaser Indebtedness, whether such Purchaser Indebtedness
was created or acquired before or after the issuance of this Agreement, and each
holder of the Purchaser Indebtedness shall be deemed conclusively to have relied
upon such provisions in acquiring and continuing to hold such Purchaser
Indebtedness.
Article VI
Miscellaneous
6.1. AMENDMENTS, ETC. No amendment to or waiver of any provision of
this Agreement, and no consent to any departure by the Purchaser here from,
shall in any event be effective unless in a writing manually signed by or on
behalf of the Lender; provided, however, that no amendment to Article V of this
Agreement or any section hereof specifically made subject to Article V shall be
made without the prior written consent of the Administrative Agent under the
Purchaser Credit Agreement, such consent not to be unreasonably withheld. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
6.2. NO IMPLIED WAIVER; REMEDIES CUMULATIVE. No delay or failure of
the Lender in exercising any right or remedy under this Agreement shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right
or remedy preclude any other or further exercise thereof or the exercise of any
other right or remedy. The rights and remedies of the Lender under this
Agreement are cumulative and not exclusive of any other rights or remedies
available hereunder, under any other agreement, at law, or otherwise.
6.3. NOTICES. Except to the extent, if any, otherwise expressly
provided herein, all notices and other communications (collectively, "notices")
under this Agreement shall be in writing (including facsimile transmission) and
shall be sent by first-class mail, by nationally-recognized overnight courier,
by personal delivery, or by facsimile transmission, in all cases with charges
prepaid. All notices shall be sent, if to the Purchaser, to its address
specified on the signature page hereof, or if to the Lender, to its address
specified in the Loan Agreement, or, in any case, to such other address as shall
have been designated by the applicable party by notice to the other party
hereto. Any properly given notice shall be effective when received, except that
properly given notices to the Purchaser shall be effective at the following
time, if earlier: if given by telephone, when telephoned; if by first-class
mail, three Business Days after deposit in the mail; if by overnight courier,
one Business Day after pickup by such courier; and if by facsimile transmission,
upon transmission (receipt confirmed). The Lender may rely on any notice
(whether or not made in a manner contemplated by this Agreement) purportedly
made by or on behalf of the Purchaser, and the Lender shall have no duty to
verify the identity or authority of the Person giving such notice.
6.4. EXPENSES. Subject to the provisions of Article V, the
Purchaser agrees to pay upon demand all reasonable expenses (including
reasonable fees and expenses of counsel) which the Lender may incur from time to
<PAGE>
time arising from or relating to the administration of, or exercise, enforcement
or preservation of rights or remedies under, this Agreement.
6.5. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior and contemporaneous understandings and agreements.
6.6. SURVIVAL. All representations and warranties of the Purchaser
contained in or made in connection with this Agreement shall survive, and shall
not be waived by, the execution and delivery of this Agreement, any
investigation by or knowledge of the Lender, any extension of credit, or any
other event or circumstance whatever.
6.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute but one and the same agreement.
6.8. SETOFF. Subject to the provisions of Article V, in the event
that any obligation of the Purchaser now or hereafter existing under this
Agreement or any other Loan Document shall have become due and payable, the
Lender shall have the right from time to time, without notice to the Purchaser,
to set off against and apply to such due and payable amount any obligation of
any nature of the Lender to the Purchaser, including all deposits (whether time
or demand, general or special, provisionally or finally credited, however
evidenced) now or hereafter maintained by the Purchaser with the Lender. Subject
to the provisions of Article V, to the fullest extent permitted by law, such
right shall be absolute and unconditional in all circumstances and, without
limitation, shall exist whether such obligation to the Purchaser is absolute or
contingent, matured or unmatured (it being agreed that the Lender may deem such
obligation to be then due and payable at the time of such setoff), regardless of
the offices or branches through which the parties are acting with respect to the
offset obligations, regardless of whether the offset obligations are denominated
in the same or different currencies, and regardless of the existence or adequacy
of any other direct or indirect security or any other right or remedy available
to the Lender. Except as set forth in Article V, nothing in this Agreement or
any other Loan Document shall be deemed a waiver of or restriction on any right
of setoff or banker's lien available to the Lender under this Section 6.8, at
law or otherwise.
6.9. CONSTRUCTION. In this Agreement, unless the context otherwise
clearly requires, references to the plural include the singular, the singular
the plural, and the part the whole; the neuter case includes the masculine and
feminine cases; and "or" is not exclusive. In this Agreement, any references to
property (or similar terms) include any interest in such property (or other item
referred to); "include," "includes," "including" and similar terms are not
limiting; "hereof," "herein," "hereunder" and similar terms refer to this
Agreement as a whole and not to any particular provision; and "expenses,"
"costs," "out-of-pocket expenses" and similar terms include the charges of
in-house counsel, auditors and other professionals of the relevant Person to the
extent that such charges are routinely identified and charged under such
Person's cost accounting system. Section and other headings in this Agreement,
and any table of contents herein, are for reference purposes only and shall not
affect the interpretation of this Agreement in any respect. Section and other
references in this Agreement are to this Agreement unless otherwise specified.
This Agreement has been fully negotiated between the applicable parties, each
party having the benefit of legal counsel, and accordingly neither any doctrine
of construction of suretyships in favor of a surety nor any doctrine of
construction of ambiguities against the party controlling the drafting shall
apply to this Agreement.
<PAGE>
6.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the Purchaser, its successors and assigns, and shall inure to the benefit of and
be enforceable by the Lender and its successors and assigns. Without limitation
of the foregoing, the Lender (and any successive assignee or transferee) from
time to time may assign or otherwise transfer all or any portion of its rights
or obligations under the Loan Documents (including all or any portion of any
commitment to extend credit), or any Borrower Obligations, including the Note,
to any other Person, and such Note and Borrower Obligations (including any
Borrower Obligations resulting from extension of credit by such other Person
under or in connection with the Loan Documents) shall be and remain the Note and
Borrower Obligations entitled to the benefit of this Agreement but shall be
expressly subject to the provisions of Article V, and to the extent of its
interest in such Note and other Borrower Obligations such other Person shall be
vested with all the benefits in respect thereof granted to the Lender in this
Agreement or otherwise, but subject to the provisions of Article V.
6.11. CERTAIN LEGAL MATTERS.
(a) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, exclusive of
choice of law principles.
(b) SUBMISSION TO JURISDICTION AND VENUE; CONSENT TO SERVICE
OF PROCESS; WAIVER OF JURY TRIAL; ETC. To the fullest extent permitted by law,
the Purchaser hereby irrevocably and unconditionally:
(i) agrees that any action, suit or proceeding by any Person
arising from or relating to this Agreement or any other Loan Document
or any statement, course of conduct, act, omission or event in
connection with any of the foregoing (collectively, "Related
Litigation") may be brought in any state or federal court of competent
jurisdiction sitting in New York, New York, submits to the jurisdiction
of such courts, and agrees not to bring any Related Litigation in any
other forum (but nothing herein shall affect the right of the Lender to
bring any Related Litigation in any other forum);
(ii) acknowledges that such courts will be the most
convenient forum for any Related Litigation, waives any objection to
the laying of venue of any Related Litigation brought in any such
court, waives any claim that any Related Litigation brought in any such
court has been brought in an inconvenient forum, and waives any right
to object, with respect to any Related Litigation, that such court does
not have jurisdiction over it;
(iii) consents and agrees to service of any summons, complaint
or other legal process in any Related Litigation by registered or
certified U.S. mail, postage prepaid, to it at the address for notices
described in this Agreement, and consents and agrees that such service
shall constitute in every respect valid and effective service (but
nothing herein shall affect the validity or effectiveness of process
served in any other manner permitted by law); and
(iv) waives the right to trial by jury in any Related
Litigation.
(c) LIMITATION OF LIABILITY. To the fullest extent permitted
by law, no claim may be made by the Purchaser against the Lender or any
affiliate, director, officer, employee, attorney or agent of the Lender for any
special, indirect, consequential or punitive damages in respect of any claim
arising from or relating to this Agreement or any other Loan Document or any
statement, course of conduct, act, omission or event in connection with any of
the foregoing (whether based on breach of contract, tort or any other theory of
liability); and the Purchaser hereby waives, releases and agrees not to sue upon
any claim for any such damages, whether or not accrued and whether or not known
or suspected to exist.
<PAGE>
IN WITNESS WHEREOF, the Purchaser has executed and delivered this
Agreement as of the date first above written.
SUBURBAN PROPANE, L.P.
By
---------------------------------
Name: Robert M. Plante
Title: Treasurer
Address for Notices:
One Suburban Plaza
240 Route 10 West
Whippany, NJ 07981-0206
Attn.: Treasurer
Telephone: 973-503-9110
Fax: 973-503-9041
ACCEPTED AND AGREED:
MELLON BANK, N.A.
By
-----------------------
Name:
--------------------
Title:
-------------------
subunpam.bdk
<PAGE>
EXHIBIT A
Form of Assignment of Note
Assignment of Note
FOR VALUE RECEIVED, Mellon Bank, N.A. ("Assignor") hereby sells,
assigns and transfers to Suburban Propane, L.P. ("Assignee"), without recourse,
representation or warranty (express or implied) except as set forth in the next
sentence hereof, all of Assignor's right, title and interest in and to the
promissory note dated May 26, 1999, of Suburban Energy Services Group LLC.
Assignor represents to Assignee that Assignor is transferring such promissory
note free and clear of any lien, charge or other encumbrance created by
Assignor.
Mellon Bank, N.A.
By:
-------------------------------
(Signature)
Name:
-----------------------------
Title:
----------------------------
Date:
---------------------
EXHIBIT 10.(i)
--------------
NOTE CALL AGREEMENT
NOTE CALL AGREEMENT, dated as of May 26, 1999, between
Suburban Propane, L.P., a limited partnership organized under the laws of the
State of Delaware (the "Purchaser"), and Mellon Bank, N. A., a national banking
association (the "Lender").
RECITALS:
A. Suburban Energy Services Group LLC, a limited liability
company organized under the laws of the State of Delaware (the "Borrower"), has
entered into the Term Loan Agreement, dated as of May 26, 1999 (as amended from
time to time, the "Loan Agreement"), with the Lender. The Purchaser will derive
substantial direct and indirect benefit from the transactions contemplated by
the Loan Agreement.
B. It is a condition precedent to the extension of credit
under the Loan Agreement that the Purchaser execute and deliver the Note
Purchase Agreement (the "Note Purchase Agreement") obliging the Purchaser to
purchase from the Lender the Promissory Note of the Borrower, dated May 26,
1999, issued under the Loan Agreement (together with any replacement therefor
under the Loan Agreement, the "Note"), upon the terms and subject to the
conditions set forth therein. This Agreement is being entered into by the
parties, among other things, to induce the Purchaser to enter into the Note
Purchase Agreement.
NOW, THEREFORE, in consideration of the premises, and
intending to be legally bound, the Purchaser hereby agrees as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
(a) CERTAIN DEFINITIONS. Capitalized terms not otherwise
defined herein shall have the meanings given in the Loan
Agreement. In addition to the other terms defined elsewhere in
this Agreement, as used herein the following terms shall have the
following meanings:
"Borrower Obligations" shall mean any and all of the
obligations of the Borrower under the Loan Agreement, the Note or
the other Loan Documents to which the Borrower is a party or by
which it is bound.
"Loan Documents" shall mean the Loan Agreement, this
Agreement, and all agreements and instruments from time to time
delivered under or in connection with any of the foregoing, in
each case as the same may be amended from time to time.
<PAGE>
"Call Purchase Date" shall mean such date after the date on
which an Event of Default has occurred, as shall be specified in
written notice from the Purchaser to the Lender as the "Call
Purchase Date" hereunder, but in any event not less than five
Business Days after the date of such notice.
"Purchaser Credit Agreement" shall mean the Second Amended and
Restated Credit Agreement, dated as of May 26, 1999, among the
Purchaser, First Union National Bank, as Administrative Agent,
and the lenders party thereto, as the same may be amended,
restated, renewed or supplemented from time to time, and any
credit agreement or loan agreement that refinances, replaces or
is substituted for the Purchaser Credit Agreement or any
refinancing, replacement or substitute credit or loan agreement.
ARTICLE II
CALL
2.1 CALL. The Purchaser shall have the absolute,
unconditional and irrevocable right (but not the obligation, except as and to
the extent set forth under the Note Purchase Agreement) to purchase from the
Lender, and the Lender shall be absolutely, unconditionally and irrevocably
obliged to transfer and sell to the Purchaser, on the Call Purchase Date, the
Note for a purchase price equal to the then outstanding unpaid principal amount
of and accrued interest on the Note, together with all other amounts then due
and payable by the Borrower to the Lender under the Loan Agreement. Such payment
shall be made against delivery by the Lender to the Purchaser of an Assignment
of Note in substantially the form of Exhibit A to this Agreement . The purchase
of the Note by the Purchaser shall be without representation, warranty or
recourse of any kind from the Lender, other than the representation that the
Lender is transferring the Note free and clear of any lien, charge or other
encumbrance created by the Lender. The right of the Purchaser hereunder is in no
way conditioned upon any attempt by the Lender to collect from or proceed
against the Borrower or any other Person or any other event or circumstance.
2.2 REINSTATEMENT. This Agreement shall continue to be
effective, or be automatically reinstated, as the case may be, if at any time
payment of any of the Borrower Obligations is avoided, rescinded or must
otherwise be returned by the Lender for any reason, all as though such payment
had not been made.
2.3 PAYMENTS. All payments to be made by the Purchaser
pursuant to this Agreement shall be made in funds immediately available at the
Lender's office at One Mellon Bank Center, Pittsburgh, Pennsylvania 15258,
without setoff, counterclaim, withholding or other deduction of any nature. All
payments made by the Purchaser pursuant to this Agreement may be applied to the
Borrower Obligations and all other amounts payable under this Agreement in such
order as the Lender may elect.
2.4 CONTINUING AGREEMENT. This Agreement shall continue in
full force and effect until all Borrower Obligations and all other amounts
payable under this Agreement have been paid in cash, and all commitments to
<PAGE>
extend credit under the Loan Documents have terminated, subject in any event to
reinstatement in accordance with Section 2.2. Without limiting the generality of
the foregoing, the Lender hereby irrevocably waives any right to terminate or
revoke this Agreement.
2.5 RELEASE OF COLLATERAL. The Lender agrees with the
Purchaser that it will not release or exchange any collateral securing the Note
except in connection with the exercise of its remedies under the Pledge
Agreement or pursuant to the Note Purchase Agreement.
ARTICLE III
MISCELLANEOUS
3.1 AMENDMENTS, ETC. No amendment to or waiver of any
provision of this Agreement, and no consent to any departure by the Lender of
its obligations hereunder, shall in any event be effective unless in a writing
manually signed by the Purchaser. Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
3.2 NO IMPLIED WAIVER; REMEDIES CUMULATIVE. No delay or
failure of a party in exercising any right or remedy under this Agreement shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right or remedy preclude any other or further exercise thereof or the
exercise of any other right or remedy. The rights and remedies of the parties
under this Agreement are cumulative and not exclusive of any other rights or
remedies available hereunder, under any other agreement, at law, or otherwise.
3.3 NOTICES. Except to the extent, if any, otherwise
expressly provided herein, all notices and other communications (collectively,
"notices") under this Agreement shall be in writing (including facsimile
transmission) and shall be sent by first-class mail, by nationally-recognized
overnight courier, by personal delivery, or by facsimile transmission, in all
cases with charges prepaid. All notices shall be sent, if to the Purchaser, to
its address specified on the signature page hereof, or if to the Lender, to its
address specified in the Loan Agreement, or, in any case, to such other address
as shall have been designated by the applicable party by notice to the other
party hereto. Any properly given notice shall be effective when received, except
that properly given notices to the Purchaser shall be effective at the following
time, if earlier: if given by telephone, when telephoned; if by first-class
mail, three Business Days after deposit in the mail; if by overnight courier,
one Business Day after pickup by such courier; and if by facsimile transmission,
upon transmission (receipt confirmed). The Lender may rely on any notice
(whether or not made in a manner contemplated by this Agreement) purportedly
made by or on behalf of the Purchaser, and the Lender shall have no duty to
verify the identity or authority of the Person giving such notice.
3.4 EXPENSES. The Purchaser agrees to pay upon demand all
reasonable expenses (including reasonable fees and expenses of counsel) which
<PAGE>
the Lender may incur from time to time arising from or relating to the
administration of, or exercise, enforcement or preservation of rights or
remedies under, this Agreement.
3.5 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior and contemporaneous understandings and agreements with
respect to such subject matter.
3.6 SURVIVAL. All representations and warranties of the
Purchaser contained in or made in connection with this Agreement shall survive,
and shall not be waived by, the execution and delivery of this Agreement, any
investigation by or knowledge of the Lender, any extension of credit, or any
other event or circumstance whatever.
3.7 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute but one and the same agreement.
3.8 CONSTRUCTION. In this Agreement, unless the context
otherwise clearly requires, references to the plural include the singular, the
singular the plural, and the part the whole; the neuter case includes the
masculine and feminine cases; and "or" is not exclusive. In this Agreement, any
references to property (or similar terms) include any interest in such property
(or other item referred to); "include," "includes," "including" and similar
terms are not limiting; "hereof," "herein," "hereunder" and similar terms refer
to this Agreement as a whole and not to any particular provision; and
"expenses," "costs," "out-of-pocket expenses" and similar terms include the
charges of in-house counsel, auditors and other professionals of the relevant
Person to the extent that such charges are routinely identified and charged
under such Person's cost accounting system. Section and other headings in this
Agreement, and any table of contents herein, are for reference purposes only and
shall not affect the interpretation of this Agreement in any respect. Section
and other references in this Agreement are to this Agreement unless otherwise
specified. This Agreement has been fully negotiated between the applicable
parties, each party having the benefit of legal counsel, and accordingly neither
any doctrine of construction of suretyships in favor of a surety nor any
doctrine of construction of ambiguities against the party controlling the
drafting shall apply to this Agreement.
3.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Lender, its successors and assigns, and shall inure to the benefit of
and be enforceable by the Purchaser and its successors and assigns. Without
limitation of the foregoing, the Lender (and any successive assignee or
transferee) from time to time may assign or otherwise transfer all or any
portion of its rights or obligations under the Loan Documents (including all or
any portion of any commitment to extend credit), or any Borrower Obligations,
including the Note, to any other Person, and such Note and Borrower Obligations
(including any Borrower Obligations resulting from extension of credit by such
other Person under or in connection with the Loan Documents) shall be and remain
the Note and Borrower Obligations entitled to the benefit of this Agreement, and
<PAGE>
to the extent of its interest in such Note and other Borrower Obligations such
other Person shall be vested with all the benefits in respect thereof granted to
the Lender in this Agreement or otherwise; PROVIDED that any assignee shall, as
a condition to such assignment, agree in writing to be bound by this Agreement,
as and to the extent it applies to the Lender, as if such assignee was an
original signatory hereto.
3.10 CERTAIN LEGAL MATTERS.
(a) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York,
exclusive of choice of law principles.
(b) SUBMISSION TO JURISDICTION AND VENUE; CONSENT TO SERVICE
OF PROCESS; WAIVER OF JURY TRIAL; Etc. To the fullest extent
permitted by law, the Lender hereby irrevocably and
unconditionally:
(i) agrees that any action, suit or proceeding by any
Person arising from or relating to this Agreement or any
other Loan Document or any statement, course of conduct,
act, omission or event in connection with any of the
foregoing (collectively, "Related Litigation") may be
brought in any state or federal court of competent
jurisdiction sitting in New York, New York, submits to the
jurisdiction of such courts, (but nothing herein shall
affect the right of the Lender to bring any Related
Litigation in any other forum);
(ii) acknowledges that such courts will be the most
convenient forum for any Related Litigation, waives any
objection to the laying of venue of any Related Litigation
brought in any such court, waives any claim that any Related
Litigation brought in any such court has been brought in an
inconvenient forum, and waives any right to object, with
respect to any Related Litigation, that such court does not
have jurisdiction over it;
(iii) consents and agrees to service of any summons,
complaint or other legal process in any Related Litigation
by registered or certified U.S. mail, postage prepaid, to it
at the address for notices described in this Agreement, and
consents and agrees that such service shall constitute in
every respect valid and effective service (but nothing
herein shall affect the validity or effectiveness of process
served in any other manner permitted by law); and
(iv) waives the right to trial by jury in any Related
Litigation.
(c) LIMITATION OF LIABILITY. To the fullest extent permitted
by law, no claim may be made by the Purchaser against the Lender
or any affiliate, director, officer, employee, attorney or agent
of the Lender for any special, indirect, consequential or
punitive damages in respect of any claim arising from or relating
to this Agreement or any other Loan Document or any statement,
<PAGE>
course of conduct, act, omission or event in connection with any
of the foregoing (whether based on breach of contract, tort or
any other theory of liability); and the Purchaser hereby waives,
releases and agrees not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or
suspected to exist.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered
this Note Call Agreement by their duly authorized representatives as of
the date first above written.
SUBURBAN PROPANE, L.P.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Address for Notices:
One Suburban Plaza
240 Route 10 West
Whippany, NJ 07981
Attn: Robert Plante
Telephone: (973) 503-9110
Fax: (973) 515-5994
MELLON BANK, N.A.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
<PAGE>
EXHIBIT A
Form of Assignment of Note
Assignment of Note
FOR VALUE RECEIVED, Mellon Bank, N.A. ("Assignor") hereby
sells, assigns and transfers to Suburban Propane, L.P. ("Assignee"), without
recourse, representation or warranty (express or implied) except as set forth in
the next sentence hereof, all of Assignor's right, title and interest in and to
the promissory note dated May 26, 1999, of Suburban Energy Services Group LLC.
Assignor represents to Assignee that Assignor is transferring such promissory
note free and clear of any lien, charge or other encumbrance created by
Assignor.
Mellon Bank, N.A.
By:
----------------------------------
(Signature)
Name:
--------------------------------
Title:
-------------------------------
Date:
-----------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements contained in the body of the accompanying Form 10-Q and is
qualified in it's entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-25-1999
<PERIOD-START> SEP-28-1998
<PERIOD-END> JUN-26-1999
<CASH> 19,634
<SECURITIES> 0
<RECEIVABLES> 40,834
<ALLOWANCES> 2,537
<INVENTORY> 26,155
<CURRENT-ASSETS> 88,723
<PP&E> 490,340
<DEPRECIATION> 161,973
<TOTAL-ASSETS> 672,519
<CURRENT-LIABILITIES> 88,773
<BONDS> 427,625
0
0
<COMMON> 0
<OTHER-SE> 95,814
<TOTAL-LIABILITY-AND-EQUITY> 672,519
<SALES> 505,099
<TOTAL-REVENUES> 505,099
<CGS> 217,455
<TOTAL-COSTS> 376,895
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,132
<INTEREST-EXPENSE> 22,507
<INCOME-PRETAX> 38,285
<INCOME-TAX> 47
<INCOME-CONTINUING> 38,238
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,238
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
