SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report April 4, 1997
Date of earliest event reported December 17, 1996
CORNERSTONE PROPANE PARTNERS, L.P.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-12499 77-0439862
(State or other Commission File (IRS Employer
jurisdiction of incorporation) Number Identification No.)
432 Westridge Drive
Watsonville, CA 95076
(Address of principal executive (Zip Code)
offices)
(408) 724-1921
(Registrant's telephone number, including area code)
<PAGE> 2
Item 5. Other Events.
On December 17, 1996, Cornerstone Propane Partners, L.P., a
Delaware limited partnership (the "registrant" or the "Partnership")
issued 9,821,000 common units representing limited partner interests
in the Partnership, in a public offering registered under the
Securities Act of 1933, as amended (Registration Statement No. 333-
13879). In addition, Cornerstone Propane, L.P., the Partnership's
operating subsidiary (the "Operating Subsidiary"), issued $220 million
aggregate principal amount of Senior Secured Notes due 2010 to certain
institutional investors in a private placement and entered into a $125
million bank credit facility, consisting of a $50 million working
capital facility and a $75 million revolving credit facility.
The Partnership was formed to acquire, own and operate the
propane businesses and assets (the "Combined Operations") of SYN Inc.,
Empire Energy Corporation, Myers Propane Gas Company and CGI Holdings,
Inc. Cornerstone Propane GP, Inc. is the Managing General Partner.
In connection with the public offering, the registrant and the
Operating Partnership amended and restated their respective Agreements
of Limited Partnership and entered into a series of transactions which
resulted in the Operating Partnership owning all of the businesses and
assets of the Combined Operations. The Managing General Partner
entered into Employment Agreements with certain executive officers and
the Partnership adopted a Restricted Unit Plan.
Each of the Underwriting Agreement, the Partnership
Agreement, the Operating Partnership Agreement, the Credit Agreement,
the Note Purchase Agreement, the Contribution, Conveyance and
Assumption Agreement, the Restricted Unit Plan and the Form of Amended
and Restated Employment Agreement are filed herewith as Exhibits and
are hereby incorporated by reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits
The following exhibits are filed herewith:
Exhibit
Number Description
======== ============================================================
1.1 Underwriting Agreement, dated December 11, 1996 by and among
Cornerstone Propane Partners, L.P., Cornerstone Propane,
L.P., Cornerstone Propane GP, Inc., SYN Inc. and Morgan
Stanley & Co. Incorporated, as Representative of the
Underwriters
3.1 Amended and Restated Agreement of Limited Partnership of
Cornerstone Propane Partners, L.P., dated as of December 17,
1996, by and among Cornerstone Propane GP, Inc., a
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California corporation, as the Managing General Partner, SYN
Inc., a Delaware corporation, as Special General Partner,
together with any other Persons who become Partners in the
Partnership or parties thereto as provided therein
3.2 Amended and Restated Agreement of Limited Partnership of
Cornerstone Propane, L.P. dated as of December 17, 1996, by
and among Cornerstone Propane GP, Inc., a California
corporation, as the Managing General Partner, SYN Inc., a
Delaware corporation, as Special General Partner, together
with any other Persons who become Partners in the
Partnership or parties thereto as provided therein
10.1 Credit Agreement dated December 17, 1996, among Cornerstone
Propane, L.P., as the Borrower, and Various Financial
Institutions, as the Lenders, and Bank of America National
Trust and Savings Association, as Agent for the Lenders
10.2 Note Purchase Agreement dated December 17, 1996, among
Cornerstone Propane, L.P. and certain investors
10.3 Contribution, Conveyance and Assumption Agreement dated as
of December 17, 1996, among Cornerstone Propane Partners,
L.P., Cornerstone Propane, L.P., Cornerstone Propane GP,
Inc., Empire Energy SC Corporation and SYN Inc.
10.4 1996 Cornerstone Propane Partners, L.P. Restricted Unit Plan
10.5 Form of Amended and Restated Employment Agreement for
Messrs. Baxter, Kittrell, Goedde and DiCosimo
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
CORNERSTONE PROPANE PARTNERS, L.P.
(Registrant)
By: Cornerstone Propane GP, Inc.,
Managing General Partner
By: /s/ Ronald J. Goedde
------------------------------
Name: Ronald J. Goedde
Title: Executive Vice President,
Chief Financial Officer
and Treasurer
Date: April 4, 1997
<PAGE> 5
EXHIBIT INDEX
Exhibit
Number Description
======== ============================================================
1.1 Underwriting Agreement, dated December 11, 1996 by and among
Cornerstone Propane Partners, L.P., Cornerstone Propane,
L.P., Cornerstone Propane GP, Inc., SYN Inc. and Morgan
Stanley & Co. Incorporated, as Representative of the
Underwriters
3.1 Amended and Restated Agreement of Limited Partnership of
Cornerstone Propane Partners, L.P., dated as of December 17,
1996, by and among Cornerstone Propane GP, Inc., a
California corporation, as the Managing General Partner, SYN
Inc., a Delaware corporation, as Special General Partner,
together with any other Persons who become Partners in the
Partnership or parties thereto as provided therein
3.2 Amended and Restated Agreement of Limited Partnership of
Cornerstone Propane, L.P. dated as of December 17, 1996, by
and among Cornerstone Propane GP, Inc., a California
corporation, as the Managing General Partner, SYN Inc., a
Delaware corporation, as Special General Partner, together
with any other Persons who become Partners in the
Partnership or parties thereto as provided therein
10.1 Credit Agreement dated December 17, 1996, among Cornerstone
Propane, L.P., as the Borrower, and Various Financial
Institutions, as the Lenders, and Bank of America National
Trust and Savings Association, as Agent for the Lenders
10.2 Note Purchase Agreement dated December 17, 1996, among
Cornerstone Propane, L.P. and certain investors
10.3 Contribution, Conveyance and Assumption Agreement dated as
of December 17, 1996, among Cornerstone Propane Partners,
L.P., Cornerstone Propane, L.P., Cornerstone Propane GP,
Inc., Empire Energy SC Corporation and SYN Inc.
10.4 1996 Cornerstone Propane Partners, L.P. Restricted Unit Plan
10.5 Form of Amended and Restated Employment Agreement for
Messrs. Baxter, Kittrell, Goedde and DiCosimo
<PAGE> 6
EXHIBIT 1.1
CORNERSTONE PROPANE PARTNERS, L.P.
8,540,000 COMMON UNITS REPRESENTING LIMITED PARTNER INTERESTS
UNDERWRITING AGREEMENT
December 11, 1996
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December 11, 1996
Morgan Stanley & Co.
Incorporated
Dean Witter Reynolds Inc.
A.G. Edwards & Sons, Inc.
Oppenheimer & Co., Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
c/o Morgan Stanley & Co.
Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
Cornerstone Propane Partners, L.P., a Delaware limited
partnership (the "Partnership"), proposes to issue and sell to the
several Underwriters named in Schedule I hereto (the "Underwriters")
8,540,000 common units representing limited partner interests in the
Partnership (the "Firm Units"). The Partnership also proposes to
issue and sell to the several Underwriters not more than an additional
1,281,000 common units representing limited partner interests in the
Partnership (the "Additional Units") if and to the extent that you, as
Managers of the offering, shall have determined to exercise, on behalf
of the Underwriters, the right to purchase such Additional Units
granted to the Underwriters in Section 2 hereof. The Firm Units and
the Additional Units are hereinafter collectively referred to as the
"Units." The common units representing limited partner interests in
the Partnership to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the "Common Units."
The Partnership has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, including a
prospectus, relating to the Units. The registration statement as
amended at the time it becomes effective, including the information
(if any) deemed to be part of the registration statement at the time
of effectiveness pursuant to Rule 430A under the Securities Act of
1933, as amended (the "Securities Act"), is hereinafter referred to as
the "Registration Statement;" the prospectus in the form first used to
confirm sales of Units is hereinafter referred to as the "Prospectus;"
each of the preliminary prospectus dated November 21, 1996 filed as
part of the registration statement and each preliminary prospectus
filed as a part of any subsequent amendment thereto, or filed pursuant
to Rule 424 under the Securities Act prior to the Prospectus, is
hereinafter referred to as a "Preliminary Prospectus." If the
Partnership has filed an abbreviated registration statement to
register additional Common Units pursuant to Rule 462(b) under the
Securities Act (the "Rule 462 Registration Statement"), then any
reference herein to the term "Registration Statement" shall be deemed
to include such Rule 462 Registration Statement.
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It is understood and agreed to by all parties that the
Partnership was formed to acquire and operate the business and assets
of (a) SYN Inc., a Delaware corporation ("Synergy"), and Empire Energy
Corporation, a Tennessee corporation ("Empire Energy"), each of which
is a subsidiary of Northwestern Growth Corporation, a South Dakota
corporation ("NGC"), which is a subsidiary of Northwestern Public
Service Company, a Delaware corporation ("NPS"), (b) Myers Propane Gas
Company, a Delaware corporation ("Myers"), which is a subsidiary of
NPS, (c) CGI Acquisition Corporation, a Delaware corporation
("Acquisition Corp."), which is a subsidiary of NGC, and (d) CGI
Holdings, Inc., a Delaware corporation ("Coast"), which will be
acquired by NGC prior to the closing of the offering of the Units
contemplated hereby. Cornerstone Propane GP, Inc., a Delaware
corporation ("Newco"), is the general partner (the "Managing General
Partner") of both the Partnership and Cornerstone Propane, L.P., a
Delaware limited partnership (the "Operating Partnership"). Upon the
closing of the offering of the Units, Synergy will be the special
general partner (the "Special General Partner") of the Partnership and
the Operating Partnership. Synergy, Empire Energy, Myers, Coast and
their respective subsidiaries are collectively referred to herein as
the "Predecessor Entities." The Partnership, the Operating
Partnership and Cornerstone Sales & Service Corporation, a Delaware
corporation and a wholly owned subsidiary of the Operating Partnership
(the "Corporate Sub"), are collectively referred to herein as the
"Partnership Entities."
It is further understood and agreed to by all parties that
prior to or concurrently with the closing of the offering of the Units
contemplated hereby, (1)(a) NGC will purchase stock of (and certain
rights related to) Synergy and Myers owned by Empire Gas Corporation,
a Missouri corporation currently known as "All Star Gas Corporation"
("Empire Gas"), (b) NGC will cause Acquisition Corp. to merge with and
into Coast, (c) NPS will contribute all the outstanding shares of
capital stock of Myers owned by NPS to NGC as a capital contribution
(and not in exchange for stock of NGC), (d) pursuant to a Contribution
and Assumption Agreement between NGC and Coast (the "NGC Contribution
Agreement"), NGC will contribute all of the outstanding shares of
capital stock of (and certain rights related to) Synergy, Myers,
Empire Energy and Newco owned by NGC and a promissory note of Empire
Energy in the outstanding principal amount of $8.0 million (the
"Empire Energy Promissory Note"), including accrued interest, to Coast
and Coast will assume approximately $85.0 million in outstanding
principal amount of indebtedness of NGC and the Predecessor Entities
and (e) pursuant to a Contribution and Assumption Agreement between
Coast and Coast Gas (the "Coast Contribution Agreement"), Coast will
contribute all of the outstanding shares of capital stock of (and
certain rights related to) Synergy, Myers, Empire Energy and Newco
owned by Coast and the Empire Energy Promissory Note (including
accrued interest) and the assets acquired as a result of the merger of
Coast with CGI Acquisition to Coast Gas, Inc., a California
corporation and a wholly owned subsidiary of Coast ("Coast Gas"), and
Coast Gas will assume the outstanding indebtedness of Coast on such
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date (including the indebtedness assumed by Coast as described in
clause (d)), (2)(a) all of the subsidiaries of Synergy (other than
Claremont Gas Corporation) will merge into Synergy, (b) all of the
subsidiaries of Empire Energy, other than Empire Energy SC
Corporation, a Delaware corporation ("SC"), will merge into Empire
Energy, (c) Empire Energy and Myers will merge into Coast Gas,
(d) Coast Energy Group, Inc., a Delaware corporation and the sole
subsidiary of Coast Gas ("CEG"), will merge into Coast Gas, (e) Coast
will merge into NGC and (f) Newco will merge into Coast Gas (in
connection with which Coast Gas will change its name to "Cornerstone
Propane GP, Inc." and will become the "Managing General Partner"),
(3) pursuant to a Contribution, Conveyance and Assumption Agreement
(the "Contribution Agreement"), (a) Synergy will convey substantially
all of its assets to the Operating Partnership in exchange for a
0.2337% general partner interest and a limited partner interest in the
Operating Partnership and the assumption by the Operating Partnership
of substantially all of the liabilities of Synergy, (b) SC will convey
all of its assets to the Operating Partnership in exchange for a
limited partner interest in the Operating Partnership and the
assumption by the Operating Partnership of all of the liabilities of
SC, and (c) Coast Gas will convey substantially all of its assets
(other than approximately $34.3 million principal amount promissory
note of SC and the shares of the capital stock of Synergy and SC) to
the Operating Partnership in exchange for a limited partner interest
in the Operating Partnership, a 0.7764% general partner interest in
the Operating Partnership and the assumption by the Operating
Partnership of all of the liabilities of Coast Gas (other than
approximately $34.3 million in outstanding principal amount of
indebtedness of SC) (the assets to be conveyed to the Operating
Partnership pursuant to the Contribution Agreement (including, without
limitation, the assets to be acquired by Coast Gas pursuant to the
transactions listed in clauses (1) and (2) of this sentence) are
collectively referred to as the "Transferred Assets"), (4) the
Operating Partnership will enter into a Bank Credit Agreement (the
"Bank Credit Agreement") providing for a $50.0 million working capital
facility and a $75.0 million acquisition facility, (5)(a) the
Operating Partnership will issue $220.0 million in Senior Secured
Notes (the "Senior Notes") to certain institutional investors pursuant
to a Note Purchase Agreement (the "Note Agreement"), which Senior
Notes will be secured pursuant to a Security Agreement (the "Security
Agreement"), (b) the Operating Partnership will borrow approximately
$12.8 million under the working capital facility provided for in the
Bank Credit Agreement and (c) the proceeds from the issuance of the
Senior Notes and the borrowing under the working capital facility will
be used to repay approximately $156.1 million principal amount of
indebtedness assumed by the Operating Partnership and to distribute an
aggregate of approximately $58.7 million to the Special General
Partner and approximately $17.9 million to the General Partners,
(6) pursuant to the Contribution Agreement, (a) Synergy will convey
all of its limited partner interest in the Operating Partnership to
the Partnership in exchange for a maximum of 1,822,750 subordinated
units representing limited partner interests in the Partnership
3
<PAGE> 10
("Subordinated Units") (assuming no Additional Units are issued under
the terms of this Agreement), a 0.2314% general partner interest in
the Partnership and 2,314 rights representing non-voting limited
partner interests in the Partnership entitling the holder to certain
incentive distribution rights (the "Incentive Distribution Rights")
and (b) Coast Gas and SC will convey all of their limited partner
interests in the Operating Partnership to the Partnership in exchange
for a maximum of 6,055,869 Subordinated Units (assuming no Additional
Units are issued under the terms of this Agreement), a 0.7686% general
partner interest in the Partnership and 7,686 Incentive Distribution
Rights (as a result of which the Partnership will own a 98.9899%
limited partner interest in the Operating Partnership), (7) the
Partnership will contribute the proceeds from the sale of the Units to
the Underwriters to the Operating Partnership, which will use such
proceeds to repay approximately $175.8 million principal amount of
indebtedness and will use borrowings of approximately $17.9 million
from NPS to pay expenses associated with the Transactions (as defined
below), (8)(a) the Special General Partner will redeem a portion of
its preferred stock and (b) pursuant to a Conveyance and Assumption
Agreement (the "Service Assets Conveyance Agreement"), the Operating
Partnership will convey its appliance sales, installation and service
assets to the Corporate Sub, in exchange for shares of its common
stock, (c) the Managing General Partner will repay approximately $34.3
million of indebtedness and (d) SC will merge into the Managing
General Partner (such merger and the mergers described in clause (2)
above are collectively referred to herein as the "Northwestern
Mergers") (the transactions described in clauses (1) through (8) above
are collectively referred to as the "Transactions"). In connection
with the consummation of the Transactions, the Predecessor Entities,
the Partnership Entities, Newco and NGC will enter into various
agreements and certificates of merger, bills of sale, conveyances,
deeds and other assignments pursuant to the Contribution Agreement
(collectively with the NGC Contribution Agreement, the Coast
Contribution Agreement, the Contribution Agreement and the Service
Assets Conveyance Agreement, the "Merger and Conveyance Documents").
1. REPRESENTATIONS AND WARRANTIES. Each of the
Partnership, the Operating Partnership, the Managing General Partner
and Synergy represents and warrants to and agrees with each of the
Underwriters that:
(a) The Registration Statement has become effective; no
stop order suspending the effectiveness of the Registration Statement
is in effect, and no proceedings for such purpose are pending before
or, to the knowledge of the Partnership, the Operating Partnership,
Newco or Synergy, threatened by the Commission.
(b) (i) The Registration Statement, when it became
effective, did not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) the
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Registration Statement, any Preliminary Prospectus and the Prospectus
comply and, as amended or supplemented, if applicable, will comply in
all material respects with the Securities Act and the applicable rules
and regulations of the Commission thereunder and (iii) any Preliminary
Prospectus and the Prospectus do not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and
warranties set forth in this paragraph 1(b) do not apply to statements
or omissions in the Registration Statement, any Preliminary Prospectus
or the Prospectus, as amended or supplemented, if applicable, based
upon information relating to any Underwriter furnished to the
Partnership in writing by such Underwriter through you expressly for
use therein.
(c) None of the Predecessor Entities, the Partnership
Entities, Newco, NGC and NPS has taken, and none of them will take,
directly or indirectly, any action designed to or that could
reasonably be expected to cause or result in the stabilization or
manipulation of the price of the Common Units, and the Partnership has
not distributed and, prior to the later to occur of (i) the Closing
Date (as defined in Section 4 hereof) and (ii) completion of the
distribution of the Units, will not distribute, any prospectus (as
defined under the Securities Act) in connection with the offering and
sale of the Units other than the Registration Statement, any
Preliminary Prospectus, the Prospectus or other materials, if any,
permitted by the Securities Act, including Rule 134 of the general
rules and regulations thereunder.
(d) Each of the Partnership and the Operating Partnership
is a limited partnership duly formed, validly existing and in good
standing under the Delaware Revised Uniform Limited Partnership Act
(the "Delaware Act") with full partnership power and authority to own
or lease its properties to be owned or leased at the Closing Date, to
assume the liabilities being assumed by it pursuant to the Merger and
Conveyance Documents and to conduct its business to be conducted at
the Closing Date in all material respects as described in the
Registration Statement and the Prospectus, and each of the Partnership
and the Operating Partnership is, or at the Closing Date will be, duly
registered or qualified as a foreign limited partnership to conduct
its business and in good standing in each jurisdiction or place where
the nature or location of its properties or the conduct of its
business requires such registration or qualification, except where the
failure so to register or qualify (i) would not have a material
adverse effect on the condition, financial or otherwise, or in the
earnings, business or operations of the Partnership Entities taken as
a whole, and (ii) would not subject the limited partners of the
Partnership to any material liability.
(e) Corporate Sub is a corporation duly organized and
validly existing in good standing under the laws of the State of
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Delaware with full corporate power and authority to own or lease its
properties to be owned or leased at the Closing Date and to conduct
its business to be conducted at the Closing Date in all material
respects as described in the Registration Statement and the
Prospectus, and Corporate Sub is, or at the Closing Date will be, duly
registered or qualified as a foreign corporation to conduct its
business and is in good standing in each jurisdiction or place where
the nature or location of its properties or the conduct of its
business requires such registration or qualification, except where the
failure so to register or qualify (i) would not have a material
adverse effect on the condition, financial or otherwise, or in the
earnings, business or operations of the Partnership Entities taken as
a whole, and (ii) would not subject the limited partners of the
Partnership to any material liability.
(f) Newco is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with
full corporate power and authority to own or lease its properties and
to conduct its business and to act as a general partner of the
Partnership and of the Operating Partnership, in each case in all
material respects as described in the Registration Statement and the
Prospectus, and Newco is duly registered or qualified as a foreign
corporation to conduct its business and is in good standing in each
jurisdiction or place where the nature or location of its properties
or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify
(i) would not have a material adverse effect on the condition,
financial or otherwise, or in the earnings, business or operations of
the Partnership Entities taken as a whole, and (ii) would not subject
the limited partners of the Partnership to any material liability.
(g) Coast Gas is a corporation duly organized, validly
existing and in good standing under the laws of the State of
California with full corporate power and authority to own or lease its
properties and to conduct its business and to act as managing general
partner of the Partnership and of the Operating Partnership in each
case in all material respects as described in the Registration
Statement and the Prospectus, and Coast Gas is duly registered or
qualified as a foreign corporation to conduct its business and is in
good standing in each jurisdiction or place where the nature or
location of its properties or the conduct of its business requires
such registration or qualification, except where the failure so to
register or qualify (i) would not have a material adverse effect on
the condition, financial or otherwise, or in the earnings, business or
operations of the Partnership Entities taken as a whole, and
(ii) would not subject the limited partners of the Partnership to any
material liability.
(h) Synergy is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with
full corporate power and authority to own or lease its properties and
to conduct its business and to act as a special general partner of the
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Partnership and the Operating Partnership in each case in all material
respects as described in the Registration Statement and the
Prospectus, and Synergy is duly registered or qualified as a foreign
corporation to conduct its business and is in good standing in each
jurisdiction or place where the nature or location of its properties
or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify
(i) would not have a material adverse effect on the condition,
financial or otherwise, or in the earnings, business or operations of
the Partnership Entities taken as a whole, and (ii) would not subject
the limited partners of the Partnership to any material liability.
(i) NGC is a corporation duly organized and validly
existing in good standing under the laws of the State of South Dakota,
with full corporate power and authority to perform the Transactions to
which it is a party (the "NGC Transactions").
(j) NPS is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware,
with full corporate power and authority to contribute the stock of
Myers to NGC (the "NPS Transaction").
(k) At the Closing Date, neither the Managing General
Partner, the Special General Partner, the Partnership, the Operating
Partnership nor the Corporate Sub will have any subsidiaries (other
than the Special General Partner, the Partnership, the Operating
Partnership and the Corporate Sub themselves in their capacities as
subsidiaries) which, individually or taken as a whole, would be deemed
to be a significant subsidiary (as such term is defined in Section 1-
02 of Regulation S-X of the Commission).
(l) At the Closing Date, the Managing General Partner will
be the sole managing general partner of the Partnership with a 0.7686%
general partner interest in the Partnership; such general partner
interest will have been duly authorized by the Amended and Restated
Agreement of Limited Partnership of the Partnership (the "Partnership
Agreement") among the Managing General Partner, the Special General
Partner and NGC, as organizational limited partner (the
"Organizational Limited Partner"), and will have been validly issued
to the Managing General Partner; and the Managing General Partner will
own such managing general partner interest free and clear of all
liens, encumbrances, security interests, equities, charges or claims,
except as set forth in the Partnership Agreement.
(m) At the Closing Date, the Managing General Partner will
be the sole managing general partner of the Operating Partnership with
a 0.7764% general partner interest in the Operating Partnership; such
general partner interest will have been duly authorized by the Amended
and Restated Agreement of Limited Partnership of the Operating
Partnership (the "Operating Partnership Agreement," and together with
the Partnership Agreement, the "Partnership Agreements") among the
Managing General Partner, the Special General Partner and the
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Partnership, and will have been validly issued to the Managing General
Partner; and the Managing General Partner will own such general
partner interest free and clear of all liens, encumbrances, security
interests, equities, charges or claims, except as set forth in the
Operating Partnership Agreement.
(n) At the Closing Date, the Special General Partner will
be the sole special general partner of the Partnership with a 0.2314%
general partner interest in the Partnership; such general partner
interest will have been duly authorized by the Partnership Agreement
and will have been validly issued to the Special General Partner; and
the Special General Partner will own such general partner interest
free and clear of all liens, encumbrances, security interests,
equities, charges or claims, except as set forth in the Partnership
Agreement.
(o) At the Closing Date, the Special General Partner will
be the sole special general partner of the Operating Partnership with
a 0.2337% general partner interest in the Operating Partnership; such
general partner interest will have been duly authorized by the
Operating Partnership Agreement and will have been validly issued to
the Special General Partner; and the Special General Partner will own
such general partner interest free and clear of all liens,
encumbrances, security interests, equities, charges or claims, except
as set forth in the Operating Partnership Agreement.
(p) At the Closing Date, the Managing General Partner will
own limited partner interests in the Partnership represented by a
maximum of 6,055,869 Subordinated Units (assuming no Additional Units
are issued under the terms of this Agreement) and 7,686 Incentive
Distribution Rights; at the Closing Date, the Special General Partner
will own limited partner interests in the Partnership represented by a
maximum of 1,822,750 Subordinated Units (assuming no Additional Units
are issued under the terms of this Agreement) and 2,314 Incentive
Distribution Rights; at the Closing Date, there will be issued to the
Underwriters the Firm Units (assuming no purchase by the Underwriters
of Additional Units); at the Closing Date or the Option Closing Date
(as defined in Section 4 hereof), as the case may be, the Firm Units
or the Additional Units, as the case may be, and the limited partner
interests represented thereby will be duly authorized by the
Partnership Agreement and, when issued and delivered to the
Underwriters against payment therefor as provided herein, will be
validly issued, fully paid (to the extent required under the
Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by matters described in the
Prospectus under the caption "The Partnership Agreement Limited
Liability"); and other than such Subordinated Units and such Incentive
Distribution Rights owned by the Managing General Partner and the
Special General Partner at the Closing Date or the Option Closing
Date, as the case may be, the Units will be the only limited partner
interests of the Partnership issued and outstanding.
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(q) At the Closing Date and the Option Closing Date, (i)
the Partnership will be the sole limited partner of the Operating
Partnership, with a limited partner interest in the Operating
Partnership of 98.9899%; (ii) such limited partner interest will be
duly authorized by the Operating Partnership Agreement, will be
validly issued in accordance with the Operating Partnership Agreement
and will be fully paid (to the extent required under the Operating
Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by matters similar to those described
in the Prospectus under the caption "The Partnership Agreement Limited
Liability"); and (iii) the Partnership will own such limited partner
interest in the Operating Partnership free and clear of all liens,
encumbrances, security interests, equities, charges or claims, except
as set forth in the Operating Partnership Agreement.
(r) At the Closing Date and the Option Closing Date, all of
the outstanding shares of capital stock of Corporate Sub will have
been duly authorized and validly issued and will be fully paid and
nonassessable; and all of the issued shares of capital stock of
Corporate Sub will be registered on its books in the name of the
Operating Partnership, free and clear of all liens, encumbrances,
security interests, equities, charges or claims, except pursuant to
the Note Agreement, the Security Agreement or the Bank Credit
Agreement.
(s) All of the outstanding shares of capital stock of Newco
have been duly authorized and validly issued and are fully paid and
nonassessable; and all of the issued shares of capital stock of Newco
are registered on its books in the name of NGC free and clear of all
liens, encumbrances, security interests, equities, charges or claims.
(t) At the Closing Date and the Option Closing Date, all of
the outstanding shares of capital stock of Coast Gas will have been
duly authorized and validly issued and will be fully paid and
nonassessable; and all of the issued shares of capital stock of Coast
Gas will be registered on its books in the name of NGC, free and clear
of all liens, encumbrances, security interests, equities, charges or
claims.
(u) At the Closing Date and the Option Closing Date, the
outstanding shares of capital stock of Synergy will consist of 100,000
shares of common stock, all of which will have been duly authorized
and validly issued and will be fully paid and nonassessable; and
82,500 shares of common stock of Synergy will be registered on its
books in the name of Coast Gas, free and clear of all liens,
encumbrances, security interests, equities, charges or claims.
(v) Except as described in the Prospectus and except as
provided in Section 5.2(e) of the Partnership Agreement, there are no
preemptive rights or other rights to subscribe for or to purchase, nor
any restriction upon the voting or transfer of, any limited partner
interests in the Partnership or the Operating Partnership pursuant to
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<PAGE> 16
either of the Partnership Agreements or any agreement or other
instrument to which the Partnership or the Operating Partnership is a
party or by which either of them may be bound. Except as described in
the Prospectus, there are no outstanding options or warrants to
purchase any Common Units or Subordinated Units. The Units, when
issued and delivered against payment therefor as provided herein, and
the Subordinated Units, when issued and delivered in accordance with
the terms of the Partnership Agreement and the Contribution Agreement,
will conform in all material respects to the descriptions thereof
contained in the Prospectus. The Partnership has all requisite power
and authority to issue, sell and deliver (i) the Units, in accordance
with and upon the terms and conditions set forth in this Agreement and
in the Prospectus, and (ii) the Subordinated Units, in accordance with
the terms and conditions set forth in the Partnership Agreement and
the Contribution Agreement. At the Closing Date and the Option
Closing Date, all corporate and partnership action, as the case may
be, required to be taken by any of the Predecessor Entities, the
Partnership Entities, Newco, NGC and NPS or any of their shareholders
or partners for the authorization, issuance, sale and delivery of the
Units and the Subordinated Units and the consummation of the
transactions (including the Transactions) contemplated by this
Agreement and the Operative Agreements (as defined in Section 1(x)
hereof) shall have been validly taken.
(w) This Agreement has been duly authorized, executed and
delivered by each of the Partnership, the Operating Partnership, the
Managing General Partner and Synergy.
(x) At or before the Closing Date, the Partnership
Agreement will have been duly authorized, executed and delivered by
the Managing General Partner, the Special General Partner and the
Organizational Limited Partner and will be a valid and legally binding
agreement of the Managing General Partner, the Special General Partner
and the Organizational Limited Partner, enforceable against the
Managing General Partner, the Special General Partner and the
Organizational Limited Partner in accordance with its terms; at or
before the Closing Date, the Operating Partnership Agreement will have
been duly authorized, executed and delivered by the Managing General
Partner, the Special General Partner and the Partnership and will be a
valid and legally binding agreement of the Managing General Partner,
the Special General Partner and the Partnership, enforceable against
the Managing General Partner, the Special General Partner and the
Partnership in accordance with its terms; at or before the Closing
Date, each of the Merger and Conveyance Documents will have been duly
authorized, executed and delivered by the parties thereto and, as
applicable, (i) will be a valid and legally binding agreement of the
parties thereto enforceable against such parties in accordance with
its terms or (ii) will have been duly filed with all appropriate state
authorities and shall be in full force and effect in accordance with
its terms; at or before the Closing Date, each of NGC and NPS will
have taken all corporate action necessary to duly authorize the NGC
Transactions and the NPS Transaction, respectively, and such
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<PAGE> 17
authorizations shall remain in full force and effect; at or before the
Closing Date, the Senior Notes and the Note Agreement will have been
duly authorized, executed and delivered by the Operating Partnership
and will be valid and legally binding agreements of the Operating
Partnership enforceable against the Operating Partnership in
accordance with their respective terms; at or before the Closing Date,
the Bank Credit Agreement will have been duly authorized, executed and
delivered by the Operating Partnership and will be a valid and legally
binding agreement of the Operating Partnership enforceable against the
Operating Partnership in accordance with its terms; provided that,
with respect to each agreement described in this Section 1(x), the
enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, receivership, moratorium and
similar laws of general application relating to or affecting
creditors' rights generally and to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law), and provided further, that
indemnification, contribution and exoneration provisions provided in
any such agreement may be limited by public policy and applicable law
relating to fiduciary duties. The Partnership Agreements, the Merger
and Conveyance Documents, the Senior Notes, the Note Agreement, the
Security Agreement and the Bank Credit Agreement are herein
collectively referred to as the "Operative Agreements."
(y) None of the offering, issuance and sale by the
Partnership of the Units, the offering, issuance and sale by the
Operating Partnership of the Senior Notes, the execution, delivery and
performance of this Agreement and the Operative Agreements by any of
the Predecessor Entities, the Partnership Entities or Newco which are
parties thereto, nor the consummation of the transactions contemplated
hereby and thereby (including the Transactions) (i) will conflict with
or will constitute a violation of the agreement of limited
partnership, certificate or articles of incorporation or bylaws or
other organizational documents of any of the Predecessor Entities, the
Partnership Entities, Newco, NGC or NPS, (ii) will conflict with or
will constitute a breach or violation of, or a default (or an event
which, with notice or lapse of time or both, would constitute such an
event) under any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which any of the Predecessor
Entities, the Partnership Entities, Newco, NGC or NPS is a party or
by which any of them or any of their respective properties may be
bound, (iii) violates or will violate any order, judgment, decree or
injunction of any court or governmental agency or body directed to any
of the Predecessor Entities, the Partnership Entities, Newco, NGC or
NPS or any of their properties in a proceeding to which any of them or
their property is a party, (iv) violates or will violate any statute,
law or regulation applicable to any of the Predecessor Entities, the
Partnership Entities, Newco, NGC or NPS or any of their respective
properties, or (v) will result in the creation or imposition of any
lien, charge or encumbrance (except as contemplated by the Note
Agreement and the Bank Credit Agreement) upon any property or assets
of any of the Predecessor Entities, the Partnership Entities or Newco,
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<PAGE> 18
in the case of clause (ii), (iii), (iv) or (v) which conflicts,
breaches, violations or defaults would have a material adverse effect
upon the condition, financial or otherwise, or in the earnings,
business or operations of the Partnership Entities taken as a whole.
(z) No permit, consent, approval, authorization or order of
any court, governmental agency or body or financial institution is
required in connection with the execution and delivery of, or the
consummation of the transactions contemplated by, this Agreement or
the Operative Agreements, or the consummation by any of the
Predecessor Entities, the Partnership Entities, Newco, NGC or NPS of
the Transactions, except (i) for such permits, consents, approvals and
similar authorizations required under the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the securities or "Blue Sky" laws of certain jurisdictions, (ii) for
such permits, consents, approvals and similar authorizations which
have been, or on or prior to the Closing Date will be, obtained, (iii)
for such permits, consents, approvals and similar authorizations
which, if not obtained, would not, individually or in the aggregate,
have a material adverse effect upon the condition, financial or
otherwise, or in the earnings, business or operations of the
Partnership Entities taken as a whole and (iv) as set forth or
contemplated in the Prospectus.
(aa) Except as described in the Prospectus, none of the
Predecessor Entities, the Partnership Entities, Newco, NGC and NPS is
in (i) breach or violation of the provisions of its certificate or
articles of incorporation or bylaws or other organizational documents,
or of any law, statute, ordinance, administrative or governmental rule
or regulation applicable to it or of any decree of any court or
governmental agency or body having jurisdiction over it, or
(ii) breach, default (and no event has occurred which, with notice or
lapse of time or both, would constitute such an event) or violation in
the performance of any term, covenant or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it is bound
or to which any of its properties may be subject, which (x) would have
a material adverse effect on the condition, financial or otherwise, or
in the earnings, business or operations of the Partnership Entities
taken as a whole, (y) could impair the ability of the Predecessor
Entities, the Partnership Entities or Newco to perform their
obligations under the Operative Agreements or (z) could impair the
ability of NGC to consummate the NGC Transactions or the ability of
NPS to consummate the NPS Transaction. To the knowledge of the
Partnership, the Operating Partnership, Newco and Synergy, no third
party to any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which any of the Predecessor
Entities, the Partnership Entities or Newco is a party or by which any
of them is bound or to which any of their properties is subject, is in
default under any such agreement, which breach, default or violation
would, if continued, have a material adverse effect on the condition,
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<PAGE> 19
financial or otherwise, or in the earnings, business or operations of
the Partnership Entities taken as a whole. Neither the conduct of the
business currently operated by the Predecessor Entities nor the
conduct of the business as described or contemplated in the Prospectus
to be operated by the Partnership Entities immediately following the
Transactions violates or will violate any agreement limiting the
ability of any of the Predecessor Entities or any of the Partnership
Entities to compete in their businesses, including, without
limitation, the Non-Competition Agreement dated May 7, 1994 by and
among Empire Gas Corporation, a Missouri corporation ("Empire Gas"),
Empire Energy, Mr. Robert W. Plaster, Mr. Stephen R. Plaster, Mr.
Joseph Schaefer and Mr. Paul S. Lindsey, Jr. and the Management
Agreement dated May 17, 1995 among Empire Gas, NGC and Synergy, as
amended, and as further amended by the Termination Agreement among
Empire Gas, NGC and Synergy dated September 28, 1996 (collectively,
the "Empire Non-Competition Agreements").
(bb) Arthur Andersen LLP, who have expressed their opinions
on the pro forma consolidated financial statements of the Partnership
and the audited consolidated financial statements of the Partnership,
Newco and Synergy included in the Registration Statement and the
Prospectus, are independent public accountants as required by the
Securities Act and the rules and regulations thereunder.
(cc) Baird, Kurtz & Dobson, who have expressed their
opinions on the audited consolidated financial statements of Empire
Energy and Synergy Group, Incorporated included in the Registration
Statement and the Prospectus, are independent public accountants as
required by the Securities Act and the rules and regulations
thereunder.
(dd) Price Waterhouse LLP, who have expressed their opinion
on the audited consolidated financial statements of Coast included in
the Registration Statement and the Prospectus, are independent public
accountants as required by the Securities Act and the rules and
regulations thereunder.
(ee) At September 30, 1996, the Partnership would have had,
on the pro forma basis indicated in the Prospectus, the capitalization
set forth therein. The financial statements (including the related
notes and supporting schedules) included in the Registration Statement
and the Prospectus present fairly in all material respects the
financial position, results of operations and cash flows of the
entities purported to be shown thereby on the basis stated therein at
the respective dates or for the respective periods to which they apply
and have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved, except to the extent disclosed therein. The information set
forth in the Registration Statement and the Prospectus under the
captions "Selected Pro Forma Financial and Operating Data" and
"Selected Historical Financial and Operating Data" is accurately
presented in all material respects and has been prepared on a basis
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<PAGE> 20
consistent with the unaudited pro forma financial statements and the
audited and unaudited historical consolidated financial statements
from which it has been derived. The pro forma financial statements of
the Partnership included in the Registration Statement and the
Prospectus have been prepared in all material respects in accordance
with the applicable accounting requirements of Article 11 of
Regulation S-X of the Commission; the assumptions used in the
preparation of such pro forma financial statements are, in the opinion
of the management of the Managing General Partner, reasonable; and the
pro forma adjustments reflected in such pro forma financial statements
have been properly applied in all material respects to the historical
amounts in the compilation of such pro forma financial statements.
(ff) Except as described in the Prospectus, each of the
Predecessor Entities has, and, upon consummation of the Transactions,
on the Closing Date each of the Operating Partnership and Corporate
Sub will have, good and marketable title in fee simple to all real
property and good title to all personal property described in the
Prospectus to be owned by it, in each case free and clear of all
liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such
property and do not interfere with the use made of such property by
the Predecessor Entities and proposed to be made of such property by
the Partnership Entities; and all real property and buildings held
under lease by the Predecessor Entities and proposed to be held by the
Operating Partnership or the Corporate Sub are held by the Predecessor
Entities, and, upon consummation of the Transactions, on the Closing
Date will be held by the Operating Partnership or Corporate Sub under
valid, subsisting and enforceable leases with such exceptions as are
not material and do not interfere with the use made of such property
and buildings by the Predecessor Entities and proposed to be made of
such property and buildings by the Partnership Entities, in each case
except as described in or contemplated by the Prospectus. The Merger
and Conveyance Documents will be, as of the Closing Date, legally
sufficient to transfer or convey to the Operating Partnership or
Corporate Sub all properties that are, individually or in the
aggregate, required to enable the Operating Partnership or Corporate
Sub to conduct its operations (in all material respects as
contemplated by the Prospectus), subject to the conditions,
reservations and limitations contained in the Merger and Conveyance
Documents and those set forth in the Prospectus. The Operating
Partnership and Corporate Sub will, upon execution, delivery and
effectiveness of the Merger and Conveyance Documents, succeed in all
material respects to the business, assets, properties, liabilities and
operations reflected by the pro forma financial statements of the
Partnership, except as disclosed in the Prospectus. On the Closing
Date, each of the Northwestern Mergers will have become effective.
(gg) Each of the Predecessor Entities possesses, and at the
Closing Date and the Option Closing Date each of the Partnership
Entities will possess, all certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory
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<PAGE> 21
authorities necessary to conduct its business as described in the
Prospectus, including, without limitation, the business currently
conducted by CEG, except for such certificates, authorizations and
permits which, if not obtained, would not, individually or in the
aggregate, have a material adverse effect upon the ability of the
Partnership Entities, taken as a whole, to conduct their businesses as
described in the Prospectus; and none of the Predecessor Entities or
the Partnership Entities has received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in
a material adverse change in the condition, financial or otherwise, or
in the earnings, business or operations of the Partnership Entities,
taken as a whole, except as described in or contemplated by the
Prospectus.
(hh) Each of the Predecessor Entities has filed all material
tax returns required to be filed through the date hereof, which
returns are complete and correct in all material respects, and has
timely paid all taxes shown to be due pursuant to such returns, other
than those (i) which, if not paid, would not have a material adverse
effect on the condition, financial or otherwise, or in the earnings,
business or operations of the Partnership Entities taken as a whole,
or (ii) which are being contested in good faith.
(ii) Each of the Predecessor Entities owns or possesses, and
at the Closing Date and the Option Closing Date each of the
Partnership Entities will own, possess, have the right to use or be
able to acquire on reasonable terms, all material patents, patent
rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks and trade names currently employed by the Predecessor Entities
in connection with the business now operated by them other than those
which if not so owned or possessed would not have a material adverse
effect on the condition, financial or otherwise, or in the earnings,
business or operations of the Partnership Entities, taken as a whole;
and none of the Predecessor Entities has received any notice of
infringement of or conflict with asserted rights of others with
respect to any of the foregoing which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would
result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business or operations of the
Partnership Entities, taken as a whole.
(jj) None of the Predecessor Entities, the Partnership
Entities or Newco, is now, or after sale of the Units to be sold by
the Partnership hereunder and application of the net proceeds from
such sale as described in the Prospectus under the caption "Use of
Proceeds" will be, an "investment company" or a company "controlled
by" an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
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<PAGE> 22
(kk) After sale of the Units to be sold by the Partnership
hereunder and application of the net proceeds from such sale as
described in the Prospectus under the caption "Use of Proceeds," the
Operating Partnership will not be a "gas utility company" and none of
the Partnership Entities, the Managing General Partner or the Special
General Partner will be a "holding company," within the meaning of the
Public Utility Holding Company Act of 1935, as amended, or subject to
regulation thereunder.
(ll) No material labor dispute with the employees of the
Predecessor Entities exists, except as described in or contemplated by
the Prospectus, or, to the knowledge of any of the Partnership, the
Operating Partnership, Newco or Synergy, is imminent.
(mm) At each of the Closing Date and the Option Closing
Date, as the case may be, the Managing General Partner and the Special
General Partner will have (excluding their interests in the
Partnership and the Operating Partnership and any notes receivable
from or payable to the Partnership or the Operating Partnership) a
combined net worth of at least $15 million. For purposes of this
representation, assets will be valued at fair market value, and the
interests of the Managing General Partner and the Special General
Partner in the Partnership and the Operating Partnership (as general
partner, limited partner and creditor) shall not be taken into account
except as an offset to the Partnership's or the Operating
Partnership's liabilities that are taken into account in computing
such net worth.
(nn) Each of the offer, sale and issuance of the
Subordinated Units to the Managing General Partner, the Special
General Partner and SC pursuant to the Contribution Agreement and the
Partnership Agreement and the offer, sale and issuance of the Senior
Notes pursuant to the Note Agreement is exempt from the registration
requirements of the Securities Act and the securities laws of any
state having jurisdiction with respect thereto, and none of the
Predecessor Entities, the Partnership Entities or Newco has taken or
will take any action that would cause the loss of such exemption.
(oo) The Units have been approved for listing on the New
York Stock Exchange, subject only to official notice of issuance.
(pp) There has not occurred any material adverse change, or
any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings, business or
operations of the Partnership Entities taken as a whole from that set
forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
(qq) There are no legal or governmental proceedings pending
or threatened to which any of the Predecessor Entities or the
Partnership Entities is a party or to which any of the properties of
the Predecessor Entities or the Partnership Entities is subject that
16
<PAGE> 23
are required to be described in the Registration Statement or the
Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as
required.
(rr) All of the Predecessor Entities and all of the
Partnership Entities (i) are in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect upon the
condition, financial or otherwise, or in the earnings, business or
operations of the Partnership Entities taken as a whole.
(ss) Each of the Predecessor Entities maintains insurance
against such losses and risks and in such amounts as is reasonably
adequate to protect the Partnership Entities, the Managing General
Partner, the Special General Partner and their businesses; none of the
Predecessor Entities has within the last two years been refused any
insurance coverage sought or applied for; and none of the Predecessor
Entities has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not materially and
adversely affect the condition (financial or otherwise), business or
operations of the Partnership Entities taken as a whole, except as
described in or contemplated by the Prospectus.
(tt) Each of the Predecessor Entities maintains a system of
internal accounting controls sufficient to provide reasonable
assurance that (1) transactions are executed in accordance with
management's general or specific authorizations; (2) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (3) access to assets is permitted only
in accordance with management's general or specific authorization; and
(4) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(uu) Except for the Partnership Agreement, there are no
contracts, agreements or understandings between any of the Predecessor
Entities, the Partnership Entities, Newco, NGC or NPS and any person
17
<PAGE> 24
granting such person the right to require the Partnership to file a
registration statement under the Securities Act with respect to any
securities of the Partnership or to require the Partnership to include
such securities with the Units registered pursuant to the Registration
Statement.
(vv) Each of the Predecessor Entities, the Partnership
Entities and Newco has complied with all provisions of Section
517.075, Florida Statutes relating to issuers doing business with the
Government of Cuba or with any person or affiliate located in Cuba.
(ww) On the date hereof and at the Closing Date, (i) Keith
G. Baxter, Charles J. Kittrell, Ronald J. Goedde and Vincent J.
DiCosimo will be duly qualified and acting officers of Newco and
(ii) Merle D. Lewis, Richard R. Hylland, Mr. Baxter and Daniel K.
Newell will be members of the Board of Directors of Newco.
2. AGREEMENTS TO SELL AND PURCHASE. The Partnership
hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties
herein contained, but subject to the conditions hereinafter stated,
agrees, severally and not jointly, to purchase from the Partnership
the respective number of Firm Units set forth in Schedule I hereto
opposite its name, at $19.53 a Unit (the "Purchase Price").
On the basis of the representations and warranties contained
in this Agreement, and subject to its terms and conditions, the
Partnership agrees to sell to the Underwriters the Additional Units,
and the Underwriters shall have a one-time right to purchase,
severally and not jointly, up to 1,281,000 Additional Units at the
Purchase Price. If you, on behalf of the Underwriters, elect to
exercise such option, you shall so notify the Partnership in writing
not later than 30 days after the date of this Agreement, which notice
shall specify the number of Additional Units to be purchased by the
Underwriters and the date on which such Units are to be purchased.
Such date may be the same as the Closing Date (as defined below) but
not earlier than the Closing Date nor later than ten business days
after the date of such notice. Additional Units may be purchased as
provided in Section 4 hereof solely for the purpose of covering over-
allotments made in connection with the offering of the Firm Units. If
any Additional Units are to be purchased, each Underwriter agrees,
severally and not jointly, to purchase the number of Additional Units
(subject to such adjustments to eliminate fractional shares as you may
determine) that bears the same proportion to the total number of
Additional Units to be purchased as the number of Firm Units set forth
in Schedule I hereto opposite the name of such Underwriter bears to
the total number of Firm Units.
Each of the Partnership, the Managing General Partner and
the Special General Partner hereby agrees that, without the prior
written consent of Morgan Stanley & Co. Incorporated on behalf of the
Underwriters, it will not, during the period ending 180 days after the
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<PAGE> 25
date of the Prospectus, (i) offer, issue, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of, directly or indirectly, any Common
Units, Subordinated Units or any securities convertible into or
exercisable or exchangeable for Common Units or Subordinated Units or
(ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of
ownership of the Common Units or such other securities, whether any
such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Units or such other securities, in cash
or otherwise. The foregoing sentence shall not apply to (A) the Units
to be sold hereunder, (B) the Subordinated Units to be issued on the
Closing Date as provided in the Partnership Agreement, (C) the
issuance or redemption of Subordinated Units by the Partnership in
connection with the sale by the Partnership of Additional Units as
described in Section 5.2(e) of the Partnership Agreement,
(D) issuances of Common Units pursuant to employee benefit plans
described in the Prospectus or (E) the issuance of Common Units in
connection with Acquisitions or Capital Improvements (each as defined
in the Partnership Agreement); provided that the Subordinated Units
may be transferred without such consent to an affiliate of the
Managing General Partner who agrees to be bound by the transfer
restrictions contained in this paragraph.
3. TERMS OF PUBLIC OFFERING. The Partnership is advised
by you that the Underwriters propose to make a public offering of
their respective portions of the Units as soon after the Registration
Statement and this Agreement have become effective as in your judgment
is advisable. The Partnership is further advised by you that the
Units are to be offered to the public initially at $21.00 a Unit (the
"Public Offering Price") and to certain dealers selected by you at a
price that represents a concession not in excess of $.85 a Unit under
the Public Offering Price, and that any Underwriter may allow, and
such dealers may reallow, a concession, not in excess of $.10 a Unit,
to any Underwriter or to certain other dealers.
4. PAYMENT AND DELIVERY. Payment for the Firm Units shall
be made to the Partnership in federal or other funds immediately
available in New York City against delivery of such Firm Units for the
respective accounts of the several Underwriters at 9:00 A.M., New York
City time, on December 17, 1996, or at such other time on the same or
such other date, not later than December 24, 1996, as shall be
designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Closing Date."
Payment for any Additional Units shall be made to the
Partnership in federal or other funds immediately available in New
York City against delivery of such Additional Units for the respective
accounts of the several Underwriters at 9:00 A.M., New York City time,
on the date specified in the notice described in Section 2 or at such
other time on the same or on such other date, in any event not later
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<PAGE> 26
than January 24, 1997, as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the
"Option Closing Date."
Certificates for the Firm Units and the Additional Units
shall be in definitive form and registered in such names and in such
denominations as you shall request in writing not later than one full
business day prior to the Closing Date or the Option Closing Date, as
the case may be. The certificates evidencing the Firm Units and the
Additional Units shall be delivered to you on the Closing Date or the
Option Closing Date, as the case may be, for the respective accounts
of the several Underwriters, with any transfer taxes payable in
connection with the transfer of the Units to the Underwriters duly
paid, against payment of the Purchase Price therefor.
5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The
obligations of the Partnership to sell the Units to the Underwriters
and the several obligations of the Underwriters to purchase and pay
for the Units on the Closing Date are subject to the condition that
the Registration Statement shall have become effective not later than
5:30 P.M., New York City time, on the date hereof.
The several obligations of the Underwriters to purchase and
pay for the Units on the Closing Date are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date there shall not have occurred
any change, or any development involving a prospective change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Partnership Entities taken as a whole from that set
forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Units on the terms and in the manner
contemplated in the Prospectus.
(b) The representations and warranties of the Partnership,
the Operating Partnership, the Managing General Partner and Synergy
contained in this Agreement shall be true and correct as of the
Closing Date and the Partnership, the Operating Partnership, the
Managing General Partner and Synergy shall have complied in all
material respects with all of the agreements and satisfied in all
material respects all of the conditions on their part to be performed
or satisfied hereunder on or before the Closing Date.
(c) The Underwriters shall have received on the Closing
Date a certificate, dated the Closing Date and signed by an executive
officer of each of the Managing General Partner and the Special
General Partner, to the effect set forth in clause (b) above.
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<PAGE> 27
(d) The Underwriters shall have received on the Closing
Date an opinion of Andrews & Kurth L.L.P., special outside counsel for
the Partnership, the Operating Partnership, the Managing General
Partner and the Special General Partner, dated the Closing Date, to
the effect that:
(i) Each of the Partnership and the Operating
Partnership has been duly formed and is validly existing in
good standing as a limited partnership under the Delaware
Act with all necessary partnership power and authority to
own or lease its properties, to assume the liabilities being
assumed by it pursuant to the Operative Agreements and to
conduct its business, in each case in all material respects
as described in the Prospectus.
(ii) The Managing General Partner is the sole managing
general partner of the Partnership and the Operating
Partnership with a general partner interest in the
Partnership of 0.7686% and a general partner interest in the
Operating Partnership of 0.7764%; such general partner
interests are duly authorized by the Partnership Agreement
and the Operating Partnership Agreement, respectively, and
were validly issued.
(iii) The Special General Partner is the sole
special general partner of the Partnership and the Operating
Partnership with a general partner interest in the
Partnership of 0.2314% and a general partner interest in the
Operating Partnership of 0.2337%; such general partner
interests are duly authorized by the Partnership Agreement
and the Operating Partnership Agreement, respectively, and
were validly issued.
(iv) The 6,055,869 Subordinated Units and the 7,686
Incentive Distribution Rights to be issued to the Managing
General Partner and SC and the 1,822,750 Subordinated Units
and the 2,314 Incentive Distribution Rights to be issued to
the Special General Partner pursuant to the Contribution
Agreement and the Partnership Agreement and the limited
partner interests represented thereby are duly authorized by
the Partnership Agreement and, when issued and delivered
pursuant to the terms of the Contribution Agreement and the
Partnership Agreement, will be validly issued, fully paid
(to the extent required under the Partnership Agreement) and
nonassessable (except as such nonassessability may be
affected by matters described in the Prospectus under "The
Partnership Agreement Limited Liability").
(v) The Partnership is the sole limited partner of the
Operating Partnership, with a limited partner interest of
98.9899%; such limited partner interest is duly authorized
by the Operating Partnership Agreement and is validly
21
<PAGE> 28
issued, fully paid (to the extent required under the
Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by matters similar to those
described in the Prospectus under the caption "The
Partnership Agreement Limited Liability").
(vi) The 8,540,000 Common Units to be issued and sold
to the Underwriters by the Partnership pursuant to this
Agreement and the limited partner interests represented
thereby are duly authorized by the Partnership Agreement
and, when issued and delivered against payment therefor as
provided in this Agreement, will be validly issued, fully
paid (to the extent required under the Partnership
Agreement) and nonassessable (except as such
nonassessability may be affected by matters described in the
Prospectus under the caption "The Partnership
Agreement Limited Liability").
(vii) Other than the 6,055,869 Subordinated Units
(assuming no Additional Units are issued under the terms of
this Agreement) and the 7,686 Incentive Distribution Rights
that will be owned by the Managing General Partner and SC
and the 1,822,750 Subordinated Units (assuming no Additional
Units are issued under the terms of this Agreement) and the
2,314 Incentive Distribution Rights that will be owned by
the Special General Partner, the Firm Units will be the only
limited partner interests of the Partnership issued at the
Closing Date, unless the Option Closing Date and the Closing
Date are the same date.
(viii) The Partnership Agreement constitutes a valid
and legally binding agreement of the Managing General
Partner, the Special General Partner and the Organizational
Limited Partner, enforceable against the Managing General
Partner, the Special General Partner and the Organizational
Limited Partner in accordance with its terms, except as the
enforceability thereof may be limited by (A) bankruptcy,
insolvency, fraudulent transfer, reorganization,
receivership, moratorium and similar laws of general
application relating to or affecting creditors' rights
generally and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law) and (B) public policy, applicable law
relating to fiduciary duties and an implied covenant of good
faith and fair dealing.
(ix) The Operating Partnership Agreement constitutes a
valid and legally binding agreement of the Managing General
Partner, the Special General Partner and the Partnership,
enforceable against the Managing General Partner, the
Special General Partner and the Partnership in accordance
with its terms, except as the enforceability thereof may be
22
<PAGE> 29
limited by (A) bankruptcy, insolvency, fraudulent transfer,
reorganization, receivership, moratorium and similar laws of
general application relating to or affecting creditors'
rights generally and to general principles of equity
(regardless of whether such enforceability is considered in
a proceeding in equity or at law) and (B) public policy,
applicable law relating to fiduciary duties and an implied
covenant of good faith and fair dealing.
(x) The Senior Notes, the Note Agreement and the
Security Agreement have been duly authorized and validly
executed and delivered by the Operating Partnership; and the
Senior Notes, the Note Agreement and the Security Agreement
constitute valid and legally binding agreements of the
Operating Partnership, enforceable against the Operating
Partnership in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws relating to or affecting
creditors' rights generally and to general principles of
equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(xi) The Managing General Partner owns its general
partner interests in the Partnership and the Operating
Partnership, and will own, together with SC, the 6,055,869
Subordinated Units and will own the 7,686 Incentive
Distribution Rights to be issued to them pursuant to the
Partnership Agreement and the Contribution Agreement, in
each case free and clear of all liens, encumbrances,
security interests, charges or claims (A) in respect of
which a financing statement under the Uniform Commercial
Code of California or Delaware naming the Managing General
Partner as debtor is on file in the office of the Secretary
of State of the State of California or Delaware as of a
recent date or (B) otherwise known to such counsel, without
independent investigation, other than those created by or
arising under the Delaware Act or the Partnership Agreement.
(xii) The Special General Partner owns its general
partner interest in the Partnership and the Operating
Partnership and will own the 1,822,750 Subordinated Units
(assuming no Additional Units are issued under the terms of
this Agreement) and the 2,314 Incentive Distribution Rights
to be issued to it pursuant to the Partnership Agreement and
the Contribution Agreement, in each case free and clear of
all liens, encumbrances, security interests, charges or
claims (A) in respect of which a financing statement under
the Uniform Commercial Code of the State of Missouri or
Delaware naming the Special General Partner as debtor is on
file in the office of the Secretary of State of the State of
Missouri or Delaware as of a recent date or (B) otherwise
known to such counsel, without independent investigation,
23
<PAGE> 30
other than those created by or arising under the Delaware
Act or the Partnership Agreement.
(xiii) The Partnership owns its limited partner
interest in the Operating Partnership free and clear of all
liens, encumbrances, security interests, charges or claims
(A) in respect of which a financing statement under the
Uniform Commercial Code of the State of California or
Delaware naming the Partnership as debtor is on file in the
office of the Secretary of State of the State of California
or Delaware as of a recent date or (B) otherwise known to
such counsel, without independent investigation, other than
those created by or arising under the Delaware Act or the
Operating Partnership Agreement.
(xiv) The statements in the Registration Statement
and Prospectus under the captions "The Transactions," "Cash
Distribution Policy" (other than the table under the
subsection " Incentive Distributions Hypothetical Annualized
Yield," as to which such counsel need not express any
opinion), "Conflicts of Interest and Fiduciary
Responsibilities," "Description of the Common Units," "The
Partnership Agreement," "Units Eligible for Future Sale" and
"Underwriters" and in the Registration Statement in Items 14
and 15, in each case insofar as such statements constitute
descriptions of this Agreement and the Partnership
Agreements or summaries of the legal matters, documents or
proceedings referred to therein, fairly present the
information called for with respect to this Agreement and
such Partnership Agreements, legal matters, documents and
proceedings and fairly summarize the matters referred to
therein, and the Units and the Subordinated Units conform in
all material respects to the descriptions thereof contained
in the Registration Statement and Prospectus under the
captions "Prospectus Summary Risk Factors Risks Interest in
an Investment in the Partnership," " Risk Factors Conflicts
of Interest and Fiduciary Responsibilities," " Partnership
Structure and Management," " The Offering," "Risk
Factors Risks Inherent in an Investment in the Partnership,"
" Conflicts of Interest and Fiduciary Responsibilities,"
"Cash Distribution Policy," "Conflicts of Interest and
Fiduciary Responsibilities," "Description of the Common
Units," "The Partnership Agreement" and "Units Eligible for
Future Sale."
(xv) None of the offering, issuance and sale by the
Partnership of the Units, the offering, issuance and sale by
the Operating Partnership of the Senior Notes, the
execution, delivery and performance of this Agreement and
the Operative Agreements by any of the Predecessor Entities,
the Partnership Entities or Newco, which are parties
thereto, nor the consummation of the transactions
24
<PAGE> 31
contemplated hereby and thereby (including the Transactions)
(A) will constitute a violation of the agreement of limited
partnership, certificate or articles of incorporation or
bylaws or other organizational documents of any of the
Partnership Entities, (B) will violate the Delaware Act or
the Delaware General Corporation Law or (C) will result in
the creation or imposition of any lien, charge or
encumbrance upon any property or assets of any of the
Partnership Entities except as contemplated by the Note
Agreement and the Bank Credit Agreement.
(xvi) None of the offering, issuance and sale by
the Partnership of the Units, the execution, delivery and
performance of this Agreement or the Partnership Agreements
by any of the Predecessor Entities, the Partnership Entities
or Newco, which are parties thereto, nor the consummation of
the transactions contemplated hereby and thereby constitutes
or will constitute a violation of, or a default under (or an
event which, with notice or lapse of time or both, would
constitute such an event) the Note Agreements or of the Bank
Credit Agreement.
(xvii) No permit, consent, approval, authorization
or order of any federal or Delaware court, governmental
agency or body is required in connection with the execution
and delivery of, or the consummation of the transactions
contemplated by, this Agreement or the issuance and sale of
the Common Units and the Subordinated Units under the
Partnership Agreement, except (A) for such permits,
consents, approvals and similar authorizations required
under the Securities Act and the Exchange Act, (B) as may be
required under state securities or "Blue Sky" laws, as to
which such counsel need not express any opinion, (C) for
permits, consents, approvals and similar authorizations as
may be required by the Interstate Commerce Commission or the
U.S. Department of Transportation (or their successor
agencies or departments, as the case may be) or under the
Public Utility Holding Company Act of 1935 or the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as to which
such counsel need not express any opinion, (D) for such
permits, consents, approvals and similar authorizations
which have been obtained, (E) for such permits, consents,
approvals and similar authorizations which (1) are of a
routine or administrative nature, (2) need not be or are not
customarily obtained or made prior to the consummation of
transactions such as those contemplated hereby and (3) are
expected in the reasonable judgment of the Managing General
Partner to be obtained in the ordinary course of business
subsequent to the consummation of the Transactions and
(F) as set forth or contemplated in the Prospectus.
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<PAGE> 32
(xviii) The opinion of Andrews & Kurth L.L.P. that is
filed as Exhibit 8.1 to the Registration Statement is
confirmed and the Underwriters may rely upon such opinion as
if it were addressed to them.
(xix) The Registration Statement was declared
effective under the Securities Act on December 11, 1996; to
the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or
threatened by the Commission; and any required filing of the
Prospectus pursuant to Rule 424(b) has been made in the
manner and within the time period required by such Rule.
(xx) Upon delivery to the Underwriters of certificates
evidencing the Units issued in the name of the Underwriters
and payment by the Underwriters of the purchase price for
the Units, the Underwriters will acquire the Units free of
any adverse claim (as such term is defined in Section 8-302
of the New York Uniform Commercial Code), assuming that the
Underwriters are acting in good faith and without notice of
any adverse claim.
(xxi) Except as described in the Prospectus and
except as provided in Section 5.2(e) of the Partnership
Agreement, there are no preemptive rights or other rights to
subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any limited partner interests
pursuant to either of the Partnership Agreements. The
Partnership has all requisite power and authority under the
Delaware Act and the Partnership Agreement to issue, sell
and deliver (A) the Units, in accordance with and upon the
terms and conditions set forth in this Agreement and in the
Registration Statement and Prospectus, and (B) the
Subordinated Units, in accordance with the terms and
conditions set forth in the Contribution Agreement and the
Partnership Agreement.
(xxii) The Units have been approved for listing on
the New York Stock Exchange, subject only to official notice
of issuance.
(xxiii) The offer, sale and issuance of the
Subordinated Units to the Managing General Partner, SC and
the Special General Partner pursuant to the Contribution
Agreement and the Partnership Agreement are exempt from the
registration requirements of the Securities Act and the
securities laws of any state having jurisdiction with
respect thereto.
(xxiv) Such counsel (A) is of the opinion that the
Registration Statement and Prospectus (except for historical
26
<PAGE> 33
and pro forma financial statements and schedules and other
historical, pro forma and projected financial and
statistical data included therein as to which such counsel
need not express any opinion) comply as to form in all
material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder, (B) has
no reason to believe that (except for historical and pro
forma financial statements and schedules and other
historical, pro forma and projected financial and
statistical data as to which such counsel need not express
any belief) the statements in the Registration Statement and
the prospectus included therein at the time the Registration
Statement became effective under the captions "Prospectus
Summary Risk Factors Risks Inherent in an Investment in the
Partnership," " Risk Factors Conflicts of Interest and
Fiduciary Responsibilities," " Cash Available for
Distribution," " Partnership Structure and Management,"
" The Offering," " Summary of Tax Considerations," "Risk
Factors Risks Inherent in an Investment in the Partnership,"
" Conflicts of Interest and Fiduciary Responsibilities,"
" Tax Risks," "The Transactions," "Use of Proceeds," "Cash
Distribution Policy" (other than the table under the
subsection " Incentive Distributions Hypothetical Annualized
Yield," as to which such counsel need not comment), "Cash
Available for Distribution," "Conflicts of Interest and
Fiduciary Responsibilities," "Description of the Common
Units," "The Partnership Agreement," "Units Eligible for
Future Sale," "Tax Considerations" and "Investment in the
Partnership by Employee Benefit Plans" contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading and (C) has no reason to
believe that (except for historical and pro forma financial
statements and schedules and other historical, pro forma and
projected financial and statistical data as to which such
counsel need not express any belief) the statements in the
Prospectus under the captions "Prospectus Summary Risk
Factors Risks Inherent in an Investment in the Partnership,"
" Risk Factors Conflicts of Interest and Fiduciary
Responsibilities," " Cash Available for Distribution,"
" Partnership Structure and Management," " The Offering,"
" Summary of Tax Consideration," "Risk Factors Risks
Inherent in an Investment in the Partnership," " Conflicts
of Interest and Fiduciary Responsibilities," " Tax Risks,"
"The Transactions," "Use of Proceeds," "Cash Distribution
Policy" (other than the table under the subsection
" Incentive Distributions Hypothetical Annualized Yield," as
to which such counsel need not comment), "Cash Available for
Distribution," "Conflicts of Interest and Fiduciary
Responsibilities," "Description of the Common Units," "The
Partnership Agreement," "Units Eligible for Future Sale,"
"Tax Considerations" and "Investment in the Partnership by
27
<PAGE> 34
Employee Benefit Plans" contain any untrue statement of a
material fact or omits to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(e) The Underwriters shall have received on the Closing
Date, an opinion of Schiff Hardin & Waite, outside counsel for the
Partnership, the Operating Partnership, the Managing General Partner
and the Special General Partner, dated the Closing Date, to the effect
that:
(i) Coast Gas is a corporation duly organized and
validly existing in good standing under the laws of the
State of California, with full corporate power and authority
to own or lease its properties and to conduct its business
and to act as managing general partner of the Partnership
and of the Operating Partnership, in each case in all
material respects as described in the Registration Statement
and the Prospectus.
(ii) Synergy is a corporation duly organized and
validly existing in good standing under the laws of the
State of Delaware, with full corporate power and authority
to own or lease its properties and to conduct its business
and to act as special general partner of the Partnership and
the Operating Partnership, in each case in all material
respects as described in the Registration Statement and the
Prospectus.
(iii) Corporate Sub is a corporation duly organized
and validly existing in good standing under the laws of the
State of Delaware, with full corporate power and authority
to own or lease its properties and to conduct its business
as contemplated by the Registration Statement and the
Prospectus.
(iv) NGC is a corporation duly organized and validly
existing in good standing under the laws of the State of
South Dakota, with full corporate power and authority to
perform the NGC Transactions.
(v) NPS is a corporation duly organized and validly
existing in good standing under the laws of the State of
Delaware, with full corporate power and authority to perform
the NPS Transaction.
(vi) Each of the Partnership and the Operating
Partnership is duly qualified or registered as a foreign
limited partnership for the transaction of business under
the laws of the states listed on Schedule I to such opinion;
and, to such counsel's knowledge, such jurisdictions are the
only jurisdictions in which the character of the business
28
<PAGE> 35
conducted by the Partnership or the Operating Partnership or
the location of the properties owned or leased by it makes
such qualification or registration necessary (except where
the failure to so qualify or so register would not (A) have
a material adverse effect on the financial condition,
business or results of operations of the Partnership
Entities taken as a whole or (B) subject the limited
partners of the Partnership to any material liability).
(vii) Coast Gas is duly qualified or registered as
a foreign corporation for the transaction of business under
the laws of the states listed on Schedule II to such
opinion; and to the knowledge of such counsel, such
jurisdictions are the only jurisdictions in which the
character of the business conducted by Coast Gas or the
location of the properties owned or leased by it makes such
qualification or registration necessary (except where the
failure to so qualify or so register would not (A) have a
material adverse effect on the financial condition, business
or results of operations of the Partnership Entities taken
as a whole or (B) subject the limited partners of the
Partnership to any material liability).
(viii) Synergy is duly qualified or registered as a
foreign corporation for the transaction of business under
the laws of the states listed on Schedule III to such
opinion; and to the knowledge of such counsel, such
jurisdictions are the only jurisdictions in which the
character of the business conducted by Synergy or the
location of the properties owned or leased by it makes such
qualification or registration necessary (except where the
failure to so qualify or so register would not (A) have a
material adverse effect on the financial condition, business
or results of operations of the Partnership Entities taken
as a whole or (B) subject the limited partners of the
Partnership to any material liability).
(ix) Corporate Sub is duly qualified or registered as a
foreign corporation for the transaction of business under
the laws of the states listed on Schedule IV to such
opinion; and to the knowledge of such counsel, such
jurisdictions are the only jurisdictions in which the
character of the business conducted by Corporate Sub or the
location of the properties owned or leased by it makes such
qualification or registration necessary (except where the
failure to so qualify or so register would not (A) have a
material adverse effect on the financial condition, business
or results of operations of the Partnership Entities taken
as a whole or (B) subject the limited partners of the
Partnership to any material liability).
29
<PAGE> 36
(x) All of the issued and outstanding shares of
capital stock of Coast Gas have been duly authorized and
validly issued and are fully paid and nonassessable and are
owned by NGC free and clear of all liens, encumbrances,
security interests, charges or claims known to such counsel,
without independent investigation, other than those created
by or arising under the California Corporations Code.
(xi) The outstanding capital stock of Synergy consists
of 100,000 shares of common stock, all of which have been
duly authorized and validly issued and are fully paid and
nonassessable, 82,500 shares of which are owned by the
Managing General Partner free and clear of all liens,
encumbrances, security interests, charges or claims known to
such counsel, without independent investigation, other than
those created by or arising under the Delaware General
Corporation Law.
(xii) All of the issued and outstanding shares of
capital stock of Corporate Sub have been duly authorized and
validly issued and are fully paid and nonassessable; and all
of such shares are owned of record by the Operating
Partnership free and clear of all liens, encumbrances,
security interests, charges or claims known to such counsel,
without independent investigation, other than those created
by or arising under the Delaware General Corporation Law.
(xiii) This Agreement has been duly authorized,
executed and delivered by each of the Partnership, the
Operating Partnership, the Managing General Partner and
Synergy.
(xiv) Each of the Merger and Conveyance Documents
has been duly authorized and validly executed and delivered
by each of the Partnership, the Operating Partnership, the
Managing General Partner, NGC, Coast and Synergy, to the
extent a party thereto; each of the Merger and Conveyance
Documents constitutes the valid and legally binding
agreement of the parties thereto, enforceable against such
parties in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium
and similar laws relating to or affecting creditors' rights
generally and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law). Each of the Northwestern Mergers has
become effective.
(xv) Each of NGC and NPS has taken all corporate action
necessary to duly authorize the NGC Transactions and the NPS
Transaction, respectively, and such authorizations remain in
full force and effect.
30
<PAGE> 37
(xvi) The Bank Credit Agreement has been duly
authorized and validly executed and delivered by the
Operating Partnership; and the Bank Credit Agreement
constitutes a valid and legally binding agreement of the
Operating Partnership, enforceable against the Operating
Partnership in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws relating to or affecting
creditors' rights generally and to general principles of
equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(xvii) The statements in the Registration Statement
and the Prospectus under the captions "Management's
Discussion and Analysis of Financial Condition and Results
of Operations Description of Indebtedness," "Business and
Properties Government Regulation," "Business and Properties
Transfer of the Partnership Assets," "Certain Relationships
and Related Transactions Contribution and Conveyance
Agreement," insofar as they constitute descriptions of the
Operative Agreements or refer to statements of law or legal
conclusions, are accurate and complete in all material
respects.
(xviii) After due inquiry, such counsel does not know
of any legal or governmental proceedings pending or
threatened to which any of the Predecessor Entities or the
Partnership Entities is a party or to which any of the
properties of any of the Predecessor Entities or the
Partnership Entities is subject that are required to be
described in the Registration Statement or the Prospectus
and are not so described or of any statutes, regulations,
contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or
to be filed as exhibits to the Registration Statement that
are not described or filed as required.
(xix) To the knowledge of such counsel, other than
as described or contemplated in the Prospectus, there is no
litigation, proceeding or governmental investigation pending
or overtly threatened against any of Synergy, Empire Energy,
Coast and Coast Gas (the "Material Predecessor Entities"),
the Partnership Entities, Newco, NGC or NPS that relates to
any of the transactions contemplated by the Prospectus or
which, if adversely determined, (x) would have a material
adverse effect on the financial condition, business or
results of operations of the Partnership Entities taken as a
whole, (y) would impair or call into question the validity
of this Agreement or the performance by any of the
Partnership Entities or Newco of their obligations under
this Agreement, any of the Operative Agreements or the
Transactions or, (z) would impair or call into question the
31
<PAGE> 38
performance by NGC or NPS of the NGC Transactions or the NPS
Transaction, respectively.
(xx) None of the Partnership Entities or Newco is now,
or after sale of the Units to be sold by the Partnership
hereunder and application of the net proceeds from such sale
as described in the Prospectus under the caption "Use of
Proceeds" none of them will be, an "investment company" or a
company "controlled by" an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(xxi) After sale of the Units to be sold by the
Partnership hereunder and application of the net proceeds
from such sale as described in the Prospectus under the
caption "Use of Proceeds," the Operating Partnership will
not be a "gas utility company" and none of the Partnership
Entities, the Managing General Partner or the Special
General Partner will be a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935,
as amended, or subject to regulation thereunder.
(xxii) The consummation of the Transactions is not
subject to any further pre-merger notification and waiting
period requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
(xxiii) None of the offering, issuance and sale by
the Partnership of the Units, the offering, issuance and
sale by the Operating Partnership of the Senior Notes, the
execution, delivery and performance of this Agreement and
the Operative Agreements by any of the Material Predecessor
Entities, the Partnership Entities, Newco or NGC which are
parties thereto, nor the consummation of the transactions
contemplated hereby and thereby (including the Transactions)
(A) will constitute a violation of the certificate or
articles of incorporation or bylaws or other organizational
documents of any of the Material Predecessor Entities, Newco
or NGC, (B) will constitute a breach or violation of, or a
default under (or an event which, with notice or lapse of
time or both, would constitute such an event), any
indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument (other than the Partnership
Agreements) known to such counsel to which any of the
Material Predecessor Entities, the Partnership Entities,
Newco, NGC or NPS is a party or by which any of them or any
of their respective properties may be bound, (C) will
violate any order, judgment, decree or injunction of any
court or governmental agency or body known to such counsel
directed to any of the Material Predecessor Entities, the
Partnership Entities, Newco, NGC or NPS or any of their
properties in a proceeding to which any of the Material
Predecessor Entities, the Partnership Entities, Newco, NGC
32
<PAGE> 39
or NPS or their property is a party, (D) violates or will
violate any federal statute, law or regulation applicable to
any of the Material Predecessor Entities or any of their
respective properties, (E) violates or will violate the
South Dakota Public Utilities Act or (F) will result in the
creation or imposition of any lien, charge or encumbrance
upon any property or assets of any of the Partnership
Entities except as contemplated by the Note Agreement and
the Bank Credit Agreement.
(xxiv) No permit, consent, approval, authorization
or order of any federal or South Dakota court, governmental
agency or body or any financial institution is required in
connection with the execution and delivery of, or the
consummation of the transactions contemplated by, this
Agreement or the Operative Agreements or the consummation by
the Material Predecessor Entities, the Partnership Entities,
Newco, NGC or NPS of the Transactions, except (A) as may be
required under state securities or "Blue Sky" laws, as to
which such counsel need not express any opinion, (B) for
such permits, consents, approvals and similar authorizations
which have been obtained, (C) for such permits, consents,
approvals and similar authorizations which (1) are of a
routine or administrative nature, (2) need not be or are not
customarily obtained or made prior to the consummation of
transactions such as those contemplated hereby and by the
Operative Agreements and (3) are expected in the reasonable
judgment of the Managing General Partner to be obtained in
the ordinary course of business subsequent to the
consummation of the Transaction and (D) as set forth or
contemplated in the Prospectus.
(xxv) Except as described in the Prospectus, to the
knowledge of such counsel, none of the Material Predecessor
Entities, Newco, NGC and NPS was immediately prior to the
Transactions, and none of the Partnership Entities, Newco,
NGC and NPS is, in (A) breach or violation of the provisions
of its certificate or articles of incorporation or bylaws or
other organizational documents or (B) breach, default (and
no event has occurred which, with notice or lapse of time or
both, would constitute such a default) or violation in the
due performance of any term, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a
party or by which it is bound or to which any of its
properties are subject, which in either case (x) would have
a material adverse effect on the financial condition,
business or results of operations of the Partnership
Entities taken as a whole, (y) could impair the ability of
any of the Partnership Entities or Newco to perform their
obligations under the Operative Agreements, or (z) could
impair the ability of NGC to consummate the NGC Transactions
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or the ability of NPS to consummate the NPS Transaction.
The conduct of the business as described or contemplated in
the Prospectus to be operated by the Partnership Entities
immediately following the Transactions does not and will not
violate any agreement limiting the ability of any of the
Partnership Entities to compete in their businesses,
including, without limitation, the Empire Non-Competition
Agreements.
(xxvi) Each of the Partnership Entities possesses all
certificates, authorizations and permits issued by the
appropriate federal regulatory authorities necessary to
conduct its business as described in the Prospectus,
including, without limitation, the business conducted by CEG
prior to consummation of the Transactions.
(xxvii) Except as described in the Prospectus, there
are no preemptive rights or other rights to subscribe for or
to purchase, nor any restriction upon the voting or transfer
of, any limited partner interests in the Partnership or the
Operating Partnership or shares of capital stock of the
Managing General Partner or the Special General Partner
pursuant to the certificate of incorporation or bylaws of
the Managing General Partner or the Special General Partner
or, to the knowledge of such counsel, pursuant to any
agreement or instrument to which any Northwestern Entity,
any Northwestern Party or any Partnership Entity is a party
or by which any of them may be bound. To such counsel's
knowledge, neither the filing of the Registration Statement
nor the offering or sale of the Units as contemplated hereby
gives rise to any rights for or relating to the registration
of any Units or other securities of the Partnership. To
such counsel's knowledge, except as disclosed in the
Prospectus, there are no outstanding options or warrants to
purchase any Units or Subordinated Units or other
partnership interests in the Partnership or the Operating
Partnership. All corporate and partnership action required
to be taken by the Material Predecessor Entities, the
Partnership Entities, Newco and their shareholders or
partners for the authorization, issuance, sale and delivery
of the Units and Subordinated Units and the consummation of
the transactions contemplated hereby and by the Operative
Agreements (including the Transactions) has been validly
taken.
(xxviii) Such counsel (A) is of the opinion that the
Registration Statement and Prospectus (except for financial
statements and schedules and other historical, pro forma and
projected financial and statistical data included therein as
to which such counsel need not express any opinion) comply
as to form in all material respects with the Securities Act
and the applicable rules and regulations of the Commission
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<PAGE> 41
thereunder, (B) has no reason to believe that (except for
financial statements and schedules and other historical, pro
forma and projected financial and statistical data as to
which such counsel need not express any belief) the
Registration Statement and the prospectus included therein
at the time the Registration Statement became effective
contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and
(C) has no reason to believe that (except for financial
statements and schedules and other historical, pro forma and
projected financial and statistical data as to which such
counsel need not express any belief) the Prospectus contains
any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading.
You shall also have received on the Closing Date, a copy of
the opinion of Schiff Hardin & Waite delivered pursuant to the Note
Agreement, substantially in the form attached as an exhibit to the
Note Agreement, accompanied by a letter dated the Closing Date and
addressed to you from such counsel stating that you are entitled to
rely on the opinion relating to the exemption from the registration
requirements of the Securities Act of the offer, sale and issuance of
the Senior Notes as if it were addressed to you.
(f) The Underwriters shall have received on the Closing
Date, an opinion or opinions of outside counsel to the Partnership,
the Operating Partnership, Newco and Synergy in each of the States of
Alabama, Arkansas, California, Florida, Kentucky, Mississippi,
Missouri, New York and Tennessee, dated the Closing Date, to the
effect that:
(i) Each of the Partnership, the Operating
Partnership, the Managing General Partner, the Special
General Partner and Corporate Sub has been duly qualified or
registered, to the extent required in such state, as a
foreign limited partnership or a foreign corporation, as the
case may be, for the transaction of business under the laws
of such state.
(ii) The Operating Partnership has all requisite
partnership power and authority under the laws of such state
to own or lease its properties and to conduct its business
in such state; Corporate Sub has all requisite corporate
power and authority under the laws of such state to own or
lease its properties and to conduct its business in such
state; and upon the consummation of the Transactions,
assuming that the Partnership will not be liable under the
laws of the State of Delaware for the liabilities of the
Operating Partnership and assuming that the Unitholders will
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not be liable under the laws of the State of Delaware for
liabilities of the Partnership or the Operating Partnership,
the Partnership will not be liable as a limited partner
under the laws of such state for the liabilities of the
Operating Partnership, and the Unitholders will not be
liable as limited partners under the laws of such state for
the liabilities of the Partnership or the Operating
Partnership, except in each case to the same extent as under
the laws of the State of Delaware.
(iii) The execution, delivery and performance of
the Merger and Conveyance Documents relating to the transfer
of property in such state or the merger of one or more
entities organized under the laws of such state in
accordance with the terms thereof will not violate any
statute of such state or any rule, regulation or, to the
knowledge of such counsel, any order of any agency of such
state having jurisdiction over any of the Predecessor
Entities, the Partnership Entities, Newco or any of their
respective properties, except for any such violations which,
individually or in the aggregate, would not have a material
adverse effect upon the holders of Common Units or upon the
operations to be conducted in such state by the Partnership
Entities taken as a whole.
(iv) Each of the Merger and Conveyance Documents
relating to the transfer of property in such state or the
merger of one or more entities organized under the laws of
such state, assuming the due authorization, execution and
delivery thereof by the parties thereto and assuming such
Merger and Conveyance Documents are governed by the laws of
such state notwithstanding any choice of law provisions
thereof, is a valid and legally binding agreement of the
parties thereto under the laws of such state, enforceable in
accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general application relating to or
affecting creditors' rights generally and to general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law); each of such Merger and Conveyance Documents is in a
form legally sufficient as between the parties thereto to
convey to the transferee thereunder all of the right, title
and interest of the transferor stated therein in and to the
properties located in such state, as described in such
Merger and Conveyance Documents, subject to the conditions,
reservations and limitations contained in such Merger and
Conveyance Documents, except motor vehicles or other
property requiring conveyance of certificated title as to
which such Merger and Conveyance Documents are legally
sufficient to compel delivery of such certificated title.
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<PAGE> 43
(v) Each of the deeds and assignments (including,
without limitation, the form of the exhibits and schedules
thereto) relating to the transfer of property in such state
is in a form legally sufficient for recordation in the
appropriate public offices of such state, to the extent such
recordation is required, and, upon proper recordation of any
of such deeds and assignments in such state, will constitute
notice to all third parties under the recordation statutes
of such state concerning record title to the assets
transferred thereby; recordation in the office of the County
Clerk for each county in which the Operating Partnership or
Corporate Sub owns property is the appropriate public office
in such state for the recordation of deeds and assignments
of interests in real property located in such county.
(vi) No consent, approval, authorization, order,
registration or qualification of or with any governmental
agency or body of such state having jurisdiction over any of
the Predecessor Entities, Partnership Entities or Newco, as
the case may be, or any of their respective properties is
required for the issue and sale of the Units by the
Partnership or for the conveyance of the properties located
in such state purported to be conveyed to the Operating
Partnership or Corporate Sub pursuant to the Merger and
Conveyance Documents, except (A) such permits, consents,
approvals and similar authorizations required under the Act
and the securities or "Blue Sky" laws of such state, (B)
such permits, consents, approvals and similar authorizations
which have been obtained, (C) such permits, consents,
approvals and similar authorizations which (1) are of a
routine or administrative nature, (2) need not be or are not
customarily obtained or made prior to the consummation of
transactions such as those contemplated hereby and by the
Merger and Conveyance Documents and (3) are expected in the
reasonable judgment of such counsel to be obtained in the
ordinary course of business subsequent to the consummation
of the Transactions or (D) such permits, consents, approvals
and similar authorizations which, if not obtained, would
not, individually or in the aggregate, have a material
adverse effect upon the operations to be conducted in such
state by the Partnership Entities taken as a whole.
(vii) The Predecessor Entities and the Partnership
Entities possess all certificates, authorizations or permits
issued by the appropriate state regulatory agencies or
bodies necessary to conduct the business currently (or, as
described or contemplated in the Prospectus, to be) operated
by them, except (A) with respect to the Partnership, the
Operating Partnership and Corporate Sub for such
certificates, authorizations or permits which (1) are of a
routine or administrative nature, (2) need not be or are not
customarily obtained or made prior to the consummation of
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<PAGE> 44
transactions such as those contemplated hereby and by the
Merger and Conveyance Documents and (3) are expected in the
reasonable judgment of such counsel to be obtained in the
ordinary course of business subsequent to the consummation
of the Transactions and (B) such certificates,
authorizations or permits which would not, individually or
in the aggregate, have a material adverse effect upon the
operations to be conducted in such state by the Partnership
Entities taken as a whole.
(g) The Underwriters shall have received on the Closing
Date an opinion of Baker & Botts, L.L.P., counsel for the
Underwriters, dated the Closing Date, covering the matters referred to
in subparagraphs (vi) and (xiv) (but only as to the statements in the
Prospectus under "Cash Distribution Policy," "Conflicts of Interest
and Fiduciary Responsibilities," "Description of the Common Units,"
"The Partnership Agreement," "Units Eligible for Future Sale" and
"Underwriters") of paragraph (d) above and subparagraphs (xiii) and
(xxviii) of paragraph (e) above.
With respect to subparagraph (xxiv) of paragraph (d) above
and subparagraph (xxviii) of paragraph (e) above, Baker &
Botts, L.L.P., Andrews & Kurth L.L.P. and Schiff Hardin & Waite may
state that their opinion and belief are based upon their participation
in the preparation of the Registration Statement and Prospectus and
any amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification,
except as specified.
The opinions described in paragraphs (d), (e) and (f) above
shall be rendered to the Underwriters at the request of the
Partnership and shall so state therein.
(h) The Underwriters shall have received, on each of the
date hereof and the Closing Date, a letter dated the date hereof or
the Closing Date, as the case may be, in form and substance
satisfactory to the Underwriters, from each of Arthur Andersen LLP,
Baird, Kurtz & Dobson and Price Waterhouse LLP, independent public
accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the
Prospectus; provided that the letters delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(i) The Units shall have been approved for listing on the
New York Stock Exchange.
(j) Acquisition Corp. shall have merged with and into Coast
in accordance with the terms of the Stock Purchase and Merger
Agreement dated September 4, 1996 among NGC, Acquisition Corp., Coast
and the holders of all of the preferred stock of Coast.
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(k) Prior to or simultaneously with the sale of the Units
on the Closing Date, the Northwestern Mergers shall have been
consummated.
(l) Prior to the sale of the Units on the Closing Date,
(i) the closing of the offering of the Senior Notes shall have
occurred on the basis set forth in the Prospectus and (ii) the Bank
Credit Agreement shall have been executed and delivered and become
effective in substantially the form filed as an exhibit to the
Registration Statement.
(m) Prior to or simultaneously with the sale of the Units
on the Closing Date, the conveyance of the Transferred Assets to the
Operating Partnership shall have been consummated.
The several obligations of the Underwriters to purchase
Additional Units hereunder are subject to the delivery to you on the
Option Closing Date of such documents as you may reasonably request
with respect to the good standing of the Partnership, the due
authorization and issuance of the Additional Units and other matters
related to the issuance of the Additional Units and the satisfaction
of the foregoing conditions to the several obligations of the
Underwriters to purchase and pay for the Units on the Closing Date
(other than paragraph (f)), except that all references to the Firm
Units and the Closing Date shall be deemed to refer to the Additional
Units and the Option Closing Date, respectively.
6. COVENANTS OF THE PARTNERSHIP. In further consideration
of the agreements of the Underwriters herein contained, each of the
Partnership, the Operating Partnership, the Managing General Partner
and Synergy covenants with each Underwriter as follows:
(a) To furnish to you, without charge, three signed copies
of the Registration Statement (including exhibits thereto) and for
delivery to each other Underwriter a conformed copy of the
Registration Statement (without exhibits thereto) and to furnish to
you in New York City, without charge, prior to 5:00 P.M., New York
City time, on the business day next succeeding the date of this
Agreement and during the period mentioned in paragraph (c) below, as
many copies of the Prospectus and any supplements and amendments
thereto or to the Registration Statement as you may reasonably
request; provided that if such request is made nine months or more
after the effective date of the Registration Statement, you shall pay
the expenses of providing such copies.
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file
with the Commission within the applicable period specified in Rule
424(b) under the Securities Act any prospectus required to be filed
pursuant to such Rule.
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<PAGE> 46
(c) If, at any time prior to the expiration of nine months
after the effective date of the Registration Statement when, in the
opinion of counsel for the Underwriters the Prospectus is required by
law to be delivered in connection with sales by an Underwriter or
dealer, any event shall occur or condition exist as a result of which
it is necessary to amend or supplement the Prospectus in order to make
the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if, in the
opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to
the Underwriters and to the dealers (whose names and addresses you
will furnish to the Partnership) to which Units may have been sold by
you on behalf of the Underwriters and to any other dealers upon
request, either amendments or supplements to the Prospectus so that
the statements in the Prospectus as so amended or supplemented will
not, in the light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus, as
amended or supplemented, will comply with law; and, in case any
Underwriter is required to deliver the Prospectus nine months or more
after the effective date of the Registration Statement, the
Partnership upon the request of the Representatives and at the expense
of such Underwriter will prepare promptly such amendment or supplement
to the Prospectus as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Securities Act.
(d) To endeavor to qualify the Units for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request; PROVIDED, HOWEVER, that neither the
Partnership, the Managing General Partner nor Synergy shall be
required to qualify to do business or to file a general consent to
service of process in any such jurisdictions.
(e) To make generally available to the Partnership's
security holders and to you as soon as practicable an earnings
statement covering the twelve-month period ending December 31, 1997
that satisfies the provisions of Section 11(a) of the Securities Act
and the rules and regulations of the Commission thereunder.
(f) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Partnership's counsel and the
Partnership's accountants in connection with the registration and
delivery of the Units under the Securities Act and all other fees or
expenses in connection with the preparation and filing of the
Registration Statement, any Preliminary Prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all
printing costs associated therewith, and the mailing and delivering of
copies thereof to the Underwriters and dealers, in the quantities
hereinabove specified, (ii) all costs and expenses related to the
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<PAGE> 47
transfer and delivery of the Units to the Underwriters, including any
transfer or other taxes payable thereon, (iii) the cost of printing or
producing any Blue Sky or Legal Investment memorandum in connection
with the offer and sale of the Units under state securities laws and
all expenses in connection with the qualification of the Units for
offer and sale under state securities laws as provided in Section 6(d)
hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and disbursements of counsel to the
Underwriters incurred in connection with the review and qualification
of the offering of the Units by the National Association of Securities
Dealers, Inc., (v) all fees and expenses in connection with the
preparation and filing of the registration statement on Form 8-A
relating to the Common Units and all costs and expenses incident to
listing the Units on the New York Stock Exchange, (vi) the cost of
printing certificates representing the Units, (vii) the costs and
charges of any transfer agent, registrar or depositary, (viii) the
costs and expenses of the Partnership relating to investor
presentations on any "road show" undertaken in connection with the
marketing of the offering of the Units, including, without limitation,
expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection
with the road show presentations with the prior approval of the
Partnership, travel and lodging expenses of the representatives and
officers of the Partnership and any such consultants, and the cost of
any aircraft chartered in connection with the road show, and (ix) all
other costs and expenses incident to the performance of the
obligations of the Partnership hereunder for which provision is not
otherwise made in this Section. It is understood, however, that
except as provided in this Section, Section 7 entitled "Indemnity and
Contribution," and the last paragraph of Section 9 below, the
Underwriters will pay all of their costs and expenses, including fees
and disbursements of their counsel, stock transfer taxes payable on
resale of any of the Units by them and any advertising expenses
connected with any offers they may make. Notwithstanding anything to
the contrary provided in the foregoing, each of the parties to this
Agreement shall bear its own expenses in connection with road show
presentations.
(g) To cause the Predecessor Entities, the Partnership
Entities and the Managing General Partner to accomplish or obtain, as
soon as practicable, all consents, recordings and filings necessary to
perfect, preserve and protect the title of the Operating Partnership
and Corporate Sub to the properties and assets owned by them as a
result of the Transactions.
(h) The Partnership Entities, the Managing General Partner
and the Special General Partner will use the net proceeds received by
them from the sale of the Units and the Senior Notes in the manner
specified in the Prospectus under "Use of Proceeds."
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7. INDEMNITY AND CONTRIBUTION. (a) Each of the
Partnership, the Operating Partnership and the Managing General
Partner, jointly and severally, agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all losses,
claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, any
preliminary prospectus or the Prospectus (as amended or supplemented
if the Partnership shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based
upon information relating to any Underwriter furnished to the
Partnership in writing by such Underwriter through you expressly for
use therein; PROVIDED, HOWEVER, that the foregoing indemnity agreement
with respect to any preliminary prospectus shall not inure to the
benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Units, or any person
controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Partnership shall have furnished any
amendments or supplements thereto) was not sent or given by or on
behalf of such Underwriter to such person, if required by law so to
have been delivered, at or prior to the written confirmation of the
sale of the Units to such person, and if the Prospectus (as so amended
or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the
result of noncompliance by the Partnership with Section 6(a) hereof.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Partnership, the Operating Partnership
and the Managing General Partner, their respective directors and
officers who sign the Registration Statement and each person, if any,
who controls the Partnership within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Partnership, the Operating
Partnership and the Managing General Partner to such Underwriter, but
only with reference to information relating to such Underwriter
furnished to the Partnership in writing by such Underwriter through
you expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to paragraph (a) or (b) of this
Section 7, such person (the "indemnified party") shall promptly notify
the person against whom such indemnity may be sought (the
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<PAGE> 49
"indemnifying party") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party and the indemnified party
shall have mutually agreed to the retention of such counsel or (ii)
the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in
respect of the legal expenses of any indemnified party in connection
with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in
addition to any local counsel) for all such indemnified parties and
that all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by Morgan Stanley
& Co. Incorporated, in the case of parties indemnified pursuant to
paragraph (a) of this Section 7, and by the Managing General Partner,
in the case of parties indemnified pursuant to paragraph (b) of this
Section 7. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement
of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in
paragraph (a) or (b) of this Section 7 is unavailable to an
indemnified party or insufficient in respect of any losses, claims,
damages or liabilities referred to therein, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified
party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Partnership, the Operating
Partnership and the Managing General Partner on the one hand and the
Underwriters on the other hand from the offering of the Units or (ii)
if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also
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the relative fault of the Partnership, the Operating Partnership and
the Managing General Partner on the one hand and of the Underwriters
on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The relative benefits
received by the Partnership, the Operating Partnership and the
Managing General Partner on the one hand and the Underwriters on the
other hand in connection with the offering of the Units shall be
deemed to be in the same respective proportions as the net proceeds
from the offering of the Units (before deducting expenses) received by
the Partnership and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table
on the cover of the Prospectus, bear to the aggregate Public Offering
Price of the Units. The relative fault of the Partnership, the
Operating Partnership and the Managing General Partner on the one hand
and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the
Partnership, the Operating Partnership and the Managing General
Partner or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Underwriters' respective obligations
to contribute pursuant to this Section 7 are several in proportion to
the respective number of Units they have purchased hereunder, and not
joint.
(e) The Partnership, the Operating Partnership and the
Managing General Partner and the Underwriters agree that it would not
be just or equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations
referred to in paragraph (d) of this Section 7. The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section
7, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Units underwritten
by it and distributed to the public were offered to the public exceeds
the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 7 are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
44
<PAGE> 51
(f) The indemnity and contribution provisions contained in
this Section 7 and the representations, warranties and other
statements of the Partnership, the Operating Partnership, the Managing
General Partner and Synergy contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter or
by or on behalf of the Partnership, the Operating Partnership, the
Managing General Partner and Synergy, the respective officers or
directors or any person controlling the Partnership and (iii)
acceptance of and payment for any of the Units.
8. TERMINATION. This Agreement shall be subject to
termination by notice given by you to the Partnership, if (a) after
the execution and delivery of this Agreement and prior to the Closing
Date, (i) trading generally shall have been suspended or materially
limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the
Chicago Mercantile Exchange or the Chicago Board of Trade, (ii)
trading of any securities of the Partnership or NPS shall have been
suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall
have been declared by either federal or New York State authorities or
(iv) there shall have occurred any outbreak or escalation of
hostilities or any change in financial markets or any calamity or
crisis that, in your judgment, is material and adverse and (b) in the
case of any of the events specified in clauses (a)(i) through (iv),
such event, singly or together with any other such event, makes it, in
your judgment, impracticable to market the Units on the terms and in
the manner contemplated in the Prospectus.
9. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement
shall become effective upon the execution and delivery hereof by the
parties hereto.
If, on the Closing Date or the Option Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse
to purchase Units that it has or they have agreed to purchase
hereunder on such date, and the aggregate number of Units which such
defaulting Underwriter or Underwriters agreed but failed or refused to
purchase is not more than one-tenth of the aggregate number of the
Units to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Units
set forth opposite their respective names in Schedule I bears to the
aggregate number of Firm Units set forth opposite the names of all
such nondefaulting Underwriters, or in such other proportions as you
may specify, to purchase the Units which such defaulting Underwriter
or Underwriters agreed but failed or refused to purchase on such date;
provided that in no event shall the number of Units that any
Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 9 by an amount in excess of one-
45
<PAGE> 52
ninth of such number of Units without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters
shall fail or refuse to purchase Firm Units and the aggregate number
of Firm Units with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Units to be purchased, and
arrangements satisfactory to you and the Partnership for the purchase
of such Firm Units are not made within 48 hours after such default,
this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Partnership. In any such case
either you or the Partnership shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and
in the Prospectus or in any other documents or arrangements may be
effected. If, on the Option Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Additional Units and the
aggregate number of Additional Units with respect to which such
default occurs is more than one-tenth of the aggregate number of
Additional Units to be purchased, the nondefaulting Underwriters shall
have the option to (i) terminate their obligation hereunder to
purchase Additional Units or (ii) purchase not less than the number of
Additional Units that such nondefaulting Underwriters would have been
obligated to purchase in the absence of such default. Any action
taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters,
or any of them, because of any failure or refusal on the part of the
Partnership, the Operating Partnership, the Managing General Partner
or Synergy to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason the Partnership,
the Operating Partnership, the Managing General Partner or Synergy
shall be unable to perform their obligations under this Agreement, the
Partnership, the Operating Partnership, the Managing General Partner
and Synergy will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such
Underwriters in connection with this Agreement or the offering
contemplated hereunder.
10. COUNTERPARTS. This Agreement may be signed in two or
more counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
11. APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New
York.
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<PAGE> 53
12. HEADINGS. The headings of the sections of this
Agreement have been inserted for convenience of reference only and
shall not be deemed a part of this Agreement.
Very truly yours,
CORNERSTONE PROPANE PARTNERS, L.P.
By Cornerstone Propane GP, Inc.,
its Managing General Partner
By /s/ Keith G. Baxter
-----------------------------
Keith G. Baxter
President and Chief Executive
Officer
CORNERSTONE PROPANE, L.P.
By Cornerstone Propane GP, Inc.,
its Managing General Partner
By /s/ Keith G. Baxter
------------------------------
Keith G. Baxter
President and Chief
Executive Officer
CORNERSTONE PROPANE GP, INC.
By /s/ R.J. Goedde
---------------------------------
Ronald J. Goedde
Executive Vice President and
Chief Financial Officer
SYN INC.
By /s/ Daniel K. Newell
---------------------------------
Daniel K. Newell
Vice President
47
<PAGE> 54
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Dean Witter Reynolds Inc.
A.G. Edwards & Sons, Inc.
Oppenheimer & Co., Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
Acting severally on behalf
of themselves and the several
Underwriters named herein.
By Morgan Stanley & Co.
Incorporated
By /s/ Charles J. Ditkoff
-----------------------------------------
Charles J. Ditkoff
Vice President
48
<PAGE> 55
SCHEDULE I
Number of
Firm Units
Underwriter To Be Purchased
----------- ---------------
Morgan Stanley & Co. Incorporated 1,123,334
Dean Witter Reynolds Inc. 1,123,334
A.G. Edwards & Sons, Inc. 1,123,333
Oppenheimer & Co., Inc. 1,123,333
PaineWebber Incorporated 1,123,333
Prudential Securities Incorporated 1,123,333
Bear, Stearns & Co. Inc. 180,000
Alex. Brown & Sons Incorporated 180,000
Dain Bosworth Incorporated 90,000
Donaldson, Lufkin & Jenrette Securities
Corporation 180,000
EVEREN Securities, Inc. 90,000
Fahnestock & Co. Inc. 90,000
Goldman, Sachs & Co. 180,000
Janney Montgomery Scott Inc. 90,000
Edward D. Jones & Co., L.P. 90,000
Legg Mason Wood Walker, Incorporated 90,000
McDonald & Company Securities, Inc. 90,000
Piper Jaffray Inc. 90,000
Ragen MacKenzie Incorporated 90,000
Rauscher Pierce Refsnes, Inc. 90,000
The Robinson-Humphrey Company, Inc. 90,000
Scott & Stringfellow, Inc. 90,000
-------
8,540,000
Total....................................... ==========
EXHIBIT 3.1
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CORNERSTONE PROPANE PARTNERS, L.P.
<PAGE> 57
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Construction . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE II
ORGANIZATION
2.1 Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.3 Registered Office; Registered Agent; Principal Office; Other
Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.4 Purpose and Business . . . . . . . . . . . . . . . . . . . . . 24
2.5 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.6 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . 24
2.7 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.8 Title to Partnership Assets . . . . . . . . . . . . . . . . . . 26
ARTICLE III
RIGHTS OF LIMITED PARTNERS
3.1 Limitation of Liability . . . . . . . . . . . . . . . . . . . . 27
3.2 Management of Business . . . . . . . . . . . . . . . . . . . . 27
3.3 Outside Activities of the Limited Partners . . . . . . . . . . 28
3.4 Rights of Limited Partners . . . . . . . . . . . . . . . . . . 28
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF
PARTNERSHIP INTERESTS; REDEMPTION OF
PARTNERSHIP INTERESTS
4.1 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.2 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . 29
4.3 Record Holders . . . . . . . . . . . . . . . . . . . . . . . . 30
4.4 Transfer Generally . . . . . . . . . . . . . . . . . . . . . . 31
4.5 Registration and Transfer of Limited Partner Interests . . . . 31
4.6 Transfer of a General Partner's General Partner Interest . . . 32
4.7 Restriction on Transfer of Special General Partner's General
Partner Interest . . . . . . . . . . . . . . . . . . . . . . . 33
4.8 Transfer of Incentive Distribution Rights . . . . . . . . . . . 33
4.9 Restrictions on Transfers . . . . . . . . . . . . . . . . . . . 34
4.10 Citizenship Certificates; Non-citizen Assignees . . . . . . . . 34
4.11 Redemption of Partnership Interests of Non-citizen Assignees . 36
ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
5.1 Organizational Contributions . . . . . . . . . . . . . . . . . 37
5.2 Contributions by the General Partners and their Affiliates . . 37
5.3 Contributions by Initial Limited Partners . . . . . . . . . . . 38
5.4 Interest and Withdrawal . . . . . . . . . . . . . . . . . . . . 39
5.5 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . 40
5.6 Issuances of Additional Partnership Securities . . . . . . . . 44
5.7 Limitations on Issuance of Additional Partnership Securities . 45
5.8 Conversion of Subordinated Units . . . . . . . . . . . . . . . 47
5.9 Limited Preemptive Right . . . . . . . . . . . . . . . . . . . 48
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5.10 Splits and Combination . . . . . . . . . . . . . . . . . . . . 49
5.11 Fully Paid and Non-Assessable Nature of Limited Partner
Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 Allocations for Capital Account Purposes . . . . . . . . . . . 50
6.2 Allocations for Tax Purposes . . . . . . . . . . . . . . . . . 58
6.3 Requirement and Characterization of Distributions;
Distributions to Record Holders . . . . . . . . . . . . . . . . 61
6.4 Distributions of Available Cash from Operating Surplus . . . . 62
6.5 Distributions of Available Cash from Capital Surplus . . . . . 64
6.6 Adjustment of Minimum Quarterly Distribution and Target
Distribution Levels . . . . . . . . . . . . . . . . . . . . . . 64
6.7 Special Provisions Relating to the Holders of Subordinated
Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.8 Special Provisions Relating to the Holders of Incentive 65
Distribution Rights . . . . . . . . . . . . . . . . . . . . . .
6.9 Entity-Level Taxation . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
7.1 Management . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.2 Certificate of Limited Partnership . . . . . . . . . . . . . . 69
7.3 Restrictions on General Partners' Authority . . . . . . . . . . 69
7.4 Reimbursement of the Managing General Partner . . . . . . . . . 70
7.5 Outside Activities . . . . . . . . . . . . . . . . . . . . . . 71
7.6 Loans from the General Partners; Loans or Contributions from
the Partnership; Contracts with Affiliates; Certain
Restrictions on the General Partners . . . . . . . . . . . . . 73
7.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 75
7.8 Liability of Indemnitees . . . . . . . . . . . . . . . . . . . 77
7.9 Resolution of Conflicts of Interest . . . . . . . . . . . . . . 78
7.10 Other Matters Concerning the Managing General Partner . . . . . 80
7.11 Intentionally Deleted . . . . . . . . . . . . . . . . . . . . . 80
7.12 Purchase or Sale of Partnership Securities . . . . . . . . . . 80
7.13 Registration Rights of the General Partners and their
Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.14 Reliance by Third Parties . . . . . . . . . . . . . . . . . . . 83
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 Records and Accounting . . . . . . . . . . . . . . . . . . . . 84
8.2 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.3 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
ARTICLE IX
TAX MATTERS
9.1 Tax Returns and Information . . . . . . . . . . . . . . . . . . 85
9.2 Tax Elections . . . . . . . . . . . . . . . . . . . . . . . . . 85
9.3 Tax Controversies . . . . . . . . . . . . . . . . . . . . . . . 86
9.4 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . 86
ARTICLE X
ADMISSION OF PARTNERS
10.1 Admission of Initial Limited Partners . . . . . . . . . . . . . 86
10.2 Admission of Substituted Limited Partner . . . . . . . . . . . 87
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<PAGE> 59
10.3 Admission of Successor General Partner . . . . . . . . . . . . 87
10.4 Admission of Additional Limited Partners . . . . . . . . . . . 88
10.5 Amendment of Agreement and Certificate of Limited Partnership . 88
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
11.1 Withdrawal of the General Partners . . . . . . . . . . . . . . 88
11.2 Removal of the Managing General Partner . . . . . . . . . . . . 91
11.3 Interest of Departing Partner and Successor General Partner . . 91
11.4 Termination of Subordination Period, Conversion of Subordinated
Units and Extinguishment of Cumulative Common Unit Arrearages . 93
11.5 Withdrawal of Limited Partners . . . . . . . . . . . . . . . . 93
ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . 94
12.2 Continuation of the Business of the Partnership After
Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . 94
12.3 Liquidator . . . . . . . . . . . . . . . . . . . . . . . . . . 95
12.4 Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . 96
12.5 Cancellation of Certificate of Limited Partnership . . . . . . 97
12.6 Return of Contributions . . . . . . . . . . . . . . . . . . . . 97
12.7 Waiver of Partition . . . . . . . . . . . . . . . . . . . . . . 97
12.8 Capital Account Restoration . . . . . . . . . . . . . . . . . . 97
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
13.1 Amendment to be Adopted Solely by the
Managing General Partner . . . . . . . . . . . . . . . . . 98
13.2 Amendment Procedures . . . . . . . . . . . . . . . . . . . . . 100
13.3 Amendment Requirements . . . . . . . . . . . . . . . . . . . . 100
13.4 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . 101
13.5 Notice of a Meeting . . . . . . . . . . . . . . . . . . . . . . 101
13.6 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . 102
13.7 Adjournment . . . . . . . . . . . . . . . . . . . . . . . . . . 102
13.8 Waiver of Notice; Approval of Meeting; Approval of Minutes . . 102
13.9 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
13.10 Conduct of a Meeting . . . . . . . . . . . . . . . . . . . . . 103
13.11 Action Without a Meeting . . . . . . . . . . . . . . . . . . . 104
13.12 Voting and Other Rights . . . . . . . . . . . . . . . . . . . . 104
ARTICLE XIV
MERGER
14.1 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
14.2 Procedure for Merger or Consolidation . . . . . . . . . . . . . 105
14.3 Approval by Limited Partners of Merger or Consolidation . . . . 106
14.4 Certificate of Merger . . . . . . . . . . . . . . . . . . . . . 107
14.5 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . 108
ARTICLE XV
RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
15.1 Right to Acquire Limited Partner Interests . . . . . . . . . . 108
ARTICLE XVI
GENERAL PROVISIONS
16.1 Addresses and Notices . . . . . . . . . . . . . . . . . . . . . 111
16.2 Further Action . . . . . . . . . . . . . . . . . . . . . . . . 111
16.3 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . 112
16.4 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . 112
iii
<PAGE> 60
16.5 Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
16.6 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
16.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 112
16.8 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . 112
16.9 Invalidity of Provisions . . . . . . . . . . . . . . . . . . . 112
16.10 Consent of Partners . . . . . . . . . . . . . . . . . . . . . . 113
iv
<PAGE> 61
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
CORNERSTONE PROPANE PARTNERS, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
CORNERSTONE PROPANE PARTNERS, L.P. dated as of December 17, 1996, is
entered into by and among Cornerstone Propane GP, Inc., a California
corporation, as the Managing General Partner, SYN Inc., a Delaware
corporation, as Special General Partner and Northwestern Growth
Corporation, a South Dakota corporation, as the Organizational Limited
Partner, together with any other Persons who become Partners in the
Partnership or parties hereto as provided herein. In consideration of
the covenants, conditions and agreements contained herein, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used
in this Agreement.
"Acquisition" means any transaction in which any Group Member
acquires (through an asset acquisition, merger, stock acquisition or
other form of investment) control over all or a portion of the assets,
properties or business of another Person for the purpose of increasing
the operating capacity or revenues of the Partnership Group from the
operating capacity or revenues of the Partnership Group existing
immediately prior to such transaction.
"Additional Book Basis" means the portion of any remaining
Carrying Value of an Adjusted Property that is attributable to
positive adjustments made to such Carrying Value as a result of
Book-Up Events. For purposes of determining the extent that Carrying
Value constitutes Additional Book Basis:
(i) Any negative adjustment made to the Carrying Value of
an Adjusted Property as a result of either a Book-Down Event or a
Book-Up Event shall first be deemed to offset or decrease that
portion of the Carrying Value of such Adjusted Property that is
attributable to any prior positive adjustments made thereto
pursuant to a Book-Up Event or Book-Down Event.
(ii) If Carrying Value that constitutes Additional Book
Basis is reduced as a result of a Book-Down Event and the
Carrying Value of other property is increased as a result of such
Book-Down Event, an allocable portion of any such increase in
Carrying Value shall be treated as Additional Book Basis;
1
<PAGE> 62
provided that the amount treated as Additional Book Basis
pursuant hereto as a result of such Book-Down Event shall not
exceed the amount by which the Aggregate Remaining Net Positive
Adjustments after such Book-Down Event exceeds the remaining
Additional Book Basis attributable to all of the Partnership's
Adjusted Property after such Book-Down Event (determined without
regard to the application of this clause (ii) to such Book-Down
Event).
"Additional Book Basis Derivative Items" means any Book Basis
Derivative Items that are computed with reference to Additional Book
Basis. To the extent that the Additional Book Basis attributable to
all of the Partnership's Adjusted Property as of the beginning of any
taxable period exceeds the Aggregate Remaining Net Positive
Adjustments as of the beginning of such period (the "Excess Additional
Book Basis"), the Additional Book Basis Derivative Items for such
period shall be reduced by the amount that bears the same ratio to the
amount of Additional Book Basis Derivative Items determined without
regard to this sentence as the Excess Additional Book Basis bears to
the Additional Book Basis as of the beginning of such period.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 10.4 and who is
shown as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained
for each Partner as of the end of each fiscal year of the Partnership,
(a) increased by any amounts that such Partner is obligated to restore
under the standards set by Treasury Regulation Section
1.704-1(b)(2)(ii)(c) (or is deemed obligated to restore under Treasury
Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b) decreased by
(i) the amount of all losses and deductions that, as of the end of
such fiscal year, are reasonably expected to be allocated to such
Partner in subsequent years under Sections 704(e)(2) and 706(d) of the
Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the
amount of all distributions that, as of the end of such fiscal year,
are reasonably expected to be made to such Partner in subsequent years
in accordance with the terms of this Agreement or otherwise to the
extent they exceed offsetting increases to such Partner's Capital
Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made
(other than increases as a result of a minimum gain chargeback
pursuant to Section 6.1(d)(i) or 6.1(d)(ii)). The foregoing definition
of Adjusted Capital Account is intended to comply with the provisions
of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith. The "Adjusted Capital Account" of
a Partner in respect of a general partner interest, a Common Unit, a
Subordinated Unit or an Incentive Distribution Right or any other
specified interest in the Partnership shall be the amount which such
Adjusted Capital Account would be if such general partner interest,
Common Unit, Subordinated Unit, Incentive Distribution Right or other
interest in the Partnership were the only interest in the Partnership
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<PAGE> 63
held by a Partner from and after the date on which such general
partner interest, Common Unit, Subordinated Unit, Incentive
Distribution Right or other interest was first issued.
"Adjusted Operating Surplus" means, with respect to any period,
Operating Surplus generated during such period (a) less (i) any net
increase in working capital borrowings during such period and (ii) any
net reduction in cash reserves for Operating Expenditures during such
period not relating to an Operating Expenditure made during such
period, and (b) plus (i) any net decrease in working capital
borrowings during such period and (ii) any net increase in cash
reserves for Operating Expenditures during such period required by any
debt instrument for the repayment of principal, interest or premium.
Adjusted Operating Surplus does not include that portion of Operating
Surplus included in clause (a)(i) of the definition of Operating
Surplus.
"Adjusted Property" means any property the Carrying Value of
which has been adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii).
Once an Adjusted Property is deemed distributed by, and recontributed
to, the Partnership for federal income tax purposes upon a termination
of the Partnership pursuant to Treasury Regulation Section 1.708-
(b)(1)(iv), such property shall thereafter constitute a Contributed
Property until the Carrying Value of such property is subsequently
adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii). Upon termination
of the Partnership following the publication of Proposed Treasury
Regulation 1.708-1(b)(1)(iv) as a final regulation, an Adjusted
Property deemed contributed to a new partnership in exchange for an
interest in the new partnership, followed by the deemed liquidation of
the Partnership, shall thereafter constitute a Contributed Property
until the Carrying Value of such property is subsequently adjusted
pursuant to Section 5.5(d)(i) or 5.5(d)(ii).
"Affiliate" means, with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries
controls, is controlled by or is under common control with, the Person
in question. As used herein, the term "control" means the possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through ownership of
voting securities, by contract or otherwise.
"Aggregate Remaining Net Positive Adjustments" means, as of the
end of any taxable period, the sum of the Remaining Net Positive
Adjustments of all the Partners.
"Agreed Allocation" means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant to
the provisions of Section 6.1, including, without limitation, a
Curative Allocation (if appropriate to the context in which the term
"Agreed Allocation" is used).
"Agreed Value" of any Contributed Property means the fair market
3
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value of such property or other consideration at the time of
contribution as determined by the Managing General Partner using such
reasonable method of valuation as it may adopt; provided, however,
that the Agreed Value of any property deemed contributed to the
Partnership for federal income tax purposes upon termination and
reconstitution thereof pursuant to Section 708 of the Code (whether
before or after finalization of Proposed Treasury Regulation
Section 1.708-1(b)(l)(iv)) shall be determined in accordance with
Section 5.5(c)(i). Subject to Section 5.5(c)(i), the Managing General
Partner shall, in its discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate Agreed Value of
Contributed Properties contributed to the Partnership in a single or
integrated transaction among each separate property on a basis
proportional to the fair market value of each Contributed Property.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership of Cornerstone Propane Partners, L.P., as it may be
amended, supplemented or restated from time to time.
"Assignee" means a Non-citizen Assignee or a Person to whom one
or more Limited Partner Interests have been transferred in a manner
permitted under this Agreement and who has executed and delivered a
Transfer Application as required by this Agreement, but who has not
been admitted as a Substituted Limited Partner.
"Associate" means, when used to indicate a relationship with any
Person, (a) any corporation or organization of which such Person is a
director, officer or partner or is, directly or indirectly, the owner
of 20% or more of any class of voting stock or other voting interest;
(b) any trust or other estate in which such Person has at least a 20%
beneficial interest or as to which such Person serves as trustee or in
a similar fiduciary capacity; and (c) any relative or spouse of such
Person, or any relative of such spouse, who has the same principal
residence as such Person.
"Audit Committee" means a committee of the Board of Directors of
the Managing General Partner composed entirely of two or more
directors who are neither officers nor employees of either of the
General Partners nor officers, directors or employees of any Affiliate
of the General Partners.
"Available Cash" means, with respect to any Quarter ending prior
to the Liquidation Date,
(a) the sum of (i) all cash and cash equivalents of the
Partnership Group on hand at the end of such Quarter, and
(ii) all additional cash and cash equivalents of the Partnership
Group on hand on the date of determination of Available Cash with
respect to such Quarter resulting from borrowings for working
capital purposes made subsequent to the end of such Quarter, less
(b) the amount of any cash reserves that is necessary or
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appropriate in the reasonable discretion of the Managing General
Partner to (i) provide for the proper conduct of the business of
the Partnership Group (including reserves for future capital
expenditures and for anticipated future credit needs of the
Partnership Group) subsequent to such Quarter, (ii) comply with
applicable law or any loan agreement, security agreement,
mortgage, debt instrument or other agreement or obligation to
which any Group Member is a party or by which it is bound or its
assets are subject or (iii) provide funds for distributions under
Section 6.4 or 6.5 in respect of any one or more of the next four
Quarters; provided, however, that the Managing General Partner
may not establish cash reserves pursuant to (iii) above if the
effect of such reserves would be that the Partnership is unable
to distribute the Minimum Quarterly Distribution on all Common
Units with respect to such Quarter; and, provided further, that
disbursements made by a Group Member or cash reserves
established, increased or reduced after the end of such Quarter
but on or before the date of determination of Available Cash with
respect to such Quarter shall be deemed to have been made,
established, increased or reduced, for purposes of determining
Available Cash, within such Quarter if the Managing General
Partner so determines.
Notwithstanding the foregoing, "Available Cash" with respect to
the Quarter in which the Liquidation Date occurs and any subsequent
Quarter shall equal zero.
"Book Basis Derivative Items" means any item of income,
deduction, gain or loss included in the determination of Net Income or
Net Loss that is computed with reference to the Carrying Value of an
Adjusted Property (e.g., depreciation, depletion, or gain or loss with
respect to an Adjusted Property).
"Book-Down Event" means an event which triggers a negative
adjustment to the Capital Accounts of the Partners pursuant to Section
5.5(d).
"Book-Tax Disparity" means with respect to any item of
Contributed Property or Adjusted Property, as of the date of any
determination, the difference between the Carrying Value of such
Contributed Property or Adjusted Property and the adjusted basis
thereof for federal income tax purposes as of such date. A Partner's
share of the Partnership's Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as
maintained pursuant to Section 5.5 and the hypothetical balance of
such Partner's Capital Account computed as if it had been maintained
strictly in accordance with federal income tax accounting principles.
"Book-Up Event" means an event which triggers a positive
adjustment to the Capital Accounts of the Partners pursuant to Section
5.5(d).
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"Business Day" means Monday through Friday of each week, except
that a legal holiday recognized as such by the government of the
United States of America or the states of New York or California shall
not be regarded as a Business Day.
"Capital Account" means the capital account maintained for a
Partner pursuant to Section 5.5. The "Capital Account" of a Partner in
respect of a general partner interest, a Common Unit, a Subordinated
Unit, an Incentive Distribution Right or any other Partnership
Interest shall be the amount which such Capital Account would be if
such general partner interest, Common Unit, Subordinated Unit,
Incentive Distribution Right, or other Partnership Interest were the
only interest in the Partnership held by a Partner from and after the
date on which such general partner interest, Common Unit, Subordinated
Unit, Incentive Distribution Right or other Partnership Interest was
first issued.
"Capital Contribution" means any cash, cash equivalents or the
Net Agreed Value of Contributed Property that a Partner contributes to
the Partnership pursuant to this Agreement.
"Capital Improvement" means any (a) addition or improvement to
the capital assets owned by any Group Member or (b) acquisition of
existing, or the construction of new, capital assets (including retail
distribution outlets, propane tanks, pipeline systems, storage
facilities, appliance showrooms, training facilities and related
assets), in each case made to increase the operating capacity or
revenues of the Partnership Group from the operating capacity or
revenues of the Partnership Group existing immediately prior to such
addition, improvement, acquisition or construction.
"Capital Surplus" has the meaning assigned to such term in
Section 6.3(a).
"Carrying Value" means (a) with respect to a Contributed
Property, the Agreed Value of such property reduced (but not below
zero) by all depreciation, amortization and cost recovery deductions
charged to the Partners' and Assignees' Capital Accounts in respect of
such Contributed Property, and (b) with respect to any other
Partnership property, the adjusted basis of such property for federal
income tax purposes, all as of the time of determination. The Carrying
Value of any property shall be adjusted from time to time in
accordance with Sections 5.5(d)(i) and 5.5(d)(ii) and to reflect
changes, additions or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed
appropriate by the Managing General Partner.
"Cause" means a court of competent jurisdiction has entered a
final, non-appealable judgment finding the Managing General Partner
liable for actual fraud, gross negligence or willful or wanton
misconduct in its capacity as general partner of the Partnership.
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"Certificate" means a certificate, substantially in the form of
Exhibit A to this Agreement or in such other form as may be adopted by
the Managing General Partner in its discretion, issued by the
Partnership evidencing ownership of one or more Common Units or a
certificate, in such form as may be adopted by the Managing General
Partner in its discretion, issued by the Partnership evidencing
ownership of one or more other Partnership Securities.
"Certificate of Limited Partnership" means the Certificate of
Limited Partnership of the Partnership filed with the Secretary of
State of the State of Delaware as referenced in Section 2.1, as such
Certificate of Limited Partnership may be amended, supplemented or
restated from time to time.
"Citizenship Certification" means a properly completed
certificate in such form as may be specified by the Managing General
Partner by which an Assignee or a Limited Partner certifies that he
(and if he is a nominee holding for the account of another Person,
that to the best of his knowledge such other Person) is an Eligible
Citizen.
"Claim" has the meaning assigned to such term in Section 7.13(c).
"Closing Date" means the first date on which Common Units are
sold by the Partnership to the Underwriters pursuant to the provisions
of the Underwriting Agreement.
"Closing Price" has the meaning assigned to such term in Section
15.1(a).
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time. Any reference herein to a specific section
or sections of the Code shall be deemed to include a reference to any
corresponding provision of successor law.
"Combined Interest" has the meaning assigned to such term in
Section 11.3(a).
"Commission" means the United States Securities and Exchange
Commission.
"Common Unit" means a Partnership Security representing a
fractional part of the Partnership Interests of all Limited Partners
and Assignees and of the General Partners (exclusive of their interest
as holders of the general partner interests and the Incentive
Distribution Rights) and having the rights and obligations specified
with respect to Common Units in this Agreement. The term "Common Unit"
does not refer to a Subordinated Unit prior to its conversion into
Common Unit pursuant to the terms hereof.
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"Common Unit Arrearage" means, with respect to any Common Unit,
whenever issued, as to any Quarter within the Subordination Period,
the excess, if any, of (a) the Minimum Quarterly Distribution with
respect to a Common Unit in respect of such Quarter over (b) the sum
of all Available Cash distributed with respect to a Common Unit in
respect of such Quarter pursuant to Section 6.4(a)(i).
"Contributed Property" means each property or other asset, in
such form as may be permitted by the Delaware Act, but excluding cash,
contributed to the Partnership (or deemed contributed to the
Partnership on termination and reconstitution thereof pursuant to
Section 708 of the Code, whether before or after finalization of
Proposed Treasury Regulation Section 1.708-1(b)(1)(iv)). Once the
Carrying Value of a Contributed Property is adjusted pursuant to
Section 5.5(d), such property shall no longer constitute a Contributed
Property, but shall be deemed an Adjusted Property.
"Contribution and Conveyance Agreement" means that certain
Contribution, Conveyance and Assumption Agreement, dated as of the
Closing Date, among the General Partners, the Partnership, the
Operating Partnership and certain other parties, together with the
additional conveyance documents and instruments contemplated or
referenced thereunder.
"Cornerstone Propane GP, Inc." means Cornerstone Propane
GP, Inc., a California corporation, which is currently the Managing
General Partner of the Partnership, and is the successor to
Cornerstone Propane GP, Inc., a Delaware corporation.
"Cumulative Common Unit Arrearage" means, with respect to any
Common Unit, whenever issued, and as of the end of any Quarter, the
excess, if any, of (a) the sum resulting from adding together the
Common Unit Arrearage as to an Initial Common Unit for each of the
Quarters within the Subordination Period ending on or before the last
day of such Quarter over (b) the sum of any distributions theretofore
made pursuant to Section 6.4(a)(ii) and the second sentence of Section
6.5 with respect to an Initial Common Unit (including any
distributions to be made in respect of the last of such Quarters).
"Curative Allocation" means any allocation of an item of income,
gain, deduction, loss or credit pursuant to the provisions of Section
6.1(d)(xi).
"Current Market Price" has the meaning assigned to such term in
Section 15.1(a).
"Delaware Act" means the Delaware Revised Uniform Limited
Partnership Act, 6 Del C. Section 17-101, et seq., as amended,
supplemented or restated from time to time, and any successor to
such statute.
"Departing Partner" means a former General Partner, either
Managing General Partner or Special General Partner, from and after
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the effective date of any withdrawal or removal of such former General
Partner pursuant to Section 11.1 or 11.2.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"EESC" means Empire Energy SC Corporation, a Delaware
corporation.
"Eligible Citizen" means a Person qualified to own interests in
real property in jurisdictions in which any Group Member does business
or proposes to do business from time to time, and whose status as a
Limited Partner or Assignee does not or would not subject such Group
Member to a significant risk of cancellation or forfeiture of any of
its properties or any interest therein.
"Event of Withdrawal" has the meaning assigned to such term in
Section 11.1(a).
"Final Subordinated Units" has the meaning assigned to such term
in Section 6.1(d)(x).
"First Liquidation Target Amount" has the meaning assigned to
such term in Section 6.1(c)(i)(D).
"First Target Distribution" means $0.594 per Unit per Quarter
(or, with respect to the period commencing on the Closing Date and
ending on March 31, 1997, it means the product of $0.594 multiplied by
a fraction of which the numerator is the number of days in such
period, and of which the denominator is 90), subject to adjustment in
accordance with Sections 6.6 and 6.9.
"General Partners" means the Managing General Partner and the
Special General Partner and their successors and permitted assigns as
general partners of the Partnership.
"Group" means a Person that with or through any of its Affiliates
or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except voting pursuant to a
revocable proxy or consent given to such Person in response to a proxy
or consent solicitation made to 10 or more Persons) or disposing of
any Partnership Securities with any other Person that beneficially
owns, or whose Affiliates or Associates beneficially own, directly or
indirectly, Partnership Securities.
"Group Member" means a member of the Partnership Group.
"Holder" as used in Section 7.13, has the meaning assigned to
such term in Section 7.13(a).
"Incentive Distribution Right" means a non-voting limited partner
Partnership Interest issued to the General Partners in connection with
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the transfer of their assets to the Partnership pursuant to Section
5.2, which Partnership Interest shall confer upon the holder thereof
only the rights and obligations specifically provided in this
Agreement with respect to Incentive Distribution Rights (and no other
rights otherwise available to or other obligations of holders of a
Partnership Interest).
"Incentive Distributions" means any amount of cash distributed to
the holders of the Incentive Distribution Rights pursuant to Sections
6.4(a)(v), (vi) and (vii) and 6.4(b)(iii), (iv) and (v).
"Indemnified Persons" has the meaning assigned to such term in
Section 7.13(c).
"Indemnitee" means (a) any General Partner, any Departing Partner
and any Person who is or was an Affiliate of any General Partner or
any Departing Partner, (b) any Person who is or was a director,
officer, employee, agent or trustee of a Group Member, (c) any Person
who is or was an officer, member, partner, director, employee, agent
or trustee of any General Partner or any Departing Partner or any
Affiliate of the General Partner or any Departing Partner, or any
Affiliate of any such Person and (d) any Person who is or was serving
at the request of any General Partner or any Departing Partner or any
such Affiliate as a director, officer, employee, member, partner,
agent, fiduciary or trustee of another Person; provided, that a Person
shall not be an Indemnitee by reason of providing, on a
fee-for-services basis, trustee, fiduciary or custodial services.
"Initial Common Units" means the Common Units sold in the Initial
Offering.
"Initial Limited Partners" means the General Partners (with
respect to the Subordinated Units and the Incentive Distribution
Rights received by them pursuant to Section 5.2), EESC (with respect
to the Subordinated Units it receives pursuant to Section 5.2) and the
Underwriters, in each case upon being admitted to the Partnership in
accordance with Section 10.1.
"Initial Offering" means the initial offering and sale of Common
Units to the public, as described in the Registration Statement.
"Initial Unit Price" means (a) with respect to the Common Units
and the Subordinated Units, the initial public offering price per
Common Unit at which the Underwriters offered the Common Units to the
public for sale as set forth on the cover page of the prospectus
included as part of the Registration Statement and first issued at or
after the time the Registration Statement first became effective or
(b) with respect to any other class or series of Units, the price per
Unit at which such class or series of Units is initially sold by the
Partnership, as determined by the Managing General Partner, in each
case adjusted as the Managing General Partner determines to be
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appropriate to give effect to any distribution, subdivision or
combination of Units.
"Interim Capital Transactions" means the following transactions
if they occur prior to the Liquidation Date: (a) borrowings,
refinancings or refundings of indebtedness and sales of debt
securities (other than for working capital purposes and other than for
items purchased on open account in the ordinary course of business) by
any Group Member; (b) sales of equity interests by any Group Member
(including Initial Common Units sold to the Underwriters pursuant to
the exercise of the Over-allotment Option); and (c) sales or other
voluntary or involuntary dispositions of any assets of any Group
Member other than (x) sales or other dispositions of inventory in the
ordinary course of business, (y) sales or other dispositions of other
current assets, including receivables and accounts in the ordinary
course of business, and (z) sales or other dispositions of assets as
part of normal retirements or replacements.
"Issue Price" means the price at which a Unit is purchased from
the Partnership, after taking into account any sales commission or
underwriting discount charged to the Partnership.
"Limited Partner" means, unless the context otherwise requires,
(a) the Organizational Limited Partner, each Initial Limited Partner,
each Substituted Limited Partner, each Additional Limited Partner and
any Partner upon the change of its status from General Partner to
Limited Partner pursuant to Section 11.3 or (b) solely for purposes of
Articles V, VI, VII and IX and Sections 12.3 and 12.4, each Assignee.
"Limited Partner Interest" means the ownership interest of a
Limited Partner or Assignee in the Partnership, which may be evidenced
by Common Units, Subordinated Units, Incentive Distribution Rights or
other Partnership Securities or a combination thereof or interest
therein, and includes any and all benefits to which such Limited
Partner or Assignee is entitled as provided in this Agreement,
together with all obligations of such Limited Partner or Assignee to
comply with the terms and provisions of this Agreement.
"Liquidation Date" means (a) in the case of an event giving rise
to the dissolution of the Partnership of the type described in clauses
(a) and (b) of the first sentence of Section 12.2, the date on which
the applicable time period during which the holders of Outstanding
Units have the right to elect to reconstitute the Partnership and
continue its business has expired without such an election being made,
and (b) in the case of any other event giving rise to the dissolution
of the Partnership, the date on which such event occurs.
"Liquidator" means one or more Persons selected by the Managing
General Partner to perform the functions described in Section 12.3 as
liquidating trustee of the Partnership within the meaning of the
Delaware Act.
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"Managing General Partner" means Cornerstone Propane GP, Inc. and
its predecessors, successors and permitted assigns as general partner
of the Partnership.
"Merger Agreement" has the meaning assigned to such term in
Section 14.1.
"Minimum Quarterly Distribution" means $0.54 per Unit per Quarter
(or with respect to the period commencing on the Closing Date and
ending on March 31, 1997, it means the product of $0.54 multiplied by
a fraction of which the numerator is the number of days in such period
and of which the denominator is 90), subject to adjustment in
accordance with Sections 6.6 and 6.9.
"National Securities Exchange" means an exchange registered with
the Commission under Section 6(a) of the Securities Exchange Act of
1934, as amended, supplemented or restated from time to time, and any
successor to such statute, or the Nasdaq Stock Market or any successor
thereto.
"Net Agreed Value" means, (a) in the case of any Contributed
Property, the Agreed Value of such property reduced by any liabilities
either assumed by the Partnership upon such contribution or to which
such property is subject when contributed, and (b) in the case of any
property distributed to a Partner or Assignee by the Partnership, the
Partnership's Carrying Value of such property (as adjusted pursuant to
Section 5.5(d)(ii)) at the time such property is distributed, reduced
by any indebtedness either assumed by such Partner or Assignee upon
such distribution or to which such property is subject at the time of
distribution, in either case, as determined under Section 752 of the
Code.
"Net Income" means, for any taxable year, the excess, if any, of
the Partnership's items of income and gain (other than those items
taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year over the Partnership's items
of loss and deduction (other than those items taken into account in
the computation of Net Termination Gain or Net Termination Loss) for
such taxable year. The items included in the calculation of Net Income
shall be determined in accordance with Section 5.5(b) and shall not
include any items specially allocated under Section 6.1(d); provided
that the determination of the items that have been specially allocated
under Section 6.1(d) shall be made as if Section 6.1(d)(xii) were not
in this Agreement.
"Net Loss" means, for any taxable year, the excess, if any, of
the Partnership's items of loss and deduction (other than those items
taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year over the Partnership's items
of income and gain (other than those items taken into account in the
computation of Net Termination Gain or Net Termination Loss) for such
taxable year. The items included in the calculation of Net Loss shall
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be determined in accordance with Section 5.5(b) and shall not include
any items specially allocated under Section 6.1(d); provided that the
determination of the items that have been specially allocated under
Section 6.1(d) shall be made as if Section 6.1(d)(xii) were not in
this Agreement.
"Net Positive Adjustments" means, with respect to any Partner,
the excess, if any, of the total positive adjustments over the total
negative adjustments made to the Capital Account of such Partner
pursuant to Book-Up Events and Book-Down Events.
"Net Termination Gain" means, for any taxable year, the sum, if
positive, of all items of income, gain, loss or deduction recognized
by the Partnership after the Liquidation Date. The items included in
the determination of Net Termination Gain shall be determined in
accordance with Section 5.5(b) and shall not include any items of
income, gain or loss specially allocated under Section 6.1(d).
"Net Termination Loss" means, for any taxable year, the sum, if
negative, of all items of income, gain, loss or deduction recognized
by the Partnership after the Liquidation Date. The items included in
the determination of Net Termination Loss shall be determined in
accordance with Section 5.5(b) and shall not include any items of
income, gain or loss specially allocated under Section 6.1(d).
"Non-citizen Assignee" means a Person whom the Managing General
Partner has determined in its discretion does not constitute an
Eligible Citizen and as to whose Partnership Interest the Managing
General Partner has become the Substituted Limited Partner, pursuant
to Section 4.10.
"Nonrecourse Built-in Gain" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or
pledge securing a Nonrecourse Liability, the amount of any taxable
gain that would be allocated to the Partners pursuant to Sections
6.2(b)(i)(A), 6.2(b)(ii)(A) and 6.2(b)(iii) if such properties were
disposed of in a taxable transaction in full satisfaction of such
liabilities and for no other consideration.
"Nonrecourse Deductions" means any and all items of loss,
deduction or expenditures (described in Section 705(a)(2)(B) of the
Code) that, in accordance with the principles of Treasury Regulation
Section 1.704-2(b), are attributable to a Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
"Notes" means the $220 million of Senior Secured Notes issued by
the Operating Partnership in a private placement in conjunction with
the Initial Offering.
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"Notice of Election to Purchase" has the meaning assigned to such
term in Section 15.1(b) hereof.
"NPS Note" means the note evidencing the loan from Northwestern
Public Service Company to the Partnership on the Closing Date to
finance certain fees and expenses incurred in connection with the
Initial Offering and the issuance of the Notes.
"Operating Expenditures" means all Partnership Group
expenditures, including, but not limited to, taxes, reimbursements of
the General Partners, debt service payments, and capital expenditures,
subject to the following:
(a) Payments (including prepayments) of principal of and
premium on indebtedness shall not be an Operating Expenditure if
the payment is (i) required in connection with the sale or other
disposition of assets or (ii) made in connection with the
refinancing or refunding of indebtedness with the proceeds from
new indebtedness or from the sale of equity interests. For
purposes of the foregoing, at the election and in the reasonable
discretion of the Managing General Partner, any payment of
principal or premium shall be deemed to be refunded or refinanced
by any indebtedness incurred or to be incurred by the Partnership
Group within 180 days before or after such payment to the extent
of the principal amount of such indebtedness.
(b) Operating Expenditures shall not include (i) capital
expenditures made for Acquisitions or for Capital Improvements,
(ii) payment of transaction expenses relating to Interim Capital
Transactions or (iii) distributions to Partners. Where capital
expenditures are made in part for Acquisitions or for Capital
Improvements and in part for other purposes, the Managing General
Partner's good faith allocation between the amounts paid for each
shall be conclusive.
"Operating Partnership" means Cornerstone Propane L.P., a
Delaware limited partnership, and any successors thereto.
"Operating Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of the Operating Partnership, as it
may be amended, supplemented or restated from time to time.
"Operating Surplus," means, with respect to any period ending
prior to the Liquidation Date, on a cumulative basis and without
duplication,
(a) the sum of (i) $25 million plus all cash and cash
equivalents of the Partnership Group on hand as of the close of
business on the Closing Date, (ii) all cash receipts of the
Partnership Group for the period beginning on the Closing Date
and ending with the last day of such period, other than cash
receipts from Interim Capital Transactions (except to the extent
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specified in Section 6.5) and (iii) all cash receipts of the
Partnership Group after the end of such period but on or before
the date of determination of Operating Surplus with respect to
such period resulting from borrowings for working capital
purposes, less
(b) the sum of (i) Operating Expenditures for the period
beginning on the Closing Date and ending with the last day of
such period and (ii) the amount of cash reserves that is
necessary or advisable in the reasonable discretion of the
Managing General Partner to provide funds for future Operating
Expenditures, provided, however, that disbursements made
(including contributions to a Group Member or disbursements on
behalf of a Group Member) or cash reserves established, increased
or reduced after the end of such period but on or before the date
of determination of Available Cash with respect to such period
shall be deemed to have been made, established, increased or
reduced, for purposes of determining Operating Surplus, within
such period if the Managing General Partner so determines.
Notwithstanding the foregoing, "Operating Surplus" with respect
to the Quarter in which the Liquidation Date occurs and any subsequent
Quarter shall equal zero.
"Opinion of Counsel" means a written opinion of counsel (who may
be regular counsel to the Partnership or the General Partners or any
of their Affiliates) acceptable to the Managing General Partner in its
reasonable discretion.
"Option Closing Date" has the meaning assigned to such term in
the Underwriting Agreement.
"Organizational Limited Partner" means Northwestern Growth
Corporation in its capacity as the organizational limited partner of
the Partnership pursuant to this Agreement.
"Outstanding" means, with respect to Partnership Securities, all
Partnership Securities that are issued by the Partnership and
reflected as outstanding on the Partnership's books and records as of
the date of determination; provided, however, that if at any time any
Person or Group (other than the Managing General Partner or its
Affiliates) beneficially owns 20% or more of any Outstanding
Partnership Securities of any class then Outstanding, all Partnership
Securities owned by such Person or Group shall not be voted on any
matter and shall not be considered to be Outstanding when sending
notices of a meeting of Limited Partners to vote on any matter (unless
otherwise required by law), calculating required votes, determining
the presence of a quorum or for other similar purposes under this
Agreement, except that Common Units so owned shall be considered to be
Outstanding for purposes of Section 11.1(b)(iv) (such Common Units
shall not, however, be treated as a separate class of Partnership
Securities for purposes of this Agreement).
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"Over-allotment Option" means the over-allotment option granted
to the Underwriters by the Partnership pursuant to the Underwriting
Agreement.
"Parity Units" means Common Units and all other Units having
rights to distributions or in liquidation ranking on a parity with the
Common Units.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth
in Treasury Regulation Section 1.704-2(i)(2).
"Partner Nonrecourse Deductions" means any and all items of loss,
deduction or expenditure (including, without limitation, any
expenditure described in Section 705(a)(2)(B) of the Code) that, in
accordance with the principles of Treasury Regulation Section
1.704-2(i), are attributable to a Partner Nonrecourse Debt.
"Partners" means the General Partners, the Limited Partners and
the holders of Common Units, Subordinated Units and Incentive
Distribution Rights.
"Partnership" means Cornerstone Propane Partners, L.P., a
Delaware limited partnership, and any successors thereto.
"Partnership Group" means the Partnership, the Operating
Partnership and any Subsidiary of either such entity, treated as a
single consolidated entity.
"Partnership Interest" means an interest in the Partnership,
which shall include general partner interests, Common Units,
Subordinated Units, Incentive Distribution Rights and other
Partnership Securities, or a combination thereof or interest therein,
as the case may be.
"Partnership Minimum Gain" means that amount determined in
accordance with the principles of Treasury Regulation Section
1.704-2(d).
"Partnership Security" means any class or series of Unit, any
option, right, warrant or appreciation rights relating thereto, or any
other type of equity interest that the Partnership may lawfully issue,
or any unsecured or secured debt obligation of the Partnership that is
convertible into any class or series of equity interests of the
Partnership.
"Percentage Interest" means as of the date of such determination
(a) as to the General Partners (in their capacity as General Partners
without reference to any Units or limited partner interests held by
them), an aggregate 1.0%, (b) as to any Unitholder or Assignee holding
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Units, the product obtained by multiplying (i) 99% less the percentage
applicable to paragraph (c) by (ii) the quotient obtained by dividing
(A) the number of Units held by such Unitholder or Assignee by (B) the
total number of all Outstanding Units, and (c) as to the holders of
additional Partnership Securities issued by the Partnership in
accordance with Section 5.6, the percentage established as a part of
such issuance. The Percentage Interest with respect to an Incentive
Distribution Right shall at all times be zero.
"Person" means an individual or a corporation, limited liability
company, partnership, joint venture, trust, unincorporated
organization, association, government agency or political subdivision
thereof or other entity.
"Per Unit Capital Amount" means, as of any date of determination,
the Capital Account, stated on a per Unit basis, underlying any Unit
held by a Person other than the General Partners or any Affiliate of a
General Partner who holds Units.
"Proportionate Share" means (i) with respect to the Managing
General Partner, the percentage share equal to the quotient of (A) the
Net Agreed Value of the assets contributed by the Managing General
Partner to the Partnership reduced by the value of the general partner
interest and Incentive Distribution Rights received by the Managing
General Partner divided by (B) the sum of the amount described in (A)
above plus the Net Agreed Value of the assets contributed by EESC to
the Partnership and (ii) with respect to EESC, the percentage share
equal to the quotient of (A) the Net Agreed Value of the assets
contributed by EESC to the Partnership divided by the amount described
in (B) above.
"Pro Rata" means (a) when modifying Units or any class thereof,
apportioned equally among all designated Units in accordance with
their relative Percentage Interests, (b) when modifying Partners and
Assignees, apportioned among all Partners and Assignees in accordance
with their respective Percentage Interests, (c) when modifying holders
of Incentive Distribution Rights, apportioned equally among all
holders of Incentive Distribution Rights in accordance with the
relative number of Incentive Distribution Rights held by each such
holder and (d) when modifying the General Partners, apportioned
76.8645% to the Managing General Partner and 23.1355% to the Special
General Partner, provided, however, to the extent an allocation of
losses pursuant to Section 6.1(b) or Section 6.1(c)(ii) would cause
the Special General Partner to have a deficit balance in its Adjusted
Capital Account at the end of such taxable year (or increase any
existing deficit in its Adjusted Capital Account), then Pro Rata shall
mean 100% to the Managing General Partner and zero to the Special
General Partner.
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"Purchase Date" means the date determined by the Managing General
Partner as the date for purchase of all Outstanding Units (other than
Units owned by the General Partners and their Affiliates) pursuant to
Article XV.
"Quarter" means, unless the context requires otherwise, a fiscal
quarter of the Partnership.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Sections 734 or
743 of the Code) upon the disposition of any property or asset of the
Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect
to such property or asset.
"Record Date" means the date established by the Managing General
Partner for determining (a) the identity of the Record Holders
entitled to notice of, or to vote at, any meeting of Limited Partners
or entitled to vote by ballot or give approval of Partnership action
in writing without a meeting or entitled to exercise rights in respect
of any lawful action of Limited Partners or (b) the identity of Record
Holders entitled to receive any report or distribution or to
participate in any offer.
"Record Holder" means the Person in whose name a Common Unit is
registered on the books of the Transfer Agent as of the opening of
business on a particular Business Day, or with respect to other
Partnership Securities, the Person in whose name any such other
Partnership Security is registered on the books which the Managing
General Partner has caused to be kept as of the opening of business on
such Business Day.
"Redeemable Interests" means any Partnership Interests for which
a redemption notice has been given, and has not been withdrawn,
pursuant to Section 4.11.
"Registration Statement" means the Registration Statement on Form
S-1 (Registration No. 333-13879) as it has been or as it may be
amended or supplemented from time to time, filed by the Partnership
with the Commission under the Securities Act to register the offering
and sale of the Common Units in the Initial Offering.
"Remaining Net Positive Adjustments" means as of the end of any
taxable period, (i) with respect to the Unitholders holding Common
Units or Subordinated Units, the excess of (a) the Net Positive
Adjustments of the Unitholders holding Common Units or Subordinated
Units as of the end of such period over (b) the sum of those Partners'
Share of Additional Book Basis Derivative Items for each prior taxable
period, (ii) with respect to the General Partners (as holders of the
general partner interests), the excess of (a) the Net Positive
Adjustments of the General Partners as of the end of such period over
(b) the sum of the General Partners' Share of Additional Book Basis
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Derivative Items with respect to the general partner interests for
each prior taxable period, and (iii) with respect to the holders of
Incentive Distribution Rights, the excess of (a) the Net Positive
Adjustments of the holders of Incentive Distribution Rights as of the
end of such period over (b) the sum of the Share of Additional Book
Basis Derivative Items of the holders of the Incentive Distribution
Rights for each prior taxable period.
"Required Allocations" means (a) any limitation imposed on any
allocation of Net Losses or Net Termination Losses under Section
6.1(b) or 6.1(c)(ii) and (b) any allocation of an item of income,
gain, loss or deduction pursuant to Section 6.1(d)(i), 6.1(d)(ii),
6.1(d)(iv), 6.1(d)(vii) or 6.1(d)(ix).
"Residual Gain" or "Residual Loss" means any item of gain or
loss, as the case may be, of the Partnership recognized for federal
income tax purposes resulting from a sale, exchange or other
disposition of a Contributed Property or Adjusted Property, to the
extent such item of gain or loss is not allocated pursuant to Section
6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to eliminate Book-Tax
Disparities.
"Second Liquidation Target Amount" has the meaning assigned to
such term in Section 6.1(c)(i)(E).
"Second Target Distribution" means $0.700 per Unit per Quarter
(or, with respect to the period commencing on the Closing Date and
ending on March 31, 1997, it means the product of $0.700 multiplied by
a fraction of which the numerator is equal to the number of days in
such period and of which the denominator is 90), subject to adjustment
in accordance with Sections 6.6 and 6.9.
"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such
statute.
"Share of Additional Book Basis Derivative Items" means in
connection with any allocation of Additional Book Basis Derivative
Items for any taxable period, (i) with respect to the Unitholders
holding Common Units or Subordinated Units, the amount that bears the
same ratio to such Additional Book Basis Derivative Items as the
Unitholders' Remaining Net Positive Adjustments as of the end of such
period bears to the Aggregate Remaining Net Positive Adjustments as of
that time, (ii) with respect to the General Partners (as holders of
the general partner interests), the amount that bears the same ratio
to such additional Book Basis Derivative Items as the General
Partners' Remaining Net Positive Adjustments as of the end of such
period bears to the Aggregate Remaining Net Positive Adjustment as of
that time, and (iii) with respect to the Partners holding Incentive
Distribution Rights, the amount that bears the same ratio to such
Additional Book Basis Derivative Items as the Remaining Net Positive
Adjustments of the Partners holding the Incentive Distribution Rights
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as of the end of such period bears to the Aggregate Remaining Net
Positive Adjustments as of that time.
"Special Approval" means approval by a majority of the members of
the Audit Committee.
"Special General Partner" means SYN and its successors and
assigns as special general partner of the Partnership.
"Subordinated Unit" means a Unit representing a fractional part
of the Partnership Interests of all Limited Partners and Assignees
(other than of holders of the Incentive Distribution Rights) and
having the rights and obligations specified with respect to
Subordinated Units in this Agreement. The term "Subordinated Unit" as
used herein does not include a Common Unit.
"Subordination Period" means the period commencing on the Closing
Date and ending on the first to occur of the following dates:
(a) the first day of any Quarter beginning after
December 31, 2001 in respect of which (i) (A) distributions of
Available Cash from Operating Surplus on each of the Outstanding
Common Units and Subordinated Units with respect to each of the
three consecutive, non-overlapping four- Quarter periods
immediately preceding such date equaled or exceeded the sum of
the Minimum Quarterly Distribution on all Outstanding Common
Units and Subordinated Units during such periods and (B) the
Adjusted Operating Surplus generated during each of the three
consecutive, non-overlapping four-Quarter periods immediately
preceding such date equaled or exceeded the sum of the Minimum
Quarterly Distribution on all of the Outstanding Common Units and
Subordinated Units, plus the related distribution on the general
partner interests in the Partnership and in the Operating
Partnership, during such periods and (ii) there are no Cumulative
Common Unit Arrearages; and
(b) the date on which the Managing General Partner is
removed as general partner of the Partnership upon the requisite
vote by holders of Outstanding Units under circumstances where
Cause does not exist and Units held by the General Partners and
their Affiliates are not voted in favor of such removal.
"Subsidiary" means, with respect to any Person, (a) a corporation
of which more than 50% of the voting power of shares entitled (without
regard to the occurrence of any contingency) to vote in the election
of directors or other governing body of such corporation is owned,
directly or indirectly, at the date of determination, by such Person,
by one or more Subsidiaries of such Person or a combination thereof,
(b) a partnership (whether general or limited) in which such Person or
a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than
50% of the partnership interests of such partnership (considering all
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of the partnership interests of the partnership as a single class) is
owned, directly or indirectly, at the date of determination, by such
Person, by one or more Subsidiaries of such Person, or a combination
thereof, or (c) any other Person (other than a corporation or a
partnership) in which such Person, one or more Subsidiaries of such
Person, or a combination thereof, directly or indirectly, at the date
of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 10.2 in place
of and with all the rights of a Limited Partner and who is shown as a
Limited Partner on the books and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such term
in Section 14.2(b).
"SYN" means SYN Inc., a Delaware corporation.
"Third Target Distribution" means $0.900 per Unit per Quarter
(or, with respect to the period commencing on the Closing Date and
ending on March 31, 1997, it means the product of $0.900 multiplied by
a fraction of which the numerator is equal to the number of days in
such period and of which the denominator is 90), subject to adjustment
in accordance with Sections 6.6 and 6.9.
"Trading Day" has the meaning assigned to such term in Section
15.1(a).
"Transfer" has the meaning assigned to such term in Section
4.4(a).
"Transfer Agent" means such bank, trust company or other Person
(including the Managing General Partner or one of its Affiliates) as
shall be appointed from time to time by the Partnership to act as
registrar and transfer agent for the Common Units.
"Transfer Application" means an application and agreement for
transfer Limited Partner Interests in the form set forth on the back
of a Certificate or in a form substantially to the same effect in a
separate instrument.
"Underwriter" means each Person named as an underwriter in
Schedule I to the Underwriting Agreement who purchases Common Units
pursuant thereto.
"Underwriting Agreement" means the Underwriting Agreement dated
December 11, 1996, among the Underwriters, the Partnership and certain
other parties, providing for the purchase of Common Units by such
Underwriters.
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"Unit" means a Partnership Interest of a Limited Partner or
Assignee in the Partnership and shall include Common Units and
Subordinated Units but shall not include (x) the general partner
interests in the Partnership or (y) Incentive Distribution Rights.
"Unitholders" means the holders of Common Units and Subordinated
Units.
"Unit Majority" means, during the Subordination Period, at least
a majority of the Outstanding Common Units voting as a class and at
least a majority of the Outstanding Subordinated Units voting as a
class, and thereafter, at least a majority of the Outstanding Units.
"Unpaid MQD" has the meaning assigned to such term in Section
6.1(c)(i)(B).
"Unrealized Gain" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any,
of (a) the fair market value of such property as of such date (as
determined under Section 5.5(d)) over (b) the Carrying Value of such
property as of such date (prior to any adjustment to be made pursuant
to Section 5.5(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any,
of (a) the Carrying Value of such property as of such date (prior to
any adjustment to be made pursuant to Section 5.5(d) as of such date)
over (b) the fair market value of such property as of such date (as
determined under Section 5.5(d)).
"Unrecovered Capital" means at any time, with respect to a Unit,
the Initial Unit Price less the sum of all distributions constituting
Capital Surplus theretofore made in respect of an Initial Common Unit
and any distributions of cash (or the Net Agreed Value of any
distributions in kind) in connection with the dissolution and
liquidation of the Partnership theretofore made in respect of an
Initial Common Unit, adjusted as the Managing General Partner
determines to be appropriate to give effect to any distribution,
subdivision or combination of such Units.
"U.S. GAAP" means United States Generally Accepted Accounting
Principles consistently applied.
"Withdrawal Opinion of Counsel" has the meaning assigned to such
term in Section 11.1(b).
1.2. CONSTRUCTION
Unless the context requires otherwise: (a) any pronoun used in
this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns, pronouns and verbs shall
include the plural and vice versa; (b) references to Articles and
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Sections refer to Articles and Sections of this Agreement; and
(c) "include" or "includes" means includes, without limitation, and
"including" means including, without limitation.
ARTICLE II
ORGANIZATION
2.1 FORMATION
The Managing General Partner and the Organizational Limited
Partner have previously formed the Partnership as a limited
partnership pursuant to the provisions of the Delaware Act and hereby
amend and restate the original Agreement of Limited Partnership of
Cornerstone Propane Partners, L.P. in its entirety. This amendment and
restatement shall become effective on the date of this Agreement.
Except as expressly provided to the contrary in this Agreement, the
rights, duties (including fiduciary duties), liabilities and
obligations of the Partners and the administration, dissolution and
termination of the Partnership shall be governed by the Delaware Act.
All Partnership Interests shall constitute personal property of the
owner thereof for all purposes and a Partner has no interest in
specific Partnership property.
2.2 NAME
The name of the Partnership shall be "Cornerstone Propane
Partners, L.P." The Partnership's business may be conducted under any
other name or names deemed necessary or appropriate by the Managing
General Partner in its sole discretion, including the name of the
Managing General Partner. The words "Limited Partnership," "L.P.,"
"Ltd." or similar words or letters shall be included in the
Partnership's name where necessary for the purpose of complying with
the laws of any jurisdiction that so requires. The Managing General
Partner in its discretion may change the name of the Partnership at
any time and from time to time and shall notify the Limited Partners
of such change in the next regular communication to the Limited
Partners.
2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE; OTHER
OFFICES
Unless and until changed by the Managing General Partner, the
registered office of the Partnership in the State of Delaware shall be
located at 1209 Orange Street, New Castle County, Wilmington, Delaware
19801, and the registered agent for service of process on the
Partnership in the State of Delaware at such registered office shall
be The Corporation Trust Company. The principal office of the
Partnership shall be located at 432 Westridge Drive, Watsonville,
California 95076 or such other place as the Managing General Partner
may from time to time designate by notice to the Limited Partners. The
Partnership may maintain offices at such other place or places within
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or outside the State of Delaware as the Managing General Partner deems
necessary or appropriate. The address of the Managing General Partner
shall be 432 Westridge Drive, Watsonville, California 95076 or such
other place as the Managing General Partner may from time to time
designate by notice to the Limited Partners.
2.4 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted by the
Partnership shall be to (a) serve as a limited partner in the
Operating Partnership and, in connection therewith, to exercise all
the rights and powers conferred upon the Partnership as a limited
partner in the Operating Partnership pursuant to the Operating
Partnership Agreement or otherwise, (b) engage directly in, or enter
into or form any corporation, partnership, joint venture, limited
liability company or other arrangement to engage indirectly in, any
business activity that the Operating Partnership is permitted to
engage in by the Operating Partnership Agreement and, in connection
therewith, to exercise all of the rights and powers conferred upon the
Partnership pursuant to the agreements relating to such business
activity, (c) engage directly in, or enter into or form any
corporation, partnership, joint venture, limited liability company or
other arrangement to engage indirectly in, any business activity that
is approved by the Managing General Partner and which lawfully may be
conducted by a limited partnership organized pursuant to the Delaware
Act and, in connection therewith, to exercise all of the rights and
powers conferred upon the Partnership pursuant to the agreements
relating to such business activity; provided, however, that the
Managing General Partner reasonably determines, as of the date of the
acquisition or commencement of such activity, that such activity
(i) generates "qualifying income" (as such term is defined pursuant to
Section 7704 of the Code) or (ii) enhances the operations of an
activity of the Operating Partnership or a Partnership activity that
generates qualifying income, and (d) do anything necessary or
appropriate to the foregoing, including the making of capital
contributions or loans to a Group Member. The Managing General Partner
has no obligation or duty to the Partnership, the Limited Partners, or
the Assignees to propose or approve, and in its discretion may decline
to propose or approve, the conduct by the Partnership of any business.
2.5 POWERS
The Partnership shall be empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and
business described in Section 2.4 and for the protection and benefit
of the Partnership.
2.6 POWER OF ATTORNEY
(a) The Special General Partner, each Limited Partner and each
Assignee hereby constitutes and appoints the Managing General Partner
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and, if a Liquidator shall have been selected pursuant to Section
12.3, the Liquidator, severally (and any successor to the Liquidator
by merger, transfer, assignment, election or otherwise) and each of
their authorized officers and attorneys-in-fact, as the case may be,
with full power of substitution, as his true and lawful agent and
attorney-in-fact, with full power and authority in his name, place and
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 hereof or thereof) that the Managing General Partner
or the Liquidator deems necessary or appropriate to form, qualify
or continue the existence or qualification of the Partnership as
a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware and in
all other jurisdictions in which the Partnership may conduct
business or own property; (B) all certificates, documents and
other instruments that the Managing General Partner or the
Liquidator deems necessary or appropriate to reflect, in
accordance with its terms, any amendment, change, modification or
restatement of this Agreement; (C) all certificates, documents
and other instruments (including conveyances and a certificate of
cancellation) that the Managing General Partner or the Liquidator
deems necessary or appropriate to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this
Agreement; (D) all certificates, documents and other instruments
relating to the admission, withdrawal, removal or substitution of
any Partner pursuant to, or other events described in,
Article IV, X, XI or XII; (E) all certificates, documents and
other instruments relating to the determination of the rights,
preferences and privileges of any class or series of Partnership
Securities issued pursuant to Section 5.6; and (F) all
certificates, documents and other instruments (including
agreements and a certificate of merger) relating to a merger or
consolidation of the Partnership pursuant to Article XIV; and
(ii) execute, swear to, acknowledge, deliver, file and
record all ballots, consents, approvals, waivers, certificates,
documents and other instruments necessary or appropriate, in the
discretion of the Managing General Partner or the Liquidator, to
make, evidence, give, confirm or ratify any vote, consent,
approval, agreement or other action that is made or given by the
Partners hereunder or is consistent with the terms of this
Agreement or is necessary or appropriate, in the discretion of
the Managing General Partner or the Liquidator, to effectuate the
terms or intent of this Agreement; provided, that when required
by Section 13.3 or any other provision of this Agreement that
establishes a percentage of the Limited Partners or of the
Limited Partners of any class or series required to take any
action, the Managing General Partner and the Liquidator may
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exercise the power of attorney made in this Section
2.6(a)(ii) only after the necessary vote, consent or approval of
the Limited Partners or of the Limited Partners of such class or
series, as applicable.
Nothing contained in this Section 2.6(a) shall be construed as
authorizing the Managing General Partner to amend this Agreement
except in accordance with Article XIII or as may be otherwise
expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive
and, to the maximum extent permitted by law, not be affected by the
subsequent death, incompetency, disability, incapacity, dissolution,
bankruptcy or termination of any Limited Partner or Assignee and the
transfer of all or any portion of such Special General Partner's,
Limited Partner's or Assignee's Partnership Interest and shall extend
to such Special General Partner's, Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such
Special General Partner, Limited Partner or Assignee hereby agrees to
be bound by any representation made by the Managing General Partner or
the Liquidator acting in good faith pursuant to such power of
attorney; and each such Special General Partner, Limited Partner or
Assignee, to the maximum extent permitted by law, hereby waives any
and all defenses that may be available to contest, negate or disaffirm
the action of the Managing General Partner or the Liquidator taken in
good faith under such power of attorney. Each Special General Partner,
Limited Partner or Assignee shall execute and deliver to the Managing
General Partner or the Liquidator, within 15 days after receipt of the
request therefor, such further designation, powers of attorney and
other instruments as the Managing General Partner or the Liquidator
deems necessary to effectuate this Agreement and the purposes of the
Partnership.
2.7 TERM
The term of the Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware Act
and shall continue in existence until the close of Partnership
business on December 31, 2086 or until the earlier dissolution of the
Partnership in accordance with the provisions of Article XII. The
existence of the Partnership as a separate legal entity shall continue
until the cancellation of the Certificate of Limited Partnership as
provided in the Delaware Act.
2.8 TITLE TO PARTNERSHIP ASSETS
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partner or Assignee, individually or
collectively, shall have any ownership interest in such Partnership
assets or any portion thereof. Title to any or all of the Partnership
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assets may be held in the name of the Partnership, a General Partner,
one or more of its Affiliates or one or more nominees, as the Managing
General Partner may determine. The General Partners hereby declare and
warrant that any Partnership assets for which record title is held in
the name of a General Partner or one or more of its Affiliates or one
or more nominees shall be held by such General Partner or such
Affiliate or nominee for the use and benefit of the Partnership in
accordance with the provisions of this Agreement; provided, however,
that such General Partner shall use reasonable efforts to cause record
title to such assets (other than those assets in respect of which the
Managing General Partner determines that the expense and difficulty of
conveyancing makes transfer of record title to the Partnership
impracticable) to be vested in the Partnership as soon as reasonably
practicable; provided, further, that, prior to the withdrawal or
removal of such General Partner or as soon thereafter as practicable,
such General Partner shall use reasonable efforts to effect the
transfer of record title to the Partnership and, prior to any such
transfer, will provide for the use of such assets in a manner
satisfactory to the Managing General Partner. All Partnership assets
shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which record title to such
Partnership assets is held.
ARTICLE III
RIGHTS OF LIMITED PARTNERS
3.1 LIMITATION OF LIABILITY
The Limited Partners and the Assignees shall have no liability
under this Agreement except as expressly provided in this Agreement or
the Delaware Act.
3.2 MANAGEMENT OF BUSINESS
No Limited Partner or Assignee, in its capacity as such, shall
participate in the operation, management or control (within the
meaning of the Delaware Act) of the Partnership's business, transact
any business in the Partnership's name or have the power to sign
documents for or otherwise bind the Partnership. Any action taken by
any Affiliate of the Managing General Partner or any officer,
director, employee, member, general partner, agent or trustee of the
Managing General Partner or any of its Affiliates, or any officers,
director, employee, member, general partner, agent or trustee of a
Group Member, in its capacity as such, shall not be deemed to be
participation in the control of the business of the Partnership by a
limited partner of the Partnership (within the meaning of
Section 17-303(a) of the Delaware Act) and shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or
Assignees under this Agreement.
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3.3 OUTSIDE ACTIVITIES OF THE LIMITED PARTNERS
Subject to the provisions of Section 7.5, which shall continue to
be applicable to the Persons referred to therein, regardless of
whether such Persons shall also be Limited Partners or Assignees, any
Limited Partner or Assignee shall be entitled to and may have business
interests and engage in business activities in addition to those
relating to the Partnership, including business interests and
activities in direct competition with the Partnership Group. Neither
the Partnership nor any of the other Partners or Assignees shall have
any rights by virtue of this Agreement in any business ventures of any
Limited Partner or Assignee.
3.4 RIGHTS OF LIMITED PARTNERS
(a) In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 3.4(b), each Limited
Partner shall have the right, for a purpose reasonably related to such
Limited Partner's interest as a limited partner in the Partnership,
upon reasonable written demand and at such Limited Partner's own
expense:
(i) to obtain true and full information regarding the
status of the business and financial condition of the
Partnership;
(ii) promptly after becoming available, to obtain a copy of
the Partnership's federal, state and local income tax returns for
each year;
(iii) to have furnished to him a current list of the
name and last known business, residence or mailing address of
each Partner;
(iv) to have furnished to him a copy of this Agreement and
the Certificate of Limited Partnership and all amendments
thereto, together with a copy of the executed copies of all
powers of attorney pursuant to which this Agreement, the
Certificate of Limited Partnership and all amendments thereto
have been executed;
(v) to obtain true and full information regarding the
amount of cash and a description and statement of the Net Agreed
Value of any other Capital Contribution by each Partner and which
each Partner has agreed to contribute in the future, and the date
on which each became a Partner; and
(vi) to obtain such other information regarding the affairs
of the Partnership as is just and reasonable.
(b) The General Partners may keep confidential from the Limited
Partners and Assignees, for such period of time as the Managing
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General Partner deems reasonable, (i) any information that the
Managing General Partner reasonably believes to be in the nature of
trade secrets or (ii) other information the disclosure of which the
Managing General Partner in good faith believes (A) is not in the best
interests of the Partnership Group, (B) could damage the Partnership
Group or (C) that any Group Member is required by law or by agreement
with any third party to keep confidential (other than agreements with
Affiliates of the Partnership the primary purpose of which is to
circumvent the obligations set forth in this Section 3.4).
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF
PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS
4.1 CERTIFICATES
Upon the Partnership's issuance of Common Units or Subordinated
Units to any Person, the Partnership shall issue one or more
Certificates in the name of such Person evidencing the number of such
Units being so issued. In addition, (a) upon a General Partner's
request, the Partnership shall issue to it one or more Certificates in
the name of such General Partner evidencing its interests in the
Partnership and (b) upon the request of any Person owning Incentive
Distribution Rights or any Partnership Securities, the Partnership
shall issue to such Person one or more certificates evidencing such
Incentive Distribution Rights or Partnership Securities. Certificates
shall be executed on behalf of the Partnership by the Chairman of the
Board, President or any Vice President and the Secretary or any
Assistant Secretary of the Managing General Partner. No Common Unit
Certificate shall be valid for any purpose until it has been
countersigned by the Transfer Agent. Subject to the requirements of
Section 6.7(b), the Partners holding Certificates evidencing
Subordinated Units may exchange such Certificates for Certificates
evidencing Common Units on or after the date on which such
Subordinated Units are converted into Common Units pursuant to the
terms of Section 5.8.
4.2 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES
(a) If any mutilated Certificate is surrendered to the Transfer
Agent, the appropriate officers of the Managing General Partner on
behalf of the Partnership shall execute, and the Transfer Agent shall
countersign and deliver in exchange therefor, a new Certificate
evidencing the same number and type of Partnership Securities as the
Certificate so surrendered.
(b) The appropriate officers of the Managing General Partner on
behalf of the Partnership shall execute and deliver, and the Transfer
Agent shall countersign a new Certificate in place of any Certificate
previously issued if the Record Holder of the Certificate:
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(i) makes proof by affidavit, in form and substance
satisfactory to the Partnership, that a previously issued
Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate before the
Partnership has notice that the Certificate has been acquired by
a purchaser for value in good faith and without notice of an
adverse claim;
(iii) if requested by the Partnership, delivers to the
Partnership a bond, in form and substance satisfactory to the
Partnership, with surety or sureties and with fixed or open
penalty as the Partnership may reasonably direct, in its sole
discretion, to indemnify the Partnership, the Partners, the
Managing General Partner and the Transfer Agent against any claim
that may be made on account of the alleged loss, destruction or
theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by
the Partnership.
If a Limited Partner or Assignee fails to notify the Partnership
within a reasonable time after he has notice of the loss, destruction
or theft of a Certificate, and a transfer of the Limited Partner
Interests represented by the Certificate is registered before the
Partnership, the Managing General Partner or the Transfer Agent
receives such notification, the Limited Partner or Assignee shall be
precluded from making any claim against the Partnership, the Managing
General Partner or the Transfer Agent for such transfer or for a new
Certificate.
(c) As a condition to the issuance of any new Certificate under
this Section 4.2, the Partnership may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees
and expenses of the Transfer Agent) reasonably connected therewith.
4.3 RECORD HOLDERS
The Partnership shall be entitled to recognize the Record Holder
as the Partner or Assignee with respect to any Partnership Interest
and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Partnership Interest on the part of
any other Person, regardless of whether the Partnership shall have
actual or other notice thereof, except as otherwise provided by law or
any applicable rule, regulation, guideline or requirement of any
National Securities Exchange on which such Partnership Interests are
listed for trading. Without limiting the foregoing, when a Person
(such as a broker, dealer, bank, trust company or clearing corporation
or an agent of any of the foregoing) is acting as nominee, agent or in
some other representative capacity for another Person in acquiring
and/or holding Partnership Interests, as between the Partnership on
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the one hand, and such other Persons on the other, such representative
Person (a) shall be the Partner or Assignee (as the case may be) of
record and beneficially, (b) must execute and deliver a Transfer
Application and (c) shall be bound by this Agreement and shall have
the rights and obligations of a Partner or Assignee (as the case may
be) hereunder and as, and to the extent, provided for herein.
4.4 TRANSFER GENERALLY
(a) The term "transfer," when used in this Agreement with
respect to a Partnership Interest, shall be deemed to refer to a
transaction by which a General Partner assigns its Partnership
Interest as a general partner in the Partnership to another Person who
becomes the General Partner, by which the holder of a Limited Partner
Interest assigns such Limited Partner Interest to another Person who
is or becomes a Limited Partner or an Assignee, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage,
exchange or any other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in
this Article IV. Any transfer or purported transfer of a Partnership
Interest not made in accordance with this Article IV shall be null and
void.
(c) Nothing contained in this Agreement shall be construed to
prevent a disposition by any shareholder of a General Partner of any
or all of the issued and outstanding capital stock of a General
Partner.
4.5 REGISTRATION AND TRANSFER OF LIMITED PARTNER INTERESTS
(a) The Partnership shall keep or cause to be kept on behalf of
the Partnership a register in which, subject to such reasonable
regulations as it may prescribe and subject to the provisions of
Section 4.5(b), the Partnership will provide for the registration and
transfer of Limited Partner Interests. The Transfer Agent is hereby
appointed registrar and transfer agent for the purpose of registering
Common Units and transfers of such Common Units as herein provided.
The Partnership shall not recognize transfers of Certificates
evidencing Limited Partner Interests unless such transfers are
effected in the manner described in this Section 4.5. Upon surrender
of a Certificate for registration of transfer of any Limited Partner
Interests evidenced by a Certificate, and subject to the provisions of
Section 4.5(b), the appropriate officers of the Managing General
Partner on behalf of the Partnership shall execute and deliver, and in
the case of Common Units, the Transfer Agent shall countersign and
deliver, in the name of the holder or the designated transferee or
transferees, as required pursuant to the holder's instructions, one or
more new Certificates evidencing the same aggregate number and type of
Limited Partner Interests as was evidenced by the Certificate so
surrendered.
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(b) Except as otherwise provided in Section 4.10, the
Partnership shall not recognize any transfer of Limited Partner
Interests until the Certificates evidencing such Limited Partner
Interests are surrendered for registration of transfer and such
Certificates are accompanied by a Transfer Application duly executed
by the transferee (or the transferee's attorney-in-fact duly
authorized in writing). No charge shall be imposed by the Partnership
for such transfer; provided, that as a condition to the issuance of
any new Certificate under this Section 4.5, the Partnership may
require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed with respect thereto.
(c) Limited Partner Interests may be transferred only in the
manner described in this Section 4.5. The transfer of any Limited
Partner Interests and the admission of any new Limited Partner shall
not constitute an amendment to this Agreement.
(d) Until admitted as a Substituted Limited Partner pursuant to
Section 10.2, the Record Holder of a Limited Partner Interest shall be
an Assignee in respect of such Limited Partner Interest. Limited
Partners may include custodians, nominees or any other individual or
entity in its own or any representative capacity.
(e) A transferee of a Limited Partner Interest who has completed
and delivered a Transfer Application shall be deemed to have
(i) requested admission as a Substituted Limited Partner, (ii) agreed
to comply with and be bound by and to have executed this Agreement,
(iii) represented and warranted that such transferee has the right,
power and authority and, if an individual, the capacity to enter into
this Agreement, (iv) granted the powers of attorney set forth in this
Agreement and (v) given the consents and approvals and made the
waivers contained in this Agreement.
(f) The General Partners and EESC shall have the right at any
time to transfer their Subordinated Units and Common Units (whether
issued upon conversion of the Subordinated Units or otherwise) to one
or more Persons.
4.6 TRANSFER OF A GENERAL PARTNER'S GENERAL PARTNER INTEREST
(a) Subject to Section 4.6(c) below, prior to December 31, 2006,
a General Partner shall not transfer all or any part of its
Partnership Interest as general partner in the Partnership to a Person
unless such transfer (i) has been approved by the prior written
consent or vote of the holders of at least a Unit Majority or (ii) is
of all, but not less than all, of its Partnership Interest as general
partner in the Partnership to (A) an Affiliate of such General Partner
or (B) another Person in connection with the merger or consolidation
of such General Partner with or into another Person or the transfer by
such General Partner of all or substantially all of its assets to
another Person.
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(b) Subject to Section 4.6(c) below, on or after December 31,
2006, a General Partner may transfer all or any of its Partnership
Interest as general partner in the Partnership without Unitholder
approval.
(c) Notwithstanding anything herein to the contrary, no transfer
by a General Partner of all or any part of its Partnership Interest as
general partner in the Partnership to another Person shall be
permitted unless (i) the transferee agrees to assume the rights and
duties of such General Partner under this Agreement and the Operating
Partnership Agreement and to be bound by the provisions of this
Agreement and the Operating Partnership Agreement, (ii) the
Partnership receives an Opinion of Counsel that such transfer would
not result in the loss of limited liability of any Limited Partner or
of any limited partner of the Operating Partnership or cause the
Partnership or the Operating Partnership to be treated as an
association taxable as a corporation or otherwise to be taxed as an
entity for federal income tax purposes (to the extent not already so
treated or taxed) and (iii) such transferee also agrees to purchase
all (or the appropriate portion thereof, if applicable) of the
partnership interest of such General Partner as the General Partner of
each other Group Member. In the case of a transfer pursuant to and in
compliance with this Section 4.6, the transferee or successor (as the
case may be) shall, subject to compliance with the terms of Section
10.3, be admitted to the Partnership as a General Partner immediately
prior to the transfer of the Partnership Interest, and the business of
the Partnership shall continue without dissolution.
4.7 RESTRICTION ON TRANSFER OF SPECIAL GENERAL PARTNER'S GENERAL
PARTNER INTEREST
Notwithstanding anything else herein contained, the Special
General Partner cannot transfer its general partner interest in the
Partnership without the approval of the Managing General Partner,
which approval is in the sole discretion of the Managing General
Partner.
4.8 TRANSFER OF INCENTIVE DISTRIBUTION RIGHTS
Prior to December 31, 2006, a holder of Incentive Distribution
Rights may transfer any or all of the Incentive Distribution Rights
held by such holder without any consent of the Unitholders (a) to an
Affiliate or (b) to another Person in connection with (i) the merger
or consolidation of such holder of Incentive Distribution Rights with
or into such other Person or (ii) the transfer by such holder of all
or substantially all of its assets to such other Person. Any other
transfer of the Incentive Distribution Rights prior to December 31,
2006, shall require the prior approval of holders of at least a Unit
Majority. On or after December 31, 2006, a General Partner may
transfer any or all of its Incentive Distribution Rights without
Unitholder approval. The Managing General Partner shall have the
authority (but shall not be required) to adopt such reasonable
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restrictions on the transfer of Incentive Distribution Rights and
requirements for registering the transfer of Incentive Distribution
Rights as the Managing General Partner, in its sole discretion, shall
determine are necessary or appropriate.
4.9 RESTRICTIONS ON TRANSFERS
(a) Except as provided in Section 4.9(d) below, but
notwithstanding the other provisions of this Article IV, no transfer
of any Partnership Interests shall be made if such transfer would
(i) violate the then applicable federal or state securities laws or
rules and regulations of the Commission, any state securities
commission or any other governmental authority with jurisdiction over
such transfer, (ii) terminate the existence or qualification of the
Partnership or the Operating Partnership under the laws of the
jurisdiction of its formation, or (iii) cause the Partnership or the
Operating Partnership to be treated as an association taxable as a
corporation or otherwise to be taxed as an entity for federal income
tax purposes (to the extent not already so treated or taxed).
(b) The Managing General Partner may impose restrictions on the
transfer of Partnership Interests if a subsequent Opinion of Counsel
determines that such restrictions are necessary to avoid a significant
risk of the Partnership or the Operating Partnership becoming taxable
as a corporation or otherwise to be taxed as an entity for federal
income tax purposes. The restrictions may be imposed by making such
amendments to this Agreement as the Managing General Partner may
determine to be necessary or appropriate to impose such restrictions;
provided, however, that any amendment that the Managing General
Partner believes, in the exercise of its reasonable discretion, could
result in the delisting or suspension of trading of any class of
Limited Partner Interests on the principal National Securities
Exchange on which such class of Limited Partner Interests is then
traded must be approved, prior to such amendment being effected, by
the holders of at least a majority of the Outstanding Limited Partner
Interests of such class.
(c) The transfer of a Subordinated Unit that has converted into
a Common Unit shall be subject to the restrictions imposed by Section
6.7(b).
(d) Nothing contained in this Article IV, or elsewhere in this
Agreement, shall preclude the settlement of any transactions involving
Partnership Interests entered into through the facilities of any
National Securities Exchange on which such Partnership Interests are
listed for trading.
4.10 CITIZENSHIP CERTIFICATES; NON-CITIZEN ASSIGNEES
(a) If any Group Member is or becomes subject to any federal,
state or local law or regulation that, in the reasonable determination
of the Managing General Partner, creates a substantial risk of
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cancellation or forfeiture of any property in which the Group Member
has an interest based on the nationality, citizenship or other related
status of a Limited Partner or Assignee, the Managing General Partner
may request any Partner or Assignee to furnish to the Managing General
Partner, within 30 days after receipt of such request, an executed
Citizenship Certification or such other information concerning his
nationality, citizenship or other related status (or, if the Limited
Partner or Assignee is a nominee holding for the account of another
Person, the nationality, citizenship or other related status of such
Person) as the Managing General Partner may request. If a Limited
Partner or Assignee fails to furnish to the Managing General Partner
within the aforementioned 30-day period such Citizenship Certification
or other requested information or if upon receipt of such Citizenship
Certification or other requested information the Managing General
Partner determines, with the advice of counsel, that a Limited Partner
or Assignee is not an Eligible Citizen, the Partnership Interests
owned by such Limited Partner or Assignee shall be subject to
redemption in accordance with the provisions of Section 4.11. In
addition, the Managing General Partner may require that the status of
any such Partner or Assignee be changed to that of a Non-citizen
Assignee and, thereupon, the Managing General Partner shall be
substituted for such Non-citizen Assignee as the Limited Partner in
respect of his Limited Partner Interests.
(b) The Managing General Partner shall, in exercising voting
rights in respect of Limited Partner Interests held by it on behalf of
Non-citizen Assignees, distribute the votes in the same ratios as the
votes of Partners (including without limitation the General Partners)
in respect of Limited Partner Interests other than those of
Non-citizen Assignees are cast, either for, against or abstaining as
to the matter.
(c) Upon dissolution of the Partnership, a Non-citizen Assignee
shall have no right to receive a distribution in kind pursuant to
Section 12.4 but shall be entitled to the cash equivalent thereof, and
the Partnership shall provide cash in exchange for an assignment of
the Non-citizen Assignee's share of the distribution in kind. Such
payment and assignment shall be treated for Partnership purposes as a
purchase by the Partnership from the Non-citizen Assignee of his
Limited Partner Interest (representing his right to receive his share
of such distribution in kind).
(d) At any time after he can and does certify that he has become
an Eligible Citizen, a Non-citizen Assignee may, upon application to
the Managing General Partner, request admission as a Substituted
Limited Partner with respect to any Limited Partner Interests of such
Non-citizen Assignee not redeemed pursuant to Section 4.11, and upon
his admission pursuant to Section 10.2, the Managing General Partner
shall cease to be deemed to be the Limited Partner in respect of the
Non-citizen Assignee's Limited Partner Interests.
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4.11 REDEMPTION OF PARTNERSHIP INTERESTS OF NON-CITIZEN ASSIGNEES
(a) If at any time a Limited Partner or Assignee fails to
furnish a Citizenship Certification or other information requested
within the 30-day period specified in Section 4.10(a), or if upon
receipt of such Citizenship Certification or other information the
Managing General Partner determines, with the advice of counsel, that
a Limited Partner or Assignee is not an Eligible Citizen, the
Partnership may, unless the Limited Partner or Assignee establishes to
the satisfaction of the Managing General Partner that such Limited
Partner or Assignee is an Eligible Citizen or has transferred his
Partnership Interests to a Person who is an Eligible Citizen and who
furnishes a Citizenship Certification to the Managing General Partner
prior to the date fixed for redemption as provided below, redeem the
Partnership Interest of such Limited Partner or Assignee as follows:
(i) The Managing General Partner shall, not later than the
30th day before the date fixed for redemption, give notice of
redemption to the Limited Partner or Assignee, at his last
address designated on the records of the Partnership or the
Transfer Agent, by registered or certified mail, postage prepaid.
The notice shall be deemed to have been given when so mailed. The
notice shall specify the Redeemable Interests, the date fixed for
redemption, the place of payment, that payment of the redemption
price will be made upon surrender of the Certificate evidencing
the Redeemable Interests and that on and after the date fixed for
redemption no further allocations or distributions to which the
Limited Partner or Assignee would otherwise be entitled in
respect of the Redeemable Interests will accrue or be made.
(ii) The aggregate redemption price for Redeemable Interests
shall be an amount equal to the Current Market Price (the date of
determination of which shall be the date fixed for redemption) of
Limited Partner Interests of the class to be so redeemed
multiplied by the number of Limited Partner Interests of each
such class included among the Redeemable Interests. The
redemption price shall be paid, in the discretion of the Managing
General Partner, in cash or by delivery of a promissory note of
the Partnership in the principal amount of the redemption price,
bearing interest at the rate of 10% annually and payable in three
equal annual installments of principal together with accrued
interest, commencing one year after the redemption date.
(iii) Upon surrender by or on behalf of the Limited
Partner or Assignee, at the place specified in the notice of
redemption, of the Certificate evidencing the Redeemable
Interests, duly endorsed in blank or accompanied by an assignment
duly executed in blank, the Limited Partner or Assignee or his
duly authorized representative shall be entitled to receive the
payment therefor.
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(iv) After the redemption date, Redeemable Interests shall
no longer constitute issued and Outstanding Limited Partner
Interests.
(b) The provisions of this Section 4.11 shall also be applicable
to Limited Partner Interests held by a Limited Partner or Assignee as
nominee of a Person determined to be other than an Eligible Citizen.
(c) Nothing in this Section 4.11 shall prevent the recipient of
a notice of redemption from transferring his Limited Partner Interest
before the redemption date if such transfer is otherwise permitted
under this Agreement. Upon receipt of notice of such a transfer, the
Managing General Partner shall withdraw the notice of redemption,
provided the transferee of such Limited Partner Interest certifies to
the satisfaction of the Managing General Partner in a Citizenship
Certification delivered in connection with the Transfer Application
that he is an Eligible Citizen. If the transferee fails to make such
certification, such redemption shall be effected from the transferee
on the original redemption date.
ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
5.1 ORGANIZATIONAL CONTRIBUTIONS
In connection with the formation of the Partnership under the
Delaware Act, the Managing General Partner made an initial Capital
Contribution to the Partnership in the amount of $10.00, for an
interest in the Partnership and has been admitted as the Managing
General Partner of the Partnership, and the Organizational Limited
Partner made an initial Capital Contribution to the Partnership in the
amount of $990.00 for an interest in the Partnership and has been
admitted as a Limited Partner of the Partnership. As of the Closing
Date, the interest of the Organizational Limited Partner shall be
redeemed as provided in the Contribution and Conveyance Agreement; the
initial Capital Contributions of each Partner shall thereupon be
refunded; and the Organizational Limited Partner shall cease to be a
Limited Partner of the Partnership. Ninety-nine percent of any
interest or other profit that may have resulted from the investment or
other use of such initial Capital Contributions shall be allocated and
distributed to the Organizational Limited Partner, and the balance
thereof shall be allocated and distributed to the Managing General
Partner.
5.2 CONTRIBUTIONS BY THE GENERAL PARTNERS AND THEIR AFFILIATES
(a) On the Closing Date and pursuant to the Contribution and
Conveyance Agreement, the Managing General Partner shall contribute to
the Partnership, as a Capital Contribution, all of its limited partner
interest in the Operating Partnership in exchange for (i) its .7686%
Partnership Interest as Managing General Partner of the Partnership,
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subject to all of the rights, privileges and duties of the Managing
General Partner under this Agreement, (ii) its Proportionate Share of
5,352,162 Subordinated Units and (iii) 7,686 Incentive Distribution
Rights.
(b) On the Closing Date and pursuant to the Contribution and
Conveyance Agreement, the Special General Partner shall contribute to
the Partnership, as a Capital Contribution, all of its limited partner
interest in the Operating Partnership in exchange for (i) its .2314%
Partnership Interest as Special General Partner of the Partnership ,
(ii) 1,610,942 Subordinated Units, and (iii) 2,314 Incentive
Distribution Rights.
(c) On the Closing Date and pursuant to the Contribution and
Conveyance Agreement, EESC shall contribute to the Partnership, as a
Capital Contribution, all of its limited partner interest in the
Operating Partnership in exchange for its Proportionate Share of
5,352,162 Subordinated Units.
(d) Upon the issuance of any additional Limited Partner
Partnership Interests by the Partnership (other than the issuance of
the Common Units issued in the Initial Offering or pursuant to the
Over-allotment Option), the General Partners shall be required to make
additional combined Capital Contributions equal to 1/99th of any
amount contributed to the Partnership in exchange for such Additional
Units. Each General Partner shall contribute its Pro Rata share of
such additional Capital Contributions. Except as set forth in the
immediately preceding sentence, Section 5.2(e) and Article XII, the
General Partners shall not be obligated to make any additional Capital
Contributions to the Partnership.
(e) Immediately after the exercise or lapse of the
Over-allotment Option, if any amount remains outstanding with respect
to the NPS Note after the payments described in Section 5.3(b) below,
the General Partners shall contribute, Pro Rata, cash to the
Partnership in an amount equal to the outstanding balance of the NPS
Note in exchange for the issuance to the General Partners, Pro Rata,
of an aggregate number of Subordinated Units equal to the quotient
obtained by dividing (i) such cash contribution to the Partnership by
(ii) the Issue Price per Initial Common Unit. The cash received by the
Partnership pursuant to this Section 5.2(e) shall be used to satisfy
the NPS Note.
5.3 CONTRIBUTIONS BY INITIAL LIMITED PARTNERS
(a) On the Closing Date and pursuant to the Underwriting
Agreement, each Underwriter shall contribute to the Partnership cash
in an amount equal to the Issue Price per Initial Common Unit,
multiplied by the number of Common Units specified in the Underwriting
Agreement to be purchased by such Underwriter at the Closing Date. In
exchange for such Capital Contributions by the Underwriters, the
Partnership shall issue Common Units to each Underwriter on whose
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behalf such Capital Contribution is made in an amount equal to the
quotient obtained by dividing (i) the cash contribution to the
Partnership by or on behalf of such Underwriter by (ii) the Issue
Price per Initial Common Unit.
(b) Upon the exercise of the Over-allotment Option, each
Underwriter shall contribute to the Partnership cash in an amount
equal to the Issue Price per Initial Common Unit, multiplied by the
number of Common Units specified in the Underwriting Agreement to be
purchased by such Underwriter at the Option Closing Date. In exchange
for such Capital Contributions by the Underwriters, the Partnership
shall issue Common Units to each Underwriter on whose behalf such
Capital Contribution is made in an amount equal to the quotient
obtained by dividing (i) the cash contributions to the Partnership by
or on behalf of such Underwriter by (ii) the Issue Price per Initial
Common Unit.
Notwithstanding anything else herein contained, but subject to
Section 17-607 of the Delaware Act, the proceeds received by the
Partnership from the issuance of Common Units upon the exercise of the
Over-allotment Option will be utilized: first, to pay any underwriting
commissions and expenses relating to the exercise of the
Over-allotment Option; second, to satisfy the NPS Note; and third, the
remaining proceeds (if any) will be distributed to the General
Partners, Pro Rata, to redeem from the General Partners, Pro Rata, an
aggregate number of Subordinated Units equal to the quotient obtained
by dividing (i) such remaining proceeds by (ii) the Issue Price per
Initial Common Unit. Such redemption shall be a partial reimbursement
for capital expenditures incurred by the General Partners within two
years preceding the Closing Date with respect to Assets they
contributed to the Partnership Group.
(c) No Limited Partner Partnership Interests will be issued or
issuable as of or at the Closing Date other than (i) the Common Units
issuable pursuant to subparagraph (a) hereof in aggregate number equal
to 8,540,000, (ii) the "Additional Units" as such term is defined in
the Underwriting Agreement in aggregate number up to 1,281,000
issuable upon exercise of the Over-allotment Option pursuant to
subparagraph (b) hereof, (iii) the 7,878,619 Subordinated Units
issuable to the General Partners and EESC pursuant to Section 5.2
hereof, and (iv) the 10,000 Incentive Distribution Rights issuable to
the General Partners pursuant to Section 5.2 hereof.
5.4 INTEREST AND WITHDRAWAL
No interest shall be paid by the Partnership on Capital
Contributions. No Partner or Assignee shall be entitled to the
withdrawal or return of its Capital Contribution, except to the
extent, if any, that distributions made pursuant to this Agreement or
upon termination of the Partnership may be considered as such by law
and then only to the extent provided for in this Agreement. Except to
the extent expressly provided in this Agreement, no Partner or
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Assignee shall have priority over any other Partner or Assignee either
as to the return of Capital Contributions or as to profits, losses or
distributions. Any such return shall be a compromise to which all
Partners and Assignees agree within the meaning of 17-502(b) of the
Delaware Act.
5.5 CAPITAL ACCOUNTS
(a) The Partnership shall maintain for each Partner (or a
beneficial owner of Partnership Interests held by a nominee in any
case in which the nominee has furnished the identity of such owner to
the Partnership in accordance with Section 6031(c) of the Code or any
other method acceptable to the Managing General Partner in its sole
discretion) owning a Partnership Interest a separate Capital Account
with respect to such Partnership Interest in accordance with the rules
of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account
shall be increased by (i) the amount of all Capital Contributions made
to the Partnership with respect to such Partnership Interest pursuant
to this Agreement and (ii) all items of Partnership income and gain
(including, without limitation, income and gain exempt from tax)
computed in accordance with Section 5.5(b) and allocated with respect
to such Partnership Interest pursuant to Section 6.1, and decreased by
(x) the amount of cash or Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such
Partnership Interest pursuant to this Agreement and (y) all items of
Partnership deduction and loss computed in accordance with
Section 5.5(b) and allocated with respect to such Partnership Interest
pursuant to Section 6.1.
(b) For purposes of computing the amount of any item of income,
gain, loss or deduction which is to be allocated pursuant to
Article VI and is to be reflected in the Partners' Capital Accounts,
the determination, recognition and classification of any such item
shall be the same as its determination, recognition and classification
for federal income tax purposes (including, without limitation, any
method of depreciation, cost recovery or amortization used for that
purpose), provided, that:
(i) Solely for purposes of this Section 5.5, the
Partnership shall be treated as owning directly its proportionate
share (as determined by the Managing General Partner based upon
the provisions of the Operating Partnership Agreement) of all
property owned by the Operating Partnership.
(ii) All fees and other expenses incurred by the Partnership
to promote the sale of (or to sell) a Partnership Interest that
can neither be deducted nor amortized under Section 709 of the
Code, if any, shall, for purposes of Capital Account maintenance,
be treated as an item of deduction at the time such fees and
other expenses are incurred and shall be allocated among the
Partners pursuant to Section 6.1.
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(iii) Except as otherwise provided in Treasury
Regulation Section 1.704-1(b)(2)(iv)(m), the computation of all
items of income, gain, loss and deduction shall be made without
regard to any election under Section 754 of the Code which may be
made by the Partnership and, as to those items described in
Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without regard
to the fact that such items are not includable in gross income or
are neither currently deductible nor capitalized for federal
income tax purposes. To the extent an adjustment to the adjusted
tax basis of any Partnership asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment in
the Capital Accounts shall be treated as an item of gain or loss.
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if
the adjusted basis of such property as of such date of
disposition were equal in amount to the Partnership's Carrying
Value with respect to such property as of such date.
(v) In accordance with the requirements of Section 704(b)
of the Code, any deductions for depreciation, cost recovery or
amortization attributable to any Contributed Property shall be
determined as if the adjusted basis of such property on the date
it was acquired by the Partnership were equal to the Agreed Value
of such property. Upon an adjustment pursuant to Section 5.5(d)
to the Carrying Value of any Partnership property subject to
depreciation, cost recovery or amortization, any further
deductions for such depreciation, cost recovery or amortization
attributable to such property shall be determined (A) as if the
adjusted basis of such property were equal to the Carrying Value
of such property immediately following such adjustment and
(B) using a rate of depreciation, cost recovery or amortization
derived from the same method and useful life (or, if applicable,
the remaining useful life) as is applied for federal income tax
purposes; provided, however, that, if the asset has a zero
adjusted basis for federal income tax purposes, depreciation,
cost recovery or amortization deductions shall be determined
using any reasonable method that the Managing General Partner may
adopt.
(vi) If the Partnership's adjusted basis in a depreciable or
cost recovery property is reduced for federal income tax purposes
pursuant to Section 48(q)(1) or 48(q)(3) of the Code, the amount
of such reduction shall, solely for purposes hereof, be deemed to
be an additional depreciation or cost recovery deduction in the
year such property is placed in service and shall be allocated
among the Partners pursuant to Section 6.1. Any restoration of
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such basis pursuant to Section 48(q)(2) of the Code shall, to the
extent possible, be allocated in the same manner to the Partners
to whom such deemed deduction was allocated.
(c) (i) A transferee of a Partnership Interest shall succeed to
a pro rata portion of the Capital Account of the transferor relating
to the Partnership Interest so transferred; provided, however, that,
if the transfer causes a termination of the Partnership under
Section 708(b)(1)(B) of the Code, the Partnership's properties and
liabilities shall be deemed (i) to have been distributed in
liquidation of the Partnership to the Partners (including any
transferee of a Partnership Interest that is a party to the transfer
causing such termination) pursuant to Section 12.4 (after adjusting
the balance of the Capital Accounts of the Partners as provided in
Section 5.5(d)(ii)) and recontributed by such Partners in
reconstitution of the Partnership or (ii) in the event of a
termination of the Partnership that occurs after the finalization of
Proposed Treasury Regulation Section 1.704-1(b)(1)(iv), to have been
contributed to a new partnership which will be deemed to be a
continuation of, and successor to, the Partnership and the Partnership
will be deemed to make liquidating distributions of the interests in
this new partnership to the Partners (including any transferee of a
Partnership Interest that is a party to the transfer causing such
termination) pursuant to Section 12.4 (after adjusting the balance of
the Capital Accounts of the Partners as provided in
Section 5.5(d)(ii)). Any such deemed distribution and contribution, in
the case of a characterization under clause (i) of the preceding
sentence, or any such deemed contribution and distribution, in the
case of a characterization under clause (ii) of the preceding
sentence, shall be treated as an actual contribution and distribution
for purposes of this Section 5.5. In such event, the Carrying Values
of the Partnership's properties shall be adjusted immediately prior to
such deemed distribution and contribution, or deemed contribution and
distribution, pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv) and this Section 5.5 and such Carrying
Values shall then constitute the Agreed Values of such properties upon
such deemed contribution to the new partnership. In either case, the
Capital Accounts of the new partnership that results under the
applicable characterization shall be maintained in accordance with the
principles of this Section 5.5.
(ii) Immediately prior to the transfer of a Subordinated Unit or
of a Subordinated Unit that has converted into a Common Unit pursuant
to Section 5.8 by a holder thereof (other than a transfer to an
Affiliate unless the Managing General Partner elects to have this
subparagraph 5.5(c)(ii) apply), the Capital Account maintained for
such Person with respect to its Subordinated Units or converted
Subordinated Units will (A) first, be allocated to the Subordinated
Units or converted Subordinated Units to be transferred in an amount
equal to the product of (x) the number of such Subordinated Units or
converted Subordinated Units to be transferred and (y) the Per Unit
Capital Amount for a Common Unit, and (B) second, any remaining
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balance in such Capital Account will be retained by the transferor,
regardless of whether it has retained any Subordinated Units or
converted Subordinated Units. Following any such allocation, the
transferor's Capital Account, if any, maintained with respect to the
retained Subordinated Units or converted Subordinated Units, if any,
will have a balance equal to the amount allocated under clause (B)
hereinabove, and the transferee's Capital Account established with
respect to the transferred Subordinated Units or converted
Subordinated Units will have a balance equal to the amount allocated
under clause (A) hereinabove.
(d) (i) In accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership
Interests for cash or Contributed Property or the conversion of the
General Partners' Combined Interest to Common Units pursuant to
Section 11.3(b), the Capital Account of all Partners and the Carrying
Value of each Partnership property immediately prior to such issuance
shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual
sale of each such property immediately prior to such issuance and had
been allocated to the Partners at such time pursuant to Section 6.1 in
the same manner as any item of gain or loss actually recognized during
such period would have been allocated. In determining such Unrealized
Gain or Unrealized Loss, the aggregate cash amount and fair market
value of all Partnership assets (including, without limitation, cash
or cash equivalents) immediately prior to the issuance of additional
Partnership Interests shall be determined by the Managing General
Partner using such reasonable method of valuation as it may adopt;
provided, however, that the Managing General Partner, in arriving at
such valuation, must take fully into account the fair market value of
the Partnership Interests of all Partners at such time. The Managing
General Partner shall allocate such aggregate value among the assets
of the Partnership (in such manner as it determines in its discretion
to be reasonable) to arrive at a fair market value for individual
properties.
(ii) In accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), immediately prior to any actual or
deemed distribution to a Partner of any Partnership property (other
than a distribution of cash that is not in redemption or retirement of
a Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of all Partnership property shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized Gain
or Unrealized Loss had been recognized in a sale of such property
immediately prior to such distribution for an amount equal to its fair
market value, and had been allocated to the Partners, at such time,
pursuant to Section 6.1 in the same manner as any item of gain or loss
actually recognized during such period would have been allocated. In
determining such Unrealized Gain or Unrealized Loss the aggregate cash
amount and fair market value of all Partnership assets (including,
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without limitation, cash or cash equivalents) immediately prior to a
distribution shall (A) in the case of an actual distribution which is
not made pursuant to Section 12.4 or in the case of a deemed
contribution and/or distribution occurring as a result of a
termination of the Partnership pursuant to Section 708 of the Code, be
determined and allocated in the same manner as that provided in
Section 5.5(d)(i) or (B) in the case of a liquidating distribution
pursuant to Section 12.4, be determined and allocated by the
Liquidator using such reasonable method of valuation as it may adopt.
5.6 ISSUANCES OF ADDITIONAL PARTNERSHIP SECURITIES
(a) Subject to Section 5.7, the Partnership may issue additional
Partnership Securities and options, rights, warrants and appreciation
rights relating to the Partnership Securities for any Partnership
purpose at any time and from time to time to such Persons for such
consideration and on such terms and conditions as shall be established
by the Managing General Partner in its sole discretion, all without
the approval of any Limited Partners.
(b) Each additional Partnership Security authorized to be issued
by the Partnership pursuant to Section 5.6(a) may be issued in one or
more classes, or one or more series of any such classes, with such
designations, preferences, rights, powers and duties (which may be
senior to existing classes and series of Partnership Securities), as
shall be fixed by the Managing General Partner in the exercise of its
sole discretion, including (i) the right to share Partnership profits
and losses or items thereof; (ii) the right to share in Partnership
distributions; (iii) the rights upon dissolution and liquidation of
the Partnership; (iv) whether, and the terms and conditions upon
which, the Partnership may redeem the Partnership Security;
(v) whether such Partnership Security is issued with the privilege of
conversion or exchange and, if so, the terms and conditions of such
conversion or exchange; (vi) the terms and conditions upon which each
Partnership Security will be issued, evidenced by certificates and
assigned or transferred; and (vii) the right, if any, of each such
Partnership Security to vote on Partnership matters, including matters
relating to the relative rights, preferences and privileges of such
Partnership Security.
(c) The Managing General Partner is hereby authorized and
directed to take all actions that it deems necessary or appropriate in
connection with (i) each issuance of Partnership Securities and
options, rights, warrants and appreciation rights relating to
Partnership Securities pursuant to this Section 5.6, (ii) the
conversion of a general partner interest and Incentive Distribution
Rights into Units pursuant to the terms of this Agreement, (iii) the
admission of Additional Limited Partners and (iv) all additional
issuances of Partnership Securities. The Managing General Partner is
further authorized and directed to specify the relative rights, powers
and duties of the holders of the Units or other Partnership Securities
being so issued. The Managing General Partner shall do all things
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necessary to comply with the Delaware Act and is authorized and
directed to do all things it deems to be necessary or advisable in
connection with any future issuance of Partnership Securities or in
connection with the conversion of a general partner interest into
Units pursuant to the terms of this Agreement, including compliance
with any statute, rule, regulation or guideline of any federal, state
or other governmental agency or any National Securities Exchange on
which the Units or other Partnership Securities are listed for
trading.
5.7 LIMITATIONS ON ISSUANCE OF ADDITIONAL PARTNERSHIP SECURITIES
The issuance of Partnership Securities pursuant to Section 5.6
shall be subject to the following restrictions and limitations:
(a) During the Subordination Period, the Partnership shall not
issue (and shall not issue any options, rights, warrants or
appreciation rights relating to) an aggregate of more than 4,270,000
additional Parity Units without the prior approval of the holders of a
Unit Majority. In applying this limitation, there shall be excluded
Common Units and other Parity Units issued (A) in connection with the
exercise of the Over-allotment Option, (B) in accordance with Sections
5.7(b) and 5.7(c), (C) upon conversion of Subordinated Units pursuant
to Section 5.8, (D) upon conversion of general partner interests and
Incentive Distribution Rights pursuant to Section 11.3(b),(E) pursuant
to the employee benefit plans of the Managing General Partner, the
Partnership or any other Group Member and (F) in the event of a
combination or subdivision of Common Units.
(b) The Partnership may also issue an unlimited number of Parity
Units, prior to the end of the Subordination Period and without the
prior approval of the Unitholders, if such issuance occurs (i) in
connection with an Acquisition or a Capital Improvement or (ii) within
365 days of, and the net proceeds from such issuance are used to repay
debt incurred in connection with, an Acquisition or a Capital
Improvement, in each case where such Acquisition or Capital
Improvement involves assets that, if acquired by the Partnership as of
the date that is one year prior to the first day of the Quarter in
which such Acquisition is to be consummated or such Capital
Improvement is to be completed, would have resulted in an increase in:
(A) the amount of Adjusted Operating Surplus generated by
the Partnership on a per-Unit basis (for all Outstanding Units)
with respect to each of the four most recently completed Quarters
(on a pro-forma basis as described below) as compared to
(B) the actual amount of Adjusted Operating Surplus
generated by the Partnership on a per-Unit basis (for all
Outstanding Units) (excluding Adjusted Operating Surplus
attributable to the Acquisition or Capital Improvement) with
respect to each of such four most recently completed Quarters.
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If the issuance of Parity Units with respect to an
Acquisition or Capital Improvement occurs within the first four
full Quarters after the Closing Date, then Adjusted Operating
Surplus as used in clauses (A) (subject to the succeeding
sentence) and (B) above shall be calculated (i) for each Quarter,
if any, that commenced after the Closing Date for which actual
results of operations are available, based on the actual Adjusted
Operating Surplus of the Partnership generated with respect to
such Quarter, and (ii) for each other Quarter, on a pro forma
basis consistent with the procedure, as applicable, set forth in
Appendix D to the Registration Statement. Furthermore, the amount
in clause (A) shall be determined on a pro forma basis assuming
that (1) all of the Parity Units or Partnership Securities to be
issued in connection with or within 365 days of such Acquisition
or Capital Improvement had been issued and outstanding, (2) all
indebtedness for borrowed money to be incurred or assumed in
connection with such Acquisition or Capital Improvement (other
than any such indebtedness that is to be repaid with the proceeds
of such issuance of Parity Units) had been incurred or assumed,
in each case as of the commencement of such four-Quarter period,
(3) the personnel expenses that would have been incurred by the
Partnership in the operation of the acquired assets are the
personnel expenses for employees to be retained by the
Partnership in the operation of the acquired assets, and (4) the
non-personnel costs and expenses are computed on the same basis
as those incurred by the Partnership in the operation of the
Partnership's business at similarly situated Partnership
facilities.
(c) The Partnership may also issue an unlimited number of Parity
Units, prior to the end of the Subordination Period and without the
approval of the Unitholders, if the proceeds from such issuance are
used exclusively to repay up to $75 million of indebtedness of a Group
Member where the aggregate amount of distributions that would have
been paid with respect to such newly issued Units or Partnership
Securities, plus the related distributions on the general partner
interests in the Partnership and the Operating Partnership in respect
of the four-Quarter period ending prior to the first day of the
Quarter in which the issuance is to be consummated (assuming such
additional Units or Partnership Securities had been Outstanding
throughout such period and that distributions equal to the
distributions that were actually paid on the Outstanding Units during
the period were paid on such additional Units or Partnership
Securities) did not exceed the interest costs actually incurred during
such period on the indebtedness that is to be repaid (or, if such
indebtedness was not outstanding throughout the entire period, would
have been incurred had such indebtedness been outstanding for the
entire period).
(d) During the Subordination Period, the Partnership shall not
issue (and shall not issue any options, rights, warrants or
appreciation rights relating to) additional Partnership Securities
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having rights to distributions or in liquidation ranking prior or
senior to the Common Units, without the prior approval of the holders
of a Unit Majority.
(e) No fractional Units shall be issued by the Partnership.
5.8 CONVERSION OF SUBORDINATED UNITS
(a) A total of one-quarter of the Outstanding Subordinated Units
(determined upon the exercise or expiration of the Over-allotment
Option after taking into account the redemption of Subordinated Units
pursuant to Section 5.3 or the issuance of additional Subordinated
Units pursuant to Section 5.2) will convert into Common Units on a
one-for-one basis on the first day after the Record Date for
distribution in respect of any Quarter ending on or after December 31,
1999, in respect of which:
(i) distributions under Section 6.4 in respect of all
Outstanding Common Units and Subordinated Units with respect to
each of the three consecutive, non-overlapping four-Quarter
periods immediately preceding such date equaled or exceeded the
sum of the Minimum Quarterly Distribution on all of the
Outstanding Common Units and Subordinated Units during such
periods;
(ii) the Adjusted Operating Surplus generated during each of
the two consecutive, non-overlapping four-Quarter periods
immediately preceding such date equaled or exceeded the sum of
the Minimum Quarterly Distribution on all of the Outstanding
Common Units and Subordinated Units, plus the related
distribution on the general partner interests in the Partnership
and in the Operating Partnership, during such periods; and
(iii) the Cumulative Common Unit Arrearage on all of the
Common Units is zero.
(b) An additional one-quarter of the Outstanding Subordinated
Units (determined upon the exercise or expiration of the
Over-allotment Option after taking into account the redemption of
Subordinated Units pursuant to Section 5.3 or the issuance of
additional Subordinated Units pursuant to Section 5.2) will convert
into Common Units on a one-for-one basis on the first day after the
Record Date for distribution in respect of any Quarter ending on or
after December 31, 2000, in respect of which:
(i) distributions under Section 6.4 in respect of all
Outstanding Common Units and Subordinated Units with respect to
each of the three consecutive, non-overlapping four-Quarter
periods immediately preceding such date equaled or exceeded the
sum of the Minimum Quarterly Distribution on all of the
Outstanding Common Units and Subordinated Units during such
periods;
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(ii) the Adjusted Operating Surplus generated during each of
the two consecutive, non-overlapping four-Quarter periods
immediately preceding such date equaled or exceeded the sum of
the Minimum Quarterly Distribution on all of the Outstanding
Common Units and Subordinated Units, plus the related
distribution on the general partner interests in the Partnership
and in the Operating Partnership, during such periods; and
(iii) the Cumulative Common Unit Arrearage on all of the
Common Units is zero;
provided, however, that the conversion of Subordinated Units pursuant
to this Section 5.8(b) may not occur until at least one year following
the conversion of Subordinated Units pursuant to Section 5.8(a).
(c) In the event that less than all of the Outstanding
Subordinated Units shall convert into Common Units pursuant to
Section 5.8(a) or 5.8(b) at a time when there shall be more than one
holder of Subordinated Units, then, unless all of the holders of
Subordinated Units shall agree to a different allocation, the
Subordinated Units that are to be converted into Common Units shall be
allocated among the holders of Subordinated Units pro rata based on
the number of Subordinated Units held by each such holder.
(d) Any Subordinated Units that are not converted into Common
Units pursuant to Sections 5.8(a) and (b) shall convert into Common
Units on a one-for-one basis on the first day following the Record
Date for distributions in respect of the final Quarter of the
Subordination Period.
(e) Notwithstanding any other provision of this Agreement, all
the then Outstanding Subordinated Units will automatically convert
into Common Units on a one-for-one basis as set forth in, and pursuant
to the terms of, Section 11.4.
(f) A Subordinated Unit that has converted into a Common Unit
shall be subject to the provisions of Section 6.7(b).
5.9 LIMITED PREEMPTIVE RIGHT
Except as provided in this Section 5.9 and in Section 5.2, no
Person shall have any preemptive, preferential or other similar right
with respect to the issuance of any Partnership Security, whether
unissued, held in the treasury or hereafter created. The Managing
General Partner shall have the right, which it may from time to time
assign in whole or in part to any of its Affiliates, to purchase
Partnership Securities from the Partnership whenever, and on the same
terms that, the Partnership issues Partnership Securities to Persons
other than the General Partners and their Affiliates, to the extent
necessary to maintain the Percentage Interests of the General Partners
and their Affiliates equal to that which existed immediately prior to
the issuance of such Partnership Securities.
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5.10 SPLITS AND COMBINATION
(a) Subject to Sections 5.10(d), 6.6 and 6.9 (dealing with
adjustments of distribution levels), the Partnership may make a Pro
Rata distribution of Partnership Securities to all Record Holders or
may effect a subdivision or combination of Partnership Securities so
long as, after any such event, each Partner shall have the same
Percentage Interest in the Partnership as before such event, and any
amounts calculated on a per Unit basis (including any Common Unit
Arrearage or Cumulative Common Unit Arrearage) or stated as a number
of Units (including the number of Subordinated Units that may convert
prior to the end of the Subordination Period and the number of
additional Parity Units that may be issued pursuant to Section 5.7
without a Unitholder vote) are proportionately adjusted retroactive to
the beginning of the Partnership.
(b) Whenever such a distribution, subdivision or combination of
Partnership Securities is declared, the Managing General Partner shall
select a Record Date as of which the distribution, subdivision or
combination shall be effective and shall send notice thereof at least
20 days prior to such Record Date to each Record Holder as of a date
not less than 10 days prior to the date of such notice. The Managing
General Partner also may cause a firm of independent public
accountants selected by it to calculate the number of Partnership
Securities to be held by each Record Holder after giving effect to
such distribution, subdivision or combination. The Managing General
Partner shall be entitled to rely on any certificate provided by such
firm as conclusive evidence of the accuracy of such calculation.
(c) Promptly following any such distribution, subdivision or
combination, the Partnership may issue Certificates to the Record
Holders of Partnership Securities as of the applicable Record Date
representing the new number of Partnership Securities held by such
Record Holders, or the Managing General Partner may adopt such other
procedures as it may deem appropriate to reflect such changes. If any
such combination results in a smaller total number of Partnership
Securities Outstanding, the Partnership shall require, as a condition
to the delivery to a Record Holder of such new Certificate, the
surrender of any Certificate held by such Record Holder immediately
prior to such Record Date.
(d) The Partnership shall not issue fractional Units upon any
distribution, subdivision or combination of Units. If a distribution,
subdivision or combination of Units would result in the issuance of
fractional Units but for the provisions of Section 5.7(e) and this
Section 5.10(d), each fractional Unit shall be rounded to the nearest
whole Unit (and a 0.5 Unit shall be rounded to the next higher Unit).
5.11 FULLY PAID AND NON-ASSESSABLE NATURE OF LIMITED PARTNER INTERESTS
All Limited Partner Interests issued pursuant to, and in
accordance with the requirements of, this Article V shall be fully
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paid and non-assessable Limited Partner Interests in the Partnership,
except as such non-assessability may be affected by Section 17-607 of
the Delaware Act.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES
For purposes of maintaining the Capital Accounts and in
determining the rights of the Partners among themselves, the
Partnership's items of income, gain, loss and deduction (computed in
accordance with Section 5.5(b)) shall be allocated among the Partners
in each taxable year (or portion thereof) as provided herein below.
(a) NET INCOME. After giving effect to the special allocations set
forth in Section 6.1(d), Net Income for each taxable year and all
items of income, gain, loss and deduction taken into account in
computing Net Income for such taxable year shall be allocated as
follows:
(i) First, 100% to the General Partners in proportion to
the aggregate Net Losses allocated to the General Partners
pursuant to Section 6.1(b)(iii) for all previous taxable years
until the aggregate Net Income allocated to the General Partners
pursuant to this Section 6.1(a)(i) for the current taxable year
and all previous taxable years is equal to the aggregate Net
Losses allocated to the General Partners pursuant to
Section 6.1(b)(iii) for all previous taxable years;
(ii) Second, 1% to the General Partners in proportion to the
aggregate Net Losses allocated to the General Partners pursuant
to Section 6.1(b)(ii) for all previous taxable years and 99% to
the Unitholders, in accordance with their respective Percentage
Interests, until the aggregate Net Income allocated to such
Partners pursuant to this Section 6.1(a)(ii) for the current
taxable year and all previous taxable years is equal to the
aggregate Net Losses allocated to such Partners pursuant to
Section 6.1(b)(ii) for all previous taxable years; and
(iii) Third, the balance, if any, 100% to the General
Partners, Pro Rata, and the Unitholders in accordance with their
respective Percentage Interests.
(b) NET LOSSES. After giving effect to the special allocations set
forth in Section 6.1(d), Net Losses for each taxable period and all
items of income, gain, loss and deduction taken into account in
computing Net Losses for such taxable period shall be allocated as
follows:
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(i) First, 1% to the General Partners, Pro Rata, and 99% to
the Unitholders, in accordance with their respective Percentage
Interests, until the aggregate Net Losses allocated pursuant to
this Section 6.1(b)(i) for the current taxable year and all
previous taxable years is equal to the aggregate Net Income
allocated to such Partners pursuant to Section 6.1(a)(iii) for
all previous taxable years, provided that the Net Losses shall
not be allocated pursuant to this Section 6.1(b)(i) to the extent
that such allocation would cause any Unitholder to have a deficit
balance in its Adjusted Capital Account at the end of such
taxable year (or increase any existing deficit balance in its
Adjusted Capital Account);
(ii) Second, 1% to the General Partners, Pro Rata, and 99%
to the Unitholders in accordance with their respective Percentage
Interests; provided, that Net Losses shall not be allocated
pursuant to this Section 6.1(b)(ii) to the extent that such
allocation would cause any Unitholder to have a deficit balance
in its Adjusted Capital Account at the end of such taxable year
(or increase any existing deficit balance in its Adjusted Capital
Account);
(iii) Third, the balance, if any, 100% to the General
Partners, Pro Rata.
(c) NET TERMINATION GAINS AND LOSSES. After giving effect to the
special allocations set forth in Section 6.1(d), all items of income,
gain, loss and deduction taken into account in computing Net
Termination Gain or Net Termination Loss for such taxable period shall
be allocated in the same manner as such Net Termination Gain or Net
Termination Loss is allocated hereunder. All allocations under this
Section 6.1(c) shall be made after Capital Account balances have been
adjusted by all other allocations provided under this Section 6.1 and
after all distributions of Available Cash provided under Sections 6.4
and 6.5 have been made; provided, however, that solely for purposes of
this Section 6.1(c), Capital Accounts shall not be adjusted for
distributions made pursuant to Section 12.4.
(i) If a Net Termination Gain is recognized (or deemed
recognized pursuant to Section 5.5(d)), such Net Termination Gain
shall be allocated among the Partners in the following manner (and the
Capital Accounts of the Partners shall be increased by the amount so
allocated in each of the following subclauses, in the order listed,
before an allocation is made pursuant to the next succeeding
subclause):
(A) First, to each Partner having a deficit balance in its
Capital Account, in the proportion that such deficit balance
bears to the total deficit balances in the Capital Accounts of
all Partners, until each such Partner has been allocated Net
Termination Gain equal to any such deficit balance in its Capital
Account;
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(B) Second, 99% to all Unitholders holding Common Units, in
proportion to their relative Percentage Interests, and 1% to the
General Partners, Pro Rata, until the Capital Account in respect
of each Common Unit then Outstanding is equal to the sum of
(1) its Unrecovered Capital plus (2) the Minimum Quarterly
Distribution for the Quarter during which the Liquidation Date
occurs, (the amount determined pursuant to this clause (2) is
hereinafter defined as the "Unpaid MQD") plus (3) any then
existing Cumulative Common Unit Arrearage;
(C) Third, if such Net Termination Gain is recognized (or
is deemed to be recognized) prior to the expiration of the
Subordination Period, 99% to all Unitholders holding Subordinated
Units, in proportion to their relative Percentage Interests, and
1% to the General Partners, Pro Rata, until the Capital Account
in respect of each Subordinated Unit then Outstanding equals the
sum of (1) its Unrecovered Capital, determined for the taxable
year (or portion thereof) to which this allocation of gain
relates, plus (2) the Minimum Quarterly Distribution for the
Quarter during which the Liquidation Date occurs;
(D) Fourth, 99% to all Unitholders, in accordance with
their relative Percentage Interests, and 1% to the General
Partners, Pro Rata, until the Capital Account in respect of each
Common Unit then Outstanding is equal to the sum of (1) its
Unrecovered Capital, plus (2) the Unpaid MQD, plus (3) any then
existing Cumulative Common Unit Arrearage, plus (4) the excess of
(aa) the First Target Distribution less the Minimum Quarterly
Distribution for each Quarter of the Partnership's existence over
(bb) the cumulative per Unit amount of any distributions of
Operating Surplus that was distributed pursuant to Sections
6.4(a)(iv) and 6.4(b)(ii) (the sum of (1) plus (2) plus (3) plus
(4) is hereinafter defined as the "First Liquidation Target
Amount");
(E) Fifth, 85.8673% to all Unitholders, in accordance with
their relative Percentage Interests, 13.1327% to the holders of
the Incentive Distribution Rights, Pro Rata, and 1% to the
General Partners, Pro Rata, until the Capital Account in respect
of each Common Unit then Outstanding is equal to the sum of
(1) the First Liquidation Target Amount, plus (2) the excess of
(aa) the Second Target Distribution less the First Target
Distribution for each Quarter of the Partnership's existence over
(bb) the cumulative per Unit amount of any distributions of
Operating Surplus that was distributed pursuant to Sections
6.4(a)(v) and 6.4(b)(iii) (the sum of (1) plus (2) is hereinafter
defined as the "Second Liquidation Target Amount");
(F) Sixth, 75.7653% to all Unitholders, in accordance with
their relative Percentage Interests, 23.2347% to the holders of
the Incentive Distribution Rights, Pro Rata, and 1% to the
General Partners, Pro Rata, until the Capital Account in respect
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of each Common Unit then Outstanding is equal to the sum of
(1) the Second Liquidation Target Amount, plus (2) the excess of
(aa) the Third Target Distribution less the Second Target
Distribution for each Quarter of the Partnership's existence over
(bb) the cumulative per Unit amount of any distributions of
Operating Surplus that was distributed pursuant to Sections
6.4(a)(vi) and 6.4(b)(iv); and
(G) Finally, any remaining amount 50.5102% to all
Unitholders, in accordance with their relative Percentage
Interests, 48.4898% to the holders of the Incentive Distribution
Rights, Pro Rata, and 1% to the General Partners, Pro Rata.
(ii) If a Net Termination Loss is recognized (or deemed
recognized pursuant to Section 5.5(d)), such Net Termination Loss
shall be allocated among the Partners in the following manner:
(A) First, if such Net Termination Loss is recognized (or
is deemed to be recognized) prior to the conversion of the last
Outstanding Subordinated Unit, 99% to the Unitholders holding
Subordinated Units, in proportion to their relative Percentage
Interests, and 1% to the General Partners, Pro Rata, until the
Capital Account in respect of each Subordinated Unit then
Outstanding has been reduced to zero;
(B) Second, 99% to all Unitholders holding Common Units, in
proportion to their relative Percentage Interests, and 1% to the
General Partners, Pro Rata, until the Capital Account in respect
of each Common Unit then Outstanding has been reduced to zero;
and
(C) Third, the balance, if any, 100% to the General
Partners, Pro Rata.
(d) SPECIAL ALLOCATIONS. Notwithstanding any other provision of
this Section 6.1, the following special allocations shall be made for
such taxable period:
(i) PARTNERSHIP MINIMUM GAIN CHARGEBACK. Notwithstanding any
other provision of this Section 6.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period, each
Partner shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in the manner and
amounts provided in Treasury Regulation Sections 1.704-2(f)(6),
1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor provision. For
purposes of this Section 6.1(d), each Partner's Adjusted Capital
Account balance shall be determined, and the allocation of income or
gain required hereunder shall be effected, prior to the application of
any other allocations pursuant to this Section 6.1(d) with respect to
such taxable period (other than an allocation pursuant to
Sections 6.1(d)(vi) and 6.1(d)(vii)). This Section 6.1(d)(i) is
intended to comply with the Partnership Minimum Gain chargeback
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requirement in Treasury Regulation Section 1.704-2(f) and shall be
interpreted consistently therewith.
(ii) CHARGEBACK OF PARTNER NONRECOURSE DEBT MINIMUM GAIN.
Notwithstanding the other provisions of this Section 6.1 (other than
Section 6.1(d)(i)), except as provided in Treasury Regulation
Section 1.704-2(i)(4), if there is a net decrease in Partner
Nonrecourse Debt Minimum Gain during any Partnership taxable period,
any Partner with a share of Partner Nonrecourse Debt Minimum Gain at
the beginning of such taxable period shall be allocated items of
Partnership income and gain for such period (and, if necessary,
subsequent periods) in the manner and amounts provided in Treasury
Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any
successor provisions. For purposes of this Section 6.1(d), each
Partner's Adjusted Capital Account balance shall be determined, and
the allocation of income or gain required hereunder shall be effected,
prior to the application of any other allocations pursuant to this
Section 6.1(d), other than Section 6.1(d)(i) and other than an
allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vii), with
respect to such taxable period. This Section 6.1(d)(ii) is intended to
comply with the chargeback of items of income and gain requirement in
Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(iii) PRIORITY ALLOCATIONS.
(A) If the amount of cash or the Net Agreed Value of any
property distributed (except cash or property distributed
pursuant to Section 12.4) to any Unitholder with respect to its
Units for a taxable year is greater (on a per Unit basis) than
the amount of cash or the Net Agreed Value of property
distributed to the other Unitholders with respect to their Units
(on a per Unit basis), then (1) each Unitholder receiving such
greater cash or property distribution shall be allocated gross
income in an amount equal to the product of (aa) the amount by
which the distribution (on a per Unit basis) to such Unitholder
exceeds the distribution (on a per Unit basis) to the Unitholders
receiving the smallest distribution and (bb) the number of Units
owned by the Unitholder receiving the greater distribution; and
(2) the General Partners shall be allocated gross income, Pro
Rata, in an aggregate amount equal to 1/99TH of the sum of the
amounts allocated in clause (1) above.
(B) After the application of Section 6.1(d)(iii)(A), all or
any portion of the remaining items of Partnership gross income or
gain for the taxable period, if any, shall be allocated 100% to
the holders of Incentive Distribution Rights, Pro Rata, until the
aggregate amount of such items allocated to the holders of
Incentive Distribution Rights pursuant to this paragraph
6.1(d)(iii)(B) for the current taxable year and all previous
taxable years is equal to the cumulative amount of all Incentive
Distributions made to the holders of Incentive Distribution
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Rights from the Closing Date to a date 45 days after the end of
the current taxable year.
(iv) QUALIFIED INCOME OFFSET. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of
Partnership income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations promulgated under Section
704(b) of the Code, the deficit balance, if any, in its Adjusted
Capital Account created by such adjustments, allocations or
distributions as quickly as possible unless such deficit balance is
otherwise eliminated pursuant to Section 6.1(d)(i) or (ii).
(v) GROSS INCOME ALLOCATIONS. In the event any Partner has a
deficit balance in its Capital Account at the end of any Partnership
taxable period in excess of the sum of (A) the amount such Partner is
required to restore pursuant to the provisions of this Agreement and
(B) the amount such Partner is deemed obligated to restore pursuant to
Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such
Partner shall be specially allocated items of Partnership gross income
and gain in the amount of such excess as quickly as possible;
provided, that an allocation pursuant to this Section 6.1(d)(v) shall
be made only if and to the extent that such Partner would have a
deficit balance in its Capital Account as adjusted after all other
allocations provided for in this Section 6.1 have been tentatively
made as if this Section 6.1(d)(v) were not in this Agreement.
(vi) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with
their respective Percentage Interests. If the Managing General Partner
determines in its good faith discretion that the Partnership's
Nonrecourse Deductions must be allocated in a different ratio to
satisfy the safe harbor requirements of the Treasury Regulations
promulgated under Section 704(b) of the Code, the Managing General
Partner is authorized, upon notice to the other Partners, to revise
the prescribed ratio to the numerically closest ratio that does
satisfy such requirements.
(vii) PARTNER NONRECOURSE DEDUCTIONS. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the
Partner that bears the Economic Risk of Loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable in accordance with Treasury Regulation Section
1.704-2(i). If more than one Partner bears the Economic Risk of Loss
with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse
Deductions attributable thereto shall be allocated between or among
such Partners in accordance with the ratios in which they share such
Economic Risk of Loss.
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(viii) NONRECOURSE LIABILITIES. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (A) the amount
of Partnership Minimum Gain and (B) the total amount of Nonrecourse
Built-in Gain shall be allocated among the Partners in accordance with
their respective Percentage Interests.
(ix) CODE SECTION 743 ADJUSTMENTS. To the extent an adjustment to
the adjusted tax basis of any Partnership asset pursuant to Section
734(b) or 743(c) of the Code is required, pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the
Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis), and such item of gain or loss shall
be specially allocated to the Partners in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted
pursuant to such Section of the Treasury Regulations.
(x) ECONOMIC UNIFORMITY. At the election of the Managing General
Partner with respect to any taxable period ending upon, or after, the
termination of the Subordination Period, all or a portion of the
remaining items of Partnership gross income or gain for such taxable
period, after taking into account allocations pursuant to Section
6.1(d)(iii), shall be allocated 100% to each Partner holding
Subordinated Units that are Outstanding as of the termination of the
Subordination Period ("Final Subordinated Units") in the proportion of
the number of Final Subordinated Units held by such Partner to the
total number of Final Subordinated Units then Outstanding, until each
such Partner has been allocated an amount of gross income or gain
which increases the Capital Account maintained with respect to such
Final Subordinated Units to an amount equal to the product of (A) the
number of Final Subordinated Units held by such Partner and (B) the
Per Unit Capital Amount for a Common Unit. The purpose of this
allocation is to establish uniformity between the Capital Accounts
underlying Final Subordinated Units and the Capital Accounts
underlying Common Units held by Persons other than the General
Partners and their Affiliates immediately prior to the conversion of
such Final Subordinated Units into Common Units. This allocation
method for establishing such economic uniformity will only be
available to the Managing General Partner if the method for allocating
the Capital Account maintained with respect to the Subordinated Units
between the transferred and retained Subordinated Units pursuant to
Section 5.5(c)(ii) does not otherwise provide such economic uniformity
to the Final Subordinated Units.
(xi) CURATIVE ALLOCATION.
(A) Notwithstanding any other provision of this Section
6.1, other than the Required Allocations, the Required
Allocations shall be taken into account in making the Agreed
Allocations so that, to the extent possible, the net amount of
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items of income, gain, loss and deduction allocated to each
Partner pursuant to the Required Allocations and the Agreed
Allocations, together, shall be equal to the net amount of such
items that would have been allocated to each such Partner under
the Agreed Allocations had the Required Allocations and the
related Curative Allocation not otherwise been provided in this
Section 6.1. Notwithstanding the preceding sentence, Required
Allocations relating to (1) Nonrecourse Deductions shall not be
taken into account except to the extent that there has been a
decrease in Partnership Minimum Gain and (2) Partner Nonrecourse
Deductions shall not be taken into account except to the extent
that there has been a decrease in Partner Nonrecourse Debt
Minimum Gain. Allocations pursuant to this Section
6.1(d)(xi)(A) shall only be made with respect to Required
Allocations to the extent the Managing General Partner reasonably
determines that such allocations will otherwise be inconsistent
with the economic agreement among the Partners. Further,
allocations pursuant to this Section 6.1(d)(xi)(A) shall be
deferred with respect to allocations pursuant to clauses (1) and
(2) hereof to the extent the Managing General Partner reasonably
determines that such allocations are likely to be offset by
subsequent Required Allocations.
(B) The Managing General Partner shall have reasonable
discretion, with respect to each taxable period, to (1) apply the
provisions of Section 6.1(d)(xi)(A) in whatever order is most
likely to minimize the economic distortions that might otherwise
result from the Required Allocations, and (2) divide all
allocations pursuant to Section 6.1(d)(xi)(A) among the Partners
in a manner that is likely to minimize such economic distortions.
(xii) CORRECTIVE ALLOCATIONS. In the event of any allocation
of Additional Book Basis Derivative Items or any Book-Down Event or
any recognition of a Net Termination Loss, the following rules shall
apply:
(A) In the case of any allocation of Additional Book Basis
Derivative Items (other than an allocation of Unrealized Gain or
Unrealized Loss under Section 5.5(d) hereof), the Managing
General Partner shall allocate additional items of gross income
and gain away from the holders of Incentive Distribution Rights
to the Unitholders and the General Partners, or additional items
of deduction and loss away from the Unitholders and the General
Partners to the holders of Incentive Distribution Rights, to the
extent that the Additional Book Basis Derivative Items allocated
to the Unitholders or the General Partners exceed their Share of
Additional Book Basis Derivative Items. For this purpose, the
Unitholders and the General Partners shall be treated as being
allocated Additional Book Basis Derivative Items to the extent
that such Additional Book Basis Derivative Items have reduced the
amount of income that would otherwise have been allocated to the
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Unitholders or the General Partners under the Partnership
Agreement (e.g., Additional Book Basis Derivative Items taken
into account in computing cost of goods sold would reduce the
amount of book income otherwise available for allocation among
the Partners). Any allocation made pursuant to this Section
6.1(d)(xii)(A) shall be made after all of the other Agreed
Allocations have been made as if this Section 6.1(d)(xii) were
not in this Agreement and, to the extent necessary, shall require
the reallocation of items that have been allocated pursuant to
such other Agreed Allocations.
(B) In the case of any negative adjustments to the Capital
Accounts of the Partners resulting from a Book-Down Event or from
the recognition of a Net Termination Loss, such negative
adjustment (1) shall first be allocated, to the extent of the
Aggregate Remaining Net Positive Adjustments, in such a manner,
as reasonably determined by the Managing General Partner, that to
the extent possible the aggregate Capital Accounts of the
Partners will equal the amount which would have been the Capital
Account balance of the Partners if no prior Book-Up Events had
occurred, and (2) any negative adjustment in excess of the
Aggregate Remaining Net Positive Adjustments shall be allocated
pursuant to Section 6.1(c) hereof.
(C) In making the allocations required under this Section
6.1(d)(xii), the Managing General Partner, in its sole
discretion, may apply whatever conventions or other methodology
it deems reasonable to satisfy the purpose of this Section
6.1(d)(xii).
(xiii) FIRST YEAR ALLOCATION. Net Income or Net Loss of the
Partnership for the period beginning on the Closing Date and ending on
the last day of the taxable year of the Partnership that includes the
Closing Date shall be allocated 100% to the General Partners, Pro
Rata.
6.2 ALLOCATIONS FOR TAX PURPOSES
(a) Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as its correlative
item of "book" income, gain, loss or deduction is allocated pursuant
to Section 6.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable
to a Contributed Property or Adjusted Property, items of income, gain,
loss, depreciation, amortization and cost recovery deductions shall be
allocated for federal income tax purposes among the Partners as
follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the
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manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property
and its adjusted basis at the time of contribution; and (B) any
item of Residual Gain or Residual Loss attributable to a
Contributed Property shall be allocated among the Partners in the
same manner as its correlative item of "book" gain or loss is
allocated pursuant to Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items
shall (1) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code to
take into account the Unrealized Gain or Unrealized Loss
attributable to such property and the allocations thereof
pursuant to Section 5.5(d)(i) or 5.5(d)(ii), and (2) second, in
the event such property was originally a Contributed Property, be
allocated among the Partners in a manner consistent with
Section 6.2(b)(i)(A); and (B) any item of Residual Gain or
Residual Loss attributable to an Adjusted Property shall be
allocated among the Partners in the same manner as its
correlative item of "book" gain or loss is allocated pursuant to
Section 6.1.
(iii) The Managing General Partner shall apply the
principles of Treasury Regulation Section 1.704-3(d) to eliminate
Book-Tax Disparities.
(c) For the proper administration of the Partnership and for the
preservation of uniformity of the Limited Partner Interests (or any
class or classes thereof), the Managing General Partner shall have
sole discretion to (i) adopt such conventions as it deems appropriate
in determining the amount of depreciation, amortization and cost
recovery deductions; (ii) make special allocations for federal income
tax purposes of income (including, without limitation, gross income)
or deductions; and (iii) amend the provisions of this Agreement as
appropriate (x) to reflect the proposal or promulgation of Treasury
Regulations under Section 704(b) or Section 704(c) of the Code or (y)
otherwise to preserve or achieve uniformity of the Limited Partner
Interests (or any class or classes thereof). The Managing General
Partner may adopt such conventions, make such allocations and make
such amendments to this Agreement as provided in this Section
6.2(c) only if such conventions, allocations or amendments would not
have a material adverse effect on the Partners, the holders of any
class or classes of Limited Partner Interests issued and Outstanding
or the Partnership, and if such allocations are consistent with the
principles of Section 704 of the Code.
(d) The Managing General Partner in its discretion may determine
to depreciate or amortize the portion of an adjustment under Section
743(b) of the Code attributable to unrealized appreciation in any
Adjusted Property (to the extent of the unamortized Book-Tax
Disparity) using a predetermined rate derived from the depreciation or
amortization method and useful life applied to the Partnership's
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common basis of such property, despite any inconsistency of such
approach with Proposed Treasury Regulation Section 1.168-2(n),
Treasury Regulation Section 1.167(c)-l(a)(6) or the legislative
history of Section 197 of the Code. If the Managing General Partner
determines that such reporting position cannot reasonably be taken,
the Managing General Partner may adopt depreciation and amortization
conventions under which all purchasers acquiring Limited Partner
Interests in the same month would receive depreciation and
amortization deductions, based upon the same applicable rate as if
they had purchased a direct interest in the Partnership's property. If
the Managing General Partner chooses not to utilize such aggregate
method, the Managing General Partner may use any other reasonable
depreciation and amortization conventions to preserve the uniformity
of the intrinsic tax characteristics of any Limited Partner Interests
that would not have a material adverse effect on the Limited Partners
or the Record Holders of any class or classes of Limited Partner
Interests.
(e) Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall, to the extent
possible, after taking into account other required allocations of gain
pursuant to this Section 6.2, be characterized as Recapture Income in
the same proportions and to the same extent as such Partners (or their
predecessors in interest) have been allocated any deductions directly
or indirectly giving rise to the treatment of such gains as Recapture
Income.
(f) All items of income, gain, loss, deduction and credit
recognized by the Partnership for federal income tax purposes and
allocated to the Partners in accordance with the provisions hereof
shall be determined without regard to any election under Section 754
of the Code which may be made by the Partnership; provided, however,
that such allocations, once made, shall be adjusted as necessary or
appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction
attributable to a transferred Partnership Interest, shall for federal
income tax purposes, be determined on an annual basis and prorated on
a monthly basis and shall be allocated to the Partners as of the
opening of the New York Stock Exchange on the first Business Day of
each month; provided, however, that (i) such items for the period
beginning on the Closing Date and ending on the last day of the month
in which the Option Closing Date or the expiration of the
Over-allotment Option occurs shall be allocated to the Partners as of
the opening of the New York Stock Exchange on the first Business Day
of the next succeeding month; and provided, further, that gain or loss
on a sale or other disposition of any assets of the Partnership other
than in the ordinary course of business shall be allocated to the
Partners as of the opening of the New York Stock Exchange on the first
Business Day of the month in which such gain or loss is recognized for
federal income tax purposes. The Managing General Partner may revise,
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alter or otherwise modify such methods of allocation as it determines
necessary, to the extent permitted or required by Section 706 of the
Code and the regulations or rulings promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited
Partner under the provisions of this Article VI shall instead be made
to the beneficial owner of Limited Partner Interests held by a nominee
in any case in which the nominee has furnished the identity of such
owner to the Partnership in accordance with Section 6031(c) of the
Code or any other method acceptable to the Managing General Partner in
its sole discretion.
6.3 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS; DISTRIBUTIONS
TO RECORD HOLDERS
(a) Within 45 days following the end of each Quarter commencing
with the Quarter ending on March 31, 1997, an amount equal to 100% of
Available Cash with respect to such Quarter shall, subject to Section
17-607 of the Delaware Act, be distributed in accordance with this
Article VI by the Partnership to the Partners as of the Record Date
selected by the Managing General Partner in its reasonable discretion.
All amounts of Available Cash distributed by the Partnership on any
date from any source shall be deemed to be Operating Surplus until the
sum of all amounts of Available Cash theretofore distributed by the
Partnership to the Partners pursuant to Section 6.4 equals the
Operating Surplus from the Closing Date through the close of the
immediately preceding Quarter. Any remaining amounts of Available Cash
distributed by the Partnership on such date shall, except as otherwise
provided in Section 6.5, be deemed to be "Capital Surplus." All
distributions required to be made under this Agreement shall be made
subject to Section 17-607 of the Delaware Act.
(b) Notwithstanding Section 6.3(a), in the event of the
dissolution and liquidation of the Partnership, all receipts received
during or after the Quarter in which the Liquidation Date occurs,
other than from borrowings described in (a)(ii) of the definition of
Available Cash, shall be applied and distributed solely in accordance
with, and subject to the terms and conditions of, Section 12.4.
(c) The Managing General Partner shall have the discretion to
treat taxes paid by the Partnership on behalf of, or amounts withheld
with respect to, all or less than all of the Partners, as a
distribution of Available Cash to such Partners.
(d) Each distribution in respect of a Partnership Interest shall
be paid by the Partnership, directly or through the Transfer Agent or
through any other Person or agent, only to the Record Holder of such
Partnership Interest as of the Record Date set for such distribution.
Such payment shall constitute full payment and satisfaction of the
Partnership's liability in respect of such payment, regardless of any
claim of any Person who may have an interest in such payment by reason
of an assignment or otherwise.
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6.4 DISTRIBUTIONS OF AVAILABLE CASH FROM OPERATING SURPLUS
(a) DURING SUBORDINATION PERIOD. Available Cash with respect to
any Quarter within the Subordination Period that is deemed to be
Operating Surplus pursuant to the provisions of Section 6.3 or 6.5
shall, subject to Section 17-607 of the Delaware Act, be distributed
as follows, except as otherwise required by Section 5.6(b) in respect
of additional Partnership Securities issued pursuant thereto:
(i) First, 99% to the Unitholders holding Common Units, in
proportion to their relative Percentage Interests, and 1% to the
General Partners, Pro Rata, until there has been distributed in
respect of each Common Unit then Outstanding an amount equal to
the Minimum Quarterly Distribution for such Quarter;
(ii) Second, 99% to the Unitholders holding Common Units, in
proportion to their relative Percentage Interests, and 1% to the
General Partners, Pro Rata, until there has been distributed in
respect of each Common Unit then Outstanding an amount equal to
the Cumulative Common Unit Arrearage existing with respect to
such Quarter;
(iii) Third, 99% to the Unitholders holding Subordinated
Units, in proportion to their relative Percentage Interests, and
1% to the General Partners, Pro Rata, until there has been
distributed in respect of each Subordinated Unit then Outstanding
an amount equal to the Minimum Quarterly Distribution for such
Quarter;
(iv) Fourth, 99% to all Unitholders, in accordance with
their relative Percentage Interests, and 1% to the General
Partners, Pro Rata, until there has been distributed in respect
of each Unit then Outstanding an amount equal to the excess of
the First Target Distribution over the Minimum Quarterly
Distribution for such Quarter;
(v) Fifth, 85.8673% to all Unitholders, in accordance with
their relative Percentage Interests, 13.1327% to the holders of
the Incentive Distribution Rights, Pro Rata, and 1% to the
General Partners, Pro Rata, until there has been distributed in
respect of each Unit then Outstanding an amount equal to the
excess of the Second Target Distribution over the First Target
Distribution for such Quarter;
(vi) Sixth, 75.7653% to all Unitholders, in accordance with
their relative Percentage Interests, 23.2347% to the holders of
the Incentive Distribution Rights, Pro Rata, and 1% to the
General Partners, Pro Rata, until there has been distributed in
respect of each Unit then Outstanding an amount equal to the
excess of the Third Target Distribution over the Second Target
Distribution for such Quarter; and
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(vii) Thereafter, 50.5102% to all Unitholders, in
accordance with their relative Percentage Interests, 48.4898% to
the holders of the Incentive Distribution Rights, Pro Rata, and
1% to the General Partners, Pro Rata;
provided, however, if the Minimum Quarterly Distribution, the First
Target Distribution, the Second Target Distribution and the Third
Target Distribution have been reduced to zero pursuant to the second
sentence of Section 6.6(a), the distribution of Available Cash that is
deemed to be Operating Surplus with respect to any Quarter will be
made solely in accordance with Section 6.4(a)(vii).
(b) AFTER SUBORDINATION PERIOD. Available Cash with respect to
any Quarter after the Subordination Period that is deemed to be
Operating Surplus pursuant to the provisions of Section 6.3 or 6.5,
subject to Section 17-607 of the Delaware Act, shall be distributed as
follows, except as otherwise required by Section 5.6(b) in respect of
additional Partnership Securities issued pursuant thereto:
(i) First, 99% to all Unitholders, in accordance with their
relative Percentage Interests, and 1% to the General Partners,
Pro Rata, until there has been distributed in respect of each
Unit then Outstanding an amount equal to the Minimum Quarterly
Distribution for such Quarter;
(ii) Second, 99% to all Unitholders, in accordance with
their relative Percentage Interests, and 1% to the General
Partners, Pro Rata, until there has been distributed in respect
of each Unit then Outstanding an amount equal to the excess of
the First Target Distribution over the Minimum Quarterly
Distribution for such Quarter;
(iii) Third, 85.8673% to all Unitholders, in accordance
with their relative Percentage Interests, and 13.1327% to the
holders of the Incentive Distribution Rights, Pro Rata, and 1% to
the General Partners, Pro Rata, until there has been distributed
in respect of each Unit then Outstanding an amount equal to the
excess of the Second Target Distribution over the First Target
Distribution for such Quarter;
(iv) Fourth, 75.7653% to all Unitholders, in accordance with
their relative Percentage Interests, and 23.2347% to the holders
of the Incentive Distribution Rights, Pro Rata, and 1% to the
General Partners, Pro Rata, until there has been distributed in
respect of each Unit then Outstanding an amount equal to the
excess of the Third Target Distribution over the Second Target
Distribution for such Quarter; and
(v) Thereafter, 50.5102% to all Unitholders, in accordance
with their relative Percentage Interests, and 48.4898% to the
holders of the Incentive Distribution Rights, Pro Rata, and 1% to
the General Partners, Pro Rata;
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provided, however, if the Minimum Quarterly Distribution, the First
Target Distribution, the Second Target Distribution and the Third
Target Distribution have been reduced to zero pursuant to the second
sentence of Section 6.6(a), the distribution of Available Cash that is
deemed to be Operating Surplus with respect to any Quarter will be
made solely in accordance with Section 6.4(b)(v).
6.5 DISTRIBUTIONS OF AVAILABLE CASH FROM CAPITAL SURPLUS
Available Cash that is deemed to be Capital Surplus pursuant to
the provisions of Section 6.3(a) shall, subject to Section 17-607 of
the Delaware Act, be distributed, unless the provisions of Section 6.3
require otherwise, 99% to all Unitholders, in accordance with their
relative Percentage Interests, and 1% to the General Partners, Pro
Rata, until a hypothetical holder of a Common Unit acquired on the
Closing Date has received with respect to such Common Unit, during the
period since the Closing Date through such date, distributions of
Available Cash that are deemed to be Capital Surplus in an aggregate
amount equal to the Initial Unit Price. Available Cash that is deemed
to be Capital Surplus shall then be distributed 99% to all Unitholders
holding Common Units, in accordance with their relative Percentage
Interests, and 1% to the General Partners, Pro Rata, until there has
been distributed in respect of each Common Unit then Outstanding an
amount equal to the Cumulative Common Unit Arrearage. Thereafter, all
Available Cash shall be distributed as if it were Operating Surplus
and shall be distributed in accordance with Section 6.4.
6.6 ADJUSTMENT OF MINIMUM QUARTERLY DISTRIBUTION AND TARGET
DISTRIBUTION LEVELS
(a) The Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution, Third Target Distribution,
Common Unit Arrearages and Cumulative Common Unit Arrearages shall be
proportionately adjusted in the event of any distribution, combination
or subdivision (whether effected by a distribution payable in Units or
otherwise) of Units or other Partnership Securities in accordance with
Section 5.10. In the event of a distribution of Available Cash that is
deemed to be from Capital Surplus, the then applicable Minimum
Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution shall be adjusted
proportionately downward to equal the product obtained by multiplying
the otherwise applicable Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target
Distribution, as the case may be, by a fraction of which the numerator
is the Unrecovered Capital of the Common Units immediately after
giving effect to such distribution and of which the denominator is the
Unrecovered Capital of the Common Units immediately prior to giving
effect to such distribution.
(b) The Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution
shall also be subject to adjustment pursuant to Section 6.9.
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6.7 SPECIAL PROVISIONS RELATING TO THE HOLDERS OF SUBORDINATED UNITS
(a) Except with respect to the right to vote on or approve
matters requiring the vote or approval of a percentage of the holders
of Outstanding Common Units and the right to participate in
allocations of income, gain, loss and deduction and distributions made
with respect to Common Units, the holder of a Subordinated Unit shall
have all of the rights and obligations of a Unitholder holding Common
Units hereunder; provided, however, that immediately upon the
conversion of Subordinated Units into Common Units pursuant to
Section 5.8, the Unitholder holding a Subordinated Unit shall possess
all of the rights and obligations of a Unitholder holding Common Units
hereunder, including the right to vote as a Common Unitholder and the
right to participate in allocations of income, gain, loss and
deduction and distributions made with respect to Common Units;
provided, however, that such converted Subordinated Units shall remain
subject to the provisions of Sections 5.5(c)(ii), 6.1(d)(x) and
6.7(b).
(b) The Unitholder holding a Subordinated Unit which has
converted into a Common Unit pursuant to Section 5.8 shall not be
issued a Common Unit Certificate pursuant to Section 4.1, and shall
not be permitted to transfer its converted Subordinated Units to a
Person which is not an Affiliate of the holder until such time as the
Managing General Partner determines, based on advice of counsel, that
a converted Subordinated Unit should have, as a substantive matter,
like intrinsic economic and federal income tax characteristics, in all
material respects, to the intrinsic economic and federal income tax
characteristics of an Initial Common Unit. In connection with the
condition imposed by this Section 6.7(b), the Managing General Partner
may take whatever reasonable steps are required to provide economic
uniformity to the converted Subordinated Units in preparation for a
transfer of such converted Subordinated Units, including the
application of Sections 5.5(c)(ii) and 6.1(d)(x); provided, however,
that no such steps may be taken that would have a material adverse
effect on the Unitholders holding Common Units represented by Common
Unit Certificates.
6.8 SPECIAL PROVISIONS RELATING TO THE HOLDERS OF INCENTIVE
DISTRIBUTION RIGHTS
Notwithstanding anything to the contrary set forth in this
Agreement, the holders of the Incentive Distribution Rights (a) shall
(i) possess the rights and obligations provided in this Agreement with
respect to a Limited Partner pursuant to Articles III and VII and
(ii) have a Capital Account as a Partner pursuant to Section 5.5 and
all other provisions related thereto and (b) shall not (i) be entitled
to vote on any matters requiring the approval or vote of the holders
of Outstanding Units, (ii) be entitled to any distributions other than
as provided in Sections 6.4(a)(v), (vi) and (vii), 6.4(b)(iii),
(iv) and (v), and 12.4 or (iii) be allocated items of income, gain,
loss or deduction other than as specified in this Article VI.
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6.9 ENTITY-LEVEL TAXATION
If legislation is enacted or the interpretation of existing
language is modified by the relevant governmental authority which
causes the Partnership or the Operating Partnership to be treated as
an association taxable as a corporation or otherwise subjects the
Partnership or the Operating Partnership to entity-level taxation for
federal income tax purposes, the then applicable Minimum Quarterly
Distribution, First Target Distribution, Second Target Distribution
and Third Target Distribution shall be adjusted to equal the product
obtained by multiplying (a) the amount thereof by (b) one minus the
sum of (i) the highest marginal federal corporate (or other entity, as
applicable) income tax rate of the Partnership or the Operating
Partnership for the taxable year of the Partnership or the Operating
Partnership in which such Quarter occurs (expressed as a percentage)
plus (ii) the effective overall state and local income tax rate
(expressed as a percentage) applicable to the Partnership or the
Operating Partnership for the calendar year next preceding the
calendar year in which such Quarter occurs (after taking into account
the benefit of any deduction allowable for federal income tax purposes
with respect to the payment of state and local income taxes), but only
to the extent of the increase in such rates resulting from such
legislation or interpretation. Such effective overall state and local
income tax rate shall be determined for the taxable year next
preceding the first taxable year during which the Partnership or the
Operating Partnership is taxable for federal income tax purposes as an
association taxable as a corporation or is otherwise subject to
entity-level taxation by determining such rate as if the Partnership
or the Operating Partnership had been subject to such state and local
taxes during such preceding taxable year.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
7.1 MANAGEMENT
(a) The Managing General Partner shall conduct, direct and
manage all activities of the Partnership. Except as otherwise
expressly provided in this Agreement, all management powers over the
business and affairs of the Partnership shall be exclusively vested in
the Managing General Partner, and neither the Special General Partner
nor any Limited Partner or Assignee shall have any management power
over the business and affairs of the Partnership. In addition to the
powers now or hereafter granted a general partner of a limited
partnership under applicable law or which are granted to the Managing
General Partner under any other provision of this Agreement, the
Managing General Partner, subject to Section 7.3, shall have full
power and authority to do all things and on such terms as it, in its
sole discretion, may deem necessary or appropriate to conduct the
business of the Partnership, to exercise all powers set forth in
Section 2.5 and to effectuate the purposes set forth in Section 2.4,
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including the following:
(i) the making of any expenditures, the lending or
borrowing of money, the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance
of evidences of indebtedness, including indebtedness that is
convertible into Partnership Securities, and the incurring of any
other obligations;
(ii) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other
agencies having jurisdiction over the business or assets of the
Partnership;
(iii) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the
assets of the Partnership or the merger or other combination of
the Partnership with or into another Person (the matters
described in this clause (iii) being subject, however, to any
prior approval that may be required by Section 7.3);
(iv) the use of the assets of the Partnership (including
cash on hand) for any purpose consistent with the terms of this
Agreement, including the financing of the conduct of the
operations of the Partnership Group, the lending of funds to
other Persons (including the Operating Partnership), the
repayment of obligations of the Partnership Group and the making
of capital contributions to any member of the Partnership Group;
(iv) the negotiation, execution and performance of any
contracts, conveyances or other instruments (including
instruments that limit the liability of the Partnership under
contractual arrangements to all or particular assets of the
Partnership, with the other party to the contract to have no
recourse against the General Partners or their assets other than
their interest in the Partnership, even if same results in the
terms of the transaction being less favorable to the Partnership
than would otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees
(including employees having titles such as "president," "vice
president," "secretary" and "treasurer") and agents, outside
attorneys, accountants, consultants and contractors and the
determination of their compensation and other terms of employment
or hiring;
(viii) the maintenance of such insurance for the benefit
of the Partnership Group and the Partners as it deems necessary
or appropriate;
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(ix) the formation of, or acquisition of an interest in, and
the contribution of property and the making of loans to, any
further limited or general partnerships, joint ventures,
corporations or other relationships (including the acquisition of
interests in, and the contributions of property to, the Operating
Partnership from time to time) subject to the restrictions set
forth in Section 2.4;
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the bringing and
defending of actions at law or in equity and otherwise engaging
in the conduct of litigation and the incurring of legal expense
and the settlement of claims and litigation;
(xi) the indemnification of any Person against liabilities
and contingencies to the extent permitted by law;
(xii) the entering into of listing agreements with any
National Securities Exchange and the delisting of some or all of
the Limited Partner Interests from, or requesting that trading be
suspended on, any such exchange (subject to any prior approval
that may be required under Section 4.9);
(xiii) unless restricted or prohibited by Section 5.7,
the purchase, sale or other acquisition or disposition of
Partnership Securities, or the issuance of additional options,
rights, warrants and appreciation rights relating to Partnership
Securities; and
(xiv) the undertaking of any action in connection with
the Partnership's participation in the Operating Partnership as
the limited partner.
(b) Notwithstanding any other provision of this Agreement, the
Operating Partnership Agreement, the Delaware Act or any applicable
law, rule or regulation, each of the Partners and Assignees and each
other Person who may acquire an interest in Partnership Securities
hereby (i) approves, ratifies and confirms the execution, delivery and
performance by the parties thereto of the Operating Partnership
Agreement, the Underwriting Agreement, the Contribution and Conveyance
Agreement, the agreements and other documents filed as exhibits to the
Registration Statement, and the other agreements described in or filed
as a part of the Registration Statement; (ii) agrees that the Managing
General Partner (on its own or through any officer of the Partnership)
is authorized to execute, deliver and perform the agreements referred
to in clause (i) of this sentence and the other agreements, acts,
transactions and matters described in or contemplated by the
Registration Statement on behalf of the Partnership without any
further act, approval or vote of the Partners or the Assignees or the
other Persons who may acquire an interest in Partnership Securities;
and (iii) agrees that the execution, delivery or performance by the
General Partners, any Group Member or any Affiliate of any of them, of
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this Agreement or any agreement authorized or permitted under this
Agreement (including the exercise by the Managing General Partner or
any Affiliate of the Managing General Partner of the rights accorded
pursuant to Article XV), shall not constitute a breach by the General
Partners of any duty that the General Partners may owe the Partnership
or the Limited Partners or any other Persons under this Agreement (or
any other agreements) or of any duty stated or implied by law or
equity.
7.2 CERTIFICATE OF LIMITED PARTNERSHIP
The Managing General Partner has caused the Certificate of
Limited Partnership to be filed with the Secretary of State of the
State of Delaware as required by the Delaware Act and shall use all
reasonable efforts to cause to be filed such other certificates or
documents as may be determined by the Managing General Partner in its
sole discretion to be reasonable and necessary or appropriate for the
formation, continuation, qualification and operation of a limited
partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the
extent that such action is determined by the Managing General Partner
in its sole discretion to be reasonable and necessary or appropriate,
the Managing General Partner shall file amendments to and restatements
of the Certificate of Limited Partnership and do all things to
maintain the Partnership as a limited partnership (or a partnership or
other entity in which the limited partners have limited liability)
under the laws of the State of Delaware or of any other state in which
the Partnership may elect to do business or own property. Subject to
the terms of Section 3.4(a), the Managing General Partner shall not be
required, before or after filing, to deliver or mail a copy of the
Certificate of Limited Partnership, any qualification document or any
amendment thereto to any Limited Partner.
7.3 RESTRICTIONS ON GENERAL PARTNERS' AUTHORITY
(a) The Managing General Partner may not, without written
approval of the specific act by holders of all of the Outstanding
Limited Partner Interests or by other written instrument executed and
delivered by holders of all of the Outstanding Limited Partner
Interests subsequent to the date of this Agreement, take any action in
contravention of this Agreement, including, except as otherwise
provided in this Agreement, (i) committing any act that would make it
impossible to carry on the ordinary business of the Partnership;
(ii) possessing Partnership property, or assigning any rights in
specific Partnership property, for other than a Partnership purpose;
(iii) admitting a Person as a Partner; (iv) amending this Agreement in
any manner; or (v) transferring its interest as general partner of the
Partnership.
(b) Except as provided in Articles XII and XIV, the Managing
General Partner may not sell, exchange or otherwise dispose of all or
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substantially all of the Partnership's assets in a single transaction
or a series of related transactions or approve on behalf of the
Partnership the sale, exchange or other disposition of all or
substantially all of the assets of the Operating Partnership, without
the approval of holders of at least a Unit Majority; provided however
that this provision shall not preclude or limit the Managing General
Partner's ability to mortgage, pledge, hypothecate or grant a security
interest in all or substantially all of the assets of the Partnership
or Operating Partnership and shall not apply to any forced sale of any
or all of the assets of the Partnership or Operating Partnership
pursuant to the foreclosure of, or other realization upon, any such
encumbrance. Without the approval of holders of at least a Unit
Majority, the Managing General Partner shall not, on behalf of the
Partnership, (i) consent to any amendment to the Operating Partnership
Agreement or, except as expressly permitted by Section 7.9(d), take
any action permitted to be taken by a partner of the Operating
Partnership, in either case, that would have a material adverse effect
on the Partnership as a partner of the Operating Partnership or
(ii) except as permitted under Sections 4.6, 11.1 and 11.2, elect or
cause the Partnership to elect a successor general partner of the
Partnership or the Operating Partnership.
(c) At all times while serving as a General Partner of the
Partnership, each General Partner shall not make any dividend or
distribution on, or repurchase any shares of, its stock or take any
other action within its control if the effect of such action would
cause the combined net worth of the General Partners, independent of
their interest in the Partnership Group, to be less than $15.0
million or such lower amount, which lower amount is based on an
Opinion of Counsel that states, (i) based on a change in the position
of the Internal Revenue Service with respect to partnership status
pursuant to Code Section 7701, such lower amount would not cause the
Partnership or the Operating Partnership to be treated as an
association taxable as a corporation or otherwise to be taxed as an
entity for federal income tax purposes and (ii) would not result in
the loss of the limited liability of any Limited Partner or of the
limited partner of the Operating Partnership.
7.4 REIMBURSEMENT OF THE MANAGING GENERAL PARTNER
(a) Except as provided in this Section 7.4 and elsewhere in this
Agreement or in the Operating Partnership Agreement, the Managing
General Partner shall not be compensated for its services as general
partner of any Group Member.
(b) The Managing General Partner shall be reimbursed on a
monthly basis, or such other reasonable basis as the Managing General
Partner may determine in its sole discretion, for (i) all direct and
indirect expenses it incurs or payments it makes on behalf of the
Partnership (including salary, bonus, incentive compensation and other
amounts paid to any Person including Affiliates of the Managing
General Partner to perform services for the Partnership or for the
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Managing General Partner in the discharge of its duties to the
Partnership), and (ii) all other necessary or appropriate expenses
allocable to the Partnership or otherwise reasonably incurred by the
Managing General Partner in connection with operating the
Partnership's business (including expenses allocated to the Managing
General Partner by its Affiliates). The Managing General Partner shall
determine the expenses that are allocable to the Partnership in any
reasonable manner determined by the Managing General Partner in its
sole discretion. Reimbursements pursuant to this Section 7.4 shall be
in addition to any reimbursement to the Managing General Partner as a
result of indemnification pursuant to Section 7.7.
(c) Subject to Section 5.7, the Managing General Partner, in its
sole discretion and without the approval of the Limited Partners (who
shall have no right to vote in respect thereof), may propose and adopt
on behalf of the Partnership employee benefit plans, employee programs
and employee practices (including plans, programs and practices
involving the issuance of Partnership Securities or options to
purchase Partnership Securities), or cause the Partnership to issue
Partnership Securities in connection with, or pursuant to, any
employee benefit plan, employee program or employee practice
maintained or sponsored by the Managing General Partner or any of its
Affiliates, in each case for the benefit of employees of the Managing
General Partner, any Group Member or any Affiliate, or any of them, in
respect of services performed, directly or indirectly, for the benefit
of the Partnership Group. The Partnership agrees to issue and sell to
the Managing General Partner or any of its Affiliates any Partnership
Securities that the Managing General Partner or such Affiliate is
obligated to provide to any employees pursuant to any such employee
benefit plans, employee programs or employee practices. Expenses
incurred by the Managing General Partner in connection with any such
plans, programs and practices (including the net cost to the Managing
General Partner or such Affiliate of Partnership Securities purchased
by the Managing General Partner or such Affiliate from the Partnership
to fulfill options or awards under such plans, programs and practices)
shall be reimbursed in accordance with Section 7.4(b). Any and all
obligations of the Managing General Partner under any employee benefit
plans, employee programs or employee practices adopted by the Managing
General Partner as permitted by this Section 7.4(c) shall constitute
obligations of the Managing General Partner hereunder and shall be
assumed by any successor Managing General Partner approved pursuant to
Section 11.1 or 11.2 or the transferee of or successor to all of the
Managing General Partner's Partnership Interest as a general partner
in the Partnership pursuant to Section 4.6.
7.5 OUTSIDE ACTIVITIES
(a) After the Closing Date, the Managing General Partner, for so
long as it is the Managing General Partner of the Partnership
(i) agrees that its sole business will be to act as a general partner
of the Partnership, the Operating Partnership, and any other
partnership of which the Partnership or the Operating Partnership is,
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directly or indirectly, a partner and to undertake activities that are
ancillary or related thereto (including being a limited partner in the
partnership), (ii) shall not engage in any business or activity or
incur any debts or liabilities except in connection with or incidental
to (A) its performance as general partner of one or more Group Members
or as described in or contemplated by the Registration Statement or
(B) the acquiring, owning or disposing of debt or equity securities in
any Group Member and (iii) shall not engage in the retail sale of
propane to end users in the continental United States. Except as
provided in this Section 7.5(a) with respect to the retail sale of
propane to end users in the continental United States, nothing herein
contained in this paragraph shall prohibit an Affiliate of the
Managing General Partner (including the Special General Partner) from
competing with the Partnership.
Affiliates of the Managing General Partner may engage in a
business activity that involves the retail sales of propane to end
users in the continental United States only if (i) the Managing
General Partner determines in its reasonable judgment, prior to the
commencement of such activity, that it is not in the best interests of
the Partnership to engage in such activity either (A) because of the
financial commitments or operating characteristics associated with
such activity or (B) because such activity is not consistent with the
Partnership's business strategy or cannot otherwise be integrated with
the Partnership's operations on a beneficial basis to the Partnership
or (ii) such activity is being undertaken as provided in a joint
venture agreement or other agreement between the Partnership and an
Affiliate of a General Partner and such joint venture or other
agreement was determined at the time it was entered into to be fair to
the Partnership in the reasonable judgment of the Managing General
Partner.
(b) Except as specifically restricted by Section 7.5(a), each
Indemnitee shall have the right to engage in businesses of every type
and description and other activities for profit and to engage in and
possess an interest in other business ventures of any and every type
or description, whether in businesses engaged in or anticipated to be
engaged in by any Group Member, independently or with others,
including business interests and activities in direct competition with
the business and activities of any Group Member, and none of the same
shall constitute a breach of this Agreement or any duty express or
implied by law to any Group Member or any Partner or Assignee. Neither
any Group Member, any Limited Partner nor any other Person shall have
any rights by virtue of this Agreement, the Operating Partnership
Agreement or the partnership relationship established hereby or
thereby in any business ventures of any Indemnitee.
(c) Subject to the terms of Section 7.5(a) and (b), but
otherwise notwithstanding anything to the contrary in this Agreement,
(i) the engaging in competitive activities by any Indemnitees (other
than the Managing General Partner) in accordance with the provisions
of this Section 7.5 is hereby approved by the Partnership and all
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Partners and (ii) it shall be deemed not to be a breach of the
Managing General Partner's fiduciary duty or any other obligation of
any type whatsoever of the General Partners for the Indemnitees (other
than the Managing General Partner) to engage in such business
interests and activities in preference to or to the exclusion of the
Partnership (including, without limitation, the Managing General
Partner and the Indemnities shall have no obligation to present
business opportunities to the Partnership).
(d) The Managing General Partner and any of its Affiliates may
acquire Units or other Partnership Securities in addition to those
acquired on the Closing Date and, except as otherwise provided in this
Agreement, shall be entitled to exercise all rights of a General
Partner or Limited Partner, as applicable, relating to such Units or
Partnership Securities.
(e) The term "Affiliates" when used in Sections 7.5(a) and
7.5(b) with respect to the Managing General Partner shall not include
any Group Member or any Subsidiary of the Group Member. (f)
Anything in this Agreement to the contrary notwithstanding, to the
extent that provisions of Sections 7.7, 7.8, 7.9, 7.10 or other
Sections of this Agreement purport or are interpreted to have the
effect of restricting the fiduciary duties that might otherwise, as a
result of Delaware or other applicable law, be owed by the Managing
General Partner to the Partnership and its Limited Partners, or to
constitute a waiver or consent by the Limited Partners to any such
restriction, such provisions shall be inapplicable and have no effect
in determining whether the Managing General Partner has complied with
its fiduciary duties in connection with determinations made by it
under this Section 7.5.
7.6 LOANS FROM THE GENERAL PARTNERS; LOANS OR CONTRIBUTIONS FROM
THE PARTNERSHIP; CONTRACTS WITH AFFILIATES; CERTAIN
RESTRICTIONS ON THE GENERAL PARTNERS
(a) The General Partners or their Affiliates may lend to any
Group Member, and any Group Member may borrow from the General
Partners or any of their Affiliates, funds needed or desired by the
Group Member for such periods of time and in such amounts as the
Managing General Partner may determine; provided, however, that in any
such case the lending party may not charge the borrowing party
interest at a rate greater than the rate that would be charged the
borrowing party or impose terms less favorable to the borrowing party
than would be charged or imposed on the borrowing party by unrelated
lenders on comparable loans made on an arm's-length basis (without
reference to the lending party's financial abilities or guarantees).
The borrowing party shall reimburse the lending party for any costs
(other than any additional interest costs) incurred by the lending
party in connection with the borrowing of such funds. For purposes of
this Section 7.6(a) and Section 7.6(b), the term "Group Member" shall
include any Affiliate of a Group Member that is controlled by the
Group Member. No Group Member may lend funds to the General Partners
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or any of their Affiliates (other than another Group Member).
(b) The Partnership may lend or contribute to any Group Member,
and any Group Member may borrow from the Partnership, funds on terms
and conditions established in the sole discretion of the Managing
General Partner; provided, however, that the Partnership may not
charge the Group Member interest at a rate less than the rate that
would be charged to the Group Member (without reference to the General
Partners' financial abilities or guarantees) by unrelated lenders on
comparable loans. The foregoing authority shall be exercised by the
Managing General Partner in its sole discretion and shall not create
any right or benefit in favor of any Group Member or any other Person.
(c) The Managing General Partner may itself, or may enter into
an agreement with any of its Affiliates to, render services to a Group
Member or to the Managing General Partner in the discharge of its
duties as general partner of the Partnership. Any services rendered to
a Group Member by the Managing General Partner or any of its
Affiliates shall be on terms that are fair and reasonable to the
Partnership; provided, however, that the requirements of this
Section 7.6(c) shall be deemed satisfied as to (i) any transaction
approved by Special Approval, (ii) any transaction, the terms of which
are no less favorable to the Partnership Group than those generally
being provided to or available from unrelated third parties or
(iii) any transaction that, taking into account the totality of the
relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership Group), is equitable to the Partnership Group. The
provisions of Section 7.4 shall apply to the rendering of services
described in this Section 7.6(c).
(d) The Partnership Group may transfer assets to joint ventures,
other partnerships, corporations, limited liability companies or other
business entities in which it is or thereby becomes a participant upon
such terms and subject to such conditions as are consistent with this
Agreement and applicable law.
(e) Neither the General Partners nor any of their Affiliates
shall sell, transfer or convey any property to, or purchase any
property from, the Partnership, directly or indirectly, except
pursuant to transactions that are fair and reasonable to the
Partnership; provided, however, that the requirements of this
Section 7.6(e) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to Sections 5.2 and 5.3, the
Contribution and Conveyance Agreement and any other transactions
described in or contemplated by the Registration Statement, (ii) any
transaction approved by Special Approval, (iii) any transaction, the
terms of which are no less favorable to the Partnership than those
generally being provided to or available from unrelated third parties,
or (iv) any transaction that, taking into account the totality of the
relationships between the parties involved (including other
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transactions that may be particularly favorable or advantageous to the
Partnership), is equitable to the Partnership. With respect to any
contribution of assets to the Partnership in exchange for Partnership
Securities, the Audit Committee, in determining whether the
appropriate number of Partnership Securities are being issued, may
take into account, among other things, the fair market value of the
assets, the liquidated and contingent liabilities assumed, the tax
basis in the assets, the extent to which tax-only allocations to the
transferor will protect the existing partners of the Partnership
against a low tax basis, and such other factors as the Audit Committee
deems relevant under the circumstances.
(f) The General Partners and their Affiliates will have no
obligation to permit any Group Member to use any facilities or assets
of the General Partners and their Affiliates, except as may be
provided in contracts entered into from time to time specifically
dealing with such use, nor shall there be any obligation on the part
of the General Partners or their Affiliates to enter into such
contracts.
(g) Without limitation of Sections 7.6(a) through 7.6(f), and
notwithstanding anything to the contrary in this Agreement, the
existence of the conflicts of interest described in the Registration
Statement are hereby approved by all Partners.
7.7 INDEMNIFICATION
(a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, all Indemnitees
shall be indemnified and held harmless by the Partnership from and
against any and all losses, claims, damages, liabilities, joint or
several, expenses (including legal fees and expenses), judgments,
fines, penalties, interest, settlements or other amounts arising from
any and all claims, demands, actions, suits or proceedings, whether
civil, criminal, administrative or investigative, in which any
Indemnitee may be involved, or is threatened to be involved, as a
party or otherwise, by reason of its status as an Indemnitee;
provided, that in each case the Indemnitee acted in good faith and in
a manner that such Indemnitee reasonably believed to be in, or (in the
case of a Person other than a General Partner) not opposed to, the
best interests of the Partnership and, with respect to any criminal
proceeding, had no reasonable cause to believe its conduct was
unlawful; provided, further, no indemnification pursuant to this
Section 7.7 shall be available to the General Partners with respect to
their obligations incurred pursuant to the Underwriting Agreement or
the Contribution and Conveyance Agreement (other than obligations
incurred by the Managing General Partner on behalf of the Partnership
or the Operating Partnership). The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea
of nolo contendere, or its equivalent, shall not create a presumption
that the Indemnitee acted in a manner contrary to that specified
above. Any indemnification pursuant to this Section 7.7 shall be made
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only out of the assets of the Partnership, it being agreed that the
General Partners shall not be personally liable for such
indemnification and shall have no obligation to contribute or loan any
monies or property to the Partnership to enable it to effectuate such
indemnification.
(b) To the fullest extent permitted by law, expenses (including
legal fees and expenses) incurred by an Indemnitee who is indemnified
pursuant to Section 7.7(a) in defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the
Partnership prior to the final disposition of such claim, demand,
action, suit or proceeding upon receipt by the Partnership of any
undertaking by or on behalf of the Indemnitee to repay such amount if
it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 7.7.
(c) The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee may be entitled
under any agreement, pursuant to any vote of the holders of
Outstanding Limited Partner Interests, as a matter of law or
otherwise, both as to actions in the Indemnitee's capacity as an
Indemnitee and as to actions in any other capacity (including any
capacity under the Underwriting Agreement), and shall continue as to
an Indemnitee who has ceased to serve in such capacity and shall inure
to the benefit of the heirs, successors, assigns and administrators of
the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the
General Partners or their Affiliates for the cost of) insurance, on
behalf of the General Partners, their Affiliates and such other
Persons as the Managing General Partner shall determine, against any
liability that may be asserted against or expense that may be incurred
by such Person in connection with the Partnership's activities or such
Person's activities on behalf of the Partnership, regardless of
whether the Partnership would have the power to indemnify such Person
against such liability under the provisions of this Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an
employee benefit plan whenever the performance by it of its duties to
the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan;
excise taxes assessed on an Indemnitee with respect to an employee
benefit plan pursuant to applicable law shall constitute "fines"
within the meaning of Section 7.7(a); and action taken or omitted by
it with respect to any employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest
of the participants and beneficiaries of the plan shall be deemed to
be for a purpose which is in, or not opposed to, the best interests of
the Partnership.
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(f) In no event may an Indemnitee subject the Limited Partners
to personal liability by reason of the indemnification provisions set
forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole
or in part under this Section 7.7 because the Indemnitee had an
interest in the transaction with respect to which the indemnification
applies if the transaction was otherwise permitted by the terms of
this Agreement.
(h) The provisions of this Section 7.7 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of any
other Persons.
(i) No amendment, modification or repeal of this Section 7.7 or
any provision hereof shall in any manner terminate, reduce or impair
the right of any past, present or future Indemnitee to be indemnified
by the Partnership, nor the obligations of the Partnership to
indemnify any such Indemnitee under and in accordance with the
provisions of this Section 7.7 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from
or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
7.8 LIABILITY OF INDEMNITEES
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partners, the Assignees or any other Persons
who have acquired interests in the Partnership Securities, for losses
sustained or liabilities incurred as a result of any act or omission
if such Indemnitee acted in good faith.
(b) Subject to its obligations and duties as Managing General
Partner set forth in Section 7.1(a), the Managing General Partner may
exercise any of the powers granted to it by this Agreement and perform
any of the duties imposed upon it hereunder either directly or by or
through its agents, and the Managing General Partner shall not be
responsible for any misconduct or negligence on the part of any such
agent appointed by the Managing General Partner in good faith.
(c) To the extent that, at law or in equity, an Indemnitee has
duties (including fiduciary duties) and liabilities relating thereto
to the Partnership or to the Partners, the General Partners and any
other Indemnitee acting in connection with the Partnership's business
or affairs shall not be liable to the Partnership or to any Partner
for its good faith reliance on the provisions of this Agreement. The
provisions of this Agreement, to the extent that they restrict or
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otherwise modify the duties and liabilities of an Indemnitee otherwise
existing at law or in equity, are agreed by the Partners to replace
such other duties and liabilities of such Indemnitee.
(d) Any amendment, modification or repeal of this Section 7.8 or
any provision hereof shall be prospective only and shall not in any
way affect the limitations on the liability to the Partnership, the
Limited Partners, the General Partners, and the Partnership's and
General Partners' directors, officers and employees under this
Section 7.8 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating
to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
7.9 RESOLUTION OF CONFLICTS OF INTEREST
(a) Unless otherwise expressly provided in this Agreement or the
Operating Partnership Agreement, whenever a potential conflict of
interest exists or arises between any of the General Partners or any
of their Affiliates, on the one hand, and the Partnership, the
Operating Partnership, any Partner or any Assignee, on the other, any
resolution or course of action by the Managing General Partner or its
Affiliates in respect of such conflict of interest shall be permitted
and deemed approved by all Partners, and shall not constitute a breach
of this Agreement, of the Operating Partnership Agreement, of any
agreement contemplated herein or therein, or of any duty stated or
implied by law or equity, if the resolution or course of action is, or
by operation of this Agreement is deemed to be, fair and reasonable to
the Partnership. The Managing General Partner shall be authorized but
not required in connection with its resolution of such conflict of
interest to seek Special Approval of such resolution. Any conflict of
interest and any resolution of such conflict of interest shall be
conclusively deemed fair and reasonable to the Partnership if such
conflict of interest or resolution is (i) approved by Special Approval
(as long as the material facts known to the Managing General Partner
or any of its Affiliates regarding any proposed transaction were
disclosed to the Audit Committee at the time it gave its approval),
(ii) on terms no less favorable to the Partnership than those
generally being provided to or available from unrelated third parties
or (iii) fair to the Partnership, taking into account the totality of
the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership). The Managing General Partner may also adopt a resolution
or course of action that has not received Special Approval. The
Managing General Partner (including the Audit Committee in connection
with Special Approval) shall be authorized in connection with its
determination of what is "fair and reasonable" to the Partnership and
in connection with its resolution of any conflict of interest to
consider (A) the relative interests of any party to such conflict,
agreement, transaction or situation and the benefits and burdens
relating to such interest; (B) any customary or accepted industry
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practices and any customary or historical dealings with a particular
Person; (C) any applicable generally accepted accounting practices or
principles; and (D) such additional factors as the Managing General
Partner (including the Audit Committee) determines in its sole
discretion to be relevant, reasonable or appropriate under the
circumstances. Nothing contained in this Agreement, however, is
intended to nor shall it be construed to require the Managing General
Partner (including the Audit Committee) to consider the interests of
any Person other than the Partnership. In the absence of bad faith by
the Managing General Partner, the resolution, action or terms so made,
taken or provided by the Managing General Partner with respect to such
matter shall not constitute a breach of this Agreement or any other
agreement contemplated herein or a breach of any standard of care or
duty imposed herein or therein or, to the extent permitted by law,
under the Delaware Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated
hereby provides that the Managing General Partner or any of its
Affiliates is permitted or required to make a decision (i) in its
"sole discretion" or "discretion," that it deems "necessary or
appropriate" or "necessary or advisable" or under a grant of similar
authority or latitude, except as otherwise provided herein, the
Managing General Partner or such Affiliate shall be entitled to
consider only such interests and factors as it desires and shall have
no duty or obligation to give any consideration to any interest of, or
factors affecting, the Partnership, the Operating Partnership, any
Limited Partner or any Assignee, (ii) it may make such decision in its
sole discretion (regardless of whether there is a reference to "sole
discretion" or "discretion") unless another express standard is
provided for, or (iii) in "good faith" or under another express
standard, the Managing General Partner or such Affiliate shall act
under such express standard and shall not be subject to any other or
different standards imposed by this Agreement, the Operating
Partnership Agreement, any other agreement contemplated hereby or
under the Delaware Act or any other law, rule or regulation. In
addition, any actions taken by the Managing General Partner or such
Affiliate consistent with the standards of "reasonable discretion" set
forth in the definitions of Available Cash or Operating Surplus shall
not constitute a breach of any duty of the Managing General Partner to
the Partnership or the Limited Partners. The Managing General Partner
shall have no duty, express or implied, to sell or otherwise dispose
of any asset of the Partnership Group other than in the ordinary
course of business. No borrowing by any Group Member or the approval
thereof by the Managing General Partner shall be deemed to constitute
a breach of any duty of the Managing General Partner to the
Partnership or the Limited Partners by reason of the fact that the
purpose or effect of such borrowing is directly or indirectly to
(A) enable distributions to the General Partners or their Affiliates
(including in their capacities as Limited Partners) to exceed 1% of
the total amount distributed to all partners or (B) hasten the
expiration of the Subordination Period or the conversion of any
Subordinated Units into Common Units.
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(c) Whenever a particular transaction, arrangement or resolution
of a conflict of interest is required under this Agreement to be "fair
and reasonable" to any Person, the fair and reasonable nature of such
transaction, arrangement or resolution shall be considered in the
context of all similar or related transactions.
(d) The Unitholders hereby authorize the Managing General
Partner, on behalf of the Partnership as a partner of a Group Member,
to approve of actions by the general partner of such Group Member
similar to those actions permitted to be taken by the Managing General
Partner pursuant to this Section 7.9.
7.10 OTHER MATTERS CONCERNING THE MANAGING GENERAL PARTNER
(a) The Managing General Partner may rely and shall be protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties.
(b) The Managing General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers
and other consultants and advisers selected by it, and any act taken
or omitted to be taken in reliance upon the opinion (including an
Opinion of Counsel) of such Persons as to matters that the Managing
General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to
have been done or omitted in good faith and in accordance with such
opinion.
(c) The Managing General Partner shall have the right, in
respect of any of its powers or obligations hereunder, to act through
any of its duly authorized officers, a duly appointed attorney or
attorneys-in-fact or the duly authorized officers of the Partnership.
(d) Any standard of care and duty imposed by this Agreement or
under the Delaware Act or any applicable law, rule or regulation shall
be modified, waived or limited, to the extent permitted by law, as
required to permit the Managing General Partner to act under this
Agreement or any other agreement contemplated by this Agreement and to
make any decision pursuant to the authority prescribed in this
Agreement, so long as such action is reasonably believed by the
Managing General Partner to be in, or not inconsistent with, the best
interests of the Partnership.
7.11 INTENTIONALLY DELETED
7.12 PURCHASE OR SALE OF PARTNERSHIP SECURITIES
The Managing General Partner may cause the Partnership to
purchase or otherwise acquire Partnership Securities; provided that,
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the Managing General Partner may not cause any Group Member to
purchase Subordinated Units during the Subordination Period. As long
as Partnership Securities are held by any Group Member, such
Partnership Securities shall not be considered outstanding for any
purpose, except as otherwise provided herein. The General Partners or
any Affiliate of the General Partners may also purchase or otherwise
acquire and sell or otherwise dispose of Partnership Securities for
its own account, subject to the provisions of Articles IV and X.
7.13 REGISTRATION RIGHTS OF THE GENERAL PARTNERS AND THEIR AFFILIATES
(a) If (i) either of the General Partners or any Affiliate of a
General Partner (including for purposes of this Section 7.13, any
Person that is an Affiliate of a General Partner at the date hereof
notwithstanding that it may later cease to be an Affiliate of a
General Partner) holds Partnership Securities that it desires to sell
and (ii) Rule 144 of the Securities Act (or any successor rule or
regulation to Rule 144) or another exemption from registration is not
available to enable such holder of Partnership Securities (the
"Holder") to dispose of the number of Partnership Securities it
desires to sell at the time it desires to do so without registration
under the Securities Act, then upon the request of either of the
General Partners or any of their Affiliates, the Partnership shall
file with the Commission as promptly as practicable after receiving
such request, and use all reasonable efforts to cause to become
effective and remain effective for a period of not less than six
months following its effective date or such shorter period as shall
terminate when all Partnership Securities covered by such registration
statement have been sold, a registration statement under the
Securities Act registering the offering and sale of the number of
Partnership Securities specified by the Holder; provided, however,
that the Partnership shall not be required to effect more than three
registrations pursuant to this Section 7.13(a); and provided further,
however, that if the Audit Committee determines in its good faith
judgment that a postponement of the requested registration for up to
six months would be in the best interests of the Partnership and its
Partners due to a pending transaction, investigation or other event,
the filing of such registration statement or the effectiveness thereof
may be deferred for up to six months, but not thereafter. In
connection with any registration pursuant to the immediately preceding
sentence, the Partnership shall promptly prepare and file (x) such
documents as may be necessary to register or qualify the securities
subject to such registration under the securities laws of such states
as the Holder shall reasonably request; provided, however, that no
such qualification shall be required in any jurisdiction where, as a
result thereof, the Partnership would become subject to general
service of process or to taxation or qualification to do business as a
foreign corporation or partnership doing business in such jurisdiction
solely as a result of such registration, and (y) such documents as may
be necessary to apply for listing or to list the Partnership
Securities subject to such registration on such National Securities
Exchange as the Holder shall reasonably request, and do any and all
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other acts and things that may reasonably be necessary or advisable to
enable the Holder to consummate a public sale of such Partnership
Securities in such states. Except as set forth in Section 7.13(c), all
costs and expenses of any such registration and offering (other than
the underwriting discounts and commissions) shall be paid by the
Partnership, without reimbursement by the Holder.
(b) If the Partnership shall at any time propose to file a
registration statement under the Securities Act for an offering of
equity securities of the Partnership for cash (other than an offering
relating solely to an employee benefit plan), the Partnership shall
use all reasonable efforts to include such number or amount of
securities held by the Holder in such registration statement as the
Holder shall request. If the proposed offering pursuant to this
Section 7.13(b) shall be an underwritten offering, then, in the event
that the managing underwriter or managing underwriters of such
offering advise the Partnership and the Holder in writing that in
their opinion the inclusion of all or some of the Holder's Partnership
Securities would adversely and materially affect the success of the
offering, the Partnership shall include in such offering only that
number or amount, if any, of securities held by the Holder which, in
the opinion of the managing underwriter or managing underwriters, will
not so adversely and materially affect the offering. Except as set
forth in Section 7.13(c), all costs and expenses of any such
registration and offering (other than the underwriting discounts and
commissions) shall be paid by the Partnership, without reimbursement
by the Holder.
(c) If underwriters are engaged in connection with any
registration referred to in this Section 7.13, the Partnership shall
provide indemnification, representations, covenants, opinions and
other assurance to the underwriters in form and substance reasonably
satisfactory to such underwriters. Further, in addition to and not in
limitation of the Partnership's obligation under Section 7.7, the
Partnership shall, to the fullest extent permitted by law, indemnify
and hold harmless the Holder, its officers, directors and each Person
who controls the Holder (within the meaning of the Securities Act) and
any agent thereof (collectively, "Indemnified Persons") against any
losses, claims, demands, actions, causes of action, assessments,
damages, liabilities (joint or several), costs and expenses (including
interest, penalties and reasonable attorneys' fees and disbursements),
resulting to, imposed upon, or incurred by the Indemnified Persons,
directly or indirectly, under the Securities Act or otherwise
(hereinafter referred to in this Section 7.13(c) as a "claim" and in
the plural as "claims") based upon, arising out of or resulting from
any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which any Partnership
Securities were registered under the Securities Act or any state
securities or Blue Sky laws, in any preliminary prospectus (if used
prior to the effective date of such registration statement), or in any
summary or final prospectus or in any amendment or supplement thereto
(if used during the period the Partnership is required to keep the
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registration statement current), or arising out of, based upon or
resulting from the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements made therein not misleading; provided, however, that the
Partnership shall not be liable to any Indemnified Person to the
extent that any such claim arises out of, is based upon or results
from an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, such
preliminary, summary or final prospectus or such amendment or
supplement, in reliance upon and in conformity with written
information furnished to the Partnership by or on behalf of such
Indemnified Person specifically for use in the preparation thereof.
(d) The provisions of Section 7.13(a) and 7.13(b) shall continue
to be applicable with respect to each of the General Partners (and any
of the General Partners' Affiliates) after it ceases to be a Partner
of the Partnership, during a period of two years subsequent to the
effective date of such cessation and for so long thereafter as is
required for the Holder to sell all of the Partnership Securities with
respect to which it has requested during such two-year period
inclusion in a registration statement otherwise filed or that a
registration statement be filed; provided, however, that the
Partnership shall not be required to file successive registration
statements covering the same Partnership Securities for which
registration was demanded during such two-year period. The provisions
of Section 7.13(c) shall continue in effect thereafter.
(e) Any request to register Partnership Securities pursuant to
this Section 7.13 shall (i) specify the Partnership Securities
intended to be offered and sold by the Person making the request,
(ii) express such Person's present intent to offer such shares for
distribution, (iii) describe the nature or method of the proposed
offer and sale of Partnership Securities, and (iv) contain the
undertaking of such Person to provide all such information and
materials and take all action as may be required in order to permit
the Partnership to comply with all applicable requirements in
connection with the registration of such Partnership Securities.
7.14 RELIANCE BY THIRD PARTIES
Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Partnership shall be entitled to assume that
the Managing General Partner and any officer of the Managing General
Partner authorized by the Managing General Partner to act on behalf of
and in the name of the Partnership has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf
of the Partnership, and such Person shall be entitled to deal with the
Managing General Partner or any such officer as if it were the
Partnership's sole party in interest, both legally and beneficially.
Each Limited Partner hereby waives any and all defenses or other
remedies that may be available against such Person to contest, negate
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or disaffirm any action of the Managing General Partner or any such
officer in connection with any such dealing. In no event shall any
Person dealing with the Managing General Partner or any such officer
or its representatives be obligated to ascertain that the terms of the
Agreement have been complied with or to inquire into the necessity or
expedience of any act or action of the Managing General Partner or any
such officer or its representatives. Each and every certificate,
document or other instrument executed on behalf of the Partnership by
the Managing General Partner or its representatives shall be
conclusive evidence in favor of any and every Person relying thereon
or claiming thereunder that (a) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement
was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and
empowered to do so for and on behalf of the Partnership and (c) such
certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is
binding upon the Partnership.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 RECORDS AND ACCOUNTING
The Managing General Partner shall keep or cause to be kept at
the principal office of the Partnership appropriate books and records
with respect to the Partnership's business, including all books and
records necessary to provide to the Limited Partners any information
required to be provided pursuant to Section 3.4(a). Any books and
records maintained by or on behalf of the Partnership in the regular
course of its business, including the record of the Record Holders and
Assignees of Units or other Partnership Securities, books of account
and records of Partnership proceedings, may be kept on, or be in the
form of, computer disks, hard drives, punch cards, magnetic tape,
photographs, micrographics or any other information storage device;
provided, that the books and records so maintained are convertible
into clearly legible written form within a reasonable period of time.
The books of the Partnership shall be maintained, for financial
reporting purposes, on an accrual basis in accordance with U.S. GAAP.
8.2 FISCAL YEAR
The fiscal year of the Partnership shall be a fiscal year ending
June 30.
8.3 REPORTS
(a) As soon as practicable, but in no event later than 120 days
after the close of each fiscal year of the Partnership, the Managing
General Partner shall cause to be mailed or furnished to each Record
Holder of a Unit as of a date selected by the Managing General Partner
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in its discretion, an annual report containing financial statements of
the Partnership for such fiscal year of the Partnership, presented in
accordance with U.S. GAAP, including a balance sheet and statements of
operations, Partnership equity and cash flows, such statements to be
audited by a firm of independent public accountants selected by the
Managing General Partner.
(b) As soon as practicable, but in no event later than 90 days
after the close of each Quarter except the last Quarter of each fiscal
year, the Managing General Partner shall cause to be mailed or
furnished to each Record Holder of a Unit, as of a date selected by
the Managing General Partner in its discretion, a report containing
unaudited financial statements of the Partnership and such other
information as may be required by applicable law, regulation or
rule of any National Securities Exchange on which the Units are listed
for trading, or as the Managing General Partner determines to be
necessary or appropriate.
ARTICLE IX
TAX MATTERS
9.1 TAX RETURNS AND INFORMATION
The Partnership shall timely file all returns of the Partnership
that are required for federal, state and local income tax purposes on
the basis of the accrual method and a taxable year ending on
December 31. The tax information reasonably required by Record Holders
for federal and state income tax reporting purposes with respect to a
taxable year shall be furnished to them within 90 days of the close of
the calendar year in which the Partnership's taxable year ends. The
classification, realization and recognition of income, gain, losses
and deductions and other items shall be on the accrual method of
accounting for federal income tax purposes.
9.2 TAX ELECTIONS
(a) The Partnership shall make the election under Section 754 of
the Code in accordance with applicable regulations thereunder, subject
to the reservation of the right to seek to revoke any such election
upon the Managing General Partner's determination that such revocation
is in the best interests of the Limited Partners. Notwithstanding any
other provision herein contained, for the purposes of computing the
adjustments under Section 743(b) of the Code, the Managing General
Partner shall be authorized (but not required) to adopt a convention
whereby the price paid by a transferee of a Limited Partner Interest
will be deemed to be the lowest quoted closing price of the Limited
Partner Interests on any National Securities Exchange on which such
Limited Partner Interests are traded during the calendar month in
which such transfer is deemed to occur pursuant to Section 6.2(g)
without regard to the actual price paid by such transferee.
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(b) The Partnership shall elect to deduct expenses incurred in
organizing the Partnership ratably over a sixty-month period as
provided in Section 709 of the Code.
(c) Except as otherwise provided herein, the Managing General
Partner shall determine whether the Partnership should make any other
elections permitted by the Code.
9.3 TAX CONTROVERSIES
Subject to the provisions hereof, the Managing General Partner is
designated as the Tax Matters Partner (as defined in the Code) and is
authorized and required to represent the Partnership (at the
Partnership's expense) in connection with all examinations of the
Partnership's affairs by tax authorities, including resulting
administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. Each
Partner agrees to cooperate with the Managing General Partner and to
do or refrain from doing any or all things reasonably required by the
Managing General Partner to conduct such proceedings.
9.4 WITHHOLDING
Notwithstanding any other provision of this Agreement, the
Managing General Partner is authorized to take any action that it
determines in its discretion to be necessary or appropriate to cause
the Partnership and the Operating Partnership to comply with any
withholding requirements established under the Code or any other
federal, state or local law including, without limitation, pursuant to
Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that the
Partnership is required or elects to withhold and pay over to any
taxing authority any amount resulting from the allocation or
distribution of income to any Partner or Assignee (including, without
limitation, by reason of Section 1446 of the Code), the amount
withheld may at the discretion of the Managing General Partner be
treated by the Partnership as a distribution of cash pursuant to
Section 6.3 in the amount of such withholding from such Partner.
ARTICLE X
ADMISSION OF PARTNERS
10.1 ADMISSION OF INITIAL LIMITED PARTNERS
Upon the issuance by the Partnership of Subordinated Units and
Incentive Distribution Rights to the General Partners and Subordinated
Units to EESC as described in Section 5.2, each of the General
Partners and EESC shall be deemed to have been admitted to the
Partnership as a Limited Partner in respect of the Subordinated Units
and Incentive Distribution Rights issued to it. Upon the issuance by
the Partnership of Common Units to the Underwriters as described in
Section 5.3 in connection with the Initial Offering and the execution
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by each Underwriter of a Transfer Application, the Managing General
Partner shall admit the Underwriters to the Partnership as Initial
Limited Partners in respect of the Common Units purchased by them.
10.2 ADMISSION OF SUBSTITUTED LIMITED PARTNER
By transfer of a Limited Partner Interest in accordance with
Article IV, the transferor shall be deemed to have given the
transferee the right to seek admission as a Substituted Limited
Partner subject to the conditions of, and in the manner permitted
under, this Agreement. A transferor of a Certificate representing a
Limited Partner Interest shall, however, only have the authority to
convey to a purchaser or other transferee who does not execute and
deliver a Transfer Application (a) the right to negotiate such
Certificate to a purchaser or other transferee and (b) the right to
transfer the right to request admission as a Substituted Limited
Partner to such purchaser or other transferee in respect of the
transferred Limited Partner Interests. Each transferee of a Limited
Partner Interest (including any nominee holder or an agent acquiring
such Limited Partner Interest for the account of another Person) who
executes and delivers a Transfer Application shall, by virtue of such
execution and delivery, be an Assignee and be deemed to have applied
to become a Substituted Limited Partner with respect to the Limited
Partner Interests so transferred to such Person. Such Assignee shall
become a Substituted Limited Partner (x) at such time as the Managing
General Partner consents thereto, which consent may be given or
withheld in the Managing General Partner's discretion, and (y) when
any such admission is shown on the books and records of the
Partnership. If such consent is withheld, such transferee shall be an
Assignee. An Assignee shall have an interest in the Partnership
equivalent to that of a Limited Partner with respect to allocations
and distributions, including liquidating distributions, of the
Partnership. With respect to voting rights attributable to Limited
Partner Interests that are held by Assignees, the Managing General
Partner shall be deemed to be the Limited Partner with respect thereto
and shall, in exercising the voting rights in respect of such Limited
Partner Interests on any matter, vote such Limited Partner Interests
at the written direction of the Assignee who is the Record Holder of
such Limited Partner Interests. If no such written direction is
received, such Limited Partner Interests will not be voted. An
Assignee shall have no other rights of a Limited Partner.
10.3 ADMISSION OF SUCCESSOR GENERAL PARTNER
A successor General Partner approved pursuant to Section 11.1 or
11.2 or the transferee of or successor to all of a General Partner's
Partnership Interest as general partner in the Partnership pursuant to
Section 4.6 who is proposed to be admitted as a successor General
Partner shall be admitted to the Partnership as a General Partner,
effective immediately prior to the withdrawal or removal of the
predecessor or transferring General Partner pursuant to Section 11.1
or 11.2 or the transfer of a General Partner's Partnership Interest as
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a general partner in the Partnership pursuant to Section 4.6,
provided, however, that no such successor shall be admitted to the
Partnership until compliance with the terms of Section 4.6 has
occurred and such successor has executed and delivered such other
documents or instruments as may be required to effect such admission.
Any such successor shall, subject to the terms hereof, carry on the
business of the members of the Partnership Group without dissolution.
10.4 ADMISSION OF ADDITIONAL LIMITED PARTNERS
(a) A Person (other than the General Partners, an Initial
Limited Partner or a Substituted Limited Partner) who makes a Capital
Contribution to the Partnership in accordance with this Agreement
shall be admitted to the Partnership as an Additional Limited Partner
only upon furnishing to the Managing General Partner (i) evidence of
acceptance in form satisfactory to the Managing General Partner of all
of the terms and conditions of this Agreement, including the power of
attorney granted in Section 2.6, and (ii) such other documents or
instruments as may be required in the discretion of the Managing
General Partner to effect such Person's admission as an Additional
Limited Partner.
(b) Notwithstanding anything to the contrary in this
Section 10.4, no Person shall be admitted as an Additional Limited
Partner without the consent of the Managing General Partner, which
consent may be given or withheld in the Managing General Partner's
discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such
Person is recorded as such in the books and records of the
Partnership, following the consent of the Managing General Partner to
such admission.
10.5 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
To effect the admission to the Partnership of any Partner, the
Managing General Partner shall take all steps necessary and
appropriate under the Delaware Act to amend the records of the
Partnership to reflect such admission and, if necessary, to prepare as
soon as practicable an amendment to this Agreement and, if required by
law, the Managing General Partner shall prepare and file an amendment
to the Certificate of Limited Partnership, and the Managing General
Partner may for this purpose, among others, exercise the power of
attorney granted pursuant to Section 2.6.
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
11.1 WITHDRAWAL OF THE GENERAL PARTNERS
(a) The Managing General Partner shall be deemed to have
withdrawn from the Partnership upon the occurrence of any one of the
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following events (each such event herein referred to as an "Event of
Withdrawal");
(i) The Managing General Partner voluntarily withdraws from
the Partnership by giving written notice to the other Partners
(and it shall be deemed that the Managing General Partner has
withdrawn pursuant to this Section 11.1(a)(i) if the Managing
General Partner voluntarily withdraws as general partner of the
Operating Partnership);
(ii) The Managing General Partner transfers all of its
rights as Managing General Partner pursuant to Section 4.6;
(iii) The Managing General Partner is removed pursuant
to Section 11.2;
(iv) The Managing General Partner (A) makes a general
assignment for the benefit of creditors; (B) files a voluntary
bankruptcy petition for relief under Chapter 7 of the United
States Bankruptcy Code; (C) files a petition or answer seeking
for itself a liquidation, dissolution or similar relief (but not
a reorganization) under any law; (D) files an answer or other
pleading admitting or failing to contest the material allegations
of a petition filed against the Managing General Partner in a
proceeding of the type described in clauses (A)-(C) of this
Section 11.1(a)(iv); or (E) seeks, consents to or acquiesces in
the appointment of a trustee (but not a debtor in possession),
receiver or liquidator of the Managing General Partner or of all
or any substantial part of its properties;
(v) A final and non-appealable order of relief under
Chapter 7 of the United States Bankruptcy Code is entered by a
court with appropriate jurisdiction pursuant to a voluntary or
involuntary petition by or against the Managing General Partner;
or
(vi) (A) in the event the Managing General Partner is a
corporation, a certificate of dissolution or its equivalent is
filed for the Managing General Partner, or 90 days expire after
the date of notice to the Managing General Partner of revocation
of its charter without a reinstatement of its charter, under the
laws of its state of incorporation; (B) in the event the Managing
General Partner is a partnership, the dissolution and
commencement of winding up of the Managing General Partner;
(C) in the event the Managing General Partner is acting in such
capacity by virtue of being a trustee of a trust, the termination
of the trust; (D) in the event the Managing General Partner is a
natural person, his death or adjudication of incompetency; and
(E) otherwise in the event of the termination of the Managing
General Partner.
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If an Event of Withdrawal specified in Section 11.1(a)(iv),
(v) or (vi)(A), (B), (C) or (E) occurs, the withdrawing Managing
General Partner shall give notice to the Limited Partners within 30
days after such occurrence. The Partners hereby agree that only the
Events of Withdrawal described in this Section 11.1 shall result in
the withdrawal of the Managing General Partner from the Partnership.
(b) Withdrawal of the Managing General Partner from the
Partnership upon the occurrence of an Event of Withdrawal shall not
constitute a breach of this Agreement under the following
circumstances: (i) at any time during the period beginning on the
Closing Date and ending at 12:00 midnight, Eastern Standard Time, on
December 31, 2006, the Managing General Partner voluntarily withdraws
by giving at least 90 days' advance notice of its intention to
withdraw to the Limited Partners; provided that prior to the effective
date of such withdrawal, the withdrawal is approved by Unitholders
holding at least a Unit Majority and the Managing General Partner
delivers to the Partnership an Opinion of Counsel ("Withdrawal Opinion
of Counsel") that such withdrawal (following the selection of the
successor General Partner) would not result in the loss of the limited
liability of any Limited Partner or of the limited partner of the
Operating Partnership or cause the Partnership or the Operating
Partnership to be treated as an association taxable as a corporation
or otherwise to be taxed as an entity for federal income tax purposes
(to the extent not previously treated as such); (ii) at any time after
12:00 midnight, Eastern Standard Time, on December 31, 2006, the
Managing General Partner voluntarily withdraws by giving at least 90
days' advance notice to the Unitholders, such withdrawal to take
effect on the date specified in such notice; (iii) at any time that
the Managing General Partner ceases to be the Managing General Partner
pursuant to Section 11.1(a)(ii) or is removed pursuant to
Section 11.2; or (iv) notwithstanding clause (i) of this sentence, at
any time that the Managing General Partner voluntarily withdraws by
giving at least 90 days' advance notice of its intention to withdraw
to the Limited Partners, such withdrawal to take effect on the date
specified in the notice, if at the time such notice is given one
Person and its Affiliates (other than the Managing General Partner and
its Affiliates) own beneficially or of record or control at least 50%
of the Outstanding Units. The withdrawal of the Managing General
Partner from the Partnership upon the occurrence of an Event of
Withdrawal shall also constitute the withdrawal of the Managing
General Partner as general partner of the other Group Members. If the
Managing General Partner gives a notice of withdrawal pursuant to
Section 11.1(a)(i), the holders of a Unit Majority, may, prior to the
effective date of such withdrawal, elect a successor Managing General
Partner. The Person so elected as successor Managing General Partner
shall automatically become the successor general partner of the other
Group Members of which the Managing General Partner is a general
partner. If, prior to the effective date of the Managing General
Partner's withdrawal, a successor is not selected by the Unitholders
as provided herein or the Partnership does not receive a Withdrawal
Opinion of Counsel, the Partnership shall be dissolved in accordance
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with Section 12.1. Any successor Managing General Partner elected in
accordance with the terms of this Section 11.1 shall be subject to the
provisions of Section 10.3.
(c) An Event of Withdrawal of the Managing General Partner shall
also be an Event of Withdrawal of the Special General Partner from the
Partnership and as general partner of other Group Members of which the
Special General Partner is a general partner at the same time and upon
the same conditions as set forth in Sections 11.1(a) and 11.1(b) with
respect to the Managing General Partner. The Partners hereby agree
that only the Withdrawal Events described in Section 11.1 with respect
to the Managing General Partner shall result in the withdrawal of the
Special General Partner. Upon a withdrawal of the Special General
Partner, the Unitholders are not required to elect a successor Special
General Partner of the Partnership.
11.2 REMOVAL OF THE MANAGING GENERAL PARTNER
The Managing General Partner may be removed if such removal is
approved by the Unitholders holding at least 66 2/3% of the
Outstanding Units (including Units held by the General Partners and
their Affiliates). Any such action by such holders for removal of the
Managing General Partner must also provide for the election of a
successor Managing General Partner by the Unitholders holding at least
a Unit Majority (including Units held by the General Partners and
their Affiliates). Such removal shall be effective immediately
following the admission of a successor Managing General Partner
pursuant to Section 10.3. The removal of the Managing General Partner
shall also automatically constitute the removal of the Managing
General Partner as general partner of the other Group Members of which
the Managing General Partner is a general partner. If a Person is
elected as a successor Managing General Partner in accordance with the
terms of this Section 11.2, such Person shall, upon admission pursuant
to Section 10.3, automatically become a successor general partner of
the other Group Members of which the Managing General Partner is a
general partner. The right of the holders of Outstanding Units to
remove the Managing General Partner shall not exist or be exercised
unless the Partnership has received an opinion opining as to the
matters covered by a Withdrawal Opinion of Counsel. Any successor
Managing General Partner elected in accordance with the terms of this
Section 11.2 shall be subject to the provisions of Section 10.3.
11.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR GENERAL PARTNER
(a) In the event of (i) withdrawal of the Managing General
Partner under circumstances where such withdrawal does not violate
this Agreement or (ii) removal of the Managing General Partner by the
holders of Outstanding Units under circumstances where Cause does not
exist, if a successor Managing General Partner is elected in
accordance with the terms of Section 11.1 or 11.2, the Departing
Partner shall have the option exercisable prior to the effective date
of the departure of such Departing Partner to require its successor to
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purchase its Partnership Interest as a general partner in the
Partnership and its partnership interest as the general partner in the
other Group Members and all of its Incentive Distribution Rights
(collectively, the "Combined Interest") in exchange for an amount in
cash equal to the fair market value of such Combined Interest, such
amount to be determined and payable as of the effective date of its
departure. If the Managing General Partner is removed by the
Unitholders under circumstances where Cause exists or if the Managing
General Partner withdraws under circumstances where such withdrawal
violates this Agreement or the Operating Partnership Agreement, and if
a successor Managing General Partner is elected in accordance with the
terms of Section 11.1 or 11.2, such successor shall have the option,
exercisable prior to the effective date of the departure of such
Departing Partner, to purchase the Combined Interest for such fair
market value of such Combined Interest. In either event, the Departing
Partner shall be entitled to receive all reimbursements due such
Departing Partner pursuant to Section 7.4, including any
employee-related liabilities (including severance liabilities),
incurred in connection with the termination of any employees employed
by the Managing General Partner for the benefit of the Partnership or
the other Group Members.
For purposes of this Section 11.3(a), the fair market value of
the Combined Interest shall be determined by agreement between the
Departing Partner and its successor or, failing agreement within 30
days after the effective date of such Departing Partner's departure,
by an independent investment banking firm or other independent expert
selected by the Departing Partner and its successor, which, in turn,
may rely on other experts, and the determination of which shall be
conclusive as to such matter. If such parties cannot agree upon one
independent investment banking firm or other independent expert within
45 days after the effective date of such departure, then the Departing
Partner shall designate an independent investment banking firm or
other independent expert, the Departing Partner's successor shall
designate an independent investment banking firm or other independent
expert, and such firms or experts shall mutually select a third
independent investment banking firm or independent expert, which third
independent investment banking firm or other independent expert shall
determine the fair market value of the Combined Interest. In making
its determination, such third independent investment banking firm or
other independent expert may consider the then current trading price
of Units on any National Securities Exchange on which Units are then
listed, the value of the Partnership's assets, the rights and
obligations of the Departing Partner and other factors it may deem
relevant.
(b) If the Combined Interest is not purchased in the manner set
forth in Section 11.3(a), the Departing Partners (or their
transferees) shall become Limited Partners and their Combined Interest
shall be converted into Common Units pursuant to a valuation made by
an investment banking firm or other independent expert selected
pursuant to Section 11.3(a), without reduction in such Partnership
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Interest (but subject to proportionate dilution by reason of the
admission of its successor). Any successor Managing General Partner
shall indemnify the Departing Partners (or their transferees) as to
all debts and liabilities of the Partnership arising on or after the
date on which the Departing Partners (or their transferees) become
Limited Partners. For purposes of this Agreement, conversion of the
Combined Interest to Common Units will be characterized as if the
General Partners (or their transferees) contributed their Combined
Interest to the Partnership in exchange for the newly issued Common
Units.
(c) If a successor Managing General Partner is elected in
accordance with the terms of Section 11.1 or 11.2 and the option
described in Section 11.3(a) is not exercised by the party entitled to
do so, the successor Managing General Partner shall, at the effective
date of its admission to the Partnership, contribute to the
Partnership cash in the amount equal to 1/99th of the Net Agreed
Value of the Partnership's assets on such date. In such event, such
successor Managing General Partner shall, subject to the following
sentence, be entitled to 1% of all Partnership allocations and
distributions. The successor Managing General Partner shall cause this
Agreement to be amended to reflect that, from and after the date of
such successor Managing General Partner's admission, the successor
Managing General Partner's interest in all Partnership distributions
and allocations shall be 1%.
11.4 TERMINATION OF SUBORDINATION PERIOD, CONVERSION OF SUBORDINATED
UNITS AND EXTINGUISHMENT OF CUMULATIVE COMMON UNIT ARREARAGES
Notwithstanding any provision of this Agreement, if the Managing
General Partner is removed as general partner of the Partnership under
circumstances where Cause does not exist and Units held by the General
Partners and their Affiliates are not voted in favor of such removal,
(i) the Subordination Period will end and all Outstanding Subordinated
Units will immediately and automatically convert into Common Units on
a one-for-one basis and (ii) all Cumulative Common Unit Arrearages on
the Common Units will be extinguished.
11.5 WITHDRAWAL OF LIMITED PARTNERS
No Limited Partner shall have any right to withdraw from the
Partnership; provided, however, that when a transferee of a Limited
Partner's Limited Partner Interest becomes a Record Holder of the
Limited Partner Interest so transferred, such transferring Limited
Partner shall cease to be a Limited Partner with respect to the
Limited Partner Interest so transferred.
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ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 DISSOLUTION
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the
admission of a successor Managing General Partner in accordance with
the terms of this Agreement. Upon the removal or withdrawal of the
Managing General Partner, if a successor Managing General Partner is
elected pursuant to Section 11.1 or 11.2, the Partnership shall not be
dissolved and such successor Managing General Partner shall continue
the business of the Partnership. The Partnership shall dissolve, and
(subject to Section 12.2) its affairs shall be wound up, upon:
(a) the expiration of its term as provided in Section 2.7;
(b) an Event of Withdrawal of the Managing General Partner
as provided in Section 11.1(a) (other than Section 11.1(a)(ii)),
unless a successor is elected and an Opinion of Counsel is
received as provided in Section 11.1(b) or 11.2 and such
successor is admitted to the Partnership pursuant to
Section 10.3;
(c) an election to dissolve the Partnership by the Managing
General Partner that is approved by the holders of a Unit
Majority;
(d) the entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Delaware Act; or
(e) the sale of all or substantially all of the assets and
properties of the Partnership Group.
12.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER DISSOLUTION
Upon (a) dissolution of the Partnership following an Event of
Withdrawal caused by the withdrawal or removal of the Managing General
Partner as provided in Section 11.1(a)(i) or (iii) and the failure of
the Partners to select a successor to such Departing Partner pursuant
to Section 11.1 or 11.2, then within 90 days thereafter, or
(b) dissolution of the Partnership upon an event constituting an Event
of Withdrawal as defined in Section 11.1(a)(iv), (v) or (vi), then, to
the maximum extent permitted by law, within 180 days thereafter, the
holders of a Unit Majority may elect to reconstitute the Partnership
and continue its business on the same terms and conditions set forth
in this Agreement by forming a new limited partnership on terms
identical to those set forth in this Agreement and having as the
successor general partner a Person approved by the holders of a Unit
Majority. Unless such an election is made within the applicable time
period as set forth above, the Partnership shall conduct only
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activities necessary to wind up its affairs. If such an election is so
made, then:
(i) the reconstituted Partnership shall continue until the
end of the term set forth in Section 2.7 unless earlier dissolved
in accordance with this Article XII;
(ii) if the successor Managing General Partner is not the
former Managing General Partner, then the interest of the former
Managing General Partner shall be treated in the manner provided
in Section 11.3; and
(iii) all necessary steps shall be taken to cancel this
Agreement and the Certificate of Limited Partnership and to enter
into and, as necessary, to file a new partnership agreement and
certificate of limited partnership, and the successor general
partner may for this purpose exercise the powers of attorney
granted the Managing General Partner pursuant to Section 2.6;
provided, that the right of the holders of a Unit Majority to
approve a successor Managing General Partner and to reconstitute
and to continue the business of the Partnership shall not exist
and may not be exercised unless the Partnership has received an
Opinion of Counsel that (x) the exercise of the right would not
result in the loss of limited liability of any Limited Partner
and (y) neither the Partnership, the reconstituted limited
partnership nor the Operating Partnership would be treated as an
association taxable as a corporation or otherwise be taxable as
an entity for federal income tax purposes upon the exercise of
such right to continue.
12.3 LIQUIDATOR
Upon dissolution of the Partnership, unless the Partnership is
continued under an election to reconstitute and continue the
Partnership pursuant to Section 12.2, the Managing General Partner
shall select one or more Persons to act as Liquidator. The Liquidator
(if other than the Managing General Partner) shall be entitled to
receive such compensation for its services as may be approved by
holders of at least a majority of the Outstanding Common Units and
Subordinated Units voting as a single class. The Liquidator (if other
than the Managing General Partner) shall agree not to resign at any
time without 15 days' prior notice and may be removed at any time,
with or without cause, by notice of removal approved by holders of at
least a majority of the Outstanding Common Units and Subordinated
Units voting as a single class. Upon dissolution, removal or
resignation of the Liquidator, a successor and substitute Liquidator
(who shall have and succeed to all rights, powers and duties of the
original Liquidator) shall within 30 days thereafter be approved by
holders of at least a majority of the Outstanding Common Units and
Subordinated Units voting as a single class. The right to approve a
successor or substitute Liquidator in the manner provided herein shall
be deemed to refer also to any such successor or substitute Liquidator
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approved in the manner herein provided. Except as expressly provided
in this Article XII, the Liquidator approved in the manner provided
herein shall have and may exercise, without further authorization or
consent of any of the parties hereto, all of the powers conferred upon
the Managing General Partner under the terms of this Agreement (but
subject to all of the applicable limitations, contractual and
otherwise, upon the exercise of such powers, other than the limitation
on sale set forth in Section 7.3(b)) to the extent necessary or
desirable in the good faith judgment of the Liquidator to carry out
the duties and functions of the Liquidator hereunder for and during
such period of time as shall be reasonably required in the good faith
judgment of the Liquidator to complete the winding up and liquidation
of the Partnership as provided for herein.
12.4 LIQUIDATION
The Liquidator shall proceed to dispose of the assets of the
Partnership, discharge its liabilities, and otherwise wind up its
affairs in such manner and over such period as the Liquidator
determines to be in the best interest of the Partners, subject to
Section 17-804 of the Delaware Act and the following:
(a) Disposition of Assets. The assets may be disposed of by public
or private sale or by distribution in kind to one or more Partners on
such terms as the Liquidator and such Partner or Partners may agree.
If any property is distributed in kind, the Partner receiving the
property shall be deemed for purposes of Section 12.4(c) to have
received cash equal to its fair market value; and contemporaneously
therewith, appropriate cash distributions must be made to the other
Partners. The Liquidator may, in its absolute discretion, defer
liquidation or distribution of the Partnership's assets for a
reasonable time if it determines that an immediate sale or
distribution of all or some of the Partnership's assets would be
impractical or would cause undue loss to the Partners. The Liquidator
may, in its absolute discretion, distribute the Partnership's assets,
in whole or in part, in kind if it determines that a sale would be
impractical or would cause undue loss to the partners.
(b) Discharge of Liabilities. Liabilities of the Partnership
include amounts owed to Partners otherwise than in respect of their
distribution rights under Article VI. With respect to any liability
that is contingent, conditional or unmatured or is otherwise not yet
due and payable, the Liquidator shall either settle such claim for
such amount as it thinks appropriate or establish a reserve of cash or
other assets to provide for its payment. When paid, any unused portion
of the reserve shall be distributed as additional liquidation
proceeds.
(c) Liquidation Distributions. All property and all cash in excess
of that required to discharge liabilities as provided in
Section 12.4(b) shall be distributed to the Partners in accordance
with, and to the extent of, the positive balances in their respective
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Capital Accounts, as determined after taking into account all Capital
Account adjustments (other than those made by reason of distributions
pursuant to this Section 12.4(c)) for the taxable year of the
Partnership during which the liquidation of the Partnership occurs
(with such date of occurrence being determined pursuant to Treasury
Regulation Section 1.704-1(b)(2)(ii)(g)), and such distribution shall
be made by the end of such taxable year (or, if later, within 90 days
after said date of such occurrence).
12.5 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP
Upon the completion of the distribution of Partnership cash and
property as provided in Section 12.4 in connection with the
liquidation of the Partnership, the Partnership shall be terminated
and the Certificate of Limited Partnership and all qualifications of
the Partnership as a foreign limited partnership in jurisdictions
other than the State of Delaware shall be canceled and such other
actions as may be necessary to terminate the Partnership shall be
taken.
12.6 RETURN OF CONTRIBUTIONS
The General Partners shall not be personally liable for, and
shall have no obligation to contribute or loan any monies or property
to the Partnership to enable it to effectuate, the return of the
Capital Contributions of the Limited Partners or Unitholders, or any
portion thereof, it being expressly understood that any such return
shall be made solely from Partnership assets.
12.7 WAIVER OF PARTITION
To the maximum extent permitted by law, each Partner hereby
waives any right to partition of the Partnership property.
12.8 CAPITAL ACCOUNT RESTORATION
No Limited Partner shall have any obligation to restore any
negative balance in its Capital Account upon liquidation of the
Partnership. Each of the General Partners shall be obligated to
restore any negative balance in its Capital Account upon liquidation
of its interest in the Partnership by the end of the taxable year of
the Partnership during which such liquidation occurs, or, if later,
within 90 days after the date of such liquidation; provided, however,
the Special General Partner's total obligation pursuant to this
Section 12.8 and Section 12.8 of the Operating Partnership Agreement
shall be limited to $78,000,000. The non-contributing General Partner
shall indemnify the contributing General Partner for amounts
contributed to the Partnership pursuant to this Section 12.8 and by it
to the Operating Partnership pursuant to Section 12.8 of the Operating
Partnership Agreement to the extent it exceeds the contributing
General Partner's Pro Rata share of the amounts so contributed,
provided, however, that the Special General Partner's total
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indemnification obligation is limited by the excess of $78,000,000
over the aggregate amount previously contributed by it to the
Partnership pursuant to this Section 12.8 and by it to the Operating
Partnership pursuant to Section 12.8 of the Operating Partnership
Agreement.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
13.1 AMENDMENT TO BE ADOPTED SOLELY BY THE MANAGING GENERAL PARTNER
Each Partner agrees that the Managing General Partner, without
the approval of any Partner or Assignee, may amend any provision of
this Agreement and execute, swear to, acknowledge, deliver, file and
record whatever documents may be required in connection therewith, to
reflect:
(a) a change in the name of the Partnership, the location
of the principal place of business of the Partnership, the
registered agent of the Partnership or the registered office of
the Partnership;
(b) admission, substitution, withdrawal or removal of
Partners in accordance with this Agreement;
(c) a change that, in the sole discretion of the Managing
General Partner, is necessary or advisable to qualify or continue
the qualification of the Partnership as a limited partnership or
a partnership in which the Limited Partners have limited
liability under the laws of any state or to ensure that the
Partnership and the Operating Partnership will not be treated as
an association taxable as a corporation or otherwise taxed as an
entity for federal income tax purposes;
(d) a change that, in the discretion of the Managing
General Partner, (i) does not adversely affect the Limited
Partners in any material respect, (ii) is necessary or advisable
to (A) satisfy any requirements, conditions or guidelines
contained in any opinion, directive, order, ruling or regulation
of any federal or state agency or judicial authority or contained
in any federal or state statute (including the Delaware Act) or
(B) facilitate the trading of the Limited Partner Interest
(including the division of any class or classes of Outstanding
Limited Partner Interest into different classes to facilitate
uniformity of tax consequences within such classes of Limited
Partner Interests) or comply with any rule, regulation, guideline
or requirement of any National Securities Exchange on which the
Limited Partner Interests are or will be listed for trading,
compliance with any of which the Managing General Partner
determines in its discretion to be in the best interests of the
Partnership and the Limited Partners, (iii) is necessary or
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advisable in connection with action taken by the Managing General
Partner pursuant to Section 5.10, or (iv) is required to effect
the intent expressed in the Registration Statement or the intent
of the provisions of this Agreement or is otherwise contemplated
by this Agreement;
(e) a change in the fiscal year or taxable year of the
Partnership and any changes that, in the discretion of the
Managing General Partner, are necessary or advisable as a result
of a change in the fiscal year or taxable year of the Partnership
including, if the Managing General Partner shall so determine, a
change in the definition of "Quarter" and the dates on which
distributions are to be made by the Partnership;
(f) an amendment that is necessary, in the Opinion of
Counsel, to prevent the Partnership, or the General Partners or
their directors, officers, trustees or agents from in any manner
being subjected to the provisions of the Investment Company Act
of 1940, as amended, the Investment Advisers Act of 1940, as
amended, or "plan asset" regulations adopted under the Employee
Retirement Income Security Act of 1974, as amended, regardless of
whether such are substantially similar to plan asset regulations
currently applied or proposed by the United States Department of
Labor;
(g) subject to the terms of Section 5.7, an amendment that,
in the discretion of the Managing General Partner, is necessary
or advisable in connection with the authorization of issuance of
any class or series of Partnership Securities pursuant to
Section 5.6;
(h) any amendment expressly permitted in this Agreement to
be made by the Managing General Partner acting alone;
(i) an amendment effected, necessitated or contemplated by
a Merger Agreement approved in accordance with Section 14.3;
(j) an amendment that, in the discretion of the Managing
General Partner, is necessary or advisable to reflect, account
for and deal with appropriately the formation by the Partnership
of, or investment by the Partnership in, any corporation,
partnership, joint venture, limited liability company or other
entity other than the Operating Partnership, in connection with
the conduct by the Partnership of activities permitted by the
terms of Section 2.4;
(k) a merger or conveyance pursuant to Section 14.3(d); or
(l) any other amendments substantially similar to the
foregoing.
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13.2 AMENDMENT PROCEDURES
Except as provided in Sections 13.1 and 13.3, all amendments to
this Agreement shall be made in accordance with the following
requirements. Amendments to this Agreement may be proposed only by or
with the consent of the Managing General Partner which consent may be
given or withheld in its sole discretion. A proposed amendment shall
be effective upon its approval by the holders of at least a Unit
Majority, unless a greater or different percentage is required under
this Agreement or by Delaware law. Each proposed amendment that
requires the approval of the holders of a specified percentage of
Outstanding Units shall be set forth in a writing that contains the
text of the proposed amendment. If such an amendment is proposed, the
Managing General Partner shall seek the written approval of the
requisite percentage of Outstanding Units or call a meeting of the
Unitholders to consider and vote on such proposed amendment. The
Managing General Partner shall notify all Record Holders upon final
adoption of any such proposed amendments.
13.3 AMENDMENT REQUIREMENTS
(a) Notwithstanding the provisions of Sections 13.1 and
13.2, no provision of this Agreement that establishes a
percentage of Outstanding Units (including Units deemed owned by
the General Partners) required to take any action shall be
amended, altered, changed, repealed or rescinded in any respect
that would have the effect of reducing such voting percentage
unless such amendment is approved by the written consent or the
affirmative vote of holders of Outstanding Units whose aggregate
Outstanding Units constitute not less than the voting requirement
sought to be reduced.
(b) Notwithstanding the provisions of Sections 13.1 and
13.2, no amendment to this Agreement may (i) enlarge the
obligations of any Limited Partner without its consent, unless
such shall be deemed to have occurred as a result of an amendment
approved pursuant to Section 13.3(c), (ii) enlarge the
obligations of, restrict in any way any action by or rights of,
or reduce in any way the amounts distributable, reimbursable or
otherwise payable to, the Managing General Partner or any of its
Affiliates without its consent, which may be given or withheld in
its sole discretion, (iii) change Section 12.1(a) or 12.1(c), or
(iv) change the term of the Partnership or, except as set forth
in Section 12.1(c), give any Person the right to dissolve the
Partnership.
(c) Except as provided in Section 14.3, and except as
otherwise provided, and without limitation of the Managing
General Partner's authority to adopt amendments to this Agreement
as contemplated in Section 13.1, any amendment that would have a
material adverse effect on the rights or preferences of any class
of Partnership Interests in relation to other classes of
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Partnership Interests must be approved by the holders of not less
than a majority of the Outstanding Partnership Interests of the
class affected.
(d) Notwithstanding any other provision of this Agreement,
except for amendments pursuant to Section 13.1 and except as
otherwise provided by Section 14.3(b), no amendments shall become
effective without the approval of the holders of at least 90% of
the Outstanding Common Units and Subordinated Units voting as a
single class unless the Partnership obtains an Opinion of Counsel
to the effect that such amendment will not affect the limited
liability of any Limited Partner under applicable law.
(e) Except as provided in Section 13.1, this Section 13.3
shall only be amended with the approval of the holders of at
least 90% of the Outstanding Units.
13.4 SPECIAL MEETINGS
All acts of Limited Partners to be taken pursuant to this
Agreement shall be taken in the manner provided in this Article XIII.
Special meetings of the Limited Partners may be called by the Managing
General Partner or by Limited Partners owning 20% or more of the
Outstanding Limited Partner Interests of the class or classes for
which a meeting is proposed. Limited Partners shall call a special
meeting by delivering to the Managing General Partner one or more
requests in writing stating that the signing Limited Partners wish to
call a special meeting and indicating the general or specific purposes
for which the special meeting is to be called. Within 60 days after
receipt of such a call from Limited Partners or within such greater
time as may be reasonably necessary for the Partnership to comply with
any statutes, rules, regulations, listing agreements or similar
requirements governing the holding of a meeting or the solicitation of
proxies for use at such a meeting, the Managing General Partner shall
send a notice of the meeting to the Limited Partners either directly
or indirectly through the Transfer Agent. A meeting shall be held at a
time and place determined by the Managing General Partner on a date
not less than 10 days nor more than 60 days after the mailing of
notice of the meeting. Limited Partners shall not vote on matters that
would cause the Limited Partners to be deemed to be taking part in the
management and control of the business and affairs of the Partnership
so as to jeopardize the Limited Partners' limited liability under the
Delaware Act or the law of any other state in which the Partnership is
qualified to do business.
13.5 NOTICE OF A MEETING
Notice of a meeting called pursuant to Section 13.4 shall be
given to the Record Holders of the class or classes of Limited Partner
Interests for which a meeting is proposed in writing by mail or other
means of written communication in accordance with Section 16.1. The
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notice shall be deemed to have been given at the time when deposited
in the mail or sent by other means of written communication.
13.6 RECORD DATE
For purposes of determining the Limited Partners entitled to
notice of or to vote at a meeting of the Limited Partners or to give
approvals without a meeting as provided in Section 13.11, the Managing
General Partner may set a Record Date, which shall not be less than 10
nor more than 60 days before (a) the date of the meeting (unless such
requirement conflicts with any rule, regulation, guideline or
requirement of any National Securities Exchange on which the Limited
Partner Interests are listed for trading, in which case the rule,
regulation, guideline or requirement of such exchange shall govern) or
(b) in the event that approvals are sought without a meeting, the date
by which Limited Partners are requested in writing by the Managing
General Partner to give such approvals.
13.7 ADJOURNMENT
When a meeting is adjourned to another time or place, notice need
not be given of the adjourned meeting and a new Record Date need not
be fixed, if the time and place thereof are announced at the meeting
at which the adjournment is taken, unless such adjournment shall be
for more than 45 days. At the adjourned meeting, the Partnership may
transact any business which might have been transacted at the original
meeting. If the adjournment is for more than 45 days or if a new
Record Date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given in accordance with this Article XIII.
13.8 WAIVER OF NOTICE; APPROVAL OF MEETING; APPROVAL OF MINUTES
The transactions of any meeting of Limited Partners, however
called and noticed, and whenever held, shall be as valid as if it had
occurred at a meeting duly held after regular call and notice, if a
quorum is present either in person or by proxy, and if, either before
or after the meeting, Limited Partners representing such quorum who
were present in person or by proxy and entitled to vote, sign a
written waiver of notice or an approval of the holding of the meeting
or an approval of the minutes thereof. All waivers and approvals shall
be filed with the Partnership records or made a part of the minutes of
the meeting. Attendance of a Limited Partner at a meeting shall
constitute a waiver of notice of the meeting, except when the Limited
Partner does not approve, at the beginning of the meeting, of the
transaction of any business because the meeting is not lawfully called
or convened; and except that attendance at a meeting is not a waiver
of any right to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, if the
disapproval is expressly made at the meeting.
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13.9 QUORUM
The holders of a majority of the Outstanding Limited Partner
Interests of the class or classes for which a meeting has been called
(including Limited Partner Interests deemed owned by the General
Partners) represented in person or by proxy shall constitute a quorum
at a meeting of Limited Partners of such class or classes unless any
such action by the Limited Partners requires approval by holders of a
greater percentage of such Limited Partner Interests, in which case
the quorum shall be such greater percentage. At any meeting of the
Limited Partners duly called and held in accordance with this
Agreement at which a quorum is present, the act of Limited Partners
holding Outstanding Limited Partner Interests that in the aggregate
represent a majority of the Outstanding Limited Partner Interests
entitled to vote and be present in person or by proxy at such meeting
shall be deemed to constitute the act of all Limited Partners, unless
a greater or different percentage is required with respect to such
action under the provisions of this Agreement, in which case the act
of the Limited Partners holding Outstanding Limited Partner Interests
that in the aggregate represent at least such greater or different
percentage shall be required. The Limited Partners present at a duly
called or held meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the withdrawal of
enough Limited Partners to leave less than a quorum, if any action
taken (other than adjournment) is approved by the required percentage
of Outstanding Limited Partner Interests specified in this Agreement
(including Limited Partner Interests deemed owned by the General
Partners). In the absence of a quorum any meeting of Limited Partners
may be adjourned from time to time by the affirmative vote of holders
of at least a majority of the Outstanding Limited Partner Interests
entitled to vote at such meeting (including Limited Partner Interests
deemed owned by the General Partners) represented either in person or
by proxy, but no other business may be transacted, except as provided
in Section 13.7.
13.10 CONDUCT OF A MEETING
The Managing General Partner shall have full power and authority
concerning the manner of conducting any meeting of the Limited
Partners or solicitation of approvals in writing, including the
determination of Persons entitled to vote, the existence of a quorum,
the satisfaction of the requirements of Section 13.4, the conduct of
voting, the validity and effect of any proxies and the determination
of any controversies, votes or challenges arising in connection with
or during the meeting or voting. The Managing General Partner shall
designate a Person to serve as chairman of any meeting and shall
further designate a Person to take the minutes of any meeting. All
minutes shall be kept with the records of the Partnership maintained
by the Managing General Partner. The Managing General Partner may make
such other regulations consistent with applicable law and this
Agreement as it may deem advisable concerning the conduct of any
meeting of the Limited Partners or solicitation of approvals in
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writing, including regulations in regard to the appointment of
proxies, the appointment and duties of inspectors of votes and
approvals, the submission and examination of proxies and other
evidence of the right to vote, and the revocation of approvals in
writing.
13.11 ACTION WITHOUT A MEETING
If authorized by the Managing General Partner, any action that
may be taken at a meeting of the Limited Partners may be taken without
a meeting if an approval in writing setting forth the action so taken
is signed by Limited Partners owning not less than the minimum
percentage of the Outstanding Limited Partner Interests (including
Limited Partner Interests deemed owned by the General Partners) that
would be necessary to authorize or take such action at a meeting at
which all the Limited Partners were present and voted (unless such
provision conflicts with any rule, regulation, guideline or
requirement of any National Securities Exchange on which the Limited
Partner Interests are listed for trading, in which case the rule,
regulation, guideline or requirement of such exchange shall govern).
Prompt notice of the taking of action without a meeting shall be given
to the Limited Partners who have not approved in writing. The Managing
General Partner may specify that any written ballot submitted to
Limited Partners for the purpose of taking any action without a
meeting shall be returned to the Partnership within the time period,
which shall be not less than 20 days, specified by the Managing
General Partner. If a ballot returned to the Partnership does not vote
all of the Limited Partner Interests held by the Limited Partners the
Partnership shall be deemed to have failed to receive a ballot for the
Limited Partner Interests that were not voted. If approval of the
taking of any action by the Limited Partners is solicited by any
Person other than by or on behalf of the Managing General Partner, the
written approvals shall have no force and effect unless and until
(a) they are deposited with the Partnership in care of the Managing
General Partner, (b) approvals sufficient to take the action proposed
are dated as of a date not more than 90 days prior to the date
sufficient approvals are deposited with the Partnership and (c) an
Opinion of Counsel is delivered to the Managing General Partner to the
effect that the exercise of such right and the action proposed to be
taken with respect to any particular matter (i) will not cause the
Limited Partners to be deemed to be taking part in the management and
control of the business and affairs of the Partnership so as to
jeopardize the Limited Partners' limited liability, and (ii) is
otherwise permissible under the state statutes then governing the
rights, duties and liabilities of the Partnership and the Partners.
13.12 VOTING AND OTHER RIGHTS
(a) Only those Record Holders of the Limited Partner Interests
on the Record Date set pursuant to Section 13.6 (and also subject to
the limitations contained in the definition of "Outstanding") shall be
entitled to notice of, and to vote at, a meeting of Limited Partners
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or to act with respect to matters as to which the holders of the
Outstanding Limited Partner Interests have the right to vote or to
act. All references in this Agreement to votes of, or other acts that
may be taken by, the Outstanding Limited Partner Interests shall be
deemed to be references to the votes or acts of the Record Holders of
such Outstanding Limited Partner Interests.
(b) With respect to Limited Partner Interests that are held for
a Person's account by another Person (such as a broker, dealer, bank,
trust company or clearing corporation, or an agent of any of the
foregoing), in whose name such Limited Partner Interests are
registered, such other Person shall, in exercising the voting rights
in respect of such Limited Partner Interests on any matter, and unless
the arrangement between such Persons provides otherwise, vote such
Limited Partner Interests in favor of, and at the direction of, the
Person who is the beneficial owner, and the Partnership shall be
entitled to assume it is so acting without further inquiry. The
provisions of this Section 13.12(b) (as well as all other provisions
of this Agreement) are subject to the provisions of Section 4.3.
ARTICLE XIV
MERGER
14.1 AUTHORITY
The Partnership may merge or consolidate with one or more
corporations, limited liability companies, business trusts or
associations, real estate investment trusts, common law trusts or
unincorporated businesses, including a general partnership or limited
partnership, formed under the laws of the State of Delaware or any
other state of the United States of America, pursuant to a written
agreement of merger or consolidation ("Merger Agreement") in
accordance with this Article XIV.
14.2 PROCEDURE FOR MERGER OR CONSOLIDATION
Merger or consolidation of the Partnership pursuant to this
Article XIV requires the prior approval of the Managing General
Partner. If the Managing General Partner shall determine, in the
exercise of its discretion, to consent to the merger or consolidation,
the Managing General Partner shall approve the Merger Agreement, which
shall set forth:
(a) The names and jurisdictions of formation or
organization of each of the business entities proposing to merge
or consolidate;
(b) The name and jurisdiction of formation or organization
of the business entity that is to survive the proposed merger or
consolidation (the "Surviving Business Entity");
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(c) The terms and conditions of the proposed merger or
consolidation;
(d) The manner and basis of exchanging or converting the
equity securities of each constituent business entity for, or
into, cash, property or general or limited partner interests,
rights, securities or obligations of the Surviving Business
Entity; and (i) if any general or limited partner interests,
securities or rights of any constituent business entity are not
to be exchanged or converted solely for, or into, cash, property
or general or limited partner interests, rights, securities or
obligations of the Surviving Business Entity, the cash, property
or general or limited partner interests, rights, securities or
obligations of any limited partnership, corporation, trust or
other entity (other than the Surviving Business Entity) which the
holders of such general or limited partner interests, securities
or rights are to receive in exchange for, or upon conversion of
their general or limited partner interests, securities or rights,
and (ii) in the case of securities represented by certificates,
upon the surrender of such certificates, which cash, property or
general or limited partner interests, rights, securities or
obligations of the Surviving Business Entity or any general or
limited partnership, corporation, trust or other entity (other
than the Surviving Business Entity), or evidences thereof, are to
be delivered;
(e) A statement of any changes in the constituent documents
or the adoption of new constituent documents (the articles or
certificate of incorporation, articles of trust, declaration of
trust, certificate or agreement of limited partnership or other
similar charter or governing document) of the Surviving Business
Entity to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date
of the filing of the certificate of merger pursuant to
Section 14.4 or a later date specified in or determinable in
accordance with the Merger Agreement (provided, that if the
effective time of the merger is to be later than the date of the
filing of the certificate of merger, the effective time shall be
fixed no later than the time of the filing of the certificate of
merger and stated therein); and
(g) Such other provisions with respect to the proposed
merger or consolidation as are deemed necessary or appropriate by
the Managing General Partner.
14.3 APPROVAL BY LIMITED PARTNERS OF MERGER OR CONSOLIDATION
(a) Except as provided in Section 14.3(d), the Managing
General Partner, upon its approval of the Merger Agreement, shall
direct that the Merger Agreement be submitted to a vote of
Limited Partners, whether at a special meeting or by written
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consent, in either case in accordance with the requirements of
Article XIII. A copy or a summary of the Merger Agreement shall
be included in or enclosed with the notice of a special meeting
or the written consent.
(b) Except as provided in Section 14.3(d), the Merger
Agreement shall be approved upon receiving the affirmative vote
or consent of the holders of a Unit Majority unless the Merger
Agreement contains any provision that, if contained in an
amendment to this Agreement, the provisions of this Agreement or
the Delaware Act would require for its approval the vote or
consent of a greater percentage of the Outstanding Limited
Partner Interests or of any class of Limited Partners, in which
case such greater percentage vote or consent shall be required
for approval of the Merger Agreement.
(c) Except as provided in Section 14.3(d), after such
approval by vote or consent of the Limited Partners, and at any
time prior to the filing of the certificate of merger pursuant to
Section 14.4, the merger or consolidation may be abandoned
pursuant to provisions therefor, if any, set forth in the Merger
Agreement.
(d) Notwithstanding anything else contained in this
Article XIV or in this Agreement, the Managing General Partner is
permitted, in its discretion, without Limited Partner approval,
to merge the Partnership or any Group Member into, or convey all
of the Partnership's assets to, another limited liability entity
which shall be newly formed and shall have no assets, liabilities
or operations at the time of such Merger other than those it
receives from the Partnership or other Group Member if (i) the
Managing General Partner has received an Opinion of Counsel that
the merger or conveyance, as the case may be, would not result in
the loss of the limited liability of any Limited Partner or any
limited partner in the Operating Partnership or cause the
Partnership or Operating Partnership to be treated as an
association taxable as a corporation or otherwise to be taxed as
an entity for federal income tax purposes (to the extent not
previously treated as such), (ii) the sole purpose of such merger
or conveyance is to effect a mere change in the legal form of the
Partnership into another limited liability entity and (iii) the
governing instruments of the new entity provide the Limited
Partners and the Managing General Partner with the same rights
and obligations as are herein contained.
14.4 CERTIFICATE OF MERGER
Upon the required approval by the Managing General Partner and
the Unitholders of a Merger Agreement, a certificate of merger shall
be executed and filed with the Secretary of State of the State of
Delaware in conformity with the requirements of the Delaware Act.
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14.5 EFFECT OF MERGER
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all
property, real, personal and mixed, and all debts due to any of
those business entities and all other things and causes of action
belonging to each of those business entities, shall be vested in
the Surviving Business Entity and after the merger or
consolidation shall be the property of the Surviving Business
Entity to the extent they were of each constituent business
entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not
revert and is not in any way impaired because of the merger or
consolidation;
(iii) all rights of creditors and all liens on or
security interests in property of any of those constituent
business entities shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity
and may be enforced against it to the same extent as if the
debts, liabilities and duties had been incurred or contracted by
it.
(b) A merger or consolidation effected pursuant to this
Article shall not be deemed to result in a transfer or assignment of
assets or liabilities from one entity to another.
ARTICLE XV
RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
15.1 RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
(a) Notwithstanding any other provision of this Agreement, if at
any time not more than 20% of the total Limited Partner Interests of
any class then Outstanding is held by Persons other than the Managing
General Partner and its Affiliates, the Managing General Partner shall
then have the right, which right it may assign and transfer in whole
or in part to the Partnership or any Affiliate of the Managing General
Partner, exercisable in its sole discretion, to purchase all, but not
less than all, of such Limited Partner Interests of such class then
Outstanding held by Persons other than the Managing General Partner
and its Affiliates, at the greater of (x) the Current Market Price as
of the date three days prior to the date that the notice described in
Section 15.1(b) is mailed and (y) the highest price paid by the
Managing General Partner or any of its Affiliates for any such Limited
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Partner Interest of such class purchased during the 90-day period
preceding the date that the notice described in Section 15.1(b) is
mailed. As used in this Agreement, (i) "Current Market Price" as of
any date of any class of limited partner interests listed or admitted
to trading on any National Securities Exchange means the average of
the daily Closing Prices (as hereinafter defined) per limited partner
interest of such class for the 20 consecutive Trading Days (as
hereinafter defined) immediately prior to such date; (ii) "Closing
Price" for any day means the last sale price on such day, regular way,
or in case no such sale takes place on such day, the average of the
closing bid and asked prices on such day, regular way, in either case
as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted for trading on the
principal National Securities Exchange (other than the Nasdaq Stock
Market) on which such Limited Partner Interests of such class are
listed or admitted to trading or, if such Limited Partner Interests of
such class are not listed or admitted to trading on any National
Securities Exchange (other than the Nasdaq Stock Market), the last
quoted price on such day or, if not so quoted, the average of the high
bid and low asked prices on such day in the over-the-counter market,
as reported by the Nasdaq Stock Market or such other system then in
use, or, if on any such day such Limited Partner Interests of such
class are not quoted by any such organization, the average of the
closing bid and asked prices on such day as furnished by a
professional market maker making a market in such Limited Partner
Interests of such class selected by the Managing General Partner, or
if on any such day no market maker is making a market in such Limited
Partner Interests of such class, the fair value of such Limited
Partner Interests on such day as determined reasonably and in good
faith by the Managing General Partner; and (iii) "Trading Day" means a
day on which the principal National Securities Exchange on which such
limited partner interests of any class are listed or admitted to
trading is open for the transaction of business or, if Limited Partner
Interests of a class are not listed or admitted to trading on any
National Securities Exchange, a day on which banking institutions in
New York City generally are open.
(b) If the Managing General Partner, any Affiliate of the
Managing General Partner or the Partnership elects to exercise the
right to purchase Limited Partner Interests granted pursuant to
Section 15.1(a), the Managing General Partner shall deliver to the
Transfer Agent notice of such election to purchase (the "Notice of
Election to Purchase") and shall cause the Transfer Agent to mail a
copy of such Notice of Election to Purchase to the Record Holders of
Limited Partner Interests of such class (as of a Record Date selected
by the Managing General Partner) at least 10, but not more than 60,
days prior to the Purchase Date. Such Notice of Election to Purchase
shall also be published for a period of at least three consecutive
days in at least two daily newspapers of general circulation printed
in the English language and published in the Borough of Manhattan, New
York. The Notice of Election to Purchase shall specify the Purchase
Date and the price (determined in accordance with Section 15.1(a)) at
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which Limited Partner Interests will be purchased and state that the
Managing General Partner, its Affiliate or the Partnership, as the
case may be, elects to purchase such Limited Partner Interests, upon
surrender of Certificates representing such Limited Partner Interests
in exchange for payment, at such office or offices of the Transfer
Agent as the Transfer Agent may specify, or as may be required by any
National Securities Exchange on which such Limited Partner Interests
are listed or admitted to trading. Any such Notice of Election to
Purchase mailed to a Record Holder of Limited Partner Interests at his
address as reflected in the records of the Transfer Agent shall be
conclusively presumed to have been given regardless of whether the
owner receives such notice. On or prior to the Purchase Date, the
Managing General Partner, its Affiliate or the Partnership, as the
case may be, shall deposit with the Transfer Agent cash in an amount
sufficient to pay the aggregate purchase price of all of such Limited
Partner Interests to be purchased in accordance with this
Section 15.1. If the Notice of Election to Purchase shall have been
duly given as aforesaid at least 10 days prior to the Purchase Date,
and if on or prior to the Purchase Date the deposit described in the
preceding sentence has been made for the benefit of the holders of
Limited Partner Interests subject to purchase as provided herein, then
from and after the Purchase Date, notwithstanding that any Certificate
shall not have been surrendered for purchase, all rights of the
holders of such Limited Partner Interests (including any rights
pursuant to Articles IV, V, VI, and XII) shall thereupon cease, except
the right to receive the purchase price (determined in accordance with
Section 15.1(a)) for Limited Partner Interests therefor, without
interest, upon surrender to the Transfer Agent of the Certificates
representing such Limited Partner Interests, and such Limited Partner
Interests shall thereupon be deemed to be transferred to the Managing
General Partner, its Affiliate or the Partnership, as the case may be,
on the record books of the Transfer Agent and the Partnership, and the
Managing General Partner or any Affiliate of the Managing General
Partner, or the Partnership, as the case may be, shall be deemed to be
the owner of all such Limited Partner Interests from and after the
Purchase Date and shall have all rights as the owner of such Limited
Partner Interests (including all rights as owner of such Limited
Partner Interests pursuant to Articles IV, V, VI and XII).
(c) At any time from and after the Purchase Date, a holder of an
Outstanding Limited Partner Interest subject to purchase as provided
in this Section 15.1 may surrender his Certificate evidencing such
Limited Partner Interest to the Transfer Agent in exchange for payment
of the amount described in Section 15.1(a), therefor, without interest
thereon.
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ARTICLE XVI
GENERAL PROVISIONS
16.1 ADDRESSES AND NOTICES
Any notice, demand, request, report or proxy materials required
or permitted to be given or made to a Partner or Assignee under this
Agreement shall be in writing and shall be deemed given or made when
delivered in person or when sent by first class United States mail or
by other means of written communication to the Partner or Assignee at
the address described below. Any notice, payment or report to be given
or made to a Partner or Assignee hereunder shall be deemed
conclusively to have been given or made, and the obligation to give
such notice or report or to make such payment shall be deemed
conclusively to have been fully satisfied, upon sending of such
notice, payment or report to the Record Holder of such Partnership
Securities at his address as shown on the records of the Transfer
Agent or as otherwise shown on the records of the Partnership,
regardless of any claim of any Person who may have an interest in such
Partnership Securities by reason of any assignment or otherwise. An
affidavit or certificate of making of any notice, payment or report in
accordance with the provisions of this Section 16.1 executed by the
Managing General Partner, the Transfer Agent or the mailing
organization shall be prima facie evidence of the giving or making of
such notice, payment or report. If any notice, payment or report
addressed to a Record Holder at the address of such Record Holder
appearing on the books and records of the Transfer Agent or the
Partnership is returned by the United States Post Office marked to
indicate that the United States Postal Service is unable to deliver
it, such notice, payment or report and any subsequent notices,
payments and reports shall be deemed to have been duly given or made
without further mailing (until such time as such Record Holder or
another Person notifies the Transfer Agent or the Partnership of a
change in his address) if they are available for the Partner or
Assignee at the principal office of the Partnership for a period of
one year from the date of the giving or making of such notice, payment
or report to the other Partners and Assignees. Any notice to the
Partnership shall be deemed given if received by the Managing General
Partner at the principal office of the Partnership designated pursuant
to Section 2.3. The Managing General Partner may rely and shall be
protected in relying on any notice or other document from a Partner,
Assignee or other Person if believed by it to be genuine.
16.2 FURTHER ACTION
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary
or appropriate to achieve the purposes of this Agreement.
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16.3 BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
16.4 INTEGRATION
This Agreement constitutes the entire agreement among the parties
hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.
16.5 CREDITORS
None of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
16.6 WAIVER
No failure by any party to insist upon the strict performance of
any covenant, duty, agreement or condition of this Agreement or to
exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach of any other covenant, duty,
agreement or condition.
16.7 COUNTERPARTS
This Agreement may be executed in counterparts, all of which
together shall constitute an agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to
the original or the same counterpart. Each party shall become bound by
this Agreement immediately upon affixing its signature hereto or, in
the case of a Person acquiring a Unit, upon accepting the certificate
evidencing such Unit or executing and delivering a Transfer
Application as herein described, independently of the signature of any
other party.
16.8 APPLICABLE LAW
This Agreement shall be construed in accordance with and governed
by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
16.9 INVALIDITY OF PROVISIONS
If any provision of this Agreement is or becomes invalid, illegal
or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not
be affected thereby.
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<PAGE> 173
16.10 CONSENT OF PARTNERS
Each Partner hereby expressly consents and agrees that, whenever
in this Agreement it is specified that an action may be taken upon the
affirmative vote or consent of less than all of the Partners, such
action may be so taken upon the concurrence of less than all of the
Partners and each Partner shall be bound by the results of such
action.
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<PAGE> 174
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
MANAGING GENERAL PARTNER:
CORNERSTONE PROPANE GP, INC.
By: /s/ R. J. Goedde
-------------------------------
Name: Ronald J. Goedde
Title: Executive Vicve President &
Chief Financial Officer
SPECIAL GENERAL PARTNER:
SYN INC.
By: /s/ Daniel K. Newell
---------------------------------
Name: Daniel K. Newell
Title: Vice President
ORGANIZATIONAL LIMITED PARTNER:
NORTHWESTERN GROWTH CORPORATION
By: /s/ Daniel K. Newell
--------------------------------
Name: Daniel K. Newell
Title: Executive Vice President
LIMITED PARTNERS
All Limited Partners now and hereafter
admitted as Limited Partners of the
Partnership, pursuant to powers of
attorney now and hereafter executed in
favor of, and granted and delivered to
the Managing General Partner.
By: /s/ R. J. Goedde
---------------------------------
Ronald J. Goedde
114
<PAGE> 175
EXHIBIT A TO THE AMENDED AND
RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
CORNERSTONE PROPANE PARTNERS, L.P.
CERTIFICATE EVIDENCING COMMON UNITS
REPRESENTING LIMITED PARTNER INTERESTS IN
CORNERSTONE PROPANE PARTNERS, L.P.
NO. COMMON UNITS
In accordance with Section 4.1 of the Amended and Restated
Agreement of Limited Partnership of Cornerstone Propane Partners,
L.P., as amended, supplemented or restated from time to time (the
"Partnership Agreement"), Cornerstone Propane Partners, L.P., a
Delaware limited partnership (the "Partnership"), hereby certifies
that (the "Holder") is the registered owner of Common
Units representing limited partner interests in the Partnership (the
"Common Units") transferable on the books of the Partnership, in
person or by duly authorized attorney, upon surrender of this
Certificate properly endorsed and accompanied by a properly executed
application for transfer of the Common Units represented by this
Certificate. The rights, preferences and limitations of the Common
Units are set forth in, and this Certificate and the Common Units
represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Partnership Agreement. Copies of the
Partnership Agreement are on file at, and will be furnished without
charge on delivery of written request to the Partnership at, the
principal office of the Partnership located at 432 Westridge Drive,
Watsonville, California 95076. Capitalized terms used herein but not
defined shall have the meanings given them in the Partnership
Agreement.
The Holder, by accepting this Certificate, is deemed to have
(i) requested admission as, and agreed to become, a Limited Partner
and to have agreed to comply with and be bound by and to have executed
the Partnership Agreement, (ii) represented and warranted that the
Holder has all right, power and authority and, if an individual, the
capacity necessary to enter into the Partnership Agreement,
(iii) granted the powers of attorney provided for in the Partnership
Agreement and (iv) made the waivers and given the consents and
approvals contained in the Partnership Agreement.
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<PAGE> 176
This Certificate shall not be valid for any purpose unless it has
been countersigned and registered by the Transfer Agent and Registrar.
Dated: _____________________________ CORNERSTONE PROPANE PARTNERS, L.P.
Countersigned and Registered by: By: ________________________________
Cornerstone Propane GP, Inc.,
its Managing General Partner
____________________________________ By: ________________________________
as Transfer Agent and Registrar President and Chief Executive
Officer
By: By: ______________________________
__________________________________ Secretary
Authorized Signature
116
<PAGE> 177
[REVERSE OF CERTIFICATE]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this Certificate, shall be construed as follows according to
applicable laws or regulations:
TEN as tenants in common UNIF GIFT MIN ACT
COM ___
TEN as tenants by the Custodian
ENT___ entireties
JT as joint tenants with (Cust) (Minor)
TEN___ right of survivorship
and not as
tenants in common under Uniform Gifts to Minors
Act
State
Additional abbreviations, though not in the above list, may also be
used.
ASSIGNMENT OF COMMON UNITS
in
CORNERSTONE PROPANE PARTNERS, L.P.
IMPORTANT NOTICE REGARDING INVESTOR RESPONSIBILITIES
DUE TO TAX SHELTER STATUS OF CORNERSTONE PROPANE PARTNERS, L.P.
You have acquired an interest in Cornerstone Propane
Partners, L.P., 432 Westridge Drive, Watsonville, California 95076,
whose taxpayer identification number is 77-0439862. The Internal
Revenue Service has issued Cornerstone Propane Partners, L.P. the
following tax shelter registration number: .
YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL REVENUE
SERVICE IF YOU CLAIM ANY DEDUCTION, LOSS, CREDIT OR OTHER TAX BENEFIT
OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT IN CORNERSTONE
PROPANE PARTNERS, L.P.
You must report the registration number as well as the name and
taxpayer identification number of CORNERSTONE PROPANE PARTNERS, L.P.
on Form 8271. FORM 8271 MUST BE ATTACHED TO THE RETURN ON WHICH YOU
CLAIM THE DEDUCTION, LOSS, CREDIT OR OTHER TAX BENEFIT OR REPORT ANY
INCOME BY REASON OF YOUR INVESTMENT IN CORNERSTONE PROPANE PARTNERS,
L.P.
If you transfer your interest in Cornerstone Propane Partners,
L.P. to another person, you are required by the Internal Revenue
Service to keep a list containing (a) that person's name, address and
taxpayer identification number, (b) the date on which you transferred
the interest and (c) the name, address and tax shelter registration
number of Cornerstone Propane Partners, L.P. If you do not want to
117
<PAGE> 178
keep such a list, you must (1) send the information specified above to
the Partnership, which will keep the list for this tax shelter, and
(2) give a copy of this notice to the person to whom you transfer your
interest. Your failure to comply with any of the above-described
responsibilities could result in the imposition of a penalty under
Section 6707(b) or 6708(a) of the Internal Revenue Code of 1986, as
amended, unless such failure is shown to be due to reasonable cause.
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS
INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR
APPROVED BY THE INTERNAL REVENUE SERVICE.
FOR VALUE RECEIVED, ________________ hereby assigns, conveys,
sells and transfers unto ________________
(Please insert Social Security or
(Please print or typewrite name other
and address of Assignee) identifying number of Assignee)
________________ Common Units representing limited partner interests
evidenced by this Certificate, subject to the Partnership Agreement,
and does hereby irrevocably constitute and appoint ________________ as
its attorney-in-fact with full power of substitution to transfer the
same on the books of Cornerstone Propane Partners, L.P.
Date: NOTE: The signature to any
endorsement hereon must
correspond with the name as
written upon the face of this
Certificate in every
particular, without
alteration, enlargement or
change.
SIGNATURE(S) MUST BE ______________________________
GUARANTEED BY A MEMBER (Signature)
FIRM OF THE NATIONAL
ASSOCIATION OF
SECURITIES DEALERS, ______________________________
INC. OR BY A COMMERCIAL (Signature)
BANK OR TRUST COMPANY
SIGNATURE(S) GUARANTEED
No transfer of the Common Units evidenced hereby will be
registered on the books of the Partnership, unless the Certificate
evidencing the Common Units to be transferred is surrendered for
118
<PAGE> 179
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.
_________
119
<PAGE> 180
APPLICATION FOR TRANSFER OF COMMON UNITS
The undersigned ("Assignee") hereby applies for transfer to the
name of the Assignee of the Common Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited
Partner and agrees to comply with and be bound by, and hereby
executes, the Amended and Restated Agreement of Limited Partnership of
Cornerstone Propane Partners, L.P. (the "Partnership"), as amended,
supplemented or restated to the date hereof (the "Partnership
Agreement"), (b) represents and warrants that the Assignee has all
right, power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement, (c) appoints the
Managing General Partner of the Partnership and, if a Liquidator shall
be appointed, the Liquidator of the Partnership as the Assignee's
attorney-in-fact to execute, swear to, acknowledge and file any
document, including, without limitation, the Partnership Agreement and
any amendment thereto and the Certificate of Limited Partnership of
the Partnership and any amendment thereto, necessary or appropriate
for the Assignee's admission as a Substituted Limited Partner and as a
party to the Partnership Agreement, (d) gives the powers of attorney
provided for in the Partnership Agreement, and (e) makes the waivers
and gives the consents and approvals contained in the Partnership
Agreement. Capitalized terms not defined herein have the meanings
assigned to such terms in the Partnership Agreement.
Date:
------------------------
Social Security or other identifying Signature of Assignee
number of Assignee
Purchase Price including Name and Address of Assignee
commissions, if any
Type of Entity (check one):
/__/ Individual /__/ Partnership /__/ Corporation
/__/ Trust /__/ Other (specify) ___
Nationality (check
one):
/__/ U.S. Citizen, Resident or Domestic
Entity
/__/ Foreign /__/ Non-resident
Corporation Alien
If the U.S. Citizen, Resident or Domestic Entity box is checked,
the following certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Partnership must withhold tax with respect
120
<PAGE> 181
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
121
<PAGE> 182
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.
122
EXHIBIT 3.2
======================================================================
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CORNERSTONE PROPANE, L.P.
======================================================================
<PAGE> 184
TABLE OF CONTENTS
-----------------
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS . . . . . . . . . . . . . . . . . 1
Section 1.2 CONSTRUCTION . . . . . . . . . . . . . . . . 12
ARTICLE II
ORGANIZATION
Section 2.1 FORMATION . . . . . . . . . . . . . . . . . . 12
Section 2.2 NAME . . . . . . . . . . . . . . . . . . . . 12
Section 2.3 REGISTERED OFFICE; REGISTERED AGENT;
PRINCIPAL OFFICE; OTHER OFFICES . . . . . . . 12
Section 2.4 PURPOSE AND BUSINESS . . . . . . . . . . . . 13
Section 2.5 POWERS . . . . . . . . . . . . . . . . . . . 13
Section 2.6 POWER OF ATTORNEY . . . . . . . . . . . . . . 14
Section 2.7 TERM . . . . . . . . . . . . . . . . . . . . 15
Section 2.8 TITLE TO PARTNERSHIP ASSETS . . . . . . . . . 15
ARTICLE III
RIGHTS OF LIMITED PARTNERS
Section 3.1 LIMITATION OF LIABILITY . . . . . . . . . . . 16
Section 3.2 MANAGEMENT OF BUSINESS . . . . . . . . . . . 16
Section 3.3 OUTSIDE ACTIVITIES OF THE LIMITED PARTNERS . 17
Section 3.4 RIGHTS OF LIMITED PARTNERS . . . . . . . . . 17
ARTICLE IV
TRANSFER OF PARTNERSHIP INTERESTS
Section 4.1 TRANSFER GENERALLY . . . . . . . . . . . . . 18
Section 4.2 TRANSFER OF A GENERAL PARTNER'S PARTNERSHIP
INTEREST . . . . . . . . . . . . . . . . . . 18
Section 4.3 TRANSFER OF THE LIMITED PARTNERS' PARTNERSHIP
INTERESTS . . . . . . . . . . . . . . . . . . 19
Section 4.4 RESTRICTIONS ON TRANSFERS . . . . . . . . . . 19
ARTICLE V
CONTRIBUTIONS AND INITIAL TRANSFERS
Section 5.1 INITIAL CONTRIBUTIONS . . . . . . . . . . . . 20
Section 5.2 CONTRIBUTIONS AND INITIAL TRANSFERS BY THE
GENERAL PARTNERS AND THEIR AFFILIATES . . . . 20
Section 5.3 ADDITIONAL CAPITAL CONTRIBUTIONS . . . . . . 20
Section 5.4 INTEREST AND WITHDRAWAL . . . . . . . . . . . 21
Section 5.5 CAPITAL ACCOUNTS . . . . . . . . . . . . . . 21
Section 5.6 LOANS FROM PARTNERS . . . . . . . . . . . . . 25
Section 5.7 LIMITED PREEMPTIVE RIGHTS . . . . . . . . . . 25
Section 5.8 FULLY PAID AND NON-ASSESSABLE NATURE OF
LIMITED PARTNER PARTNERSHIP INTERESTS . . . . 25
<PAGE> 185
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
Section 6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES . . 25
Section 6.2 ALLOCATIONS FOR TAX PURPOSES . . . . . . . . 30
Section 6.3 SPECIAL DISTRIBUTION . . . . . . . . . . . . 32
Section 6.4 GENERAL DISTRIBUTIONS . . . . . . . . . . . . 32
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
Section 7.1 MANAGEMENT . . . . . . . . . . . . . . . . . 33
Section 7.2 CERTIFICATE OF LIMITED PARTNERSHIP . . . . . 35
Section 7.3 RESTRICTIONS ON GENERAL PARTNERS' AUTHORITY . 36
Section 7.4 REIMBURSEMENT OF THE MANAGING GENERAL
PARTNER . . . . . . . . . . . . . . . . . . . 37
Section 7.5 OUTSIDE ACTIVITIES . . . . . . . . . . . . . 38
Section 7.6 LOANS FROM THE GENERAL PARTNERS; LOANS OR
CONTRIBUTIONS FROM THE PARTNERSHIP; CONTRACTS
WITH AFFILIATES; CERTAIN RESTRICTIONS ON THE
GENERAL PARTNERS . . . . . . . . . . . . . . 39
Section 7.7 INDEMNIFICATION . . . . . . . . . . . . . . . 41
Section 7.8 LIABILITY OF INDEMNITEES . . . . . . . . . . 43
Section 7.9 RESOLUTION OF CONFLICTS OF INTEREST . . . . . 44
Section 7.10 OTHER MATTERS CONCERNING THE MANAGING GENERAL
PARTNER . . . . . . . . . . . . . . . . . . . 46
Section 7.11 RELIANCE BY THIRD PARTIES . . . . . . . . . . 47
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 8.1 RECORDS AND ACCOUNTING . . . . . . . . . . . 47
Section 8.2 FISCAL YEAR . . . . . . . . . . . . . . . . . 48
ARTICLE IX
TAX MATTERS
Section 9.1 TAX RETURNS AND INFORMATION . . . . . . . . . 48
Section 9.2 TAX ELECTIONS . . . . . . . . . . . . . . . . 48
Section 9.3 TAX CONTROVERSIES . . . . . . . . . . . . . . 48
Section 9.4 WITHHOLDING . . . . . . . . . . . . . . . . . 49
ARTICLE X
ADMISSION OF PARTNERS
Section 10.1 ADMISSION OF THE GENERAL PARTNERS AND THE
MLP . . . . . . . . . . . . . . . . . . . . . 49
Section 10.2 ADMISSION OF SUBSTITUTED LIMITED PARTNERS . . 49
Section 10.3 ADMISSION OF SUCCESSOR OR TRANSFEREE GENERAL
PARTNER . . . . . . . . . . . . . . . . . . . 50
Section 10.4 ADMISSION OF ADDITIONAL LIMITED PARTNERS . . 50
ii
<PAGE> 186
Section 10.5 AMENDMENT OF AGREEMENT AND CERTIFICATE OF
LIMITED PARTNERSHIP . . . . . . . . . . . . . 50
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
Section 11.1 WITHDRAWAL OF THE GENERAL PARTNERS . . . . . 51
Section 11.2 REMOVAL OF THE MANAGING GENERAL PARTNER . . . 53
Section 11.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR
GENERAL PARTNER . . . . . . . . . . . . . . . 53
Section 11.4 WITHDRAWAL OF THE LIMITED PARTNER . . . . . . 54
ARTICLE XII
DISSOLUTION AND LIQUIDATION
Section 12.1 DISSOLUTION . . . . . . . . . . . . . . . . . 54
Section 12.2 CONTINUATION OF THE BUSINESS OF THE
PARTNERSHIP AFTER DISSOLUTION . . . . . . . . 54
Section 12.3 LIQUIDATOR . . . . . . . . . . . . . . . . . 56
Section 12.4 LIQUIDATION . . . . . . . . . . . . . . . . . 56
Section 12.5 CANCELLATION OF CERTIFICATE OF LIMITED
PARTNERSHIP . . . . . . . . . . . . . . . . . 57
Section 12.6 RETURN OF CONTRIBUTIONS . . . . . . . . . . . 57
Section 12.7 WAIVER OF PARTITION . . . . . . . . . . . . . 57
Section 12.8 CAPITAL ACCOUNT RESTORATION . . . . . . . . . 58
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
Section 13.1 AMENDMENT TO BE ADOPTED SOLELY BY THE
MANAGING GENERAL PARTNER . . . . . . . . . . 60
Section 13.2 AMENDMENT PROCEDURES . . . . . . . . . . . . 60
ARTICLE XIV
MERGER
Section 14.1 AUTHORITY . . . . . . . . . . . . . . . . . . 60
Section 14.2 PROCEDURE FOR MERGER OR CONSOLIDATION . . . . 60
Section 14.3 APPROVAL BY LIMITED PARTNER OF MERGER OR
CONSOLIDATION . . . . . . . . . . . . . . . . 61
Section 14.4 CERTIFICATE OF MERGER . . . . . . . . . . . . 62
Section 14.5 EFFECT OF MERGER . . . . . . . . . . . . . . 62
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 ADDRESSES AND NOTICES . . . . . . . . . . . . 63
Section 15.2 REFERENCES . . . . . . . . . . . . . . . . . 63
Section 15.3 FURTHER ACTION . . . . . . . . . . . . . . . 63
Section 15.4 BINDING EFFECT . . . . . . . . . . . . . . . 63
Section 15.5 INTEGRATION . . . . . . . . . . . . . . . . . 64
Section 15.6 CREDITORS . . . . . . . . . . . . . . . . . . 64
iii
<PAGE> 187
Section 15.7 WAIVER . . . . . . . . . . . . . . . . . . . 64
Section 15.8 COUNTERPARTS . . . . . . . . . . . . . . . . 64
Section 15.9 APPLICABLE LAW . . . . . . . . . . . . . . . 64
Section 15.10 INVALIDITY OF PROVISIONS . . . . . . . . . . 64
Section 15.11 CONSENT OF PARTNERS . . . . . . . . . . . . . 64
iv
<PAGE> 188
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
CORNERSTONE PROPANE, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
CORNERSTONE PROPANE, L.P. dated as of December 17, 1996, is entered
into by and among Cornerstone Propane GP, Inc., a California
corporation, as the Managing General Partner, SYN Inc., a Delaware
corporation, as Special General Partner and Cornerstone Propane
Partners, L.P., a Delaware limited partnership, as the Organizational
Limited Partner, together with any other Persons who become Partners
in the Partnership or parties hereto as provided herein. In
consideration of the covenants, conditions and agreements contained
herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 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.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 10.4 and who is
shown as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained
for each Partner as of the end of each fiscal year of the Partnership,
(a) increased by any amounts that such Partner is obligated to restore
under the standards set by Treasury Regulation Section
1.704-1(b)(2)(ii)(c) (or is deemed obligated to restore under Treasury
Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b) decreased by
(i) the amount of all losses and deductions that, as of the end of
such fiscal year, are reasonably expected to be allocated to such
Partner in subsequent years under Sections 704(e)(2) and 706(d) of the
Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the
amount of all distributions that, as of the end of such fiscal year,
are reasonably expected to be made to such Partner in subsequent years
in accordance with the terms of this Agreement or otherwise to the
extent they exceed offsetting increases to such Partner's Capital
Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made
(other than increases as a result of a minimum gain chargeback
pursuant to Section 6.1(d)(i) or 6.1(d)(ii)). The foregoing definition
of Adjusted Capital Account is intended to comply with the provisions
of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith. The "Adjusted Capital Account" of
a Partner in respect of a general partner interest or any other
specified interest in the Partnership shall be the amount which such
Adjusted Capital Account would be if such general partner interest or
<PAGE> 189
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 interest or other interest was first issued.
"Adjusted Property" means any property the Carrying Value of
which has been adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii).
Once an Adjusted Property is deemed distributed by, and recontributed
to, the Partnership for federal income tax purposes upon a termination
thereof pursuant to Treasury Regulation Section 1.708-1(b)(1)(iv) such
property shall thereafter constitute a Contributed Property until the
Carrying Value of such property is subsequently adjusted pursuant to
Section 5.5(d)(i) or 5.5(d)(ii). Upon a termination of the
Partnership following the publication of Proposed Treasury Regulation
1.708-1(b)(1)(iv) as a final regulation, an Adjusted Property deemed
contributed to a new partnership in exchange for an interest in the
new partnership, followed by the deemed liquidation of the
Partnership, shall thereafter constitute a Contributed Property until
the Carrying Value of such property is subsequently adjusted pursuant
to Section 5.5(d)(i) or 5.5(d)(ii).
"Affiliate" means, with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries
controls, is controlled by or is under common control with, the Person
in question. As used herein, the term "control" means the possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through ownership of
voting securities, by contract or otherwise.
"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 by the Managing General Partner using such
reasonable method of valuation as it may adopt; provided, however,
that the Agreed Value of any property deemed contributed to the
Partnership for federal income tax purposes upon termination and
reconstitution thereof pursuant to Section 708 of the Code (whether
before or after finalization of Proposed Treasury Regulation Section
1.708-1(b)(1)(iv)) shall be determined in accordance with Section
5.5(c). Subject to Section 5.5(c), the Managing General Partner shall,
in its discretion, use such method as it deems reasonable and
appropriate to allocate the aggregate Agreed Value of Contributed
Properties contributed to the Partnership in a single or integrated
transaction among each separate property on a basis proportional to
the fair market value of each Contributed Property.
2
<PAGE> 190
"Agreement" means this Amended and Restated Agreement of Limited
Partnership of Cornerstone Propane, L.P., as it may be amended,
supplemented or restated from time to time.
"Assets" means the asset being conveyed by the General Partners
and EESC, to the Partnership on the Closing Date pursuant to Section
5.2(a) and the Contribution and Conveyance Agreement.
"Associate" means, when used to indicate a relationship with any
Person, (a) any corporation or organization of which such Person is a
director, officer or partner or is, directly or indirectly, the owner
of 20% or more of any class of voting stock or other voting interest;
(b) any trust or other estate in which such Person has at least a 20%
beneficial interest or as to which such Person serves as trustee or in
a similar fiduciary capacity; and (c) any relative or spouse of such
Person, or any relative of such spouse, who has the same principal
residence as such Person.
"Assumed Liabilities" means the liabilities that the Partnership
is either assuming or taking subject in connection with the conveyance
of the Assets pursuant to Section 5.2(a) and the Contribution and
Conveyance Agreement.
"Audit Committee" means a committee of the Board of Directors of
the Managing General Partner composed entirely of two or more
directors who are neither officers nor employees of either of the
General Partners nor officers, directors or employees of any Affiliate
of the General Partners.
"Available Cash" means, with respect to any Quarter ending prior
to the Liquidation Date,
(a) the sum of (i) all cash and cash equivalents of the
Partnership Group on hand at the end of such Quarter, and (ii) all
additional cash and cash equivalents of the Partnership Group on hand
on the date of determination of Available Cash with respect to such
Quarter resulting from borrowings for working capital purposes made
subsequent to the end of such Quarter, less
(b) the amount of any cash reserves that is necessary or
appropriate in the reasonable discretion of the Managing General
Partner to (i) provide for the proper conduct of the business of the
Partnership Group (including reserves for future capital expenditures
and for the anticipated future credit needs of the Partnership Group)
subsequent to such Quarter, (ii) comply with applicable law or any
loan agreement, security agreement, mortgage, debt instrument or other
agreement or obligation to which any Group Member is a party or by
which it is bound or its assets are subject or (iii) provide funds for
distributions under Section 6.4 or 6.5 of the MLP Agreement in respect
of any one or more of the next four Quarters; provided, however, that
the Managing General Partner may not establish cash reserves pursuant
to (iii) above if the effect of such reserves would be that the MLP is
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unable to distribute the Minimum Quarterly Distribution on all Common
Units with respect to such Quarter; and, provided further, that
disbursements made by a Group Member or cash reserves established,
increased or reduced after the end of such Quarter but on or before
the date of determination of Available Cash with respect to such
Quarter shall be deemed to have been made, established, increased or
reduced, for purposes of determining Available Cash, within such
Quarter if the Managing General Partner so determines.
Notwithstanding the foregoing, "Available Cash" with respect to
the Quarter in which the Liquidation Date occurs and any subsequent
Quarter shall equal zero.
"Book-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 California shall
not be regarded as a Business Day.
"Capital Account" means the capital account maintained for a
Partner pursuant to Section 5.5. The "Capital Account" of a Partner in
respect of a general partner interest or any other Partnership
Interest shall be the amount which such Capital Account would be if
such general partner interest or other Partnership Interest were the
only interest in the Partnership held by a Partner from and after the
date on which such general partner interest or other Partnership
Interest was first issued.
"Capital Contribution" means any cash, cash equivalents or the
Net Agreed Value of Contributed Property that a Partner contributes to
the Partnership pursuant to this Agreement.
"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
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changes, additions or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed
appropriate by the Managing General Partner.
"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 Date" means the first date on which Common Units are
sold by the MLP to the Underwriters pursuant to the provisions of the
Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time. Any reference herein to a specific section
or sections of the Code shall be deemed to include a reference to any
corresponding provision of successor law.
"Common Unit" has the meaning assigned to such term in the MLP
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 (or deemed contributed to the
Partnership on termination and reconstitution thereof pursuant to
Section 708 of the Code whether before or after finalization of
Proposed Treasury Regulation Section 1.708-1(b)(1)(iv)). Once the
Carrying Value of a Contributed Property is adjusted pursuant to
Section 5.5(d), such property shall no longer constitute a Contributed
Property, but shall be deemed an Adjusted Property.
"Contribution and Conveyance Agreement" means that certain
Contribution, Conveyance and Assumption Agreement, dated as of the
Closing Date, among the General Partners, the Partnership, the MLP and
certain other parties, together with the additional conveyance
documents and instruments contemplated or referenced thereunder.
"Cornerstone Propane GP, Inc." means Cornerstone Propane
GP, Inc., a California corporation, which is currently the Managing
General Partner of the Partnership.
"Curative Allocation" means any allocation of an item of income,
gain, deduction, loss or credit pursuant to the provisions of Section
6.1(d)(ix).
"Delaware Act" means the Delaware Revised Uniform Limited
Partnership Act, 6 Del C. Section 17-101, et seq., as amended, supplemented
or restated from time to time, and any successor to such statute.
"Departing Partner" means a former General Partner (either
Managing General Partner or Special General Partner) from and after
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the effective date of any withdrawal or removal of such former General
Partner pursuant to Section 11.1 or 11.2.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"EESC" means Empire Energy SC Corporation, a Delaware
corporation.
"Event of Withdrawal" has the meaning assigned to such term in
Section 11.1(a).
"General Partners" means the Managing General Partner and the
Special General Partner and their successors and permitted assigns as
general partners of the Partnership.
"Group Member" means a member of the Partnership Group.
"Indemnitee" means (a) any General Partner, any Departing Partner
and any Person who is or was an Affiliate of any General Partner or
any Departing Partner, (b) any Person who is or was a director,
officer, employee, agent or trustee of a Group Member, (c) any Person
who is or was an officer, member, partner, director, employee, agent
or trustee of any General Partner or any Departing Partner or any
Affiliate of the General Partner or any Departing Partner, or any
Affiliate of any such Person, (d) any Person who is or was serving at
the request of any General Partner or any Departing Partner or any
such Affiliate as a director, officer, employee, member, partner,
agent, fiduciary or trustee of another Person; provided, that a Person
shall not be an Indemnitee by reason of providing, on a
fee-for-services basis, trustee, fiduciary or custodial services.
"Initial Offering" means the initial offering and sale of Common
Units to the public, as described in the Registration Statement.
"Limited Partner" means any Person that is admitted to the
Partnership as a limited partner pursuant to the terms and conditions
of this Agreement; but the term Limited Partner shall not include any
Person from and after the time such Person withdraws as a Limited
Partner from the Partnership.
"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 Managing
General Partner to perform the functions described in Section 12.3 as
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liquidating trustee of the Partnership within the meaning of the
Delaware Act.
"Managing General Partner" means Cornerstone Propane GP, Inc. and
its successors and permitted assigns as general partner of the
Partnership.
"Merger Agreement" has the meaning assigned to such term in
Section 14.1.
"Minimum Quarterly Distribution" has the meaning assigned to such
term in the MLP Agreement.
"MLP" means Cornerstone Propane Partners, L.P., a Delaware
limited partnership.
"MLP Agreement" means the Amended and Restated Agreement of
Limited Partnership of the MLP, dated December 17, 1996.
"National Securities Exchange" means an exchange registered with
the Commission under Section 6(a) of the Securities Exchange Act of
1934, as amended, supplemented or restated from time to time, and any
successor to such statute, or the Nasdaq Stock Market or any successor
thereto.
"Net Agreed Value" means, (a) in the case of any Contributed
Property, the Agreed Value of such property reduced by any liabilities
either assumed by the Partnership upon such contribution or to which
such property is subject when contributed, and (b) in the case of any
property distributed to a Partner or Assignee by the Partnership, the
Partnership's Carrying Value of such property (as adjusted pursuant to
Section 5.5(d)(ii)) at the time such property is distributed, reduced
by any indebtedness either assumed by such Partner or Assignee upon
such distribution or to which such property is subject at the time of
distribution, in either case, as determined under Section 752 of the
Code.
"Net Income" means, for any taxable year, the excess, if any, of
the Partnership's items of income and gain (other than those items
taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year over the Partnership's items
of loss and deduction (other than those items taken into account in
the computation of Net Termination Gain or Net Termination Loss) for
such taxable year. The items included in the calculation of Net Income
shall be determined in accordance with Section 5.5(b) and shall not
include any items specially allocated under Section 6.1(d).
"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
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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(d).
"Net Note Proceeds" means the proceeds remaining from the
issuance of the Partnership's Notes after the Partnership repays a
portion of the Assumed Liabilities.
"Net Termination Gain" means, for any taxable year, the sum, if
positive, of all items of income, gain, loss or deduction recognized
by the Partnership after the Liquidation Date. The items included in
the determination of Net Termination Gain shall be determined in
accordance with Section 5.5(b) and shall not include any items of
income, gain or loss specially allocated under Section 6.1(d).
"Net Termination Loss" means, for any taxable year, the sum, if
negative, of all items of income, gain, loss or deduction recognized
by the Partnership after the Liquidation Date. The items included in
the determination of Net Termination Loss shall be determined in
accordance with Section 5.5(b) and shall not include any items of
income, gain or loss specially allocated under Section 6.1(d).
"Nonrecourse Built-in Gain" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or
pledge securing a Nonrecourse Liability, the amount of any taxable
gain that would be allocated to the Partners pursuant to Sections
6.2(b)(i)(A), 6.2(b)(ii)(A) and 6.2(b)(iii) if such properties were
disposed of in a taxable transaction in full satisfaction of such
liabilities and for no other consideration.
"Nonrecourse Deductions" means any and all items of loss,
deduction or expenditures (described in Section 705(a)(2)(B) of the
Code) that, in accordance with the principles of Treasury Regulation
Section 1.704-2(b), are attributable to a Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
"Notes" means the $220 million of Senior Secured Notes issued by
the Partnership in a private placement in conjunction with the Initial
Offering.
"OLP Subsidiary" means a Subsidiary of the Partnership.
"Opinion of Counsel" means a written opinion of counsel (who may
be regular counsel to the Partnership or the General Partners or any
of their Affiliates) acceptable to the Managing General Partner in its
reasonable discretion.
"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 Partners and the Limited Partner.
"Partnership" means Cornerstone 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 an ownership 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 Partners (in
their capacity as general partners of the Partnership) 1.0101% and (b)
as to the Limited Partner 98.9899%.
"Person" means an individual or a corporation, limited liability
company, partnership, joint venture, trust, unincorporated
organization, association, government agency or political subdivision
thereof or other entity.
"Pro Rata" means when modifying the General Partners, apportioned
76.8645% to the Managing General Partner and 23.1355% to the Special
General Partner, provided, however, to the extent an allocation of
losses pursuant to Section 6.1(b) or Section 6.1(c)(ii) would cause
the Special General Partner to have a deficit balance in its Adjusted
Capital Account at the end of such taxable year (or increase any
existing deficit in its Adjusted Capital Account), then Pro Rata shall
mean 100% to the Managing General Partner and zero to the Special
General Partner.
"Quarter" means, unless the context requires otherwise, a fiscal
quarter of the Partnership.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Sections 734 or
743 of the Code) upon the disposition of any property or asset of the
Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect
to such property or asset.
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"Registration Statement" means the Registration Statement on Form
S-1 (Registration No. 333-13879) as it has been or as it may be
amended or supplemented from time to time, filed by the MLP with the
Commission under the Securities Act to register the offering and sale
of the Common Units in the Initial Offering.
"Required Allocations" means (a) any limitation imposed on any
allocation of Net Losses or Net Termination Losses under Section
6.1(b) or 6.1(c)(ii) and (b) any allocation of an item of income,
gain, loss or deduction pursuant to Section 6.1(d)(i), 6.1(d)(ii),
6.1(d)(iv), 6.1(d)(vii) or 6.1(d)(ix).
"Residual Gain" or "Residual Loss" means any item of gain or
loss, as the case may be, of the Partnership recognized for federal
income tax purposes resulting from a sale, exchange or other
disposition of a Contributed Property or Adjusted Property, to the
extent such item of gain or loss is not allocated pursuant to Section
6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to eliminate Book-Tax
Disparities.
"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.
"Special General Partner" mean SYN and it successors and assigns
as special general partner of the Partnership.
"Subordinated Unit" has the meaning assigned to such term in the
MLP Agreement.
"Subordination Period" has the meaning assigned to such term in
the MLP Agreement.
"Subsidiary" means, with respect to any Person, (a) a corporation
of which more than 50% of the voting power of shares entitled (without
regard to the occurrence of any contingency) to vote in the election
of directors or other governing body of such corporation is owned,
directly or indirectly, at the date of determination, by such Person,
by one or more Subsidiaries of such Person or a combination thereof,
(b) a partnership (whether general or limited) in which such Person or
a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than
50% of the partnership interests of such partnership (considering all
of the partnership interests of the partnership as a single class) is
owned, directly or indirectly, at the date of determination, by such
Person, by one or more Subsidiaries of such Person, or a combination
thereof, or (c) any other Person (other than a corporation or a
partnership) in which such Person, one or more Subsidiaries of such
Person, or a combination thereof, directly or indirectly, at the date
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of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 10.2 in place
of and with all the rights of a Limited Partner and who is shown as a
Limited Partner on the books and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such term
in Section 14.2(b).
"SYN" means SYN Inc., a Delaware corporation.
"Transfer" has the meaning assigned to such term in Section
4.1(a).
"Underwriter" means each Person named as an underwriter in
Schedule I to the Underwriting Agreement who purchases Common Units
pursuant thereto.
"Underwriting Agreement" means the Underwriting Agreement dated
December 11, 1996, among the Underwriters, the MLP and certain other
parties, providing for the purchase of Common Units by such
Underwriters.
"Unit" has the meaning assigned to such term in the MLP
Agreement.
"Unit Majority" has the meaning assigned to such term in the MLP
Agreement.
"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).
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Section 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
Section 2.1 FORMATION.
The Managing General Partner and the Organizational Limited
Partner have previously formed the Partnership as a limited
partnership pursuant to the provisions of the Delaware Act and hereby
amend and restate the original Agreement of Limited Partnership of
Cornerstone Propane Partners, L.P. in its entirety. This amendment and
restatement shall become effective on the date of this Agreement.
Except as expressly provided to the contrary in this Agreement, the
rights, duties (including fiduciary duties), liabilities and
obligations of the Partners and the administration, dissolution and
termination of the Partnership shall be governed by the Delaware Act.
All Partnership Interests shall constitute personal property of the
owner thereof for all purposes.
Section 2.2 NAME.
The name of the Partnership shall be "Cornerstone Propane, L.P."
The Partnership's business may be conducted under any other name or
names deemed necessary or appropriate by the Managing General Partner
in its sole discretion, including the name of the Managing General
Partner. The words "Limited Partnership," "L.P.," "Ltd." or similar
words or letters shall be included in the Partnership's name where
necessary for the purpose of complying with the laws of any
jurisdiction that so requires. The Managing General Partner in its
discretion may change the name of the Partnership at any time and from
time to time and shall notify the Limited Partner of such change in
the next regular communication to the Limited Partners.
Section 2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE;
OTHER OFFICES.
Unless and until changed by the Managing General Partner, the
registered office of the Partnership in the State of Delaware shall be
located at 1209 Orange Street, New Castle County, Wilmington, Delaware
19801, and the registered agent for service of process on the
Partnership in the State of Delaware at such registered office shall
be The Corporation Trust Company. The principal office of the
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Partnership shall be located at 432 Westridge Drive, Watsonville,
California 95076 or such other place as the Managing General Partner
may from time to time designate by notice to the Limited Partners. The
Partnership may maintain offices at such other place or places within
or outside the State of Delaware as the Managing General Partner deems
necessary or appropriate. The address of the Managing General Partner
shall be 432 Westridge Drive, Watsonville, California 95076 or such
other place as the Managing General Partner may from time to time
designate by notice to the Limited Partners.
Section 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 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
type of business or activity engaged in by the General Partners and
their predecessors prior to the Closing Date and, in connection
therewith, to exercise all of the rights and powers conferred upon the
Partnership pursuant to the agreements relating to such business
activity, (c) engage directly in, or enter into or form any
corporation, partnership, joint venture, limited liability company or
other arrangement to engage indirectly in, any business activity that
is approved by the Managing General Partner and which lawfully may be
conducted by a limited partnership organized pursuant to the Delaware
Act and, in connection therewith, to exercise all of the rights and
powers conferred upon the Partnership pursuant to the agreements
relating to such business activity; provided, however, that the
Managing General Partner reasonably determines, as of the date of the
acquisition or commencement of such activity, that such activity
(i) generates "qualifying income" (as such term is defined pursuant to
Section 7704 of the Code) or (ii) enhances the operations of an
activity of the Partnership that generates qualifying income, and
(d) do anything necessary or appropriate to the foregoing, including
the making of capital contributions or loans to a Group Member, the
MLP or any Subsidiary of the MLP. The Managing General Partner has no
obligation or duty to the Partnership, the Limited Partners, or the
Assignees to propose or approve, and in its discretion may decline to
propose or approve, the conduct by the Partnership of any business.
Section 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.
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Section 2.6 POWER OF ATTORNEY.
(a) The Special General Partner, each Limited Partner and
each Assignee hereby constitutes and appoints the Managing General
Partner 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 hereof or thereof) that the Managing General Partner
or the Liquidator deems necessary or appropriate to form, qualify
or continue the existence or qualification of the Partnership as
a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware and in
all other jurisdictions in which the Partnership may conduct
business or own property; (B) all certificates, documents and
other instruments that the Managing General Partner or the
Liquidator deems necessary or appropriate to reflect, in
accordance with its terms, any amendment, change, modification or
restatement of this Agreement; (C) all certificates, documents
and other instruments (including conveyances and a certificate of
cancellation) that the Managing General Partner or the Liquidator
deems necessary or appropriate to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this
Agreement; (D) all certificates, documents and other instruments
relating to the admission, withdrawal, removal or substitution of
any Partner pursuant to, or other events described in,
Article IV, X, XI or XII; (E) all certificates, documents and
other instruments relating to the determination of the rights,
preferences and privileges of any class or series of Partnership
Securities issued pursuant to Section 5.6; and (F) all
certificates, documents and other instruments (including
agreements and a certificate of merger) relating to a merger or
consolidation of the Partnership pursuant to Article XIV; and
(ii) execute, swear to, acknowledge, deliver, file and
record all ballots, consents, approvals, waivers, certificates,
documents and other instruments necessary or appropriate, in the
discretion of the Managing General Partner or the Liquidator, to
make, evidence, give, confirm or ratify any vote, consent,
approval, agreement or other action that is made or given by the
Partners hereunder or is consistent with the terms of this
Agreement or is necessary or appropriate, in the discretion of
the Managing General Partner or the Liquidator, to effectuate the
terms or intent of this Agreement; provided, that when required
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by any provision of this Agreement that establishes a percentage
of the Limited Partners or of the Limited Partners of any class
or series required to take any action, the Managing General
Partner and the Liquidator may exercise the power of attorney
made in this Section 2.6(a)(ii) only after the necessary vote,
consent or approval of the Limited Partners or of the Limited
Partners of such class or series, as applicable.
Nothing contained in this Section 2.6(a) shall be construed as
authorizing the Managing General Partner to amend this Agreement
except in accordance with Article XIII or as may be otherwise
expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to
be irrevocable and a power coupled with an interest, and it shall
survive and, to the maximum extent permitted by law, not be affected
by the subsequent death, incompetency, disability, incapacity,
dissolution, bankruptcy or termination of any Limited Partner or
Assignee and the transfer of all or any portion of such Special
General Partner's, Limited Partner's or Assignee's Partnership
Interest and shall extend to such Special General Partner's, Limited
Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Special General Partner, Limited Partner or
Assignee hereby agrees to be bound by any representation made by the
Managing General Partner or the Liquidator acting in good faith
pursuant to such power of attorney; and each such Special General
Partner, Limited Partner or Assignee, to the maximum extent permitted
by law, hereby waives any and all defenses that may be available to
contest, negate or disaffirm the action of the Managing General
Partner or the Liquidator taken in good faith under such power of
attorney. Each Special General Partner, Limited Partner or Assignee
shall execute and deliver to the Managing General Partner or the
Liquidator, within 15 days after receipt of the request therefor, such
further designation, powers of attorney and other instruments as the
Managing General Partner or the Liquidator deems necessary to
effectuate this Agreement and the purposes of the Partnership.
Section 2.7 TERM.
The term of the Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware Act
and shall continue in existence until the close of Partnership
business on December 31, 2086 or until the earlier dissolution of the
Partnership in accordance with the provisions of Article XII. The
existence of the Partnership as a separate legal entity shall continue
until the cancellation of the Certificate of Limited Partnership as
provided in the Delaware Act.
Section 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
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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, a General Partner,
one or more of its Affiliates or one or more nominees, as the Managing
General Partner may determine. The General Partners hereby declare
and warrant that any Partnership assets for which record title is held
in the name of a General Partner or one or more of its Affiliates or
one or more nominees shall be held by such General Partner or such
Affiliate or nominee for the use and benefit of the Partnership in
accordance with the provisions of this Agreement; provided, however,
that such General Partner shall use reasonable efforts to cause record
title to such assets (other than those assets in respect of which the
Managing General Partner determines that the expense and difficulty of
conveyancing makes transfer of record title to the Partnership
impracticable) to be vested in the Partnership as soon as reasonably
practicable; provided, further, that, prior to the withdrawal or
removal of such General Partner or as soon thereafter as practicable,
such General Partner shall use reasonable efforts to effect the
transfer of record title to the Partnership and, prior to any such
transfer, will provide for the use of such assets in a manner
satisfactory to the Managing General Partner. All Partnership assets
shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which record title to such
Partnership assets is held.
ARTICLE III
RIGHTS OF LIMITED PARTNERS
Section 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.
Section 3.2 MANAGEMENT OF BUSINESS.
No Limited Partner or Assignee, in its capacity as such, shall
participate in the operation, management or control (within the
meaning of the Delaware Act) of the Partnership's business, transact
any business in the Partnership's name or have the power to sign
documents for or otherwise bind the Partnership. Any action taken by
any Affiliate of the Managing General Partner or any officer,
director, employee, member, general partner, agent or trustee of the
Managing General Partner or any of its Affiliates, or any officer,
director, employee, member, general partner or agent or trustee 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
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shall not affect, impair or eliminate the limitations on the liability
of the Limited Partners or Assignees under this Agreement.
Section 3.3 OUTSIDE ACTIVITIES OF THE LIMITED PARTNERS.
Subject to the provisions of Section 7.5, which shall continue to
be applicable to the Persons referred to therein, regardless of
whether such Persons shall also be Limited Partners or Assignees, any
Limited Partner or Assignee shall be entitled to and may have business
interests and engage in business activities in addition to those
relating to the Partnership, including business interests and
activities in direct competition with the Partnership Group. Neither
the Partnership nor any of the other Partners or Assignees shall have
any rights by virtue of this Agreement in any business ventures of any
Limited Partner or Assignee.
Section 3.4 RIGHTS OF LIMITED PARTNERS.
(a) In addition to other rights provided by this Agreement
or by applicable law, and except as limited by Section 3.4(b), each
Limited Partner shall have the right, for a purpose reasonably related
to such Limited Partner's interest as a limited partner in the
Partnership, upon reasonable written demand and at such Limited
Partner's own expense:
(i) to obtain true and full information regarding the
status of the business and financial condition of the
Partnership;
(ii) promptly after becoming available, to obtain a
copy of the Partnership's federal, state and local income tax
returns for each year;
(iii) to have furnished to him a current list of
the name and last known business, residence or mailing address of
each Partner;
(iv) to have furnished to him a copy of this Agreement
and the Certificate of Limited Partnership and all amendments
thereto, together with a copy of the executed copies of all
powers of attorney pursuant to which this Agreement, the
Certificate of Limited Partnership and all amendments thereto
have been executed;
(v) to obtain true and full information regarding the
amount of cash and a description and statement of the Net Agreed
Value of any other Capital Contribution by each Partner and which
each Partner has agreed to contribute in the future, and the date
on which each became a Partner; and
(vi) to obtain such other information regarding the
affairs of the Partnership as is just and reasonable.
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(b) The General Partners may keep confidential from the
Limited Partners and Assignees, for such period of time as the
Managing General Partner deems reasonable, (i) any information that
the Managing General Partner reasonably believes to be in the nature
of trade secrets or (ii) other information the disclosure of which the
Managing General Partner in good faith believes (A) is not in the best
interests of the MLP or the Partnership Group, (B) could damage the
MLP or the Partnership Group or (C) that the MLP or any Group Member
is required by law or by agreement with any third party to keep
confidential (other than agreements with Affiliates of the Partnership
the primary purpose of which is to circumvent the obligations set
forth in this Section 3.4).
ARTICLE IV
TRANSFER OF PARTNERSHIP INTERESTS
Section 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.
(b) No Partnership Interest shall be transferred, in whole
or in part, except in accordance with the terms and conditions set
forth in this Article IV. Any transfer or purported transfer of a
Partnership Interest not made in accordance with this Article IV shall
be null and void.
(c) Nothing contained in this Agreement shall be construed
to prevent a disposition by any shareholder of a General Partner of
any or all of the issued and outstanding capital stock of a General
Partner.
Section 4.2 TRANSFER OF A GENERAL PARTNER'S PARTNERSHIP INTEREST.
If a 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, such 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 Partners hereby expressly consent to such
transfer. Except as set forth in the immediately preceding sentence
and in Section 5.2, a General Partner may not transfer all or any part
of its Partnership Interest as the general partner of the Partnership;
provided, however, that this provision shall not preclude or limit a
General Partner's ability to mortgage, pledge, hypothecate or grant a
security interest in its Partnership Interest as the General Partner
of the Partnership and shall not prevent any forced sale of any or all
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of its Partnership Interest as the General Partner of the Partnership
pursuant to the foreclosure of, or other realization upon, any such
encumbrance.
Section 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 Partner pursuant to Article X.
Except as set forth in the immediately preceding sentence and in
Section 5.2, 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 except for the transfers contemplated by Sections 5.2 and 10.1, a
Limited Partner may not transfer all or any part of its Partnership
Interest or withdraw from the Partnership.
Section 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 authority 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 Managing General Partner may impose restrictions on
the transfer of Partnership Interests if a subsequent Opinion of
Counsel determines that such restrictions are necessary to avoid a
significant risk of the Partnership or the 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 Managing General Partner may
determine to be necessary or appropriate to impose such restrictions.
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ARTICLE V
CONTRIBUTIONS AND INITIAL TRANSFERS
Section 5.1 INITIAL CONTRIBUTIONS.
In connection with the formation of the Partnership under the
Delaware Act, the Managing General Partner made an initial Capital
Contribution to the Partnership in the amount of $10.10 in exchange
for an interest in the Partnership and has been admitted as a general
partner of the Partnership, and the MLP made an initial Capital
Contribution to the Partnership in the amount of $989.90 in exchange
for an interest in the Partnership and has been admitted as a limited
partner of the Partnership.
Section 5.2 CONTRIBUTIONS AND INITIAL TRANSFERS BY THE GENERAL
PARTNERS AND THEIR AFFILIATES.
On the Closing Date, pursuant to, and subject to the conditions
of, the Contribution and Conveyance Agreement, the following
transactions shall occur in the following order:
(a) The General Partners and ESSC shall convey the Assets
to the Partnership. In exchange, the Partnership shall (A) continue
the General Partners' 1.0101% general partner interest in the
Partnership, (B) issue to the General Partners and EESC a 98.9899%
limited partner interest in the Partnership and (C) assume the Assumed
Liabilities. The Managing General Partner's interest in 1.0101% in
the general partner described in (A) above shall be 76.8645%
(representing a .7764% Managing General Partner interest) and the
remaining 23.1355% belongs to the Special General Partner
(representing a .2337% Special General Partner interest). The
Managing General Partner and EESC shall share their combined 76.8645%
of the 98.9899% limited partner interest based on the relative Net
Agreed Value of the Property each contributed for such interest.
(b) The General Partners and EESC shall transfer all of
their limited partner interest in the Partnership to the MLP in
exchange for the consideration provided for in the Contribution and
Conveyance Agreement.
Section 5.3 ADDITIONAL CAPITAL CONTRIBUTIONS.
With the consent of the Managing General Partner, 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 in addition to those
provided in Sections 5.1 and 5.2, the General Partners shall be
obligated to make an additional combined Capital Contribution to the
Partnership in an amount equal to 1.0101 divided by 98.9899 of the Net Agreed
Value of the additional Capital Contribution then made by such Limited
Partner. Each General Partner shall contribute its Pro Rata share of
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such additional combined Capital Contribution. Except as set forth in
the immediately preceding sentence and Article XII, the General
Partners shall not be obligated to make any additional Capital
Contributions to the Partnership.
Section 5.4 INTEREST AND WITHDRAWAL.
No interest shall be paid by the Partnership on Capital
Contributions. No Partner or Assignee shall be entitled to the
withdrawal or return of its Capital Contribution, except to the
extent, if any, that distributions made pursuant to this Agreement or
upon termination of the Partnership may be considered as such by law
and then only to the extent provided for in this Agreement. Except to
the extent expressly provided in this Agreement, no Partner or
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 Section
17-502(b) of the Delaware Act.
Section 5.5 CAPITAL ACCOUNTS.
(a) The Partnership shall maintain for each Partner (or a
beneficial owner of Partnership Interests held by a nominee in any
case in which the nominee has furnished the identity of such owner to
the Partnership in accordance with Section 6031(c) of the Code or any
other method acceptable to the Managing General Partner in its sole
discretion) owning a Partnership Interest a separate Capital Account
with respect to such Partnership Interest in accordance with the rules
of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account
shall be increased by (i) the amount of all Capital Contributions made
to the Partnership with respect to such Partnership Interest pursuant
to this Agreement and (ii) all items of Partnership income and gain
(including, without limitation, income and gain exempt from tax)
computed in accordance with Section 5.5(b) and allocated with respect
to such Partnership Interest pursuant to Section 6.1, and decreased by
(x) the amount of cash or Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such
Partnership Interest pursuant to this Agreement and (y) all items of
Partnership deduction and loss computed in accordance with
Section 5.5(b) and allocated with respect to such Partnership Interest
pursuant to Section 6.1.
(b) For purposes of computing the amount of any item of
income, gain, loss or deduction which is to be allocated pursuant to
Article VI and is to be reflected in the Partners' Capital Accounts,
the determination, recognition and classification of any such item
shall be the same as its determination, recognition and classification
for federal income tax purposes (including, without limitation, any
method of depreciation, cost recovery or amortization used for that
purpose), provided, that:
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(i) Solely for purposes of this Section 5.5, the
Partnership shall be treated as owning directly its proportionate
share (as determined by the Managing General Partner) 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 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 purposes,
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depreciation, cost recovery or amortization deductions shall be
determined using any reasonable method that the Managing General
Partner may adopt.
(vi) If the Partnership's adjusted basis in a
depreciable or cost recovery property is reduced for federal
income tax purposes pursuant to Section 48(q)(1) or 48(q)(3) of
the Code, the amount of such reduction shall, solely for purposes
hereof, be deemed to be an additional depreciation or cost
recovery deduction in the year such property is placed in service
and shall be allocated among the Partners pursuant to
Section 6.1. Any restoration of 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; provided, however, that if
the transfer causes a termination of the Partnership under Section
708(b)(1)(B) of the Code, the Partnership's properties and liabilities
shall be deemed (i) to have been distributed in liquidation of the
Partnership to the Partners (including any transferee of a Partnership
Interest that is a party to the transfer causing such termination)
pursuant to Section 12.4 (after adjusting the balance of the Capital
Accounts of the Partners as provided in Section 5.5(d)(ii) and
recontributed by such Partners in reconstitution of the Partnership or
(ii) in the event of a termination of the Partnership that occurs
after the finalization of Proposed Treasury Regulation Section 1.704-
1(b)(1)(iv), to have been contributed to a new partnership which will
be deemed to make liquidating distributions of the interests in this
new partnership to the Partners (including any transferee of a
Partnership Interest that is a party to the transfer causing such
termination) pursuant to Section 12.4 (after adjusting the balance of
the Capital Accounts of the Partners as provided in Section
5.5(d)(ii)). Any such deemed distribution and contribution, in the
case of a characterization under clause (i) of the preceding sentence,
or any such deemed contribution and distribution, in the case of a
characterization under clause (ii) of the preceding sentence, shall be
treated as an actual contribution and distribution for purposes of
this Section 5.5. In such event, the Carrying Values of the
Partnership's properties shall be adjusted immediately prior to such
deemed distribution and contribution, or deemed contribution and
distribution, pursuant to Treasury Regulation Section 1.704-
1(b)(2)(iv) and this Section 5.5 and such Carrying Values shall then
constitute the Agreed Values of such properties upon such deemed
contribution to the new partnership. In either case, the Capital
Accounts of the new partnership that results under the applicable
characterization shall be maintained in accordance with the principles
of this Section 5.5.
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(d) (i) In accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), on an issuance of additional
Partnership Interests for cash or Contributed Property or the
conversion of the General Partners' Combined Interest to Common
Units pursuant to Section 11.3(a) (or upon the occurance of any
other event listed in such regulation), the Capital Account of
all Partners and the Carrying Value of each Partnership property
immediately prior to such issuance shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized
Gain or Unrealized Loss had been recognized on an actual sale of
each such property immediately prior to such issuance and had
been allocated to the Partners at such time pursuant to
Section 6.1 in the same manner as any item of gain or loss
actually recognized during such period would have to be
allocated. In determining such Unrealized Gain or Unrealized
Loss, the aggregate cash amount and fair market value of all
Partnership assets (including, without limitation, cash or cash
equivalents) immediately prior to the issuance of additional
Partnership Interests shall be determined by the Managing General
Partner using such reasonable method of valuation as it may
adopt; provided, however, that the Managing General Partner, in
arriving at such valuation, must take fully into account the fair
market value of the Partnership Interests of all Partners at such
time. The Managing General Partner shall allocate such aggregate
value among the assets of the Partnership (in such manner as it
determines in its discretion to be reasonable) to arrive at a
fair market value for individual properties.
(ii) In accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), immediately prior to any actual or
deemed distribution to a Partner of any Partnership property
(other than a distribution of cash that is not in redemption or
retirement of a Partnership Interest), the Capital Accounts of
all Partners and the Carrying Value of all Partnership property
shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership
property, as if such Unrealized Gain or Unrealized Loss had been
recognized in a sale of such property immediately prior to such
distribution for an amount equal to its fair market value, and
had been allocated to the Partners, at such time, pursuant to
Section 6.1 in the same manner as any item of gain or loss
actually recognized during such period would have been allocated.
In determining such Unrealized Gain or Unrealized Loss the
aggregate cash amount and fair market value of all Partnership
assets (including, without limitation, cash or cash equivalents)
immediately prior to a distribution shall (A) in the case of an
actual distribution which is not made pursuant to Section 12.4 or
in the case of a deemed contribution and/or distribution
occurring as a result of a termination of the Partnership
pursuant to Section 708 of the Code, be determined and allocated
in the same manner as that provided in Section 5.5(d)(i) or
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(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.
Section 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 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.
Section 5.7 LIMITED PREEMPTIVE RIGHTS.
Except as provided in Section 5.3, no Person shall have
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.
Section 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 Limited Partner 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
Section 6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES.
For purposes of maintaining the Capital Accounts and in
determining the rights of the Partners among themselves, the
Partnership's items of income, gain, loss and deduction (computed in
accordance with Section 5.5(b)) shall be allocated among the Partners
in each taxable year (or portion thereof) as provided herein below.
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(a) Net Income. After giving effect to the special
allocations set forth in Section 6.1(d), Net Income for each taxable
year and all items of income, gain, loss and deduction taken into
account in computing Net Income for such taxable year shall be
allocated as follows:
(i) First, 100% to the General Partners, Pro Rata,
until the aggregate Net Income allocated to the General Partners
pursuant to this Section 6.1(a)(i) for the current taxable year
and all previous taxable years is equal to the aggregate Net
Losses allocated to the General Partners pursuant to Section
6.1(b)(ii) for all previous taxable years;
(ii) Second, 1.0101% to the General Partners, Pro Rata,
and 98.9899% to the Limited Partners, in accordance with their
respective Percentage Interests.
(b) Net Losses. After giving effect to the special
allocations set forth in Section 6.1(d), Net Losses for each taxable
period and all items of income, gain, loss and deduction taken into
account in computing Net Losses for such taxable period shall be
allocated as follows:
(i) First, 1.0101% to the General Partners, Pro Rata,
and 98.9899% to the Limited Partners, in accordance with their
respective Percentage Interests; provided, that Net Losses shall
not be allocated pursuant to this Section 6.1(b)(i) to the extent
that such allocation would cause a Limited Partner to have a
deficit balance in its Adjusted Capital Account at the end of
such taxable year (or increase any existing deficit balance in
its Adjusted Capital Account);
(ii) Second, the balance, if any, 100% to the General
Partners, Pro Rata.
(c) Net Termination Gains and Losses. After giving effect
to the special allocations set forth in Section 6.1(d), all items of
income, gain, loss and deduction taken into account in computing Net
Termination Gain or Net Termination Loss for such taxable period shall
be allocated in the same manner as such Net Termination Gain or Net
Termination Loss is allocated hereunder. All allocations under this
Section 6.1(c) shall be made after Capital Account balances have been
adjusted by all other allocations provided under this Section 6.1 and
after all distributions of Available Cash provided under Section 6.4
have been made with respect to the taxable period ending on or before
the Liquidation Date; provided, however, that solely for purposes of
this Section 6.1(c), Capital Accounts shall not be adjusted for
distributions made pursuant to Section 12.4.
(i) If a Net Termination Gain is recognized (or deemed
recognized pursuant to Section 5.5(d)), such Net Termination Gain
shall be allocated between the General Partners, Pro Rata, and
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the Limited Partners in the following manner (and the Capital
Accounts of the Partners shall be increased by the amount so
allocated in each of the following subclauses, in the order
listed, before an allocation is made pursuant to the next
succeeding subclause):
(A) First, to each Partner having a deficit
balance in its Capital Account, in the proportion that such
deficit balance bears to the total deficit balances in the
Capital Accounts of all Partners, until each such Partner
has been allocated Net Termination Gain equal to any such
deficit balance in its Capital Account; and
(B) Second, 100% to the General Partners, Pro
Rata, and the Limited Partners in accordance with their
respective Percentage Interests.
(ii) If a Net Termination Loss is recognized (or deemed
recognized pursuant to Section 5.5(d)), such Net Termination Loss
shall be allocated to the Partners in the following manner:
(A) First, 100% to the General Partners, Pro
Rata, and the Limited Partners in proportion to, and to the
extent of, the positive balances in their respective Capital
Accounts; and
(B) Second, the balance, if any, 100% to the
General Partners, Pro Rata.
(d) Special Allocations. Notwithstanding any other
provision of this Section 6.1, the following special allocations shall
be made for such taxable period:
(i) PARTNERSHIP MINIMUM GAIN CHARGEBACK.
Notwithstanding any other provision of this Section 6.1, if there
is a net decrease in Partnership Minimum Gain during any
Partnership taxable period, each Partner shall be allocated items
of Partnership income and gain for such period (and, if
necessary, subsequent periods) in the manner and amounts provided
in Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and
1.704-2(j)(2)(i), or any successor provision. For purposes of
this Section 6.1(d), each Partner's Adjusted Capital Account
balance shall be determined, and the allocation of income or gain
required hereunder shall be effected, prior to the application of
any other allocations pursuant to this Section 6.1(d) with
respect to such taxable period (other than an allocation pursuant
to Sections 6.1(d)(v) and 6.1(d)(vi)). This Section 6.1(d)(i) is
intended to comply with the Partnership Minimum Gain chargeback
requirement in Treasury Regulation Section 1.704-2(f) and shall
be interpreted consistently therewith.
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(ii) CHARGEBACK OF PARTNER NONRECOURSE DEBT MINIMUM
GAIN. Notwithstanding the other provisions of this Section 6.1
(other than Section 6.1(d)(i)), except as provided in Treasury
Regulation Section 1.704-2(i)(4), if there is a net decrease in
Partner Nonrecourse Debt Minimum Gain during any Partnership
taxable period, any Partner with a share of Partner Nonrecourse
Debt Minimum Gain at the beginning of such taxable period shall
be allocated items of Partnership income and gain for such period
(and, if necessary, subsequent periods) in the manner and amounts
provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions. For purposes of
this Section 6.1(d), each Partner's Adjusted Capital Account
balance shall be determined, and the allocation of income or gain
required hereunder shall be effected, prior to the application of
any other allocations pursuant to this Section 6.1(d), other than
Section 6.1(d)(i) and other than an allocation pursuant to
Sections 6.1(d)(v) and 6.1(d)(vi), with respect to such taxable
period. This Section 6.1(d)(ii) is intended to comply with the
chargeback of items of income and gain requirement in Treasury
Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(iii) QUALIFIED INCOME OFFSET. In the event any
Partner unexpectedly receives any adjustments, allocations or
distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain
shall be specially allocated to such Partner in an amount and
manner sufficient to eliminate, to the extent required by the
Treasury Regulations promulgated under Section 704(b) of the
Code, the deficit balance, if any, in its Adjusted Capital
Account created by such adjustments, allocations or distributions
as quickly as possible unless such deficit balance is otherwise
eliminated pursuant to Section 6.1(d)(i) or (ii).
(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 shall be specially
allocated items of Partnership gross income and gain in the
amount of such excess as quickly as possible; provided, that an
allocation pursuant to this Section 6.1(d)(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(d)(iv) were not in this
Agreement.
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(v) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for
any taxable period shall be allocated to the Partners in
accordance with their respective Percentage Interests. If the
Managing General Partner determines in its good faith discretion
that the Partnership's Nonrecourse Deductions must be allocated
in a different ratio to satisfy the safe harbor requirements of
the Treasury Regulations promulgated under Section 704(b) of the
Code, the Managing General Partner is authorized, upon notice to
the other Partners, to revise the prescribed ratio to the
numerically closest ratio that does satisfy such requirements.
(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
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Allocations and the Agreed Allocations, together, shall be
equal to the net amount of such items that would have been
allocated to each such Partner under the Agreed Allocations
had the Required Allocations and the related Curative
Allocation not otherwise been provided in this Section 6.1.
Notwithstanding the preceding sentence, Required Allocations
relating to (1) Nonrecourse Deductions shall not be taken
into account except to the extent that there has been a
decrease in Partnership Minimum Gain and (2) Partner
Nonrecourse Deductions shall not be taken into account
except to the extent that there has been a decrease in
Partner Nonrecourse Debt Minimum Gain. Allocations pursuant
to this Section 6.1(d)(ix)(A) shall only be made with
respect to Required Allocations to the extent the Managing
General Partner reasonably determines that such allocations
will otherwise be inconsistent with the economic agreement
among the Partners. Further, allocations pursuant to this
Section 6.1(d)(ix)(A) shall be deferred with respect to
allocations pursuant to clauses (1) and (2) hereof to the
extent the Managing General Partner reasonably determines
that such allocations are likely to be offset by subsequent
Required Allocations.
(B) The Managing General Partner shall have reasonable
discretion, with respect to each taxable period, to (1)
apply the provisions of Section 6.1(d)(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(d)(ix)(A) among the Partners in a manner that is likely
to minimize such economic distortions.
Section 6.2 ALLOCATIONS FOR TAX PURPOSES.
(a) Except as otherwise provided herein, for federal income
tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as its correlative
item of "book" income, gain, loss or deduction is allocated pursuant
to Section 6.1.
(b) In an attempt to eliminate Book-Tax Disparities
attributable to a Contributed Property or Adjusted Property, items of
income, gain, loss, depreciation, amortization and cost recovery
deductions shall be allocated for federal income tax purposes among
the Partners as follows:
(i) (A) In the case of a Contributed Property, such
items attributable thereto shall be allocated among the Partners
in the 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
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Contributed Property shall be allocated among the Partners in the
same manner as its correlative item of "book" gain or loss is
allocated pursuant to Section 6.1.
(ii) (A) In the case of an Adjusted Property, such
items shall (1) first, be allocated among the Partners in a
manner consistent with the principles of Section 704(c) of the
Code to take into account the Unrealized Gain or Unrealized Loss
attributable to such property and the allocations thereof
pursuant to Section 5.5(d)(i) or 5.5(d)(ii), and (2) second, in
the event such property was originally a Contributed Property, be
allocated among the Partners in a manner consistent with
Section 6.2(b)(i)(A); and (B) any item of Residual Gain or
Residual Loss attributable to an Adjusted Property shall be
allocated among the Partners in the same manner as its
correlative item of "book" gain or loss is allocated pursuant to
Section 6.1.
(iii) The Managing General Partner shall apply the
principles of Treasury Regulation Section 1.704-3(d) to eliminate
Book-Tax Disparities.
(c) For the proper administration of the Partnership and
for the preservation of uniformity of the Units or other limited
partner interests of the MLP (or any class or classes thereof), the
Managing General Partner shall have sole discretion to (i) adopt such
conventions as it deems appropriate in determining the amount of
depreciation, amortization and cost recovery deductions; (ii) make
special allocations for federal income tax purposes of income
(including, without limitation, gross income) or deductions; and (iii)
amend the provisions of this Agreement as appropriate (x) to reflect
the proposal or promulgation of Treasury Regulations under Section
704(b) or Section 704(c) of the Code or (y) otherwise to preserve or
achieve uniformity of the Units or other limited partner interests of
the MLP (or any class or classes thereof). The Managing General
Partner may adopt such conventions, make such allocations and make
such amendments to this Agreement as provided in this Section
6.2(c) only if such conventions, allocations or amendments would not
have a material adverse effect on the Partners, the holders of any
class or classes of Units or other limited partner interests of the
MLP issued and Outstanding or the Partnership, and if such allocations
are consistent with the principles of Section 704 of the Code.
(d) The Managing General Partner in its discretion may
determine to depreciate or amortize the portion of an adjustment under
Section 743(b) of the Code attributable to unrealized appreciation in
any Adjusted Property (to the extent of the unamortized Book-Tax
Disparity) using a predetermined rate derived from the depreciation or
amortization method and useful life applied to the Partnership's
common basis of such property, despite any inconsistency of such
approach with Proposed Treasury Regulation Section 1.168-2(n),
Treasury Regulation Section 1.167(c)-l(a)(6) or the legislative
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history of Section 197 of the Code. If the Managing General Partner
determines that such reporting position cannot reasonably be taken,
the Managing General Partner may adopt depreciation and amortization
conventions under which all purchasers acquiring Limited Partner
Interests 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 Managing General Partner chooses not to utilize such aggregate
method, the Managing General Partner may use any other reasonable
depreciation and amortization conventions to preserve the uniformity
of the intrinsic tax characteristics of any Limited Partner Interests
of the MLP that would not have a material adverse effect on the
Limited Partners or the holders of any class or classes of Limited
Partner Interests of the MLP.
(e) Any gain allocated to the Partners upon the sale or
other taxable disposition of any Partnership asset shall, to the
extent possible, after taking into account other required allocations
of gain pursuant to this Section 6.2, be characterized as Recapture
Income in the same proportions and to the same extent as such Partners
(or their predecessors in interest) have been allocated any deductions
directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
(f) All items of income, gain, loss, deduction and credit
recognized by the Partnership for federal income tax purposes and
allocated to the Partners in accordance with the provisions hereof
shall be determined without regard to any election under Section 754
of the Code which may be made by the Partnership; provided, however,
that such allocations, once made, shall be adjusted as necessary or
appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) The Managing General Partner may adopt such methods of
allocation of income, gain, loss or deduction between a transferor and
a transferee of a Partnership Interest as it determines necessary, to
the extent permitted or required by Section 706 of the Code and the
regulations or rulings promulgated thereunder.
Section 6.3 SPECIAL DISTRIBUTION.
Immediately following the Note Offering, the Partnership shall,
subject to Section 17-607 of the Delaware Act, distribute (i) to the
Special General Partner $77,320,851 of the Net Note Proceeds and (ii)
to the Managing General Partner the balance of the Net Note Proceeds
(approximately $2,074,000).
Section 6.4 GENERAL DISTRIBUTIONS.
(a) Within 45 days following the end of each Quarter
commencing with the Quarter ending on March 31, 1997, an amount equal
to 100% of Available Cash with respect to such Quarter shall, subject
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to Section 17-607 of the Delaware Act, 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, other than from borrowings
described in (a)(ii) of the definition of Available Cash, shall be
applied and distributed solely in accordance with, and subject to the
terms and conditions of, Section 12.4.
(c) The Managing General Partner shall have the discretion
to treat taxes paid by the Partnership on behalf of, or amounts
withheld with respect to, all or less than all of the Partners, as a
distribution of Available Cash to such Partners.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
Section 7.1 MANAGEMENT.
(a) The Managing General Partner shall conduct, direct and
manage all activities of the Partnership. Except as otherwise
expressly provided in this Agreement, all management powers over the
business and affairs of the Partnership shall be exclusively vested in
the Managing General Partner, neither the Special General Partner nor
any Limited Partner or Assignee shall have any management power over
the business and affairs of the Partnership. In addition to the powers
now or hereafter granted a general partner of a limited partnership
under applicable law or which are granted to the Managing General
Partner under any other provision of this Agreement, the Managing
General Partner, subject to Section 7.3, shall have full power and
authority to do all things and on such terms as it, in its sole
discretion, may deem necessary or appropriate to conduct the business
of the Partnership, to exercise all powers set forth in Section 2.5
and to effectuate the purposes set forth in Section 2.4, including the
following:
(i) the making of any expenditures, the lending or
borrowing of money, the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance
of evidences of indebtedness, including indebtedness that is
convertible into Partnership Interests, and the incurring of any
other obligations;
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(ii) the making of tax, regulatory and other filings,
or rendering of periodic or other reports to governmental or
other agencies having jurisdiction over the business or assets of
the Partnership;
(iii) the acquisition, disposition, mortgage,
pledge, encumbrance, hypothecation or exchange of any or all of
the assets of the Partnership or the merger or other combination
of the Partnership with or into another Person (the matters
described in this clause (iii) being subject, however, to any
prior approval that may be required by Section 7.3);
(iv) the use of the assets of the Partnership
(including cash on hand) for any purpose consistent with the
terms of this Agreement, including the financing of the conduct
of the operations of the Partnership Group, (subject to Section
7.6) the lending of funds to other Persons (including the MLP,
the General Partners and their Affiliates), the repayment of
obligations of the Partnership, the MLP or Partnership Group and
the making of capital contributions to any member of the
Partnership Group;
(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 Partners or their assets other than
their interest in the Partnership, even if same results in the
terms of the transaction being less favorable to the Partnership
than would otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees
(including employees having titles such as "president," "vice
president," "secretary" and "treasurer") and agents, outside
attorneys, accountants, consultants and contractors and the
determination of their compensation and other terms of employment
or hiring;
(viii) the maintenance of such insurance for the
benefit of the Partnership Group and the Partners (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 or other relationships subject to the restrictions
set forth in Section 2.4;
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(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;
(b) Notwithstanding any other provision of this Agreement,
the MLP Agreement, the Delaware Act or any applicable law, rule or
regulation, each of the Partners hereby (i) approves, ratifies and
confirms the execution, delivery and performance by the parties
thereto of the MLP Agreement, the Underwriting Agreement, the
Contribution and Conveyance Agreement, the agreements and other
documents filed as exhibits to the Registration Statement, and the
other agreements described in or filed as a part of the Registration
Statement; (ii) agrees that the Managing General Partner (on its own
or through any officer of the Partnership) is authorized to execute,
deliver and perform the agreements referred to in clause (i) of this
sentence and the other agreements, acts, transactions and matters
described in or contemplated by the Registration Statement on behalf
of the Partnership without any further act, approval or vote of the
Partners; and (iii) agrees that the execution, delivery or performance
by the General Partners, the MLP, 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 Managing
General Partner or any Affiliate of the Managing General Partner of
the rights accorded pursuant to Article XV), shall not constitute a
breach by the Managing General Partner of any duty that the General
Partners 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.
Section 7.2 CERTIFICATE OF LIMITED PARTNERSHIP.
The Managing General Partner has caused the Certificate of
Limited Partnership to be filed with the Secretary of State of the
State of Delaware as required by the Delaware Act and shall use all
reasonable efforts to cause to be filed such other certificates or
documents as may be determined by the Managing General Partner in its
sole discretion to be reasonable and necessary or appropriate for the
formation, continuation, qualification and operation of a limited
partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the
extent that such action is determined by the Managing General Partner
in its sole discretion to be reasonable and necessary or appropriate,
the Managing General Partner shall file amendments to and restatements
of the Certificate of Limited Partnership and do all things to
maintain the Partnership as a limited partnership (or a partnership or
other entity in which the limited partners have limited liability)
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under the laws of the State of Delaware or of any other state in which
the Partnership may elect to do business or own property. Subject to
the terms of Section 3.4(a), the Managing General Partner shall not be
required, before or after filing, to deliver or mail a copy of the
Certificate of Limited Partnership, any qualification document or any
amendment thereto to any Limited Partner or Assignee.
Section 7.3 RESTRICTIONS ON GENERAL PARTNERS' AUTHORITY.
(a) The Managing General Partner may not, without written
approval of the specific act by the Limited Partner or by other
written instrument executed and delivered by the Limited Partner
subsequent to the date of this Agreement, take any action in
contravention of this Agreement, including, except as otherwise
provided in this Agreement, (i) committing any act that would make it
impossible to carry on the ordinary business of the Partnership;
(ii) possessing Partnership property, or assigning any rights in
specific Partnership property, for other than a Partnership purpose;
(iii) admitting a Person as a Partner; (iv) amending this Agreement in
any manner; or (v) transferring its interest as general partner of the
Partnership.
(b) Except as provided in Articles XII and XIV, the
Managing General Partner may not sell, exchange or otherwise dispose
of all or 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 Partnership, without the
approval of the Limited Partners; provided however that this provision
shall not preclude or limit the Managing General Partner's ability to
mortgage, pledge, hypothecate or grant a security interest in all or
substantially all of the assets of the Partnership and shall not apply
to any forced sale of any or all of the assets of the Partnership
pursuant to the foreclosure of, or other realization upon, any such
encumbrance. Without the approval of holders of at least a Unit
Majority, the Managing General Partner shall not, on behalf of the
MLP, (i) consent to any amendment to this Agreement or, except as
expressly permitted by Section 7.9(d) of the MLP Agreement, take any
action permitted to be taken by a partner of the Partnership, in
either case, that would have a material adverse effect on the MLP as a
partner of the Partnership or (ii) except as permitted under
Sections 4.6, 11.1 and 11.2 of the MLP Agreement, elect or cause the
MLP to elect a successor general partner of the Partnership.
(c) At all times while serving as a General Partner of the
Partnership, each of the General Partners shall not make any dividend
or distribution on, or repurchase any shares of, its stock or take any
other action within its control if the effect of such action would
cause their combined net worth, independent of their interest in the
Partnership Group, to be less than $15.0 million or such lower amount,
which lower amount is based on an Opinion of Counsel that states,
(i) based on a change in the position of the Internal Revenue Service
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with respect to partnership status pursuant to Code Section 7701, such
lower amount would not 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 and (ii) would not result in
the loss of the limited liability of any Limited Partner.
Section 7.4 REIMBURSEMENT OF THE MANAGING GENERAL PARTNER.
(a) Except as provided in this Section 7.4 and elsewhere in
this Agreement or in the MLP Agreement, the Managing General Partner
shall not be compensated for its services as general partner of the
MLP or any Group Member.
(b) The Managing General Partner shall be reimbursed on a
monthly basis, or such other reasonable basis as the Managing General
Partner may determine in its sole discretion, for (i) all direct and
indirect expenses it incurs or payments it makes on behalf of the
Partnership (including salary, bonus, incentive compensation and other
amounts paid to any Person including Affiliates of the Managing
General Partner to perform services for the Partnership or for the
Managing General Partner in the discharge of its duties to the
Partnership), and (ii) all other necessary or appropriate expenses
allocable to the Partnership or otherwise reasonably incurred by the
Managing General Partner in connection with operating the
Partnership's business (including expenses allocated to the Managing
General Partner by its Affiliates). The Managing General Partner shall
determine the expenses that are allocable to the Partnership in any
reasonable manner determined by the Managing General Partner in its
sole discretion. Reimbursements pursuant to this Section 7.4 shall be
in addition to any reimbursement to the Managing General Partner as a
result of indemnification pursuant to Section 7.7.
(c) Subject to Section 5.7, the Managing General Partner,
in its sole discretion and without the approval of the Limited
Partners (who shall have no right to vote in respect thereof), may
propose and adopt on behalf of the Partnership employee benefit plans,
employee programs and employee practices, or cause the Partnership to
issue partnership securities, in connection with, pursuant to any
employee benefit plan, employee program or employee practice
maintained or sponsored by the Managing General Partner or any of its
Affiliates, in each case for the benefit of employees of the Managing
General Partner, any Group Member or any Affiliate, or any of them, in
respect of services performed, directly or indirectly, for the benefit
of the Partnership Group. Expenses incurred by the Managing General
Partner in connection with any such plans, programs and practices
shall be reimbursed in accordance with Section 7.4(b). Any and all
obligations of the Managing General Partner under any employee benefit
plans, employee programs or employee practices adopted by the Managing
General Partner as permitted by this Section 7.4(c) shall constitute
obligations of the Managing General Partner hereunder and shall be
assumed by any successor Managing General Partner approved pursuant to
Section 11.1 or 11.2 or the transferee of or successor to all of the
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Managing General Partner's Partnership Interest as a general partner
in the Partnership pursuant to Section 4.2.
Section 7.5 OUTSIDE ACTIVITIES.
(a) After the Closing Date, the Managing General Partner,
for so long as it is the Managing General Partner of the Partnership
(i) agrees that its sole business will be to act as a general partner
of the Partnership, the 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), (ii) shall not engage in any
business or activity or incur any debts or liabilities except in
connection with or incidental to (A) its performance as general
partner of the MLP or one or more Group Members or as described in or
contemplated by the Registration Statement or (B) the acquiring,
owning or disposing of debt or equity securities in the MLP or any
Group Member and (iii) shall not engage in the retail sale of propane
to end users in the continental United States. Except as provided in
this Section 7.5(a) with respect to the retail sale of propane to end
users in the continental United States, nothing herein contained in
this paragraph shall prohibit an Affiliate of the Managing General
Partner (including the Special General Partner) from competing with
the Partnership.
Affiliates of the Managing General Partner (including the Special
General Partner) may engage in a business activity that involves the
retail sales of propane to end users in the continental United States
only if (i) the Managing General Partner determines in its reasonable
judgment, prior to the commencement of such activity, that it is not
in the best interests of the Partnership to engage in such activity
either (A) because of the financial commitments or operating
characteristics associated with such activity or (B) because such
activity is not consistent with the Partnership's business strategy or
cannot otherwise be integrated with the Partnership's operations on a
beneficial basis to the Partnership or (ii) such activity is being
undertaken as provided in a joint venture agreement or other agreement
between the Partnership and an Affiliate of a General Partner and such
joint venture or other agreement was determined at the time it was
entered into to be fair to the Partnership in the reasonable judgment
of the Managing General Partner.
(b) Except as specifically restricted by Section 7.5(a),
each Indemnitee shall have the right to engage in businesses of every
type and description and other activities for profit and to engage in
and possess an interest in other business ventures of any and every
type or description, whether in businesses engaged in or anticipated
to be engaged in by the MLP or any Group Member, independently or with
others, including business interests and activities in direct
competition with the business and activities of the MLP or any Group
Member, and none of the same shall constitute a breach of this
Agreement or any duty express or implied by law to the MLP or any
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Group Member or any Partner or Assignee. Neither 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.
(c) Subject to the terms of Section 7.5(a) and (b), but
otherwise notwithstanding anything to the contrary in this Agreement,
(i) the engaging in competitive activities by any Indemnitees (other
than the Managing General Partner) in accordance with the provisions
of this Section 7.5 is hereby approved by the Partnership and all
Partners and (ii) it shall be deemed not to be a breach of the
Managing General Partner's fiduciary duty or any other obligation of
any type whatsoever of the General Partners for the Indemnitees (other
than the Managing General Partner) to engage in such business
interests and activities in preference to or to the exclusion of the
Partnership (including, without limitation, the Managing General
Partner and the Indemnities shall have no obligation to present
business opportunities to the Partnership).
(d) The Managing General Partner and any of its Affiliates
may acquire Units or other Partnership Securities (as defined in the
MLP Agreement) of the MLP in addition to those acquired on the Closing
Date and, except as otherwise provided in this Agreement, shall be
entitled to exercise all rights of a General Partner or Limited
Partner, as applicable, relating to such Units or Partnership
Securities of the MLP.
(e) The term "Affiliates" when used in Section 7.5(a) and
Section 7.5(b) with respect to the Managing General Partner shall not
include the MLP, any Group Member or any Subsidiary of the MLP or any
Group Member.
(f) Anything in this Agreement to the contrary
notwithstanding, to the extent that provisions of Sections 7.7, 7.8,
7.9 or 7.10 or other Sections of this Agreement purport or are
interpreted to have the effect of restricting the fiduciary duties
that might otherwise, as a result of Delaware or other applicable law,
be owed by the Managing General Partner to the Partnership and its
Limited Partners, or to constitute a waiver or consent by the Limited
Partners to any such restriction, such provisions shall be
inapplicable and have no effect in determining whether the Managing
General Partner has complied with its fiduciary duties in connection
with determinations made by it under this Section 7.5.
Section 7.6 LOANS FROM THE GENERAL PARTNERS; LOANS OR CONTRIBUTIONS
FROM THE PARTNERSHIP; CONTRACTS WITH AFFILIATES;
CERTAIN RESTRICTIONS ON THE GENERAL PARTNERS.
(a) The General Partners or their Affiliates may lend to
the MLP or any Group Member, and the MLP or any Group Member may
borrow from the General Partners or any of their Affiliates, funds
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needed or desired by the MLP or the Group Member for such periods of
time and in such amounts as the Managing General Partner may
determine; provided, however, that in any such case the lending party
may not charge the borrowing party interest at a rate greater than the
rate that would be charged the borrowing party or impose terms less
favorable to the borrowing party than would be charged or imposed on
the borrowing party by unrelated lenders on comparable loans made on
an arm's-length basis (without reference to the lending party's
financial abilities or guarantees). The borrowing party shall
reimburse the lending party for any costs (other than any additional
interest costs) incurred by the lending party in connection with the
borrowing of such funds. For purposes of this Section 7.6(a) and
Section 7.6(b), the term "Group Member" shall include any Affiliate of
a Group Member that is controlled by the Group Member. No Group Member
may lend funds to the General Partners or any of their Affiliates
(other than the MLP, a Subsidiary of the MLP, any other Group Member
or any Subsidiary of a Group Member).
(b) The Partnership may lend or contribute to any Group
Member and any Group Member may borrow from the Partnership, funds on
terms and conditions established in the sole discretion of the
Managing General Partner; provided, however, that the Partnership may
not charge the Group Member interest at a rate less than the rate that
would be charged to the Group Member (without reference to the General
Partners' financial abilities or guarantees) by unrelated lenders on
comparable loans. The foregoing authority shall be exercised by the
Managing General Partner in its sole discretion and shall not create
any right or benefit in favor of any Group Member or any other Person.
(c) The Managing General Partner may itself, or may enter
into an agreement with any of its Affiliates to, render services to a
Group Member or to the Managing General Partner in the discharge of
its duties as general partner of the Partnership. Any services
rendered to a Group Member by the Managing General Partner or any of
its Affiliates shall be on terms that are fair and reasonable to the
Partnership; provided, however, that the requirements of this
Section 7.6(c) shall be deemed satisfied as to (1) any transaction
approved by Special Approval, (ii) any transaction, the terms of which
are no less favorable to the Partnership Group than those generally
being provided to or available from unrelated third parties or
(iii) any transaction that, taking into account the totality of the
relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership Group), is equitable to the Partnership Group. The
provisions of Section 7.4 shall apply to the rendering of services
described in this Section 7.6(c).
(d) Any Group Member 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
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such terms and subject to such conditions as are consistent with this
Agreement and applicable law.
(e) Neither the General Partners nor any of their
Affiliates shall sell, transfer or convey any property to, or purchase
any property from the Partnership, directly or indirectly, except
pursuant to transactions that are fair and reasonable to the
Partnership; provided, however, that the requirements of this
Section 7.6(e) shall be deemed to be satisfied as to (1) the
transactions effected pursuant to Sections 5.2 and 5.3, the
Contribution and Conveyance Agreement and any other transactions
described in or contemplated by the Registration Statement, (ii) any
transaction approved by Special Approval, (iii) any transaction, the
terms of which are no less favorable to the Partnership than those
generally being provided to or available from unrelated third parties,
or (iv) any transaction that, taking into account the totality of the
relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership), is equitable to the Partnership.
(f) The General Partners and their Affiliates will have no
obligation to permit any Group Member to use any facilities or assets
of the General Partners and their Affiliates, except as may be
provided in contracts entered into from time to time specifically
dealing with such use, nor shall there be any obligation on the part
of the General Partners or their Affiliates to enter into such
contracts.
(g) Without limitation of Sections 7.6(a) through 7.6(f),
and notwithstanding anything to the contrary in this Agreement, the
existence of the conflicts of interest described in the Registration
Statement are hereby approved by all Partners.
Section 7.7 INDEMNIFICATION.
(a) To the fullest extent permitted by law but subject to
the limitations expressly provided in this Agreement, all Indemnitees
shall be indemnified and held harmless by the Partnership from and
against any and all losses, claims, damages, liabilities, joint or
several, expenses (including legal fees and expenses), judgments,
fines, penalties, interest, settlements or other amounts arising from
any and all claims, demands, actions, suits or proceedings, whether
civil, criminal, administrative or investigative, in which any
Indemnitee may be involved, or is threatened to be involved, as a
party or otherwise, by reason of its status as an Indemnitee,
provided, that in each case the Indemnitee acted in good faith and in
a manner that such Indemnitee reasonably believed to be in, or (in the
case of a Person other than a General Partner) not opposed to, the
best interests of the Partnership and, with respect to any criminal
proceeding, had no reasonable cause to believe its conduct was
unlawful; provided, further, no indemnification pursuant to this
Section 7.7 shall be available to the General Partners with respect to
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their obligations incurred pursuant to the Underwriting Agreement or
the Contribution and Conveyance Agreement (other than obligations
incurred by the Managing General Partner on behalf of the Partnership
or the MLP). The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that the
Indemnitee acted in a manner contrary to that specified above. Any
indemnification pursuant to this Section 7.7 shall be made only out of
the assets of the Partnership, it being agreed that the General
Partners shall not be personally liable for such indemnification and
shall have no obligation to contribute or loan any monies or property
to the Partnership to enable it to effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses
(including legal fees and expenses) incurred by an Indemnitee who is
indemnified pursuant to Section 7.7(a) in defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced by
the Partnership prior to the final disposition of such claim, demand,
action, suit or proceeding upon receipt by the Partnership of any
undertaking by or on behalf of the Indemnitee to repay such amount if
it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 7.7.
(c) The indemnification provided by this Section 7.7 shall
be in addition to any other rights to which an Indemnitee may be
entitled under any agreement, pursuant to any vote of the 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 General Partners or their Affiliates for the cost of) insurance,
on behalf of the General Partners, their Affiliates and such other
Persons as the Managing General Partner shall determine, against any
liability that may be asserted against or expense that may be incurred
by such Person in connection with the Partnership's activities or such
Person's activities on behalf of the Partnership, regardless of
whether the Partnership would have the power to indemnify such Person
against such liability under the provisions of this Agreement.
(e) For purposes of this Section 7.7, the Partnership shall
be deemed to have requested an Indemnitee to serve as fiduciary of an
employee benefit plan whenever the performance by it of its duties to
the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan;
excise taxes assessed on an Indemnitee with respect to an employee
benefit plan pursuant to applicable law shall constitute "fines"
within the meaning of Section 7.7(a); and action taken or omitted by
it with respect to any employee benefit plan in the performance of its
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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 7.7 because the Indemnitee had an
interest in the transaction with respect to which the indemnification
applies if the transaction was otherwise permitted by the terms of
this Agreement.
(h) The provisions of this Section 7.7 are for the benefit
of the Indemnitees, their heirs, successors, assigns and
administrators and shall not be deemed to create any rights for the
benefit of any other Persons.
(i) No amendment, modification or repeal of this
Section 7.7 or any provision hereof shall in any manner terminate,
reduce or impair the right of any past, present or future Indemnitee
to be indemnified by the Partnership, nor the obligations of the
Partnership to indemnify any such Indemnitee under and in accordance
with the provisions of this Section 7.7 as in effect immediately prior
to such amendment, modification or repeal with respect to claims
arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when
such claims may arise or be asserted.
Section 7.8 LIABILITY OF INDEMNITEES.
(a) Notwithstanding anything to the contrary set forth in
this Agreement, no Indemnitee shall be liable for monetary damages to
the Partnership, the Limited Partners, the Assignees or any other
Persons who have acquired interests in the Units or other Partnership
Securities of the MLP, for losses sustained or liabilities incurred as
a result of any act or omission if such Indemnitee acted in good
faith.
(b) Subject to its obligations and duties as Managing
General Partner set forth in Section 7.1(a), the Managing General
Partner may exercise any of the powers granted to it by this Agreement
and perform any of the duties imposed upon it hereunder either
directly or by or through its agents, and the Managing General Partner
shall not be responsible for any misconduct or negligence on the part
of any such agent appointed by the Managing General Partner in good
faith.
(c) To the extent that, at law or in equity, an Indemnitee
has duties (including fiduciary duties) and liabilities relating
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thereto to the Partnership or to the Partners, the General Partners
and any other Indemnitee acting in connection with the Partnership's
business or affairs shall not be liable to the Partnership or to any
Partner for its good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent that they
restrict or otherwise modify the duties and liabilities of an
Indemnitee otherwise existing at law or in equity, are agreed by the
Partners to replace such other duties and liabilities of such
Indemnitee.
(d) Any amendment, modification or repeal of this
Section 7.8 or any provision hereof shall be prospective only and
shall not in any way affect the limitations on the liability to the
Partnership, the Limited Partners, the General Partners, and the
Partnership's and General Partners' directors, officers and employees
under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from
or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
Section 7.9 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 any of the General Partners or any of their
Affiliates, on the one hand, and the Partnership, the MLP, any Partner
or any Assignee, on the other, any resolution or course of action by
the Managing General Partner or its Affiliates in respect of such
conflict of interest shall be permitted and deemed approved by all
Partners, and shall not constitute a breach of this Agreement, of the
MLP Agreement, of any agreement contemplated herein or therein, or of
any duty stated or implied by law or equity, if the resolution or
course of action is, or by operation of this Agreement is deemed to
be, fair and reasonable to the Partnership. The Managing General
Partner shall be authorized but not required in connection with its
resolution of such conflict of interest to seek Special Approval of
such resolution. Any conflict of interest and any resolution of such
conflict of interest shall be conclusively deemed fair and reasonable
to the Partnership if such conflict of interest or resolution is
(i) approved by Special Approval (as long as the material facts known
to the Managing General Partner or any of its Affiliates regarding any
proposed transaction were disclosed to the Audit Committee at the time
it gave its approval), (ii) on terms no less favorable to the
Partnership than those generally being provided to or available from
unrelated third parties or (iii) fair to the Partnership, taking into
account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or
advantageous to the Partnership). The Managing General Partner may
also adopt a resolution or course of action that has not received
Special Approval. The Managing General Partner (including the Audit
Committee in connection with Special Approval) shall be authorized in
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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
Managing General Partner (including the Audit Committee) determines in
its sole discretion to be relevant, reasonable or appropriate under
the circumstances. Nothing contained in this Agreement, however, is
intended to nor shall it be construed to require the Managing General
Partner (including the Audit Committee) to consider the interests of
any Person other than the Partnership. In the absence of bad faith by
the Managing General Partner, the resolution, action or terms so made,
taken or provided by the Managing General Partner with respect to such
matter shall not constitute a breach of this Agreement or any other
agreement contemplated herein or a breach of any standard of care or
duty imposed herein or therein or, to the extent permitted by law,
under the Delaware Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement
contemplated hereby provides that the Managing General Partner or any
of its Affiliates is permitted or required to make a decision (i) in
its "sole discretion" or "discretion," that it deems "necessary or
appropriate" or "necessary or advisable" or under a grant of similar
authority or latitude, except as otherwise provided herein, the
Managing General Partner or such Affiliate shall be entitled to
consider only such interests and factors as it desires and shall have
no duty or obligation to give any consideration to any interest of, or
factors affecting, the Partnership, any Limited Partner or any
Assignee, (ii) it may make such decision in its sole discretion
(regardless of whether there is a reference to "sole discretion" or
"discretion") unless another express standard is provided for, or
(iii) in "good faith" or under another express standard, the Managing
General Partner or such Affiliate shall act under such express
standard and shall not be subject to any other or different standards
imposed by this Agreement, the 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 Managing
General Partner or such Affiliate consistent with the standards of
"reasonable discretion" set forth in the definitions of Available Cash
shall not constitute a breach of any duty of the Managing General
Partner to the Partnership, any Limited Partner or any limited partner
of the Limited Partner. The Managing General Partner shall have no
duty, express or implied, to sell or otherwise dispose of any asset of
the Partnership Group other than in the ordinary course of business.
No borrowing by any Group Member or the approval thereof by the
Managing General Partner shall be deemed to constitute a breach of any
duty of the Managing General Partner to the Partnership or any Limited
Partners by reason of the fact that the purpose or effect of such
borrowing is directly or indirectly to (A) enable distributions to the
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General Partners or their Affiliates (including in their capacities as
Limited Partners) to exceed 1% of the total amount distributed to all
partners or (B) hasten the expiration of the Subordination Period or
the conversion of any Subordinated Units into Common Units.
(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 Partner hereby authorizes the Managing
General Partner, on behalf of the Partnership as a partner of a Group
Member, to approve of actions by the General Partner of such Group
Member similar to those actions permitted to be taken by the Managing
General Partner pursuant to this Section 7.9.
Section 7.10 OTHER MATTERS CONCERNING THE MANAGING GENERAL PARTNER.
(a) The Managing General Partner may rely and shall be
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties.
(b) The Managing General Partner may consult with legal
counsel, accountants, appraisers, management consultants, investment
bankers and other consultants and advisers selected by it, and any act
taken or omitted to be taken in reliance upon the opinion (including
an Opinion of Counsel) of such Persons as to matters that the Managing
General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to
have been done or omitted in good faith and in accordance with such
opinion.
(c) The Managing General Partner shall have the right, in
respect of any of its powers or obligations hereunder, to act through
any of its duly authorized officers, a duly appointed attorney or
attorneys-in-fact or the duly authorized officers of the Partnership.
(d) Any standard of care and duty imposed by this Agreement
or under the Delaware Act or any applicable law, rule or regulation
shall be modified, waived or limited, to the extent permitted by law,
as required to permit the Managing General Partner to act under this
Agreement or any other agreement contemplated by this Agreement and to
make any decision pursuant to the authority prescribed in this
Agreement, so long as such action is reasonably believed by the
Managing General Partner to be in, or not inconsistent with, the best
interests of the Partnership.
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Section 7.11 RELIANCE BY THIRD PARTIES.
Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Partnership shall be entitled to assume that
the Managing General Partner and any officer of the Managing General
Partner authorized by the Managing General Partner to act on behalf of
and in the name of Partnership has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf
of the Partnership, and such Person shall be entitled to deal with the
Managing General Partner or any such officer as if it were the
Partnership's sole party in interest, both legally and beneficially.
Each Limited Partner hereby waives any and all defenses or other
remedies that may be available against such Person to contest, negate
or disaffirm any action of the Managing General Partner or any such
officer in connection with any such dealing. In no event shall any
Person dealing with the Managing General Partner or any such officer
or its representatives be obligated to ascertain that the terms of the
Agreement have been complied with or to inquire into the necessity or
expedience of any act or action of the Managing General Partner or any
such officer or its representatives. Each and every certificate,
document or other instrument executed on behalf of the Partnership by
the Managing General Partner or its representatives shall be
conclusive evidence in favor of any and every Person relying thereon
or claiming thereunder that (a) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement
was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and
empowered to do so for and on behalf of the Partnership and (c) such
certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is
binding upon the Partnership.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 8.1 RECORDS AND ACCOUNTING.
The Managing General Partner shall keep or cause to be kept at
the principal office of the Partnership appropriate books and records
with respect to the Partnership's business, including all books and
records necessary to provide to the Limited Partners any information
required to be provided pursuant to Section 3.4(a). Any books and
records maintained by or on behalf of the Partnership in the regular
course of its business, including 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
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the Partnership shall be maintained, for financial reporting purposes,
on an accrual basis in accordance with U.S. GAAP.
Section 8.2 FISCAL YEAR.
The fiscal year of the Partnership shall be a fiscal year ending
June 30.
ARTICLE IX
TAX MATTERS
Section 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.
Section 9.2 TAX ELECTIONS.
(a) The Partnership shall make the election under
Section 754 of the Code in accordance with applicable regulations
thereunder, subject to the reservation of the right to seek to revoke
any such election upon the Managing General Partner's determination
that such revocation is in the best interests of the Limited Partners.
(b) The Partnership shall elect to deduct expenses incurred
in organizing the Partnership ratably over a sixty-month period as
provided in Section 709 of the Code.
(c) Except as otherwise provided herein, the Managing
General Partner shall determine whether the Partnership should make
any other elections permitted by the Code.
Section 9.3 TAX CONTROVERSIES.
Subject to the provisions hereof, the Managing General Partner is
designated as the Tax Matters Partner (as defined in the Code) and is
authorized and required to represent the Partnership (at the
Partnership's expense) in connection with all examinations of the
Partnership's affairs by tax authorities, including resulting
administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. Each
Partner agrees to cooperate with the Managing General Partner and to
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do or refrain from doing any or all things reasonably required by the
Managing General Partner to conduct such proceedings.
Section 9.4 WITHHOLDING.
Notwithstanding any other provision of this Agreement, the
Managing General Partner is authorized to take any action that it
determines in its discretion to be necessary or appropriate to cause
the Partnership to comply with any withholding requirements
established under the Code or any other federal, state or local law
including, without limitation, pursuant to Sections 1441, 1442, 1445
and 1446 of the Code. To the extent that the Partnership is required
or elects to withhold and pay over to any taxing authority any amount
resulting from the allocation or distribution of income to any Partner
or Assignee (including, without limitation, by reason of Section 1446
of the Code), the amount withheld may, at the discretion of the
Managing General Partner be treated by the Partnership as a
distribution of cash pursuant to Section 6.3 in the amount of such
withholding from such Partner.
ARTICLE X
ADMISSION OF PARTNERS
Section 10.1 ADMISSION OF THE GENERAL PARTNERS AND THE MLP.
Upon the conveyance referred to in Section 5.2(a), the General
Partners and EESC shall be admitted to the Partnership as Limited
Partners. Upon the transfer referred to in Section 5.2(b), the
General Partners and EESC shall withdraw from, and cease to be a
Limited Partner of, the Partnership and the MLP shall be admitted as a
Limited Partner.
Section 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 General Partner (i)
acceptance in form satisfactory to the Managing General Partner of all
of the terms and conditions of this Agreement and (ii) such other
documents or instruments as may be required to effect its admission as
a Limited Partner in the Partnership and (b) obtaining the consent of
the Managing General Partner, which consent may be given or withheld
in the Managing General Partner's 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, except that the
Managing General Partner shall give such consent to a person who has
become a successor in interest pursuant to a bonafide pledge and
foreclosure as contemplated by Section 4.3.
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Section 10.3 ADMISSION OF SUCCESSOR OR TRANSFEREE GENERAL PARTNER.
A successor General Partner approved pursuant to Section 11.1 or
11.2 or the transferee of or successor to all of a General Partner's
Partnership Interest as general partner in the Partnership pursuant to
Section 4.2 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 a General Partner,
effective immediately prior to the withdrawal or removal of the
predecessor or transferring General Partner pursuant to Section 11.1
or 11.2 or the transfer of a General Partner's Partnership Interest as
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 members of the Partnership Group without dissolution.
Section 10.4 ADMISSION OF ADDITIONAL LIMITED PARTNERS.
(a) A Person (other than the General Partners, 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 Managing General Partner (i) evidence of acceptance in form
satisfactory to the Managing General Partner of all of the terms and
conditions of this Agreement, including the power of attorney granted
in Section 2.6, and (ii) such other documents or instruments as may be
required in the discretion of the Managing General Partner to effect
such Person's admission as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this
Section 10.4, no Person shall be admitted as an Additional Limited
Partner without the consent of the Managing General Partner, which
consent may be given or withheld in the Managing General Partner's
discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such
Person is recorded as such in the books and records of the
Partnership, following the consent of the Managing General Partner to
such admission.
Section 10.5 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP.
To effect the admission to the Partnership of any Partner, the
Managing General Partner shall take all steps necessary and
appropriate under the Delaware Act to amend the records of the
Partnership to reflect such admission and, if necessary, to prepare as
soon as practicable an amendment to this Agreement and, if required by
law, the Managing General Partner shall prepare and file an amendment
to the Certificate of Limited Partnership, and the Managing General
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Partner may for this purpose, among others, exercise the power of
attorney granted pursuant to Section 2.6.
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
Section 11.1 WITHDRAWAL OF THE GENERAL PARTNERS.
(a) The Managing General Partner shall be deemed to have
withdrawn from the Partnership upon the occurrence of any one of the
following events (each such event herein referred to as an "Event of
Withdrawal");
(i) The Managing General Partner voluntarily withdraws
from the Partnership by giving written notice to the Limited
Partners;
(ii) The Managing General Partner transfers all of its
rights as Managing General Partner pursuant to Section 4.2;
(iii) The Managing General Partner is removed
pursuant to Section 11.2;
(iv) The Managing General Partner of the MLP withdraws
from, or is removed as the managing general partner of, the MLP;
(v) The Managing General Partner (A) makes a general
assignment for the benefit of creditors; (B) files a voluntary
bankruptcy petition for relief under Chapter 7 of the United
States Bankruptcy Code; (C) files a petition or answer seeking
for itself a liquidation, dissolution or similar relief (but not
a reorganization) under any law; (D) files an answer or other
pleading admitting or failing to contest the material allegations
of a petition filed against the Managing General Partner in a
proceeding of the type described in clauses (A)-(C) of this
Section 11.1(a)(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 Managing General Partner or of all
or any substantial part of its properties;
(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 Managing General Partner;
or
(vii) (A) in the event the Managing General Partner
is a corporation, a certificate of dissolution or its equivalent
is filed for the Managing General Partner, or 90 days expire
after the date of notice to the Managing General Partner of
revocation of its charter without a reinstatement of its charter,
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under the laws of its state of incorporation; (B) in the event
the Managing General Partner is a partnership, the dissolution
and commencement of winding up of the Managing General Partner;
(C) in the event the Managing General Partner is acting in such
capacity by virtue of being a trustee of a trust, the termination
of the trust; (D) in the event the Managing General Partner is a
natural person, his death or adjudication of incompetency; and
(E) otherwise in the event of the termination of the Managing
General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv)(with
respect to withdrawal), (v), (vi) or (vii)(A), (B), (C) or (E) occurs,
the withdrawing Managing General Partner shall give notice to the
Limited Partners within 30 days after such occurrence. The Partners
hereby agree that only the Events of Withdrawal described in this
Section 11.1 shall result in the withdrawal of the Managing General
Partner from the Partnership.
(b) Withdrawal of the Managing General Partner from the
Partnership upon the occurrence of an Event of Withdrawal shall not
constitute a breach of this Agreement under the following
circumstances: (i) at any time during the period beginning on the
Closing Date and ending at 12:00 midnight, Eastern Standard Time, on
December 31, 2006, the Managing General Partner voluntarily withdraws
by giving at least 90 days' advance notice of its intention to
withdraw to the Limited Partners; provided that prior to the effective
date of such withdrawal, the withdrawal is approved by the Limited
Partner and the Managing General Partner delivers to the Partnership
an Opinion of Counsel ("Withdrawal Opinion of Counsel") that such
withdrawal (following the selection of the successor General Partner)
would not result in the loss of the limited liability of any Limited
Partner or of the limited partner of the MLP or 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 previously treated as such); (ii) at any time after
12:00 midnight, Eastern Standard Time, on December 31, 2006, the
Managing General Partner voluntarily withdraws by giving at least 90
days' advance notice to the Limited Partners, such withdrawal to take
effect on the date specified in such notice; (iii) at any time that
the Managing General Partner ceases to be the Managing General Partner
pursuant to Section 11.1(a)(ii), (iii) or (iv). If the Managing
General Partner gives a notice of withdrawal pursuant to
Section 11.1(a)(i) or Section 11.1(a)(1) of the MLP Agreement, the
Limited Partner may, prior to the effective date of such withdrawal,
elect a successor Managing 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 Managing General Partner in its
capacity as general partner of the MLP. If, prior to the effective
date of the Managing General Partner's withdrawal, a successor is not
selected by the Limited Partners as provided herein or the Partnership
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does not receive a Withdrawal Opinion of Counsel, the Partnership
shall be dissolved in accordance with Section 12.1. Any successor
Managing General Partner elected in accordance with the terms of this
Section 11.1 shall be subject to the provisions of Section 10.3.
(c) An Event of Withdrawal of the Managing General Partner
shall also be an Event of Withdrawal of the Special General Partner
from the Partnership and as general partner of other Group Members of
which the Special General Partner is a general partner at the same
time and upon the same conditions as set forth in Section 11.1(a) and
11.1(b) with respect to the Managing General Partner. The Partners
hereby agree that only the Events of Withdrawal described in Section
11.1 with respect to the Managing General Partner shall result in a
withdrawal of the Special General Partner. Upon a withdrawal of the
Special General Partner, the Limited Partners are not required to
elect a successor Special General Partner of the Partnership.
Section 11.2 REMOVAL OF THE MANAGING GENERAL PARTNER.
The Managing General Partner shall be removed if such Managing
General Partner is removed as a Managing 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
Managing General Partner as the Managing General Partner of the MLP
pursuant to the terms of the MLP Agreement. If a successor Managing
General Partner is elected in connection with the removal of such
Managing General Partner as a Managing General Partner of the MLP,
such successor Managing General Partner shall, upon admission pursuant
to Article X, automatically become a successor Managing General
Partner of the Partnership. The admission of any such successor
Managing General Partner to the Partnership shall be subject to the
provisions of Section 10.3.
Section 11.3 INTEREST OF DEPARTING PARTNER AND 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 7.4,
including any employee-related liabilities (including severance
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liabilities), incurred in connection with the termination of any
employees employed by such Departing Partner for the benefit of the
Partnership.
Section 11.4 WITHDRAWAL OF THE LIMITED PARTNER.
Without the prior written consent of the Managing 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
Section 12.1 DISSOLUTION.
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the
admission of a successor Managing General Partner in accordance with
the terms of this Agreement. Upon the removal or withdrawal of the
Managing General Partner, if a successor Managing General Partner is
elected pursuant to Section 11.1 or 11.2, the Partnership shall not be
dissolved and such successor Managing General Partner shall continue
the business of the Partnership. The Partnership shall dissolve, and
(subject to Section 12.2) its affairs shall be wound up, upon:
(a) the expiration of its term as provided in Section 2.7;
(b) an Event of Withdrawal of the Managing General Partner
as provided in Section 11.1(a) (other than Section 11.1(a)(ii)),
unless a successor is elected and an Opinion of Counsel is received as
provided in Section 11.1(b) or 11.2 and such successor is admitted to
the Partnership pursuant to Section 10.3;
(c) an election to dissolve the Partnership by the Managing
General Partner that is approved by all the Limited Partners;
(d) the 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.
Section 12.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER
DISSOLUTION.
Upon (a) dissolution of the Partnership following an Event of
Withdrawal caused by the withdrawal or removal of the Managing General
Partner as provided in Section 11.1(a)(i) or (iii) and the failure of
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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) 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 a general partner a Person approved by the
majority in interest 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 12.2 of the MLP Agreement, the
reconstituted MLP may, within 180 days after such event of
dissolution, as the Limited Partner (whether or not it is the sole
limited partner), 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 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 Partners
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 General Partner 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 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.
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Section 12.3 LIQUIDATOR.
Upon dissolution of the Partnership, unless the Partnership is
continued under an election to reconstitute and continue the
Partnership pursuant to Section 12.2, the Managing General Partner
shall select one or more Persons to act as Liquidator. The Liquidator
(if other than the Managing General Partner) shall be entitled to
receive such compensation for its services as may be approved by the
Limited Partners. The Liquidator (if other than the Managing General
Partner) shall agree not to resign at any time without 15 days' prior
notice and may be removed at any time, with or without cause, by
notice of removal approved by the Limited Partner. Upon dissolution,
removal or resignation of the Liquidator, a successor and substitute
Liquidator (who shall have and succeed to all rights, powers and
duties of the original Liquidator) shall within 30 days thereafter be
approved by the Limited Partner. The right to approve a successor or
substitute Liquidator in the manner provided herein shall be deemed to
refer also to any such successor or substitute Liquidator approved in
the manner herein provided. Except as expressly provided in this
Article XII, the Liquidator approved in the manner provided herein
shall have and may exercise, without further authorization or consent
of any of the parties hereto, all of the powers conferred upon the
Managing General Partner under the terms of this Agreement (but
subject to all of the applicable limitations, contractual and
otherwise, upon the exercise of such powers, other than the limitation
on sale set forth in Section 7.3(b)) to the extent necessary or
desirable in the good faith judgment of the Liquidator to carry out
the duties and functions of the Liquidator hereunder for and during
such period of time as shall be reasonably required in the good faith
judgment of the Liquidator to complete the winding up and liquidation
of the Partnership as provided for herein.
Section 12.4 LIQUIDATION.
The Liquidator shall proceed to dispose of the assets of the
Partnership, discharge its liabilities, and otherwise wind up its
affairs in such manner and over such period as the Liquidator
determines to be in the best interest of the Partners, subject to
Section 17-804 of the Delaware Act and the following:
(a) Disposition of Assets. The assets may be disposed of
by public or private sale or by distribution in kind to one or more
Partners on such terms as the Liquidator and such Partner or Partners
may agree. If any property is distributed in kind, the Partner
receiving the property shall be deemed for purposes of
Section 12.4(c) to have received cash equal to its fair market value;
and contemporaneously therewith, appropriate cash distributions must
be made to the other Partners. The Liquidator may, in its absolute
discretion, defer liquidation or distribution of the Partnership's
assets for a reasonable time if it determines that an immediate sale
or distribution of all or some of the Partnership's assets would be
impractical or would cause undue loss to the Partners. The Liquidator
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may, in its absolute discretion, distribute the Partnership's assets,
in whole or in part, in kind if it determines that a sale would be
impractical or would cause undue loss to the partners.
(b) Discharge of Liabilities. Liabilities of the
Partnership include amounts owed to Partners otherwise than in respect
of their distribution rights under Article VI. With respect to any
liability that is contingent conditional or unmatured or is otherwise
not yet due and payable, the Liquidator shall either settle such claim
for such amount as it thinks appropriate or establish a reserve of
cash or other assets to provide for its payment. When paid, any
unused portion of the reserve shall be distributed as additional
liquidation proceeds.
(c) Liquidation Distributions. All property and all cash
in excess of that required to discharge liabilities as provided in
Section 12.4(b) shall be distributed to the Partners in accordance
with, and to the extent of, the positive balances in their respective
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).
Section 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.
Section 12.6 RETURN OF CONTRIBUTIONS.
The General Partners shall not be personally liable for, and
shall have no obligation to contribute or loan any monies or property
to the Partnership to enable it to effectuate, the return of the
Capital Contributions of the Limited Partners, or any portion thereof,
it being expressly understood that any such return shall be made
solely from Partnership assets.
Section 12.7 WAIVER OF PARTITION.
To the maximum extent permitted by law, each Partner hereby
waives any right to partition of the Partnership property.
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Section 12.8 CAPITAL ACCOUNT RESTORATION.
No Limited Partner shall have any obligation to restore any
negative balance in its Capital Account upon liquidation of the
Partnership. Each of the General Partners shall be obligated to
restore any negative balance in their Capital Account upon liquidation
of its interest in the Partnership by the end of the taxable year of
the Partnership during which such liquidation occurs, or, if later,
within 90 days after the date of such liquidation; provided, however,
the Special General Partner's total obligation, pursuant to this
Section 12.8 and Section 12.8 of the MLP Agreement, shall be limited
to $88,000,000. The non-contributing General Partner shall indemnify
the contributing General Partner for amounts contributed to the
Partnership pursuant to this Section 12.8 and Section 12.8 of the MLP
Agreement to the extent it exceeds the contributing General Partner's
Pro Rata share of the amounts so contributed, provided, however, that
the Special General Partner's total indemnification obligation is
limited by the excess of $88,000,000 over the aggregate amount
previously contributed to the Partnership pursuant to this Section
12.8 and Section 12.8 of the MLP Agreement.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
Section 13.1 AMENDMENT TO BE ADOPTED SOLELY BY THE MANAGING GENERAL
PARTNER.
Each Partner agrees that the Managing General Partner, without
the approval of any Partner or Assignee, may amend any provision of
this Agreement and execute, swear to, acknowledge, deliver, file and
record whatever documents may be required in connection therewith, to
reflect:
(a) a change in the name of the Partnership, the location
of the principal place of business of the Partnership, the registered
agent of the Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of
Partners in accordance with this Agreement;
(c) a change that, in the sole discretion of the Managing
General Partner, is necessary or advisable to qualify or continue the
qualification of the Partnership as a limited partnership or a
partnership in which the Limited Partners have limited liability under
the laws of any state or to ensure that neither the Partnership and
the MLP will not be treated as an association taxable as a corporation
or otherwise taxed as an entity for federal income tax purposes;
(d) a change that, in the discretion of the Managing
General Partner, (i) does not adversely affect the the Limited
Partners in any material respect, (ii) is necessary or advisable to
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(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 or other Limited Partner Partnership Interests of
the MLP (including the division of any class or classes 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 or other Limited Partner Partnership
Interests of the MLP are or will be listed for trading, compliance
with any of which the Managing General Partner determines in its
discretion to be in the best interests of the Partnership and the
Limited Partners, (iii) is required to effect the intent expressed in
the Registration Statement or the intent of the provisions of this
Agreement or is otherwise contemplated by this Agreement 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 Managing
General Partner, are necessary or advisable as a result of a change in
the fiscal year or taxable year of the Partnership including, if the
Managing General Partner shall so determine, a change in the
definition of "Quarter" and the dates on which distributions are to be
made by the Partnership;
(f) an amendment that is necessary, in the Opinion of
Counsel, to prevent the Partnership, or the General Partners or their
directors, officers, trustees or agents from in any manner being
subjected to the provisions of the Investment Company Act of 1940, as
amended, the Investment Advisers Act of 1940, as amended, or "plan
asset" regulations adopted under the Employee Retirement Income
Security Act of 1974, as amended, regardless of whether such are
substantially similar to plan asset regulations currently applied or
proposed by the United States Department of Labor;
(g) any amendment expressly permitted in this Agreement to
be made by the Managing General Partner 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 Managing
General Partner, is necessary or advisable to reflect, account for and
deal with appropriately the formation by the Partnership of, or
investment by the Partnership in, any corporation, partnership, joint
venture, limited liability company or other entity, in connection with
the conduct by the Partnership of activities permitted by the terms of
Section 2.4;
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(j) a merger or conveyance pursuant to Section 14.3(d); or
(k) any other amendments substantially similar to the
foregoing.
Section 13.2 AMENDMENT PROCEDURES.
Except with respect to amendments of he 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 Managing General Partner
which consent may be given or withheld in its sole discretion. A
proposed amendments shall be effective upon its approval by the
Limited Partner.
ARTICLE XIV
MERGER
Section 14.1 AUTHORITY.
The Partnership may merge or consolidate with one or more
corporations, limited liability companies, business trusts or
associations, real estate investment trusts, common law trusts or
unincorporated businesses, including a general partnership or limited
partnership, formed under the laws of the State of Delaware or any
other state of the United States of America, pursuant to a written
agreement of merger or consolidation ("Merger Agreement") in
accordance with this Article IV.
Section 14.2 PROCEDURE FOR MERGER OR CONSOLIDATION.
Merger or consolidation of the Partnership pursuant to this
Article XIV requires the prior approval of the Managing General
Partner. If the Managing General Partner shall determine, in the
exercise of its discretion, to consent to the merger or consolidation,
the Managing General Partner shall approve the Merger Agreement, which
shall set forth:
(a) The names and jurisdictions of formation or
organization of each of the business entities proposing to merge or
consolidate;
(b) The name and jurisdiction of formation or organization
of the business entity that is to survive the proposed merger or
consolidation (the "Surviving Business Entity");
(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,
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cash, property or general or limited partner interests, rights,
securities or obligations of the Surviving Business Entity; and (i) if
any general or limited partner interests, securities or rights of any
constituent business entity are not to be exchanged or converted
solely for, or into, cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving Business
Entity, the cash, property or general or limited partner interests,
rights, securities or obligations of any limited partnership,
corporation, trust or other entity (other than the Surviving Business
Entity) which the holders of such general or limited partner
interests, securities or rights are to receive in exchange for, or
upon conversion of their general or limited partner interests,
securities or rights, and (ii) in the case of securities represented
by certificates, upon the surrender of such certificates, which cash,
property or general or limited partner interests, rights, securities
or obligations of the Surviving Business Entity or any general or
limited partnership, corporation, trust or other entity (other than
the Surviving Business Entity), or evidences thereof, are to be
delivered;
(e) A statement of any changes in the constituent documents
or the adoption of new constituent documents (the articles or
certificate of incorporation, articles of trust, declaration of trust,
certificate or agreement of limited partnership or other similar
charter or governing document) of the Surviving Business Entity to be
effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date
of the filing of the certificate of merger pursuant to Section 14.4 or
a later date specified in or determinable in accordance with the
Merger Agreement (provided, that if the effective time of the merger
is to be later than the date of the filing of the certificate of
merger, the effective time shall be fixed no later than the time of
the filing of the certificate of merger and stated therein); and
(g) Such other provisions with respect to the proposed
merger or consolidation as are deemed necessary or appropriate by the
Managing General Partner.
Section 14.3 APPROVAL BY LIMITED PARTNER OF MERGER OR CONSOLIDATION.
(a) Except as provided in Section 14.3(d), the Managing
General Partner, upon its approval of the Merger Agreement, shall
direct that a copy or a summary of the Merger Agreement be submitted
to a vote of Limited Partner, whether at a special meeting or by
written consent, in either case in accordance with the requirements of
Article XIII. A copy or a summary of the Merger Agreement shall be
included in or enclosed with the notice of a special meeting or the
written consent.
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(b) Except as provided in Section 14.3(d), the Merger
Agreement shall be approved upon receiving the approval of the Limited
Partner.
(c) After such approval by the Limited Partner, and at any
time prior to the filing of the certificate of merger pursuant to
Section 14.4, the merger or consolidation may be abandoned pursuant to
provisions therefor, if any, set forth in the Merger Agreement.
(d) Notwithstanding anything else contained in this
Article XIV or in this Agreement, the Managing General Partner is
permitted, in its discretion, without approval of the other Partners,
to merge the Partnership or any Group Member into, or convey all of
the Partnership's assets to, another limited liability entity which
shall be newly formed and shall have no assets, liabilities or
operations at the time of such Merger other than those it receives
from the Partnership or other Group Member if (1) the Managing General
Partner has received an Opinion of Counsel that the merger or
conveyance, as the case may be, would not result in the loss of the
limited liability of any Limited Partner or any limited partner in the
MLP or 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 previously
treated as such), (ii) the sole purpose of such merger or conveyance
is to effect a mere change in the legal form of the Partnership into
another limited liability entity and (iii) the governing instruments
of the new entity provide the Limited Partners and the Managing
General Partner with the same rights and obligations as are herein
contained.
Section 14.4 CERTIFICATE OF MERGER.
Upon the required approval by the Managing General Partner and
the Limited Partner of a Merger Agreement, a certificate of merger
shall be executed and filed with the Secretary of State of the State
of Delaware in conformity with the requirements of the Delaware Act.
Section 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;
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(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not
revert and is not in any way impaired because of the merger or
consolidation;
(iii) all rights of creditors and all liens on or
security interests in property of any of those constituent
business entities shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those
constituent business entities shall attach to the Surviving
Business Entity and may be enforced against it to the same extent
as if the debts, liabilities and duties had been incurred or
contracted by it.
(b) A merger or consolidation effected pursuant to this
Article shall not be deemed to result in a transfer or assignment of
assets or liabilities from one entity to another.
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 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
received by it at the principal office of the Partnership referred to
in Section 2.3.
Section 15.2 REFERENCES.
Except as specifically provided as otherwise, references to
"Articles" and "Sections" are to Articles and Sections of this
Agreement.
Section 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.
Section 15.4 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.
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Section 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.
Section 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.
Section 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.
Section 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.
Section 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.
Section 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.
Section 15.11 CONSENT OF PARTNERS.
Each Partner hereby expressly consents and agrees that, whenever
in this Agreement it is specified that an action may be taken upon the
affirmative vote or consent of less than all of the Partners, such
action may be so taken upon the concurrence of less than all of the
Partners and each Partner shall be bound by the results of such
action.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
MANAGING GENERAL PARTNER:
CORNERSTONE PROPANE GP, INC.
By: /s/ Ronald J. Goedde
------------------------------
Name: Ronald J. Goedde
Title: Executive Vice President
and Chief Financial
Officer
SPECIAL GENERAL PARTNER:
SYN INC.
By: /s/ Daniel K. Newell
------------------------------
Name: Daniel K. Newell
Title: Vice President
ORGANIZATIONAL LIMITED PARTNER:
CORNERSTONE PROPANE PARTNERS, L.P.
By: Cornerstone Propane GP, Inc.,
as Managing General Partner
By: /s/ Ronald J. Goedde
------------------------------
Name: Ronald J. Goedde
Title: Executive Vice President
and Chief Financial
Officer
LIMITED PARTNER:
EMPIRE ENERGY SC CORPORATION
By: /s/ Daniel K. Newell
------------------------------
Name: Daniel K. Newell
Title: President
65
EXHIBIT 10.1
CREDIT AGREEMENT,
dated as of December 11, 1996
among
CORNERSTONE PROPANE, L.P.,
as the Borrower,
and
VARIOUS FINANCIAL INSTITUTIONS,
as the Lenders,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent for the Lenders.
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . 1
1.2 Use of Defined Terms . . . . . . . . . . . . . . . . 27
1.3 Cross-References . . . . . . . . . . . . . . . . . . 28
1.4 Accounting and Financial Determinations . . . . . . 28
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES . . . . 28
2.1 Commitments . . . . . . . . . . . . . . . . . . . . 28
2.1.1 Working Capital Loan Commitment . . . . . . 28
2.1.2 Acquisition Loan Commitment . . . . . . . . 29
2.1.3 Lenders Not Permitted or Required to Make
Loans . . . . . . . . . . . . . . . . . . . 29
2.2 Reduction of Commitment Amounts . . . . . . . . . . 29
2.2.1 Optional . . . . . . . . . . . . . . . . . . 29
2.2.2 Mandatory . . . . . . . . . . . . . . . . . 29
2.3 Borrowing Procedure . . . . . . . . . . . . . . . . 30
2.4 Continuation and Conversion Elections . . . . . . . 30
2.5 Funding . . . . . . . . . . . . . . . . . . . . . . 31
2.6 Notes . . . . . . . . . . . . . . . . . . . . . . . 31
2.7 Swing Line . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES . . . . 33
3.1 Repayments and Prepayments . . . . . . . . . . . . . 33
3.1.1 Stated Maturity Date and Loan Commitment
Termination Date . . . . . . . . . . . . . . 35
3.2 Interest Provisions . . . . . . . . . . . . . . . . 37
3.2.1 Rates . . . . . . . . . . . . . . . . . . . 37
3.2.2 Post-Maturity Rates . . . . . . . . . . . . 38
3.2.3 Payment Dates . . . . . . . . . . . . . . . 38
3.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . 39
3.3.1 Facility Fee . . . . . . . . . . . . . . . . 39
3.3.2 Letter of Credit Face Amount Fee . . . . . . 39
3.3.3 Letter of Credit Issuing Fee . . . . . . . . 39
3.3.4 Additional Fee . . . . . . . . . . . . . . . 39
i
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Page
ARTICLE IV
LETTERS OF CREDIT . . . . . . . . . . 39
4.1 Issuance Requests . . . . . . . . . . . . . . . . . 39
4.2 Issuances and Extensions . . . . . . . . . . . . . . 40
4.3 Expenses . . . . . . . . . . . . . . . . . . . . . . 41
4.4 Other Lenders' Participation . . . . . . . . . . . . 41
4.5 Disbursements . . . . . . . . . . . . . . . . . . . 42
4.6 Reimbursement . . . . . . . . . . . . . . . . . . . 42
4.7 Deemed Disbursements . . . . . . . . . . . . . . . . 43
4.8 Nature of Reimbursement Obligations . . . . . . . . 44
4.9 Increased Costs; Indemnity . . . . . . . . . . . . . 44
ARTICLE V
CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS . . . . 46
5.1 Eurodollar Rate Lending Unlawful . . . . . . . . . . 46
5.2 Deposits Unavailable . . . . . . . . . . . . . . . . 46
5.3 Increased Eurodollar Rate Loan Costs, etc . . . . . 46
5.4 Funding Losses . . . . . . . . . . . . . . . . . . . 47
5.5 Increased Capital Costs . . . . . . . . . . . . . . 48
5.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . 48
5.7 Payments, Computations, etc. . . . . . . . . . . . . 50
5.8 Sharing of Payments . . . . . . . . . . . . . . . . 50
5.9 Setoff . . . . . . . . . . . . . . . . . . . . . . . 51
5.10 Use of Proceeds . . . . . . . . . . . . . . . . . . 51
5.11 Recourse . . . . . . . . . . . . . . . . . . . . . . 52
5.12 Replacement of Lenders . . . . . . . . . . . . . . . 52
ARTICLE VI
CONDITIONS TO BORROWING . . . . . . . . . 52
6.1 Initial Borrowing . . . . . . . . . . . . . . . . . 52
6.1.1 Partnership Action . . . . . . . . . . . . . 52
6.1.2 Delivery of Notes . . . . . . . . . . . . . 53
6.1.3 Private Placement Debt and Public
Partnership Common Units . . . . . . . . . . 53
6.1.4 Payment of Outstanding Indebtedness, etc . . 53
6.1.5 Transfer . . . . . . . . . . . . . . . . . . 53
6.1.6 Working Capital Debt . . . . . . . . . . . . 53
6.1.7 Intercreditor Agreement . . . . . . . . . . 53
6.1.8 Security Agreement . . . . . . . . . . . . . 53
6.1.9 Permits . . . . . . . . . . . . . . . . . . 54
6.1.10 Opinion of Counsel . . . . . . . . . . . . . 54
6.1.11 Closing Fees, Expenses, etc. . . . . . . . . 55
ii
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Page
6.1.12 Compliance Certificate . . . . . . . . . . . 55
6.1.13 Insurance Certificate . . . . . . . . . . . 55
6.1.14 Solvency Certificate . . . . . . . . . . . . 55
6.2 All Borrowings and Issuances of Letters
of Credit. . . . . . . . . . . . . . . . . 55
6.2.1 Compliance with Warranties, No Default,
etc. . . . . . . . . . . . . . . . . . . . . 55
6.2.2 Borrowing Request . . . . . . . . . . . . . 56
6.2.3 Satisfactory Legal Form . . . . . . . . . . 56
ARTICLE VII
REPRESENTATIONS AND WARRANTIES . . . . . . . 57
7.1 Organization, etc . . . . . . . . . . . . . . . . . 57
7.2 Partnership Interests. . . . . . . . . . . . . . . . 57
7.3 Qualification. . . . . . . . . . . . . . . . . . . . 58
7.4 Due Authorization, Non-Contravention, etc. . . . . . 58
7.5 Government Approval, Regulation, etc. . . . . . . . 59
7.6 Business; Financial Statements . . . . . . . . . . . 59
7.7 No Material Adverse Change . . . . . . . . . . . . . 60
7.8 Litigation, Labor Controversies, etc. . . . . . . . 60
7.9 Ownership of Properties . . . . . . . . . . . . . . 61
7.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . 61
7.11 Pension and Welfare Plans . . . . . . . . . . . . . 61
7.12 Environmental Warranties . . . . . . . . . . . . . . 62
7.13 Regulations G, U and X . . . . . . . . . . . . . . . 64
7.14 Accuracy of Information . . . . . . . . . . . . . . 64
7.15 Capitalization . . . . . . . . . . . . . . . . . . . 64
7.16 Solvency . . . . . . . . . . . . . . . . . . . . . . 64
7.17 Private Placement Debt Representations . . . . . . . 65
7.18 Compliance with Laws . . . . . . . . . . . . . . . . 65
ARTICLE VIII
COVENANTS . . . . . . . . . . . . 65
8.1 Affirmative Covenants . . . . . . . . . . . . . . . 65
8.1.1 Financial Information, Reports, Notices,
etc. . . . . . . . . . . . . . . . . . . . . 65
8.1.2 Compliance with Laws, etc. . . . . . . . . . 68
8.1.3 Maintenance of Properties . . . . . . . . . 68
8.1.4 Insurance . . . . . . . . . . . . . . . . . 68
8.1.5 Books and Records . . . . . . . . . . . . . 69
8.1.6 Inspection . . . . . . . . . . . . . . . . . 69
8.1.7 Environmental Covenant . . . . . . . . . . . 69
8.1.8 Ranking/security . . . . . . . . . . . . . . 69
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Page
8.1.9 Clean Down Period . . . . . . . . . . . . . 70
8.2 Negative Covenants . . . . . . . . . . . . . . . . . 70
8.2.1 Business Activities . . . . . . . . . . . . 70
8.2.2 Indebtedness . . . . . . . . . . . . . . . . 70
8.2.3 Liens . . . . . . . . . . . . . . . . . . . 74
8.2.4 Financial Condition . . . . . . . . . . . . 75
8.2.5 Investments . . . . . . . . . . . . . . . . 76
8.2.6 Restricted Payments, etc. . . . . . . . . . 77
8.2.7 Consolidation, Merger, etc. . . . . . . . . 77
8.2.8 Asset Dispositions, etc. . . . . . . . . . . 78
8.2.9 Modification of Certain Agreements . . . . . 80
8.2.10 Transactions with Affiliates . . . . . . . . 81
8.2.11 Negative Pledges, Restrictive Agreements,
etc. . . . . . . . . . . . . . . . . . . . . 81
8.2.12 Limitation on Issuance of Subsidiary
Stock . . . . . . . . . . . . . . . . . . . 81
8.2.13 Operating Leases . . . . . . . . . . . . . . 81
8.2.14 Restricted Subsidiaries . . . . . . . . . . 81
8.2.15 Organic Documents . . . . . . . . . . . . . 83
8.2.16 Cornerstone Sales & Service Corporation . . 83
ARTICLE IX
EVENTS OF DEFAULT . . . . . . . . . . 83
9.1 Listing of Events of Default . . . . . . . . . . . . 83
9.1.1 Non-Payment of Obligations . . . . . . . . . 83
9.1.2 Breach of Warranty . . . . . . . . . . . . . 83
9.1.3 Non-Performance of Other Covenants and
Obligations . . . . . . . . . . . . . . . . 83
9.1.4 Default on Other Indebtedness . . . . . . . 83
9.1.5 Judgments . . . . . . . . . . . . . . . . . 84
9.1.6 Pension Plans . . . . . . . . . . . . . . . 84
9.1.7 Change in Control . . . . . . . . . . . . . 84
9.1.8 Bankruptcy, Insolvency, etc. . . . . . . . . 84
9.1.9 Impairment of Security, etc. . . . . . . . . 86
9.1.10 Split-Up . . . . . . . . . . . . . . . . . . 86
9.1.11 Partners . . . . . . . . . . . . . . . . . . 86
9.2 Action if Bankruptcy . . . . . . . . . . . . . . . . 86
9.3 Action if Other Event of Default . . . . . . . . . . 87
ARTICLE X
THE AGENT . . . . . . . . . . . . 87
10.1 Appointment and Authorization . . . . . . . . . . . 87
10.2 Delegation of Duties . . . . . . . . . . . . . . . . 88
10.3 Liability of Agent . . . . . . . . . . . . . . . . . 88
iv
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Page
10.4 Reliance by Agent . . . . . . . . . . . . . . . . . 88
10.5 Notice of Default . . . . . . . . . . . . . . . . . 89
10.6 Credit Decision . . . . . . . . . . . . . . . . . . 89
10.7 Indemnification of Agent . . . . . . . . . . . . . . 90
10.8 Agent in Individual Capacity . . . . . . . . . . . . 90
10.9 Successor Agent . . . . . . . . . . . . . . . . . . 91
10.10 Withholding Tax . . . . . . . . . . . . . . . . . . 91
10.11 Collateral Matters . . . . . . . . . . . . . . . . . 93
ARTICLE XI
MISCELLANEOUS PROVISIONS . . . . . . . . . 94
11.1 Waivers, Amendments, etc. . . . . . . . . . . . . . 94
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . 94
11.3 Payment of Costs and Expenses . . . . . . . . . . . 95
11.4 Indemnification . . . . . . . . . . . . . . . . . . 95
11.5 Survival . . . . . . . . . . . . . . . . . . . . . . 96
11.6 Severability . . . . . . . . . . . . . . . . . . . . 97
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . 97
11.8 Execution in Counterparts, Effectiveness, etc. . . . 97
11.9 Governing Law; Entire Agreement . . . . . . . . . . 97
11.10 Successors and Assigns . . . . . . . . . . . . . . . 97
11.11 Sale and Transfer of Loans and Notes;
Participations in Loans and Notes . . . . . . . . . 97
11.11.1 Assignments . . . . . . . . . . . . . . . . 98
11.11.2 Participations . . . . . . . . . . . . . . . 98
11.12 Other Transactions . . . . . . . . . . . . . . . . . 99
11.13 Forum Selection and Consent to Jurisdiction . . . . 100
11.14 Waiver of Jury Trial . . . . . . . . . . . . . . . . 100
v
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SCHEDULE AND EXHIBITS
SCHEDULE I - Disclosure Schedule
ITEM 7.2 - Subsidiaries
ITEM 7.3 - Jurisdictions
ITEM 7.5 - Government Approvals
ITEM 7.8 - Litigation
ITEM 7.11 - Employee Benefit Plans
ITEM 7.12 - Environmental Matters
ITEM 7.15 - Capitalization
ITEM 8.2.2(a) - Indebtedness to be Paid on Effective Date
ITEM 8.2.3 - Liens
ITEM 8.2.10 - Transactions with Affiliates
EXHIBIT A - Form of Working Capital Note
EXHIBIT B - Form of Acquisition Note
EXHIBIT C - Form of Borrowing Request
EXHIBIT D - Form of Issuance Request
EXHIBIT E - Form of Continuation/Conversion Notice
EXHIBIT F - Form of Assignment and Acceptance
Agreement
EXHIBIT G - Form of Intercreditor and Trust Agreement
EXHIBIT H - Form of Commitment Termination Date Extension
Request
EXHIBIT I - Form of Security Agreement
EXHIBIT J-1 - Form of Opinion of Counsel to the
Borrowers
EXHIBIT J-2 - Form of Opinion of Local Counsel to the
Borrowers
EXHIBIT K - Form of Swing Loan Request
EXHIBIT L - Form of Guaranty
EXHIBIT M - Form of Solvency Certificate
EXHIBIT N - Form of Intercompany Note
EXHIBIT O - Form of Compliance Certificate
1
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of December 11, 1996 among
CORNERSTONE PROPANE, L.P., a Delaware limited partnership (the
"BORROWER"), the various financial institutions as are or may become
parties hereto (collectively, the "LENDERS"), and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"), as agent (the
"AGENT") for the Lenders,
W I T N E S E T H:
WHEREAS, the Borrower is engaged in the wholesale and retail
sale, distribution, and storage of propane and natural gas and related
petroleum derivative products, leasing propane storage tanks, related
retail sales of supplies and equipment, including home appliances,
other business activities described in the Registration Statement (as
defined below) and any other business reasonably related thereto.
WHEREAS, the Borrower is a limited partnership owned by
Cornerstone Propane Partners, L.P., a Delaware limited partnership
(the "Public Partnership"), Cornerstone Propane GP, Inc., a Delaware
corporation (the "Managing General Partner") and SYN Inc., a Delaware
corporation (the "Special General Partner", and collectively with the
Public Partnership and the Managing General Partner, the "Partners");
WHEREAS, the Borrower desires to obtain Commitments from the
Lenders pursuant to which Loans, in a maximum aggregate principal
amount at any one time outstanding not to exceed $125,000,000, will be
made to the Borrower from time to time prior to the Loan Commitment
Termination Date; and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including ARTICLE VI), to extend
such Commitments and make such Loans to the Borrower; and
WHEREAS, the proceeds of such Loans will be used for acquisitions
permitted by the terms of this Agreement and general working capital
purposes of the Borrower;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 DEFINED TERMS. The following terms (whether or
not underscored) when used in this Agreement, including its preamble
and recitals, shall, except where the context otherwise requires, have
the following meanings (such meanings to be equally applicable to the
singular and plural forms thereof):
"ACQUISITION LOAN" is defined in SECTION 2.1.2.
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"ACQUISITION LOAN COMMITMENT" means, relative to any Lender, such
Lender's obligation to make Loans pursuant to SECTION 2.1.2.
"ACQUISITION LOAN COMMITMENT AMOUNT" means, on any date,
$75,000,000 as such amount may be reduced from time to time pursuant
to SECTION 2.2.
"ACQUISITION LOAN CONVERSION DATE" means the earliest of
(a) December 31, 1999;
(b) the date on which the Acquisition Loan Commitment
Amount is terminated in full or reduced to zero pursuant to
SECTION 2.2; and
(c) the date on which any Commitment Termination
Event occurs.
Upon the occurrence of any event described in CLAUSE (b) or (c), the
Acquisition Loan Commitments shall terminate automatically and without
any further action.
"ACQUISITION NOTE" means a promissory note of the Borrower
payable to the Agent, in the form of EXHIBIT B hereto (as such
promissory note may be amended, endorsed or otherwise modified from
time to time), evidencing the aggregate Indebtedness of the Borrower
resulting from outstanding Acquisition Loans, and also means all other
promissory notes accepted from time to time in substitution therefor
or renewal thereof.
"ACQUISITION PERCENTAGE" means, relative to any Lender, the
Acquisition Percentage set forth opposite its signature hereto or set
forth in the Assignment and Acceptance Agreement, as such percentage
may be adjusted from time to time pursuant to Assignment and
Acceptance Agreement(s) executed by such Lender and its Assignee
Lender(s) and delivered pursuant to SECTION 11.11.1.
"AFFILIATE" of any Person means as applied to any Person, any
other Person directly or indirectly controlling or controlled by or
under common control with such Person, PROVIDED that, for purposes of
this definition, control as used with respect to any Person shall
mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person,
whether as a general partner or through the ownership of voting
securities or by contract or otherwise. As applied to the Borrower and
its Restricted Subsidiaries, Affiliate includes without limitation
the Managing General Partner and the Public Partnership.
"AGENT" is defined in the PREAMBLE and includes each other Person
as shall have subsequently been appointed as the successor Agent
pursuant to SECTION 10.9.
2
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"AGENT-RELATED PERSON" means BofA in its capacity as agent and
any successor agent arising under SECTION 10.9 and any Issuer
hereunder, together with their respective Affiliates, and the
officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.
"AGREEMENT" means, on any date, this Credit Agreement as
originally in effect on the Effective Date and as thereafter from time
to time amended, supplemented, amended and restated, or otherwise
modified and in effect on such date.
"ALTERNATE BASE RATE" means, on any date and with respect to all
Base Rate Loans, a fluctuating rate of interest per annum equal to the
higher of
(a) the rate of interest most recently announced by
the Agent at its principal office as its reference rate for
Dollar loans; and
(b) the Federal Funds Rate most recently determined
by the Agent plus 1/2 of 1%.
The Alternate Base Rate is not necessarily intended to be the lowest
rate of interest determined by the Reference Lender in connection with
extensions of credit. Changes in the rate of interest on that portion
of any Loans maintained as Base Rate Loans will take effect
simultaneously with each change in the Alternate Base Rate. The Agent
will give notice promptly to the Borrower and the Lenders of changes
in the Alternate Base Rate.
"APPLICABLE BASE RATE MARGIN" means, with respect to any Base
Rate Loan, the then applicable per annum rate set forth in the Pricing
Grid; PROVIDED, that the Applicable Base Rate Margin for the period
from the Effective Date to the Financial Statement Delivery Date next
following March 31, 1997 shall be determined on the assumption that
Tier V is in effect until the Financial Statement Delivery Date next
following March 31, 1997.
"APPLICABLE EURODOLLAR RATE MARGIN" means, with respect to any
Eurodollar Rate Loan, the then applicable per annum rate set forth in
the Pricing Grid; PROVIDED, that the Applicable Eurodollar Rate Margin
for the period from the Effective Date to the Financial Statement
Delivery Date next following March 31, 1997 shall be determined on the
assumption that Tier V is in effect until the Financial Statement
Delivery Date next following March 31, 1997.
"ASSET DISPOSITION" is defined in SECTION 8.2.8.
"ASSETS" mean the assets conveyed to the Borrower pursuant to the
Conveyance Documents.
"ASSIGNEE LENDER" is defined in SECTION 11.11.1.
3
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"ASSIGNMENT AND ACCEPTANCE AGREEMENT" means an Assignment and
Acceptance Agreement substantially in the form of EXHIBIT F hereto.
"AUTHORIZED OFFICER" means, relative to any Obligor, those of its
officers (or, in the case of the Borrower, those officers of the
Managing General Partner) whose signatures and incumbency shall have
been certified to the Agent and the Lenders pursuant to SECTION 6.1.1
or in a similar certificate delivered at any subsequent time during
the term of this Agreement.
"AVAILABLE CASH" shall mean with respect to any Fiscal Quarter of
the Borrower, (a) the sum of (i) all cash and cash equivalents of the
Partnership Group and the Public Partnership on hand at the end of
such quarter and (ii) all additional cash and cash equivalents of the
Partnership Group and the Public Partnership on hand on the date of
determination of Available Cash with respect to such quarter obtained
through available borrowings for working capital purposes made after
the end of such quarter, less (b) (i) the amount of cash reserves
necessary or appropriate in the reasonable discretion of the Managing
General Partner to (A) provide for the proper conduct of the business
of the Borrower and the Restricted Subsidiaries (including, without
limitation, the reserves for future capital expenditures and for
anticipated future credit needs of the Public Partnership and
Partnership Group subsequent to such Fiscal Quarter or (B) provide
funds for distributions under Sections 6.4 or 6.5 of the partnership
agreement of the Public Partnership in respect of any one or more of
next four Fiscal Quarters or (C) comply with applicable law or any
loan agreement (including this Agreement), mortgage, security
agreement, debt instrument or other agreement or obligation to which
the Partnership Group or the Public Partnership is a party or by which
it or its assets are subject (including the payment of principal, make
whole amount or premium amount, if applicable, and interest) in
respect of the Private Placement Debt, the Obligations and the Parity
Debt, (ii) all Dedicated Funds and (iii) all amounts which a
Restricted Subsidiary is prohibited from dividending or distributing
to the Borrower; PROVIDED that Available Cash shall exclude without
duplication (x) in each Fiscal Quarter a reserve equal to at least 50%
of the aggregate amount of all interest payments, in respect of all
Indebtedness of the Borrower and the Restricted Subsidiaries upon
which interest is due semiannually or less frequently to be made in
the next Fiscal Quarter (assuming, in the case of Indebtedness
incurred under the Obligations and other Indebtedness bearing interest
at fluctuating interest rates which cannot be determined in advance,
that the interest rate in effect on the last Business Day of the
immediately preceding Fiscal Quarter will remain in effect until such
Indebtedness is due to be paid), (y) with respect to Parity Debt,
Private Placement Debt and the Obligations, in the third Fiscal
Quarter immediately preceding each Fiscal Quarter in which any
scheduled principal payment is due with respect of such Indebtedness
(a "principal payment quarter"), a reserve equal to at least 25% of
the aggregate amount of all principal to be paid in respect of such
Indebtedness in such principal payment quarter; in the second Fiscal
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Quarter immediately preceding a principal payment quarter, a reserve
equal to at least 50% of the aggregate amount of all principal to be
paid in respect of such Indebtedness in such principal payment
quarter; and in the Fiscal Quarter immediately preceding a principal
payment quarter, a reserve equal to at least 75% of the aggregate
amount of al principal to be paid in respect of such Indebtedness in
such principal payment quarter, and (z) with respect to the Private
Placement Debt, the Obligations and the Parity Debt of which principal
is payable semiannually, in each Fiscal Quarter which immediately
precedes a Fiscal Quarter in which principal is payable in respect of
such Indebtedness a reserve equal to at least 50% of the aggregate
amount of all principal to be paid in respect of such Indebtedness in
the next Fiscal Quarter; PROVIDED FURTHER that the amount of such
reserve specified in clauses (y) and (z) of this definition for
principal amounts to be paid shall be reduced by the aggregate
principal amount of all binding, irrevocable letters of credit
established to refinance such principal amounts.
"BANKRUPTCY CODE" means Title 11 of the United States Code or any
successor statute.
"BANKRUPTCY LAW" is defined in SECTION 9.1.8.
"BASE RATE LOAN" means a Loan bearing interest at a fluctuating
rate determined by reference to the Alternate Base Rate.
"BofA" is defined in the PREAMBLE.
"BORROWER" is defined in the PREAMBLE.
"BORROWING" means the Loans of the same type and, in the case of
Eurodollar Rate Loans, having the same Interest Period made by all
Lenders on the same Business Day and pursuant to the same Borrowing
Request in accordance with SECTION 2.3.
"BORROWING REQUEST" means a loan request and certificate duly
executed by an Authorized Officer of the Borrower, substantially in
the form of EXHIBIT C hereto.
"BUSINESS DAY" means
(a) any day which is neither a Saturday or Sunday nor
a legal holiday on which banks are authorized or required to be
closed in Chicago, Illinois, San Francisco, California or New
York, New York; and
(b) relative to the making, continuing, prepaying or
repaying of any Eurodollar Rate Loans, any day on which dealings
in Dollars are carried on in the interbank eurodollar market.
"CAPITAL STOCK" means, with respect to any Person, any capital
stock (including preferred stock), shares, units, interests,
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participations or other ownership interests (however designated,
including without limitation such items as they may apply to a
partnership, limited liability company or similar Person) of such
Person and any rights, warrants or options to purchase any thereof.
"CAPITALIZED LEASE LIABILITIES" means all monetary obligations of
any Borrower or any Subsidiary under any leasing or similar
arrangement which, in accordance with GAAP, would be classified as
capitalized leases, and, for purposes of this Agreement and each other
Loan Document, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a
penalty.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response
Compensation Liability Information System List.
"CHANGE IN CONTROL" means any of the following events or
circumstances:
(i) the liquidation or dissolution of the Managing
General Partner,
(ii) any merger or consolidation of the Managing
General Partner with or into any Person, other than NPS
or any of its Affiliates if the Managing General Partner
is not the surviving entity thereof, or any sale, whether
direct or indirect, of substantially all of the assets of
the Managing General Partner to any person or group (as
such term is used in Section 13(d) and 14(d) of the
Exchange Act), other than NPS or any of its Affiliates,
(iii) any Person or group other than NPS or any of its
Affiliates, is or becomes the beneficial owner, directly
or indirectly, of more than 50% of the total voting power
in the aggregate then outstanding of all classes of stock
of the Managing General Partner then outstanding normally
entitled to vote in elections of directors,
(iv) during any period of 12 consecutive months after
the Closing Date, individuals who at the beginning of
such 12 month period (or persons nominated by such
members of the Board of Directors of the Managing General
Partner to succeed them) constitute the Board of
Directors of the Managing General Partner cease, for any
reason, to constitute a majority of the Board of
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Directors of the Managing General Partner then in office,
or
(v) the Managing General Partner, NPS and its Affiliates
shall cease to own directly or indirectly, in the aggregate,
an amount of the general partners interest in the Borrower
equal to at least 50% of the amount of the general partner
interests in the Borrower owned collectively, by the General
Partners on the date of Closing (as reduced to reflect the
effect of the overallotment option granted to the
underwriters by the Public Partnership pursuant to its
underwriting agreement with such underwriters);
provided that a transfer of a general partnership interest shall not
constitute a Change of Control; and notwithstanding the foregoing, it
shall not be a Change of Control as it relates to clause (ii), (iii),
(iv) or (v) above if the Chief Executive Officer and the Chief
Financial Officer of the Borrower following any of the events
described above in clause (ii), (iii), (iv) or (v) retain the same
positions with the same levels of authority as they previously had
prior to such event.
"CLOSING DATE" means the date on which all conditions precedent
set forth in SECTION 6.1 are satisfied or waived by all Lenders and
shall occur on or before December 31, 1996 or such later date upon
which the Borrower and the Lenders shall mutually agree.
"CODE" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"COLLATERAL" is defined in SECTION 5.11.
"COLLATERAL AGENT" means the collateral agent engaged by the
Lenders and the Private Placement Debt holders to hold and maintain
perfected security interests in the Collateral on behalf of the
holders of the Obligations, the Private Placement Debt and the Parity
Debt and as more fully described in the Intercreditor Agreement.
"COMMITMENT" means, as the context may require, a Lender's
Working Capital Loan Commitment or Acquisition Loan Commitment, or
both.
"COMMITMENT AMOUNT" means, as the context may require, either the
Working Capital Loan Commitment Amount or the Acquisition Loan
Commitment Amount.
"COMMITMENT TERMINATION DATE EXTENSION REQUEST" means an extension
request executed by an Authorized Officer of the Borrower,
substantially in the form of EXHIBIT H hereto.
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"COMMITMENT TERMINATION EVENT" means
(a) the occurrence of any Default described in clauses (a),
(b) or with respect to the Borrower or the Managing General
Partner, (e) of SECTION 9.1.8; or
(b) the occurrence and continuance of any other Event of
Default and either
(i) the declaration of the Loans to be due and payable
pursuant to SECTION 9.3, or
(ii) in the absence of such declaration, the giving of
notice by the Agent, acting at the direction of the Required
Lenders, to the Borrower that the Commitments have been
terminated.
"COMMODITY HEDGING AGREEMENT" means any agreement or arrangement
designed solely to protect the Borrower against fluctuations in the
price of propane or natural gas with respect to quantities of propane
or natural gas that the Borrower reasonably expects to purchase from
suppliers, sell to its customers or need for its inventory during the
period covered by such agreement or arrangement.
"COMMON UNITS" means the common limited partner interests of the
Public Partnership.
"COMMON UNITS ISSUANCE" means issuance of Common Units by the
Public Partnership with net proceeds of at least $162,500,000 received
by the Public Partnership.
"CONSOLIDATED" or "CONSOLIDATED," when used with reference to any
accounting term, means the amount described by such accounting term,
determined on a consolidated basis in accordance with GAAP, after
elimination of intercompany items.
"CONSOLIDATED CASH FLOW" means with respect to the Borrower at
any date of determination, for the period of four consecutive Fiscal
Quarters most recently completed at least 45 days prior to such date
of determination (except that, in connection with any calculation
required pursuant to SECTION 8.2.6, for the period of four consecutive
Fiscal Quarters most recently completed for which financial statements
have been delivered pursuant to SECTION 8.1.1),
(i) the sum of, without duplication, the amounts for such
period, taken as a single accounting period,
(a) Consolidated Net Income,
(b) consolidated non-cash items,
(c) consolidated Interest Expense,
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(d) consolidated income tax expense, and
(e) all fees, costs and expenses with respect to the
retirement or repayment of Indebtedness existing
immediately prior to the closing, to the extent that
the same were deducted from consolidated net income
LESS
(ii) the sum of, without duplication, the amounts for such
period, taken on a single accounting period, any non-cash
items added in the determination of such consolidated net
income for such period.
Consolidated Cash Flow shall be calculated after giving
effect, on a pro forma basis for the four consecutive Fiscal
Quarters most recently completed, to, without duplication, any
asset sales or asset acquisitions (including, without limitation,
any asset acquisition giving rise to the need to make such
calculation as a result of the Borrower or one of its Restricted
Subsidiaries (including any Person who becomes a Restricted
Subsidiary as a result of the asset acquisition) incurring,
assuming or otherwise being liable for acquired debt) occurring
during the period commencing on the first day of such period to
and including the date of determination (the Reference Period ),
as if such asset sale or asset acquisition occurred on the first
day of the Reference Period; provided, that Consolidated Cash
Flow generated by an acquired business or asset shall be
determined on the basis of, without duplication, (a) the actual
gross profit (revenues minus cost of goods sold) of the acquired
business or asset during the immediately preceding four full
Fiscal Quarters) minus (b) the pro forma expenses that would have
been incurred by the Borrower or such Restricted Subsidiary in
the operation of such acquired business or asset during such
period computed on the basis of personnel expenses for employees
retained or to be retained by the Borrower or such Restricted
Subsidiary in the operation of such acquired business or asset
and non-personnel costs and expenses incurred by the Borrower or
the Managing General Partner in the operation of its business at
similarly situated facilities. If the applicable Reference Period
for any calculation of Consolidated Cash Flow shall include a
partial period occurring prior to the Closing Date, then such
Consolidated Cash Flow shall be calculated based upon the
Consolidated Cash Flow on a pro forma basis for such portion of
the Reference Period prior to the Closing Date (giving effect to
the transactions occurring on the Closing Date) and the
Consolidated Cash Flow for the remaining portion of the Reference
Period occurring on and after the Closing Date, giving pro forma
effect, as described in the preceding sentences, to all
applicable transactions occurring on the Closing Date or
otherwise. Notwithstanding the foregoing, for any calculation of
Consolidated Cash Flow, it shall be assumed that Consolidated
Cash Flow for the Fiscal Quarter ending March 31, 1996 was
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$28,048,070, for the Fiscal Quarter ending June 30, 1996 was
$4,931,796, for the Fiscal Quarter ending September 30, 1996 was
$4,561,192 and for the Fiscal Quarter ending December 31, 1996
was $17,772,942.
"CONSOLIDATED CASH FLOW TO CONSOLIDATED PRO FORMA DEBT SERVICE"
means, as of the date of determination, the pro forma Consolidated
Cash Flow for the period of four Fiscal Quarters then ending divided
by Consolidated Pro Forma Debt Service for the four consecutive Fiscal
Quarters next succeeding such date of determination.
"CONSOLIDATED CASH FLOW TO MAXIMUM CONSOLIDATED PRO FORMA DEBT
SERVICE" means, as of the date of determination, the pro forma
Consolidated Cash Flow for such period of four Fiscal Quarters then
ending divided by the Maximum Consolidated Pro Forma Debt Service.
"CONSOLIDATED NET INCOME" with reference to any period, the net
income (or deficit) of the Borrower and the Restricted Subsidiaries
for such period (taken as a cumulative whole), after deducting all
operating expenses, provisions for all taxes and reserves (including
reserves for deferred income taxes) and all other proper deductions,
all determined in accordance with GAAP on a consolidated basis, after
eliminating all intercompany transactions, PROVIDED that there shall
be excluded (a) the income (or deficit) of any Person accrued prior to
the date it becomes a Restricted Subsidiary or is merged into or
consolidated with the Borrower or a Restricted Subsidiary, (b) the
income (or deficit) of any Person (other than a Restricted Subsidiary)
in which the Borrower or any Restricted Subsidiary has an ownership
interest, except to the extent that any such income has been actually
received by the Borrower or such Restricted Subsidiary in the form of
dividends or similar distributions, (c) the undistributed earnings of
any Restricted Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by such Restricted
Subsidiary is not at the time permitted by the terms of its charter or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Restricted Subsidiary, (d)
any restoration to income of any contingency reserve, except to the
extent that provision for such reserve was made out of income accrued
during such period, (e) any aggregate net after tax gain or net after
tax loss during such period arising from the sale, exchange or other
disposition of capital assets (such term to include all fixed assets,
whether tangible or intangible, all Inventory sold in conjunction with
the disposition of fixed assets, and all securities), (f) any write-up
of any asset, (g) any net gain from the collection of the proceeds of
life insurance polices, (h) any gain arising from the acquisition of
any securities, or the extinguishment, under GAAP, of any
Indebtedness, of the Borrower or any Restricted Subsidiary, (i) any
after tax gain or loss during such period from any change in
accounting, from any discontinued operations or the disposition
thereof, from any extraordinary events or from any prior period
adjustments, (j) any deferred credit representing the excess of equity
in any Restricted Subsidiary at the date of acquisition over the cost
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of the investment in such Restricted Subsidiary, and (k) in the case
of a successor to the Borrower by consolidation or merger or as a
transferee of its assets, any earnings of the successor corporation
prior to such consolidation, merger or transfer of assets.
"CONSOLIDATED NET WORTH" means at any time of determination:
(a) the total assets of the Borrower and its Restricted
Subsidiaries which would be shown as assets on a consolidated balance
sheet of the Borrower and its Restricted Subsidiaries as of such time,
prepared in accordance with GAAP, MINUS
(b) the total liabilities of the Borrower and its Restricted
Subsidiaries which would be shown as liabilities on a consolidated
balance sheet of the Borrower and, its Restricted Subsidiaries as such
time, prepared in accordance with GAAP.
"CONSOLIDATED PRO FORMA DEBT SERVICE" means as of any date of
determination, the total amount payable by the Borrower and the
Restricted Subsidiaries on a consolidated basis, during the four
consecutive calendar quarters next succeeding the date of
determination, in respect of scheduled principal payments and all cash
interest charges with respect to Indebtedness of the Borrower and the
Restricted Subsidiaries outstanding on such date of determination,
after giving effect to any Indebtedness proposed to be incurred on
such date (the "Incurrence Date") and to any Indebtedness proposed to
be repaid from funds of such newly incurred Indebtedness (x) within 30
days of the Incurrence Date, or (y) within the twelve months following
such Incurrence Date as to which funds for such payments have been
within 30 days of the Incurrence Date irrevocably placed in escrow
with the Collateral Agent with irrevocable instructions to the
Collateral Agent to make such repayments (such funds pursuant to
clauses (x) and (y) collectively, the "Dedicated Funds") and (a)
including actual payments under Capital Lease Liabilities, (b)
assuming, in the case of Indebtedness (other than the Obligations)
bearing interest at fluctuating interest rates which cannot be
determined in advance, that the rate in effect on such date will
remain in effect throughout such period, (c) assuming in the case of
the Obligations, that (1) the interest payments payable during such
four consecutive calendar quarters next succeeding the date of
determination will equal the actual interest payments associated with
the Obligations during the most recent four Fiscal Quarters, (2)
except for the twelve-month period immediately prior to the
termination of final maturity thereof (unless extended, renewed or
refinanced), no principal payments will be made on the Working Capital
Loans and (3) principal payments relating to the Acquisition Loans
will (unless the Acquisition Loan Conversion Date shall have already
occurred) become due based on the assumption that the Acquisition Loan
Conversion Date shall occur on December 31, 1999, (d) treating the
principal amount of all Indebtedness outstanding as of such date of
determination under a revolving credit or similar agreement (other
than the Obligations) as maturing and becoming due and payable on the
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scheduled maturity date or dates thereof (including the maturity of
any payment required by any commitment reduction or similar
amortization provision), without regard to any provision permitting
such maturity date to be extended and (e) including any other
designated repayments of Indebtedness due within twelve months from
such date of determination.
"CONTINGENT LIABILITY" means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise
becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment, to
supply funds to, or otherwise to invest in, a debtor, or otherwise to
assure a creditor against loss) the indebtedness, obligation or any
other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of
dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability
shall (subject to any limitation set forth therein) be deemed to be
the outstanding principal amount of the debt, obligation or other
liability guaranteed thereby.
"CONTINUATION/CONVERSION NOTICE" means a notice of continuation
or conversion and certificate duly executed by an Authorized Officer
of the Borrower, substantially in the form of EXHIBIT E hereto.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all members of a controlled group of trades or
businesses (whether or not incorporated) under common control which,
together with the Borrower, are treated as a single employer under
Section 414(b) or 414(c) of the Code or Section 4001 of ERISA.
"CONVEYANCE DOCUMENTS" means (a) the Contribution, Conveyance and
Assumption Agreement, dated as of the Closing Date, among the
Borrower, the Public Partnership, General Partners and Empire Energy
SC Corporation, a Delaware corporation, and (b) each of the individual
conveyances, deeds, assignments and bills of sale delivered to the
Borrower pursuant to the agreements referred to in the foregoing
clause (a).
"CORNERSTONE SALES & SERVICE CORPORATION" means Cornerstone Sales
& Service Corporation, a Delaware corporation.
"COVERAGE TEST" means the pro forma ratio of Consolidated Cash
Flow to consolidated Interest Expense.
"DEBT" means all Indebtedness of the type described in CLAUSES
(a), (b), and (c) of the definition of Indebtedness and all
Indebtedness of the type described in CLAUSE (i) of such definition in
respect of Indebtedness described in CLAUSES (a), (b), and (c) of such
definition.
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"DEDICATED FUNDS" is defined in the definition of "Consolidated
Pro Forma Debt Service."
"DEFAULT" means any Event of Default or any condition, occurrence
or event which, after notice or lapse of time or both, would
constitute an Event of Default.
"DISBURSEMENT DATE" is defined in SECTION 4.5.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached
hereto as SCHEDULE I, as it may be amended, supplemented or otherwise
modified from time to time by the Borrower with the written consent of
the Agent and the Required Lenders.
"DISQUALIFIED STOCK" means, with respect to any Person, any
Capital Stock of such Person which by its terms (or by the terms of
any security into which it is convertible or for which it is
exchangeable or exercisable), upon the happening of any event or
otherwise (i) matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, (ii) is convertible into or
exchangeable or exercisable for Indebtedness or Disqualified Stock or
(iii) is redeemable at the option of the holder thereof, in whole or
in part, in each case on or prior to the first anniversary of the
stated maturity of such Capital Stock.
"DOLLAR" and the sign "$" mean lawful money of the United States.
"EFFECTIVE DATE" means the date this Agreement becomes effective
pursuant to SECTION 11.8.
"ENVIRONMENTAL CLAIM" means any written or oral notice, claim,
demand or other communication (collectively, a "claim") for
investigatory costs, cleanup costs, Government Authority response
costs, damages to natural resources or other property, personal
injuries, fines or penalties arising out of, based on or resulting
from (a) the presence, or release into the environment, of any
Hazardous Material at any location, or (b) circumstances forming the
basis of any violation, or alleged violation, of any Environmental
Law. The term "Environmental Claim" shall include, without
limitation, any claim by any Government Authority for enforcement,
cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and any claim by any
third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the
presence of Hazardous Materials or arising from alleged injury or
threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAW" means any law, regulation, statute,
ordinance, code, rule, regulation, order or guideline (including
consent decrees or administrative orders) relating to human health,
safety or the environment or to emissions, discharges, releases or
threatened releases of Hazardous Materials into the environment
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(including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata), or otherwise
relating to the presence, existence, manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import,
together with the regulations thereunder, in each case as in effect
from time to time. References to sections of ERISA also refer to any
successor sections.
"EUROCURRENCY RESERVE PERCENTAGE" is defined in SECTION 3.2.1
"EURODOLLAR OFFICE" means, relative to any Lender, the office of
such Lender designated as such below its signature hereto or
designated in the Assignment and Acceptance Agreement or such other
office of a Lender (or any successor or assign of such Lender) within
the United States as may be designated from time to time by notice
from such Lender, as the case may be, to each other Person party
hereto. A Lender may have separate Eurodollar Offices for purposes of
making, maintaining or continuing, as the case may be, Base Rate Loans
and Eurodollar Rate Loans.
"EURODOLLAR RATE" is defined in SECTION 3.2.1.
"EURODOLLAR RATE LOAN" means a Loan bearing interest, at all
times during an Interest Period applicable to such Loan, at a fixed
rate of interest determined by reference to the Eurodollar Rate
(Reserve Adjusted).
"EURODOLLAR RATE (RESERVE ADJUSTED)" is defined in SECTION 3.2.1.
"EVENT OF DEFAULT" is defined in SECTION 9.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to
(a) the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Reference Lender from three federal
funds brokers of recognized standing selected by it.
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"FINANCIAL STATEMENT DELIVERY DATE" means the earlier of each
date on which the Borrower delivers, or is required to deliver,
financial statements pursuant to SECTION 8.1.1(a) or SECTION 8.1.1(b),
as the case may be.
"FISCAL QUARTER" means any quarter of a Fiscal Year.
"FISCAL YEAR" means any period of twelve consecutive calendar
months ending on June 30; references to a Fiscal Year with a number
corresponding to any calendar year (e.g., the "1996 Fiscal Year")
refer to the Fiscal Year ending on the June 30 occurring during such
calendar year.
"F.R.S. BOARD" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"GAAP" is defined in SECTION 1.4.
"GENERAL COLLATERAL" is defined in SECTION 5.11.
"GENERAL PARTNERS" means the Managing General Partner and the
Special General Partner.
"GOVERNMENT AUTHORITY" means any agency, authority, board,
bureau, commission, department, office or instrumentality of any
nature whatsoever of any governmental or quasi-governmental unit,
whether federal, state, county, district, city or other political
subdivision, foreign or otherwise and whether now or hereafter in
existence, or any officer or official of any thereof.
"GUARANTY" means a Guaranty of the Restricted Subsidiaries other
than Cornerstone Sales & Service Corporation, substantially in the
form of EXHIBIT L hereto.
"HAZARDOUS MATERIAL" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any "pollutant" pursuant to the Clean Water Act, as
amended;
(d) any petroleum product or related compound;
(e) any polychlorinated biphenyls or asbestos;
(f) any radioactive material or substance; or
(g) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material, substance or waste within the meaning
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of any other applicable federal, state or local law, regulation,
statute, ordinance, order or requirement (including consent
decrees and administrative orders issued to any Borrower or
Subsidiary) relating to or imposing liability or standards of
conduct concerning any hazardous, toxic or dangerous waste,
substance or material, all as amended or hereafter amended.
"HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar terms
contained in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document, as the case may be, as a whole
and not to any particular Section, paragraph or provision of this
Agreement or such other Loan Document.
"IMPERMISSIBLE QUALIFICATION" means, relative to the opinion or
certification of any independent public accountant as to any financial
statement of the Borrower, any qualification or exception to such
opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of
matters relevant to such financial statement; or
(c) which relates to the treatment or classification of any
item in such financial statement and which, as a condition to its
removal, would require an adjustment to such item the effect of
which would be to cause the Borrower to be in default of any of
its obligations under SECTION 8.2.4.
"INCLUDING" means including without limiting the generality of
any description preceding such term, and, for purposes of this
Agreement and each other Loan Document, the parties hereto agree that
the rule of EJUSDEM GENERIS shall not be applicable to limit a general
statement, which is followed by or referable to an enumeration of
specific matters, to matters similar to the matters specifically
mentioned.
"INCURRENCE DATE" is defined in the definition of "Consolidated
pro Forma Debt Service."
"INDEBTEDNESS" of any Person means, without duplication:
(a) any indebtedness for borrowed money which such Person
has directly or indirectly created, incurred or assumed;
(b) any indebtedness, whether or not for borrowed money,
with respect to which such Person has become directly or
indirectly liable and which represents the deferred purchase
price (or a portion thereof) or has been incurred to finance the
purchase price (or a portion thereof) of any property or service
or business acquired by such Person, whether by purchase,
consolidation, merger or otherwise;
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(c) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets
or businesses;
(d) all indebtedness created or arising under any
conditional sale or other title retention agreement, or incurred
as financing, in either case with respect to property acquired by
the Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited
to repossession or sale of such property);
(e) all Capitalized Lease Liabilities;
(f) any indebtedness, whether or not for borrowed money,
secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any
Lien in respect of property owned by such Person, whether or not
such Person has assumed or become liable for the payment of such
indebtedness, PROVIDED that the amount of such Indebtedness if
not so assumed shall in no event be deemed to be greater than the
fair market value from time to time (as determined in good faith
by such Person) of the property subject to such Lien;
(g) all capital stock of such Person redeemable at the
option of the holder prior to the final maturity of the Private
Placement Debt, valued at the greater of its voluntary or
involuntary maximum fixed repurchase price or any mandatory
redemption payment obligations in respect thereon plus, in either
case, accrued dividends thereon;
(h) any preferred stock of any Restricted Subsidiary of
such Person redeemable at the option of the holder prior to the
final maturity of the Private Placement Debt, valued at the sum
of the liquidation preference thereof or any mandatory redemption
payment obligations in respect thereof PLUS, in either case,
accrued dividends thereon;
(i) all liabilities of such Person in respect of letters of
credit or instruments serving a similar function issued or
accepted for its account by banks and other financial
institutions (whether or not representing obligations for
borrowed money);
(j) any indebtedness of the character referred to in clause
(a) through (i) of this definition deemed to be extinguished
under GAAP but for which such Person remains legally liable; and
(k) any indebtedness of any other Person of the character
referred to in clause (a) through (j) of this definition with
respect to which the Person whose Indebtedness is being
determined has become liable by way of a Contingent Liability.
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Notwithstanding the foregoing, in determining the Indebtedness of the
Borrower and the Restricted Subsidiaries, there shall be excluded all
undrawn letters of credit (not yet due and payable), trade accounts
payable, accrued interest and other accrued expenses and customer
credit balances arising in the ordinary course of business on ordinary
terms.
"INDEMNIFIED LIABILITIES" is defined in SECTION 11.4.
"INDEMNIFIED PARTIES" is defined in SECTION 11.4.
"INTERCREDITOR AGREEMENT" means the Intercreditor and Trust
Agreement executed and delivered pursuant to SECTION 6.1.7,
substantially in the form of EXHIBIT G hereto, as amended,
supplemented, restated or otherwise modified from time to time.
"INTEREST EXPENSE" means, for any period, the aggregate
consolidated interest expense of the Borrower and all Subsidiaries
determined in accordance with GAAP but including, without duplication,
all commissions, discounts and other fees and charges owed with
respect to letters of credit and banker's acceptances, net costs under
interest rate protection agreements and the portion of any Capitalized
Lease Liabilities allocable to consolidated interest expense and the
product of (A) the amount of all dividends (whether in cash or
otherwise (except dividends payable solely in shares of Qualified
Capital Stock)) on all Disqualified Stock of such Person and its
Subsidiaries, times (B) a fraction, the numerator of which is one and
the denominator of which is one minus the then current effective
consolidated federal, state and local income tax rate of such Person,
expressed as a decimal.
"INTEREST PERIODS" means, relative to any Eurodollar Rate Loans,
the period beginning on (and including) the date on which such
Eurodollar Rate Loan is made or continued as, or converted into, a
Eurodollar Rate Loan pursuant to SECTION 2.3 or 2.4 and ending on (but
excluding) the day which numerically corresponds to such date one,
two, three or six months thereafter (or, if such month as no
numerically corresponding day, on the last Business Day of such
month), in each case as the Borrower may select in its relevant notice
pursuant to SECTION 2.3 or 2.4; PROVIDED, HOWEVER, that
(a) the Borrower shall not be permitted to select Interest
Periods to be in effect at any one time which have expiration
dates occurring on more than ten different dates;
(b) Interest Periods commencing on the same date for Loans
comprising part of the same Borrowing shall be of the same
duration;
(c) if such Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on
the next following Business Day (unless, if such Interest Period
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applied to Eurodollar Rate Loans, such next following Business
Day is the first Business Day of a calendar month, in which case
such Interest Period shall end on the Business Day next preceding
such numerically corresponding day); and
(d) no Interest Period may end later than the date set
forth in CLAUSE (a) of the definition "WORKING CAPITAL LOAN
COMMITMENT TERMINATION DATE", in the case of Interest Periods for
Working Capital Loans, or in the case of Interest Periods for
Acquisition Loans any date on which a principal payment is due if
it would be necessary to repay Acquisition Loans before the end
of the Interest Period applicable thereto.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or
arrangement designed solely to protect the Borrower against
fluctuations in interest rates on Indebtedness outstanding under the
Working Capital Loan Commitments or the Acquisition Loan Commitments
as long as it is provided by a Lender or an Affiliate of a Lender.
"INVESTMENT" means, relative 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. For
the purposes of Section 8.2.5, the amount involved in Investments made
during any period shall be the aggregate cost to the Borrower of all
such Investments made during such period, determined in accordance
with GAAP, but without regard to unrealized increases or decreases in
value, or write-ups, write-downs or write-offs, of such investments
and without regard to the existence of any undistributed earnings or
accrued interest with respect thereto accrued after the respective
dates on which such Investments were made, less any net return of
capital realized during such period upon the sale, repayment or other
liquidation of such Investment (determined in accordance with GAAP,
but without regard to any amounts received during such period as
earnings (in the form of dividends not constituting a return of
capital, interest or otherwise) on such Investment or as loans from
any Person in whom such Investment or as loans from any Person in whom
such Investments have been made).
"ISSUANCE REQUEST" means a request and certificate duly executed
by an Authorized Officer of the Borrower, in substantially the form of
EXHIBIT D attached hereto (with such changes thereto as may be agreed
upon from time to time by the Agent and the Borrower).
"ISSUER" means BofA or any successor issuer thereto as may be
reasonably agreed upon by the Agent, Required Lenders and Borrower.
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"LENDERS" is defined in the PREAMBLE.
"LETTER OF CREDIT" is defined in SECTION 4.1.
"LETTER OF CREDIT AVAILABILITY" means, at any time, the lesser of
(a) the excess of
(i) $30,000,000 at any time prior to March 31, 1997 or
$20,000,000 at any time thereafter
OVER
(ii) the then Letter of Credit Outstandings,
OR
(b) the Working Capital Loan Commitment Amount at such
time.
"LETTER OF CREDIT OUTSTANDINGS" means, at any time, an amount
equal to the sum of
(a) the aggregate Stated Amount at such time of all Letters
of Credit then outstanding and undrawn (as such aggregate Stated
Amount shall be adjusted, from time to time, as a result of
drawings, the issuance of Letters of Credit, or otherwise),
PLUS
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
"LIEN" shall mean as to any Person, any mortgage, lien (statutory
or otherwise), pledge, reservation, right of entry, encroachment,
easement, right of way, restrictive covenant, license, charge,
security interest or other encumbrance in or on, or any interest or
title of any vendor, lessor, lender or other secured party to or of
such Person under any conditional sale or other title retention
agreement or capital lease with respect to, any property or asset
owned or held by such Person, or the signing or filing of a financing
statement with respect to any of the foregoing which names such Person
as debtor, the signing of any security agreement with respect to any
of the foregoing authorizing any other party as the secured party
thereunder to file any financing statement or any other agreement to
give or grant any of the foregoing. For the purposes of this
Agreement, a Person shall be deemed to be the owner of any asset which
it has placed in trust for the benefit of the holders of Indebtedness
of such Person and such trust shall be deemed to be a Lien if such
Person remains legally liable therefor, notwithstanding that such
Indebtedness is or may be deemed to be extinguished under GAAP.
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"LOAN" means, as the context may require, either a Working
Capital Loan, an Acquisition Loan or a Swing Loan.
"LOAN COMMITMENT TERMINATION DATE" means, as the context may
require, either the Working Capital Loan Commitment Termination Date
or the Acquisition Loan Conversion Date.
"LOAN DOCUMENT" means this Agreement, the Notes, the Security
Agreement, the Intercreditor Agreement and any pledge agreement,
security agreement, guaranty, or mortgage delivered to the Agent
pursuant to this Agreement.
"MANAGING GENERAL PARTNER" is defined in the recitals and shall
include any successor thereto.
"MAXIMUM CONSOLIDATED PRO FORMA DEBT SERVICE" means as of any
date of determination, the highest total amount payable by the
Borrower and the Restricted Subsidiaries on a consolidated basis,
during any period of four consecutive Fiscal Quarters, commencing with
the Fiscal Quarter in which such date of determination occurs and
ending on the maturity date of the Private Placement Debt, in respect
of scheduled principal payments and all cash interest charges with
respect to all Indebtedness of the Borrower and the Restricted
Subsidiaries outstanding or to be outstanding as a result of the
transactions occurring on such date of determination, after giving
effect to any Indebtedness to be incurred on the Incurrence Date and
to any Indebtedness proposed to be repaid from Dedicated Funds and (a)
including actual payments under Capital Lease Liabilities (b)
assuming, in the case of Indebtedness (other than the Obligations)
bearing interest at fluctuating interest rates which cannot be
determined in advance, that the rate in effect on such date will
remain in effect throughout such period, (c) assuming in the case of
the Obligations, that (1) the interest payments payable during such
four consecutive Fiscal Quarters will equal the actual interest
payments associated with the Obligations during the most recent four
Fiscal Quarters, (2) except for the twelve-month period immediately
prior to the termination or final maturity thereof (unless extended,
renewed or refinanced) no principal payments will be made on the
Working Capital Loans and (3) principal payments relating to the Loans
will (unless the Acquisition Loan Conversion Date shall have already
occurred become due based on the assumption that the Acquisition Loan
Conversion Date shall occur on December 31, 1999 (d) treating the
principal amount of all Indebtedness outstanding as of such date of
determination under a revolving credit or similar agreement (other
than the Obligations) as maturing and becoming due and payable on the
scheduled maturity date or dates thereof (including the maturity of
any payment required by any commitment reduction of similar
amortization provision), without regard to any provision permitting
such maturity date to be extended and (e) including any other
designated repayments of Indebtedness.
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"MINIMUM QUARTERLY DISTRIBUTION" shall have the meaning given to
it in the Partnership Agreement.
"MULTIEMPLOYER PLAN" means a "Multiemployer Plan" as defined in
Section 4001(a)(3) of ERISA.
"NGC" means Northwestern Growth Corporation, a South Dakota
corporation and a wholly owned subsidiary of NPS.
"NOTE" means, as the context may require, either a Working
Capital Note or an Acquisition Note.
"NOTE AGREEMENT" means, collectively, the several substantially
identical note agreements dated as of December 11, 1996 pursuant to
which the Private Placement Debt shall be issued.
"NPS" means Northwestern Public Service Company, a Delaware
company.
"OBLIGATIONS" means the obligations of the Borrower to the Agent
and the Lenders under this Agreement, the Notes and each other Loan
Document.
"OBLIGOR" means the Borrower or any other Person (other than the
Agent or any Lender) obligated under any Loan Document.
"OPERATIVE AGREEMENTS" means this Agreement, the Note Agreement,
the Security Agreement, the Partnership Agreement and the Conveyance
Documents.
"ORGANIC DOCUMENT" means, relative to any Obligor, its
partnership agreement, certificate of incorporation, its by-laws and
all shareholder agreements, voting trusts and similar arrangements
applicable to any of its authorized shares of capital stock or other
equity interests.
"PARITY DEBT" means the obligations of the Borrower described in
clauses (c), (d), (h), and (l) of, and subsection (i) of the last
paragraph of, SECTION 8.2.2 which is secured and will rank pari passu
with the Obligations hereunder.
"PARTICIPANT" is defined in SECTION 11.11.2.
"PARTNERSHIP AGREEMENT" means the Amended and Restated Agreement
of Limited Partnership of the Borrower as in effect on the Closing
Date and as the same may be from time to time amended, supplemented or
otherwise modified subject to SECTION 8.2.15.
"PARTNERSHIP GROUP" means the Borrower and its Restricted
Subsidiaries.
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"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"PENSION PLAN" means a "pension plan", as such term is defined
in section 3(2) of ERISA, which is subject to Title IV of ERISA (other
than a multiemployer plan as defined in section 4001(a)(3) of ERISA),
and to which the Borrower or any corporation, trade or business that
is, along with the Borrower, a member of a Controlled Group, may have
liability, including any liability by reason of having been a
substantial employer within the meaning of section 4063 of ERISA at
any time during the preceding five years, or by reason of being deemed
to be a contributing sponsor under section 4069 of ERISA.
"PERCENTAGE" means the Working Capital Percentage or the
Acquisition Percentage, as applicable, or both.
"PERSON" means any natural person, corporation, partnership,
firm, association, trust, government, governmental agency or any other
entity, whether acting in an individual, fiduciary or other capacity.
"PLAN" means any Pension Plan or Welfare Plan.
"PRICING GRID" means the pricing grid (the last three columns
being expressed in hundredths of one percent) as follows:
Total
Funded
Indebtedness to Applicable Applicable
Consolidated Eurodollar Facility Base Rate
Tier Cash Flow Ratio Rate Margin Fee Margin
I <2.75 25.0 12.5 0.0
>=2.75
II but
<3.25 32.5 17.5 0.0
III >=3.25
but <3.75 47.5 22.5 0.0
>=3.75
IV but <4.25 60.0 27.5 0.0
V >=4.25 80.0 32.5 12.5
The applicable Tier on the Pricing Grid shall be established on each
Financial Statement Delivery Date and shall be applicable until the
next Financial Statement Delivery Date; PROVIDED, that for the period
from the Effective Date to the Financial Statement Delivery Date for
the Fiscal Quarter ending March 31, 1997 the applicable level shall be
Tier V; and provided further that if the financial statements required
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to be delivered pursuant to SECTION 8.1.1(a) or SECTION 8.1.1(b) shall
not be delivered when due, the applicable level shall be Tier V from
the due date until the date so delivered.
"PRIVATE PLACEMENT DEBT" means the issuance of $220 million
aggregate principal amount of Senior Secured Notes, with net proceeds
of not less than $210 million, having a stated interest rate, prior to
default, of 7.53% per annum.
"PUBLIC PARTNERSHIP" is defined in the recitals hereto.
"QUALIFIED CAPITAL STOCK" means Capital Stock not constituting
Disqualified Stock.
"QUARTERLY PAYMENT DATE" means the last day of each March, June,
September, and December or, if any such day is not a Business Day, the
next succeeding Business Day.
"REFERENCE LENDER" shall mean BofA, so long as BofA is the Agent,
or the Lender serving for the time being as a successor Agent to BofA
pursuant to SECTION 10.9.
"REFERENCE PERIOD", with respect to any incurrence of
Indebtedness, or any transaction pursuant to SECTION 8.2.10, means the
period of four consecutive Fiscal Quarters ending with the last full
Fiscal Quarter for which financial information in respect thereof is
available immediately preceding the date of such incurrence or
transaction.
"REGISTRATION STATEMENT" means the registration statement
originally filed on October 10, 1996 on Form S-1 by the Public
Partnership with the Securities and Exchange Commission, as amended
through Amendment Number 3 dated December 9, 1996.
"REGULATORY CHANGE" means, relative to the Agent or any Lender,
any change after the date hereof in any (or the adoption after the
date hereof of any new):
(a) United States Federal or state law or foreign law
applicable to the Agent or such Lender; or
(b) regulation, interpretation, directive, or request
(whether or not having the force of law) applicable to such Agent
or such Lender or any court or government authority charged with
the interpretation or administration of any law referred to in
the immediately preceding CLAUSE (a) or of any fiscal, monetary,
or other authority having jurisdiction over the Agent or such
Lender.
"REIMBURSEMENT OBLIGATIONS" is defined in SECTION 4.6.
"RELEASE" means a "release", as such term is defined in CERCLA.
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"REQUIRED LENDERS" means, except as otherwise provided in the
Intercreditor Agreement, Lenders holding in excess of 50% of the
Commitments (or, if the Commitments are terminated, Lenders having in
excess of 50% of the aggregate outstanding Obligations).
"RESOURCE CONSERVATION AND RECOVERY ACT" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 690, et seq., as in
effect from time to time.
"RESPONSIBLE OFFICER" means with respect to any Person, the
President, any Vice President, the Chief Financial Officer, the
Treasurer and the Secretary of such Person and any other officer of
such Person who is responsible for compliance with or performance of
any obligation under this Agreement with respect to the Borrower, any
such officer of the Managing General Partner of the Borrower and, in
any case, any employee of the Borrower performing any of the above
functions.
"RESTRICTED PAYMENT" means any payment or other distribution in
respect of any partnership interest in the Borrower, except a
distribution payable solely in additional partnership interests in the
Borrower, and any payment by the Borrower or a Restricted Subsidiary
on account of the redemption, retirement, purchase or other
acquisition of any partnership interest in the Borrower.
"RESTRICTED SUBSIDIARY" means any wholly owned Subsidiary of the
Borrower organized under the laws of the United States or any state
thereof or the District of Columbia, none of the capital stock or
ownership interests of which is owned by Unrestricted Subsidiaries and
substantially all of the operating assets of which are located in, and
substantially all of the business of which is conducted within the
United States and is designated as a Restricted Subsidiary or which
shall be designated as a Restricted Subsidiary by the Managing General
Partner at a subsequent date; provided, however, that (a) to the
extent a newly formed or acquired Subsidiary meeting the foregoing
requirements is not declared either a Restricted Subsidiary or an
Unrestricted Subsidiary within 90 days of its formation or
acquisition, such Subsidiary shall be deemed a Restricted Subsidiary
and (b) a Restricted Subsidiary may be designated as an Unrestricted
Subsidiary in accordance with the provisions of SECTION 8.2.15.
"SECURITY AGREEMENT" means the Security Agreement executed and
delivered pursuant to SECTION 6.1.8, substantially in the form of
EXHIBIT I hereto, as amended, supplemented, restated or otherwise
modified from time to time.
"SECURITY DOCUMENTS" means any of the documents securing the
Notes.
"STATED AMOUNT" of each Letter of Credit means the "Stated
Amount" as defined therein.
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"STATED EXPIRY DATE" is defined in SECTION 4.1.
"STATED MATURITY DATE" means with respect to the Working Capital
Loans, Swing Loans and Letters of Credit, December 31, 1999 subject to
SECTION 3.1.1, and with respect to the Acquisition Loans December 31,
2003.
"SUBSIDIARY" means with respect to any Person, any corporation,
limited liability company, business trust, association, partnership,
joint venture or other business entity at least a majority (by number
of votes) of the stock of any class or classes (or equivalent
interest) of which is at the time owned by such Person or by one or
more Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person, if the holders of the stock of such class
or classes (or equivalent interests) (a) are ordinarily, in the
absence of contingencies, entitled to vote for the election of a
majority of the directors (or Persons performing similar functions) of
such business entity, even though the right so to vote has been
suspended by the happening of such a contingency, or (b) are at the
time entitled, as such holders, to vote for the election of the
majority of the directors (or Persons performing similar functions) of
such business entity, whether or not the right so to vote exists by
reason of the happening of a contingency. Unless the context
otherwise requires, any reference to a Subsidiary shall mean a
Subsidiary of the Borrower.
"SWING LINE" is defined in SECTION 2.7.
"SWING LINE LENDER" is defined in SECTION 2.7.
"SWING LOAN" is defined in SECTION 2.7.
"SWING LOAN REQUEST" means a loan request and certificate duly
executed by an Authorized Officer of the Borrower on behalf of the
Borrower and substantially in the form of EXHIBIT K.
"TAXES" is defined in SECTION 5.6.
"TOTAL FUNDED INDEBTEDNESS TO CONSOLIDATED CASH FLOW RATIO" means
the ratio of consolidated Debt for the Borrower and its Subsidiaries
to Consolidated Cash Flow as at any Fiscal Quarter end for the period
then ending.
"TRANSFER" means the transfer of the Assets and the assumption of
the liabilities contemplated by the Conveyance Documents.
"TYPE" means, relative to any Loan, the portion thereof, if any,
being maintained as a Base Rate Loan or a Eurodollar Rate Loan.
"UNITHOLDERS" shall have the meaning given to it in the
Partnership Agreement.
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"UNITED STATES" or "U.S." means the United States of America, its
fifty States and the District of Columbia.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Borrower
other than a Restricted Subsidiary.
"WELFARE PLAN" means a "welfare plan", as such term is defined in
section 3(1) of ERISA.
"WORKING CAPITAL LOAN" is defined in SECTION 2.1.1.
"WORKING CAPITAL LOAN COMMITMENT" means, relative to any Lender,
such Lender's obligation to make Working Capital Loans pursuant to
SECTION 2.1.1.
"WORKING CAPITAL LOAN COMMITMENT AMOUNT" means, on any date,
$50,000,000, as such amount may be reduced from time to time pursuant
to SECTION 2.2.
"WORKING CAPITAL LOAN COMMITMENT TERMINATION DATE" means the
earliest of
(a) December 31, 1999, subject to SECTION 3.1.1;
(b) the date on which the Working Capital Loan Commitment
Amount is terminated in full or reduced to zero pursuant to
SECTION 2.2; and
(c) the date on which any Commitment Termination Event
occurs.
Upon the occurrence of any event described in CLAUSE (b) or (c), the
Working Capital Loan Commitments shall terminate automatically and
without any further action.
"WORKING CAPITAL NOTE" means a promissory note of the Borrower
payable to the Agent, in the form of EXHIBIT A hereto (as such
promissory note may be amended, endorsed or otherwise modified from
time to time), evidencing the aggregate Indebtedness of the Borrower
resulting from outstanding Working Capital Loans, and also means all
other promissory notes accepted from time to time in substitution
therefor or renewal thereof.
"WORKING CAPITAL PERCENTAGE" means, relative to any Lender, the
Working Capital Percentage set forth opposite its signature hereto or
set forth in the Assignment and Acceptance Agreement, as such
percentage may be adjusted from time to time pursuant to Assignment
and Acceptance Agreement(s) executed by such Lender and its Assignee
Lender(s) and delivered pursuant to SECTION 11.11.1.
SECTION 1.2 USE OF DEFINED TERMS. Unless otherwise defined or
the context otherwise requires, terms for which meanings are provided
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in this Agreement shall have such meanings when used in the Disclosure
Schedule and in each Note, Borrowing Request, Continuation/Conversion
Notice, Loan Document, notice and other communication delivered from
time to time in connection with this Agreement or any other Loan
Document.
SECTION 1.3 CROSS-REFERENCES. Unless otherwise specified,
references in this Agreement and in each other Loan Document to any
Article or Section are references to such Article or Section of this
Agreement or such other Loan Document, as the case may be, and, unless
otherwise specified, references in any Article, Section or definition
to any clause are references to such clause of such Article, Section
or definition.
SECTION 1.4 ACCOUNTING AND FINANCIAL DETERMINATIONS. Unless
otherwise specified, all accounting terms used herein or in any other
Loan Document shall be interpreted, all accounting determinations and
computations hereunder or thereunder (including under SECTION 8.2.4)
shall be made, and all financial statements required to be delivered
hereunder or thereunder shall be prepared in accordance with, those
generally accepted accounting principles in effect in the United
States of America from time to time ("GAAP"). Notwithstanding the
foregoing, if the Borrower, the Required Lenders or the Agent
determines that a change in GAAP from that in effect on the date
hereof, has altered the treatment of certain financial data to its
detriment under this Agreement, such party may seek of the others a
renegotiation of any financial covenant affected thereby. If the
Borrower, the Required Lenders and Agent cannot agree on renegotiated
covenants, then, for the purposes of this Agreement, GAAP will refer
to generally accepted accounting principles on the date just prior to
the date on which the change that gave rise to the renegotiation
occurred.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1 COMMITMENTS. On the terms and subject to the
conditions of this Agreement (including ARTICLE VI), each Lender
severally agrees to make Loans pursuant to the Commitments described
in this SECTION 2.1.
SECTION 2.1.1 WORKING CAPITAL LOAN COMMITMENT. From time to
time on any Business Day occurring prior to the Working Capital Loan
Commitment Termination Date, each Lender will make Loans (relative to
such Lender, its "WORKING CAPITAL LOANS") to the Borrower equal to
such Lender's Working Capital Percentage of the aggregate amount of
the Borrowing of Working Capital Loans requested by the Borrower to be
made on such day. The Commitment of each Lender described in this
SECTION 2.1.1 is herein referred to as its "WORKING CAPITAL LOAN
COMMITMENT". On the terms and subject to the conditions hereof, the
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Borrower may from time to time borrow, prepay and reborrow Working
Capital Loans.
SECTION 2.1.2 ACQUISITION LOAN COMMITMENT. From time to time on
any Business Day occurring prior to the Acquisition Loan Conversion
Date, each Lender will make Loans (relative to such Lender, its
"ACQUISITION LOANS") to the Borrower equal to such Lender's Percentage
of the aggregate amount of the Borrowing of Acquisition Loans
requested by the Borrower to be made on such day. The Commitment of
each Lender described in this SECTION 2.1.2 is herein referred to as
its "ACQUISITION LOAN COMMITMENT". On the terms and subject to the
conditions hereof, the Borrower may from time to time borrow, prepay
and reborrow Acquisition Loans prior to the Acquisition Loan
Conversion Date.
SECTION 2.1.3 LENDERS NOT PERMITTED OR REQUIRED TO MAKE LOANS.
No Lender shall be permitted or required to
(a) make any Working Capital Loan if, after giving effect
thereto, the aggregate outstanding principal amount of all
Working Capital Loans of all Lenders, together with all Letters
of Credit Outstandings and the aggregate outstanding amount of
all Swing Loans, would exceed the Working Capital Loan Commitment
Amount, or
(b) make any Acquisition Loan if, after giving effect
thereto, the aggregate outstanding principal amount of all
Acquisition Loans of all Lenders would exceed the Acquisition
Loan Commitment Amount, or
(c) issue (in the case of any Issuer that is a Lender) or
participate in (in the case of each Lender other than the Lender
that is the Issuer) any Letter of Credit if, after giving effect
thereto all Letter of Credit Outstandings and all Swing Loans
together with the aggregate outstanding principal amount of all
Working Capital Loans of all Lenders would exceed the Working
Capital Loan Commitment Amount.
SECTION 2.2 REDUCTION OF COMMITMENT AMOUNTS. The Commitment
Amounts are subject to reduction from time to time pursuant to this
SECTION 2.2.
SECTION 2.2.1 OPTIONAL. The Borrower may, from time to time on
any Business Day occurring after the Closing Date, voluntarily reduce
the unused amount of either Commitment Amount; PROVIDED, HOWEVER, that
all such reductions shall require at least three Business Days' prior
notice to the Agent and be permanent, and any partial reduction of
either Commitment Amount shall be in an integral multiple of
$1,000,000.
SECTION 2.2.2 MANDATORY. The applicable Commitment Amount shall
be reduced by an amount equal to any amount required as a mandatory
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prepayment of the Working Capital Loans or Acquisition Loans as
applicable pursuant to SECTION 3.1 (whether or not any loans shall
then be outstanding under the applicable Loan).
SECTION 2.3 BORROWING PROCEDURE. By delivering a Borrowing
Request to the Agent on or before 1:00 p.m., Chicago time, on a
Business Day, the Borrower may from time to time irrevocably request,
on not less than three nor more than five Business Days' notice in the
case of Eurodollar Rate Loans, and on not less than one nor more than
five Business Days' notice in the case of Base Rate Loans, that a
Borrowing be made in a minimum amount of $3,000,000 in the case of
Eurodollar Rate Loans, and in a minimum amount of $1,000,000 in the
case of Base Rate Loans, and in both instances in an integral multiple
of $100,000, or in the unused amount of the applicable Commitment. On
the terms and subject to the conditions of this Agreement, each
Borrowing shall be comprised of the type of Loans, and shall be made
on the Business Day, specified in such Borrowing Request. Each
Borrowing Request must be signed by an Authorized Officer of the
Borrower. On or before 2:00 p.m. (Chicago time) on such Business Day
each Lender shall deposit with the Agent same day funds in an amount
equal to such Lender's Percentage of the requested Borrowing. Such
deposit will be made to an account which the Agent shall specify from
time to time by notice to the Lenders. To the extent funds are
received from the Lenders, the Agent shall make such funds available
to the Borrower by wire transfer to the accounts specified in the
applicable Borrowing Request. No Lender's obligation to make any Loan
shall be affected by any other Lender's failure to make any Loan.
Swing Loans shall not be subject to this SECTION 2.3.
SECTION 2.4 CONTINUATION AND CONVERSION ELECTIONS. By
delivering a Continuation/Conversion Notice to the Agent on or before
1:00 p.m., Chicago time, on a Business Day, the Borrower may from time
to time irrevocably elect, on not less than three nor more than five
Business Days' notice that all, or any portion in a minimum amount of
$3,000,000, in the case of Eurodollar Rate Loans, and in a minimum
amount of $1,000,000 in the case of Base Rate Loans, and in both
instances an integral multiple of $100,000, of any Loans be, in the
case of Base Rate Loans, converted into Eurodollar Rate Loans or, in
the case of Eurodollar Rate Loans, be converted into a Base Rate Loan
or a Eurodollar Rate Loan or continued as a Eurodollar Rate Loan (in
the absence of delivery of a Continuation/Conversion Notice with
respect to any Eurodollar Rate Loan at least three Business Days
before the last day of the then current Interest Period with respect
thereto, such Eurodollar Rate Loan shall, on such last day,
automatically convert to a Base Rate Loan); PROVIDED, HOWEVER, that
(i) each such conversion or continuation shall be pro rated among the
applicable outstanding Loans of all Lenders, and (ii) no portion of
the outstanding principal amount of any Loans may be continued as, or
be converted into, Eurodollar Rate Loans when any Default has occurred
and is continuing. Each Continuation/Conversion Notice must be signed
by an Authorized Officer of the Borrower.
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SECTION 2.5 FUNDING. Each Lender may, if it so elects,
fulfill its obligation to make, continue or convert Eurodollar Rate
Loans hereunder by causing one of its foreign branches or Affiliates
(or an international banking facility created by such Lender) to make
or maintain such Eurodollar Rate Loan; PROVIDED, HOWEVER, that such
Eurodollar Rate Loan shall nonetheless be deemed to have been made and
to be held by such Lender, and the obligation of the Borrower to repay
such Eurodollar Rate Loan shall nevertheless be to such Lender for the
account of such foreign branch, Affiliate or international banking
facility. In addition, the Borrower hereby consents and agrees that,
for purposes of any determination to be made for purposes of SECTION
5.1, 5.2, 5.3 or 5.4, it shall be conclusively assumed that each
Lender elected to fund all Eurodollar Rate Loans by purchasing, as the
case may be, Dollar certificates of deposit in the U.S. or Dollar
deposits in its Eurodollar Office's interbank eurodollar market.
SECTION 2.6 NOTES. The Loans under the Commitments shall be
evidenced by two Notes of the Borrower payable to the Agent, for the
account of the Lenders, in a maximum principal amount equal to the
original applicable Commitment Amount. The Borrower hereby
irrevocably authorizes the Agent to make (or cause to be made)
appropriate notations on the grid attached to the Notes (or on any
continuation of such grid), which notations, if made, shall evidence,
INTER ALIA, the date of, the outstanding principal of, and the
interest rate and Interest Period applicable to the Loans evidenced
thereby. Such notations shall be conclusive and binding on the
Borrower absent manifest error; PROVIDED, HOWEVER, that the failure of
the Agent to make any such notations shall not limit or otherwise
affect any Obligations of the Borrower.
SECTION 2.7 SWING LINE.
(a) Upon the Borrower's request, and subject to the terms
and conditions of this Agreement, Bank of America Illinois (in
such capacity, the "Swing Line Lender") may, in its sole
discretion, on and after the Effective Date and prior to the
Working Capital Loan Commitment Termination Date, provide to the
Borrower a swing line credit facility (the "Swing Line") of up to
$5,000,000; provided that the Swing Line Lender shall not in any
event be permitted to make any Loan (each a "Swing Loan") under
the Swing Line if, after giving effect thereto, (i) the sum of
the then aggregate outstanding principal amount of all Working
Capital Loans and Swing Loans plus the then aggregate amount of
all Letter of Credit Outstandings would exceed the Working
Capital Loan Commitment Amount, or (ii) the then aggregate
outstanding principal amount of all Swing Loans made by the Swing
Line Lender would exceed $5,000,000. The Swing Line Lender shall
not be at any time obligated to make any Swing Loan.
(b) Each request for Swing Loans shall be made from time to
time by the Borrower delivering a Swing Loan Request therefor to
the Agent and the Swing Line Lender at or before 1:00 p.m.,
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Chicago time, on any Business Day. On the terms and subject to
the conditions of this Agreement, each Swing Loan shall be
disbursed on the Business Day on which the request therefor was
timely made, in same day funds by wire transfer to such
transferee(s), or to such account(s) of the Borrower, as the
Borrower shall have specified in the request therefor. Swing
Loans shall be in an aggregate minimum principal amount of
$75,000 and an integral multiple of $1,000.
(c) Each Swing Loan outstanding under the Swing Line shall
accrue interest at a rate per annum equal to the interest accrued
on a Base Rate Loan which interest shall be payable quarterly in
arrears on each Quarterly Payment Date and on the Stated Maturity
Date for Swing Loans, and shall be payable to the Swing Line
Lender; provided that, notwithstanding any other provision of
this Agreement, each Swing Loan shall bear interest for a minimum
of one day.
(d) The principal outstanding under the Swing Line shall be
due and payable
(i) at or before 1:00 p.m., Chicago time, on the
seventh Business Day immediately following any Swing Loan
made pursuant to the Swing Line; and
(ii) in any event on the Working Capital Loan
Commitment Termination Date;
provided that, if no Event of Default shall have occurred and be
continuing, then unless the Borrower notifies the Swing Line
Lender that it will repay such Swing Loans, on the due date of
any Swing Loan, if and to the extent that the Borrower is
permitted to borrow Working Capital Loans under the terms of this
Agreement (the Working Capital Loan Commitment being determined
for such purpose without giving effect to any reduction thereof
occasioned by such Swing Loans due and payable) at the time such
Swing Loans are due, the Borrower shall be deemed to have
submitted a Borrowing Request for Working Capital Loans at the
Base Rate in an amount necessary to repay the amount demanded,
and the provisions of SECTION 2.3 concerning the minimum
principal amounts and integral multiples thereof required for
Borrowings of Working Capital Loans shall not apply to Working
Capital Loans made pursuant to this Section 2.7(d).
(e) The Borrower may, from time to time on any Business
Day, make a voluntary prepayment, in whole or in part, of the
outstanding principal amount of any Swing Loans, without
incurring any premium or penalty; provided that
(i) each such voluntary prepayment shall require prior
written notice given to the Agent and Swing Line Lender no
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later than 1:00 p.m., Chicago time, on the day on which the
Borrower intends to make a voluntary prepayment, and
(ii) each such voluntary prepayment shall be in a
minimum amount of $75,000 and in an integral multiple of
$1,000 (or, if less, the aggregate outstanding principal
amount of all Swing Loans then outstanding).
(f) Each Lender shall be deemed to have unconditionally and
irrevocably purchased a pro rata risk participation from Bank of
America Illinois in such Swing Line Lender's Swing Loans, without
recourse or warranty in an amount equal to such Lender's Working
Capital Percentage of such Swing Loans. In addition, from and
after the date that any Lender funds such participation, such
Lender shall, to the extent of its Percentage, be entitled to
receive a ratable portion of any payment of principal and
interest received by the Swing Line Lender on account of such
Swing Loans, payable promptly to such Lender upon such receipt.
(g) The Swing Line Lender may at any time during the
continuance of an Event of Default, without the consent of the
Borrower, upon one Business Day's notice to the Borrower
terminate the Swing Line and cause Working Capital Loans to be
made by the Lenders in an aggregate amount equal to the amount of
principal and interest outstanding under the Swing Line, and the
conditions precedent set forth in SECTION 2.3 and SECTION 6.2
shall not apply to such Working Capital Loans. The proceeds of
such Working Capital Loans shall be paid to the Swing Line Lender
to retire the outstanding principal and interest under the Swing
Line.
(h) The Swing Line Lender shall not, without the approval
of all Lenders, make a Swing Loan if the Swing Line Lender then
has actual knowledge that a Default has occurred and is
continuing.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1 REPAYMENTS AND PREPAYMENTS. The Borrower shall
repay in full the unpaid principal amount of each Loan upon the Stated
Maturity Date applicable to such Loan. Prior thereto, the Borrower
(a) may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the outstanding
principal amount of any Loans; PROVIDED, HOWEVER, that
(i) any such prepayment shall be made PRO RATA among
Loans of the same type and, if applicable, having the same
Interest Period of all Lenders;
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(ii) all such voluntary prepayments of Eurodollar Rate
Loans, and all Acquisition Loans that shall be subsequent to
the Acquisition Loan Conversion Date, shall require at least
three but no more than five Business Days' prior written
notice to the Agent and all such voluntary prepayments of
Base Rate Loans, that are not Acquisition Loans subsequent
to the Acquisition Loan Conversion Date, shall require prior
written notice to the Agent at least by 1:00 p.m. at least
one Business Day prior to such repayment but no more than
five Business Days prior to such repayment;
(iii) all such voluntary prepayments of Eurodollar
Rate Loans or Acquisition Loans shall be made in a minimum
amount of $3,000,000 and an integral multiple of $100,000,
or in the whole outstanding principal amount of such Loans,
and all such voluntary prepayments of Working Capital Loans
maintained as Base Rate Loans shall be made in a minimum
amount of $1,000,000 and an integral multiple of $100,000,
or in the whole outstanding principal amount of such Loan;
and
(b) shall, on each date when any reduction in the
applicable Commitment Amount shall become effective, including
pursuant to SECTION 2.2, make a mandatory prepayment of all
applicable Loans equal to the excess, if any, of the aggregate
outstanding principal amount of all applicable Loans over the
applicable Commitment Amount as so reduced;
(c) shall, subject to the provisions of SECTION 8.2.8(b),
within five Business Days after receipt by the Borrower or any
Subsidiary of the net proceeds of any Asset Dispositions (or if
committed to be expended within 365 days, after such 365 days if
not so expended), make a mandatory prepayment of the Loans, the
Private Placement Debt and the Parity Debt pro rata in an amount
equal to the net proceeds of such Asset Disposition not so
expended;
(d) shall, within five Business Days of receipt, apply 100%
of the net proceeds of insurance and condemnation awards after
payment of costs and expense and associated taxes (not applied to
the restoration or replacement of like kind assets within 365
days) over an aggregate of $2,500,000 in any Fiscal Year to
prepay the Loans, and if required by the express terms thereof
the Private Placement Debt and the Parity Debt pro rata (taking
into account any premiums that may be due);
(e) shall, immediately upon any acceleration of the Stated
Maturity Date of any Loans pursuant to SECTION 9.2 or
SECTION 9.3, repay all Loans; and
(f) shall, on each Quarterly Payment Date immediately
following the Acquisition Loan Conversion Date, make a scheduled
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repayment of the aggregate principal amount, if any, of all
Acquisition Loans equal to 1/16 of the principal amount of the
Acquisition Loans outstanding on the Acquisition Loan Conversion
Date, with final payment of any remaining Acquisition Loan due on
the Acquisition Loan Stated Maturity Date. No prepayment of any
Acquisition Loan pursuant to this paragraph shall cause an
increase in the Acquisition Loan Commitment Amount.
Subsequent to the Acquisition Loan Conversion Date each voluntary
prepayment of Acquisition Loans made pursuant to CLAUSE (a) and each
mandatory prepayment of Acquisition Loans made pursuant to CLAUSE (b),
(c), (d) and (e) shall be applied, to the extent of such prepayment,
to the scheduled repayments of the Acquisition Loans installments pro
rata. Mandatory prepayment shall be applied first to the Acquisition
Loans, then the Working Capital Loans, then to the payment of the then
outstanding Swing Loans and then to the outstanding aggregate amount
of all Letter of Credit Outstandings, such mandatory prepayment that
is applied to the Letters of Credit Outstanding to be held as cash
collateral therefor pursuant to the terms of SECTION 4.7 hereof. Each
prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by SECTION 5.4. No
voluntary prepayment of principal of any Working Capital Loan or
Acquisition Loan, prior to the applicable Loan Commitment Termination
Date, shall cause a reduction in the Loan Commitment Amount.
SECTION 3.1.1 STATED MATURITY DATE AND LOAN COMMITMENT
TERMINATION DATE. (a) On the Stated Maturity Date, the Working
Capital Loans shall become due and payable. Each Lender shall be
relieved of its obligations to make any Working Capital Loans on the
Working Capital Loan Commitment Termination Date. The Borrower may
from time to time request an extension of the Working Capital Loan
Commitment Termination Date for an additional one-year period by
executing and delivering to the Agent a Commitment Termination Date
Extension Request at least sixty but not more than ninety days prior
to the then scheduled Working Capital Loan Commitment Termination
Date. The Working Capital Loan Commitment Termination Date and the
Stated Maturity Date with respect to Working Capital Loans shall be so
extended if the Agent shall have received from each Lender on or prior
to the thirtieth day preceding the then scheduled Working Capital Loan
Commitment Termination Date a duly executed counterpart of such
Commitment Termination Date Extension Request. Each Lender may in its
sole and absolute discretion withhold its consent to any such
Commitment Termination Date Extension Request.
(b) Notwithstanding the foregoing, if the Agent shall have
received duly executed counterparts of a Commitment Termination Date
Extension Request from Lenders representing, in the aggregate, 85% or
more of the Working Capital Loan Commitments, but less than 100% of
the Working Capital Loan Commitments, on or prior to the thirtieth day
preceding the then scheduled Working Capital Commitment Termination
Date, the Agent shall so notify (the date of such notice being the
"NOTICE DATE") the Borrower and the Borrower shall have the right to
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seek a substitute lender or lenders (the "NEW LENDERS") which New
Lenders would meet the requirements to be Assignee Lenders as defined
in SECTION 11.11.1, acceptable to the Agent and the Borrower (which
may be one or more of the Lenders) to replace the Lender or Lenders
which have not delivered a counterpart of such Commitment Termination
Date Extension Request by such time; PROVIDED that such New Lenders
shall replace such nonrenewing Lenders on all such nonrenewing
Lenders' Working Capital Loan Commitments, Working Capital Loans and
participation in Letter of Credit Outstandings, so the pro rata share
of any New Lender of the Acquisition Loan Commitments, Working Capital
Loan Commitments, and Letter of Credit Outstandings shall be the same.
If any Working Capital Loan Commitment Termination Date shall not have
been extended pursuant to CLAUSE (a) above, the Borrower shall elect,
by delivering to the Agent at least four Business Days prior to the
then scheduled Working Capital Loan Commitment Termination Date a
written notice of election, either (i) not to extend such Working
Capital Loan Commitment Termination Date, in which case such Working
Capital Loan Commitment Termination Date shall not be so extended for
any Lender irrespective of whether such Lender has or has not sent its
duly executed counterpart of the Commitment Termination Date Extension
Request or (ii) if the aggregate Working Capital Loan Commitments of
the Lenders who have delivered duly executed counterparts of a
Commitment Termination Date Extension Request represent at least 85%
of the Working Capital Loan Commitments, to extend such current
Working Capital Loan Commitment Termination Date, in which case (x)
the Working Capital Loan Commitment Termination Date and the Stated
Maturity Date with respect to Working Capital Loans shall be extended
for an additional period of one year from the then scheduled Working
Capital Loan Commitment Termination Date, and (y) the Working Capital
Loan Commitments shall be reduced on the then scheduled Working
Capital Loan Commitment Termination Date to an amount equal to the
aggregate of the Working Capital Loan Commitments of the Lenders who
had delivered duly executed counterparts of a Commitment Termination
Date Extension Request on or prior to the thirtieth day preceding the
then scheduled Working Capital Loan Commitment Termination Date, plus
the aggregate Working Capital Loan Commitments of the New Lenders and
(z) the Working Capital Loan Commitments shall be reduced on the then
scheduled Working Capital Loan Commitment Termination Date to an
amount equal to (1) the aggregate of the Working Capital Loan
Commitments of the Lenders who have delivered executed counterparts of
a Commitment Termination Date Extension Request on or prior to the
thirtieth day preceding the then scheduled Working Capital Loan
Commitment Termination Date plus (2) the aggregate Commitments of the
New Lenders, and the Borrower shall pay (such payment to be made on
such Working Capital Loan Commitment Termination Date) in full all
Working Capital Loans and Acquisition Loans plus all accrued interest
and fees (including any amounts owed under SECTION 5.4) owing to each
such non-renewing Lender and each such non-renewing Lender (to the
extent that such Loans have not been acquired by the New Lenders)
shall no longer have any Working Capital Loan Commitment for purposes
of this Agreement and each other Loan Document. If the Borrower shall
not have delivered such a written notice of election to the Agent on
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or prior to the then scheduled Working Capital Loan Commitment
Termination Date, such Working Capital Loan Termination Date shall not
be extended.
SECTION 3.2 INTEREST PROVISIONS. Interest on the outstanding
principal amount of Loans shall accrue and be payable in accordance
with this SECTION 3.2.
SECTION 3.2.1 RATES. Pursuant to an appropriately delivered
Borrowing Request or Continuation/Conversion Notice, the Borrower may
elect that Loans comprising a Borrowing accrue interest at a rate per
annum:
(a) on that portion maintained from time to time as a Base
Rate Loan, equal to the sum of the Alternate Base Rate from time
to time in effect plus the Applicable Base Rate Margin;
(b) on that portion maintained as a Eurodollar Rate Loan,
during each Interest Period applicable thereto, equal to the sum
of the Eurodollar Rate (Reserve Adjusted) for such Interest
Period plus the Applicable Eurodollar Rate Margin.
The "EURODOLLAR RATE (RESERVE ADJUSTED)" means, relative to any
Loan to be made, continued or maintained as, or converted into, a
Eurodollar Rate Loan for any Interest Period, a rate per annum
(rounded upward, if necessary, to the nearest 1/16 of 1%) determined
pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) 1.00 - Eurodollar Reserve Percentage
The Eurodollar Rate (Reserve Adjusted) for any Interest Period for
Eurodollar Rate Loans will be determined by the Agent on the basis of
the Eurodollar Reserve Percentage in effect on, and the applicable
rates furnished to and received by the Agent from the Reference
Lender, two Business Days before the first day of such Interest
Period.
"EURODOLLAR RATE" means, relative to any Interest Period for
Eurodollar Rate Loans, the rate of interest per annum determined by
the Agent at which Dollar deposits are offered (i) by BofA's Grand
Cayman Branch, Grand Cayman B.W.I. (or such other office as may be
designated by BofA for such purpose), or (ii) in the event BofA is not
the Reference Lender, the office as may be designated by the Reference
Lender for such purpose, in each case, to major banks in the offshore
dollar market at their request at approximately 10:00 a.m. Chicago
time two Business Days prior to the commencement of such Interest
Period in an amount approximately equal to the amount of the Reference
Lender's Eurodollar Rate Loan and for a period approximately equal to
such Interest Period.
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"EUROCURRENCY RESERVE PERCENTAGE" means, relative to any Interest
Period for Eurodollar Rate Loans, the reserve percentage (expressed as
a decimal) equal to the maximum aggregate reserve requirements
(including all basic, emergency, supplemental, marginal and other
reserves and taking into account any transitional adjustments or other
scheduled changes in reserve requirements) specified under regulations
issued from time to time by the F.R.S. Board and then applicable to
assets or liabilities consisting of and including "Eurocurrency
Liabilities", as currently defined in Regulation D of the F.R.S.
Board, having a term approximately equal or comparable to such
Interest Period.
All Eurodollar Rate Loans shall bear interest from and including
the first day of the applicable Interest Period to (but not including)
the last day of such Interest Period at the rate determined as
applicable to such Eurodollar Rate Loan.
SECTION 3.2.2 POST-MATURITY RATES. After the date any principal
amount of any Loan is due and payable (whether on the Stated Maturity
Date applicable to such Loan, upon acceleration or otherwise), or
after any other monetary Obligation of the Borrower shall have become
due and payable, the Borrower shall pay, but only to the extent
permitted by law, interest (after as well as before judgment) on such
amounts at a rate per annum equal to the Alternate Base Rate plus the
Applicable Base Rate Margin plus 2% per annum.
SECTION 3.2.3 PAYMENT DATES. Interest accrued on each Loan
shall be payable, without duplication:
(a) on the Stated Maturity Date applicable to such Loan;
(b) with respect to any prepayment of a Loan in connection
with a reduction in the applicable Loan Commitment Amount, on the
date of any such prepayment;
(c) with respect to Base Rate Loans, on each Quarterly
Payment Date occurring after the date of the initial Borrowing
hereunder;
(d) with respect to Eurodollar Rate Loans, on the last day
of each applicable Interest Period (and, if such Interest Period
shall exceed three months, on the three month anniversary of such
Interest Period); and
(e) on that portion of any Loans the Stated Maturity Date
of which is accelerated pursuant to SECTION 9.2 or SECTION 9.3,
immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under
this Agreement or any other Loan Document after the date such amount
is due and payable (whether on the applicable Stated Maturity Date,
upon acceleration or otherwise) shall be payable upon demand.
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SECTION 3.3 FEES. The Borrower agrees to pay the fees set
forth in this SECTION 3.3. All such fees shall be non-refundable.
SECTION 3.3.1 FACILITY FEE. The Borrower agrees to pay to the
Agent for the account of each Lender, for the period (including any
portion thereof when any of its Commitments are suspended by reason of
the Borrower's inability to satisfy any condition of ARTICLE VI)
commencing on the Effective Date and continuing through the applicable
Loan Commitment Termination Date, a facility fee at the rate as
established on the Pricing Grid per annum on such Lender's applicable
Percentage of the applicable Commitment Amount on the date hereof.
Such facility fees shall be payable by the Borrower in arrears on each
Quarterly Payment Date, commencing with the first such day following
the Effective Date, and on the applicable Loan Commitment Termination
Date.
SECTION 3.3.2 LETTER OF CREDIT FACE AMOUNT FEE. The Borrower
agrees to pay to the Agent, for the account of the Lenders, a fee for
each Letter of Credit for the period from and including the date of
the issuance of such Letter of Credit to (but not including) the date
upon which such Letter of Credit expires, equal to the product of the
Applicable Eurodollar Rate Margin per annum times the face amount of
such Letter of Credit. Such fee shall be payable by the Borrower in
arrears each Quarterly Payment Date, and on the Working Capital Loan
Commitment Termination Date for any period then ending for which such
fee shall not theretofore have been paid, commencing on the first such
date after the issuance of such Letter of Credit.
SECTION 3.3.3 LETTER OF CREDIT ISSUING FEE. The Borrower agrees
to pay to the Issuer for its own account, an issuing fee for each
Letter of Credit of 1/8 of 1% of the face amount of such Letter of
Credit. Such fee shall be payable by the Borrower upon issuance of
such Letter of Credit.
SECTION 3.3.4 ADDITIONAL FEE. The Borrower agrees to pay to
BofA those fees specified in the letter agreement dated November 19,
1996 between the Borrower and BofA at the times specified in such
letter agreement.
ARTICLE IV
LETTERS OF CREDIT
SECTION 4.1 ISSUANCE REQUESTS. By delivering to the Agent and
the applicable Issuer an Issuance Request, either by facsimile, by
mail or electronically, on or before 11:00 a.m., Chicago time, the
Borrower may request, from time to time prior to the Working Capital
Loan Commitment Termination Date and on not less than one nor more
than five Business Days' notice, that such Issuer issue an irrevocable
standby letter of credit in such form as may be requested by the
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Borrower and approved by such Issuer (each a "LETTER OF CREDIT"), in
support of obligations of the Borrower or any Restricted Subsidiary
incurred in the ordinary course of business of the Borrower or its
Restricted Subsidiaries and which are described in such Issuance
Request. Upon receipt of an Issuance Request, the Agent shall
promptly notify the Lenders thereof. Each Letter of Credit shall by
its terms:
(a) be issued in a Stated Amount which
(i) is at least $250,000; and
(ii) does not exceed (or would not exceed) the then
Letter of Credit Availability;
(b) be stated to expire on a date (its "STATED EXPIRY
DATE") no later than the earlier of fifteen months from its date
of issuance and the Working Capital Loan Commitment Termination
Date; and
(c) on or prior to its Stated Expiry Date
(i) terminate immediately upon notice to the Issuer
thereof from the beneficiary thereunder that all obligations
covered thereby have been terminated, paid, or otherwise
satisfied in full, or
(ii) reduce in part immediately and to the extent the
beneficiary thereunder has notified the Issuer thereof that
the obligations covered thereby have been paid or otherwise
satisfied in part.
So long as no Default has occurred and is continuing, by delivery to
the applicable Issuer and the Agent of an Issuance Request at least
three but not more than five Business Days prior to the Stated Expiry
Date of any Letter of Credit, the Borrower may request such Issuer to
extend the Stated Expiry Date of such Letter of Credit for an
additional period not to exceed the earlier of fifteen months from its
date of extension and the Working Capital Loan Commitment Termination
Date.
SECTION 4.2 ISSUANCES AND EXTENSIONS. On the terms and
subject to the conditions of this Agreement (including ARTICLE VI),
the Issuer shall issue Letters of Credit, and extend the Stated Expiry
Dates of outstanding Letters of Credit, in accordance with the
Issuance Requests made therefor. Each Issuer will make available the
original of each Letter of Credit which it issues in accordance with
the Issuance Request therefor to the beneficiary thereof and will
notify the beneficiary under any Letter of Credit of any extension of
the Stated Expiry Date thereof. In the event of a conflict between
the provisions of an Issuance Request and this Agreement, this
Agreement will govern.
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SECTION 4.3 EXPENSES. The Borrower agrees to pay to the
Issuer for the account of the applicable Issuer(s) all administrative
expenses of such Issuer(s) in connection with the issuance,
maintenance, modification (if any) and administration of each Letter
of Credit issued by such Issuer(s) upon demand from time to time.
SECTION 4.4 OTHER LENDERS' PARTICIPATION. Each Letter of
Credit issued pursuant to SECTION 4.2 shall, effective upon its
issuance and without further action, be issued on behalf of all
Lenders (including the Issuer thereof) PRO RATA according to their
respective Working Capital Percentages. Each Lender shall, to the
extent of its Percentage, be deemed irrevocably to have participated
in the issuance of such Letter of Credit and shall be responsible to
reimburse promptly the Issuer thereof for Reimbursement Obligations
which have not been reimbursed by the Borrower in accordance with
SECTION 4.5, or which have been reimbursed by the Borrower but must be
returned, restored or disgorged by such Issuer for any reason, and
each Lender shall, to the extent of its Working Capital Percentage, be
entitled to receive from the Agent a ratable portion of the letter of
credit fees received by the Agent pursuant to SECTION 3.3.2, with
respect to each Letter of Credit. In the event that the Borrower
shall fail to reimburse any Issuer, or if for any reason Working
Capital Loans shall not be made to fund any Reimbursement Obligation,
all as provided in SECTION 4.5 and in an amount equal to the amount of
any drawing honored by such Issuer under a Letter of Credit issued by
it, or in the event such Issuer must for any reason return or disgorge
such reimbursement, such Issuer shall promptly notify each Lender of
the unreimbursed amount of such drawing and of such Lender's
respective participation therein. Each Lender shall make available to
such Issuer, whether or not any Default shall have occurred and be
continuing, an amount equal to its respective participation in
immediately available funds at the office of such Issuer specified in
such notice not later than 10:00 a.m., Chicago time, on the Business
Day (under the laws of the jurisdiction of such Issuer) after the date
notified by such Issuer. In the event that any Lender fails to make
available to such Issuer the amount of such Lender's participation in
such Letter of Credit as provided herein, such Issuer shall be
entitled to recover such amount on demand from such Lender together
with interest at the daily average Federal Funds Rate for three
Business Days (together with such other compensatory amounts as may be
required to be paid by such Lender to the Agent pursuant to the Rules
for Interbank Compensation of the council on International Banking or
the Clearinghouse Compensation Committee, as the case may be, as in
effect from time to time) and thereafter at the Alternate Base Rate
plus the Applicable Base Rate Margin plus 2%. Nothing in this Section
shall be deemed to prejudice the right of any Lender to recover from
any Issuer any amounts made available by such Lender to such Issuer
pursuant to this Section in the event that it is determined by a court
of competent jurisdiction that the payment with respect to a Letter of
Credit by such Issuer in respect of which payment was made by such
Lender constituted gross negligence or wilful misconduct on the part
of such Issuer. Each Issuer shall distribute to each other Lender
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which has paid all amounts payable by it under this Section with
respect to any Letter of Credit issued by such Issuer such other
Lender's Percentage of all payments received by such Issuer from the
Borrower in reimbursement of drawings honored by such Issuer under
such Letter of Credit when such payments are received.
SECTION 4.5 DISBURSEMENTS. Each Issuer will notify the
Borrower and the Agent promptly of the presentment for payment of any
Letter of Credit, together with notice of the date (a "DISBURSEMENT
DATE") such payment shall be made. Subject to the terms and
provisions of such Letter of Credit, the applicable Issuer shall make
such payment to the beneficiary (or its designee) of such Letter of
Credit. Prior to 12:00 noon, Chicago time, on the Disbursement Date,
the Borrower will reimburse the applicable Issuer for all amounts
which the Issuer has notified the Borrower that it has disbursed under
the Letter of Credit. To the extent the applicable Issuer is not
reimbursed in full in accordance with the third sentence of this
Section, the Borrower's Reimbursement Obligation shall accrue interest
at a fluctuating rate determined by reference to the Alternate Base
Rate, plus the Applicable Base Rate Margin plus 2% per annum, payable
on demand. In the event the applicable Issuer is not reimbursed by
the Borrower on the Disbursement Date, or if such Issuer must for any
reason return or disgorge such reimbursement, the Lenders (including
such Issuer) shall, on the terms and subject to the conditions of this
Agreement, fund the Reimbursement Obligation therefor by making, on
the next Business Day, Working Capital Loans which are Base Rate Loans
as provided in SECTION 3.2.1 (the Borrower being deemed to have given
a timely Borrowing Request therefor for such amount); PROVIDED,
HOWEVER, for the purpose of determining the availability of the
Commitments to make Working Capital Loans immediately prior to giving
effect to the application of the proceeds of such Working Capital
Loans, such Reimbursement Obligation shall be deemed not to be
outstanding at such time.
SECTION 4.6 REIMBURSEMENT. The Borrower's obligation (a
"REIMBURSEMENT OBLIGATION") under SECTION 4.5 to reimburse an Issuer
with respect to each disbursement (including interest thereon), and
each Lender's obligation to make participation payments in each
drawing which has not been reimbursed by the Borrower, shall be
absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim, or defense to payment which
the Borrower may have or have had against any Lender or any
beneficiary of a Letter of Credit, including any defense based upon
the occurrence of any Default, any draft, demand or certificate or
other document presented under a Letter of Credit proving to be
forged, fraudulent, invalid or insufficient, the failure of any
disbursement to conform to the terms of the applicable Letter of
Credit (if, in the applicable Issuer's good faith opinion, such
disbursement is determined to be appropriate) or any non-application
or misapplication by the beneficiary of the proceeds of such
disbursement, or the legality, validity, form, regularity, or
enforceability of such Letter of Credit; PROVIDED, HOWEVER, that
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nothing herein shall adversely affect the right of the Borrower to
commence any proceeding against the applicable Issuer for any wrongful
disbursement made by such Issuer under a Letter of Credit as a result
of acts or omissions constituting gross negligence or wilful
misconduct on the part of such Issuer.
SECTION 4.7 DEEMED DISBURSEMENTS. Upon the occurrence and
during the continuation of any Event of Default or the occurrence of
the Working Capital Loan Commitment Termination Date, an amount equal
to that portion of Letter of Credit Outstandings attributable to
outstanding and undrawn Letters of Credit (or in the event of a
mandatory prepayment of a Letter of Credit pursuant to SECTION 3.1, an
amount equal to such mandatory prepayment) shall, at the election of
the applicable Issuer acting on instructions from the Required
Lenders, and without demand upon or notice to the Borrower, be deemed
to have been paid or disbursed by such Issuer under such Letters of
Credit (notwithstanding that such amount may not in fact have been so
paid or disbursed), and, upon notification by such Issuer to the Agent
and the Borrower of its obligations under this Section, the Borrower
shall be immediately obligated to reimburse the Agent on behalf of
such Issuer the amount deemed to have been so paid or disbursed by
such Issuer. Any amounts so received by the Agent on behalf of such
Issuer from the Borrower pursuant to this Section shall be held as
collateral security for the repayment of the Borrower's obligations in
connection with the Letters of Credit issued by such Issuer. At any
time when such Letters of Credit shall terminate and all Obligations
of each Issuer are either terminated or paid or reimbursed to such
Issuer in full, the Obligations of the Borrower under this Section
shall be reduced accordingly (subject, however, to reinstatement in
the event any payment in respect of such Letters of Credit is
recovered in any manner from such Issuer), and the Agent will return
to the Borrower the excess, if any, of
(a) the aggregate amount deposited by the Borrower with
such Issuer and not theretofore applied by such Issuer to any
Reimbursement Obligation
OVER
(b) the aggregate amount of all Reimbursement Obligations
to such Issuer pursuant to this Section, as so adjusted.
At such time when all Events of Default shall have been cured or
waived, the Agent shall return to the Borrower all amounts then on
deposit (other than amounts attributable to a mandatory prepayment)
with the Agent pursuant to this Section. All amounts on deposit
pursuant to this Section shall, until their application to any
Reimbursement Obligation or their return to the Borrower, as the case
may be, bear interest at the daily average Federal Funds Rate from
time to time in effect (net of the costs of any reserve requirements,
in respect of amounts on deposit pursuant to this Section, pursuant to
F.R.S. Board Regulation D), which interest shall be held by the Agent
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for the account of the applicable Issuer as additional collateral
security for the repayment of the Borrower's Obligations in connection
with the Letters of Credit issued by such Issuer.
SECTION 4.8 NATURE OF REIMBURSEMENT OBLIGATIONS. The Borrower
shall assume all risks of the acts, omissions, or misuse of any Letter
of Credit by the beneficiary thereof. Neither any Issuer nor any
Lender (except to the extent of its own gross negligence or wilful
misconduct) shall be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness,
or legal effect of any Letter of Credit or any document submitted
by any party in connection with the application for and issuance
of a Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate,
fraudulent, or forged;
(b) the form, validity, sufficiency, accuracy, genuineness,
or legal effect of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof in whole or in part,
which may prove to be invalid or ineffective for any reason;
(c) failure of the beneficiary to comply fully with
conditions required in order to demand payment under a Letter of
Credit;
(d) errors, omissions, interruptions, or delays in
transmission or delivery of any messages, by mail, cable,
telegraph, telex, or otherwise; or
(e) any loss or delay in the transmission or otherwise of
any document or draft required in order to make a disbursement
under a Letter of Credit or of the proceeds thereof.
None of the foregoing shall affect, impair, or prevent the vesting of
any of the rights or powers granted any Issuer or any Lender
hereunder. In furtherance and extension, and not in limitation or
derogation, of any of the foregoing, any action taken or omitted to be
taken by any Issuer in good faith shall be binding upon the Borrower
and shall not put such Issuer under any resulting liability to the
Borrower.
SECTION 4.9 INCREASED COSTS; INDEMNITY. If by reason of
(a) any change in applicable law, regulation, rule, decree
or regulatory requirement or any change in the interpretation or
application by any judicial or regulatory authority of any law,
regulation, rule, decree or regulatory requirement occurring
after the Effective Date, or
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(b) compliance by any Issuer or any Lender with any
direction, request or requirement made after the Effective Date
(whether or not having the force of law) of any governmental or
monetary authority, including Regulation D of the F.R.S. Board:
(i) any Issuer or any Lender shall be subject to any
tax (other than taxes on net income including franchise
taxes on income and franchises), levy, charge or withholding
of any nature or to any variation thereof or to any penalty
with respect to the maintenance or fulfillment of its
obligations under this ARTICLE IV, whether directly or by
such being imposed on or suffered by such Issuer or any
Lender;
(ii) any reserve, deposit or similar requirement is or
shall be applicable, imposed or modified in respect of any
Letters of Credit issued by any Issuer or participations
therein purchased by any Lender; or
(iii) there shall be imposed on any Issuer or any
Lender any other condition regarding this ARTICLE IV, any
Letter of Credit or any participation therein;
and the result of the foregoing is directly or indirectly to increase
the cost to such Issuer or such Lender of issuing, making or
maintaining any Letter of Credit or of purchasing or maintaining any
participation therein, or to reduce any amount receivable in respect
thereof by such Issuer or such Lender, then and in any such case such
Issuer or such Lender may, at any time after the additional cost is
incurred or the amount received is reduced, notify the Borrower
thereof, and the Borrower shall within five days of receipt of such
notification pay on demand such amounts as such Issuer or Lender may
specify to be necessary to compensate such Issuer or Lender for such
additional cost or reduced receipt, together with interest on such
amount from the date demanded until payment in full thereof at a rate
equal at all times to the Alternate Base Rate plus the Applicable Base
Margin plus 2% per annum; PROVIDED, HOWEVER, neither the Issuer nor
any Lender may make any demand for any amounts accrued for any period
commencing more than ninety days prior to the date of demand or,
should such cost have accrued retroactively, within ninety days of the
determination of such cost. The determination by such Issuer or
Lender, as the case may be, of any amount due pursuant to this
Section, as set forth in a statement setting forth the calculation
thereof in reasonable detail, shall, in the absence of manifest error,
be final and conclusive and binding on all of the parties hereto. In
addition to amounts payable as elsewhere provided in this ARTICLE IV,
the Borrower hereby agrees to protect, indemnify, pay and save each
Issuer harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees and allocated costs of internal counsel)
which such Issuer may incur or be subject to as a consequence, direct
or indirect, of
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(c) the issuance of the Letters of Credit, other than as a
result of the gross negligence or wilful misconduct of such
Issuer as determined by a court of competent jurisdiction, or
(d) the failure of such Issuer to honor a drawing under any
Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de
facto government or government authority.
ARTICLE V
CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS
SECTION 5.1 EURODOLLAR RATE LENDING UNLAWFUL. If any Lender
shall determine (which determination shall, upon notice thereof to the
Borrower and the Lenders, be conclusive and binding on the Borrower)
that after the Effective Date the introduction of or any change in or
in the interpretation of any law makes it unlawful, or any central
bank or other government authority asserts that it is unlawful, for
such Lender to make, continue or maintain any Loan as, or to convert
any Loan into, a Eurodollar Rate Loan of a certain type, the
obligations of such Lender to make, continue, maintain or convert any
such Loans shall, upon such determination, forthwith be suspended
until such Lender shall notify the Agent that the circumstances
causing such suspension no longer exist, and all Eurodollar Rate Loans
of such type shall automatically convert into Base Rate Loans at the
end of the then current Interest Periods with respect thereto or
sooner, if required by such law or assertion.
SECTION 5.2 DEPOSITS UNAVAILABLE. If the Agent shall have
determined that
(a) Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to the Reference
Lender in the interbank eurodollar market; or
(b) by reason of circumstances affecting the interbank
eurodollar market, adequate means do not exist for ascertaining
the interest rate applicable hereunder to Eurodollar Rate Loans
of such type,
then, upon notice from the Agent to the Borrower and the Lenders, the
obligations of all Lenders under SECTION 2.3 and SECTION 2.4 to make
or continue any Loans as, or to convert any Loans into, Eurodollar
Rate Loans of such type shall forthwith be suspended until the Agent
shall notify the Borrower and the Lenders that the circumstances
causing such suspension no longer exist.
SECTION 5.3 INCREASED EURODOLLAR RATE LOAN COSTS, ETC. The
Borrower agrees to reimburse each Lender for any increase in the cost
to such Lender of, or any reduction in the amount of any sum
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receivable by such Lender in respect of, making, continuing or
maintaining (or of its obligation to make, continue or maintain) any
Loans as, or of converting (or of its obligation to convert) any Loans
into, Eurodollar Rate Loans, in any case from time to time by reason
of:
(a) to the extent not included in the calculation of the
Eurodollar Rate (Reserve Adjusted), any reserve, special deposit,
or similar requirement against assets of, deposits with or for
the account of, or credit extended by such Lender, under or
pursuant to any change in any law, treaty, rule, regulation
(including any F.R.S. Board regulation), or requirement from that
in effect on the Effective Date, or as the result of any
Regulatory Change; or
(b) any Regulatory Change which shall subject such Lender to
any tax (other than taxes on net income including franchise taxes
based on income, and franchises), levy, impost, charge, fee,
duty, deduction, or withholding or any kind whatsoever or change
the taxation of any Loan made or maintained as a Eurodollar Rate
Loan and the interest thereon (other than any change which
affects, and to the extent that it affects, the taxation of net
income including franchise taxes based on income and franchises).
Such Lender shall promptly and in no event later than 90 days after
its knowledge of the occurrence of any such event notify the Agent and
the Borrower in writing of the occurrence of any such event, such
notice to state, in reasonable detail, the reasons therefor and the
additional amount required fully to compensate such Lender for such
increased cost or reduced amount; PROVIDED, HOWEVER, no Lender may
make any demand for any such amounts accrued under this SECTION 5.3
for any period commencing more than ninety days prior to the receipt
by the Borrower of such notice or, should such cost have accrued
retroactively, within ninety days of the determination by such Lender
of such cost. Such additional amounts shall be payable by the
Borrower directly to such Lender within five days of its receipt of
such notice, and such notice shall, in the absence of manifest error,
be conclusive and binding on the Borrower.
SECTION 5.4 FUNDING LOSSES. In the event any Lender shall
incur any loss or expense (including any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to make, continue or maintain any portion of
the principal amount of any Loan as, or to convert any portion of the
principal amount of any Loan into, a Eurodollar Rate Loan) as a result
of
(a) any conversion or repayment or prepayment of the
principal amount of any Eurodollar Rate Loans on a date other
than the scheduled last day of the Interest Period applicable
thereto, whether pursuant to SECTION 3.1 or otherwise;
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(b) any Loans not being made as Eurodollar Rate Loans in
accordance with the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into,
Eurodollar Rate Loans in accordance with the Continuation/Conver-
sion Notice therefor,
then, upon the written notice of such Lender to the Borrower (with a
copy to the Agent), the Borrower shall, within five days of its
receipt thereof, pay directly to such Lender such amount as will (in
the reasonable determination of such Lender) reimburse such Lender for
such loss or expense. Such written notice (which shall include
calculations in reasonable detail) shall, in the absence of manifest
error, be conclusive and binding on the Borrower.
SECTION 5.5 INCREASED CAPITAL COSTS. If after the Effective
Date any change in, or the introduction, adoption, effectiveness,
interpretation, reinterpretation or phase-in of, any law or
regulation, directive, guideline, decision or request (whether or not
having the force of law) of any court, central bank, regulator or
other government authority affects or would affect the amount of
capital required or expected to be maintained by any Lender or any
Person controlling such Lender, and such Lender determines (in its
sole and absolute discretion) that the rate of return on its or such
controlling Person's capital as a consequence of its Commitments or
the Loans made by such Lender is reduced to a level below that which
such Lender or such controlling Person could have achieved but for the
occurrence of any such circumstance, then, in any such case upon
notice from time to time by such Lender to the Borrower, the Borrower
shall within five days of its receipt thereof pay directly to such
Lender additional amounts sufficient to compensate such Lender or such
controlling Person for such reduction in rate of return. Such Lender
shall promptly and in no event later than ninety days after its
knowledge of any such event notify the Agent and the Borrower of the
occurrence of any such event; PROVIDED, HOWEVER, no Lenders may make
any demand for any such amounts accrued under this SECTION 5.5 for any
period commencing more than ninety days prior to the receipt by the
Borrower of any such notice or, should such cost have accrued
retroactively, within ninety days of the determination by such Lender
of such cost. A statement of such Lender as to any such additional
amount or amounts (including calculations thereof in reasonable
detail) shall, in the absence of manifest error, be conclusive and
binding on the Borrower. In determining such amount, such Lender may
use any reasonable method of averaging and attribution that it (in its
sole and absolute discretion) shall deem applicable.
SECTION 5.6 TAXES. Without duplication of any payments made
under any other provisions of this Article V, all payments by the
Borrower of principal of, and interest on, the Loans and all other
amounts payable hereunder shall be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise
taxes and other taxes, fees, duties, withholdings or other charges of
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any nature whatsoever imposed by any taxing authority, but excluding
franchise taxes and taxes imposed on or measured by any Lender's net
income (including franchise taxes based upon income) or receipts (such
non-excluded items being called "TAXES"). In the event that any
withholding or deduction from any payment to be made by the Borrower
hereunder is required in respect of any Taxes pursuant to any
applicable law, rule or regulation, then the Borrower will
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or
other documentation satisfactory to the Agent evidencing such
payment to such authority; and
(c) pay to the Agent for the account of the Lenders such
additional amount or amounts as is necessary to ensure that the
net amount actually received by each Lender will equal the full
amount such Lender would have received had no such withholding or
deduction been required; PROVIDED that each Lender shall promptly
and in no event later than 90 days after its knowledge that any
amount is payable under this CLAUSE (c) notify the Agent and the
Borrower of the same;
PROVIDED, HOWEVER, no Lender may make any demand for any such amounts
accrued under this SECTION 5.6 for any period commencing more than
ninety days prior to the receipt by the Borrower of any such notice
or, should such cost have accrued retroactively, within ninety days of
the determination by such Lender of such cost.
Moreover, if any Taxes are directly asserted against the Agent or
any Lender with respect to any payment received by the Agent or such
Lender hereunder, the Agent or such Lender may pay such Taxes and the
Borrower will promptly pay such additional amounts (including any
penalties, interest or expenses) as is necessary in order that the net
amount received by such person after the payment of such Taxes
(including any Taxes on such additional amount) shall equal the amount
such person would have received had not such Taxes been asserted.
If the Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Agent, for the
account of the respective Lenders, the required receipts or other
required documentary evidence, the Borrower shall indemnify the
Lenders for any incremental Taxes, interest or penalties that may
become payable by any Lender as a result of any such failure. For
purposes of this SECTION 5.6, a distribution hereunder by the Agent or
any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower.
Each Lender that is organized under the laws of a jurisdiction
other than the United States shall, prior to the due date of any
payments under the Notes, (i) execute and deliver to the Borrower and
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the Agent, on or about the first scheduled payment date in each Fiscal
Year, one or more (as the Borrower or the Agent may reasonably
request) United States Internal Revenue Service Forms 4224 or Forms
1001 or such other forms or documents (or successor forms or
documents), appropriately completed, as may be applicable to establish
the extent, if any, to which a payment to such Lender is exempt from
withholding or deduction of Taxes, and (ii) comply with the
requirements of SECTION 10.10, as applicable.
SECTION 5.7 PAYMENTS, COMPUTATIONS, ETC. Unless otherwise
expressly provided, all payments by the Borrower pursuant to this
Agreement, the Notes or any other Loan Document shall be made by the
Borrower to the Agent for the PRO RATA account of the Lenders entitled
to receive such payment. All such payments required to be made to the
Agent shall be made, without setoff, deduction or counterclaim, not
later than 1:00 p.m., Chicago time, on the date due, in immediately
available funds, to such account as the Agent shall specify from time
to time by notice to the Borrower. Funds received after that time
shall be deemed to have been received by the Agent on the next
succeeding Business Day. The Agent shall promptly remit in same day
funds to each Lender its share, if any, of such payments received by
the Agent for the account of such Lender. All interest (other than
interest computed at the Alternate Base Rate) and fees shall be
computed on the basis of the actual number of days (including the
first day but excluding the last day) occurring during the period for
which such interest or fee is payable over a year comprised of 360
days. Interest computed at the Alternate Base Rate shall be computed
on the basis of its actual number of days (including the first day but
excluding the last day) occurring during the period for which such
interest is payable over a year comprised of 365 or 366 days, as the
case may be. Whenever any payment to be made shall otherwise be due
on a day which is not a Business Day, such payment shall (except as
otherwise required by CLAUSE (c) of the definition of the term
"INTEREST PERIOD" with respect to Eurodollar Rate Loans) be made on
the next succeeding Business Day and such extension of time shall be
included in computing interest and fees, if any, in connection with
such payment.
SECTION 5.8 SHARING OF PAYMENTS. If any Lender shall obtain
any payment or other recovery (whether voluntary, involuntary, by
application of setoff or otherwise) on account of any Loan (other than
pursuant to the terms of SECTION 5.3, 5.4 or 5.5) or Letter of Credit
in excess of its PRO RATA share of payments then or therewith obtained
by all Lenders, such Lender shall purchase from the other Lenders such
participations in Loans made by them and/or Letters of Credit as shall
be necessary to cause such purchasing Lender to share the excess
payment or other recovery ratably with each of them; PROVIDED,
HOWEVER, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Lender, the
purchase shall be rescinded and each Lender which has sold a
participation to the purchasing Lender shall repay to the purchasing
Lender the purchase price to the ratable extent of such recovery
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together with an amount equal to such selling Lender's ratable share
(according to the proportion of
(a) the amount of such selling Lender's required repayment
to the purchasing Lender
TO
(b) the total amount so recovered from the purchasing
Lender)
of any interest or other amount paid or payable by the purchasing
Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section may, to the fullest extent permitted
by law, exercise all its rights of payment (including pursuant to
SECTION 5.9) with respect to such participation as fully as if such
Lender were the direct creditor of the Borrower in the amount of such
participation. If under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a
setoff to which this Section applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders entitled under this
Section to share in the benefits of any recovery on such secured
claim.
SECTION 5.9 SETOFF. Each Lender shall, upon the occurrence of
any Default described in CLAUSES (a), (b) and, with respect to the
Borrower and Managing General Partner, (e) of SECTION 9.1.8 or any
other Event of Default, have the right to appropriate and apply to the
payment of the Obligations owing to it (whether or not then due), and
(as security for such Obligations) the Borrower hereby grants to each
Lender a continuing security interest in, any and all balances,
credits, deposits, accounts or moneys of the Borrower then or
thereafter maintained with such Lender; PROVIDED, HOWEVER, that any
such appropriation and application shall be subject to the provisions
of SECTION 5.8. Each Lender agrees promptly to notify the Borrower
and the Agent after any such setoff and application made by such
Lender; PROVIDED, HOWEVER, that the failure to give such notice shall
not affect the validity of such setoff and application. The rights of
each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff under applicable law or
otherwise) which such Lender may have.
SECTION 5.10 USE OF PROCEEDS. The Borrower shall apply the
proceeds of (i) the Working Capital Loans, including letters of
credit, to working capital and other general partnership purposes and
(ii) the Acquisition Loans solely for purposes of financing
acquisitions by the Borrower and to finance capital expenditures
related to existing properties or future acquired businesses of the
Borrower; without limiting the foregoing, no proceeds of any Loan will
be used to acquire any equity security of a class which is registered
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pursuant to Section 12 of the Securities Exchange Act of 1934 or any
"margin stock", as defined in F.R.S. Board Regulation U.
SECTION 5.11 RECOURSE. The Obligations of the Borrower to the
Agent and the Lenders will be secured and rank pari passu with the
Private Placement Debt and Parity Debt. All of the accounts
receivable, inventory, customer storage tanks (except tanks financed
pursuant to clause (e), (f) and (g) in SECTION 8.2.2) of the Borrower
and the Restricted Subsidiaries (other than Cornerstone Sales &
Service Corporation) and all stock of all Restricted Subsidiaries now
or hereafter acquired by the Borrower (all such accounts receivables,
inventory, customer tanks and stock being called the ("General
Collateral")) will be pledged to secure the Obligations, the Private
Placement Debt and the Parity Debt. In the event that the Borrower
obtains or creates any Restricted Subsidiaries (other than Cornerstone
Sales & Service Corporation), each such Restricted Subsidiary must
issue a guarantee of the Obligations, the Private Placement Debt and
the Parity Debt and each such guarantee will be in favor of the
Collateral Agent and secured by a pledge of substantially all of the
assets of a similar nature to the General Collateral of such
guaranteeing Restricted Subsidiary (which together with the General
Collateral may be referred to as the "Collateral").
SECTION 5.12 REPLACEMENT OF LENDERS. In the event any Lender
shall provide notice to the Agent pursuant to SECTION 4.9, 5.3, 5.5 or
5.6 hereunder, the Borrower shall be permitted to replace such Lender,
PROVIDED, HOWEVER, that such Lender's replacement shall agree to all
the obligations and conditions relating to an Assignee Lender
contained in SECTION 11.11.1 hereto. Any such replacement shall be
subject to the Agent's consent which shall not be unreasonably
withheld.
ARTICLE VI
CONDITIONS TO BORROWING
SECTION 6.1 INITIAL BORROWING. The obligations of the Lenders
to fund the initial Borrowing or to issue the initial Letters of
Credit (whichever shall first occur) shall be subject to the prior or
concurrent satisfaction of each of the conditions precedent set forth
in this SECTION 6.1.
SECTION 6.1.1 PARTNERSHIP ACTION. The Agent shall have received
from the Borrower a certificate, dated the date of the initial
Borrowing or issuance of such Letters of Credit, of a Responsible
Officer of the Borrower as to
(a) the form of the Partnership Agreement;
(b) any partnership action necessary for the execution,
delivery and performance of this Agreement, the Notes, the
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Security Agreement and each other Loan Document to be executed on
behalf of the Borrower; and
(c) the incumbency and signatures of those of the officers
authorized to act with respect to this Agreement, the Notes, the
Security Agreement and each other Loan Document executed on
behalf of the Borrower,
upon which certificate each Lender may conclusively rely until it
shall have received a further certificate of a Responsible Officer
canceling or amending such prior certificate.
SECTION 6.1.2 DELIVERY OF NOTES. The Agent shall have received,
for the account of each Lender, the Notes duly executed and delivered
by an Authorized Officer of the Borrower.
SECTION 6.1.3 PRIVATE PLACEMENT DEBT AND PUBLIC PARTNERSHIP
COMMON UNITS. The Borrower shall have issued the Private Placement
Debt on terms acceptable to the Agent and the Public Partnership shall
have completed the Common Units Issuance. The Private Placement Debt
shall have received an investment grade rating from Fitch Investors
Service, Inc.
SECTION 6.1.4 PAYMENT OF OUTSTANDING INDEBTEDNESS, ETC. All
Indebtedness identified in ITEM 8.2.2(a) ("Indebtedness to be Paid on
Effective Date") of the Disclosure Schedule under the heading
"Payments on the Effective Date", together with all interest, all
prepayment premiums and other amounts due and payable with respect
thereto, shall have been paid in full (including, to the extent
necessary, from proceeds of the initial Borrowing); and all Liens
securing payment of any such Indebtedness have been released and the
Agent shall have received all Uniform Commercial Code Form UCC-3
termination statements or other instruments as may be suitable or
appropriate in connection therewith.
SECTION 6.1.5 TRANSFER. The Transfer shall concurrently be
consummated substantially as described in the Registration Statement.
SECTION 6.1.6 WORKING CAPITAL DEBT. Upon consummation of all
the conditions set forth in SECTION 6.1, no more than $15,000,000 of
Working Capital Loans shall be outstanding.
SECTION 6.1.7 INTERCREDITOR AGREEMENT. The Agent shall have
received executed counterparts of the Intercreditor Agreement, dated
as of the date hereof, duly executed by each holder of the Private
Placement Debt.
SECTION 6.1.8 SECURITY AGREEMENT. The Agent shall have received
executed counterparts of the Security Agreement, dated as of the date
hereof, duly executed by the Borrower, together with
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(a) copies of properly executed Uniform Commercial Code
financing statements (Form UCC-1), naming the Borrower as the
debtor and the Collateral Agent as the secured party, or other
similar instruments or documents, to be filed under the Uniform
Commercial Code of all jurisdictions as may be necessary or, in
the opinion of the Agent, desirable to perfect the security
interest of the Collateral Agent pursuant to the Security
Agreement;
(b) executed copies of proper Uniform Commercial Code Form
UCC-3 termination statements, if any, necessary to release all
Liens and other rights of any Person
(i) in any collateral described in the Security
Agreement previously granted by any Person, and
(ii) securing any of the Indebtedness identified in
ITEM 8.2.2(a) ("Indebtedness to be Paid on Effective Date")
of the Disclosure Schedule under the heading "Payments on
the Effective Date",
together with such other Uniform Commercial Code Form UCC-3
termination statements as the Agent may reasonably request from
such Obligors; and
(c) certified copies of Uniform Commercial Code Requests
for Information or Copies (Form UCC-11), or a similar search
report certified by a party acceptable to the Agent, dated a date
reasonably near to the date of the initial Borrowing, listing all
effective financing statements which name the Borrower (under its
present name and any previous names) as the debtor and which are
filed in the jurisdictions in which filings were made pursuant to
CLAUSE (a) above, together with copies of such financing
statements (none of which shall cover any collateral described in
the Security Agreement).
SECTION 6.1.9 PERMITS. All permits, licenses and regulatory
approvals required to continue operations shall have been obtained
except those which the failure to obtain would not have a material
adverse effect on the business or operations of the Borrower.
SECTION 6.1.10 OPINION OF COUNSEL. The Agent shall have received
opinions, dated the date of the initial Borrowing and addressed to the
Agent and all Lenders, from (i) Schiff Hardin & Waite, special counsel
to the Borrower and/or Andrews & Kurth L.L.P., special New York
counsel to the Borrower substantially in the form of Exhibit J-1
hereto and (ii) (A) Balch & Bingham, special Alabama counsel to the
Borrower, (B) Rose Law Firm, special Arkansas counsel to the Borrower,
(C) McCutchen, Doyle, Brown & Enersoon, L.L.P., special California
Counsel to the Borrower, (D) Cobb, Cole & Bell, special Florida
counsel to the Borrower, (E) Greenebaum, Dole & McDonald, special
Kentucky counsel to the Borrower, (F) Mitchell, McNutt, Threadgill,
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Smith & Sams, special Mississippi counsel to the Borrower, (G)
Thompson, Coburn, special Missouri counsel to the Borrower, (H)
Winthrop, Stimson, Putnam & Roberts, special New York counsel to the
Borrower and (I) Bass, Berry & Sims, special Tennessee counsel to the
Borrower each substantially in the form of Exhibit J-2 hereto.
SECTION 6.1.11 CLOSING FEES, EXPENSES, ETC. The Agent shall have
received for its own account, or for the account of each Lender, as
the case may be, all fees, costs and expenses due and payable pursuant
to SECTIONS 3.3 and 11.3, if then invoiced.
SECTION 6.1.12 COMPLIANCE CERTIFICATE. A certificate of the
chief financial Authorized Officer of the Borrower demonstrating
compliance with the covenants contained in SECTION 8.2.4.
SECTION 6.1.13 INSURANCE CERTIFICATE. The Agent shall have
received a certificate of the Managing General Partner stating that
all required insurance policies are in full force and effect.
SECTION 6.1.14 SOLVENCY CERTIFICATE. The chief financial
officer of either the Borrower or the Managing General Partner shall
have delivered to the Agent a solvency certificate dated the Closing
Date, substantially in the form of EXHIBIT M.
SECTION 6.2 ALL BORROWINGS AND ISSUANCES OF LETTERS OF CREDIT.
The obligation of each Lender to fund any Loan on the occasion of any
Borrowing (including the initial Borrowing), the issuance of any
Letters of Credit shall be subject to the satisfaction of each of the
conditions precedent set forth in this SECTION 6.2.
SECTION 6.2.1 COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. Both
before and after giving effect to any Borrowing and the Letter of
Credit (but, if any Default of the nature referred to in SECTION 9.1.4
shall have occurred with respect to any other Indebtedness, without
giving effect to the application, directly or indirectly, of the
proceeds thereof) the following statements shall be true and correct
(a) the representations and warranties set forth in
ARTICLE VII (excluding, however, those contained in SECTION 7.3,
SECTION 7.7 and SECTION 7.8) and the Security Agreement shall be
true and correct with the same effect as if then made (unless
stated to relate solely to an early date, in which case such
representations and warranties shall be true and correct as of
such earlier date);
(b) except as disclosed by the Borrower to the Agent and
the Lenders pursuant to SECTION 7.8
(i) no labor controversy, litigation, arbitration or
governmental investigation or proceeding shall be pending
or, to the knowledge of the Borrower, threatened against the
Borrower or any Subsidiary which is reasonably likely to
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materially adversely affect the Borrower's and Subsidiaries'
consolidated business, operations, assets, revenues, or
properties of the Borrower and its Restricted Subsidiaries
(taken as a whole) or which purports to affect the legality,
validity or enforceability of this Agreement, the Notes, the
Security Agreement or any other Loan Document;
(ii) no development shall have occurred in any labor
controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to
SECTION 7.8 which is reasonably likely to materially
adversely affect the consolidated businesses, operations,
assets, revenues, or properties of the Borrower and its
Restricted Subsidiaries (taken as a whole); and
(iii) since the date of the financial statements
described in SECTION 7.6 and after giving effect to the
Transfer the initial Borrowings hereunder and the issuance
of the Private Placement Debt and the Common Units Issuance,
and for any determination after the delivery of the first
financial statements pursuant to SECTION 8.1.1(b), since the
date of such financial statements (if such financial
statements shall be satisfactory to the Required Lenders),
there has been no material adverse change in the condition
(financial or otherwise), operations, assets or business
properties of the Borrower and Subsidiaries taken as a
whole; and
(c) no Default shall have then occurred and be continuing.
SECTION 6.2.2 BORROWING REQUEST. The Agent shall have received
a Borrowing Request, Issuance Request or request for a Swing Line
pursuant to SECTION 2.7, as the case may be, for such Borrowing or
issuance of such Letter of Credit, as the case may be. Each of the
delivery of a Borrowing Request, Issuance Request or request for a
Swing Line pursuant to SECTION 2.7 and the acceptance by the Borrower
of the proceeds of such Borrowing or the Issuance of the Letter of
Credit, as applicable, shall constitute a representation and warranty
by the Borrower that on the date of such Borrowing (both immediately
before and after giving effect to such Borrowing and the application
of the proceeds thereof) or the Issuance of the Letter of Credit, as
applicable, the statements made in SECTION 6.2.1 are true and correct.
SECTION 6.2.3 SATISFACTORY LEGAL FORM. All documents executed
or submitted pursuant hereto by or on behalf of the Borrower, any
other Obligor or any Subsidiary shall be satisfactory in form and
substance to the Agent and its counsel; the Agent and its counsel
shall have received all information, approvals, opinions, documents or
instruments as the Agent or its counsel may reasonably request.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this
Agreement and to make Loans hereunder, the Borrower represents and
warrants unto the Agent and each Lender as set forth in this
ARTICLE VII.
SECTION 7.1 ORGANIZATION, ETC. (a) The Borrower is a limited
partnership duly organized, validly existing and in good standing
under the Delaware Revised Uniform Limited Partnership Act and has all
requisite partnership power and authority to own and operate its
properties (including, without limitation, the Assets), to conduct its
business as described in the Registration Statement after giving
effect to the Transfer, to enter into this Agreement, the Notes, the
other Loan Documents and the Private Placement Debt to which it is a
party, and to carry out the terms of this Agreement, the Notes, such
other Loan Documents and the Private Placement Debt.
(b) The Managing General Partner is a corporation duly
organized, validly existing and in good standing under the laws of the
State of California and has all requisite corporate power and
authority to own and operate its properties, to conduct its business
as described in the Registration Statement, and to execute and deliver
as a general partner of the Borrower this Agreement, the Notes and the
other Loan Documents to which the Borrower is a party.
(c) Each Restricted Subsidiary is duly organized, validly
existing and in good standing under the laws of the state of its
organization and has all requisite power and authority to own and
operate its properties, to conduct its business as described in the
Registration Statement after giving effect to the Transfer or as
otherwise in compliance with SECTION 8.2.1, and to execute, deliver
and perform the Loan Documents to which it is a party.
(d) The Public Partnership is a limited partnership duly
organized, validly existing and in good standing under the Delaware
Revised Uniform Limited Partnership Act and has all requisite
partnership power and authority to own and operate its properties, to
conduct its business as described in the Registration Statement, and
to execute, deliver and carry out the terms of the Loan Documents to
which it is a party.
SECTION 7.2 PARTNERSHIP INTERESTS. The only general partners
of the Borrower are the General Partners, which at the Closing Date
will own an aggregate 1.0101% general partner interest in the
Borrower. As of the Effective Date the only limited partner of the
Borrower will be the Public Partnership, which will own 98.9899%
limited partner interest in the Borrower acquired as provided in the
Registration Statement. The Borrower will not have any other partners
at the Closing. Except as disclosed in ITEM 7.2 ("Subsidiaries") of
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the Disclosure Schedule, the Borrower does not have, and immediately
after giving effect to the transactions contemplated by the Conveyance
Documents will not have, any Subsidiaries or any Investments in any
Person (other than Investments of the types permitted in SECTION
8.2.5)).
SECTION 7.3 QUALIFICATION. The Borrower is duly qualified or
registered and is in good standing as a foreign limited partnership
for the transaction of business, and each General Partner and each
Restricted Subsidiary is qualified or registered and is in good
standing as a foreign corporation for the transaction of business, in
the jurisdictions set forth in Item 7.3 ("Jurisdictions") of the
Disclosure Schedule which are the only jurisdictions, on the date
hereof, in which, after giving effect to the Transfer, the nature of
their respective activities or the character of the properties they
own, lease or use makes such qualification or registration necessary
and in which the failure so to qualify or to be so registered would
not be reasonably expected to have a materially adverse effect on the
condition (financial or otherwise), operations, assets, business or
properties of the Borrower and its Restricted Subsidiaries taken as a
whole. Each of the General Partners, the Restricted Subsidiaries and
the Borrower has taken all necessary partnership or corporate action
to authorize the execution, delivery and performance by it of this
Agreement, the Notes, and each other Loan Document to which it is a
party. Each of the General Partners, and the Restricted Subsidiaries
has duly executed and delivered each of this Agreement, the Notes and
the other Loan Documents to which it is a party, and each of them
constitutes its legal, valid, binding and enforceable obligation in
accordance with its terms, except that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or
affecting the rights and remedies of creditors and by general
equitable principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
SECTION 7.4 DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The
execution, delivery and performance by the Borrower and each
Restricted Subsidiary of this Agreement, the Notes and each other Loan
Document required to be executed by it hereunder are within the
Borrower's and such Restricted Subsidiary's powers, have been duly
authorized by all necessary action, and do not
(a) contravene the Borrower's or any Subsidiary's Organic
Documents;
(b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or
affecting the Borrower or such Restricted Subsidiary; or
(c) result in, or require the creation or imposition of,
any Lien on any of the Borrower's or such Restricted Subsidiary's
properties, except as contemplated hereby.
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SECTION 7.5 GOVERNMENT APPROVAL, REGULATION, ETC. Except as
set forth in ITEM 7.5 of the Disclosure Schedule, no authorization or
approval or other action, by, and no notice to or filing with, any
government authority or regulatory body or other Person (that has not
been obtained) is required for the due execution, delivery or
performance by the Borrower or any Subsidiary of this Agreement, the
Notes or any other Loan Document to which it is a party, or the
issuance of the Private Placement Debt other than filings relating to
the Common Units Issuance and to perfect Liens. All such required
authorizations and approvals have been obtained and such required
notices and filings have been made. Neither the Borrower nor any
Subsidiary is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company", or
a "subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company",
within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
SECTION 7.6 BUSINESS; FINANCIAL STATEMENTS. (a) The Borrower
has not engaged in any business or activities prior to the date of
this Agreement, except for activities related to its formation,
organization and prospective operations, and will not have any
significant assets or liabilities prior to the Transfer, as
contemplated by this Agreement and the Registration Statement.
(b) The Borrower has delivered to the Agent complete and correct
copies of (i) the Registration Statement, and (ii) a memorandum
prepared by Morgan Stanley & Co. Incorporated and Dean Witter
Reynolds, Inc. for use in connection with the Borrower's private
placement of the Private Placement Debt (the "Memorandum"). The
unaudited PRO FORMA consolidated financial statements of the Public
Partnership set forth in the Registration Statement have been prepared
in all material respects in accordance with the applicable accounting
requirements of Article II of Regulation S-X of the Securities and
Exchange Commission and, in the opinion of the management of the
Managing General Partner and Borrower, the assumptions used in the
preparation of such pro forma financial statements are reasonable and
the pro forma adjustments reflected in such pro forma financial
statements have been properly applied in all material respects to the
historical amounts in the compilation of such pro forma financial
statements. The financial statements and schedules included in the
Registration Statement (other than with respect to pro forma matters)
have been prepared in accordance with GAAP consistently applied
throughout the periods specified, except to the extent disclosed
therein, and present fairly in all material respects the financial
position of the corporation or partnership to which they relate as of
the respective dates specified and the results of their operations and
cash flows for the respective periods specified. Since October 1,
1996 there has been no material adverse change in the business,
financial condition, or results of operations of Empire Energy
Corporation, CGI Holdings, Inc., the General Partners and their
consolidated subsidiaries taken as a whole. The information included
under the caption "Selected Pro Forma Financial and Operating Data" in
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the Registration Statement is accurately presented in all material
respects, on the basis stated in the Registration Statement, and has
been prepared on a basis consistent with the unaudited pro forma
financial statements and the audited and unaudited historical
consolidated financial statements included in the Registration
Statement from which it has been derived.
(c) The unaudited pro forma balance sheets of the Public
Partnership as of September 30, 1996 present fairly the financial
position of the Public Partnership as of that date. The financial
data for the Public Partnership in the Memorandum present fairly in
all material respects, on the basis stated in the Memorandum, the
information set forth therein and has been prepared based on the
audited financial statements included in the Registration Statement
from which it has been derived. Item 7.6(c) specifies information in
the Registration Statement that modifies and updates information
previously contained in the Memorandum. Modifications of a non-
material nature are not reflected in Item 7.6(c). Except as otherwise
provided on Item 7.6(c), the pro forma financial data included in the
Memorandum represent, in all material respects and on the basis stated
in the Memorandum, the Managing General Partner's best estimate at
such time with respect to pro forma financial information; and the
assumptions used in the preparation of such pro forma financial
statements are reasonable and the pro forma adjustments reflected in
such pro forma financial statements have been properly applied in all
material respects to the historical amounts in the compilation of such
pro forma financial statements.
(d) The financial projections provided on or prior to the
Closing Date were prepared in a manner consistent with the financial
statements provided in the Registration Statement and have been
prepared on a consistent basis throughout the periods specified. Such
financial projections are based on management's best estimates of
future performance in accordance with reasonable assumptions based on
historical performance. Such projections are not a guarantee of
future performance.
SECTION 7.7 NO MATERIAL ADVERSE CHANGE. Since the date of the
financial statements described in SECTION 7.6 and after giving effect
to the Transfer, the initial Borrowings hereunder and the issuance of
the Private Placement Debt and the Common Units Issuance or, for any
determination after the delivery of the first financial statements
pursuant to SECTION 8.1.1(b), since the date of such financial
statements (if such financial statements shall be satisfactory to the
Required Lenders), there has been no material adverse change in the
condition (financial or otherwise), operations, assets or business
properties of the Borrower and the Restricted Subsidiaries taken as a
whole.
SECTION 7.8 LITIGATION, LABOR CONTROVERSIES, ETC. There is no
pending or, to the knowledge of the Borrower or any Subsidiary,
threatened litigation, action, proceeding, or labor controversy
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affecting the Borrower or any Subsidiary, or any of their respective
properties, businesses, assets or revenues, which has, or is
reasonably likely to have, a material adverse effect on the condition
(financial or otherwise), operations, assets, business or properties
of the Borrower and its Restricted Subsidiaries taken as a whole or
which purports to affect the legality, validity or enforceability of
this Agreement, the Notes or any other Loan Document, except as
disclosed in ITEM 7.8 ("Litigation") of the Disclosure Schedule.
SECTION 7.9 OWNERSHIP OF PROPERTIES. The Borrower and each
Restricted Subsidiary have (i) title to all of its assets constituting
real property owned in fee simple, (ii) good and valid leasehold
interests in its assets constituting leased real property, pursuant to
which it enjoys undisturbed possession thereof, except for defects in,
or lack of recorded title and exceptions to, leasehold interests would
not, in the aggregate, be reasonably expected to have a material
adverse effect on the condition (financial or otherwise), operations,
assets or business of the Borrower and its Restricted Subsidiaries
(taken as a whole), and (iii) sufficient title to the portion of its
assets constituting personal property (including patents, trademarks,
trade names, service marks, copyrights and other intellectual property
rights) reasonably necessary for the use and operation of such
personal property as it has been used in the past and as it is
proposed to be used, in each case subject to no Liens except as
permitted pursuant to Section 8.2.3.
SECTION 7.10 TAXES. The Borrower and each Subsidiary, and any
predecessor entity thereto, has filed all tax returns and reports
required by law to have been filed by it and has paid all taxes and
governmental charges thereby shown to be owing, except (a) any such
taxes or charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books, and (b) where the
failure to do so would not reasonably be expected to have a material
adverse effect on the condition (financial or otherwise) operations,
assets, business or properties of the Borrower and its Subsidiaries
taken as a whole.
SECTION 7.11 PENSION AND WELFARE PLANS. During the twelve-
consecutive-month period prior to the date of the execution and
delivery of this Agreement and prior to the date of any Borrowing
hereunder, no steps have been taken to terminate any Pension Plan, and
no contribution failure has occurred with respect to any Pension Plan
sufficient to give rise to a Lien under section 302(f) of ERISA. No
condition exists or event or transaction has occurred with respect to
any Pension Plan which has, or is reasonably likely to have, a
material adverse effect on the condition (financial or otherwise),
operations, assets or business of the Borrower and the Restricted
Subsidiaries taken as a whole. Except as disclosed in ITEM 7.11
("Employee Benefit Plans") of the Disclosure Schedule, no Borrower nor
any member of the Controlled Group has any contingent liability with
respect to any post-retirement benefit under a Welfare Plan, other
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than liability for continuation coverage described in Part 6 of Title
I of ERISA.
SECTION 7.12 ENVIRONMENTAL WARRANTIES. Except as set forth in
ITEM 7.12 ("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying
groundwater) owned, leased, used, occupied or controlled (in
whole or in part) by the Borrower or any Subsidiary have been,
and continue to be, owned, leased, used, occupied or controlled
by the Borrower or such Subsidiary in compliance with all
Environmental Laws except where the failure of any of the
foregoing to be done could not reasonably be expected to have a
material adverse effect on the condition (financial or
otherwise), operations, assets, business or properties of the
Borrower and its Restricted Subsidiaries taken as a whole;
(b) to the Borrower's and each Subsidiary's knowledge,
there have been no past, and there are no pending or threatened
(i) claims, complaints, notices or requests for
information received by the Borrower or any Subsidiary with
respect to any alleged violation of any Environmental Law,
or
(ii) complaints, notices or inquiries to the Borrower
or any Subsidiary regarding potential liability under any
Environmental Law;
which in either the case of clause (i) or (ii) above, could be
reasonably expected to have a materially adverse effect on the
condition (financial or otherwise), operations, assets, business or
properties of the Borrower and its Restricted Subsidiaries taken as a
whole;
(c) to the Borrower's and each Subsidiary's knowledge there
have been no Releases of Hazardous Materials at, on or under any
property now or previously owned or leased by the Borrower or any
Subsidiary that, singly or in the aggregate, have, or are
reasonably likely to have, a material adverse effect on the
condition (financial or otherwise), operations, assets, business
or properties of the Borrower and, the Restricted Subsidiaries
taken as a whole;
(d) the Borrower and each Subsidiary have been issued and
are in material compliance with all permits, certificates,
approvals, licenses and other authorizations relating to
environmental matters and necessary or desirable for their
businesses the absence of or non compliance with which would be
materially adverse, and no order has been issued, no
Environmental Claim has been made, no penalty has been assessed
and, to the knowledge of the Borrower or any Subsidiary, no
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investigation or review has occurred or is pending or threatened
by any Person with respect to any alleged failure by the Borrower
or any Subsidiary to have any permit, certificate, approval,
license or other governmental authorization required under
applicable Environmental Laws in connection with the conduct of
the business or operations of any of them or to comply with any
Environmental Laws or with respect to any presence, generation,
treatment, storage, recycling, transportation, discharge,
disposal or release of any hazardous material generated by any
Borrower, or any Subsidiary, and there are no facts or
circumstances in existence which could reasonably be expected to
form the basis for any such order, Environmental Claim, penalty
or investigation in each case, with respect to all of the
foregoing matters, except where the failure of any of the
foregoing to be done could not reasonably be expected to have a
material adverse effect on the condition (financial or
otherwise), operations, assets, business or properties of the
Borrower and its Restricted Subsidiaries taken as a whole;
(e) to the Borrower's and each Subsidiary's knowledge no
property now or previously owned or leased by the Borrower or any
Subsidiary is listed or proposed for listing (with respect to
owned property only) on the National Priorities List pursuant to
CERCLA, on the CERCLIS or on any similar state list of sites
requiring investigation or clean-up where the circumstances
giving rise to such listing or proposed listing or the effect of
such listing or proposed listing has, or is reasonably likely to
have, a material adverse effect on the condition (financial or
otherwise), operations, assets, business or properties of the
Borrower and the Restricted Subsidiaries taken as a whole;
(f) to the Borrower's and each Subsidiary's knowledge there
are no underground storage tanks, active or abandoned, including
petroleum storage tanks, on or under any property now or
previously owned, leased, used, occupied or controlled (in whole
or in part) by the Borrower or any Subsidiary that, singly or in
the aggregate, have, or are reasonably likely to have, a material
adverse effect on the condition (financial or otherwise),
operations, assets, business or properties of the Borrower and
the Restricted Subsidiaries taken as a whole;
(g) to the Borrower's and each Subsidiary's knowledge, no
Borrower nor any Subsidiary has directly transported or directly
arranged for the transportation of any Hazardous Material to any
location, including locations which are listed or proposed for
listing on the National Priorities List pursuant to CERCLA, on
the CERCLIS or on any similar state list or which is the subject
of federal, state or local enforcement actions or other
investigations which, or otherwise which, is reasonably likely to
have a material adverse effect on the condition (financial or
otherwise), operations, assets, business or properties of the
Borrower and the Restricted Subsidiaries taken as a whole;
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(h) to the Borrower's and each Subsidiary's knowledge there
are no polychlorinated biphenyls or friable asbestos present at
any property now or previously owned, leased, used, occupied or
controlled (in whole or in part) by the Borrower or any
Subsidiary that, singly or in the aggregate, have, or may
reasonably be expected to have, a material adverse effect on the
condition (financial or otherwise), operations, assets, business
or properties of the Borrower and the Restricted Subsidiaries
taken as whole; and
(i) to the Borrower's and each Subsidiary's knowledge, no
conditions exist at, on or under any property now or previously
owned, leased, used, occupied or controlled (in whole or in part)
by the Borrower or any Subsidiary which, with the passage of
time, or the giving of notice or both, would give rise to a
material adverse effect on the condition (financial or
otherwise), operations, assets, business or properties of the
Borrower and the Restricted Subsidiaries taken as whole.
SECTION 7.13 REGULATIONS G, U and X. The Borrower is not
engaged in the business of extending credit for the purpose of buying
or carrying margin stock, and no proceeds of any Loans will be used
for a purpose which violates, or would be inconsistent with, F.R.S.
Board Regulation G, U or X. Terms for which meanings are provided in
F.R.S. Board Regulation G, U or X or any regulations substituted
therefor, as from time to time in effect, are used in this Section
with such meanings.
SECTION 7.14 ACCURACY OF INFORMATION. All factual information
heretofore or contemporaneously furnished by or on behalf of the
Borrower in writing to the Agent or any Lender for purposes of or in
connection with this Agreement or any transaction contemplated hereby
which were furnished to the Agent and all other such factual
information hereafter furnished by or on behalf of the Borrower or any
Subsidiary to the Agent or any Lender will be true and accurate in
every material respect on the date as of which such information is
dated or certified and as of the date of execution and delivery of
this Agreement by the Agent and such Lender, and such information,
when all such information is considered as a whole, is not, or shall
not be, as the case may be, incomplete by omitting to state any
material fact necessary to make such information not misleading.
SECTION 7.15 CAPITALIZATION. ITEM 7.15 ("Capitalization") of
the Disclosure Schedule is a pro forma balance sheet of the Borrower
on the Effective Date after giving effect to the initial Borrowings
hereunder, the issuance of the Private Placement Debt, the repayment
of the Indebtedness set forth in ITEM 8.2.2(a) ("Indebtedness to be
Paid on Effective Date") of the Disclosure Schedule and the Transfer.
SECTION 7.16 SOLVENCY. The Borrower, both prior to and after
giving effect to any Borrowing hereunder (including the initial
Borrowings), (i) is not "insolvent" (as such term is defined in
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Section 101(31)(A) of the Bankruptcy Code); (ii) is able to pay its
debts and other liabilities, contingent obligations and commitments as
they mature; and (iii) does not have unreasonably small capital for the
business in which it is engaged or for any business or transaction in
which it is about to engage.
SECTION 7.17 PRIVATE PLACEMENT DEBT REPRESENTATIONS. Each
representation and warranty made by the Borrower pursuant to the Note
Agreement was true and correct in all material respects when made.
SECTION 7.18 COMPLIANCE WITH LAWS. Neither the Borrower nor
any Restricted Subsidiary is in violation of any statute, law or
governmental rule or regulation or court or arbitrator's judgment,
decree or order, in any such case, which either individually or in the
aggregate, assuming disclosure of all known facts, would reasonably be
expected to have a material adverse effect on the condition (financial
or otherwise), operations, assets, business or properties of the
Borrower and the Restricted Subsidiaries, taken as a whole.
ARTICLE VIII
COVENANTS
SECTION 8.1 AFFIRMATIVE COVENANTS. The Borrower agrees with
the Agent and each Lender that, until all Commitments have terminated
and all Obligations have been paid and performed in full, the Borrower
will perform the obligations set forth in this SECTION 8.1.
SECTION 8.1.1 FINANCIAL INFORMATION, REPORTS, NOTICES, ETC. The
Borrower will furnish, or will cause to be furnished, to each Lender
and the Agent copies of the following financial statements, reports,
notices and information:
(a) as soon as practicable, but in any event within 60 days
after the end of each of the first three quarterly fiscal periods
in each Fiscal Year of the Borrower beginning with the fiscal
period ending December 31, 1996, consolidated (and to the extent
that such are being prepared, consolidating) balance sheets of
the Borrower and the Restricted Subsidiaries as at the end of
such period and the related consolidated (and, as to statements
of income and cash flows, if applicable and to the extent that
such are being prepared, consolidating) statements of income,
surplus or partners' capital, cash flows and stockholders' equity
of the Borrower and the Restricted Subsidiaries (i) for such
period and (ii) (in the case of the second and third quarterly
periods) for the period from the beginning of the current Fiscal
Year to the end of such quarterly period, setting forth in each
case (except in the case of financial statements with respect to
any quarter prior to the quarter ending December 31, 1997) in
comparative form the consolidated and, where applicable and as
appropriate, consolidating figures for the corresponding periods
of the previous Fiscal Year, all in reasonable detail and
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certified by an authorized financial officer of the Managing
General Partner as presenting fairly, in all material respects,
the information contained therein (subject to changes resulting
from normal year-end adjustments), in accordance with GAAP
applied on a basis consistent with prior fiscal periods, provided
that delivery within the time period specified above of copies of
the Public Partnership's quarterly report on Form 10-Q prepared
in compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements hereof to the extent such reports otherwise satisfy
such requirements;
(b) as soon as practicable but in any event within 120 days
after the end of each Fiscal Year of the Borrower beginning with
the Fiscal Year ending June 30, 1997 consolidated (and to the
extent that such are being prepared, consolidating) balance
sheets of the Borrower and the Restricted Subsidiaries as at the
end of such year and the related consolidated (and, as to
statements of income and cash flows, if applicable and to the
extent that such are being prepared, consolidating) statements of
income, partners' capital, cash flows and stockholders' equity of
the Borrower and the Restricted Subsidiaries for such Fiscal
Year, setting forth in each case (except in the case of the
financial statements with respect to the Fiscal Year of the
Borrower ending June 30, 1997)in comparative form the
consolidated and, where applicable and to the extent that such
are being prepared, consolidating figures for the previous
Fiscal Year, all in reasonable detail, provided that delivery
within the time period specified above of copies of the Public
Partnership's annual report on Form 10-K prepared in compliance
with the requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements
hereof to the extent such reports otherwise satisfy such
requirements, and accompanied by a report thereon of Arthur
Andersen LLP or other independent public accountants of
recognized national standing selected by the Borrower, which
report shall state that such consolidated financial statements
present fairly in all material respects the financial position of
the Borrower and the Restricted Subsidiaries as at the dates
indicated and the results of their operations and cash flows for
the periods indicated in conformity with GAAP applied on a basis
consistent with prior years and that the audit by such
accountants in connection with such consolidated financial
statements has been made in accordance with GAAP;
(c) as soon as available and in any event within 60 days
after the end of each of the first three Fiscal Quarters and
within 120 days after the end of each Fiscal Year, a certificate,
executed by the chief financial Authorized Officer of the
Borrower or Managing General Partner, showing (in reasonable
detail and with appropriate calculations and computations in all
respects satisfactory to the Agent) compliance with the financial
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covenants set forth in SECTION 8.2.4 and such other information
as may reasonably be requested by the Agent and stating that no
Event of Default exists, or, if any Event of Default exists,
stating the nature and status thereof;
(d) promptly upon receipt thereof, copies of all reports,
management letters and other detailed information (if any)
prepared with respect to the Borrower or any Subsidiary by any
independent public accountant in connection with each annual or
interim audit of such Person;
(e) as soon as possible and in any event within three
Business Days after knowledge of the occurrence of each Default,
a statement of the chief financial Authorized Officer of the
Borrower setting forth details of such Default and the action
which the Borrower has taken and propose to take with respect
thereto;
(f) as soon as possible and in any event within three
Business Days after (x) the occurrence of any material adverse
development with respect to any litigation, action, proceeding,
or labor controversy described in SECTION 7.7 or (y) the
commencement of any labor controversy, litigation, action,
proceeding of the type described in SECTION 7.7, notice thereof
and copies of all documentation relating thereto;
(g) within five Business Days after the sending or filing
thereof, all reports, registration statements and prospectuses
which either the Borrower, the Managing General Partner or the
Public Partnership files with the Securities and Exchange
Commission or any national securities exchange;
(h) immediately upon becoming aware of the institution of
any steps by the Borrower or any other Person to terminate any
Pension Plan, or the failure to make a required contribution to
any Pension Plan if such failure is sufficient to give rise to a
Lien under section 302(f) of ERISA, or the taking of any action
with respect to a Pension Plan which could result in the
requirement that the Borrower furnish a bond or other security to
the PBGC or such Pension Plan, or the occurrence of any event
with respect to any Pension Plan which could result in the
incurrence by the Borrower of any material liability, fine or
penalty, or any material increase in the contingent liability of
the Borrower with respect to any post-retirement Welfare Plan
benefit, notice thereof and copies of all documentation relating
thereto or any assertion against the Borrower or any Subsidiary
or any member of the Controlled Group of withdrawal liability of
any Multiemployer Plan; and
(i) within 60 Business Days after each Fiscal Quarter end,
a certificate setting forth the net proceeds from Asset
Dispositions, the application of such proceeds as permitted under
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SECTION 8.2.8, and the mandatory prepayments made as required by
SECTION 3.1(c); and
(j) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any
Subsidiary as any Lender through the Agent may from time to time
reasonably request.
SECTION 8.1.2 COMPLIANCE WITH LAWS, ETC. The Borrower will, and
will cause each of its Restricted Subsidiaries to, comply in all
material respects with all applicable laws, rules, regulations and
orders, such compliance to include (without limitation):
(a) the maintenance and preservation of its existence and
qualification as a foreign corporation or partnership; PROVIDED,
HOWEVER, that nothing in this Section 8.1.2 shall prevent the
loss of the existence of any such Subsidiary or any such right or
franchise if such loss is, in the judgment of the Borrower, both
desirable in the conduct of business of the Borrower and its
Subsidiaries, taken as a whole, and not disadvantageous in any
material respect to the Lenders individually or in the aggregate
through a series of related transactions; and
(b) the payment, before the same become delinquent, of all
material taxes, assessments and governmental charges imposed upon
it or upon its property except in each case (1) to the extent
being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with
GAAP shall have been set aside on its books or (2) where the
failure to do so would not reasonably be expected to have a
material adverse effect on the condition (financial or otherwise)
operations, assets, business or properties of the Borrower and
its Subsidiaries taken as a whole.
SECTION 8.1.3 MAINTENANCE OF PROPERTIES. The Borrower will, and
will cause each of its Subsidiaries to, maintain, preserve, protect
and keep its properties in good repair, working order and condition,
and make necessary and proper repairs, renewals and replacements so
that its business carried on in connection therewith may be properly
conducted at all times unless the Borrower determines in good faith
that the continued maintenance of any of its properties is no longer
economically desirable.
SECTION 8.1.4 INSURANCE. The Borrower will, and will cause each
of its Restricted Subsidiaries to, maintain or cause to be maintained
with responsible insurance companies, insurance, including self
insurance, with respect to its properties and business against such
casualties and contingencies and of such types and in such amounts as
is financially reasonable and customarily obtained by corporations or
partnerships similarly situated.
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SECTION 8.1.5 BOOKS AND RECORDS. The Borrower will, and will
cause each of its Subsidiaries to, keep books and records which
accurately reflect all of its business affairs and transactions.
SECTION 8.1.6 INSPECTION. The Borrower shall permit the
representatives of each Lender, at the expense of the Borrower at any
time when a Default or Event of Default has occurred and is in
existence and otherwise representatives of any Lender with a
Commitment of not less than $10,000,000 with prior written notice at
the expense of such Lender, to visit and inspect during normal
business hours any of the properties of the Borrower or any Restricted
Subsidiary, to examine all their respective books of account, records,
reports and other papers, to make copies and extracts therefrom, and
to discuss their respective affairs, finances and accounts with their
respective officers, employees and independent public accountants all
at such reasonable times and intervals and as often as may be
reasonably requested. The Borrower hereby authorizes the Borrower's
and Restricted Subsidiaries' independent accountants, and shall upon
such request deliver a letter to the Borrower's and the Restricted
Subsidiaries' independent public accountants authorizing them, to
reply to and comply with the provisions of this SECTION 8.1.6.
SECTION 8.1.7 ENVIRONMENTAL COVENANT. The Borrower will, and
will cause each of its Subsidiaries to,
(a) use and operate all of its facilities and properties in
material compliance with all Environmental Laws, keep all
material necessary permits, approvals, certificates, licenses and
other authorizations relating to environmental matters in effect
and remain in material compliance therewith, and handle all
Hazardous Materials in material compliance with all applicable
Environmental Laws;
(b) immediately notify the Agent and provide copies upon
receipt of all material written claims, complaints, notices or
inquiries relating to the condition of its facilities and
properties or compliance with Environmental Laws, and shall
promptly cure and have dismissed with prejudice to the
satisfaction of the Agent any actions and proceedings relating to
compliance with Environmental Laws except to the extent being
diligently contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP shall have
been set aside on its books; and
(c) provide such information and certifications which the
Agent may reasonably request from time to time to evidence
compliance with this SECTION 8.1.7.
SECTION 8.1.8 RANKING/SECURITY. The Borrower will cause the
Obligations to be secured and rank pari passu with the Private
Placement Debt and the Parity Debt. All of the accounts receivable,
inventory, customer storage tanks of the Borrower and the Restricted
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Subsidiaries created or acquired after the date hereof (except tanks
financed pursuant to clause (e), (f) and (g) in SECTION 8.2.2) and the
General Collateral will be pledged to secure the Parity Debt, the
Private Placement Debt and the Obligations. In the event that the
Borrower obtains or creates any Restricted Subsidiaries (after the
date hereof), the Borrower shall cause each such Restricted Subsidiary
to issue a guarantee of the Obligations, Private Placement Debt and
Parity Debt and each such guarantee will be in favor of the Collateral
Agent and secured by all the Collateral of such Restricted Subsidiary.
SECTION 8.1.9 CLEAN DOWN PERIOD. The Borrower, for a period of
thirty consecutive days during each Fiscal Year, will make a repayment
of the aggregate outstanding principal amount of all Working Capital
Loans, if any, in an amount sufficient so as to cause such aggregate
outstanding principal amount not to exceed $10,000,000.
SECTION 8.2 NEGATIVE COVENANTS. The Borrower agrees with the
Agent and each Lender that, until all Commitments have terminated and
all Obligations have been paid and performed in full, the Borrower
will perform the obligations set forth in this SECTION 8.2.
SECTION 8.2.1 BUSINESS ACTIVITIES. The Borrower will not, nor
will it permit any of its Restricted Subsidiaries to, engage in any
material line of business, except those described in the FIRST RECITAL
and such activities as may be incidental or related thereto.
SECTION 8.2.2 INDEBTEDNESS. The Borrower will not, nor will it
permit any of its Restricted Subsidiaries to, create, incur, assume or
suffer to exist or otherwise become or be liable in respect of any
Indebtedness, other than, without duplication, the following:
(a) Indebtedness identified on Item 8.2.2(a) of the
Disclosure Schedule and other Indebtedness existing on the
Closing Date not to exceed $15,000,000;
(b) Indebtedness evidenced by the Obligations;
(c) Indebtedness evidenced by the Private Placement Debt;
(d) additional Indebtedness of the Borrower and its
Restricted Subsidiaries which is incurred in connection with
additions, improvements or repairs (which may be capitalized on
the Borrower's books in accordance with GAAP) of or additions to
the assets of the Borrower (which may be secured equally and
ratably with the Obligations), and which does not, at any time,
in the aggregate exceed an amount equal to the net proceeds of
any partnership interests sold by the Borrower or capital
contributions received by the Borrower designated to finance such
additions, repairs or improvements;
(e) additional secured Indebtedness incurred in connection
with capital lease obligations provided that (1) security shall
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extend only to such property or asset, (2) the obligation
incurred does not exceed the fair market value of such property
or asset (each as determined in good faith by the Board of
Directors of the Managing General Partner), and (3) after giving
effect to such debt the Borrower could incur at least $1 of
additional Indebtedness pursuant to the incurrence test in clause
(h) below;
(f) additional secured Indebtedness incurred in connection
with purchase money obligations provided that (1) security shall
extend only to such property or asset, (2) the obligation
incurred does not exceed 85% of the fair market value of such
property or asset (as determined in good faith by the Board of
Directors of the Managing General Partner), and (3) after giving
effect to such debt, the Borrower could incur at least $1 of
additional Indebtedness pursuant to the incurrence test in clause
(h);
(g) additional secured Indebtedness incurred to pay all or
a portion of the purchase price of property acquired by the
Borrower or to secure obligations incurred in consideration of
non-compete agreements, provided that (1) security shall extend
only to the property or assets acquired, (2) such obligation does
not exceed 85% of the fair market value of such property or
asset, or 35% in the case of non-compete obligations (each as
determined in good faith by the Board of Directors of the
Managing General Partner), and (3) after giving effect to such
Indebtedness the Borrower could incur at least $1 of additional
Indebtedness pursuant to the incurrence test in clause (h) below;
(h) additional Indebtedness of the Borrower and its
Restricted Subsidiaries in excess of Indebtedness permitted by
clause (a)-(g) above, if (a) the pro forma Consolidated Cash Flow
Coverage of Debt Service (including the Indebtedness to be
incurred and the repayment of any debt being refinanced and
repaid) is greater than 2.50 (as at the end of the last Fiscal
Quarter but giving effect to such additional Indebtedness as set
forth in the definition of "Consolidated Cash Flow Coverage of
Debt Service"), (b) the pro forma Consolidated Cash Flow Coverage
of Maximum Debt Service (including the Indebtedness to be
incurred and the repayment of any debt being refinanced and
repaid) is greater than 1.25 (as at the end of the last Fiscal
Quarter but giving effect to such additional Indebtedness as set
forth in the definition of "Consolidated Cash Flow Coverage of
Maximum Debt Service"), and (c) the total funded Indebtedness
(including the Indebtedness to be incurred) to pro forma
Consolidated Cash Flow (as at the end of the last Fiscal Quarter
but giving effect to such additional Indebtedness as set forth in
the definition below) is less than 4.75:1.00 if prior to December
31, 1997, 4.50:1.00 if thereafter but prior to December 31, 1998,
and 4.25:1.00 thereafter. Such additional Indebtedness under
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this clause (h) may be secured equally and ratably with the
Obligations.
(i) additional unsecured Indebtedness of the Borrower or
its Restricted Subsidiaries owing to either General Partner or an
Affiliate of either General Partner, provided that such
Indebtedness (a) does not exceed $20,000,000 in the aggregate at
any time outstanding, and (b) is created under an agreement
substantially in the form attached hereto as EXHIBIT N, FORM OF
INTERCOMPANY NOTE, pursuant to which such Indebtedness is
subordinated to the Obligations;
(j) any Restricted Subsidiary may become liable with
respect to Indebtedness owing to the Borrower or to another
Restricted Subsidiary; provided that such Indebtedness is created
under an agreement substantially in the form attached hereto as
EXHIBIT N, FORM OF INTERCOMPANY NOTE, pursuant to which such
Indebtedness is subordinated to the Obligations;
(k) the Borrower and any Restricted Subsidiary may become
liable with respect to certain pre-existing Indebtedness relating
to any Person (including any Restricted Subsidiary), business or
assets acquired by the Borrower and its Restricted Subsidiaries,
provided that: (a) no Default or Event of Default shall have
occurred and be continuing, (b) such Indebtedness was not
incurred in anticipation of the acquisition of such Person,
business or assets, and (c) either (i) the sum of (y) such
Indebtedness and (z) the then outstanding Acquisition Loans shall
not exceed the greater of $75,000,000 or 40% of Consolidated Net
Worth as of the date of incurrence, or (ii) after giving effect
to such Person becoming a Restricted Subsidiary or the
acquisition of such business or assets, the Borrower and its
Restricted Subsidiaries could incur at least $1 of additional
Indebtedness subject to the incurrence test in (h) above (it
being understood for purposes of this SECTION 8.2.2(k) that any
Indebtedness which, on the date of acquisition of any Person,
Business or Assets, could be incurred under either the foregoing
clause (i) or (ii) of this SECTION 8.2.2(k), shall be deemed to
have been incurred under clause (ii) of this SECTION 8.2.2(k);
(l) Indebtedness pursuant to Interest Rate Agreements; and
(m) Indebtedness pursuant to Commodity Hedging Agreements.
Notwithstanding the foregoing, the aggregate outstanding
principal amount of all Indebtedness (other than obligations
under guarantees in favor of holders of Parity Debt, the Private
Placement Debt and the Obligations) of Restricted Subsidiaries
shall not exceed $10,000,000.
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Furthermore, if no Default or Event of Default shall have
occurred and be continuing, the provisions of this Section will
not prevent the Borrower and its Restricted Subsidiaries from:
(i) becoming liable for Indebtedness secured equally
and ratably with the Obligations incurred for the purpose of
extending, renewing, refunding or refinancing the Private
Placement Debt or the Parity Debt, provided that (1) the
principal amount of such Indebtedness shall not exceed the
principal amount of the Private Placement Debt or the Parity
Debt being extended, renewed, refunded or refinanced
together with any accrued interest and premium with respect
thereto and any costs and expenses related to such renewal,
refunding or refinancing and (2) such Indebtedness (x) shall
not mature prior to the stated maturity of the Parity Debt
so exchanged or refinanced and (y) shall have an average
life equal to or greater than the remaining average life of
the Parity Debt so exchanged or refinanced;
(ii) becoming liable for unsecured Indebtedness
incurred for the purpose of extending, renewing, refunding
or refinancing, the Private Placement Debt or Parity Debt or
other Indebtedness provided that (1) the principal amount of
such unsecured Indebtedness to be incurred shall not exceed
the principal amount of the Parity Debt or other
Indebtedness being extended, renewed, refunded or refinanced
together with any accrued interest and premium with respect
thereto and any costs and expenses related to such
extension, renewal, refunding or refinancing and (2) such
Indebtedness (x) shall not mature prior to the stated
maturity of the Parity Debt or other Indebtedness so
exchanged or refinanced and (y) shall have an average life
equal to or greater than the remaining average life of the
Parity Debt or other Indebtedness so exchanged or
refinanced; and
(iii) becoming liable for secured Indebtedness other
than the Private Placement Debt or Parity Debt incurred for
the purpose of extending, renewing, refunding or refinancing
permitted secured Indebtedness other than the Private
Placement Debt or Parity Debt provided that (1) the
principal amount of such secured Indebtedness to be incurred
shall not exceed the principal amount of the secured
Indebtedness being extended, renewed, refunded or refinanced
together with any accrued interest and premium with respect
thereto and any costs and expenses related to such
extension, renewal, refunding or refinancing, (2) such
Indebtedness (x) shall not mature prior to the stated
maturity of the Indebtedness so exchanged or refinanced and
(y) shall have an average life equal to or greater than the
remaining average life of the Indebtedness so exchanged or
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refinanced, and (3) the security therefor shall not be
increased.
SECTION 8.2.3 LIENS. The Borrower will not, nor will it permit
any of its Restricted Subsidiaries to, create, incur, assume or suffer
to exist any Lien upon any of its property, revenues or assets,
whether now owned or hereafter acquired, except:
(a) Liens in the Collateral created in favor of the
Collateral Agent for the benefit of the Lenders, the Private
Placement Debt holders, the holders of other Parity Debt and the
counterparties to Interest Rate Agreements;
(b) Liens in favor of holders of certain specified
permitted secured Indebtedness pursuant to clauses (a), (e), (f),
(g), (k) and (m) of SECTION 8.2.2 and extensions, renewals,
refundings or refinancings thereof permitted pursuant to (i) of
the last section of SECTION 8.2.2; provided that Liens with
respect to Indebtedness permitted pursuant to clause (a) shall be
in existence on the date hereof and Liens with respect to
Indebtedness; pursuant to clause (m) may not attach to any
property other than commodities subject to the applicable
Commodity Hedging Agreement and cash held in margin accounts
related directly thereto; and
(c) Liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter
payable without penalty or being diligently contested in good
faith by appropriate proceedings and for which adequate reserves
in accordance with GAAP shall have been set aside on its books;
(d) Liens of carriers, warehousemen, mechanics, materialmen
and landlords incurred in the ordinary course of business for
sums not overdue or being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books;
(e) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or
other forms of governmental insurance or benefits, or to secure
performance of tenders, statutory obligations, leases and
contracts (other than for borrowed money) entered into in the
ordinary course of business or to secure obligations on surety or
appeal bonds;
(f) judgment Liens (1) in existence less than 15 days after
the entry thereof or (2) with respect to which execution has been
stayed or (3) the payment of which is covered in full (subject to
a customary deductible or co-insurance amount) by insurance
maintained with responsible insurance companies not exceeding
$100,000 at any time in existence.
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(g) Liens on property or assets of any Restricted
Subsidiary securing indebtedness of such Restricted Subsidiary to
the Borrower or any other Restricted Subsidiary;
(h) Liens incurred in connection with self insurance
arrangements;
(i) Liens incidental to the conduct of its business or
ownership of its assets which were not incurred in connection
with the borrowing of money and which do not materially impair
the use thereof by the Borrower or any Restricted Subsidiary;
(j) leases or subleases granted to others, zoning
restrictions, easements, licenses, reservations, rights-of-way,
restrictions on the use of property or irregularities of title
and other similar changes, encumbrances and Liens which do not
materially impair the use thereof by the Borrower as any
Restricted Subsidiaries;
(k) Liens securing Indebtedness described in Item 8.2.2(a)
and other Liens described on ITEM 8.2.3 ("Liens") to the
Disclosure Schedule;
(l) Liens continued on renewals or extension of
Indebtedness previously secured so long as the principal amounts
of the Indebtedness secured thereby are not increased;
provided, however, that Liens on real estate shall be limited to real
estate acquired after the date hereof securing Indebtedness not in
excess of $5,000,000 per Fiscal Year.
SECTION 8.2.4 FINANCIAL CONDITION. The Borrower shall not
permit
(a) the Total Funded Indebtedness (less the amount of cash
in hand with the Borrower and its Restricted Subsidiaries in
excess of $1,000,000 but not in excess of $10,000,000) to
Consolidated Cash Flow Ratio as at the end of any Fiscal Quarter
to be greater than 4.75:1 at any time on or before December 31,
1997, 4.50:1 at any time thereafter on or before December 31,
1998 and 4.25:1 at any time thereafter, PROVIDED the Borrower may
take into consideration actual cash on hand in the amount of no
less than $1,000,000 nor more than $10,000,000 for purposes of
calculations pursuant to this paragraph.
(b) the ratio of Consolidated Cash Flow to consolidated
Interest Expense as at the end of any Fiscal Quarter to be less
than 2.00:1 at any time prior to December 31, 1997, 2.25:1 any
time thereafter on or before December 31, 1998 and 2.50:1 at any
time thereafter.
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Notwithstanding any provision in the definition of "Consolidated Cash
Flow", for the purpose clause (a) and (b)of this SECTION 8.2.4 only,
Consolidated Cash Flow shall be calculated, for any period ending on
or after December 31, 1997, on a rolling eight quarter basis divided
by two or on a rolling four quarter basis, whichever is greater.
SECTION 8.2.5 INVESTMENTS. Neither the Borrower nor any of its
Restricted Subsidiaries will purchase or own any stock or other
securities of any other person, make any acquisitions or make loans or
capital contributions to or guarantee the obligations of any other
person (other than guarantees that would be permitted as Indebtedness
under SECTION 8.2.2) or make any other Investments, except:
(a) investments, advances and loans by the Borrower to any
Restricted Subsidiary and investments, advances or loans to the
Borrower by any Restricted Subsidiary;
(b) extensions of trade credit and advances to third
parties in the ordinary course of business;
(c) loans and advances to officers and employees in the
ordinary course of business in amounts not in excess of
$2,500,000 at any time outstanding;
(d) investments received in connection with the exercise of
customary creditors' rights upon default;
(e) guarantees (excluding guarantees of Indebtedness)
undertaken in the ordinary course of business;
(f) investments in Interest Rate Agreements and Commodity
Hedging Agreements;
(g) investments in short-term, high quality marketable
securities;
(h) investments in capital stock or other equity interests,
but only if, upon completion of such transactions, the issuer of
such equity interests becomes a Restricted Subsidiary;
(i) investments (other than those included in (h) above) in
the capital stock of, or joint venture, partnership or other
equity interests in, or the contributions to capital in the
ordinary course of business of, its Unrestricted Subsidiaries up
to a maximum of $20,000,000 annually and on a cumulative basis,
no more than 20% of Consolidated Net Worth, in each case, to be
increased by the net proceeds of any partnership interests sold
by the Borrower or capital contributions received by the
Borrower from the Managing General Partner designated to finance
such investments in each case, without duplication, net of any
cash distributions received from all Unrestricted Subsidiaries
for such period; and
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(j) acquisitions so long as after any acquisition the
Borrower shall be in pro forma compliance with the covenants and
after any acquisition in excess of $15,000,000 the Borrower shall
deliver a certificate demonstrating such compliance and so long
as the Required Lenders shall consent (which consent shall not be
unreasonably withheld) to any acquisition in excess of
$25,000,000 if the outstanding Acquisition Loans exceed
$40,000,000.
SECTION 8.2.6 RESTRICTED PAYMENTS, ETC.
(a) The Borrower will not make any Restricted Payment, other
than dividend payments needed to pay the tax liability and legal,
accounting and other professional fees and expenses of the
Managing General Partner if (i) there exists a Default or an
Event of Default or if after giving effect to such Restricted
Payment a Default or an Event of Default would exist, or (ii) the
pro forma ratio of the Coverage Test is less than 2.00 if prior
to December 31, 1997, 2.25 if thereafter but prior to December
31, 1998, or 2.50 thereafter, for the period of four Fiscal
Quarters immediately preceding the date of such Restricted
Payment. Other than this restriction, the Borrower may make
quarterly Restricted Payments in an amount not to exceed
Available Cash in the preceding Fiscal Quarter. Upon
satisfaction of the Coverage Test and subsequent declaration by
the Borrower, Restricted Payments must be made within 60 days and
if the payment would have been permitted as of the date of such
declaration, such payment shall be permitted if made during such
60 day period. Notwithstanding the foregoing provisions of this
section, no payment made by the Borrower on the Closing Date and
referred to in the Registration Statement shall be deemed to
constitute a Restricted Payment.
(b) The Borrower will not, and will not cause or permit any
Restricted Subsidiary to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of such
Restricted Subsidiary to (a) pay dividends or make any other
distributions on or in respect of its capital stock, or pay any
indebtedness owed to the Borrower, (b) make loans or advances to
the Borrower or (c) transfer any of its properties or assets to
the Borrower, except for such encumbrances or restrictions
existing under or by reason of customary non-assignment
provisions in any lease governing a leasehold interest or other
contract entered into in the ordinary course of business
consistent with past practices.
SECTION 8.2.7 CONSOLIDATION, MERGER, ETC. The Borrower will
not, and will not permit any of its Subsidiaries to, merge or
consolidate with any Person and the Borrower will not, and will not
permit, any Restricted Subsidiary to, transfer all or substantially
all its assets to any Person, except
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(a) any Restricted Subsidiary may consolidate with or
merge into or transfer all or substantially all of its assets to
the Borrower or any other Restricted Subsidiary;
(b) any entity may consolidate with or merge into the
Borrower or a Restricted Subsidiary if the Borrower or a
Restricted Subsidiary is the surviving entity and after giving
effect to such transaction (a) the Borrower's Consolidated Net
Worth shall not be less than its Consolidated Net Worth
immediately prior to such transaction (without regard to purchase
accounting adjustments), (b) neither the Borrower nor any of its
Subsidiaries shall be liable with respect to Indebtedness or
allow its property to be subject to any Lien which is not
permitted hereby, (c) the Borrower can incur at least $1 of
additional Indebtedness pursuant to clause (h) under SECTION
8.2.2.; PROVIDED, HOWEVER, this provision (b)(c) shall not apply
if the consolidating or merging Person has no outstanding
Indebtedness, (d) substantially all of the assets and business of
the Borrower and its Restricted Subsidiaries are located in the
U.S., and (e) at the time of such merger or consolidation, and
after giving effect thereto, no Default or Event of Default shall
exist; and
(c) the Borrower may consolidate or merge with another
Person or transfer all or substantially all its assets to another
entity if (a) the surviving or transferee entity is a corporation
or limited partnership organized under U.S. law and such entity
assumes all of the obligations under the Agreement and the
Security Documents and delivers a legal opinion reasonably
acceptable to Required Lenders to the effect that the assumption
agreement has been duly authorized, executed and delivered by and
is enforceable against the successor; and (b) after giving effect
to such transaction: (i) such entity shall not have a
consolidated net worth of less than the Consolidated Net Worth of
the Borrower immediately prior to such transaction (without
regard to purchase accounting adjustments); (ii) such entity
shall not be liable with respect to Indebtedness or allow its
property to be subject to any Lien which is not permitted hereby;
(iii) such entity can incur at least $1 of additional
Indebtedness pursuant to clause (h) under SECTION 8.2.2;
PROVIDED, HOWEVER, this provision (c)(iii) shall not apply if the
consolidating or merging entity has no outstanding Indebtedness;
(iv) substantially all the assets and business of such entity are
located in the U.S.; and (v) at the time of such merger,
consolidation, sale or other transaction no Default or Event of
Default shall exist.
SECTION 8.2.8 ASSET DISPOSITIONS, ETC. Except in connection
with a transaction permitted under SECTION 8.2.7, and investments in
Restricted Subsidiaries or Unrestricted Subsidiaries permitted under
SECTION 8.2.5 neither the Borrower nor any of its Restricted
Subsidiaries may sell or dispose of any portion of its property
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(excepting abandonment, sale of inventory or other dispositions in the
ordinary course of business), or sell equity interests in any
Restricted Subsidiary to any third party (all of the foregoing are
herein called "ASSET DISPOSITIONS"), unless:
(a) immediately before and after giving effect to such
transaction, no Default or Event of Default shall exist or be
continuing;
(b) an amount equal to the net after-tax proceeds from such
Asset Dispositions in excess of $7,500,000 per fiscal year and
$30,000,000 over the life of the Agreement have been spent within
90 days before the sale of such assets or are committed to be
expended within 365 days after the sale of such assets for assets
in the United States in a line of business as described in
SECTION 8.2.1 and which assets, to the extent the assets so sold
constituted a portion of the General Collateral, shall be added
to the Collateral, or for the making of (or offering to make) pro
rata principal payments on the Parity Debt, the Private Placement
Debt (including any premium that may be due thereon in connection
with any such prepayment) and the Obligations (to the extent
prepayment is as a result of such Asset Disposition as required
by the terms hereof) and a certificate has been received by the
Agent attesting to the receipt of fair value for the assets, as
determined by the Board of Directors of the Managing General
Partner, and to the proper application of the proceeds, and
(c) 70% or more of the consideration received is in the
form of cash or marketable securities; PROVIDED HOWEVER, that the
amount of (1) any liabilities (as shown on the Borrower's or such
Restricted Subsidiary's most recent balance sheet or in the notes
thereto) of the Borrower or any Restricted Subsidiary (other than
liabilities that are by their terms subordinated in right of
payment to the Obligations) that are assumed by the transferee of
any such assets and (2) any notes or other obligations received
by the Borrower or any such Restricted Subsidiary from such
transferee that are promptly converted into cash (to the extent
of the cash received), shall be deemed to be cash for the
purposes of this clause (c) and provided further that any sale of
assets not in excess of $1,000,000 may be made for a cash
consideration (subject to the same assumptions) not less than 25%
of the consideration therefor.
Dispositions of Collateral made in accordance with this section
shall be made free and clear of the liens securing the Parity
Debt.
Notwithstanding the foregoing, the Borrower and its Restricted
Subsidiaries may sell or dispose of (i) real property assets sold
or disposed of within 12 months of the acquisition of such
assets, and (ii) all other assets sold or disposed of within 6
months of the acquisition of such assets, in each case
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constituting a portion of an acquired business, if (y) such
assets are specifically designated to the Agent in writing at the
time of acquisition or within 30 business days thereafter as
assets designated to be disposed of, and (z) a certificate of the
Managing General Partner has been received by the Collateral
Agent attesting to the receipt of fair value for the assets. Such
sales under this paragraph will NOT be applied towards the annual
or cumulative limitations in the preceding paragraph.
Notwithstanding the foregoing, the Borrower may at any time
exchange assets for other like assets in a line of business in
which the partnership or its Restricted Subsidiaries are engaged
provided the fair market values of the assets included in such
exchange are substantially equivalent and the total book value of
assets exchanged in (i) any such transaction shall not exceed
7.5% of then consolidated total assets of the Borrower, (ii) all
such transactions in any one year shall not exceed 15% of then
consolidated total assets of the Borrower or (iii) all such
transactions after the date of the Agreement shall not exceed 30%
of then consolidated total assets of the Borrower. With respect
to the exchange of assets in any one transaction in excess of
$10,000,000, a fairness opinion satisfactory to the Required
Lenders shall be obtained.
SECTION 8.2.9 MODIFICATION OF CERTAIN AGREEMENTS. The Borrower
will not consent to any amendment, supplement or other modification of
any of the terms or provisions contained in, or applicable to, any
document or instrument evidencing or applicable to the Private
Placement Debt, which increases any amount payable thereunder or
shortens the terms thereof or increases any installment or required
prepayment.
SECTION 8.2.10 TRANSACTIONS WITH AFFILIATES. Except for the
transactions or conduct effected pursuant to the Operative Agreements
as in effect on the Closing Date or any other transactions or conduct
described in or contemplated by the Registration Statement or listed
in ITEM 8.2.10 ("TRANSACTIONS WITH AFFILIATES"), the Borrower will
not, and will not permit any Restricted Subsidiary to, directly or
indirectly, engage in any transaction with any Affiliate, including,
without limitation, the purchase, sale or exchange of assets or the
rendering of any service, to the Borrower's or such Restricted
Subsidiary's business except upon fair and reasonable terms that are
no less favorable to the Borrower or such Restricted Subsidiary, as
the case may be, than those which might be obtained in an arm's-length
transaction at the time such transaction is agreed upon from Persons
which are not such an Affiliate, provided that the foregoing
limitations and restrictions shall not apply to any transaction
between the Borrower and any Restricted Subsidiary or between
Restricted Subsidiaries, or to loans and advances to officers and
employees made in the ordinary course of business up to $2,500,000 at
any time outstanding.
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SECTION 8.2.11 NEGATIVE PLEDGES, RESTRICTIVE AGREEMENTS, ETC.
The Borrower will not, and will not permit any of its Subsidiaries to,
enter into any agreement (excluding this Agreement, any other Loan
Document and any agreement governing any Indebtedness permitted
herein) prohibiting the creation or assumption of any Lien upon its
properties, revenues or assets, whether now owned or hereafter
acquired, or the ability of the Borrower or any other Obligor to amend
or otherwise modify this Agreement or any other Loan Document.
SECTION 8.2.12 LIMITATION ON ISSUANCE OF SUBSIDIARY STOCK.
Except as otherwise permitted herein, the Borrower shall not permit
any of its Restricted Subsidiaries to, directly or indirectly, issue,
contingently or otherwise, any shares of such Subsidiary's Capital
Stock, warrants, rights or options to purchase or acquire shares of
such Subsidiary's Capital Stock except to the Borrower or any of its
Subsidiaries.
SECTION 8.2.13 OPERATING LEASES. The Borrower will not enter
into, or permit any Restricted Subsidiaries to enter into operating
leases requiring aggregate payments in excess of $15,000,000 in any
Fiscal Year.
SECTION 8.2.14 RESTRICTED SUBSIDIARIES. The Borrower may
designate any Restricted Subsidiary or newly acquired or formed
subsidiary as an Unrestricted Subsidiary or any Unrestricted
Subsidiary or newly acquired or formed subsidiary as a Restricted
Subsidiary, in each case subject to satisfaction of the following
conditions:
(i) immediately before and after giving effect to such
designation, no Default or Event of Default shall exist and
be continuing;
(ii) the Borrower would have been in compliance as at
the end of the last Fiscal Quarter as if such designation
had taken place as at the commencement of the four Fiscal
Quarter period ending at such Fiscal Quarter end;
(iii) the designation of Unrestricted Subsidiaries
after the date of the Agreement shall not exceed at any time
5% of the Borrower's consolidated assets;
(iv) after giving effect to such designation, (y) the
Borrower would be permitted to incur at least $1 of
additional Indebtedness in accordance with the provisions
of clause (h) of SECTION 8.2.2. other than in the case of a
designation of an Unrestricted Subsidiary that does not have
any Indebtedness as a Restricted Subsidiary, and (z) the
Borrower and its Restricted Subsidiaries would not be liable
with respect to any Indebtedness or guarantee, would not own
any Investments and their property would not be subject to
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any Lien not permitted by the terms of SECTION 8.2.2,
SECTION 8.2.3 and SECTION 8.2.5,
(v) in the case of a designation as an Unrestricted
Subsidiary, (x) if such designation (and all other prior
designations of Restricted Subsidiaries or newly acquired or
formed Subsidiaries as Unrestricted Subsidiaries during the
then current Fiscal Year) were deemed to constitute a sale
by the Borrower of all the assets (other than cash in the
case of newly acquired or newly formed businesses) of the
Subsidiary so designated, such sale would be in compliance
with section (a) of SECTION 8.2.8 and (y) if such
designation (and all other prior designations of Restricted
Subsidiaries or newly acquired or formed Subsidiaries as
Unrestricted Subsidiaries during the current fiscal year)
were deemed to constitute an Investment by the Borrower in
respect of all the assets of the Borrower so designated,
such Investment would be in compliance with section (h) of
SECTION 8.2.5 in each case with the net proceeds of such
sale or the amount of such Investment being deemed to equal
the net book value of such assets in the case of a
Restricted Subsidiary or the cost of acquisition or
formation in the case of a newly acquired or formed
Subsidiary, PROVIDED, that this subdivision (v) shall not
apply to an acquisition or formation by the Borrower or a
Restricted Subsidiary of a newly acquired or formed
Unrestricted Subsidiary to the extent such acquisition or
formation (1) is funded solely by the net cash proceeds
received by the Borrower from either General Partner or the
Public Partnership as a capital contribution or as
consideration for the issuance by the Borrower of additional
partnership interests or (2) the assets involved in such
acquisition are acquired in exchange for additional
partnership interests of the Borrower or the Public
Partnership;
(vi) in the case of a designation of a Restricted
Subsidiary as an Unrestricted Subsidiary, such Restricted
Subsidiary shall not have been an Unrestricted Subsidiary
prior to being designated a Restricted Subsidiary;
(vii) the Borrower shall deliver to each Lender, within
20 Business Days after any such designation, an Officer's
Certificate stating the effective date of such designation
and stating that the foregoing conditions have been
satisfied. Such certificate shall be accompanied by a
schedule setting forth in reasonable detail the calculations
demonstrating compliance with such conditions, where
appropriate; and
(viii) in the case of the designation of any
Unrestricted Subsidiary as a Restricted Subsidiary, such new
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Restricted Subsidiary shall be deemed to have (a) made or
acquired all Investments owned by it and (b) incurred all
Indebtedness owing by it and all Liens to which it or any of
its properties are subject, on the date of such designation.
SECTION 8.2.15 ORGANIC DOCUMENTS. The Borrower will not, and
will not permit any Subsidiary, to alter any Organic Document of such
entity in any manner which would have a material adverse effect on the
condition (financial or otherwise), operations, assets, business, or
properties of the Borrower and its Subsidiaries taken as a whole.
SECTION 8.2.16 CORNERSTONE SALES & SERVICE CORPORATION. The
Borrower shall not make any Investment in nor extend any Indebtedness
to Cornerstone Sales & Service Corporation if all Investments therein
(less returns of capital thereon other than dividends and noncapital
distributions) plus all such outstanding Indebtedness, taken together,
would at any time be in the aggregate greater than $10,000,000.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1 LISTING OF EVENTS OF DEFAULT. Each of the
following events or occurrences described in this SECTION 9.1 shall
constitute an "EVENT OF DEFAULT".
SECTION 9.1.1 NON-PAYMENT OF OBLIGATIONS. The Borrower shall
default in the payment or prepayment when due of any principal of any
Loan, or the Borrower shall default (and such default shall continue
unremedied for a period of five Business Days) in the payment when due
of any interest, fee or other Obligation.
SECTION 9.1.2 BREACH OF WARRANTY. Any material representation
or warranty of the Borrower or any other Obligor made or deemed to be
made hereunder or in any other Loan Document executed by it or any
other writing or certificate furnished by or on behalf of the Borrower
or any other Obligor to the Agent or any Lender for the purposes of or
in connection with this Agreement or any such other Loan Document
(including any certificates delivered pursuant to ARTICLE VI) is or
shall be incorrect when made in any material respect.
SECTION 9.1.3 NON-PERFORMANCE OF OTHER COVENANTS AND
OBLIGATIONS. Any Obligor shall default in the due performance and
observance of any Obligation or agreement contained herein or in any
other Loan Document, and such default shall continue unremedied for a
period of 30 days after actual knowledge thereof by a Responsible
Officer.
SECTION 9.1.4 DEFAULT ON OTHER INDEBTEDNESS. The Borrower or any
Restricted Subsidiary shall default (after notice and the expiration
of any applicable grace period) in the payment of any amount of
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principal, premium or interest on any Indebtedness (other than the
Notes), or any event shall occur or condition shall exist in respect
of any Indebtedness of the Borrower or any of its Restricted
Subsidiaries (other than the Notes) and the effect of such event or
condition is to cause (or permit the holders of such Indebtedness to
cause) such Indebtedness to become due before its stated maturity, in
each case, if the outstanding principal balance of such Indebtedness
is in excess of $10,000,000 in the aggregate.
SECTION 9.1.5 JUDGMENTS. Any judgment or order for the payment
of money in excess of $10,000,000, net of insurance coverage, shall be
rendered against the Borrower or any Restricted Subsidiary and
(i) such judgment or order is non appealable, has not
been stayed pending appeal, or all rights to appeal such
judgment have expired or been exhausted; and
(ii) such judgment or order shall remain undischarged
for a period of sixty consecutive days after the date due.
SECTION 9.1.6 PENSION PLANS. Any of the following events shall
occur with respect to any Pension Plan
(a) the institution of any steps by the Borrower, any
member of its Controlled Group or any other Person to terminate a
Pension Plan if, as a result of such termination, the Borrower or
any such member could be required to make a contribution to such
Pension Plan, or could reasonably expect to incur a liability or
obligation to the PBGC, in excess of $500,000; or
(b) a contribution failure occurs with respect to any
Pension Plan sufficient to give rise to a Lien under section
302(f) of ERISA.
SECTION 9.1.7 CHANGE IN CONTROL. Any Change in Control shall
occur.
SECTION 9.1.8 BANKRUPTCY, INSOLVENCY, ETC. Any of the following
events shall occur:
(a) filing by or on the behalf of the Borrower or the
Managing General Partner of a voluntary petition or an answer
seeking reorganization, arrangement, readjustment of its debts or
for any other relief under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar act or law, state or
federal, now or hereafter existing ("Bankruptcy Law"), or any
action by the Borrower or the Managing General Partner for, or
consent or acquiescence to, the appointment of a receiver,
trustee or other custodian of the Borrower or the Managing
General Partner, or of all or a substantial part of its property;
or the making by the Borrower or the Managing General Partner of
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any assignment for the benefit of creditors; or the admission by
the Borrower or the Managing General Partner in writing of its
inability to pay its debts as they become due; or
(b) filing of any involuntary petition against the Borrower
or the Managing General Partner in bankruptcy or seeking
reorganization, arrangement, readjustment or its debts or for any
other relief under any Bankruptcy Law and an order for relief by
a court having jurisdiction in the premises shall have been
issued or entered therein; or any other similar relief shall be
granted under any applicable Federal or state law; or a decree or
order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee or
other officer having similar powers over the Borrower or the
Managing General Partner or over all or a part of its property
shall have been entered; or the involuntary appointment of an
interim receiver, trustee or other custodian of the Borrower or
the Managing General Partner or of all or a substantial part of
its property; or the issuance of a warrant of attachment,
execution or similar process against any substantial part of the
property of the Borrower or the Managing General Partner and
continuance of any such event for 60 consecutive days unless
dismissed, bonded to the satisfaction of the court having
jurisdiction in the premises or discharged; or
(c) filing by or on the behalf of any Restricted Subsidiary
of a voluntary petition or an answer seeking reorganization,
arrangement, readjustment of its debts or for any other relief
under any Bankruptcy Law, or any action by any Restricted
Subsidiary for, or consent or acquiescence to, the appointment of
a receiver, trustee or other custodian of such Restricted
Subsidiary or of all or a substantial part of its property; or
the making by any Restricted Subsidiary of any assignment for the
benefit of creditors; or the admission by any Restricted
Subsidiary in writing of its inability to pay its debts as they
become due; or
(d) filing of any involuntary petition against any
Restricted Subsidiary in bankruptcy or seeking reorganization,
arrangement, readjustment or its debts or for any other relief
under any Bankruptcy Law and an order for relief by a court
having jurisdiction in the premises shall have been issued or
entered therein; or any other similar relief shall be granted
under any applicable Federal of state law; or a decree or order
of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee or
other officer having similar powers over any Restricted
Subsidiary or over all or a part of its property shall have been
entered; or the involuntary appointment of an interim receiver,
trustee or other custodian of any Restricted Subsidiary or of all
or a substantial part of its property; or the issuance of a
warrant of attachment, execution or similar process against any
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substantial part of the property of any Restricted Subsidiary;
and continuance of any such event for 60 consecutive days unless
dismissed, bonded to the satisfaction of the court having
jurisdiction in the premises or discharged; or
(e) taking any action authorizing, or in furtherance of,
any of the foregoing by the Borrower, the Managing General
Partner or any Restricted Subsidiary.
SECTION 9.1.9 IMPAIRMENT OF SECURITY, ETC. Any of the Security
Documents or documents guarantying the Notes shall cease in any
material respect to be in full force and effect or shall be declared
to be null and void in whole or in a material part by the final
judgment (which is non-appealable or has not been stayed pending
appeal or as to which all rights to appeal have expired or have been
exhausted) of a court or other governmental or regulatory authority
having jurisdiction or the validity or enforceability thereof shall be
contested by or on behalf of the Borrower or any Restricted Subsidiary
or the Borrower or any Restricted Subsidiary shall renounce any of the
same or deny that it has any or further liability thereunder.
SECTION 9.1.10 SPLIT-UP. Any order, judgment or decree is
entered in any proceeding against the Borrower decreeing a split-up of
the Borrower which requires the divestiture of assets representing a
substantial part, or the divestiture of the stock of a Restricted
Subsidiary whose assets represent a substantial part, of the
consolidated assets of the Borrower and Subsidiaries (determined in
accordance with GAAP) or which requires the divestiture of assets, or
stock of a Restricted Subsidiary, which shall have contributed a
substantial part of the consolidated Net Income of the Borrower and
the Restricted Subsidiaries for any of the three fiscal years then
most recently ended, and such order, judgment or decree shall not be
dismissed or execution thereon stayed pending appeal or review within
60 days after entry thereof, or in the event of such a stay, such
order, judgment or decree or decree shall not be dismissed within 60
days after such stay expires;
SECTION 9.1.11 PARTNERS. Any change to any Organic Document of
either Partner which would have a material adverse effect on the
condition (financial or otherwise), operations, assets, business, or
properties of the Borrower and its Subsidiaries, taken as a whole.
SECTION 9.2 ACTION IF BANKRUPTCY. If any Event of Default
described in CLAUSE (a), (b) or with respect to the Borrower and
Managing General Partner, (e) of SECTION 9.1.8) shall occur, the
Commitments (if not theretofore terminated) shall automatically
terminate and the outstanding principal amount of all outstanding
Loans and all other Obligations shall automatically be and become
immediately due and payable, without notice or demand.
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SECTION 9.3 ACTION IF OTHER EVENT OF DEFAULT.
(a) If any Event of Default (other than any Event of
Default described in CLAUSE (a), (b) or with respect to the
Borrower and Managing General Partner, (e) of SECTION 9.1.8)
shall occur for any reason, whether voluntary or involuntary, and
be continuing, the Agent, upon the direction of the Required
Lenders, shall by notice to the Borrower declare all or any
portion of the outstanding principal amount of the Loans and
other Obligations to be due and payable and/or the Commitments
(if not theretofore terminated) to be terminated, whereupon the
full unpaid amount of such Loans and other Obligations which
shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or
presentment, and/or, as the case may be, the Commitments shall
terminate.
(b) The right of the Lenders to make any declaration or
acceleration by virtue of an Event of Default described in
SECTION 9.1.1.-9.1.11 (excluding, however, proceedings under
SECTION 9.1.8. relating directly to the Borrower), however is
subject to the condition that if, at, any time before such
declaration, such Event of Default is cured by or for the account
of the Borrower, then in every such case any such default and its
consequences shall be deemed to be annulled, but no such
annulment shall extend to or affect any subsequent default or
impair or exhaust any right or power consequent thereon.
(c) The affirmative vote of Lenders holding at least 66-
2/3% of the outstanding principal amount of the Obligations may
rescind or annul the acceleration at any time, provided that any
Event of Default has been cured.
ARTICLE X
THE AGENT
SECTION 10.1 APPOINTMENT AND AUTHORIZATION. (a) Each Lender
hereby irrevocably (subject to SECTION 10.9) appoints, designates and
authorizes the Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly
set forth herein, nor shall the Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall
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be read into this Agreement or any other Loan Document or otherwise
exist against the Agent.
(b) The Issuer shall act on behalf of the Lenders with
respect to any Letters of Credit issued by it and the documents
associated therewith until such time and (except for so long as the
Agent has agreed herein or may agree at the request of the Required
Lenders) to act for such Issuer with respect thereto; PROVIDED,
HOWEVER, that the Issuer shall have all of the benefits and immunities
(i) provided to the Agent in this ARTICLE X with respect to any acts
taken or omissions suffered by the Issuing Lender in connection with
Letters of Credit issued by it or proposed to be issued by it and the
application and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Agent", as used in this
ARTICLE X, included the Issuer with respect to such acts or omissions,
and (ii) as additionally provided in this Agreement with respect to
the Issuer.
SECTION 10.2 DELEGATION OF DUTIES. The Agent may execute any
of its duties under this Agreement or any other Loan Document by or
through agents, employees or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct of
any agent or attorney-in-fact that it selects with reasonable care.
SECTION 10.3 LIABILITY OF AGENT. None of the Agent-Related
Persons shall (i) be liable for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any
other Loan Document or the transactions contemplated hereby (except
for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by the Borrower or any
Subsidiary or Affiliate of the Borrower, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with,
this Agreement or any other Loan Document, or for the value or title
to any Collateral or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Borrower or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall 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 any
other Loan Document, or to inspect the properties, books or records of
the Borrower or any of the Borrower's Subsidiaries or Affiliates.
SECTION 10.4 RELIANCE BY AGENT. (a) The Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and
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to have been signed, sent or made by the proper Person or Persons, and
upon advice and statements of legal counsel (including counsel to the
Borrower), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to
take any action under this Agreement or any other Loan Document unless
it shall first receive such advice or concurrence of the Required
Lenders as it deems appropriate and, if it so requests, 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. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or
consent of the Required Lenders and such request and any action taken
or failure to act pursuant thereto shall be binding upon all of the
Lenders.
(b) For purposes of determining compliance with the
conditions specified in SECTION 6.1, each Lender that has executed
this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter either
sent by the Agent to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by
or acceptable or satisfactory to the Lender.
SECTION 10.5 NOTICE OF DEFAULT. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event
of Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Agent for the
account of the Lenders, unless the Agent shall have received written
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". The Agent will notify the Lenders of
its receipt of any such notice. The Agent shall take such action with
respect to such Default or Event of Default as may be requested by the
Required Lenders in accordance with ARTICLE IX; PROVIDED, HOWEVER,
that unless and until the Agent has received any such request, the
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 or in the best interest of the
Lenders.
SECTION 10.6 CREDIT DECISION. Each Lender acknowledges that
none of the Agent-Related Persons has made any representation or
warranty to it, and that no act by the Agent hereinafter taken,
including any review of the affairs of the Borrower and its
Subsidiaries, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender
represents to the Agent that it has, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of
and investigation into the business, prospects, operations, property,
financial and other condition and creditworthiness of the Borrower and
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its Subsidiaries, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to the Borrower and its
Subsidiaries hereunder. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person 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 investigations as it deems
necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly
herein required to be furnished to the Lenders by the Agent, the Agent
shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, prospects,
operations, property, financial and other condition or
creditworthiness of the Borrower which may come into the possession of
any of the Agent-Related Persons.
SECTION 10.7 INDEMNIFICATION OF AGENT. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not
reimbursed by or on behalf of the Borrower and without limiting the
obligation of the Borrower to do so), pro rata, from and against any
and all Indemnified Liabilities; PROVIDED, HOWEVER, that no Lender
shall be liable for the payment to the Agent-Related Persons of any
portion of such Indemnified Liabilities resulting solely from such
Person's gross negligence or willful misconduct. Without limitation
of the foregoing, each Lender shall reimburse the Agent upon demand
for its ratable share of any costs or out-of-pocket expenses
(including attorney costs) incurred by the Agent in connection with
the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that
the Agent is not reimbursed for such expenses by or on behalf of the
Borrower. The undertaking in this Section shall survive the payment
of all Obligations hereunder and the resignation or replacement of the
Agent.
SECTION 10.8 AGENT IN INDIVIDUAL CAPACITY. BofA and each other
Lender that may become the Agent and their respective Affiliates may
make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other
business with the Borrower and its Subsidiaries and Affiliates as
though BofA (or such other Lender) were not the Agent or the Issuer
hereunder and without notice to or consent of the Lenders. The
Lenders acknowledge that, pursuant to such activities, BofA (or such
other Lender) or their respective Affiliates may receive information
regarding the Borrower or its Affiliates (including information that
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may be subject to confidentiality obligations in favor of the Borrower
or such Subsidiary) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to its
Loans, BofA (or other Lender) shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as
though it were not the Agent or the Issuer.
SECTION 10.9 SUCCESSOR AGENT. The Agent may, and at the
request of the Required Lenders shall, resign as Agent upon 30 days'
notice to the Lenders. If the Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor
agent for the Lenders. If no successor agent is appointed prior to
the effective date of the resignation of the Agent, the Agent may
appoint, after consulting with the Lenders and the Borrower, a
successor agent from among the Lenders. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall
succeed to all the rights, powers and duties of the retiring Agent and
the term "Agent" shall mean such successor agent and the retiring
Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the
provisions of this ARTICLE X and SECTIONS 11.4 and 11.5 shall inure to
its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is 30 days following a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform
all of the duties of the Agent hereunder until such time, if any, as
the Required Lenders appoint a successor agent as provided for above.
Any successor agent shall have a market capitalization equal to or
greater than $500,000,000. Notwithstanding the foregoing, however,
BofA may not be removed as the Agent at the request of the Required
Lenders unless BofA shall also simultaneously be replaced as "Issuing
Lender" hereunder pursuant to documentation in form and substance
reasonably satisfactory to BofA.
SECTION 10.10 WITHHOLDING TAX. (a) If any Lender is a "foreign
corporation, partnership or trust" within the meaning of the Code and
such Lender claims exemption from, or a reduction of, U.S. withholding
tax under Sections 1441 or 1442 of the Code, such Lender agrees with
and in favor of the Agent and the Borrower, to deliver to the Agent
(with a copy to the Borrower):
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W-8 before the payment of any
interest in the first calendar year and before the payment of any
interest in each third succeeding calendar year during which
interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it
is effectively connected with a United States trade or business
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of such Lender, two properly completed and executed copies of IRS
Form 4224 before the payment of any interest is due in the first
taxable year of such Lender and in each succeeding taxable year
of such Lender during which interest may be paid under this
Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent and the Borrower of
any change in circumstances which would modify or render invalid any
claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form
1001 and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of the Borrower to
such Lender, such Lender agrees to notify the Agent of the percentage
amount in which it is no longer the beneficial owner of Obligations of
the Borrower to such Lender. To the extent of such percentage amount,
the Agent will treat such Lender's IRS Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the
Obligations of the Borrower to such Lender, such Lender agrees to
undertake sole responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any interest
payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the
forms or other documentation required by SUBSECTION (a) of this
Section are not delivered to the Agent, then the Agent may withhold
from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding
tax.
(e) If the IRS or any other Government Authority of the
United States or other jurisdiction asserts a claim that the Agent did
not properly withhold tax from amounts paid to or for the account of
any Lender (because the appropriate form was not delivered, was not
properly executed, or because such Lender failed to notify the Agent
of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason)
such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section,
together with all costs and expenses (including attorney costs). The
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obligation of the Lenders under this subsection shall survive the
payment of all Obligations and the resignation or replacement of the
Agent.
SECTION 10.11 COLLATERAL MATTERS.
Except as otherwise expressly provided in the Intercreditor
Agreement:
(a) The Agent is authorized on behalf of all the Lenders,
without the necessity of any notice to or further consent from the
Lenders, from time to time to take any action with respect to any
Collateral or the Security Documents which may be necessary to perfect
and maintain perfected the security interest in and Liens upon the
Collateral granted pursuant to the Security Documents.
(b) The Lenders irrevocably authorize the Agent, at its option
and in its discretion, to authorize the release of any Lien granted
for the benefit of the Agent and the Lenders upon any Collateral (i)
upon termination of the Commitments and payment in full of all Loans
and all other Obligations known to the Agent and payable under this
Agreement or any other Loan Document; (ii) constituting property sold
or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder; (iii) constituting property in which
the Borrower or any Subsidiary owned no interest at the time the Lien
was granted or at any time thereafter; (iv) constituting property
leased to the Borrower or any Subsidiary under a lease which has
expired or been terminated in a transaction permitted under this
Agreement or is about to expire and which has not been, and is not
intended by the Borrower or such Subsidiary to be, renewed or
extended; (v) consisting of an instrument evidencing Indebtedness or
other debt instrument, if the indebtedness evidenced thereby has been
paid in full; or (vi) if approved, authorized or ratified in writing
by the Required Lenders or all the Lenders, as the case may be, as
provided in SECTION 11.1. Upon request by the Agent at any time, the
Lenders will confirm in writing the Agent's authority to authorize the
release of particular types or items of Collateral pursuant to this
SECTION 10.11(b).
(c) Each Lender agrees with and in favor of each other (which
agreement shall not be for the benefit of the Borrower or any
Subsidiary) that the Borrower's and the other Obligors' obligations to
such Lender under this Agreement and the other Loan Documents is not
and shall not be secured by any Lien on real property collateral now
or hereafter granted to such Lender.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1 WAIVERS, AMENDMENTS, ETC. Except as expressly
provided in the Intercreditor Agreement, the provisions of this
Agreement and of each other Loan Document may from time to time be
amended, modified or waived, if such amendment, modification or waiver
is in writing and consented to by the Borrower and the Required
Lenders; PROVIDED, HOWEVER, that no such amendment, modification or
waiver which would:
(a) modify any requirement hereunder that any particular
action be taken by all the Lenders or by the Required Lenders
shall be effective unless consented to by each Lender;
(b) modify this SECTION 11.1, change the definition of
"REQUIRED LENDERS", increase any Commitment Amount or the
Percentage of any Lender, reduce any fees described in
ARTICLE III, release any substantial portion of collateral
security, except as otherwise specifically provided in any Loan
Document, extend the Loan Commitment Termination Date or Stated
Maturity Dates or change the interest provisions contained in
SECTION 3.2 shall be made without the consent of each Lender and
each holder of a Note;
(c) extend the due date for, or reduce the amount of, any
scheduled repayment or prepayment of principal of or interest on
any Loan (or reduce the principal amount of or rate of interest
on any Loan) shall be made without the consent of the holder of
that Note evidencing such Loan; or
(d) affect adversely the interests, rights or obligations
of the Agent shall be made without consent of the Agent.
No failure or delay on the part of the Agent, any Lender or the holder
of any Note in exercising any power or right under this Agreement or
any other Loan Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power or right preclude any
other or further exercise thereof or the exercise of any other power
or right. No notice to or demand on the Borrower in any case shall
entitle it to any notice or demand in similar or other circumstances.
No waiver or approval by the Agent, any Lender or the holder of any
Note under this Agreement or any other Loan Document shall, except as
may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be
granted hereunder.
SECTION 11.2 NOTICES. All notices and other communications
provided to any party hereto under this Agreement or any other Loan
Document shall be in writing or by Telex or by facsimile and
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addressed, delivered or transmitted to such party at its address,
Telex or facsimile number set forth below its signature hereto or,
with respect to Persons that become Lenders after the date hereof, set
forth in the Assignment and Acceptance Agreement or at such other
address, Telex or facsimile number as may be designated by such party
in a notice to the other parties. Any notice, if mailed and properly
addressed with postage prepaid or if properly addressed and sent by
pre-paid courier service, shall be deemed given when received; any
notice, if transmitted by Telex or facsimile, shall be deemed given
when transmitted (answerback confirmed in the case of Telexes).
SECTION 11.3 PAYMENT OF COSTS AND EXPENSES. The Borrower
agrees to pay on demand all reasonable expenses of the Agent
(including the reasonable fees and out-of-pocket expenses of counsel
to the Agent and of local counsel, if any, who may be retained by
counsel to the Agent) in connection with
(a) the negotiation, preparation, execution, delivery and
syndication of this Agreement and of each other Loan Document,
including schedules and exhibits, and any amendments, waivers,
consents, supplements or other modifications to this Agreement or
any other Loan Document as may from time to time hereafter be
required, whether or not the transactions contemplated hereby are
consummated,
(b) the filing, recording, refiling or rerecording of the
Security Agreement and/or any Uniform Commercial Code financing
statements relating thereto and all amendments, supplements and
modifications to any thereof and any and all other documents or
instruments of further assurance required to be filed or recorded
or refiled or rerecorded by the terms hereof or of the Security
Agreement, and
(c) the preparation and review of the form of any document
or instrument relevant to this Agreement or any other Loan
Document.
The Borrower further agrees to pay, and to save the Agent and the
Lenders harmless from all liability for, any stamp or other taxes
which may be payable in connection with the execution or delivery of
this Agreement, the borrowings hereunder, or the issuance of the Notes
or any other Loan Documents. The Borrower also agrees to reimburse
the Agent and each Lender upon demand for all reasonable out-of-pocket
expenses (including reasonable attorneys' fees and legal expenses)
incurred by the Agent or such Lender in connection with (x) the
negotiation of any restructuring or "work-out", whether or not
consummated, of any Obligations and (y) the enforcement of any
Obligations.
SECTION 11.4 INDEMNIFICATION. In consideration of the
execution and delivery of this Agreement by each Lender and the
extension of the Commitments, the Borrower hereby indemnifies,
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exonerates and holds the Agent and each Lender and each of their
respective officers, directors, employees and agents (collectively,
the "INDEMNIFIED PARTIES") free and harmless from and against any and
all actions, causes of action, suits, losses, costs, liabilities and
damages, and expenses incurred in connection therewith (irrespective
of whether any such Indemnified Party is a party to the action for
which indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (collectively, the "INDEMNIFIED
LIABILITIES"), incurred by the Indemnified Parties or any of them as a
result of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or
in part, directly or indirectly, with the proceeds of any Loan or
the use of any Letter of Credit;
(b) the entering into and performance of this Agreement and
any other Loan Document by any of the Indemnified Parties;
(c) any investigation, litigation or proceeding related to
any acquisition or proposed acquisition by the Borrower or any
Subsidiaries of all or any portion of the stock or assets of any
Person, whether or not the Agent or such Lender is party thereto;
(d) any investigation, litigation or proceeding related to
any environmental cleanup, audit, compliance or other matter
relating to the protection of the environment or the Release by
the Borrower or any Subsidiary of any Hazardous Material; or
(e) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging or releases
from, any real property owned or operated by the Borrower or any
Subsidiary of any Hazardous Material (including any losses,
liabilities, damages, injuries, costs, expenses or claims
asserted or arising under any Environmental Law), regardless of
whether caused by, or within the control of, the Borrower or such
Subsidiary,
except for any such Indemnified Liabilities arising for the account of
a particular Indemnified Party by reason of the relevant Indemnified
Party's gross negligence or wilful misconduct. If and to the extent
that the foregoing undertaking may be unenforceable for any reason,
the Borrower hereby agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which
is permissible under applicable law.
SECTION 11.5 SURVIVAL. The obligations of the Borrower under
SECTIONS 5.3, 5.4, 5.5, 5.6, 11.3 and 11.4, and the obligations of the
Lenders under SECTION 10.1, shall in each case survive until the
applicable statute of limitations has run on the bringing of any
action thereon any termination of this Agreement, the payment in full
of all Obligations and the termination of all Commitments. The
representations and warranties made by each Obligor in this Agreement
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and in each other Loan Document shall survive the execution and
delivery of this Agreement and each such other Loan Document.
SECTION 11.6 SEVERABILITY. Any provision of this Agreement or
any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such provision and such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions of this Agreement or
such Loan Document or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 11.7 HEADINGS. The various headings of this Agreement
and of each other Loan Document are inserted for convenience only and
shall not affect the meaning or interpretation of this Agreement or
such other Loan Document or any provisions hereof or thereof.
SECTION 11.8 EXECUTION IN COUNTERPARTS, EFFECTIVENESS, ETC.
This Agreement may be executed by the parties hereto in several
counterparts, all of which shall constitute together but one and the
same agreement. This Agreement shall become effective when
counterparts hereof executed on behalf of the Borrower, the Agent and
each Lender (or notice thereof satisfactory to the Agent) shall have
been received by the Agent and notice thereof shall have been given by
the Agent to the Borrower and each Lender.
SECTION 11.9 GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT,
THE NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS. This Agreement, the Notes, the Security Agreement and the
other Loan Documents constitute the entire understanding among the
parties hereto with respect to the subject matter hereof and supersede
any prior agreements, written or oral, with respect thereto.
SECTION 11.10 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns; PROVIDED, HOWEVER, that:
(a) the Borrower may not assign or transfer its rights or
obligations hereunder without the prior written consent of the
Agent and all Lenders; and
(b) the rights of sale, assignment and transfer of the
Lenders are subject to SECTION 11.11.
SECTION 11.11 SALE AND TRANSFER OF LOANS AND NOTES;
PARTICIPATIONS IN LOANS AND NOTES. Each Lender may assign, or sell
participations in, its Loans and Commitments to one or more other
Persons in accordance with this SECTION 11.11.
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SECTION 11.11.1 ASSIGNMENTS. Any Lender,
(a) with the written consents of the Borrower and the Agent
(which consents shall not be unreasonably delayed or withheld and
which consent, in the case of the Borrower, shall be deemed to
have been given in the absence of a written notice delivered by
the Borrower to the Agent, on or before the fifth Business Day
after receipt by the Borrower of such Lender's request for
consent, stating, in reasonable detail, the reasons why the
Borrower proposes to withhold such consent) may at any time
assign and delegate to one or more commercial banks or other
financial institutions; PROVIDED that such consent of the
Borrower shall not be required at any time a Default has occurred
and is continuing, and
(b) with notice to the Borrower and the Agent, but without
the consent of the Borrower or the Agent, may assign and delegate
to any of its Affiliates or to any other Lender
(each Person described in either of the foregoing clauses as being the
Person to whom such assignment and delegation is to be made, being
hereinafter referred to as an "ASSIGNEE LENDER"), all or any fraction
of such Lender's total Loans and Commitments (which assignment and
delegation shall be of a constant, and not a varying, percentage of
all the assigning Lender's Loans and Commitments) in a minimum
aggregate amount of $5,000,000; PROVIDED, HOWEVER, that any such
Assignee Lender will comply, if applicable, with the provisions
contained in the penultimate sentence of SECTION 5.6 and SECTION 10.10
and PROVIDED, FURTHER, HOWEVER, that the Borrower, each other Obligor
and the Agent shall be entitled to continue to deal solely and
directly with such Lender in connection with the interests so assigned
and delegated to an Assignee Lender until
(c) written notice of such assignment and delegation,
together with payment instructions, addresses and related
information with respect to such Assignee Lender, shall have been
given to the Borrower and the Agent by such Lender and such
Assignee Lender,
(d) such Assignee Lender shall have executed and delivered
to the Borrower and the Agent an Assignment and Acceptance
Agreement, accepted by the Agent, and
(e) the processing fees described below shall have been
paid.
From and after the date that the Agent accepts such Assignment and
Acceptance Agreement, (x) the Assignee Lender thereunder shall be
deemed automatically to have become a party hereto and to the extent
that rights and obligations hereunder have been assigned and delegated
to such Assignee Lender in connection with such Assignment and
Acceptance Agreement, shall have the rights and obligations of a
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Lender hereunder and under the other Loan Documents, and (y) the
assignor Lender, to the extent that rights and obligations hereunder
have been assigned and delegated by it in connection with such
Assignment and Acceptance Agreement, shall be released from its
obligations hereunder and under the other Loan Documents. Such
assignor Lender or such Assignee Lender must also pay a processing fee
to the Agent upon delivery of any Assignment and Acceptance Agreement
in the amount of $2,500. Any attempted assignment and delegation not
made in accordance with this SECTION 11.11.1 shall be null and void.
SECTION 11.11.2 PARTICIPATIONS. Any Lender may at any time
sell to one or more commercial banks or other Persons (each of such
commercial banks and other Persons being herein called a
"PARTICIPANT") participating interests (or a subparticipating
interest, in the case of a Lender's participating interest in a Letter
of Credit) in any of the Loans, Commitments, or other interests of
such Lender hereunder; PROVIDED, HOWEVER, that
(a) no participation contemplated in this SECTION 11.11
shall relieve such Lender from its Commitments or its other
obligations hereunder or under any other Loan Document,
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations,
(c) the Borrower, each other Obligor and the Agent shall
continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement and each of the other Loan Documents,
(d) no Participant, unless such Participant is an Affiliate
of such Lender, or is itself a Lender, shall be entitled to
require such Lender to take or refrain from taking any action
hereunder or under any other Loan Document, except that such
Lender may agree with any Participant that such Lender will not,
without such Participant's consent, take any actions of the type
described in CLAUSE (b) or (c) of SECTION 11.1, and
(e) the Borrower shall not be required to pay any amount
under SECTIONS 5.3, 5.4, 5.5 or 5.6 that is greater than the
amount which it would have been required to pay had no
participating interest been sold.
The Borrower acknowledges and agrees that each subject to the
preceding sentence Participant, for purposes of SECTIONS 5.3, 5.4,
5.5, 5.6, 5.8, 5.9, 11.3 and 11.4, shall be considered a Lender.
SECTION 11.12 OTHER TRANSACTIONS. Nothing contained herein
shall preclude the Agent or any other Lender from engaging in any
transaction, in addition to those contemplated by this Agreement or
any other Loan document, with the Borrower or any of the Borrower's
99
<PAGE> 359
Affiliates in which the Borrower or such Affiliate is not restricted
hereby from engaging with any other Person.
SECTION 11.13 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWER SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR THE
STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS OR THE SOUTHERN DISTRICT OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN THE INTERCREDITOR AGREEMENT, AT THE AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF
ILLINOIS AND THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF ILLINOIS AND FOR THE SOUTHERN
DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE BORROWER
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF ILLINOIS OR THE STATE OF NEW YORK. THE BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
SECTION 11.14 WAIVER OF JURY TRIAL. EACH OF THE AGENT, THE
LENDERS AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR
IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWER. THE
BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION
OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS
ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
100
<PAGE> 360
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
CORNERSTONE PROPANE, L.P.
By: CORNERSTONE PROPANE GP, INC.,
as managing general partner
By: /s/ Daniel K. Newell
----------------------------------
Authorized Officer
Title: Vice President
---------------------------
Address: 432 Westridge Drive
Watsonville, CA 95076
--------------------------
Facsimile No.: 408-724-4038
--------------------
Attention: Daniel Newell
-----------------------
101
<PAGE> 361
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
CORNERSTONE PROPANE, L.P.
By: CORNERSTONE PROPANE GP, INC.,
as managing general partner
By: /s/ R. J. Goedde
----------------------------------
Authorized Officer
Title: Exec. Vice Pres./CFO
----------------------------
Address: 432 Westridge Drive
Watsonville, CA 95076
--------------------------
Facsimile No.: 408-724-4038
--------------------
Attention: Ron Goedde
-----------------------
102
<PAGE> 362
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By: /s/ Patrick A. Dunbar
-----------------------------------
Authorized Officer
Title: Vice President
-----------------------------
Address: 231 South Lasalle Street
Chicago, Illinois 60697
---------------------------
Facsimile No.: 312-828-3555
--------------------
Attention: Patrick A. Dunbar
-----------------------
103
<PAGE> 363
BANK OF AMERICA ILLINOIS, as a Lender
By: Patrick A. Dunbar
----------------------------------
Authorized Officer
Title: Vice President
----------------------------
Address: 231 South LaSalle Street
Chicago, Illinois 60697
--------------------------
Facsimile No.: 312-828-3555
--------------------
Attention: Patrick A. Dunbar
-----------------------
104
EXHIBIT 10.2
Execution Copy
======================================================================
CORNERSTONE PROPANE GP, INC.,
SYN INC.
AND
CORNERSTONE PROPANE, L.P.
$220,000,000
7.53% Senior Secured Notes due December 30, 2010
(Private Placement Number: 21923# AA 4)
_________________________
NOTE AGREEMENT
_________________________
Dated as of December 11, 1996
======================================================================
<PAGE> 365
TABLE OF CONTENTS
Section Page
1. AUTHORIZATION OF NOTES . . . . . . . . . . . . . . . . . . . 1
2. SALE AND PURCHASE OF NOTES . . . . . . . . . . . . . . . . . 1
3. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . 2
4.1. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . 2
4.2. PERFORMANCE; NO DEFAULT . . . . . . . . . . . . . . 3
4.3. COMPLIANCE CERTIFICATES . . . . . . . . . . . . . . 3
4.4. OPINIONS OF COUNSEL . . . . . . . . . . . . . . . . 3
4.5. LEGAL INVESTMENT . . . . . . . . . . . . . . . . . . 4
4.6. TRUST AGREEMENT . . . . . . . . . . . . . . . . . . 4
4.7. SECURITY DOCUMENTS . . . . . . . . . . . . . . . . . 4
4.8. CONVEYANCE; RECORDATION; TAXES, ETC. . . . . . . . . 5
4.9. OPERATIVE AGREEMENTS . . . . . . . . . . . . . . . . 5
4.10. SALE AND ISSUANCE OF OTHER NOTES . . . . . . . . . . 5
4.11. SALE OF UNITS . . . . . . . . . . . . . . . . . . . 6
4.12. PROCEEDINGS AND DOCUMENTS . . . . . . . . . . . . . 6
4.13. RATING . . . . . . . . . . . . . . . . . . . . . . . 7
4.14. INSURANCE BROKER'S CERTIFICATE . . . . . . . . . . . 7
4.15. PAYMENT OF CLOSING FEES . . . . . . . . . . . . . . 7
4.16. PRIVATE PLACEMENT NUMBER . . . . . . . . . . . . . . 7
4.17. OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . 7
5. REPRESENTATIONS AND WARRANTIES, ETC. OF THE GENERAL PARTNERS
AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . 7
5.1. ORGANIZATION, STANDING, ETC. . . . . . . . . . . . . 7
5.2. PARTNERSHIP INTERESTS . . . . . . . . . . . . . . . 8
5.3. QUALIFICATION . . . . . . . . . . . . . . . . . . . 8
5.4. BUSINESS; FINANCIAL STATEMENTS . . . . . . . . . . . 9
5.5. CHANGES, ETC. . . . . . . . . . . . . . . . . . . . 11
5.6. TAX RETURNS AND PAYMENTS . . . . . . . . . . . . . . 11
5.7. INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . 11
5.8. TRANSFER OF ASSETS ADN BUSINESS . . . . . . . . . . 11
5.9. LITIGATION, ETC. . . . . . . . . . . . . . . . . . . 13
5.10. COMPLIANCE WITH OTHER INSTRUMENTS, ETC. . . . . . . 13
5.11. GOVERNMENTAL CONSENT . . . . . . . . . . . . . . . . 14
5.12. OFFER OF NOTES . . . . . . . . . . . . . . . . . . . 14
5.13. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . 14
5.14. FEDERAL RESERVE REGULATIONS . . . . . . . . . . . . 14
5.15. INVESTMENT COMPANY ACT . . . . . . . . . . . . . . . 15
5.16. PUBLIC UTILITY HOLDING COMPANY ACT; FEDERAL POWER
ACT . . . . . . . . . . . . . . . . . . . . . . . . 15
5.17. ERISA . . . . . . . . . . . . . . . . . . . . . . . 15
5.18. ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . 17
5.19. FOREIGN ASSETS CONTROL REGULATIONS, ETC. . . . . . . 18
5.20. DISCLOSURE . . . . . . . . . . . . . . . . . . . . . 18
<PAGE> 366
5.21. CHIEF EXECUTIVE OFFICE . . . . . . . . . . . . . . . 19
5.22. SOLVENCY . . . . . . . . . . . . . . . . . . . . . . 19
6. PURCHASER'S REPRESENTATIONS; SOURCE OF FUNDS . . . . . . . . 19
7. ACCOUNTING; FINANCIAL STATEMENTS AND OTHER INFORMATION . . . 22
8. INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . 29
9. PREPAYMENT OF NOTES . . . . . . . . . . . . . . . . . . . . 30
9.1. REQUIRED PREPAYMENTS OF THE NOTES . . . . . . . . . 30
9.2. OPTIONAL PREPAYMENTS OF THE NOTES WITH MAKE WHOLE
AMOUNT . . . . . . . . . . . . . . . . . . . . . . . 30
9.3. PREPAYMENT ON CHANGE OF CONTROL . . . . . . . . . . 30
9.4. CONTINGENT PREPAYMENTS ON DISPOSITION OF PROPERTY,
TAKING OR DESTRUCTION . . . . . . . . . . . . . . . 31
9.5. NOTICE OF PREPAYMENTS; OFFICERS' CERTIFICATE . . . . 32
9.6. ALLOCATION OF PARTIAL PREPAYMENTS . . . . . . . . . 33
9.7. MATURITY; SURRENDER, ETC. . . . . . . . . . . . . . 33
9.8. ACQUISITION OF NOTES . . . . . . . . . . . . . . . . 33
10. BUSINESS AND FINANCIAL COVENANTS OF THE COMPANY . . . . . . 34
10.1. INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . 34
10.2. LIENS, ETC. . . . . . . . . . . . . . . . . . . . . 42
10.3. INVESTMENTS, GUARANTIES, ETC. . . . . . . . . . . . 45
10.4. RESTRICTED PAYMENTS . . . . . . . . . . . . . . . . 48
10.5. TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . 49
10.6. SUBSIDIARY STOCK AND INDEBTEDNESS . . . . . . . . . 49
10.7. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC. . . . . 50
10.8. PARTNERSHIP OR CORPORATE EXISTENCE, ETC.; BUSINESS . 55
10.9. PAYMENT OF TAXES AND CLAIMS . . . . . . . . . . . . 56
10.10. COMPLIANCE WITH ERISA . . . . . . . . . . . . . . . 56
10.11. MAINTENANCE OF PROPERTIES; INSURANCE . . . . . . . . 57
10.12. OPERATIVE AGREEMENTS; SECURITY DOCUMENTS . . . . . . 58
10.13. CHIEF EXECUTIVE OFFICE . . . . . . . . . . . . . . . 59
10.14. RECORDATION; OPINIONS . . . . . . . . . . . . . . . 59
10.15. INFORMATION REQUIRED BY RULE 144A . . . . . . . . . 60
10.16. COVENANT TO SECURE NOTES EQUALLY . . . . . . . . . . 60
10.17. COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . 60
10.18. FURTHER ASSURANCES . . . . . . . . . . . . . . . . . 61
10.19. SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . 61
10.20. DAMAGE, DESTRUCTION, TAKING, ETC. . . . . . . . . . 63
10.21. ACCOUNTING CHANGES . . . . . . . . . . . . . . . . . 63
10.22. ACQUISITIONS . . . . . . . . . . . . . . . . . . . . 63
10.23. IMPAIRMENT OF SECURITY INTERESTS . . . . . . . . . . 63
10.24. LIMITATION ON RESTRICTIONS ON SUBSIDIARY DIVIDENDS,
ETC. . . . . . . . . . . . . . . . . . . . . . . . . 63
10.25. NO OTHER NEGATIVE PLEDGES . . . . . . . . . . . . . 64
10.26. SALES OF RECEIVABLES . . . . . . . . . . . . . . . . 64
10.27. FIXED PRICE SUPPLY CONTRACTS; CERTAIN POLICIES . . . 64
10.28. INDEPENDENT CORPORATE EXISTENCE . . . . . . . . . . 65
10.29. OTHER DEBT . . . . . . . . . . . . . . . . . . . . . 66
10.30. RESTRICTION ON GENERAL PARTNER . . . . . . . . . . . 66
10.31. RECORDATION OF CONVEYANCE DOCUMENTS . . . . . . . . 67
<PAGE> 367
11. EVENTS OF DEFAULT; ACCELERATION . . . . . . . . . . . . . . 67
12. REMEDIES ON DEFAULT; RECOURSE, ETC. . . . . . . . . . . . . 71
13. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 72
14. REGISTRATION, TRANSFER AND SUBSTITUTION OF NOTES . . . . . . 92
14.1. NOTE REGISTER; OWNERSHIP OF NOTES . . . . . . . . . 92
14.2. TRANSFER AND EXCHANGE OF NOTES . . . . . . . . . . . 92
14.3. REPLACEMENT OF NOTES . . . . . . . . . . . . . . . . 92
14.4. NOTES HELD BY COMPANY, ETC., DEEMED NOT OUTSTANDING 93
15. PAYMENTS ON NOTES . . . . . . . . . . . . . . . . . . . . . 93
15.1. PLACE OF PAYMENT . . . . . . . . . . . . . . . . . . 93
15.2. HOME OFFICE PAYMENT . . . . . . . . . . . . . . . . 93
16. EXPENSES, INDEMNIFICATION, ETC. . . . . . . . . . . . . . . 94
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . . . . . . 97
18. AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . 97
19. NOTICES, ETC. . . . . . . . . . . . . . . . . . . . . . . . 97
20. REPRODUCTION OF DOCUMENTS . . . . . . . . . . . . . . . . . 98
21. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 98
22. SUBMISSION TO JURISDICTION . . . . . . . . . . . . . . . . . 99
23. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . 99
24. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . 99
25. CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . . 100
Schedule A -- Schedule of Purchasers
Schedule 5.3 -- Jurisdiction of Qualification
Schedule 5.4(c) -- Certain Changes
Schedule 5.7 -- Indebtedness
Schedule 5.8(b) -- List of Title Exceptions
Schedule 5.9 -- Litigation
Schedule 5.18 -- Environmental Notices
Schedule 10.2 -- Liens
Schedule 10.5 -- Transactions With Affiliates
<PAGE> 368
Exhibit A -- Form of Note
Exhibit B1 -- Form of Opinion of Company Counsel
Exhibit B2 -- Form of Opinion of Local Counsel for the Company
Exhibit B3 -- Form of Opinion of Trustee's Counsel
Exhibit B4 -- Form of Opinion of Debevoise & Plimpton
Exhibit C -- Form of Trust Agreement
Exhibit D -- Form of Subordination Provisions
Exhibit E -- Form of Company Security Agreement
Exhibit F -- Form of Intercompany Note
Exhibit G -- Form of Partnership Agreement
Exhibit H -- Form of Perfection Certificate
Exhibit I -- Form of Subsidiary Guarantee Agreement
Exhibit J -- Form of Supplemental Agreement
<PAGE> 369
CORNERSTONE PROPANE GP, INC.
CORNERSTONE PROPANE, L.P.
SYN INC.
432 Westridge Drive,
Watsonville, California 95076
7.53% Senior Secured Notes due December 30, 2010
Dated as of December 11, 1996
TO EACH OF THE PURCHASERS LISTED
IN THE ATTACHED SCHEDULE A
Dear Purchaser:
Cornerstone Propane GP, Inc., a Delaware corporation
("Cornerstone Propane GP"), SYN Inc., a Delaware corporation (the
"Special General Partner"), and together with Cornerstone Propane GP,
each a "General Partner" and together, the "General Partners," and
Cornerstone Propane, L.P., a Delaware limited partnership (the
"Company"), having been formed to acquire and to operate the Assets,
hereby agree with you as follows:
SECTION 1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of
$220,000,000 aggregate principal amount of its 7.53% Senior Secured
Notes due December 30, 2010 (the "Notes", such term to include any
Notes issued in substitution therefor or replacement thereof pursuant
to Section 14). The Notes shall be substantially in the form of Ex-
hibit A, with such changes therefrom, if any, as may be approved by
you and the Company. Certain capitalized terms used in this Note
Agreement (the "Agreement") are defined in Section 13; references to a
"Section" or a "Schedule" or an "Exhibit" are, unless otherwise speci-
fied, to a Section of this Agreement or to a Schedule or an Exhibit
attached to this Agreement.
SECTION 2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this
Agreement, the Company will issue and sell to you and you will
purchase from the Company, at the Closing provided for in Section 3,
Notes in the principal amount specified opposite your name in Sched-
ule A for purchase by you at the Closing, at the purchase price of
100% of the principal amount thereof. At the Closing provided for in
Section 3, the General Partners and Empire Energy SC Corporation, a
Delaware corporation, will convey substantially all of their assets to
the Company pursuant to the Conveyance Agreements in exchange for
general and limited partner interests in the Company and the
assumption by the Company of the liabilities of the General Partners
specifically referenced in the Conveyance Agreements.
<PAGE> 370
Contemporaneously with entering into this Agreement,
the General Partners and the Company are entering into identical Note
Agreements (the "Other Agreements") with each of the other purchasers
named in Schedule A (the "Other Purchasers"), providing for the sale
to each of the Other Purchasers, at the Closing, of Notes in the
principal amount specified opposite its name in Schedule A. The sale
of Notes to you and the Other Purchasers are to be separate sales, and
this Agreement and the Other Agreements constitute separate agree-
ments.
SECTION 3. CLOSING.
The sales of the Notes to you and the Other Pur-
chasers shall take place at the offices of Schiff Hardin & Waite, 7200
Sears Tower, Chicago, Illinois, at 9:00 a.m., Chicago time, at a
closing (the "Closing") on December 17, 1996, or such later date as
may be agreed upon by Cornerstone Propane GP, the Company, you and the
Other Purchasers. At the Closing, the Company will deliver to you
Notes in the principal amount to be purchased by you, in the form of a
single Note (or such greater number of Notes as you may request,
provided that each such Note shall be in a denomination of at least
$500,000), each dated the date of the Closing and registered in your
name (or in the name of your nominee as indicated in Schedule A),
against payment of the purchase price therefor on the date of Closing
by transfer of immediately available funds to the Company, or as
otherwise directed by the Company in writing (at least two days prior
to the date of the Closing). If at the Closing the Company shall fail
to tender such Notes to you as provided above in this Section 3 or if
any of the conditions specified in Section 4 shall not have been
fulfilled to your satisfaction, you shall, at your election, be re-
lieved of all further obligations under this Agreement, without
thereby waiving any other rights you may have by reason of such
failure or such nonfulfillment. If the Closing shall not have
occurred on or prior to December 31, 1996, you will promptly
thereafter instruct the Trustee to release its lien on, and its
security interest in, all of the Collateral.
SECTION 4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to
be sold to you at the Closing is subject to the fulfillment to your
satisfaction, prior to or at the Closing, of the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES. The rep-
resentations and warranties of the Company and its Affiliates
contained in this Agreement, the other Operative Agreements, and those
otherwise made in writing by or on behalf of the Company or any
Affiliate of the Company in connection with the transactions con-
templated by this Agreement, shall be true and correct when made and
at the time of the Closing, except as affected by the consummation of
such transactions and except for any representation and warranty that
is expressly stated to relate to a specific date, in which case such
2
<PAGE> 371
representation and warranty shall be true and correct as of such
earlier date.
4.2. PERFORMANCE; NO DEFAULT. Each of the Company
and its Affiliates shall have performed and complied with all
agreements and conditions contained in this Agreement or any other
Operative Agreement required to be performed or complied with by it
prior to or at the Closing, and at the time of the Closing no Event of
Default or Potential Event of Default under this Agreement or default
by any party under any other Operative Agreement shall have occurred
and be continuing.
4.3. COMPLIANCE CERTIFICATES. You shall have
received Officers' Certificates of the Company, Northwestern, each
General Partner and the Public Partnership, each dated the date of the
Closing and satisfactory in substance and form to you, certifying, in
the case of the Officers' Certificates of each entity other than
Northwestern, that the conditions specified in Sections 4.1 and 4.2
have been fulfilled in all material respects insofar as the relevant
representation or warranty is made by, or the relevant agreement or
condition is required to be performed or complied with by, or the
relevant Event of Default, Potential Event of Default or default has
been caused by or relates to, each of such entities and, with respect
to the Officers' Certificate of the Company, its Subsidiaries, and, in
the case of the Officers' Certificate of the Managing General Partner
and the Company, certifying that no material adverse change has
occurred in the financial condition of the Business subsequent to the
date of the financial statements delivered pursuant to Section 5.4(c)
and, in the case of the Officers' Certificate of Northwestern,
certifying that neither the Memorandum (as of the date of delivery
thereof) nor the Registration Statement contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements contained therein,
in light of the circumstances under which they were made, not
misleading.
4.4. OPINIONS OF COUNSEL. You shall have received
favorable opinions from (a) Andrews & Kurth L.L.P. and Schiff Hardin &
Waite, special counsel for the Company and its Affiliates, sub-
stantially in the form of Exhibit B1, (b) (i) Balch & Bingham, special
Alabama counsel for the Company and its Affiliates, (ii) The Rose Law
Firm, special Arkansas counsel for the Company and its Affiliates,
(iii) McCutchen, Doyle, Brown & Enerson, L.L.P., special California
counsel for the Company and its Affiliates, (iv) Cobb, Cole & Bell,
special Florida counsel for the Company and its Affiliates,
(v) Greenebaum, Dole & McDonald, special Kentucky counsel for the
Company and its Affiliates, (vi) Mitchell, McNutt, Threadgill, Smith &
Sams, special Mississippi counsel for the Company and its Affiliates,
(vii) Thompson Coburn, special Missouri counsel for the Company and
its Affiliates, (viii) Winthrop, Stimson, Putnam & Roberts, special
New York counsel for the Company and its Affiliates, and (ix) Bass,
Berry & Sims, special Tennessee counsel for the Company and its
3
<PAGE> 372
Affiliates, each substantially in the form of Exhibit B2, (c) Haynes
and Boone, counsel for the Trustee, substantially in the form of Ex-
hibit B3 and (d) Debevoise & Plimpton, your special counsel in connec-
tion with the transactions contemplated by this Agreement,
substantially in the form of Exhibit B4, and in each case covering
such other matters incident to such transactions as you may reasonably
request, each addressed to you, dated the date of the Closing and
otherwise reasonably satisfactory in substance and form to you. You
shall have received copies of each of the opinions delivered pursuant
to the Underwriting Agreement (other than the opinion of counsel to
the underwriters), accompanied by letters, dated the date of the
Closing and addressed to you, from the counsel rendering such opin-
ions, stating that you are entitled to rely on such opinions as if
they were addressed to you. The Company and the General Partners
hereby direct each of their counsel referred to in clauses (a) and (b)
of this Section 4.4, and each of its counsel who deliver opinions
pursuant to the Underwriting Agreement, to deliver to you such
opinions and letters to be delivered by it and authorize you to rely
thereon.
4.5. LEGAL INVESTMENT. On the date of the Closing
your purchase of Notes shall be permitted by the laws and regulations
of each jurisdiction to which your investments are subject, but
without recourse to provisions (such as section 1404(b) or 1405(a)(8)
of the New York Insurance Law) permitting limited investments by in-
surance companies in securities not otherwise legally eligible for
investment. If requested by you by prior written request to the
Company or the General Partners, you shall have received, at least
five Business Days prior to the Closing, an Officers' Certificate of
the Company or the General Partners, as the case may be, certifying as
to such matters of fact as you may reasonably specify to enable you to
determine whether such purchase is so permitted.
4.6. TRUST AGREEMENT. The Company, the Qualifying
Restricted Subsidiaries, if any, and the Trustee shall have duly
authorized, executed and delivered the Trust Agreement. The Trust
Agreement shall be in full force and effect and shall constitute the
valid, binding and enforceable obligation of the Company, the Quali-
fying Restricted Subsidiaries, if any, and the Trustee, except that
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
application relating to or affecting the rights and remedies of
creditors, and no default on the part of the Company or the Qualifying
Restricted Subsidiaries shall exist thereunder.
4.7. SECURITY DOCUMENTS. Each of the Security
Documents to be executed and delivered on or before the Closing Date
shall have been duly authorized, executed and delivered by each of the
Company and/or its Affiliates party thereto, shall be in full force
and effect and shall (i) constitute the valid, binding and enforceable
obligation of each such party, except that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
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moratorium and similar laws of general application relating to or
affecting the rights and remedies of creditors and by general
equitable principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law, and (ii) to the extent
duly recorded pursuant to Section 4.8, constitute a valid assignment
of, and create a valid, presently effective security interest of
record in, property covered by such Security Document and all other
interests described therein, subject to no prior security interest in
any such property other than as specifically permitted therein, and no
default on the part of any such party shall exist thereunder.
4.8. CONVEYANCE; RECORDATION; TAXES, ETC. Prior to
the Closing, the Conveyance Agreements referred to in clause (b) of
the definition of such term and the Company Security Agreement, or
proper notices, statements or other instruments in respect thereof,
covering all of the Assets covered by such Conveyance Agreements and
the Security Documents, shall have been duly delivered, and all other
actions deemed necessary by your special counsel shall have been duly
performed or taken, in such manner and in such places as is required
by applicable law (a) to convey to the Company ownership of the Assets
referred to in Section 5.8(c)(ii) purported to be conveyed by such
Conveyance Agreements and (b) to establish, perfect, preserve and
protect the rights and first priority Liens purported to be granted by
each such Security Document to the Trustee with respect to the Assets
referred to in Section 5.8(c)(ii) for the benefit of the holders of
the Notes and their respective successors and assigns and all taxes,
fees and other charges then due in connection with the execution,
delivery, recording, publishing, registration and, to the extent filed
prior to the date of Closing, filing of such documents or instruments
shall have been paid in full.
4.9. OPERATIVE AGREEMENTS. Each of the Operative
Agreements to be executed on or before the Closing Date shall have
been duly authorized, executed and delivered by the respective parties
thereto, in form and substance satisfactory to you, shall be in full
force and effect, and shall constitute the legal, valid and binding
and enforceable obligations of the respective parties thereto, except
that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
application relating to or affecting the rights and remedies of
creditors and by general equitable principles, regardless of whether
such enforceability is considered in a proceeding in equity or law,
and all actions required to be performed or taken thereunder on or
prior to the date of the Closing shall have been duly taken and no
default or accrued right of termination on the part of any of the
parties thereto shall exist thereunder as of the date of the Closing,
and you and the Trustee shall have received a fully executed original,
or a true and complete copy, of each such document.
4.10. SALE AND ISSUANCE OF OTHER NOTES. Contempora-
neously with the Closing, the Company shall sell to the Other Pur-
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chasers the Notes to be purchased by them at the Closing under the
Other Agreements as specified in Schedule A.
4.11. SALE OF UNITS. At the time of the Closing,
(a) the Underwriting Agreement shall be in full force and effect,
(b) all conditions to closing contained in the Underwriting Agreement
shall have been fulfilled or, in a manner acceptable to you, waived,
(c) your special counsel shall have received a copy of each agreement,
document, opinion (as specified in Section 4.4) and certificate de-
livered in connection with the closing under the Underwriting
Agreement, and (d) substantially simultaneously with the receipt of
the proceeds of the sale of the Notes to you and the Other Purchasers
at the Closing and in substantially the order contemplated by the
Registration Statement, (i) the Public Partnership shall sell to the
Underwriters the Units provided to be sold under the Underwriting
Agreement for an aggregate gross purchase price of not less than
$170,800,000, (ii) (A) the Managing General Partner shall transfer all
of its limited partner interests in the Company to the Public
Partnership in exchange for an approximately .7686% general partner
interest in the Public Partnership and approximately 6,055,869
subordinated limited partner interests (approximately 5,071,233
subordinated limited partner interests if the Overallotment Option is
exercised in full), representing approximately 76.86% of the total
subordinated limited partner interests in the Public Partnership, (B)
the Special General Partner shall transfer all of its limited partner
interests in the Company to the Public Partnership in exchange for
approximately a .2314% general partners interest in the Public
Partnersip and approximately 1,822,750 subordinated limited partner
interests (approximately 1,614,045 subordinated limited partners
interests if the Overallotment Option is exercised in full),
representing approximately 23.14% of the total subordinated limited
partner interests in the Public Partnership, and, (C) assuming that
8,540,000 common units in the Public Partnership are sold to the
public (x) the Managing General Partner will own approximately 36.7%
of the limited partner interests in the Public Partnership
(approximately 30.8% of the limited partner interests in the Pubic
Partnership if the Overallotment Option is exercised in full), and (y)
the Special General Partner will own approximately 11.6% of the
limited partner interests in the Public Partnership (approximately
9.8% of the limited partner interests in the Public Partnership if the
Overallotment Option is exercised in full), and (iii) all transactions
contemplated by the Registration Statement and the Memorandum to be
completed by the General Partners, the Company and their Affiliates
prior to or substantially simultaneously with the issuance of the
Notes shall have been completed substantially as contemplated therein
and in a manner acceptable to you.
4.12. PROCEEDINGS AND DOCUMENTS. All proceedings in
connection with the transactions contemplated by this Agreement and
all documents and instruments incident to such transactions shall be
satisfactory to you and your special counsel, and you and your special
counsel shall have received all such counterpart originals or
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certified or other copies of such documents as you or they may reason-
ably request.
4.13. RATING. Prior to the Closing, the Notes shall
have received a rating of at least BBB from Fitch Investors Service,
Inc., which rating remains in effect as of the Closing.
4.14. INSURANCE BROKER'S CERTIFICATE. Insurance
complying with the provisions of Section 10.11 hereof shall be in full
force and effect and you, the Other Purchasers and the Trustee shall
have received a certificate from Andreini Parker Insurance Brokers or
such other independent insurance brokers or consultants as shall be
reasonably satisfactory to you, dated the date of the Closing.
4.15. PAYMENT OF CLOSING FEES. The Company shall
have paid the fees and disbursements required by Section 16 to be paid
by the Company on the date of the Closing.
4.16. PRIVATE PLACEMENT NUMBER. The Company shall
have obtained for the Notes a Private Placement Number issued by
Standard & Poor's CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners).
4.17. OTHER AGREEMENTS. The Company shall have
delivered to you a true and complete copy of the Registration
Statement.
SECTION 5. REPRESENTATIONS AND WARRANTIES, ETC. OF THE GENERAL
PARTNERS AND THE COMPANY.
Each of the General Partners and the Company
represents and warrants that:
5.1. ORGANIZATION, STANDING, ETC. (a) The Company
is a limited partnership duly organized, validly existing and in good
standing under the Delaware Revised Uniform Limited Partnership Act
and has all requisite partnership power and authority to own and
operate its properties (including, without limitation, the Assets), to
conduct its business as described in the Registration Statement after
giving effect to the transfer of the Assets, to enter into this
Agreement and the other Operative Agreements to which it is a party,
to issue and deliver the Notes and to carry out the terms of this
Agreement, such other Operative Agreements and the Notes.
(b) Each General Partner is a corporation duly or-
ganized, validly existing and in good standing (in the case of the
Managing General Partner) under the laws of Delaware or, as of the
date of Closing, under the laws of the State of California or (in the
case of the Special General Partner) under the laws of the State of
Delaware and has all requisite corporate power and authority to own
and operate its properties, to conduct its business as described in
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the Registration Statement, to enter into and carry out the terms of
this Agreement and the other Operative Agreements to which it is a
party, and, in the case of the Managaing General Partner, to execute
and deliver as Managing General Partner of the Company this Agreement,
the Notes and the other Operative Agreements to which the Company is a
party.
(c) The Restricted Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and
authority to own and operate its properties, to conduct its business
as described in the Registration Statement after giving effect to the
transfer of the Assets.
(d) The Public Partnership is a limited
partnership duly organized, validly existing and in good standing
under the Delaware Revised Uniform Limited Partnership Act and has all
requisite partnership power and authority to own and operate its
properties, to conduct its business as described in the Registration
Statement, and to execute, deliver and carry out the terms of the
Operative Agreements to which it is a party.
5.2. PARTNERSHIP INTERESTS. The only general
partners of the Company are the General Partners, which upon the
consummation of the Closing will own an aggregate 1.0101% general
partner interest in the Company. Upon the consummation of the Closing
the only limited partner of the Company will be the Public
Partnership, which will own a 98.9899% limited partner interest in the
Company acquired as provided in the Registration Statement. The
Company will not have any other partners upon the consummation of the
Closing. Except for Cornerstone Sales & Service Corporation, a
Delaware corporation, the Company does not have, and immediately after
giving effect to the transactions contemplated by the Conveyance
Agreements will not have, any Subsidiaries or any Investments in any
Person (other than Investments of the types described in Sec-
tion 10.3(a)).
5.3. QUALIFICATION. The Company is duly qualified
or registered and is in good standing as a foreign limited partnership
for the transaction of business, and each General Partner and the
Restricted Subsidiary is qualified or registered and is in good
standing as a foreign corporation for the transaction of business, in
the jurisdictions set forth in Schedule 5.3 which are the only
jurisdictions in which, after giving effect to the conveyance to the
Company of the Assets, the nature of their respective activities or
the character of the properties they own, lease or use makes such
qualification or registration necessary and in which the failure so to
qualify or to be so registered would have a Material Adverse Effect.
Each of the General Partners, Northwestern, the Restricted
Subsidiaries and the Company has taken all necessary partnership or
corporate action to authorize the execution, delivery and performance
by it of this Agreement, the Notes, as the case may be, and each other
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Operative Agreement to which it is a party. Each of the General
Partners, the Restricted Subsidiaries and the Company has duly
executed and delivered each of this Agreement, the Notes and the other
Operative Agreements to which it is a party, and each of them
constitutes its legal, valid, binding and enforceable obligation in
accordance with its terms, except that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or af-
fecting the rights and remedies of creditors and by general equitable
principles, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
5.4. BUSINESS; FINANCIAL STATEMENTS. (a) The
Company has not engaged in any business or activities prior to the
date of this Agreement, except for activities related to its
formation, organization and prospective operations, and will not have
any significant assets or liabilities prior to its acquisition of the
Assets and assumption of liabilities, as contemplated by this Agree-
ment and the Registration Statement.
(b) The Company has delivered to you complete and
correct copies of (i) the Registration Statement, and (ii) the memo-
randum prepared by Morgan Stanley & Co. Incorporated and Dean Witter
Reynolds, Inc. for use in connection with the Company's private
placement of the Notes (the "Memorandum"). The unaudited pro forma
consolidated financial statements of the Public Partnership set forth
in the Registration Statement comply in all material respects with the
applicable accounting requirements of the Securities Act of 1933, as
amended, and the published rules and regulations thereunder and, in
the opinion of the Managing General Partner, the assumptions on which
the pro forma adjustments to such pro forma consolidated financial
statements of the Public Partnership are based, provide a reasonable
basis for presenting the significant effects of the transactions
contemplated by such pro forma consolidated financial statements and
such pro forma adjustments give appropriate effect to such assumptions
and are properly applied in all material respects to the historical
amounts in the compilation of such pro forma consolidated financial
statements. The financial statements and schedules included in the
Registration Statement (other than with respect to pro forma matters)
have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods specified, except to the extent disclosed
therein, and present fairly the financial position of the corporation
to which they relate as of the respective dates specified and the
results of their operations and cash flows for the respective periods
specified (subject, as to interim statements, to year-end audit
adjustments). Since July 1, 1996, there has been no material adverse
change in the business, financial condition, or results of operations
of the General Partners and their consolidated subsidiaries taken as a
whole. The financial data included under the caption "Selected Pro
Forma Financial and Operating Data" in the Registration Statement
present fairly, on the basis stated in the Registration Statement, the
information set forth therein and have been compiled on a basis con-
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sistent with the unaudited pro forma financial statements and that of
the audited and unaudited historical financial statements included in
the Registration Statement. The historical aspects of the financial
data included under the caption "Capitalization" in the Registration
Statement present fairly, on the basis stated in the Registration
Statement, the information set forth therein and have been compiled on
a basis consistent with that of the unaudited historical financial
statements included in the Registration Statement; the pro forma
aspects of such financial data included under the caption
"Capitalization" have been prepared in all material respects in
accordance with all applicable rules and guidelines of the Securities
and Exchange Commission with respect to pro forma financial
information; and the assumptions on which the pro forma adjustments to
the pro forma aspects of the financial data included under the caption
"Capitalization" are based provide a reasonable basis for presenting
the significant effects of the transactions contemplated by such pro
forma financial data and such pro forma adjustments give appropriate
effect to such assumptions and are properly applied in all material
respects to the historical amounts in the compilation of such pro
forma financial data.
(c) The unaudited pro forma balance sheets of the
Public Partnership as of September 30, 1996 present fairly the
financial condition of the Public Partnership as of that date. Except
as disclosed on Schedule 5.4(c), since September 30, 1996, there has
been no change or event which could reasonably be expected to have a
Material Adverse Effect. The financial data for the Public
Partnership in the Memorandum present fairly in all material respects,
on the basis stated in the Memorandum, the information set forth
therein and have been compiled based on the audited financial state-
ments included in the Registration Statement. Schedule 5.4(c)
specifies information in the Registration Statement that modifies and
updates information previously contained in the Memorandum.
Modifications of a non-material nature are not reflected in
Schedule 5.4(c). Except as otherwise provided on Schedule 5.4(c), the
financial data identified as historical included in the Memorandum
present fairly, on the basis stated in the Memorandum, the information
set forth therein and have been compiled on a basis consistent with
that of the audited financial statements included in the Registration
Statement; the pro forma financial data included in the Memorandum
represent, in all material respects and on the basis stated in the
Memorandum, the Managing General Partner's best estimate at such time
with respect to pro forma financial information; and the assumptions
on which the pro forma adjustments to the pro forma aspects of the
financial data included in the Memorandum are based provide a
reasonable basis for presenting all of the significant effects of the
transactions contemplated by such pro forma financial data and such
pro forma adjustments give appropriate effect to such assumptions and
are properly applied in all material respects to the historical
amounts in the compilation of such pro forma financial data.
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5.5. CHANGES, ETC. Except as contemplated by this
Agreement, the other Operative Agreements, the Registration Statement
or the Memorandum, subsequent to the respective dates as of which
information is given in the Registration Statement or the Memorandum,
the Company and its Affiliates have not incurred any material
liabilities or obligations, direct or contingent, or entered into any
material transaction not in the ordinary course of business, no events
have occurred, which individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, and there
has not been (a) any Restricted Payment of any kind declared, paid or
made by the Company or either General Partner (other than those
referred to in Section 5.13) or (b) any incurrence of Indebtedness
under the Bank Credit Facilities.
5.6. TAX RETURNS AND PAYMENTS. On the Closing Date
and after giving effect to the transactions then to be consummated
under the Operative Agreements, each of the Company and its Affiliates
has filed all federal, state and other tax returns required by law to
be filed by it or has properly filed for an extension of time for the
filing thereof and has paid all, taxes, assessments and other govern-
mental charges levied upon it or any of its properties, assets, income
or franchises which are due and payable, except those (a) which are
not past due or are presently being contested in good faith by
appropriate proceedings diligently conducted for which such reserves
or other appropriate provisions, if any, as shall be required by GAAP
have been made, or (b) for which the failure to file or extend would
not reasonably be expected to have a Material Adverse Effect. The
Company is a limited partnership that is treated as a pass-through
entity for federal income tax purposes.
5.7. INDEBTEDNESS. At the time of the Closing,
other than the Indebtedness represented by the Notes and the
Indebtedness listed in Schedule 5.7, none of Company, either General
Partner or the Restricted Subsidiary will have any secured or un-
secured Indebtedness outstanding. At the time of the Closing, no
instrument or agreement to which the Company or, other than Section
7.6(a) of the MLP Agreement either General Partner is a party or by
which the Company or either General Partner is bound or which is
applicable to the Company or either General Partner (other than this
Agreement and the Bank Credit Facilities) contains any restrictions on
the incurrence by the Company or either General Partner of additional
Indebtedness.
5.8. TRANSFER OF ASSETS ADN BUSINESS. (a) The
Company and the Restricted Subsidiary will at the Closing, after
giving effect to the transfer of the Assets on or prior to the date of
the Closing as described in the Registration Statement, be in
possession of and operating in compliance in all respects with all
franchises, grants, authorizations, approvals, licenses, permits,
easements, rights-of-way, consents, certificates and orders required
to own, lease or use its properties (including, without limitation, to
own, lease or use the Assets and to assume certain liabilities relat-
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ing to the Assets as described in the Registration Statement and the
Operative Agreements) and (considering all such Permits (as below
defined) in the possession of, and being complied with by, the Company
and the Restricted Subsidiary taken together) to permit the conduct of
the Business as now conducted and proposed to be conducted
("Permits"), except for those Permits (collectively, "Permitted
Exceptions") (i) which are not required at such time and are routine
or administrative in nature and are expected in the reasonable
judgment of Cornerstone Propane GP to be obtained or given in the
ordinary course of business after the date of the Closing, or
(ii) which, if not obtained or given, would not, individually or in
the aggregate, have a Material Adverse Effect.
(b) Except as set forth in Schedule 5.8(b), the
General Partners have, and upon the consummation of the Closing the
Company will have, (i) title to the portion of the Assets constituting
real property owned in fee simple, (ii) good and valid leasehold
interests in the portion of the Assets constituting real property and
leased, pursuant to which the Company shall enjoy undisturbed posses-
sion thereof, except for defects in, or lack of recorded title and
exceptions to, leasehold interests as would not, in the aggregate, be
reasonably expected to have a Material Adverse Effect, and
(iii) sufficient title to the portion of the Assets constituting
personal property reasonably necessary for the use and operation of
such personal property as it has been used in the past and as it is
proposed to be used in the Business, in each case subject to no Liens
except Permitted Encumbrances and Liens that will be discharged prior
to the Closing. The Assets are all of the assets and properties
reasonably necessary to enable the Company to conduct the Business and
include all options to purchase or rights of first refusal granted to
or for the General Partners with respect to any of the Assets leased
by either General Partner. Subject to exceptions as would not,
individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect, (A) the General Partners enjoy, and, upon
execution and delivery of the Operative Agreements and the consumma-
tion of the Conveyance Agreements, the Company will enjoy, peaceful
and undisturbed possession under all leases necessary for the
operation of the Business, other than certain immaterial leased
property of which the Company shall enjoy undisturbed possession, and
(B) all such leases are valid and subsisting and are in full force and
effect. Except to perfect and to protect security interests permitted
by Section 10.2, (x) at the time of the Closing, no effective
financing statement under the Uniform Commercial Code which names the
Company, Northwestern, any Restricted Subsidiary or either General
Partner as debtor, which individually or in the aggregate relates to
any part of the Assets or other assets pledged pursuant to any
Security Document, will be on file in any jurisdiction and (y) at the
time of the Closing, none of the Company, Northwestern, any Restricted
Subsidiary or either General Partner will have signed any effective
financing statement or any effective security agreement, which relates
to any part of the Assets or other assets pledged pursuant to any
Security Document, authorizing any secured party thereunder to file
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any such financing statement, except for financing statements to be
executed and filed in connection with the Closing.
(c) Upon the consummation of the Closing, (i) the
General Partners will have transferred to the Company (except in the
case of motor vehicles covered by certificates of title where the
certificates of title will have been duly executed in favor of the
Company, and such certificates of title will have been delivered to
the Company, but will not have yet been submitted to the appropriate
governmental agency for re-issuance) title to all properties,
easements and licenses comprising the Assets, (ii) the Conveyance
Agreements referred to in clause (b) of the definition of such term
(except in the case of motor vehicles covered by certificates of
title) will have been duly delivered as required by Section 4.8 with
respect to the Assets, and (iii) the Company Security Agreement or
proper notices, statements or other instruments in respect thereof,
will have been duly recorded, published, registered and filed as
required by Section 4.8 with respect to the Assets covered by the
Company Security Agreement.
5.9. LITIGATION, ETC. Except as set forth on
Schedule 5.9, there is no action, proceeding or investigation pending
or, to the knowledge of the Company and the General Partners upon
reasonable inquiry, threatened (or any basis therefor known to the
Company or either General Partner) which questions the validity of
this Agreement, any other Operative Agreement or the Notes or any
action taken or to be taken pursuant to this Agreement, any other
Operative Agreement or the Notes, or which could reasonably be
expected to have, either in any case or in the aggregate, a Material
Adverse Effect.
5.10. COMPLIANCE WITH OTHER INSTRUMENTS, ETC.
Neither the Company, the Restricted Subsidiary nor either General
Partner (i) is in violation of any term of the Partnership Agreement
or, in the case of the Restricted Subsidiary and the General Partners,
of their respective articles or certificates of incorporation or by-
laws, or (ii) is in violation of any term of any other agreement or
instrument to which the Company, the Restricted Subsidiary or either
General Partner is a party or by which any of them or any of their
properties is bound or any term of any applicable law, ordinance, rule
or regulation of any governmental authority or any term of any appli-
cable order, judgment or decree of any court, arbitrator or govern-
mental authority, in the case of clause (ii), the consequences of
which would have a Material Adverse Effect; the execution, delivery
and performance by each of the General Partners and the Company of
this Agreement and the other Operative Agreements to which it is a
party and the Notes, as the case may be, will not result in any
violation of or be in conflict with or constitute a default under any
such term or result in the creation of (or impose any obligation on
the Company, the Restricted Subsidiary or either General Partner to
create) any Lien upon any of the properties or assets of the Company
or either General Partner prohibited by any such term, except for
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Permitted Encumbrances and for any such term relating to Indebtedness
to be repaid in full at the time of the Closing; and there is no such
term the compliance with which would have, or in the future may in the
reasonable judgment of either General Partner or the Company be likely
to have, a Material Adverse Effect.
5.11. GOVERNMENTAL CONSENT. No consent, approval or
authorization of, or declaration or filing with, any governmental
authority (which has not been obtained) is required for the valid exe-
cution, delivery and performance of this Agreement or the other Opera-
tive Agreements (other than Permitted Exceptions), and no such
consent, approval, authorization, declaration or filing is required
for the valid offer, issue, sale and delivery of the Notes pursuant to
this Agreement and the Other Agreements.
5.12. OFFER OF NOTES. Neither the Company nor any
of its Affiliates nor anyone acting on its or their behalf has
directly or indirectly offered the Notes or any part thereof or any
similar securities for sale to, or solicited any offer to buy any of
the same from, or otherwise approached or negotiated in respect
thereof with, anyone other than you, the Other Purchasers and not more
than 85 other institutional investors. Neither the General Partners
nor the Company nor anyone authorized to act on their behalf has taken
or will take any action which would subject the issuance and sale of
the Notes to the registration and prospectus delivery provisions of
the Securities Act of 1933, as amended, or to the registration or
qualification provisions of any securities or Blue Sky law of any
applicable jurisdiction or require qualification of any Security
Document under the Trust Indenture Act of 1939, as amended; provided,
however, that it is understood that any action taken by you or any
Other Purchaser shall not have been taken on behalf of the Company or
the General Partners.
5.13. USE OF PROCEEDS. The proceeds of the sale of
the Units by the Public Partnership will be used by the Public
Partnership and the Company as contemplated by the Registration
Statement. The proceeds of the sale of the Notes to you and the Other
Purchasers will be used to repay existing debt, for general
partnership purposes and to pay fees and expenses associated with the
offering and to make a distribution to the Special General Partner who
will use $15,000,000 to provide net worth for the Special General
Partner and will use the balance to redeem all or a portion of its
preferred stock.
5.14. FEDERAL RESERVE REGULATIONS. Neither the
General Partners nor the Company will, directly or indirectly, use any
of the proceeds of the sale of the Notes for the purpose, whether im-
mediate, incidental or ultimate, of buying a "margin stock" or of
maintaining, reducing or retiring any indebtedness originally incurred
to purchase a stock that is currently a "margin stock", or for any
other purpose which might constitute this transaction a "purpose cre-
dit", in each case within the meaning of Regulation G of the Board of
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Governors of the Federal Reserve System (12 C.F.R. 207, as amended),
or otherwise take or permit to be taken any action which would involve
a violation of such Regulation G or of Regulation X (12 C.F.R. 224, as
amended) or any other applicable regulation of such Board. No indebt-
edness being reduced or retired, directly or indirectly, out of the
proceeds of the sale of the Notes was incurred for the purpose of
buying or carrying any stock which is currently a "margin stock", and
neither General Partner nor the Company owns or has any present
intention of acquiring with the proceeds thereof any amount of such
"margin stock".
5.15. INVESTMENT COMPANY ACT. None of the General
Partners or the Company is an "investment company", or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
5.16. PUBLIC UTILITY HOLDING COMPANY ACT; FEDERAL
POWER ACT. None of the General Partners or the Company is a "holding
company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended; none of the General Partners
or the Company, or the issue and sale of the Notes by the Company is
subject to regulation under such Act; and none of the General
Partners or the Company is a "public utility" as such term is defined
in the Federal Power Act, as amended.
5.17. ERISA. (a) None of the General Partners, the
Company, any Subsidiary of the Company or any Related Person of the
General Partners or the Company (other than Northwestern and any
Subsidiaries of Northwestern (except for the General Partners and any
Subsidiary of the General Partners that is a Related Person of the
Company)) is obligated to contribute to, and none of the General
Partners, the Company or any Related Person of the Company has any
liability or obligation with respect to, any Plan that is subject to
Section 302 or Title IV of ERISA or Section 412 of the Code (other
than a Multiemployer Plan). None of the Company, any Subsidiary of
the Company or any Related Person of the Company has any liability or
obligation to provide any amount or type of compensation or benefit in
respect of any employee or former employee of the Business which
relates to periods, services performed or benefits or amounts accrued
prior to the transfer of the Business or the Assets pursuant to the
Operative Agreements and the transactions contemplated thereby (other
than pursuant to a Multiemployer Plan, continuation coverage provided
pursuant to Section 4980B of the Code or Section 601, et seq., of
ERISA, or any liability or obligation for contributions pursuant to a
Plan not yet required to be paid). None of the General Partners, the
Company, any Subsidiary of the Company or any Related Person of the
Company has incurred any material liability under Title IV of ERISA
with respect to any such Plan and no event or condition exists or has
occurred as a result of which such a liability would reasonably be
expected to be incurred. None of the General Partners, the Company,
15
<PAGE> 384
any Subsidiary of the Company or any Related Person of the Company has
engaged in any transaction, including the transactions contemplated
hereunder which could subject the Company or any Related Person of the
Company to a material liability pursuant to Section 4069(a) or 4212(c)
of ERISA. There has been no reportable event (within the meaning of
Section 4043(b) of ERISA other than one for which the applicable
notice requirements have been waived by PBGC regulation) or any other
event or condition with respect to any Plan which presents a risk of
the termination of, or the appointment of a trustee to administer, any
such Plan (other than a Multiemployer Plan) by the PBGC. No
prohibited transaction (within the meaning of Section 406(a) of ERISA
or Section 4975 of the Code) exists or has occurred with respect to
any Plan which has subjected or could reasonably be expected to
subject either General Partner, the Company or any Subsidiary of the
Company to a material liability under Section 502(i) or 502(l) of
ERISA or Section 4975 of the Code. No material liability to the PBGC
(other than liability for premiums not yet due) has been or is
expected to be incurred with regard to any Plan by the General
Partners, the Company, any Subsidiary of the Company or any Related
Person of the Company. None of the General Partners, the Company, any
Subsidiary of the Company or any Related Person of the Company
contributes or is obligated to contribute or has ever contributed or
been obligated to contribute to any single employer plan that has at
least two contributing sponsors not under common control. Timely
payment has been made of all amounts which the General Partners, the
Company, any Subsidiary of the Company or any Related Person of the
Company is required under applicable law, the terms of each Plan or
any collective bargaining agreement to have paid as contributions to
each such Plan except to the extent that failure to do so would not
have a Material Adverse Effect. To the knowledge of the General
Partners and the Company, no Multiemployer Plan has been terminated or
presents a material risk of termination, is insolvent or is in
reorganization within the meaning of Section 4241 or 4245 of ERISA and
the transactions contemplated hereby will not result in a withdrawal
from any Multiemployer Plan that would have a Material Adverse Effect.
None of the General Partners, the Company or any Subsidiary of the
Company has any obligation to provide any material amount of post-
employment welfare benefits or coverage (other than continuation
coverage provided pursuant to Section 4980B of the Code or Section
601, et seq., of ERISA).
(b) The execution and delivery of this Agreement
and the Other Agreements and the issue and sale of the Notes, and
delivery of the Notes hereunder and thereunder will not involve any
non-exempt "prohibited transaction" within the meaning of Section 406
of ERISA or Section 4975 of the Code. The representations by the
Company and the General Partners in the immediately preceding sentence
are made in reliance upon and subject to the accuracy of your
representation in Section 6.2 of this Agreement and the
representations of the Other Purchasers in Section 6.2 of the Other
Agreements as to the source of the funds to be used to pay the
purchase price of the Notes to be purchased by you and the Other Pur-
16
<PAGE> 385
chasers, respectively. With respect to each employee benefit plan
identified to the Company in accordance with clause (c) of Section 6.2
of this Agreement or of any of the Other Agreements, none of the
General Partners, the Company or any "affiliate" (as defined in Sec-
tion V(c) of the QPAM Exemption) of either General Partner or the
Company has at this time, and has not exercised at any time within the
one year period preceding the date of the Closing, the authority to
appoint or terminate you or any Other Purchaser as manager of any of
the assets of any such plan or to negotiate the terms of any
management agreement with you or any Other Purchaser on behalf of any
such plan.
5.18. ENVIRONMENTAL MATTERS. (a) Except as
disclosed in Schedule 5.18 each of the Company, each Restricted
Subsidiary and either General Partner is, and after giving effect to
the transfer to the Company of the Assets will be, in compliance with
all Environmental Laws applicable to it or to the Business or Assets
except where such noncompliance would not have a Material Adverse
Effect. Each of the Company and the Restricted Subsidiary has timely
and properly applied for renewal of all environmental permits or
licenses that have expired or are about to expire and are necessary
for the conduct of the Business as now conducted and as proposed to be
conducted, except where the failure to timely and properly reapply
would not have a Material Adverse Effect. Schedule 5.18 lists (i) all
notices from Federal, state or local environmental agencies to the
Company, the Restricted Subsidiary or the General Partners citing
environmental violations that have not been finally resolved and dis-
posed of, and no such violation, whether or not notice regarding such
violation is listed on Schedule 5.18, if ultimately resolved against
the Company, the Restricted Subsidiary or either General Partner, as
the case may be, individually or in the aggregate, would have a
Material Adverse Effect, and (ii) all current reports filed by the
Company, the Restricted Subsidiary or either General Partner with any
Federal, state or local environmental agency having jurisdiction over
the Assets, true and complete copies of which reports have been made
available to you, your special counsel and your environmental advisor.
Notwithstanding any such notice, the Company, the Restricted
Subsidiary and either General Partner are currently operating in all
material respects within the limits set forth in such environmental
permits or licenses and any current noncompliance with such permits or
licenses will not result in any material liability or penalty to the
Company, the Restricted Subsidiary or either General Partner or in the
revocation, loss or termination of any such environmental permits or
licenses, the revocation, loss or termination of which would have a
Material Adverse Effect.
(b) Except as disclosed in Schedule 5.18, all
facilities located on the real property included in the Assets which
are subject to regulation by RCRA are and have been operated in
compliance with RCRA, except where such noncompliance would not have a
Material Adverse Effect and none of the Company, the Restricted
Subsidiary or either General Partner has received, or, to the
17
<PAGE> 386
knowledge of the Company and either General Partner been threatened
with, a notice of violation of RCRA regarding such facilities.
(c) Except as disclosed in Schedule 5.18, no haz-
ardous substance (as defined in CERCLA) or hazardous waste (as defined
in RCRA) is located or present at any of the real property included in
the Assets in violation of any Environmental Law, which violation will
have a Material Adverse Effect, and with respect to such real property
there has not occurred (i) any release or threatened release of any
such hazardous substance, (ii) any discharge or threatened discharge
of any substance into ground, surface, or navigable waters which
violates any Federal, state, local or foreign laws, rules or
regulations concerning water pollution, or (iii) any assertion of any
Lien pursuant to Environmental Laws resulting from any use, spill,
discharge or clean-up of any hazardous or toxic substance or waste,
which occurrence will have a Material Adverse Effect.
5.19. FOREIGN ASSETS CONTROL REGULATIONS, ETC. The
issue and sale of the Notes by the Company and its use of the proceeds
thereof as contemplated by this Agreement, will not violate any of the
regulations (other than those regulations, if any, that are implicated
solely as a result of the actions of the purchasers of the Notes) ad-
ministered by the Office of Foreign Assets Control, the United States
Department of the Treasury, including, without limitation, the Foreign
Assets Control Regulations, the Transaction Control Regulations, the
Cuban Assets Control Regulations, the Foreign Funds Control
Regulations, the Iranian Assets Control Regulations, the Iranian
Transactions Regulations, the Iraqi Sanctions Regulations, the Libyan
Sanctions Regulations, the Federal Republic of Yugoslavia (Serbia and
Montenegro) and Bosnian Serb-Controlled Areas of the Republic of
Bosnia and Herzegovina Sanctions Regulations, the Unita (Angola)
Sanctions Regulations, the Terrorism Sanctions Regulations, and the
Soviet Gold Coin Regulations of the United States Treasury Department
(31 C.F.R., Subtitle B, Chapter V, as amended) or the restrictions set
forth in Executive Orders No. 8389, 9193, 12543 (Libya), 12544
(Libya), 12801 (Libya), 12722 (Iraq), 12724 (Iraq), 12775 (Haiti),
12779 (Haiti), 12808 (Yugoslavia), 12810 (Yugoslavia) or 12831
(Yugoslavia), as amended, of the President of the United States of
America or of any rules or regulations issued thereunder.
5.20. DISCLOSURE. This Agreement, the other
Operative Agreements, the Memorandum (as such has been updated by
Schedule 5.4(c) hereto), and each other historical financial
statement, document, certificate or instrument delivered to you (other
than the Registration Statement) by or on behalf of the Company, the
Restricted Subsidiary, or either General Partner or any of their
Affiliates (as amended, updated or revised by any subsequent delivery)
in connection with the transactions contemplated by this Agreement,
taken together do not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances under
which they were made, not misleading (other than the statements made
18
<PAGE> 387
regarding general economic conditions relating to national or local
economies (provided that this reference shall not affect the
representation made in Section 5.4(c)) and except for projections made
and delivered in good faith and on the basis of reasonable
assumptions). There is no fact actually known to the Company or
either General Partner which has or in the future would (so far as the
Company or either General Partner can now reasonably foresee) have a
Material Adverse Effect which has not been set forth or referred to in
this Agreement, the Memorandum (as such has been updated by Schedule
5.4(c) hereto) or another document, certificate or instrument
delivered to you (other than the Registration Statement). You and the
Other Purchasers shall be entitled to rely on the statements and
disclosures set forth in the Registration Statement.
5.21. CHIEF EXECUTIVE OFFICE. The chief executive
office of the Company and the Managing General Partner and the office
where each maintains its records relating to the transactions contem-
plated by the Operative Agreements is located at 432 Westridge Drive,
Watsonville, California 95076.
5.22. SOLVENCY. Upon the sale of the Notes and the
concurrent or prior consummation of the transactions contemplated
hereby, the Company and the Restricted Subsidiary will be Solvent.
"Solvent" means, with respect to any Person, that (a) the sum of the
assets of such Person, both at a fair valuation and at present fair
saleable value, will exceed the liabilities of such Person, (b) such
Person will have sufficient capital with which to conduct its business
as presently conducted and as proposed to be conducted and (c) such
Person has not incurred debts, and does not intend to incur debts,
beyond its ability to pay such debts as they mature. For purposes of
the foregoing definition, "debts" means any liabilities or claims, and
"claim" means (i) a right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured or (ii) a right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured. With respect to
any contingent liabilities, such liabilities shall be computed at the
amount which, in light of all the facts and circumstances existing at
the time, represents the amount which can reasonably be expected to
become an actual or matured liability.
SECTION 6. PURCHASER'S REPRESENTATIONS; SOURCE OF FUNDS.
6.1. You represent that you are purchasing the
Notes for your own account or for one or more separate accounts
maintained by you or for the account of one or more pension or trust
funds, in each case not with a view to or for sale in connection with
any distribution thereof within the meaning of the Securities Act of
1933, as amended, or with any present intention of selling any of the
19
<PAGE> 388
Notes in connection with any distribution, provided that the dis-
position of your property shall at all times be within your control.
If you are purchasing for the account of one or more pension or trust
funds (other than pension or trust funds included in the general
account of an insurance company), you represent that (except to the
extent that you have otherwise advised Debevoise & Plimpton and the
Company in writing) you have sole investment discretion with respect
to the acquisition of the Notes to be issued to you pursuant to this
Agreement and the authority to make the representations herein
contained on behalf of such pension or trust funds and on your own
behalf and that the determination and decision on your behalf to
purchase such Notes for such pension or trust funds is being made by
the same individual or group of individuals who customarily pass on
such investments.
6.2. You represent that at least one of the
following statements is an accurate representation as to the source of
funds to be used by you to pay the purchase price of the Notes
purchased by you hereunder:
(a) if you are an insurance company, no part of
such funds constitutes assets allocated to any separate
account maintained by you in which an employee benefit
plan (or its related trust) has any interest and, if the
source of funds includes assets of an insurance company
general account, then the statements in Section 6.2(e)
are accurate as to such source; or
(b) if you are an insurance company, to the extent
that any of such funds constitutes assets allocated to
any separate account maintained by you, (i) such sep-
arate account is a "pooled separate account" within the
meaning of Prohibited Transaction Class Exemption 90-1,
in which case you have disclosed to the Company the
names of each employee benefit plan whose assets in such
separate account exceed 10% of the total assets or are
expected to exceed 10% of the total assets of such
account as of the date of such purchase (and for the
purposes of this subdivision (b), all employee benefit
plans maintained by the same employer or employee
organization are deemed to be a single plan), or
(ii) such separate account contains only the assets of a
specific employee benefit plan, the identity of which
you have delivered to the Company in writing; or
(c) if you are a "qualified professional asset
manager" or "QPAM" (as defined in Part V of Prohibited
Transaction Class Exemption 84-14, issued March 13, 1984
(the "QPAM Exemption")), all of such funds constitute
assets of an "investment fund" (as defined in Part V of
the QPAM Exemption) managed by you, no employee benefit
plan assets which are included in such investment fund,
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<PAGE> 389
when combined with the assets of all other employee
benefit plans (i) established or maintained by the same
employer or an affiliate (as defined in Part V of the
QPAM Exemption) of such employer or by the same employee
organization and (ii) managed by you, exceed 20% of the
total client assets managed by you, the conditions of
the QPAM Exemption (other than Section I(a) thereof)
are satisfied and you have disclosed to the Company the
names of all employee benefit plans whose assets are
included in such investment fund; or
(d) if you are other than an insurance company,
all or a portion of such funds consists of funds which
do not constitute assets of any employee benefit plan
(other than a governmental plan exempt from the coverage
of ERISA) and the remaining portion, if any, of such
funds consists of funds which may be deemed to
constitute assets of one or more specific employee
benefit plans, accurate information as to the identity
of which you have delivered to the Company in writing;
or
(e) if you are an insurance company, the source of
the funds is an insurance company general account in
respect of which the reserves and liabilities for the
general account contract(s) held by or on behalf of any
benefit plan (as defined by the annual statement for
life insurance companies approved by the National
Association of Insurance Commissioners (the "NAIC Annual
Statement"), determined before reduction for credits on
account of any reinsurance ceded on a coinsurance basis)
together with the amount of the reserves and liabilities
for the general account contract(s) held by or on behalf
of any other benefit plans (as defined by the NAIC
Annual Statement) maintained by the same employer (or
affiliate thereof as defined in Prohibited Transaction
Class Exemption 95-60) or by the same employee
organization (as defined by the NAIC Annual Statement)
in the general account do not exceed 10% of the total
reserves and liabilities of the general account
(exclusive of separate account liabilities) plus surplus
as set forth in the NAIC Annual Statement filed with the
state of domicile of the insurance company.
As used in this Section 6.2, the terms "employee benefit plan",
"governmental plan" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
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SECTION 7. ACCOUNTING; FINANCIAL STATEMENTS AND OTHER INFORMATION.
The Company will maintain, and will cause each
Restricted Subsidiary to maintain, a system of accounting established
and administered in accordance with GAAP, and will accrue, and will
cause each Restricted Subsidiary to accrue, all such liabilities as
shall be required by GAAP. The Company will deliver (in duplicate,
unless you have advised us otherwise) to you (and, in the case of
subsection (f) hereof, to the Trustee), so long as you shall be en-
titled to purchase Notes under this Agreement or you or your nominee
shall be the holder of any Notes, and to each other Institutional
Investor holding any Notes (other than a Competitor of the Company):
(a) as soon as practicable, but in any event
within 60 days after the end of each of the first three
quarterly fiscal periods in each fiscal year of the
Company beginning with the fiscal period ending December
31, 1996, consolidated (and to the extent that such are
being prepared, consolidating) balance sheets of the
Company and the Restricted Subsidiaries as at the end of
such period and the related consolidated (and, as to
statements of income and cash flows, if applicable and,
to the extent that such are being prepared, consoli-
dating) statements of income, surplus or partners'
capital, cash flows and stockholders' equity of the
Company and the Restricted Subsidiaries (i) for such
period and (ii) (in the case of the second and third
quarterly periods) for the period from the beginning of
the current fiscal year to the end of such quarterly
period, setting forth in each case (except in the case
of financial statements with respect to any quarter
prior to the quarter ending March 31, 1998) in compara-
tive form the consolidated and, where applicable and as
appropriate, consolidating figures for the corresponding
periods of the previous fiscal year, all in reasonable
detail and certified by an authorized financial officer
of the Managing General Partner as presenting fairly, in
all material respects, the information contained therein
(subject to changes resulting from normal year-end
adjustments), in accordance with GAAP applied on a basis
consistent with prior fiscal periods, provided that
delivery within the time period specified above of
copies of the Public Partnership's Quarterly Report on
Form 10-Q prepared in compliance with the requirements
therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements
hereof to the extent such reports otherwise satisfy the
requirements of this Section 7(a);
(b) as soon as practicable, but in any event
within 120 days after the end of each fiscal year of the
Company beginning with the fiscal year ending June 30,
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<PAGE> 391
1997, consolidated (and to the extent that such are
being prepared, consolidating) balance sheets of the
Company and the Restricted Subsidiaries as at the end of
such year and the related consolidated (and, as to
statements of income and cash flows, if applicable and
to the extent that such are being prepared,
consolidating) statements of income, partners' capital,
cash flows and stockholders' equity of the Company and
the Restricted Subsidiaries for such fiscal year,
setting forth in each case (except in the case of the
financial statements with respect to the fiscal year of
the Company ending June 30, 1997) in comparative form
the consolidated and, where applicable and, to the
extent that such are being prepared, consolidating fig-
ures for the previous fiscal year, all in reasonable
detail, provided that delivery within the time periods
specified above of copies of the Public Partnership's
Annual Report on Form 10-K prepared in compliance with
the requirements therefor and filed with the Securities
and Exchange Commission shall be deemed to satisfy the
requirements hereof to the extent such reports otherwise
satisfy such requirements, and accompanied by a report
thereon of Arthur Andersen LLP or other independent
public accountants of recognized national standing
selected by the Company, which report shall state that
such consolidated financial statements present fairly in
all material respects the financial position of the
Company and the Restricted Subsidiaries as at the dates
indicated and the results of their operations and cash
flows for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years and that
the audit by such accountants in connection with such
consolidated financial statements has been made in
accordance with generally accepted auditing standards in
effect in the United States from time to time, and
(ii) in the case of such consolidating financial state-
ments of the Company, if any, certified by an authorized
financial officer of the Managing General Partner of the
Company, as presenting fairly in all material respects
the information contained therein, in accordance with
GAAP applied on a basis consistent with prior fiscal
periods;
(c) together with each delivery of financial
statements pursuant to subdivisions (a) and (b) of this
Section 7, a certificate by an authorized financial
officer of the Managing General Partner of the Company
(i) stating that the signer has reviewed the terms of
this Agreement and the other Operative Agreements and
has made, or caused to be made under his or her super-
vision, a review in reasonable detail of the
transactions and condition of the Company and the
23
<PAGE> 392
Restricted Subsidiaries during the accounting period
covered by such financial statements and that the signer
does not have knowledge of the existence and continuance
as at the date of such certificate of any condition or
event which constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event
exists, specifying the nature and period of existence
thereof and what action the Company has taken or is
taking or proposes to take with respect thereto,
(ii) specifying the amount available at the end of such
accounting period for Restricted Payments in compliance
with Section 10.4 and showing in reasonable detail all
calculations required in arriving at such amount,
(iii) demonstrating in reasonable detail, if applicable,
compliance during and at the end of such accounting
period with the restrictions contained in Sec-
tions 10.1(b), (d), (e), (f), (g), (h), (i), (j), (p),
(q) and (r), 10.3(c), 10.7(a)(ii), 10.7(a)(iii), and
10.7(c)(ii), and (iv) if not specified in the related
financial statements being delivered pursuant to subdi-
visions (a) and (b) above, specifying the aggregate
amount of interest paid or accrued by the Company and
the Restricted Subsidiaries, and the aggregate amount of
depreciation, depletion and amortization charged on the
books of the Company and the Restricted Subsidiaries,
during the fiscal period covered by such financial
statements;
(d) together with each delivery of consolidated
financial statements pursuant to subdivision (b) of this
Section 7, a written statement by the independent public
accountants giving the report thereon (i) stating that
in connection with their audit examination, the terms of
this Agreement and the other Operative Agreements were
reviewed to the extent considered necessary for the
purpose of expressing an opinion on the consolidated
financial statements and for making the statement
contained in clause (ii) hereof (it being understood
that no special audit procedures in addition to those
required by generally accepted auditing standards then
in effect in the United States shall be required) and
(ii) stating whether, in the course of their audit exam-
ination, they obtained knowledge (and whether, as of the
date of such written statement, they have knowledge) of
the existence and continuance of any condition or event
which constitutes an Event of Default or Potential Event
of Default insofar as such Event of Default or Potential
Event of Default relates to accounting or financial
matters, and, if so, specifying the nature and period of
existence thereof;
24
<PAGE> 393
(e) promptly upon their becoming publicly
available, copies of (i) all financial statements, re-
ports, notices and proxy statements sent or made
available by the Company, the Managing General Partner
or the Public Partnership to all of its security holders
in compliance with the Securities Exchange Act of 1934,
as amended from time to time, or any comparable Federal
or state laws relating to the disclosure by any Person
of information to its security holders, (ii) all regular
and periodic reports and all registration statements and
prospectuses filed by the Company, the Managing General
Partner or the Public Partnership with any securities
exchange or with the Securities and Exchange Commission
or any governmental authority succeeding to any of its
functions (other than Registration Statements on Form
S-8), and (iii) all press releases and other statements
made available by the Company, the Managing General
Partner or the Public Partnership to the public con-
cerning material developments in the business of the
Company, either General Partner of the Company or the
Public Partnership, as the case may be;
(f) promptly, but in any event within five days
after any Responsible Officer of the Company knows, that
(x) any condition or event which constitutes an Event of
Default or Potential Event of Default has occurred or
exists, or is expected to occur or exist, (y) the holder
of any Note has given any notice or taken any other
action with respect to a claimed Event of Default or
Potential Event of Default under this Agreement or
default under any other Operative Agreement or (z) any
Person has given any notice to the Company, either
General Partner or any Restricted Subsidiary or taken
any other action with respect to a claimed default or
event or condition of the type referred to in Sec-
tion 11(f), an Officers' Certificate of the Company
describing the same and the period of existence thereof
and what action the Company has taken, is taking and
proposes to take with respect thereto;
(g) promptly, and in any event within five
Business Days after a Responsible Officer of the Company
obtains knowledge of (i) the occurrence of an adverse
development with respect to any litigation or proceeding
involving the Company, any of its Subsidiaries or either
General Partner which in the reasonable judgment of the
Company presents a reasonable likelihood of having a
Material Adverse Effect or (ii) the commencement of any
litigation or proceeding involving the Company, any of
the Subsidiaries or either General Partner which in the
reasonable judgment of the Company presents a reasonable
likelihood of having a Material Adverse Effect, a
25
<PAGE> 394
written notice of a Responsible Officer describing in
reasonable detail such commencement of, or adverse
development with respect to, such litigation or
proceeding;
(h) promptly, but in any event within five days
after any Responsible Officer of the Company knows, that
any of the events or conditions specified below with
respect to any Plan has occurred or exists, or is
expected to occur or exist, a statement setting forth
details respecting such event or condition and the
action, if any, that the Company or any Related Person
of the Company has taken, is taking and proposes to take
or cause to be taken with respect thereto (and a copy of
any notice or report filed with or given to or com-
munication received from the PBGC, the Internal Revenue
Service or the Department of Labor with respect to such
event or condition):
(A)any reportable event, as defined in Sec-
tion 4043(b) of ERISA and the regulations issued
thereunder (other than one for which the applicable
notice requirements have been waived by PBGC
regulation);
(B)the filing under Section 4041 of ERISA of a
notice of intent to terminate any Plan or the
termination of any Plan;
(C)a substantial cessation of operations
within the meaning of Section 4062(e) of ERISA under
circumstances which could result in the treatment of
the Company or any Related Person of the Company as a
substantial employer under a "multiple employer plan"
or the application of the provisions of Section 4062,
4063 or 4064 of ERISA to the Company or any Related
Person of the Company;
(D)the taking of any steps by the PBGC or the
institution by the PBGC of proceedings under Sec-
tion 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or
the receipt by the Company or any Related Person of
the Company of a notice from a Multiemployer Plan
that such action has been taken by the PBGC with
respect to such Multiemployer Plan;
(E)the complete or partial withdrawal by the
Company or any Related Person of the Company under
Section 4063, 4203 or 4205 of ERISA from a Plan which
is a "multiple employer plan" or a Multiemployer
Plan, or the receipt by the Company or any Related
26
<PAGE> 395
Person of the Company of notice from a Multiemployer
Plan regarding any alleged withdrawal or that it
intends to impose withdrawal liability on the Company
or any Related Person of the Company or that it is in
reorganization or is insolvent within the meaning of
Section 4241 or 4245 of ERISA or that it intends to
terminate under Section 4041A of ERISA or from a
"multiple employer plan" that it intends to
terminate;
(F)the taking of any steps concerning the
threat or the institution of a proceeding against the
Company or any Related Person of the Company to
enforce Section 515 of ERISA;
(G)the occurrence or existence of any event or
series of events which could result in a material
liability to the Company or any Related Person of the
Company pursuant to Section 4069(a) or 4212(c) of
ERISA;
(H)the failure to make a contribution to any
Plan, which failure, either alone or when taken
together with any other such failure, is sufficient
to result in the imposition of a lien on any property
of the Company or any Related Person of the Company
pursuant to Section 302(f) of ERISA or Section 412(n)
of the Code or could result in the imposition of a
material tax or material penalty pursuant to Section
4971 of the Code on the Company or any Related Person
of the Company;
(I)the amendment of any Plan in a manner which
would be treated as a termination of such Plan under
Section 4041(e) of ERISA or require the Company or
any Related Person of the Company to provide security
to such Plan pursuant to Section 307 of ERISA or Sec-
tion 401(a)(29) of the Code; or
(J)the incurrence of liability in connection
with the occurrence of a "prohibited transaction"
(within the meaning of Section 406 of ERISA or Sec-
tion 4975 of the Code);
(i) promptly, but in any event within five days,
after an officer of any of the Company, any Subsidiary
or either General Partner receives any notice or request
from any Person (other than any Affiliate or any agent,
attorney or similar party employed by the Company or
either General Partner) for information, or if the
Company, any Subsidiary or either General Partner
provides any notice or information to any such Person
27
<PAGE> 396
(other than any Affiliate or any agent, attorney or
similar party employed by the Company or either General
Partner), concerning the presence or release of any
hazardous substance (as defined in CERCLA) or hazardous
waste (as defined in RCRA) or other contaminants (as de-
fined by any applicable federal, state, local or foreign
laws) within, on, from, relating to or affecting any
property owned, leased, or subleased by the Company, any
Subsidiary or either General Partner (each such notice,
request or information, an "Environmental Notice"),
copies of such Environmental Notice, except (i) any
Environmental Notice which the Company reasonably
determines will not result in any claim or liability in
excess of $250,000 (it being understood that to the
extent that all such Environmental Notices could
reasonably be expected to result in aggregate claims or
liabilities in excess of $250,000, the Company shall
provide a summary of such Environmental Notices) and
(ii) any Environmental Notice made in the normal course
of business which does not pertain to the violation by
the Company, any Subsidiary or either General Partner of
an Environmental Law;
(j) with reasonable promptness, such other
financial reports and information and data (including,
without limitation, any management letter issued or pro-
vided by independent public accountants of the Company
or any Restricted Subsidiary) with respect to the
Company, any Restricted Subsidiary, any other Subsidiary
(to the extent such reports, information and data relate
to environmental matters or any material litigation or
proceeding) or either General Partner as from time to
time may be requested by you (so long as you hold a
Note), or by any Institutional Investor holder of any
Note other than a Competitor of the Company;
(k) promptly after a Responsible Officer of the
Company or any Restricted Subsidiary becomes aware of
(i) any material violation of or notice of potential
liability under any Environmental Law or (ii) any
release or threatened release of any Hazardous Material
at, on, into, under or from any real property of any
facility or equipment thereat in excess of reportable or
allowable standards or levels under any Environmental
Law, or in a manner and/or amount which could reasonably
be expected to result in liability under any
Environmental Law, which liability would result in a
Material Adverse Effect, a statement setting forth
details respecting such event or condition and the
action, if any, that the Company or any Restricted
Subsidiary of the Company has taken, is taking and pro-
28
<PAGE> 397
poses to take or cause to be taken with respect thereto;
and
(l) promptly, and, in any event, within 30 days
after such material is provided to the governmental
authority or third party, copies of any notice,
submission or documentation provided by the Company or
any Restricted Subsidiary to any governmental authority
or third party under any Environmental Law if the matter
which is the subject of the notice, submission or other
documentation could reasonably be expected to have a
Material Adverse Effect.
SECTION 8. INSPECTION.
The Company will permit or cause the Managing General
Partner to permit (a) at any time when an Event of Default or
Potential Event of Default shall have occurred and be continuing, any
authorized representatives designated by you, so long as you shall be
entitled to purchase the Notes under this Agreement or you or your
nominee shall be the holder of any Notes, or by any other
Institutional Investor that is a holder of any Notes (other than a
Competitor of the Company), and (b) at any other time, any authorized
representative designated by any Purchaser or Purchasers holding at
least 4.5% of the aggregate principal amount of the Notes, or by any
other holder or holders of at least 4.5% of the aggregate principal
amount of the Notes (other than a Competitor of the Company) then
outstanding and an authorized representative of all of the holders of
the Notes, in each case, upon prior written notice and as may be
reasonably requested, to visit during normal business hours and in-
spect any of the properties of the Company, any Restricted Subsidiary
and any other Subsidiary (to the extent relating to environmental or
litigation matters) and, to the extent relating to the Business, any
properties of either General Partner or of either General Partner's
Subsidiaries, including the books of account of the Company, the
Restricted Subsidiaries, such other Subsidiaries, either General
Partner and either General Partner's Subsidiaries, and to make copies
and take extracts therefrom, and to discuss its and their affairs,
finances and accounts with its and their senior officers and (with
reasonable prior written notice) independent public accountants (and
by this provision each of the Company and either General Partner
authorizes such accountants to discuss with such representatives the
affairs, finances and accounts of the Company, any Restricted
Subsidiary, such other Subsidiaries), and, to the extent relating to
the Business, either General Partner or any of either General
Partner's Subsidiaries, as the case may be) all at such times and as
often as may be requested, provided that you shall bear the expenses
of your authorized representative, except the Company will bear the
expenses of such authorized representatives if an Event of Default or
Potential Event of Default has occurred and is continuing; and the
Company shall at all times bear the expenses of its and its
Affiliates' officers and independent public accountants.
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<PAGE> 398
SECTION 9. PREPAYMENT OF NOTES.
9.1. REQUIRED PREPAYMENTS OF THE NOTES. On each of
the dates set forth in the following table, the Company will prepay
the principal amount of the Notes set forth opposite such date in such
table (or such lesser principal amount of the Notes as shall at the
time be outstanding), at the principal amount of the Notes so prepaid,
without premium, together with interest accrued thereon:
Principal Amount
Date of Prepayment of Prepayment
------------------ ----------------
December 30, 2003 $27,500,000
December 30, 2004 27,500,000
December 30, 2005 27,500,000
December 30, 2006 27,500,000
December 30, 2007 27,500,000
December 30, 2008 27,500,000
December 30, 2009 27,500,000
Any partial prepayment of the Notes pursuant to Sec-
tion 9.2, 9.3 or (to the extent not applied to satisfy a prepayment
required under this Section 9.1) 9.4 shall be applied to reduce each
prepayment thereafter required to be made pro rata, but otherwise no
acquisition of the Notes by the Company or any of its Affiliates,
shall relieve the Company from its obligation to make the required
prepayments provided for in this Section 9.1. The Company shall
notify the holders of the Notes of any application provided for in the
immediately preceding sentence five days prior to such application.
On the maturity date, the Company will pay the then outstanding
principal amount of the Notes together with interest accrued thereon.
9.2. OPTIONAL PREPAYMENTS OF THE NOTES WITH MAKE
WHOLE AMOUNT. The Notes shall be subject to prepayment, in whole at
any time or from time to time in part (in an amount of not less than
$5,000,000), at the option of the Company, upon notice as provided in
Section 9.5 at 100% of the principal amount of the Notes so prepaid
plus interest accrued thereon to the prepayment date and the Make
Whole Amount.
9.3. PREPAYMENT ON CHANGE OF CONTROL. (a) The
Company will, within 90 days after any Change of Control give written
notice of such Change of Control to each holder of Notes. Such notice
shall contain and constitute an offer to prepay the Notes as described
in subdivision (b) of this Section 9.3 and shall be accompanied by the
certificate described in subdivision (e) of this Section 9.3.
30
<PAGE> 399
(b) The offer to prepay Notes contemplated by
subdivision (a) of this Section 9.3 shall be an offer to prepay, in
accordance with and subject to this Section 9.3, all, but not less
than all, the Notes held by each holder (in this case only, "holder"
in respect of any Note registered in the name of a nominee for a
disclosed beneficial owner shall mean such beneficial owner) on the
Business Day specified in such offer (the "Proposed Prepayment Date")
that is not less than 20 days and not more than 30 days after the date
of such offer (if the Proposed Prepayment Date shall not be specified
in such offer, the Proposed Prepayment Date shall be the 20th day
after the date of such offer).
(c) A holder of Notes may accept the offer to
prepay made pursuant to this Section 9.3 by causing a notice of such
acceptance to be delivered to the Company at least 5 days prior to the
Proposed Prepayment Date. A failure by a holder of Notes to respond
to an offer to prepay made pursuant to this Section 9.3 shall be
deemed to constitute a rejection of such offer by such holder.
(d) Prepayment of the Notes to be prepaid pursuant
to this Section 9.3 shall be at 100% of the principal amount of such
Notes, plus a premium equal to 1% of such principal amount (the
"Premium Amount"), together with interest on such Notes accrued to the
date of prepayment. The principal amount and accrued interest and the
Premium Amount shall, with respect to all Notes the holders of which
accepted the offer to prepay pursuant to subdivision (c), become due
and payable on the Proposed Prepayment Date.
(e) Each offer to prepay the Notes pursuant to
this Section 9.3 shall be accompanied by a certificate, executed by a
senior financial officer of the Managing General Partner and dated the
date of such offer, specifying: (i) the Proposed Prepayment Date;
(ii) that such offer is made pursuant to this Section 9.3; (iii) the
principal amount of each Note offered to be prepaid; (iv) the Premium
Amount due on each Note in connection with such prepayment; (v) the
interest that would be due on each Note offered to be prepaid, accrued
to the Proposed Prepayment Date; (vi) that the conditions of this
Section 9.3 have been fulfilled; (vii) in reasonable detail, the
nature and date of the Change of Control; and (viii) that a failure to
respond to such notice shall be deemed a rejection of such offer to
prepay the Notes.
9.4. CONTINGENT PREPAYMENTS ON DISPOSITION OF
PROPERTY, TAKING OR DESTRUCTION. (a) If at any time the Company or
any of the Restricted Subsidiaries disposes of property or such
property shall be damaged, destroyed or taken in eminent domain or
there shall be insurance proceeds with respect to such property, in
any such case, with the result that there are Excess Proceeds, and the
Company does not apply such Excess Proceeds in the manner described in
Section 10.7(c)(ii)(B)(x), and if the next scheduled date of
prepayment of the Notes pursuant to Section 9.1 occurs within 365 days
after receipt of such Excess Proceeds, such Excess Proceeds may be
31
<PAGE> 400
applied to such prepayment required under Section 9.1 (unless such
scheduled prepayment has been paid by the Company). To the extent
that there are such Excess Proceeds remaining after application in
accordance with the first sentence of this Section 9.4(a), the Company
shall prepay, upon notice as provided in Section 9.5 (which notice
shall be given not later than 365 days after the date of such sale of
property), a principal amount of the outstanding Notes equal to the
amount of such remaining Excess Proceeds allocable to the Notes,
determined by allocating such remaining Excess Proceeds pro rata among
the holders of all Notes and Parity Debt, if any, outstanding on the
date such prepayment is to be made, according to the aggregate then
unpaid principal amounts of the Notes (and the Make Whole Amount on
the principal amount of the Notes to be prepaid) and Parity Debt,
respectively. Each prepayment of Notes pursuant to this Section
9.4(a) shall be made at 100% of the principal amount of the Notes to
be prepaid, plus interest thereon to the prepayment date plus, to the
extent the prepayment is not made in satisfaction of a required
prepayment in accordance with Section 9.1, the Make Whole Amount
thereon.
(b) In the event that damage, destruction or a
taking shall occur in respect of all or a portion of the properties
subject to any of the Security Documents, all net insurance proceeds,
self-insurance amounts or net awards which, as of any date, shall not
theretofore have been applied to the cost of repairing or replacing
any damaged or destroyed assets shall be deemed to be proceeds of
property disposed of voluntarily, shall be subject to the provisions
of Section 10.7(c) and, if subdivision (ii)(B)(y) of Section 10.7(c)
is applicable thereto, shall be subject to the prepayment provisions
of Section 9.4(a). Any amounts prepaid pursuant to this Section
9.4(b) on the date on which a prepayment is required under Section 9.1
may be applied to satisfy such prepayment required under Section 9.1.
9.5. NOTICE OF PREPAYMENTS; OFFICERS' CERTIFICATE.
The Company will give each holder of any Notes and the Trustee
irrevocable written notice of each prepayment under Section 9.2 or 9.4
not less than 10 days and not more than 30 days prior to the Business
Day, fixed for such prepayment, in each case specifying such prepay-
ment date, the aggregate principal amount of the Notes and the
principal amount of each Note held by such holder to be prepaid and
the Section under which such prepayment is to be made. Notice of
prepayment having been given as aforesaid, the principal amount of the
Notes specified in such notice, together with interest thereon to the
prepayment date and together with the Make Whole Amount, if any, with
respect thereto, shall become due and payable on such prepayment date.
The Company shall, on or before the Business Day next succeeding the
date which the Company sends such written notice, give telephonic
notice (immediately followed by written notice sent by facsimile
transmission) of the principal amount of the Notes to be prepaid and
the prepayment date to each holder of any Notes which shall have
designated a recipient of such notices in the Schedule of Purchasers
32
<PAGE> 401
attached hereto or by notice in writing to the Company. Each holder
of a Note and the Trustee shall receive, on the Business Day
immediately preceding the date scheduled for any such prepayment, an
Officers' Certificate certifying that the conditions of the Section
under which such prepayment is to be made have been fulfilled and
specifying the particulars of such fulfillment. In the event that
there shall have been a partial prepayment of the Notes under Sec-
tion 9.2, 9.3 or 9.4, the Company shall promptly give notice to the
holders of the Notes, accompanied by an Officers' Certificate setting
forth the principal amount of each of the Notes that was prepaid and
specifying how each such amount was determined, setting forth the re-
duced amount of each required prepayment thereafter becoming due with
respect to the Notes under Section 9.1, and certifying that such
reduction has been computed in accordance with such Section.
9.6. ALLOCATION OF PARTIAL PREPAYMENTS. Upon any
partial prepayment of the Notes pursuant to Section 9.1, 9.2 or 9.4
the principal amount so prepaid shall be allocated (in integral
multiples of $1,000 as nearly as practicable) to all Notes at the time
outstanding in proportion to the respective outstanding principal
amounts thereof not theretofore called for prepayment, with
adjustments, to the extent practicable, to compensate for any prior
prepayments not made exactly in such proportion.
9.7. MATURITY; SURRENDER, ETC. In the case of each
prepayment, the principal amount of each Note to be prepaid shall
mature and become due and payable on the date fixed for such prepay-
ment, together with interest on such principal amount accrued to such
date and the applicable Make Whole Amount or Premium Amount, if any.
From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest
and Make Whole Amount or Premium Amount, if any, as aforesaid,
interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall, after such payment or prepayment in
full, be surrendered to the Company and canceled and shall not be
reissued, and no Note shall be issued in lieu of any such paid or
prepaid principal amount of any Note.
9.8. ACQUISITION OF NOTES. None of the General
Partners or the Company shall, nor shall any permit any of their
respective Subsidiaries or any Restricted Affiliate to, prepay or
otherwise retire in whole or in part prior to their stated final
maturity (other than by prepayment pursuant to Section 9.1, 9.2, 9.3
or 9.4 or upon acceleration of such final maturity pursuant to Sec-
tion 11), or purchase or otherwise acquire, directly or indirectly,
Notes held by any holder, except, in the case of such purchase or
acquisition, pursuant to an offer to purchase made pro rata to the
holders of all of the Notes on the same terms and conditions. Any
Notes prepaid or otherwise retired or purchased or otherwise acquired
by the Company or any of its Subsidiaries or either General Partner
shall not be deemed to be outstanding for any purpose under this
Agreement or any other Operative Agreement. Any Notes prepaid or
33
<PAGE> 402
otherwise purchased or otherwise acquired by any Affiliate of the
Company (other than any of its Subsidiaries or either General Partner)
shall not be deemed outstanding for the purpose of any vote of the
holders of the Notes (including, without limitation, the calculation
of any percentage of principal amount of the Notes outstanding with
respect to any such vote) pursuant to this Agreement or any other
Operative Agreement but shall be deemed outstanding with respect to
the calculation of any future payment of principal, premium and
interest on the Notes.
SECTION 10. BUSINESS AND FINANCIAL COVENANTS OF THE COMPANY.
The Company covenants that from the date of this
Agreement through the Closing and thereafter so long as any of the
Notes are outstanding:
10.1. INDEBTEDNESS. The Company will not, and will
not permit any Restricted Subsidiary to, directly or indirectly,
create, incur, assume or suffer to exist (such condition to be
satisfied only on the date of such incurrence) with respect to, any
Indebtedness, except that:
(a) the Company may become and remain liable with
respect to the Indebtedness evidenced by the Notes;
(b) the Company and the Restricted Subsidiaries
may become and remain liable with respect to
Indebtedness, which may be secured equally and ratably
with the Notes, incurred by the Company and the
Restricted Subsidiaries to finance the making of
expenditures for the improvement or repair of or
additions to the Assets, provided that (i) the aggregate
principal amount of Indebtedness incurred under this
Section 10.1(b) and outstanding at any time shall not
exceed an amount equal to the sum of (x) the net cash
proceeds received by the Company from the Managing Gen-
eral Partner or from the Public Partnership as a capital
contribution or as consideration for the issuance by the
Company of additional partnership interests, in each
case for the sole purpose of financing such expendi-
tures, and (y) the fair market value of the Units
contributed to the Company by the Public Partnership or
issued directly to the Person selling such asset or
making such repair or improvement by the Public
Partnership for the sole purpose of financing such
expenditures, only to the extent, however, that such
Units are used to pay, substantially concurrently with
the date of contribution, at least 50% of the purchase
price or cost of such improvements, repairs or
additions, and (ii) if such Indebtedness is to be
secured under the Security Documents as provided in Sec-
tion 10.2(i), the agreement or instrument pursuant to
34
<PAGE> 403
which such Indebtedness is incurred (A) contains no
financial or business covenants that are more re-
strictive on the Company or its Subsidiaries than or
that are in addition to those contained in this Sec-
tion 10 (unless prior to or simultaneously with the
incurrence of such Indebtedness this Agreement and the
Other Agreements are amended to provide the benefits of
such more restrictive covenants to the holders of the
Notes) and (B) specifies no events of default (other
than with respect to the payment of principal and
interest on such Indebtedness or the accuracy of rep-
resentations and warranties made in connection with such
agreement or instrument) which are capable of occurring
prior to the occurrence of the Events of Default
specified in Section 11 (unless prior to or
simultaneously with the incurrence of such Indebtedness
this Agreement and the Other Agreements are amended to
provide the benefit of such events of default to the
holders of the Notes);
(c) any Restricted Subsidiary may become and
remain liable with respect to Indebtedness of such
Restricted Subsidiary owing to the Company or to another
Restricted Subsidiary, provided that such Indebtedness
is created and is outstanding under an agreement or
instrument pursuant to which such Indebtedness is subor-
dinated to the Notes and to Indebtedness secured under
the Security Documents at least to the extent provided
in the subordination provisions set forth in Exhibit D
and provided further that such Indebtedness is evidenced
by an Intercompany Note pledged to the Trustee;
(d) the Company and the Restricted Subsidiaries
may become and remain liable with respect to unsecured
Indebtedness owing to either General Partner or an
Affiliate of either General Partner, provided that
(i) the aggregate principal amount of such Indebtedness
of the Company and the Restricted Subsidiaries
outstanding at any time shall not be in excess of
$20,000,000 and (ii) such Indebtedness is created and is
outstanding under an agreement or instrument pursuant to
which such Indebtedness is subordinated to the Notes and
to Indebtedness secured under the Security Documents at
least to the extent provided in the subordination
provisions set forth in Exhibit D;
(e) the Company may become and remain liable with
respect to Indebtedness incurred under the Bank Credit
Facilities, provided that
(i)the aggregate principal amount outstanding
under the Initial Acquisition Facility, together with
35
<PAGE> 404
amounts outstanding pursuant to Indebtedness
permitted by subdivisions (h)(3)(i) and (j)(x)(i) of
this Section 10.1, will be in an aggregate principal
amount not in excess of the greater of (i)
$75,000,000, and (ii) 40% of the Consolidated Net
Worth of the Company as of the date of incurrence of
the Indebtedness outstanding at any time, and
(ii)in respect of the Working Capital
Facility:
(1)there shall be a period of at least 30
consecutive days during each fiscal year of
the Company on each day of which there shall
be no such Indebtedness outstanding under the
Working Capital Facility (the "Requisite
Period"), provided that, in the event that
there shall not have been any Requisite Period
in any fiscal year, the lowest average balance
for a period of 30 consecutive days
outstanding during such fiscal year shall be
treated as outstanding funded Indebtedness for
purposes of future incurrences of Indebtedness
pursuant to Section 10.1(f)(iii), and
(2)the aggregate principal amount of loans,
exposure under letters of credit in respect of
the Working Capital Facility and the unfunded
commitments thereunder at any time outstanding
thereunder shall not be in excess of
$50,000,000;
(f) the Company and the Restricted Subsidiaries
may become and remain liable with respect to
Indebtedness, in addition to that otherwise permitted by
the other subdivisions of this Section 10.1, which may
be secured equally and ratably with the Notes, 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 (i) the ratio of Consolidated Cash Flow to
Consolidated Pro Forma Debt Service is greater than 2.50
to 1.0, (ii) the ratio of Consolidated Cash Flow to
Maximum Consolidated Pro Forma Debt Service is greater
than 1.25 to 1.0, and (iii) the ratio of total funded
Indebtedness (including the Indebtedness to be incurred)
to Consolidated Cash Flow is less than 5.0 to 1.0, pro-
vided that, in addition to the foregoing, if such In-
debtedness is to be secured under the Security Documents
as provided in Section 10.2(i), such Indebtedness shall
be incurred pursuant to an agreement or instrument which
36
<PAGE> 405
complies with the requirements set forth in clause (ii)
of the proviso to Section 10.1(b);
(g) the Company and the Restricted Subsidiaries
may become and remain liable with respect to the Indebt-
edness referred to in Schedule 5.7, provided that the
aggregate principal amount of all such Indebtedness at
any time outstanding shall not exceed $15,000,000;
(h) the Company and any Restricted Subsidiary may
become and remain liable with respect to pre-existing
Indebtedness relating to any Person, business or assets
acquired by the Company or such Restricted Subsidiary,
or both, as the case may be, provided that (1) no
condition or event shall exist which constitutes an
Event of Default or Potential Event of Default, (2) such
Indebtedness was not incurred in anticipation of the
acquisition of such Person, business or assets and
(3) after giving effect to such Person becoming a
Restricted Subsidiary, or the acquisition of such
business or assets, either (i) the sum of (A) such
Indebtedness, and (B) the then outstanding aggregate
principal amount of Indebtedness under the Initial
Acquisition Facility, and under subdivision (j)(i) of
this Section 10.1, does not exceed the greater of
(A) $75,000,000 and (B) 40% of the Consolidated Net
Worth of the Company as of the date of the incurrence of
the Indebtedness, or (ii) the Company or such Restricted
Subsidiary could incur at least $1 of additional
Indebtedness in compliance with the requirements set
forth in clauses (i), (ii) and (iii) of Section 10.1(f)
(it being understood for purposes of this Section 10(h)
and Section 10.1(e)(i) that any Indebtedness which on
the date of acquisition of any Person, business or
assets could be incurred under the foregoing clause (i)
or (ii) of this Section 10.1(h) shall be deemed to have
been incurred under clause (ii) of this
Section 10.1(h));
(i) so long as no Event of Default or Potential
Event of Default has occurred and is continuing, the
Company and the Restricted Subsidiaries may become and
remain liable with respect to Indebtedness, which may be
secured equally and ratably with the Notes, incurred for
any extension, renewal, refunding or refinancing of
Indebtedness permitted pursuant to subdivisions (a), (b)
and (f) of this Section 10.1, provided that (i) the
principal amount (including any exposure under letters
of credit and any unfunded commitments) of such
Indebtedness shall not exceed the principal amount
(including any exposure under letters of credit and any
unfunded commitments) of such Indebtedness being
37
<PAGE> 406
extended, renewed, refunded or refinanced together with
any accrued interest and Make Whole Amount, Premium
Amount or other premium with respect thereto and any
costs and expenses related to such extension, renewal,
refunding or refinancing, (ii) the maturity date of such
Indebtedness shall not be sooner than the maturity date
of such Indebtedness being extended, renewed, refunded
or refinanced, (iii) the average life to maturity of
such Indebtedness shall be equal to or greater than the
remaining average life to maturity of such Indebtedness
being extended, renewed, refunded or refinanced and (iv)
if such Indebtedness is incurred for any extension,
renewal, refunding or refinancing of Indebtedness
permitted pursuant to subdivision (b) or (f) and it is
secured, such Indebtedness satisfies the conditions
specified in clause (ii) of the proviso to subdivision
(b) and such Indebtedness specifies no events of default
(other than with respect to the payment of principal and
interest on such Indebtedness or the accuracy of rep-
resentations and warranties made in connection with such
agreement or instrument) which are capable of occurring
prior to the occurrence of the events of default
specified in the Bank Credit Facilities as of the date
of this Agreement (unless prior to or simultaneously
with the incurrence of such Indebtedness this Agreement
and the Other Agreements are amended to provide the
benefit of such more restrictive covenants and events of
default to the holders of the Notes);
(j) so long as no Event of Default or Potential
Event of Default has occurred and is continuing, the
Company and the Restricted Subsidiaries may become and
remain liable with respect to Indebtedness which may be
secured equally and ratably with the Notes, incurred for
any extension, renewal, refunding or refinancing of In-
debtedness permitted pursuant to subdivision (e) of this
Section 10.1, provided that (x) after giving effect
thereto (i) the aggregate principal amount of (A) such
Indebtedness incurred to extend, refund, renew or
refinance Indebtedness incurred pursuant to
subdivision (e)(i) in connection with the Initial
Acquisition Facility, (B) any such Indebtedness incurred
pursuant to subdivision (e)(i) and remaining
outstanding, and (C) any outstanding Indebtedness
incurred pursuant to subdivision (h)(3)(i), shall not
exceed the greater of $75,000,000 and 40% of
Consolidated Net Worth of the Company determined as of
the last day of the month immediately preceding the date
of such extension, renewal, refunding or refinancing,
and (ii) the aggregate principal amount of (A) such
Indebtedness incurred to extend, refund, renew or
refinance Indebtedness incurred pursuant to
38
<PAGE> 407
subdivision (e)(ii) in connection with the Working
Capital Facility, (B) any such Indebtedness incurred
pursuant to subdivision (e)(ii) and remaining
outstanding (including any exposure in respect of issued
but undrawn letters of credit), and (C) any remaining
unfunded commitment under the Working Capital Facility,
shall not exceed $50,000,000, and (y) such Indebtedness,
any such letters of credit and commitments shall be
incurred pursuant to the Initial Acquisition Facility or
a working capital facility (A) which complies with the
requirements set forth in clause (ii)(1) of Sec-
tion 10.1(e) and (B) the financial and business
covenants of such Indebtedness are no more restrictive
on the Company and its Subsidiaries and there are no
additional covenants than those contained in the Bank
Credit Facilities as of the date of this Agreement
and such Indebtedness specifies no events of default
(other than with respect to the payment of principal and
interest on such Indebtedness or the accuracy of rep-
resentations and warranties made in connection with such
agreement or instrument) which are capable of occurring
prior to the occurrence of the events of default
specified in the Bank Credit Facilities as of the date
of this Agreement (unless prior to or simultaneously
with the incurrence of such Indebtedness this Agreement
and the Other Agreements are amended to provide the
benefit of such more restrictive covenants and events of
default to the holders of the Notes);
(k) so long as no Event of Default or Potential
Event of Default has occurred and is continuing, the
Company and the Restricted Subsidiaries may become and
remain liable with respect to unsecured Indebtedness
incurred for any extension, renewal, refunding or
refinancing of Indebtedness otherwise permitted by this
Section 10.1, provided that (i) the principal amount of
such unsecured Indebtedness to be incurred shall not
exceed the principal amount of such Indebtedness being
extended, renewed, refunded or refinanced together with
any accrued interest and Make Whole Amount, Premium
Amount or other premium with respect thereto and any
costs and expenses related to such extension, renewal,
refunding or refinancing, (ii) the maturity date of such
unsecured Indebtedness shall not be sooner than the
maturity date of such Indebtedness being extended,
renewed, refunded or refinanced and (iii) the average
life to maturity of such unsecured Indebtedness shall be
equal to or greater than the remaining average life to
maturity of such Indebtedness being extended, renewed,
refunded or refinanced;
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(l) so long as no Event of Default or Potential
Event of Default has occurred and is continuing, the
Company and the Restricted Subsidiaries may become and
remain liable with respect to secured Indebtedness
incurred for any extension, renewal, refunding or
refinancing of secured Indebtedness (other than
Indebtedness permitted by subdivisions (a), (b), (e) or
(f)) otherwise permitted pursuant to this Section 10.1,
provided that (i) the principal amount of such
Indebtedness to be incurred shall not exceed the
principal amount of such Indebtedness being extended,
renewed, refunded or refinanced together with any
accrued interest and premium with respect thereto and
any and all costs and expenses related to such
extension, renewal, refunding or refinancing, (ii) the
maturity date of such Indebtedness shall not be sooner
than the maturity date of such Indebtedness being
extended, renewed, refunded or refinanced, and (iii) the
average life to maturity of such Indebtedness to be
incurred shall be equal to or greater than the remaining
average life to maturity of such Indebtedness being
extended, renewed, refunded or refinanced;
(m) the Company and any Restricted Subsidiaries
may become and remain liable with respect to any
Interest Rate Agreement;
(n) the Company and any Restricted Subsidiaries
may become and remain liable with respect to any
Commodity Hedging Agreements;
(o) any Qualifying Restricted Subsidiary may
become and remain liable with respect to Indebtedness
evidenced by the Subsidiary Guarantee Agreements or
Guarantees of Parity Debt;
(p) the Company may become and remain liable with
respect to secured Indebtedness incurred in connection
with Capital Lease obligations, provided that (1) the
security for such Indebtedness shall extend only to such
property or asset, (2) the obligation incurred does not
exceed the fair market value of such property or asset
(as determined in good faith by the board of directors
of the Managing General Partner) and (3) after incurring
such Indebtedness, and giving effect to the
substantially concurrent retirement of any other
Indebtedness, the Company could incur at least $1 of
additional Indebtedness in compliance with the
requirements set forth in clauses (i), (ii) and (iii) of
Section 10.1(f);
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(q) the Company may become and remain liable with
respect to secured Indebtedness incurred in connection
with purchase money obligations in respect of any
property or asset, provided that (1) the security for
such Indebtedness shall extend only to such property or
asset, (2) the obligation incurred does not exceed 85%
of the fair market value of such property or asset (as
determined in good faith by the Board of Directors of
the Managing General Partner) and (3) after incurring
such Indebtedness and giving effect to the substantially
concurrent retirement of any other Indebtedness the
Company could incur at least $1 of additional
Indebtedness in compliance with the requirements set
forth in clauses (i), (ii) and (iii) of Section 10.1(f);
and
(r) the Company may become and remain liable with
respect to secured Indebtedness incurred to pay all or a
portion of the purchase price of property acquired by
the Company or to secure obligations incurred in
consideration of non-compete agreements, provided that
(1) the security for such Indebtedness shall extend only
to the property or assets so acquired, (2) such
obligation does not exceed 85% of the fair market value
of such property or asset or 35% in the case of non-
compete obligations (each as determined in good faith by
the board of directors of the Managing General Partner
of the Company) and (3) either (A) after incurring such
Indebtedness, and giving effect to the substantially
concurrent retirement of any other Indebtedness, the
Company could incur at least $1 of additional
Indebtedness in compliance with the requirements set
forth in clauses (i), (ii) and (iii) of Section 10.1(f)
or (B) the amount of Indebtedness permitted under
subdivision (e)(i) of this Section 10.1 is permanently
reduced by the amount of such Indebtedness.
Notwithstanding the foregoing, the aggregate princi-
pal amount of all Indebtedness of all Restricted Subsidiaries at any
time outstanding (other than Indebtedness permitted by Section 10.1(o)
(but only to the extent such Guarantees are in favor of the holders of
Parity Debt) shall not exceed $10 million. For the purpose of this
Section 10.1, any Person becoming a Restricted Subsidiary after the
date of this Agreement shall be deemed to have become liable with
respect to all of its then outstanding Indebtedness at the time it be-
comes a Restricted Subsidiary, and any Person extending, renewing or
refunding any Indebtedness shall be deemed to have become liable with
respect to such Indebtedness at the time of such extension, renewal or
refunding. The Company or any Restricted Subsidiary shall be deemed
to have become liable with respect to any Indebtedness secured by any
real property acquired by the Company or such Restricted Subsidiary,
as the case may be, at the time of such acquisition. Any amendment of
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<PAGE> 410
the terms of this Agreement required by clause (ii) of the proviso to
Section 10.1(b) shall provide that such amendment shall only be
effective until the date the Indebtedness (the incurrence of which
required the amendment of this Agreement) is paid in full and all
commitments to lend and letters of credit outstanding under such
facility are canceled or terminated. The Company shall provide
written notice to each holder of the repayment in full in cash of such
Indebtedness and the cancellation of all commitments and letters of
credit pursuant to any such facility, which notice shall provide that
the amendments to this Agreement required by clause (ii) of the
proviso to Section 10.1(b) with respect to such facility, are no
longer effective.
10.2. LIENS, ETC. The Company will not, and will
not permit any Restricted Subsidiary to, directly or indirectly
create, incur, assume or permit to exist any Lien on or with respect
to any property or asset (including any document or instrument in re-
spect of goods or accounts receivable) of the Company or any
Restricted Subsidiary, whether now owned or held or hereafter ac-
quired, or any income or profits therefrom (whether or not provision
is made for the equal and ratable securing of the Notes in accordance
with the provisions of Section 10.16), except:
(a) Liens for taxes, assessments or other gov-
ernmental charges the payment of which is not at the
time required by Section 10.9;
(b) Liens of landlords and carriers, vendors,
warehousemen, mechanics, materialmen, repairmen and
other like Liens incurred in the ordinary course of
business for sums not yet due or the payment of which is
not at the time required by Section 10.9, in each case
not incurred or made in connection with the borrowing of
money, the obtaining of advances or credit or the
payment of the deferred purchase price of property;
(c) Liens (other than any Lien imposed by ERISA)
incurred or deposits made in the ordinary course of
business (i) in connection with workers' compensation,
unemployment insurance, old age pension, retiree health
benefits and other types of social security, or (ii) to
secure (or to obtain letters of credit that secure) the
performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, performance bonds,
purchase, construction or sales contracts and other
similar obligations, in each case not incurred or made
in connection with the borrowing of money, the obtaining
of advances or credit or the payment of the deferred
purchase price of property;
(d) any attachment or judgment Lien, unless the
judgment it secures shall not, within 60 days after the
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entry thereof, have been discharged or execution thereof
stayed pending appeal, or shall not have been discharged
within 60 days after expiration of any such stay;
(e) leases or subleases granted to others, zoning
restrictions, easements, licenses, reservations, rights-
of-way, 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 the consent
of the lessee) and other similar charges or
encumbrances, which do not materially interfere with the
ordinary conduct of the business of the Company or any
Restricted Subsidiary;
(f) Liens on property or assets of any Restricted
Subsidiary securing Indebtedness of such Restricted
Subsidiary owing to the Company or any other Restricted
Subsidiary;
(g) Liens existing on the Assets at the time of
the acquisition thereof by the Company and described in
Schedule 10.2;
(h) Liens created by any of the Security Documents
securing Indebtedness incurred in accordance with
Section 10.1(a) or Section 10.1(e);
(i) Liens created by any of the Security Documents
securing Indebtedness incurred in accordance with Sec-
tion 10.1(b), 10.1(f) or 10.1(m), provided that (1) such
Liens are effected through an amendment to the Security
Documents to the extent necessary to provide the holders
of such Indebtedness equal and ratable security in the
property and assets subject to the Security Documents
with the holders of the Notes and of other Indebtedness
secured under the Security Documents as provided in Sec-
tion 10.1(b), 10.1(f) or 10.1(m), (2) the Security Docu-
ments are amended to the extent necessary to extend the
Lien thereof to any property or assets acquired or
otherwise financed with the proceeds of such In-
debtedness, (3) the Company has delivered to the Trustee
an Officers' Certificate demonstrating that the
principal amount of such Indebtedness does not exceed
the lesser of the cost to the Company of such property
or assets and the fair market value of such property or
assets (as determined in good faith by the Managing
General Partner of the Company), that such incurrence of
Indebtedness pursuant to Section 10.1(b), 10.1(f) or
10.1(m), as the case may be, complies in all respects
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with the requirements of such Section and that the
amendments to the Security Documents required by this
Section 10.2(i) and the filing and recordation of such
amendments and related supplements will not have a
Material Adverse Effect, and (4) the Company has deliv-
ered to the Trustee an opinion of counsel reasonably
satisfactory to the Trustee to the effect that the Lien
of the Security Documents has attached and is perfected
with respect to such additional property and assets;
(j) Liens existing on any property of any Person
at the time it becomes a Restricted Subsidiary, or
existing prior to the time of acquisition (and not
created in anticipation of such acquisition) upon any
property acquired by the Company or any Restricted
Subsidiary through purchase, merger or consolidation or
otherwise, whether or not assumed by the Company or such
Restricted Subsidiary, or created to secure Indebtedness
incurred under Section 10.1(f) to pay all or any part of
the purchase price ("Purchase Money Lien") of property
acquired by the Company or a Restricted Subsidiary or to
pay the cost of an improvement (other than improvements
to property subject to the Lien of the Security
Documents), provided that (i) any such Lien shall be
confined solely to the item or items of property so
acquired and, if required by the terms of the instrument
originally creating such Lien, other property which is
an improvement to or is acquired for specific use in
connection with such acquired property, (ii) such item
or items of property so acquired (other than property
(which may include stock or other equity interests)
subject to Liens existing prior to the time of
acquisition and not created in anticipation of such
acquisition) are not required to become part of the
Collateral under the terms of the Security Documents,
(iii) the principal amount of the Indebtedness secured
by any such Lien shall at no time exceed an amount equal
to the lesser of (A) the cost of such property to the
Company or such Restricted Subsidiary, as the case may
be, and (B) the fair market value of such property (as
determined in good faith by the Managing General Part-
ner) at the time such Person owning such property
becomes a Restricted Subsidiary or at the time of such
acquisition by the Company or such Restricted
Subsidiary, as the case may be, (iv) any such Purchase
Money Lien shall be created not later than 90 days
after, in the case of property, its acquisition, or, in
the case of improvements, their completion and (v) any
such Lien (other than a Purchase Money Lien) shall not
have been created or assumed in contemplation of such
Person's becoming a Restricted Subsidiary or such
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acquisition of property by the Company or any Sub-
sidiary;
(k) Liens in amounts not exceeding $500,000
incurred, required or provided for under state law in
connection with self-insurance arrangements;
(l) Liens arising from or constituting Permitted
Encumbrances;
(m) any Lien securing Indebtedness referred to in
Section 10.1(i), (j) or (l) renewing or extending any
Lien permitted by the foregoing subdivisions of this
Section 10.2, provided that (i) the Indebtedness secured
by any such Lien shall not exceed the principal amount
of such Indebtedness outstanding (including any exposure
under letters of credit and any unfunded commitments)
immediately prior to the renewal or extension of such
Lien, (ii) no assets encumbered by any such Lien other
than the assets encumbered immediately prior to such
renewal or extension shall be encumbered thereby or with
respect to any Indebtedness extending, renewing,
refunding or refinancing any Indebtedness secured
pursuant to the Security Documents, the assets specified
therein and (iii) the maturity date of the Indebtedness
secured by any such Lien shall not be sooner than the
maturity date of such Indebtedness outstanding
immediately prior to the renewal or extension of such
Lien;
(n) any Lien securing Indebtedness incurred in
accordance with Section 10.1(n), Section 10.1 (p),
Section 10.1(q) or Section 10.1(r);
(o) any Lien arising from the action of collecting
banks; and
(p) those Liens described on Schedule 10.2.
10.3. INVESTMENTS, GUARANTIES, ETC. The Company
will not, and will not permit any Restricted Subsidiary to, directly
or indirectly (i) make or own any Investment in any Person, or
(ii) create or become liable with respect to any Guaranty, except:
(a) the Company or any Restricted Subsidiary may
make and own Investments in
(1)marketable obligations issued or uncon-
ditionally 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
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America in each case maturing within one year from
the date of acquisition thereof,
(2)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 any
date of determination the highest rating obtainable
from either Standard & Poor's Ratings Group or
Moody's Investors Service, Inc.,
(3)commercial paper maturing no more than 270
days from the date of creation thereof and having as
at any date of determination one of the two highest
ratings obtainable from either Standard & Poor's
Ratings Group or Moody's Investors Service, Inc.,
(4)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, (A) the
commercial paper or other short-term unsecured debt
obligations of which are rated either A-1 or better
(or comparably if the rating system is changed) by
Standard & Poor's Ratings Group or Prime-1 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 rated either AA- or
better (or comparably if the rating system is
changed) by Standard & Poor's Ratings Group or Aa3 or
better (or comparably if the rating system is
changed) by Moody's Investors Service, Inc.
("Permitted Banks"), or by any bank party to the Bank
Credit Facilities the long-term debt obligations of
which are rated either A or better (or comparably if
the rating system is changed) by Standard and Poor's
Rating Group or A or better (or comparably if the
rating system is changed) by Moody's Investor
Service, Inc.,
(5)Eurodollar time deposits having a maturity
of less than 270 days from the date of acquisition
thereof purchased directly from any Permitted Bank,
(6)bankers' acceptances eligible for re-
discount under requirements of The Board of Governors
of the Federal Reserve System and accepted by
Permitted Banks, and
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(7)obligations of the type described in
clause (1), (2), (3) or (4) 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 14 days
after the purchase thereof and which provides that
the obligations which are the subject thereof are
held for the benefit of the Company or a Restricted
Subsidiary by a custodian which is a Permitted Bank;
(b) the Company and any Restricted Subsidiary may
make and own Investments in any Restricted Subsidiary or
Investments in capital stock of, or other equity
interests in, any Person which as a result of such
Investment becomes a Restricted Subsidiary, and any
Qualifying Restricted Subsidiary may make and permit to
be outstanding Investments in the Company and may create
or become liable with respect to the Subsidiary
Guarantee Agreement in respect of the Company's
obligations under the Notes or under Parity Debt;
(c) the Company or any Restricted Subsidiary may
make and own Investments (other than those included in
subdivision (b) above) in the capital stock of, or joint
venture, partnership or other equity interests in, or
the contributions to capital in the ordinary course of
business of, any Unrestricted Subsidiary if immediately
after giving effect to the making of any such
Investment, (A) the aggregate amount of all such
Investments made and outstanding pursuant to this
subdivision (c) shall not at any time exceed 20% of the
Consolidated Net Worth of the Company and (B) the
aggregate amount of all Investments made and outstanding
pursuant to this subdivision (c) as at the end of any
fiscal quarter of the Company shall not exceed by more
than $15,000,000 the amount of such Investments
outstanding as at the end of the corresponding fiscal
quarter of the immediately preceding fiscal year of the
Company, and in the case of both clauses (A) and (B) of
this subdivision (c), (i) the amounts specified therein
may be increased by an amount equal to the net cash
proceeds received by the Company from the Managing
General Partner or from the Public Partnership as a
capital contribution or as consideration for the
issuance by the Company of additional partnership
interests for the sole purpose of making an Investment
in an Unrestricted Subsidiary, and (ii) net of cash
distributions received from all Unrestricted
Subsidiaries for such period;
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(d) the Company or any Restricted Subsidiary may
make and own Investments (x) constituting trade credits
or advances to any Person incurred in the ordinary
course of business, (y) arising out of loans and
advances to officers, directors and employees for
travel, entertainment and relocation expenses, in each
case incurred in the ordinary course of business or
(z) acquired by reason of the exercise of customary
creditors' rights upon default or pursuant to the
bankruptcy, insolvency or reorganization of a debtor;
(e) the Company or any Restricted Subsidiary may
create or become liable with respect to any Guaranty
constituting an obligation, warranty or indemnity, not
guaranteeing Indebtedness of any Person, which is
undertaken or made in the ordinary course of business;
(f) the Company or any Restricted Subsidiary may
create and become liable with respect to any Interest
Rate Agreements; and
(g) the Company may create and become liable with
respect to Commodity Hedging Agreements.
10.4. RESTRICTED PAYMENTS. The Company will not,
directly or indirectly, nor will it permit any Subsidiary to declare,
order, pay, make or set apart any sum for any Restricted Payment,
except that (a) the Company may declare, order, pay, make or set apart
once during each calendar quarter a Restricted Payment in cash if
(i) such Restricted Payment is in an amount not exceeding Available
Cash for the immediately preceding calendar quarter, (ii) prior to any
such proposed action no condition or event shall exist which
constitutes a Potential Event of Default under Section 11(b) or an
Event of Default and immediately after giving effect to any such
proposed Restricted Payment no condition or event shall exist which
constitutes a Potential Event of Default or an Event of Default, (iii)
the ratio of Consolidated Cash Flow to Consolidated Interest Expense,
as of the date of such action, is greater than 1.75 to 1.00 (the
"Coverage Test") and (iv) the Company shall have given to each holder
of a Note written notice thereof on the date such Restricted Payment
is declared, which date shall be within 50 days of the date on which
the Coverage Test was satisfied and at least 10 days prior to the date
such Restricted Payment is made, (b) the Company may declare, order,
pay, make or set apart a Restricted Payment needed to pay pass-through
taxes so long as (1) prior to any such proposed action no condition or
event shall exist which constitutes an Event of Default and (2)
immediately after giving effect to any such proposed action no
condition or event shall exist which constitutes a Potential Event of
Default or an Event of Default, and (c) any Subsidiary may make, pay
or set apart dividends and distributions so long as such dividends or
distributions are made, paid or set apart for each holder of such
Person's capital stock or other equity on a pro-rata basis. Upon
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<PAGE> 417
satisfaction of the Coverage Test by the Company, such Restricted
Payment shall be made within 60 days thereafter, and, notwithstanding
any other provision of this Section 10.4, if the payment would have
been permitted as of the date of such declaration, such payment shall
be permitted if made during such 60 day period. The Company will not,
in any event, directly or indirectly declare, order, pay or make any
Restricted Payment except in cash.
10.5. TRANSACTIONS WITH AFFILIATES. Except for the
transactions or conduct effected pursuant to the Operative Agreements
as in effect on the date of the Closing or any other transactions or
conduct described in or contemplated by the Registration Statement or
listed on Schedule 10.5, the Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, engage in any
transaction with any Affiliate of the Company, including, without
limitation, the purchase, sale or exchange of assets or the rendering
of any service, to the Company's or such Restricted Subsidiary's
business except upon fair and reasonable terms that are no less
favorable to the Company or such Restricted Subsidiary, as the case
may be, than those which might be obtained in an arm's-length transac-
tion at the time such transaction is agreed upon from Persons which
are not such an Affiliate, provided that the foregoing limitations and
restrictions shall not apply to any transaction between the Company
and any Restricted Subsidiary or between Restricted Subsidiaries or to
loans and advances to officers, directors and employees made in the
ordinary course of business.
10.6. SUBSIDIARY STOCK AND INDEBTEDNESS. The
Company will not:
(a) directly or indirectly sell, assign, pledge or
otherwise dispose of any Indebtedness of or any shares
of stock or similar interests of (or warrants, rights or
options to acquire stock or similar interests of) any
Subsidiary, except to a Restricted Subsidiary;
(b) permit any Restricted Subsidiary directly or
indirectly to sell, assign, pledge or otherwise dispose
of any Indebtedness of (i) the Company or (ii) any other
Restricted Subsidiary, or any shares of stock or similar
interests of (or warrants, rights or options to acquire
stock or similar interests of) any other Subsidiary,
except to, in the case of clause (i), the Company or, in
all other cases, the Company or a Restricted Subsidiary;
(c) permit any Restricted Subsidiary to have
outstanding any shares of stock or similar interests
which are preferred over any other shares of stock or
similar interests owned by the Company unless such
shares of preferred stock or similar interests are owned
by the Company; or
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(d) permit any Restricted Subsidiary directly or
indirectly to issue or sell (including, without
limitation, in connection with a merger or consolidation
of a Restricted Subsidiary otherwise permitted by Sec-
tion 10.7(a)) any shares of its stock or similar
interests (or warrants, rights or options to acquire its
stock or similar interests) except to the Company or a
Restricted Subsidiary;
provided that, (i) any Restricted Subsidiary may sell, assign or
otherwise dispose of Indebtedness of the Company or a Restricted
Subsidiary if, assuming such Indebtedness were incurred immediately
after such sale, assignment or disposition, such Indebtedness would be
permitted under Section 10.1 (and if such Indebtedness is secured,
such Lien would be permitted pursuant to Section 10.2) or (ii) subject
to compliance with Section 10.7(c), all Indebtedness and shares of
stock or partnership interests of any Restricted Subsidiary owned by
the Company or by another Restricted Subsidiary may be simultaneously
sold as an entirety for consideration at least equal to the fair value
thereof (as determined in good faith by the Managing General Partner)
at the time of such sale if such Restricted Subsidiary does not at the
time own (A) any Indebtedness of the Company (other than Indebtedness
which, if incurred immediately after such transaction, would be
permitted under Section 10.1) or (B) any Indebtedness, stock or other
interest in any other Restricted Subsidiary which is not also being
simultaneously sold as an entirety in compliance with this proviso or
Section 10.7(b)(ii).
10.7. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.
The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly,
(a) consolidate with or merge into any other
Person or permit any other Person to consolidate with or
merge into it, except that:
(i)any Restricted Subsidiary may consolidate
with or merge into the Company or a Restricted Sub-
sidiary if, in the case of a consolidation with or
merger into the Company, the Company shall be the
surviving Person and if, immediately after giving
effect to such transaction, no condition or event
shall exist which constitutes an Event of Default or
Potential Event of Default; and
(ii)any entity (other than a Restricted
Subsidiary) may consolidate with or merge into the
Company or a Restricted Subsidiary if the Company or
a Restricted Subsidiary, as the case may be, shall be
the surviving Person and if, immediately after giving
effect to such transaction, (w) the Company (1) shall
not have a Consolidated Net Worth (but without giving
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effect to any write-up in assets or amounts
attributable to goodwill pursuant to purchase
accounting methods) of less than the Consolidated Net
Worth of the Company immediately prior to the
effectiveness of such transaction, (2) shall not be
liable with respect to any Indebtedness or allow its
property to be subject to any Lien which it could not
become liable with respect to or allow its property
to become subject to under this Agreement on the date
of such transaction, and (3) could incur, if the
consolidating or merging entity has outstanding In-
debtedness, at least $1 of additional Indebtedness in
compliance with Section 10.1(f) after giving effect
to such transaction, (x) substantially all of the
assets of such entity shall be located and sub-
stantially all of its business shall be conducted
within the United States of America, and (y) no
condition or event shall exist which constitutes an
Event of Default or Potential Event of Default; and
(iii)the Company may consolidate with or merge
into any other entity if (v) the surviving entity is
a corporation, limited partnership, limited liability
company or business trust organized and existing
under the laws of the United States of America or a
state thereof or the District of Columbia, with sub-
stantially all of its properties located and its
business conducted within the United States of
America, (w) such corporation, limited partnership,
limited liability company or business trust expressly
and unconditionally assumes the obligations of the
Company under this Agreement and each of the other
Operative Agreements and delivers to each holder of a
Note at the time outstanding in connection with such
assumption an opinion of counsel reasonably
satisfactory to the Required Holders with respect to
such matters incident to such assumption as may be
reasonably requested by such holders, including,
without limitation, as to the due authorization and
execution of the related agreement of assumption and
the enforceability of such agreement against such
corporation, limited partnership, limited liability
company or business trust, (x) immediately after
giving effect to such transaction, such corporation,
limited partnership, limited liability company or
business trust (1) shall not have a Consolidated Net
Worth (but without giving effect to any write-up in
assets or amounts attributable to goodwill pursuant
to purchase accounting methods) of less than the Con-
solidated Net Worth of the Company immediately prior
to the effectiveness of such transaction, (2) shall
not be liable with respect to any Indebtedness or
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allow its property to be subject to any Lien which it
could not become liable with respect to or allow its
property to become subject to under this Agreement on
the date of such transaction and (3) could incur, if
the consolidating or merging entity had outstanding
Indebtedness, at least $1 of additional Indebtedness
in compliance with Section 10.1(f) after giving
effect to such transaction, and (y) immediately after
giving effect to such transaction no condition or
event shall exist which constitutes an Event of De-
fault or a Potential Event of Default; or
(b) sell, lease, abandon or otherwise dispose of
all or substantially all its assets, except that:
(i)any Restricted Subsidiary may sell, lease
or otherwise dispose of all or substantially all its
assets to the Company or to a Restricted Subsidiary;
and
(ii)the Company may sell, lease or otherwise
dispose of all or substantially all its assets to any
corporation, limited partnership, limited liability
company or business trust into which the Company
could be consolidated or merged in compliance with
clause (a)(iii) of this Section 10.7, provided that
each of the conditions set forth in such subdivision
(a)(iii) shall have been fulfilled; or
(c) sell, lease, abandon or otherwise dispose of
any property to any Person other than the Company or any
Restricted Subsidiary (except for (x) sales, leases or
other dispositions of property in transactions permitted
by the foregoing clauses (a) or (b) of this
Section 10.7, and (y) sales or leasing of inventory in
the ordinary course of business) unless immediately
before and after giving effect to such transaction, no
Event of Default or Potential Event of Default shall
exist or be continuing and:
(i)at least 70% or more of the consideration
(or 25% or more in the event such consideration is
less than $1,000,000) therefor shall be in the form
of cash consideration or marketable securities,
provided, that the amount of (A) any liabilities (as
shown on the Company's or such Restricted
Subsidiary's most recent balance sheet or in the
notes thereto) of the Company or any Restricted
Subsidiary (other than liabilities that are by their
terms subordinated in right of payment to the Notes)
that are assumed by the transferee of any such assets
and (B) any notes or other obligations received by
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<PAGE> 421
the Company or any such Restricted Subsidiary from
such transferee that are promptly converted into cash
(to the extent of the cash received), shall be deemed
to be cash for the purposes of this Sec-
tion 10.7(c)(i), and
(ii)either
(A)the aggregate net after-tax proceeds of all
such dispositions by the Company and all
Restricted Subsidiaries during the current
fiscal year (including all proceeds under
title insurance policies with respect to real
property and all net insurance proceeds, self-
insurance amounts and net awards with respect
to property lost as a result of damage,
destruction or a taking which have not been
applied to the cost of repairing or replacing
any damaged or destroyed assets ), less the
amount of all such net after-tax proceeds
previously applied in accordance with
subdivision (ii)(B) of this Section 10.7(c)
and the amount of such net after-tax proceeds
equal to the purchase price of any assets
acquired to the extent that (1) such assets
were acquired within 90 days prior to the date
of such disposal of property, (2) the purchase
price of such assets was not previously
applied to reduce the amount of net after-tax
proceeds of property disposed of under this
Section 10.7(c), (3) such assets were acquired
for subsequent replacement of the property so
disposed of or may be productively used in the
United States of America in the conduct of the
Business, (4) if the assets so disposed were
or should have been, then such newly acquired
assets shall be subject to the Lien of the
Security Documents, and (5) to the extent such
assets were acquired (in whole or in part)
with borrowed money, such borrowing has been
repaid in full, (x) shall not exceed
$7,500,000 during such fiscal year and
(y) when aggregated with such net after-tax
proceeds of all prior transactions under this
Section 10.7(c), shall not exceed $30,000,000;
or
(B)in the event that such net after-tax pro-
ceeds (less the amount thereof previously
applied in accordance with this subdivision
(ii)(B) and the amount thereof equal to the
purchase price of any assets acquired to the
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<PAGE> 422
extent that (1) such assets were acquired
within 90 days prior to the date of such
disposal of property, (2) the purchase price
of such assets was not previously applied to
reduce the amount of net after-tax proceeds of
property disposed of under this Section
10.7(c), (3) such assets were acquired for
subsequent replacement of the property so
disposed of or may be productively used in the
United States of America in the conduct of the
Business, (4) if the assets so disposed were
or should have been, then such newly acquired
assets shall be subject to the Lien of the
Security Documents, and (5) to the extent such
assets were acquired (in whole or in part)
with borrowed money, such borrowing has been
repaid in full) during the current fiscal year
exceed $7,500,000 or, when aggregated with
such net after-tax proceeds of all prior
transactions under this Section 10.7(c),
exceed $30,000,000 (the larger amount of such
excess net after-tax proceeds actually
realized being herein called "Excess Pro-
ceeds"), the Company shall promptly pay over
to the Trustee under the Trust Agreement such
Excess Proceeds not at the time held by the
Trustee for application by the Trustee
(x) within 365 days of the date of the
disposal or loss of property to the
acquisition of assets in replacement of the
property so disposed of or lost or of assets
which may be used in the United States of
America in the conduct of the Business (and if
the assets so disposed were or should have
been, then such newly acquired assets shall be
subjected to the Lien of the Security Docu-
ments) or to the cost of repairing or
replacing any damaged or destroyed assets, or
(y) to the extent of Excess Proceeds not
applied pursuant to the immediately preceding
clause (x), to the payment and/or prepayment
of the Notes and Parity Debt, if any, pursuant
to Section 9.1 and/or 9.4(a), all as provided
in Section 4(d) of the Trust Agreement and
such Section 9.1 and/or 9.4(a), and the
Trustee shall have received an Officers'
Certificate from the Managing General Partner
of the Company certifying that the con-
sideration received for such property is at
least equal to its fair value (as determined
in good faith by the Managing General Partner
of the Company) and that such consideration
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<PAGE> 423
has been applied in accordance with the terms
of this Agreement.
Notwithstanding the foregoing, the Company and any
Restricted Subsidiary may sell or dispose of (i) real property assets
sold or disposed of within 12 months of the acquisition of such
assets, and (ii) all other assets sold or disposed of within 6 months
of the acquisition of such assets, in each case constituting a portion
of an acquired business, if (y) such assets are specifically
designated to the holders of the Notes in writing at the time of such
acquisition or within 30 Business Days thereafter as assets to be
disposed of, and (z) the Trustee shall have received an Officers'
Certificate from the Managing General Partner of the Company
certifying that the consideration received for such property is at
least equal to its fair value (as determined in good faith by the
Managing General Partner of the Company). Such sales under this
paragraph will not be applied towards the annual or cumulative
limitations in subdivision (c) of this Section 10.7. In addition,
notwithstanding the foregoing, the Company may, at any time, exchange
assets for other like assets which may be used in the conduct of the
Business, provided (1) the fair value of the assets so acquired is
substantially equivalent to the fair value of the assets so exchanged
(as determined in good faith by the Managing General Partner of the
Company), (2) if the assets exchanged were or should have been, then
such newly acquired assets shall be subject to the Lien of the
Security Documents and (3) the total value of the assets so exchanged
in any twelve month period shall not in the aggregate exceed 15% of
the total assets of the Company. The holders of Notes agree to take
all actions reasonably requested by the Company (and at the expense of
the Company) to cause dispositions of any Collateral made in
compliance with this Section 10.7 to be made free and clear of the
Liens created by the Security Documents.
10.8. PARTNERSHIP OR CORPORATE EXISTENCE, ETC.;
BUSINESS. (a) (i) The Company will at all times preserve and keep in
full force and effect its partnership existence and (subject to the
provisions of subdivision (b) of this Section 10.8) its status as a
partnership not taxable as a corporation for federal income tax
purposes; (ii) the Company will cause each Restricted Subsidiary to
keep in full force and effect its partnership or corporate existence;
and (iii) the Company will, and will cause each Restricted Subsidiary
to, at all times preserve and keep in full force and effect all of its
material rights and franchises (in each case except as otherwise
specifically permitted in Sections 10.6 and 10.7; provided, however,
that notwithstanding the preceding provisions of this Section 10.8 the
partnership or corporate existence of any Restricted Subsidiary, and
any right or franchise of the Company or any Restricted Subsidiary,
may be terminated if, in the good faith judgment of the Managing Gen-
eral Partner, such termination is in the best interest of the Company,
is not disadvantageous to the holders of the Notes in any material
respect and would not have a Material Adverse Effect).
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<PAGE> 424
(b) The Company shall not be obligated to preserve
its status as a partnership not taxable as a corporation for federal
income tax purposes if (i) the Company's failure to preserve such
status shall be the result of an amendment to the tax laws enacted by
the Congress of the United States and (ii) after giving effect to the
loss of such status the ratio of Consolidated Cash Flow to Maximum
Consolidated Pro Forma Debt Service, determined as of the date of the
loss of such status, would be greater than 1.1 to 1.0, assuming, for
the purposes of the computation of Consolidated Cash Flow, that
Consolidated Cash Flow would be reduced by taxes at the applicable tax
rate of the Company for such period had the Company been taxable as a
corporation.
(c) The Company will not, and will not permit any
Restricted Subsidiary to, engage in any material lines of business
other than the Business as described in the Registration Statement and
other activities incidental or related to the Business; provided that,
the Company will not permit Cornerstone Sales & Service Corporation to
exist for any purpose, or to carry on any business, other than the
ownership and operation of the Service Assets (as defined in the
Conveyance Agreements) and other assets of that type.
10.9. PAYMENT OF TAXES AND CLAIMS. The Company
will, and will cause each Subsidiary to, pay all taxes, assessments
and other governmental charges or levies imposed upon it or any of its
properties or assets or in respect of any of its franchises, business,
income or profits when the same become due and payable, but in any
event before any penalty or interest accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials
and supplies) for sums which have become due and payable and which by
law have or might become a Lien upon any of its properties or assets,
and promptly reimburse the holders of the Notes for any such taxes,
assessments, charges or claims paid by them, provided that no such
tax, assessment, charge or claim need be paid or reimbursed if it is
being contested in good faith by appropriate proceedings promptly
initiated and diligently conducted and if such reserves or other ap-
propriate provision, if any, as shall be required by GAAP shall have
been made therefor and be adequate in the good faith judgment of the
Managing General Partner.
10.10.COMPLIANCE WITH ERISA. The Company will not,
and will not permit any Subsidiary or Related Person of the Company
to:
(a) (i) engage in any transaction in connection
with which the Company or any Subsidiary could be
subject to either a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975
of the Code, (ii) terminate (within the meaning of Title
IV of ERISA) or withdraw from any Plan in a manner, or
take, or fail to take, any other action with respect to
any Plan (including, without limitation, a substantial
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<PAGE> 425
cessation of operations within the meaning of Sec-
tion 4062(e) of ERISA), (iii) establish, maintain,
contribute to or become obligated to contribute to any
welfare benefit plan (as defined in Section 3(1) of
ERISA) or other welfare benefit arrangement which
provides post-employment benefits, which cannot be
unilaterally terminated by the Company, (iv) fail to
make full payment when due of all amounts which, under
the provisions of any Plan or applicable law, the
Company or any Subsidiary or Related Person of the
Company is required to pay as contributions or permit to
exist any material accumulated funding deficiency,
whether or not waived, with respect to any Plan or (v)
engage in any transaction in connection with which the
Company, any Subsidiary or any Related Person of the
Company could be subject to liability pursuant to
Section 4069(a) or 4212(c) of ERISA, if any such event,
condition or transaction described in clauses (i)
through (v) above, either individually or together with
any other such event, condition or transaction, could
reasonably be expected to result in (x) the imposition
of a Lien in a material amount on any assets or property
of the Company or any Subsidiary of the Company pursuant
to Section 302(f) of ERISA or Section 412(n) of the Code
or (y) any liability to the Company, any Subsidiary of
the Company or any Related Person of the Company, which
liability could have a Material Adverse Effect; or
(b) as of any date of determination (i) permit the
amount of unfunded benefit liabilities under any Plan
(other than a Multiemployer Plan) maintained at such
time by the Company or any Subsidiary or Related Persons
of the Company to exceed the current value of the assets
of any such Plan by more than $1,000,000 or (ii) permit
the aggregate liability incurred by the Company and any
Subsidiary of the Company and Related Persons of the
Company pursuant to Title IV of ERISA with respect to
one or more terminations of, or one or more complete or
partial withdrawals from, any Plan to exceed $1,000,000.
As used in this Section 10.10, the term "accumulated funding
deficiency" has the meaning specified in Section 302 of ERISA and Sec-
tion 412 of the Code, the term "current value" has the meaning
specified in Section 3 of ERISA and the terms "benefit liabilities"
and "amount of unfunded benefit liabilities" have the meanings
specified in Section 4001 of ERISA.
10.11.MAINTENANCE OF PROPERTIES; INSURANCE. (a) The
Company will maintain or cause to be maintained in working order and
condition, in accordance with normal industry standards and as
otherwise required by the Security Documents, all material properties
used or useful in the business of the Company and the Restricted
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<PAGE> 426
Subsidiaries and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof.
(b) The Company will, and will cause each of the
Restricted Subsidiaries to, keep its insurable properties adequately
insured at all times by Permitted 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
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; maintain
such other insurance policy as may be required by law or any Security
Document; and cause each such insurance policy to name the Trustee, as
an additional insured or loss payee thereunder. The Company may
maintain a system of self-insurance in an amount customary for
companies with established reputations engaged in the same or similar
business and owning similar properties as the Company. The Company
will permit the holders of the Notes and an insurance consultant
retained by the Required Holders, at the expense of the Company, to
review the insurance policies maintained by the Company on an annual
basis and will implement any changes to such policies reasonably
recommended by such consultant if available on a commercially
reasonable basis.
10.12.OPERATIVE AGREEMENTS; SECURITY DOCUMENTS. The
Company will, and will cause each Restricted Subsidiary to, perform
and comply with all of its obligations under each of the Operative
Agreements to which it is a party, will enforce each such Operative
Agreement against each other party thereto and will not accept the
termination of any such Operative Agreement, unless (but only with
respect to Operative Agreements other than this Agreement or the Other
Agreements) the taking of or omitting to take any such action would
not have a Material Adverse Effect and will not amend, modify or sup-
plement any Operative Agreement without the prior written consent of
the Required Holders (or with respect to this Agreement as specified
in Section 18), provided that (i) the MLP Agreement and the
Partnership Agreement (other than Sections 4.5, 6.3, and 7.5(a) of the
Partnership Agreement the amendment of which requires the consent of
the Required Holders) may be amended, modified or supplemented without
the prior written consent of the Required Holders if such amendment,
modification or supplement would not have a Material Adverse Effect
and the Company shall have delivered to each holder of any Notes a
copy of such proposed amendment, modification or supplement together
with an Officers' Certificate describing such proposed amendment,
modification or supplement and stating that to the best of the
Company's knowledge (after due inquiry) such proposed amendment,
modification or supplement would not have a Material Adverse Effect,
(ii) the Bank Credit Facilities may be amended, modified or
supplemented without the prior written consent of the Required Holders
if such amendment, modification or supplement may be made without the
written consent of any holders of the Notes under the Trust Agreement,
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<PAGE> 427
and (iii) the conveyances, assignments and bills of sale referred to
in clause (b) of the definition of Conveyances Agreements may be
amended, modified or supplemented so long as such amendments,
modifications or supplements do not, in the aggregate, have a Material
Adverse Effect.
10.13.CHIEF EXECUTIVE OFFICE. The Company will not
move its chief executive office and the office at which it maintains
its records relating to the transactions contemplated by this
Agreement and the Security Documents unless (a) not less than 45 days'
prior written notice of its intention to do so, clearly describing the
new location, shall have been given to the Trustee and each holder of
a Note and (b) such action, reasonably satisfactory to the Trustee and
each holder of a Note, to maintain any security interest in the
property subject to the Security Documents at all times fully per-
fected and in full force and effect shall have been taken.
10.14.RECORDATION; OPINIONS. (a) The Company will
promptly, but in any event within 30 days from the date of the
Closing, cause to be duly recorded, published, registered and filed
all Conveyance Agreements (as set forth in paragraph (b) of the
definition of such term) and the Security Documents (in each case, not
previously recorded, published, registered or filed in accordance with
Section 4.8), in such manner and in such places as is required by law
to establish, perfect, preserve and protect the rights and first
priority security interests of the parties thereto and their re-
spective successors and assigns in all of the Collateral and shall
deliver to the Trustee and your special counsel within six calendar
months of the date of the Closing copies of such duly recorded,
published, registered and filed Security Documents. The Company will
pay all taxes, fees and other charges then due in connection with the
execution, delivery, recording, publishing, registration and filing of
such documents or instruments in such places.
(b) The Company, at its expense, will furnish to
the Trustee and each holder of a Note during the period commencing
October 1 to November 1 of the years 2001 and 2006 and at such other
times as the Trustee may reasonably request in connection with the
perfection of Liens granted pursuant to the Security Documents an
opinion of counsel satisfactory to the Trustee stating that in the
opinion of such counsel such action has been taken with respect to the
recording, filing, re-recording and re-filing of the Security Docu-
ments and any financing statements necessary to maintain the Lien or
security interest created thereby and reciting the details of such
action or stating that in the opinion of such counsel no such action
is necessary to maintain such lien or security interest; provided,
however, that such opinion may be from counsel not located in such
jurisdiction and provided, further, that such opinion is not required
to address filings with respect to the perfection of any lien or
security interest in fixtures.
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10.15.INFORMATION REQUIRED BY RULE 144A. The Company
covenants that it will, upon the prior written request of the holder
of any Note, provide such holder, and any qualified institutional
buyer designated by such holder, such financial and other information
as such holder may reasonably determine to be necessary in order to
permit compliance with the information requirements of Rule 144A under
the Securities Act of 1933, as amended, in connection with the resale
of Notes, except at such times as the Company is subject to the
reporting requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended. For the purpose of this Sec-
tion 10.15, the term "qualified institutional buyer" shall have the
meaning specified in Rule 144A under the Securities Act of 1933, as
amended.
10.16.COVENANT TO SECURE NOTES EQUALLY. The Company
covenants that, if it or any Restricted Subsidiary shall create or
assume any Lien upon any of its property or assets, whether now owned
or hereafter acquired, other than Liens permitted by the provisions of
Section 10.2 (unless prior written consent to the creation or assump-
tion thereof shall have been obtained pursuant to Section 18 and
except any such Lien arising by operation of law), it will make or
cause to be made effective provision whereby the Notes will be secured
by such Lien equally and ratably with any and all other Indebtedness
thereby secured so long as any such other Indebtedness shall be so se-
cured, it being understood that the provision of such equal and
ratable security shall not constitute a cure or waiver of any related
Event of Default.
10.17.COMPLIANCE WITH LAWS. (a) The Company will,
and will cause each Subsidiary to, comply with all applicable
statutes, rules, regulations, and orders of, and all applicable
restrictions imposed by, the United States of America, foreign
countries, states, provinces and municipalities, and of or by any
governmental department, commission, board, regulatory authority,
bureau, agency and instrumentality of the foregoing, and of or by any
court, arbitrator or grand jury, in respect of the conduct of their
respective businesses and the ownership of their respective properties
or business (including, without limitation, Environmental Laws),
except (i) such as are being contested in good faith by appropriate
proceedings promptly initiated and diligently conducted and if such
reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made therefor or (ii) for any failure to so
comply which, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
(b) The Company will, and will cause each
Restricted Subsidiary to, comply with all Environmental Laws, other
than noncompliance which could not reasonably be expected to result in
a Material Adverse Effect, individually or in the aggregate, with any
other liability under any Environmental Laws.
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10.18.FURTHER ASSURANCES. At any time and from to
time promptly, the Company shall, at its expense, execute and deliver
to each holder of a Note and to the Trustee such further instruments
and documents, and take such further action, as the holders of the
Notes may from time to time reasonably request, in order to further
carry out the intent and purpose of this Agreement and to establish
and protect the rights, interests and remedies created, or intended to
be created, in favor of the holders of the Notes, including, without
limitation, the execution, delivery and recordation and filing of
security agreements and financing statements and continuation
statements under the Uniform Commercial Code of any applicable
jurisdiction.
10.19.SUBSIDIARIES. (a) The Company may designate
any Restricted Subsidiary or newly acquired or formed Subsidiary as an
Unrestricted Subsidiary or any Unrestricted Subsidiary or newly
acquired or formed Subsidiary as a Restricted Subsidiary, in each case
subject to satisfaction of the following conditions:
(i) immediately before and after giving effect to such
designation no condition or event shall exist which constitutes
an Event of Default or Potential Event of Default;
(ii) immediately after giving effect to such designation, (1)
(other than in the case of a designation of an Unrestricted
Subsidiary that does not have any Indebtedness as a Restricted
Subsidiary), the Company would be permitted to incur at least $1
of additional Indebtedness in compliance with subdivisions (i),
(ii) and (iii) of Section 10.1(f), (2) the Company and the
Restricted Subsidiaries would not be liable with respect to
Indebtedness or any Guaranty, would not own any Investments and
their property would not be subject to any Lien which is not
permitted by this Agreement and (3) substantially all of the
Company's and the Restricted Subsidiaries' assets will be
located, and substantially all of the Company's and the
Restricted Subsidiaries' business will be conducted, in the
United States of America;
(iii) in the case of a designation as an Unrestricted
Subsidiary, if such designation (and all other prior
designations of Restricted Subsidiaries or newly acquired or
formed Subsidiaries as Unrestricted Subsidiaries during the
current fiscal year) were deemed to constitute an Investment by
the Company in respect of all the assets of the Subsidiary so
designated, such Investment would be in compliance with Section
10.3(c), with the amount of such Investment being deemed to
equal the net book value of such assets (as determined in good
faith by the Managing General Partner) in the case of a
Restricted Subsidiary or the cost of acquisition or formation in
the case of a newly acquired or formed Subsidiary, provided,
that this subdivision (iii) of this Section 10.19(a) shall not
apply to an acquisition or formation by the Company or a
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Restricted Subsidiary of a newly acquired or formed Unrestricted
Subsidiary to the extent such acquisition or formation (1) is
funded solely by the net cash proceeds received by the Company
from either General Partner or from the Public Partnership as a
capital contribution or as consideration for the issuance by the
Company of additional partnership interests or (2) the assets
involved in such acquisition are acquired in exchange for
additional partnership interests of the Company or the Public
Partnership provided, further, the net book value of the
Restricted Subsidiary designated an Unrestricted Subsidiary and
the cost (other than the amount paid in cash) of the acquisition
or formation of a newly acquired or formed Subsidiary shall be
deemed proceeds from the sale of assets of the Company for
purposes of Section 10.7 and Section 9.4;
(iv) in the case of a designation of a Restricted Subsidiary
as an Unrestricted Subsidiary, such Restricted Subsidiary shall
not have been an Unrestricted Subsidiary prior to being
designated a Restricted Subsidiary; and
(v) the Company shall deliver to each holder of Notes,
within 20 Business Days after any such designation, an Officers'
Certificate stating the effective date of such designation and
confirming compliance with the provisions of this Section 10.19.
In the case of the designation of any Unrestricted Subsidiary as
a Restricted Subsidiary, such new Restricted Subsidiary shall be
deemed to have (a) made or acquired all Investments owned by it, and
(b) incurred all Indebtedness owing by it and all Liens to which any
of its properties are subject, on the date of such designation.
(b) The Company will cause each Qualifying Restricted
Subsidiary, at the time it is or is deemed to be designated as a
Restricted Subsidiary, to (i) become a party to the Company Security
Agreement, the Subsidiary Guarantee Agreement and the Trust Agreement
by execution of a Supplemental Agreement and deliver a Perfection
Certificate and (ii) enter into such documents as may be necessary or
as you may request in form and substance satisfactory to the Required
Holders in order to secure such Restricted Subsidiary's obligations
under the Subsidiary Guarantee Agreement with all or substantially all
of the assets of such Restricted Subsidiary of any type which, if they
were assets of the Company, would be Collateral. Prior to the
designation of a Subsidiary as a Restricted Subsidiary, the Company
shall deliver to the holders of the Notes an opinion of counsel with
respect to the due execution and delivery of the Supplemental
Agreement by such Subsidiary and as to the enforceability of the
Company Security Agreement, the Trust Agreement, the Supplemental
Agreement and the Subsidiary Guarantee Agreement with respect to such
Subsidiary, such opinion to be in form and substance satisfactory to
the Required Holders.
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(c) The Company will not own any Unrestricted Subsidiaries
other than Wholly Owned Subsidiaries satisfying the requirements in
clauses (a), (b) and (c) of the definition of Restricted Subsidiary.
10.20. DAMAGE, DESTRUCTION, TAKING, ETC. In the event of any
damage, destruction or a taking in respect of all or a portion of the
properties subject to any of the Security Documents or in the event
there shall be proceeds under title insurance policies with respect to
any real property, the Company will not apply any net insurance
proceeds or self-insurance amounts, net awards, if such proceeds
(whether resulting from one or a series of events or circumstances)
exceed $25,000,000 in the aggregate, to the cost of repairing or
replacing any damaged or destroyed assets without the prior written
consent of the Required Holders.
10.21. ACCOUNTING CHANGES. The Company will not, and will not
suffer or permit any Restricted Subsidiary to, make any significant
change in accounting treatment or reporting practices, except as
required by GAAP or consented to by the Company's independent public
accountant. The Company will, and will cause each Restricted
Subsidiary to, cause its fiscal year to end on June 30 in each year.
10.22. ACQUISITIONS. Except as otherwise permitted by Section
10.7, the Company will not, and will not cause or permit any of the
Restricted Subsidiaries to, purchase, lease or otherwise acquire (in
one transaction or a series of transactions) all or any substantial
part of the assets of any other Person, except that (a) the Company
and any of the Restricted Subsidiaries may purchase Inventory in the
ordinary course of business and (b) the Company or any Restricted
Subsidiary may engage in any such acquisition if no Event of Default
or Potential Event of Default has occurred and is continuing at the
time of any such acquisition or would occur immediately after giving
effect thereto.
10.23. IMPAIRMENT OF SECURITY INTERESTS. Other than with
respect to Permitted Encumbrances, the Company will not, and will not
permit any of the Restricted Subsidiaries to, take or omit to take any
action, which action or omission might or would have the result of
materially impairing the security interests in favor of the Trustee
with respect to the Collateral, and the Company will not, and will not
permit any of the Restricted Subsidiaries to, grant to any Person
(other than the Trustee) any interest whatsoever in the Collateral.
10.24. LIMITATION ON RESTRICTIONS ON SUBSIDIARY DIVIDENDS, ETC.
The Company will not, and will not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary
to (a) pay dividends or make any other distributions on or in respect
of its capital stock, or pay any Indebtedness owed to the Company or
any Restricted Subsidiary, (b) make loans or advances to the Company
or any Restricted Subsidiary or (c) transfer any of its properties or
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assets to the Company or any Restricted Subsidiary, except for such
encumbrances or restrictions existing under or by reason of (i)
customary non-assignment provisions in any lease governing a leasehold
interest or other contract entered into in the ordinary course of
business consistent with past practices, (ii) restrictions on the
payment of dividends and distributions pursuant to the terms of
Indebtedness incurred by such Restricted Subsidiary in accordance with
Section 10.1 or (iii) this Agreement or any other Operative Agreement.
10.25. NO OTHER NEGATIVE PLEDGES. The Company will not, and
will not cause or permit any of the Restricted Subsidiaries to,
directly or indirectly, enter into any agreement prohibiting the
creation or assumption of any Lien upon the properties or assets of
the Company or any Restricted Subsidiary, whether now owned or here-
after acquired, or requiring an obligation to be secured if some other
obligation is secured, except for this Agreement, the Other
Agreements, the Bank Credit Facilities and the terms of any other
Indebtedness incurred in accordance with Section 10.1 (provided that
the terms of such agreement for such other Indebtedness are no more
onerous to the Company and its Subsidiaries than those terms set forth
in Section 10.2); provided that no such agreement shall prohibit the
granting of Liens on assets of the Company and its Restricted
Subsidiaries as contemplated by the terms of this Agreement, the
Security Documents and any documents evidencing or creating any other
Parity Debt.
10.26. SALES OF RECEIVABLES. The Company will not, and will
not cause or permit any of the Restricted Subsidiaries to, sell with
recourse, discount or otherwise sell or dispose of its notes or
accounts receivable, except for (a) accounts receivable consisting of
assets of an operating unit sold as a going concern in accordance with
all other provisions of this Agreement and (b) sales of account
receivables which have been written off as uncollectable or
collectable only after extended delays.
10.27. FIXED PRICE SUPPLY CONTRACTS; CERTAIN POLICIES.
(a) The Company will not, and will not permit any of the Restricted
Subsidiaries to, at any time be a party or subject to any contract for
the purchase or supply by such parties of propane or other product
except where (i) the purchase price is set with reference to a spot
index or indices substantially contemporaneously with the delivery of
such product or (ii) delivery of such propane or other product is to
be made no more than one year after the purchase price is agreed to.
(b) The Company will not amend, modify or waive the trading
policy or supply inventory position policy existing as of the date of
Closing, except that the Company may amend its supply inventory
position policy such that such policy provides that neither it nor any
of the Restricted Subsidiaries will hold on hand more than 90 days' of
commodities inventory. The Company will provide each holder of a Note
with prompt written notice of any such new commodity hedging agreement
or any such change in such policy. Subject to the foregoing exception,
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the Company and the Restricted Subsidiaries will comply in all
material respects with such policies at all times.
10.28. INDEPENDENT CORPORATE EXISTENCE. (a) The Company shall
maintain, and shall cause each of its Subsidiaries to maintain, books,
records and accounts that are separate from the books, records and
accounts of Northwestern, the General Partners or any of their
respective Subsidiaries (other than the Company and its Subsidiaries)
such that: (i) the revenues of the Company and its Subsidiaries will
be credited to the accounts of the Company and its Subsidiaries only;
(ii) all expenses incurred by the Company and its Subsidiaries shall
be paid only from the accounts of the Company and its Subsidiaries
(other than those paid by Northwestern or the Managing General Partner
and allocated to the Company or its Subsidiaries in the manner set
forth in subdivision (c) of this Section); (iii) only officers and em-
ployees of the Managing General Partner, the Company and its
Subsidiaries in their capacity as such shall have the authority to
make disbursements with respect to the accounts of the Company and its
Subsidiaries, as the case may be; (iv) there shall occur no sharing of
accounts or funds between the Company and its Subsidiaries, on the one
hand, and Northwestern, either General Partner or any of their
respective Subsidiaries (other than the Company and its Subsidiaries),
on the other hand; and (v) all cash and funds of the Company and its
Subsidiaries shall be managed separately from the cash and funds of
Northwestern, either General Partner or any of their respective
Subsidiaries (other than the Company and its Subsidiaries), and there
shall not occur any commingling, including for investment purposes, of
funds or assets of the Company and its Subsidiaries with the funds or
assets of Northwestern, either General Partner or any of their
respective Subsidiaries (other than the Company and its Subsidiaries).
(b) All full-time employees, consultants and agents of the
Company and its Subsidiaries shall be compensated directly from the
bank accounts of the Managing General Partner, the Company and such
Subsidiaries for services provided by such employees, consultants and
agents and, to the extent any employee, consultant or agent is also an
employee, consultant or agent of Northwestern, either General Partner
or any of their respective Subsidiaries (other than the Company and
its Subsidiaries), the compensation of such employee, consultant or
agent shall be allocated in accordance with subdivision (c) of this
Section among the Company and its Subsidiaries, on the one hand, and
Northwestern, either General Partner and any of their respective Sub-
sidiaries (other than the Company and its Subsidiaries), on the other
hand, on a basis which reasonably reflects the services rendered to
the Company and its Subsidiaries.
(c) All overhead expenses (including telephone and other
utility charges) for items shared by the Company and its
Subsidiaries, on the one hand, and Northwestern, either General
Partner or any of their respective Subsidiaries (other than the
Company and its Subsidiaries), on the other hand, shall be allocated
on the basis of actual use to the extent practicable and, to the
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extent such allocation is not practicable, on a basis reasonably
related to actual use.
(d) The Company shall not permit Northwestern, either General
Partner or any of their respective Subsidiaries (other than the
Company and its Subsidiaries) to be named as a loss payee or
additional insured on the insurance policy covering the property of
the Company or any of its Subsidiaries, or enter into an agreement
with the holder of such policy whereby in the event of a loss in
connection with such property, proceeds are paid to Northwestern,
either General Partner and their respective Subsidiaries (other than
the Company and its Subsidiaries).
10.29. OTHER DEBT. (a) The Company shall ensure that the
lenders from time to time in respect of any Parity Debt or any other
Indebtedness in the aggregate principal amount of at least $3,750,000
outstanding as permitted by paragraphs (b) through (f), (i) through
(l) and (r) of Section 10.1, in the documents governing the terms of
such Indebtedness, (i) recognize the existence and validity of the
obligations represented by the Notes and (ii) agree to refrain from
making or asserting any claim that this Agreement or the obligations
represented by the Notes are invalid or not enforceable in accordance
with its and their terms as a result of the circumstances surrounding
the incurrence of such obligations.
(b) Each holder of Notes from time to time, as evidenced by its
acceptance of such Notes, (i) acknowledges the existence and validity
of the obligations of the Company under the Bank Credit Facilities
(and any extension, renewal, refunding or refinancing thereof
permitted by Section 10.1) and (ii) agrees to refrain from making or
asserting any claim that such obligations or the instruments governing
the terms thereof are invalid or not enforceable in accordance with
its and their terms as a result of the circumstances surrounding the
incurrence of such obligations.
10.30. RESTRICTION ON GENERAL PARTNER. The Managing General
Partner shall not (i) exist for any purpose or engage in any business
or business activity except (a) to serve as the Managing General
Partner of the Company and the Public Partnership, in the cir-
cumstances provided in the Partnership Agreement and Public
Partnership Agreement, and (b) to own other wholly-owned corporate
Subsidiaries, provided that, each General Partner shall have agreed
(x) that it will not guaranty or, except with respect to Indebtedness
assumed by the Company or the Public Partnership, otherwise agree to
be liable with respect to any Indebtedness incurred by such Subsidiary
and at the time of formation or acquisition thereof and in connection
therewith, the assets of either General Partner are not and will not
be subject to any Liens relating to and Indebtedness or other
obligations of such Subsidiaries and (y) to be bound by the provisions
of Section 10.28 (all references therein to the Company to be deemed
references to the General Partners and all references therein to
Subsidiaries to be deemed references to Subsidiaries of the General
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Partners) and (z) the General Partners shall confirm with an Approved
Rating Agency (as defined below) that its rating on the Notes in
effect at such time will not be downgraded solely as a result thereof,
or (ii) incur any Indebtedness or, other than with respect to the
activities described in subsection (i) (a) above, other liabilities
(other than tax liabilities). "Approved Rating Agency" shall mean any
of Fitch Investors Services, Inc., Standard & Poor's Ratings Group,
Moody's Investor Service, Inc. or Duff and Phelps Credit Rating Co.
10.31. RECORDATION OF CONVEYANCE DOCUMENTS. The Company will
cause, within 60 days subsequent to the date of Closing, the
Conveyance Agreements referred to in clause (b) of the definition of
such term, and all proper notices, statements or other instruments in
respect thereof, covering all of the Assets covered by such Conveyance
Agreements to have been duly recorded, published, registered and filed
and all other actions deemed necessary by your special counsel shall
have been duly performed or taken, in such manner and in such places
as is required by applicable law (a) to convey to the Company record
and beneficial ownership of the Assets referred to in Section
5.8(c)(ii) purported to be conveyed by such Conveyance Agreements and
(b) to establish, perfect, preserve and protect the rights and first
priority Liens purported to be granted by each such Security Document
to the Trustee with respect to the Assets referred to in Section
5.8(c)(ii) for the benefit of the holders of the Notes and their
respective successors and assigns, and the Company will cause all
taxes, fees and other charges then due in connection with the
execution, delivery, recording, publishing, registration and filing of
such documents or instruments to have been paid in full.
SECTION 11. EVENTS OF DEFAULT; ACCELERATION.
If any of the following conditions or events ("Events of
Default") shall occur and be continuing:
(a) the Company shall default in the payment of any principal
of or Make Whole Amount or Premium Amount, if any, on any Note when
the same becomes due and payable, whether at maturity or at a date
fixed for prepayment or by declaration or otherwise; or
(b) the Company shall default in the payment of any interest on
any Note or any amount due and payable under any Operative
Agreement for more than 5 Business Days after the same becomes due
and payable; or
(c) the Company or any Restricted Subsidiary shall default in
the performance of or compliance with any term contained in Sec-
tion 7(f), any of Sections 10.1 through 10.8 (other than
Section 10.8(c)), inclusive, or the Dedicated Funds are not used to
repay Indebtedness as specified in the pro forma calculations set
forth in the definition of Consolidated Pro Forma Debt Service or
the definition of Maximum Consolidated Pro Forma Debt Service, as
the case may be; or
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(d) the Company, either General Partner, Northwestern, the
Public Partnership or any Restricted Subsidiary shall default in
the performance of or compliance with any other term contained in
this Agreement or any other Operative Agreement and such default
shall not have been remedied within 30 Business Days after the
earlier of the date such default shall first have become actually
known to any Responsible Officer of such Person or the date written
notice thereof shall have been received by the Company from the
Trustee or from any Note holder; or
(e) any material representation or warranty made in writing by
or on behalf of the Company or any of its Affiliates in this
Agreement, any other Operative Agreement or in any instrument
furnished in connection with the transactions contemplated by this
Agreement shall prove to have been false or incorrect in any
material respect on the date as of which made or deemed made; or
(f) (i) the Company or any Restricted Subsidiary (as principal
or guarantor or other surety) shall default (after receiving
notice, if any, and/or the expiration of any applicable grace
period) in the payment of any amount of principal of or premium or
interest on the Parity Debt or any event shall occur or condition
shall exist in respect of the Parity Debt the effect of which is to
cause such Parity Debt to become due before its stated maturity or
before its regularly scheduled dates of payment and such default,
event or condition shall continue for more than the period of
grace, if any, specified therein and shall not have been waived
pursuant thereto;
(ii) the Company or any Restricted Subsidiary (as principal or
guarantor or other surety) shall default (after receiving notice,
if any, and/or the expiration of any applicable grace period) in
the payment of any amount of principal of or premium or interest on
any Indebtedness in an amount at least equal to $10,000,000; or any
event shall occur or condition shall exist in respect of such other
Indebtedness which is outstanding in a principal amount of at least
$10,000,000 or under any evidence of any such Indebtedness or of
any mortgage, indenture or other agreement relating to such other
Indebtedness, the effect of which is to cause such other Indebted-
ness to become due before its stated maturity or before its
regularly scheduled dates of payment; or
(g) filing by or on the behalf of the Company or the Managing
General Partner of a voluntary petition or an answer seeking
reorganization, arrangement, readjustment of its debts or for any
other relief under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar act or law, state or federal, now or
hereafter existing ("Bankruptcy Law"), or any action by the Company
or the Managing General Partner, or consent or acquiescence to, the
appointment of a receiver, trustee or other custodian of the
Company or the Managing General Partner, or of all or a substantial
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part of its property; or the making by the Company or the Managing
General Partner of any assignment for the benefit of creditors; or
the admission by the Company or the Managing General Partner of the
Company in writing of its inability to pay its debts as they become
due; or
(h) filing of any involuntary petition against the Company or
the Managing General Partner in bankruptcy or seeking
reorganization, arrangement, readjustment of its debts or for any
other relief under any Bankruptcy Law and an order for relief by a
court having jurisdiction in the premises shall have been issued or
entered therein; or any other similar relief shall be granted under
any applicable Federal or state law; or a decree or order of a
court having jurisdiction in the premises for the appointment of a
receiver, liquidator, sequestrator, trustee or other officer having
similar powers over the Company or the Managing General Partner or
over all or a part of its property shall have been entered; or the
involuntary appointment of an interim receiver, trustee or other
custodian of the Company or the Managing General Partner or of all
or a substantial part of its property; or the issuance of a warrant
of attachment, execution or similar process against any substantial
part of the property of the Company or the Managing General
Partner; and continuance of any such event for 60 consecutive days
unless dismissed, bonded to the satisfaction of the court having
jurisdiction in the premises or discharged; or
(i) filing by or on the behalf of any Restricted Subsidiary of
a voluntary petition or an answer seeking reorganization, arrange-
ment, readjustment of its debts or for any other relief under any
Bankruptcy Law, or any action by any Restricted Subsidiary for, or
consent or acquiescence to, the appointment of a receiver, trustee
or other custodian of such Restricted Subsidiary or of all or a
substantial part of its property; or the making by any Restricted
Subsidiary of any assignment for the benefit of creditors; or the
admission by any Restricted Subsidiary in writing of its inability
to pay its debts as they become due; or
(j) filing of any involuntary petition against any Restricted
Subsidiary in bankruptcy or seeking reorganization, arrangement,
readjustment of its debts or for any other relief under any
Bankruptcy Law and an order for relief by a court having juris-
diction in the premises shall have been issued or entered therein;
or any other similar relief shall be granted under any applicable
Federal or state law; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee or other officer having similar
powers over any Restricted Subsidiary or over all or a part of its
property shall have been entered; or the involuntary appointment of
an interim receiver, trustee or other custodian of any Restricted
Subsidiary or of all or a substantial part of its property; or the
issuance of a warrant of attachment, execution or similar process
against any substantial part of the property of any Restricted
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Subsidiary; and continuance of any such event for 60 consecutive
days unless dismissed, bonded to the satisfaction of the court
having jurisdiction in the premises or discharged; or
(k) a final judgment or judgments (which is or are non-
appealable or which has or have not been stayed pending appeal or
as to which all rights to appeal have expired or been exhausted)
shall be rendered against the Company or any Restricted Subsidiary
for the payment of money in excess of $10,000,000 in the aggregate
(net of any insurance coverage) and any one of such judgments shall
not be discharged or execution thereon stayed pending appeal within
60 days after the date due, or, in the event of such a stay, such
judgment shall not be discharged within 60 days after such stay
expires or any action shall be legally taken by a judgment creditor
to levy upon the assets or properties of the Company or any
Restricted Subsidiary to enforce any such judgment; or
(l) any of the Security Documents shall at any time, for any
reason, cease in any material respect to be in full force and
effect or shall be declared to be null and void in whole or in any
material part by the final judgment (which is non-appealable or has
not been stayed pending appeal or as to which all rights to appeal
have expired or been exhausted) of any court or other governmental
or regulatory authority having jurisdiction in respect thereof, or
if the validity or the enforceability of any of the Security
Documents shall be contested by or on behalf of the Company, either
General Partner, the Public Partnership, or any Restricted
Subsidiary, or the Company, either General Partner, the Public
Partnership, or any Restricted Subsidiary shall renounce any of the
Security Documents or deny that it is bound by the terms of any of
the Security Documents; or
(m) any order, judgment or decree is entered in any proceedings
against the Company decreeing a split-up of the Company, and such
order, judgment or decree shall not be dismissed or execution
thereon stayed pending appeal or review within 60 days after entry
thereof, or in the event of such a stay, such order, judgment or
decree shall not be dismissed within 60 days after such stay
expires;
then, (x) upon the occurrence of any Event of Default described in
subdivision (g) or (h) of this Section 11, the unpaid principal amount
of and accrued interest on the Notes shall automatically become due
and payable (without Make Whole Amount), or, (y) upon the occurrence
and continuance of any other Event of Default, any holder or holders
of more than 50% in principal amount of the Notes at the time
outstanding, may at any time (unless all defaults shall theretofore
have been remedied in accordance with the terms hereof) at its or
their option, by written notice or notices to the Company, declare all
the Notes to be due and payable, whereupon the same shall forthwith
mature and become due and payable, together with interest accrued
thereon and, to the extent permitted by applicable law, the applicable
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Make Whole Amount, if any, with respect to such Notes, all without
presentment, demand, protest or further notice, which are hereby
waived, provided that during the existence of an Event of Default
described in subdivision (a) or (b) (insofar as subdivision (b)
relates to interest on any Note) of this Section 11, any holder of the
Notes at the time outstanding may, at its option, by notice in writing
to the Company, declare the Notes then held by such holder to be due
and payable, whereupon the Notes then held by such holder shall forth-
with mature and become due and payable, together with interest accrued
thereon and, to the extent permitted by applicable law, the applicable
Make Whole Amount with respect to such Notes.
At any time after the principal of, and interest accrued on, all
the Notes are declared due and payable, the Required Holders, by
written notice to the Company, may rescind and annul any such
declaration and its consequences (other than in respect of any Note
which has been individually accelerated pursuant to the proviso
contained in the immediately preceding paragraph) if (x) the Company
has paid all overdue interest on the Notes, the principal of and Make
Whole Amount, if any, on any such Notes which have become due
otherwise than by reason of such declaration, and interest on such
overdue principal and the applicable Make Whole Amount and (to the
extent permitted by applicable law) overdue interest, at a rate per
annum equal to the rate of interest stated on the face of the Notes
plus 2.0%, (y) all Events of Default, other than nonpayment of amounts
which have become due solely by reason of such declaration, and all
conditions and events which constitute Events of Default or Potential
Events of Default have been cured or waived, and (z) no judgment or
decree has been entered for the payment of any monies due pursuant to
the Notes or this Agreement; but no such rescission and annulment
shall extend to or affect any subsequent Event of Default or Potential
Event of Default or impair any right consequent thereon.
SECTION 12. REMEDIES ON DEFAULT; RECOURSE, ETC.
In case any one or more Events of Default or Potential Events of
Default shall occur and be continuing, (i) the holder of any Note at
the time outstanding may proceed to protect and enforce the rights of
such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement
contained herein or in such Note, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the
exercise of any power granted hereby or thereby or by law or other-
wise, and (ii) the Trustee and the holders of the Notes may exercise
any rights or remedies in their respective capacities under the
Security Documents in accordance with the provisions thereof. In case
of a default in the payment or performance of any provision hereof or
of the Notes or of the Security Documents, the Company will pay to the
holder of each Note such further amount as shall be sufficient to
cover the costs and expenses of collection, including, without
limitation, reasonable attorneys' fees, expenses and disbursements,
and any out-of-pocket costs and expenses of any such holder incurred
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in connection with analyzing, evaluating, protecting, ascertaining,
defending or enforcing any of its rights as set forth herein or in any
of the Security Documents. No course of dealing and no delay on the
part of any holder of any Note in exercising any right, power or
remedy shall, to the extent permitted by law, operate as a waiver
thereof or otherwise prejudice such holder's rights, powers or
remedies. No right, power or remedy conferred by this Agreement or by
any Note upon any holder thereof shall be exclusive of any other
right, power or remedy referred to herein or therein or now or
hereafter available at law, in equity, by statute or otherwise.
SECTION 13. DEFINITIONS.
As used herein the following terms have the following respective
meanings:
ADMINISTRATIVE AGENT: Bank of America National Trust and
Savings Association, in its capacity as administrative agent for the
Banks under the Bank Credit Facilities, and its successors in such
capacity.
AFFILIATE: as applied to any Person, any other Person directly
or indirectly controlling or controlled by or under common control
with such Person, provided that (i) for purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled
by" and "under common control with") as used with respect to any
Person shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of
such Person, whether as a general partner or through the ownership of
voting securities or by contract or otherwise, (ii) as applied to the
Company, the term "Affiliate" shall include each General Partner and
the Public Partnership, and (iii) neither you nor any other Person
which is an institution shall be deemed to be an Affiliate of the
Company solely by reason of ownership of the Notes or other securities
issued in exchange for the Notes or by reason of having the benefits
of any agreements or covenants contained in this Agreement or the
other Operative Agreements.
AGREEMENT: the meaning specified in Section 1.
ASSETS: the assets conveyed to the Company pursuant to the
Conveyance Agreements.
AVAILABLE CASH: with respect to any fiscal quarter of the
Company, (a) the sum of (i) all cash and cash equivalents of the
Company and the Restricted Subsidiaries on hand at the end of such
quarter and (ii) all additional cash and cash equivalents of the
Company and the Restricted Subsidiaries on hand on the date of
determination of Available Cash with respect to such quarter obtained
through available borrowings for working capital purposes made after
the end of such quarter, less (b) (i) the amount of cash reserves
necessary or appropriate in the reasonable discretion of the Managing
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General Partner to (A) provide for the proper conduct of the business
of the Company subsequent to such quarter and the Restricted
Subsidiaries (including, without limitation, cash reserves for future
capital expenditures) subsequent to such quarter or (B) 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 fiscal quarters or
(C) comply with applicable law or any loan agreement (including this
Agreement), mortgage, security agreement, debt instrument or other
agreement or obligation to which the Company or any Restricted
Subsidiary is a party or by which it or its assets are subject
(including the payment of principal, Make Whole Amount or Premium
Amount, if applicable, and interest in respect of the Notes), or (ii)
all Dedicated Funds and (iii) all amounts which a Restricted
Subsidiary is prohibited from dividending or distributing to the
Company; provided that Available Cash shall exclude without
duplication (x) in each fiscal calendar quarter a reserve equal to at
least 50% of the aggregate amount of all interest payments, except for
interest payments to be made in respect of borrowings for working
capital purposes, in respect of all Indebtedness of the Company and
the Restricted Subsidiaries upon which interest is due semiannually or
less frequently to be made in the next fiscal quarter (assuming, in
the case of Indebtedness incurred under the Bank Credit Facilities and
other Indebtedness bearing interest at fluctuating interest rates
which cannot be determined in advance, that the interest rate in
effect on the last Business Day of the immediately preceding fiscal -
quarter will remain in effect until such Indebtedness is due to be
paid), (y) with respect to any Indebtedness secured equally and
ratably with the Notes of which principal is payable annually, in the
third calendar quarter immediately preceding each fiscal quarter in
which any scheduled principal payment is due with respect to such
Notes and other Indebtedness (a "principal payment quarter"), a
reserve equal to at least 25% of the aggregate amount of all principal
to be paid in respect of such Notes and other such Indebtedness
secured equally and ratably with the Notes in such principal payment
quarter; in the second fiscal quarter immediately preceding a
principal payment quarter, a reserve equal to at least 50% of the
aggregate amount of all principal to be paid in respect of such Notes
and other such Indebtedness in such principal payment quarter; and in
the fiscal quarter immediately preceding a principal payment quarter,
a reserve equal to at least 75% of the aggregate amount of all
principal to be paid in respect of such Notes and other such Indebted-
ness in such principal payment quarter, and (z) with respect to and
any other Indebtedness secured equally and ratably with the Notes of
which principal is payable semiannually, in each fiscal quarter which
immediately precedes a fiscal quarter in which principal is payable in
respect of such Indebtedness a reserve equal to at least 50% of the
aggregate amount of all principal to be paid in respect of such other
such Indebtedness in the next fiscal quarter; provided further that
the amount of such reserve specified in clauses (y) and (z) of this
definition for principal amounts to be paid shall be reduced by the
aggregate principal amount of all binding, irrevocable letters of
credit established to refinance such principal amounts.
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BANK CREDIT FACILITIES: that Credit Agreement, dated as of
December 11, 1996, among the Company, Bank of America National Trust
and Savings Association, as agent, and the Banks, pursuant to which
the Initial Acquisition Facility and the Working Capital Facility will
be made available to the Company, and any extension, renewal,
refunding or replacement thereof otherwise permitted to be incurred
and outstanding under Section 10.1.
BANKRUPTCY LAW: the meaning specified in Section 11(g).
BANKS: the financial institutions listed in the signature pages
of the Bank Credit Facilities, each assignee which becomes a lender
under the Bank Credit Facilities pursuant to the terms thereof and
their respective successors.
BUSINESS: the operation by the Company and its Subsidiaries
(and prior to the consummation of the Conveyance Agreements by the
General Partners and their Affiliates) of the wholesale and retail
sale, distribution and storage of propane gas and related petroleum
derivative products, the leasing of propane storage tanks and the
related retail sale of supplies and equipment, including home
appliances, and such other businesses in which the Company and its
Restricted Subsidiaries were engaged on the date of Closing as
described in the Registration Statement.
BUSINESS DAY: any day other than a Saturday, a Sunday or a day
on which commercial banks in New York City or Chicago, Illinois are
required or authorized by law to be closed.
CALLED PRINCIPAL: with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 9.2, 9.3 or 9.4 or
becomes or is declared to be immediately due and payable pursuant to
Section 11, as the context requires.
CAPITAL LEASE: as applied to any Person, any lease of any
property (whether real, personal or mixed) by such Person (as lessee
or guarantor or other surety) which would, in accordance with GAAP, be
required to be classified and accounted for as a capital lease on a
balance sheet of such Person.
CERCLA: the Federal Comprehensive Environmental Response,
Compensation and Liability Act, as amended.
CHANGE OF CONTROL: any of the following:
(a) the liquidation or dissolution of the Managing General
Partner of the Company;
(b) any merger or consolidation of the Managing General Partner
with or into any Person (other than a Permitted Holder) if the
Managing General Partner is not the surviving entity thereof, or any
sale, whether direct or indirect, of all or substantially all of the
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assets of the Managing General Partner to any Person or "group" (as
used in Section 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended), other than to a Permitted Holder;
(c) any Person or "group" is or becomes, directly or
indirectly, the beneficial owner of more than 50% of the then
outstanding total voting power of all classes of stock (or other
securities) of the Managing General Partner, the holders of which are
ordinarily, in the absence of contingencies, entitled to elect a
majority of the directors (or Persons performing similar functions) of
the Managing General Partner;
(d) during any period of twelve consecutive months after the
date of Closing, individuals who at the beginning of such twelve month
period (or Persons nominated by such members of the Board of Directors
of the Managing General Partner to succeed them) constitute the Board
of Directors of the Managing General Partner cease, for any reason, to
constitute a majority of the Board of Directors of the general partner
of the Company then in office; or
(e) if the Permitted Holders cease to own, directly or
indirectly, in the aggregate, an amount of the general partnership
interest in the Company equal to at least fifty percent of the amount
of the general partnership interest in the Company owned,
collectively, by the General Partners on the date of Closing (as
reduced to reflect the effect of the Overallotment Option), provided
it shall not be a Change of Control pursuant to paragraph (b), (c),
(d) or (e), if the Chief Executive Officer or Chief Financial Officer
of the Company, immediately prior to the events specified therein,
serves as Chief Executive Officer or Chief Financial Officer, after
the occurrence of such an event.
CLOSING: the meaning specified in Section 3.
CODE: the Internal Revenue Code of 1986, as amended from time
to time.
COLLATERAL: collectively, the properties referred to as the
"Collateral" under the Company Security Agreement and as the
"Security" in the Trust Agreement.
COMMODITY HEDGING AGREEMENT(s): any agreement or arrangement
designed solely to protect the Company against fluctuations in the
price of propane or natural gas with respect to quantities of propane
or natural gas that the Company reasonably expects to purchase from
suppliers, sell to its customers or need for its inventory during the
period covered by such agreement or arrangement.
COMPANY: the meaning specified in the Introduction and, for the
purposes of calculating any financial test or financial covenant under
this Agreement with respect to the period prior to the date of the
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<PAGE> 444
Closing, "Company" shall mean the General Partners and their
Affiliates (but only to the extent that any such General Partner or
Affiliate operated a portion of the Business), and any such
calculations with respect to any such prior period shall be made on a
pro forma basis substantially consistent with the pro forma
calculations of prior periods set forth in the Registration Statement.
COMPANY SECURITY AGREEMENT: the Security Agreement among the
Company, the Qualifying Restricted Subsidiaries and the Trustee
substantially in the form attached hereto as Exhibit E as amended from
time to time.
COMPETITOR: any Person engaged primarily in the wholesale and
retail sale, distribution and storage of propane gas and related
petroleum derivative products.
CONSOLIDATED CASH FLOW: at any date of determination, for the
period of four consecutive fiscal quarters most recently completed at
least 45 days (except that, in connection with any calculation
required pursuant to Section 10.4, for the period of four consecutive
fiscal quarters most recently completed) prior to such date of deter-
mination,
(a) the sum of, without duplication, the amounts for such
period, taken as a single accounting period, (i) Consolidated Net
Income and (ii) all amounts deducted in the determination of such
Consolidated Net Income for such period in respect of (v) interest
charges (including amortization of debt discount and expense and
imputed interest on Capital Lease obligations), (x) provisions for
all income taxes and reserves (including reserves for deferred
income taxes), (y) all other non-cash items, and (z) all fees, cost
and expenses with respect to the retirement or repayment of
Indebtedness of either General Partner existing immediately prior
to the Closing, less
(b) without duplication, all amounts added in the determination
of such Consolidated Net Income for such period in respect of non-
cash items.
Consolidated Cash Flow shall be calculated after giving effect
(without duplication) on a pro forma basis for the four consecutive
fiscal quarters most recently completed prior to such date of
determination to any asset sales or asset acquisitions (including,
without limitation, any asset acquisition giving rise to the need to
make such calculation as a result of the Company or any Restricted
Subsidiary (including any Person who becomes a Restricted Subsidiary
as a result of such asset acquisition) incurring, assuming or
otherwise being liable for acquired Indebtedness) occurring during the
period commencing on the first day of such four fiscal quarter period
to and including the date of determination (the "Reference Period"),
as if such asset sale or asset acquisition occurred on the first day
of the Reference Period; provided, that Consolidated Cash Flow
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generated by an acquired business or asset shall be determined on the
basis of, without duplication, (a) the actual gross profit (revenues
minus cost of goods sold) of the acquired business or asset during the
immediately preceding four full fiscal quarters), minus (b) the pro
forma expenses that would have been incurred by the Company or such
Restricted Subsidiary in the operation of such acquired business or
asset during such period computed on the basis of personnel expenses
for employees retained or to be retained by the Company or such
Restricted Subsidiary in the operation of such acquired business or
asset and non-personnel costs and expenses incurred by the Company or
the Managing General Partner in the operation of its business at
similarly situated Company facilities or Restricted Subsidiary
facilities. If the applicable Reference Period for any calculation of
Consolidated Cash Flow shall include a partial period occurring prior
to the Closing, then such Consolidated Cash Flow shall be calculated
based upon the Consolidated Cash Flow on a pro forma basis for such
portion of the Reference Period prior to the Closing (giving effect to
the transactions occurring on the date of Closing) and the
Consolidated Cash Flow for the remaining portion of the Reference
Period occurring on and after the Closing, giving pro forma effect, as
described in the preceding sentences, to all applicable transactions
occurring on the date of Closing or otherwise.
CONSOLIDATED INTEREST EXPENSE: as of any date of determination,
the total amount payable by the Company and the Restricted
Subsidiaries on a consolidated basis, during the period of twelve
consecutive months immediately following such date of determination in
respect of all interest charges (including amortization of debt dis-
count and expense and imputed interest on payments under Capital Lease
obligations) with respect to Indebtedness of the Company and the
Restricted Subsidiaries outstanding on the date of determination,
assuming for such purpose (a) the amount of such Indebtedness is not
reduced or increased during such twelve month period, and (b) that
interest expense for such twelve month period with respect to
Indebtedness of a revolving nature shall equal the actual interest
expense for Indebtedness of a revolving nature during the most
recently completed twelve month period .
CONSOLIDATED NET INCOME: with reference to any period, the net
income (or deficit) of the Company and the Restricted Subsidiaries for
such period (taken as a cumulative whole), after deducting all
operating expenses, provisions for all taxes and reserves (including
reserves for deferred income taxes) and all other proper deductions,
all determined in accordance with GAAP on a consolidated basis, after
eliminating all intercompany transactions, provided that there shall
be excluded (a) the income (or deficit) of any Person accrued prior to
the date it becomes a Restricted Subsidiary or is merged into or
consolidated with the Company or a Restricted Subsidiary, (b) the
income (or deficit) of any Person (other than a Restricted Subsidiary)
in which the Company or any Restricted Subsidiary has an ownership
interest, except to the extent that any such income has been actually
received by the Company or such Restricted Subsidiary in the form of
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<PAGE> 446
dividends or similar distributions, (c) the undistributed earnings of
any Restricted Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by such Restricted
Subsidiary is not at the time permitted by the terms of its charter or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Restricted Subsidiary,
(d) any restoration to income of any contingency reserve, except to
the extent that provision for such reserve was made out of income
accrued during such period, (e) any aggregate net after-tax gain or
net after-tax loss during such period arising from the sale, exchange
or other disposition of capital assets (such term to include all fixed
assets, whether tangible or intangible, all Inventory sold in
conjunction with the disposition of fixed assets, and all securities),
(f) any write-up of any asset, (g) any net gain from the collection of
the proceeds of life insurance policies, (h) any gain arising from the
acquisition of any securities, or the extinguishment, under GAAP, of
any Indebtedness, of the Company or any Restricted Subsidiary, (i) any
after tax gain or loss during such period from any change in
accounting, from any discontinued operations or the disposition
thereof, from any extraordinary events or from any prior period
adjustments, (j) any deferred credit representing the excess of equity
in any Restricted Subsidiary at the date of acquisition over the cost
of the investment in such Restricted Subsidiary, and (k) in the case
of a successor to the Company by consolidation or merger or as a
transferee of its assets, any earnings of the successor corporation
prior to such consolidation, merger or transfer of assets.
CONSOLIDATED NET WORTH: as to the Company, the amount by which
(i) the total assets of the Company and the Restricted
Subsidiaries appearing on a consolidated balance sheet of the
Company and the Restricted Subsidiaries prepared in accordance with
GAAP as of the date of determination exceeds
(ii) total liabilities of the Company and the Restricted
Subsidiaries appearing on a consolidated balance sheet of the
Company and the Restricted Subsidiaries prepared in accordance with
GAAP as of the date of determination on a consolidated basis,
in each case after eliminating all intercompany transactions; and as
to any other Person, the amount by which
(i) the total assets of such Person and its Subsidiaries
appearing on a consolidated balance sheet of such Person and its
Subsidiaries prepared in accordance with GAAP as of the date of
determination (after eliminating all amounts properly attributable
to minority interests in the stock and surplus, if any, of its
Subsidiaries) exceeds
(ii) total liabilities of such Person and its Subsidiaries
appearing on a consolidated balance sheet of such Person and its
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<PAGE> 447
Subsidiaries prepared in accordance with GAAP as of the date of
determination on a consolidated basis,
in each case after eliminating all intercompany transactions.
CONSOLIDATED PRO FORMA DEBT SERVICE: as of any date of
determination, the total amount payable by the Company and the
Restricted Subsidiaries on a consolidated basis, during the four con-
secutive calendar quarters next succeeding the date of determination,
in respect of scheduled principal payments and all cash interest
charges with respect to Indebtedness of the Company and the Restricted
Subsidiaries outstanding on such date of determination, after giving
effect to any Indebtedness proposed to be incurred on such date (the
"Incurrence Date") and to any Indebtedness proposed to be repaid from
funds of such newly incurred Indebtedness (x) within 30 days of the
Incurrence Date, or (y) within the twelve months following such
Incurrence Date as to which funds for such payments have been within
30 days of the Incurrence Date irrevocably placed in escrow with the
Trustee with irrevocable instructions to the Trustee to make such
repayments (such funds pursuant to clauses (x) and (y) collectively,
the "Dedicated Funds") and (a) including actual payments under Capital
Lease obligations, (b) assuming, in the case of Indebtedness (other
than Indebtedness incurred under the Bank Credit Facilities) bearing
interest at fluctuating interest rates which cannot be determined in
advance, that the rate in effect on such date will remain in effect
throughout such period, (c) assuming in the case of Indebtedness
incurred under the Bank Credit Facilities, that (1) the interest
payments payable during such four consecutive calendar quarters next
succeeding the date of determination will equal the actual interest
payments associated with the Bank Credit Facilities during the most
recent four fiscal quarters, (2) except for the twelve-month period
immediately prior to the termination or final maturity thereof (unless
extended, renewed or refinanced), no principal payments will be made
under the Working Capital Facility and (3) principal payments relating
to the Initial Acquisition Facility will (unless already converted to
a fixed amortization schedule) become due based on the assumption that
the conversion to the fixed amortization schedule pursuant to Section
3.1(f) of the Bank Credit Facilities is effected on the dates set
forth therein, (d) treating the principal amount of all Indebtedness
outstanding as of such date of determination under a revolving credit
or similar agreement (other than the Bank Credit Facilities) as
maturing and becoming due and payable on the scheduled maturity date
or dates thereof (including the maturity of any payment required by
any commitment reduction or similar amortization provision), without
regard to any provision permitting such maturity date to be extended
and (e) including any other designated repayments of Indebtedness due
within twelve months from such date of determination.
CONVEYANCE AGREEMENTS: (a) the Contribution, Conveyance and
Assumption Agreement, dated as of the date of the Closing, among the
Company, the Public Partnership, the General Partners and Empire
Energy SC Corporation, a Delaware corporation and (b) each of the
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<PAGE> 448
individual conveyances, deeds, assignments and bills of sale delivered
to the Company pursuant to the agreements referred to in the foregoing
clause (a).
DEDICATED FUNDS: the meaning specified in the definition of
"Consolidated Pro Forma Debt Service."
DISCOUNTED VALUE: with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on a semi-annual basis) equal to the
Reinvestment Yield plus 50 basis points with respect to such Called
Principal.
DOLLAR AND SIGN "$": lawful money of the United States of
America.
ENVIRONMENTAL LAWS: applicable federal, state, local and
foreign laws, rules or regulations relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes into the
environment (including, without limitation, air, surface water, ground
water or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes.
ENVIRONMENTAL NOTICE: the meaning specified in Section 7(i).
ERISA: the Employee Retirement Income Security Act of 1974, as
amended from time to time.
EVENT OF DEFAULT: the meaning specified in Section 11.
EXCESS PROCEEDS: the meaning specified in Section 10.7(c).
GAAP: generally accepted accounting principles in effect in the
United States from time to time.
GENERAL PARTNER(s): the meaning specified in the Introduction.
GUARANTY: as applied to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease (other than operating leases under which the
Company or a Restricted Subsidiary is the lessee), dividend or other
obligation of another, including, without limitation, any such
obligation directly or indirectly guaranteed, endorsed (otherwise than
for collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of
which such Person is otherwise directly or indirectly liable or any
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other obligation under any contract which, in economic effect, is
substantially equivalent to a guaranty, including, without limitation,
any such obligation of a partnership in which such Person is a general
partner or of a joint venture in which such Person is a joint
venturer, and any such obligation in effect guaranteed by such Person
through any agreement (contingent or otherwise) to purchase,
repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise), or to maintain the solvency or
any balance sheet or other financial condition of the obligor of such
obligation, or to make payment for any products, materials or supplies
or for any transportation or services regardless of the non-delivery
or nonfurnishing thereof, in any such case if the purpose or intent of
such agreement is to provide assurance that such obligation will be
paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such obligation will be
protected against loss in respect thereof.
HAZARDOUS MATERIALS: any gasoline or petroleum (including crude
oil or any fraction thereof) or petroleum products, polychlorinated
biphenyls, urea-formaldehyde insulation, asbestos or
asbestos-containing materials, pollutants, contaminants, radio-
activity, and any other materials or substances of any kind, whether
or not any such substance is defined as hazardous under any
Environmental Law, that is regulated pursuant to any Environmental Law
or that could give rise to liability under any Environmental Law.
INCURRENCE DATE: the meaning specified in the definition of
"Consolidated Pro Forma Debt Service."
INDEBTEDNESS: as applied to any Person (without duplication):
(a) any indebtedness for borrowed money which such Person has
directly or indirectly created, incurred or assumed;
(b) any indebtedness, whether or not for borrowed money, with
respect to which such Person has become directly or indirectly
liable and which represents the deferred purchase price (or a
portion thereof) or has been incurred to finance the purchase price
(or a portion thereof) of any property or service or business
acquired by such Person, whether by purchase, consolidation, merger
or otherwise;
(c) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in
connection with the acquisition or property, assets or businesses;
(d) all indebtedness created or arising under any conditional
sale or other title retention agreement, or incurred as financing,
in either case with respect to property acquired by the Person
(even though the rights and remedies of the seller or lender under
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such agreement in the event of default are limited to repossession
or sale of such property);
(e) any obligations under Capital Leases to the extent such
obligations would, in accordance with GAAP, appear on a balance
sheet of such Person;
(f) any indebtedness, whether or not for borrowed money,
secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien
in respect of property owned by such Person, whether or not such
Person has assumed or become liable for the payment of such
indebtedness, provided that the amount of such Indebtedness if not
so assumed shall in no event be deemed to be greater than the fair
market value from time to time (as determined in good faith by such
Person) of the property subject to such Lien;
(g) all capital stock of such Person redeemable at the option
of the holder prior to the final maturity of the Notes, valued at
the greater of its voluntary or involuntary maximum fixed
repurchase price or any mandatory redemption payment obligations
in respect thereon plus, in either case, accrued dividends thereon;
(h) any preferred stock of any Restricted Subsidiary of such
Person redeemable at the option of the holder prior to the final
maturity of the Notes, valued at the sum of the liquidation
preference thereof or any mandatory redemption payment obligations
in respect thereof plus, in either case, accrued dividends thereon;
(i) all liabilities of such Person in respect of letters of
credit or instruments serving a similar function issued or accepted
for its account by banks and other financial institutions (whether
or not representing obligations for borrowed money);
(j) any indebtedness of the character referred to in clause (a)
through (i) of this definition deemed to be extinguished under GAAP
but for which such Person remains legally liable; and
(k) any indebtedness of any other Person of the character
referred to in clause (a) through (j) of this definition with
respect to which the Person whose Indebtedness is being determined
has become liable by way of a Guaranty.
Notwithstanding the foregoing, in determining the Indebtedness of the
Company and the Restricted Subsidiaries, there shall be excluded all
undrawn letters of credit (not yet due and payable), all drawn letters
of credit for which the Company reimburses the issuer thereof in
accordance with the terms of the reimbursement agreement with respect
thereto, trade accounts payable, accrued interest and other accrued
expenses and customer credit balances arising in the ordinary course
of business on ordinary terms.
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INITIAL ACQUISITION FACILITY: that Initial Acquisition Facility
under the Bank Credit Facilities which shall permit borrowings
thereunder in an aggregate amount at any time no greater than as
permitted by Section 10.1(e) and which shall be secured by the
Collateral pursuant to the Security Documents, and any extension,
renewal, refunding or replacement thereof otherwise permitted to be
incurred and outstanding under Section 10.1.
INSTITUTIONAL INVESTOR: means (a) any original purchaser of a
Note, (b) any holder of a Note holding $1,000,000 or more of the
aggregate principal amount of the Notes then outstanding, and (c) any
bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance
company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form.
INTERCOMPANY NOTES: any and all promissory notes of a
Restricted Subsidiary issued to the Company or to another Restricted
Subsidiary, in the form attached hereto as Exhibit F or such other
form as may be satisfactory to the Required Holders, representing all
Indebtedness of such Restricted Subsidiary to the Company or such
other Restricted Subsidiary, as the case may be.
INTEREST RATE AGREEMENT: any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement designed solely to protect the
Company against fluctuations in interest rates on Indebtedness
outstanding under the Bank Credit Facilities entered into with one or
more of the banks party to the Bank Credit Facilities (or their
affiliates).
INVENTORY: goods held by a Person for sale or lease and
accounted for as inventory under GAAP.
INVESTMENT: 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. For
the purposes of Section 10.3(b), the amount involved in Investments
made during any period shall be the aggregate cost to the Company of
all such Investments made during such period, determined in accordance
with GAAP, but without regard to unrealized increases or decreases in
value, or write-ups, write-downs or write-offs, of such investments
and without regard to the existence of any undistributed earnings or
accrued interest with respect thereto accrued after the respective
dates on which such Investments were made, less any net return of
capital realized during such period upon the sale, repayment or other
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liquidation of such Investment (determined in accordance with GAAP,
but without regard to any amounts received during such period as
earnings (in the form of dividends not constituting a return of
capital, interest or otherwise) on such Investment or as loans from
any Person in whom such Investments have been made).
LEGAL REQUIREMENT: any law, statute, ordinance, decree,
requirement, order, judgment, rule or regulation (or published
official interpretation by any governmental authority of any of the
foregoing) of any governmental authority.
LIEN: as to any Person, any mortgage, lien (statutory or
otherwise), pledge, reservation, right of entry, encroachment,
easement, right of way, restrictive covenant, license, charge,
security interest or other encumbrance in or on, or any interest or
title of any vendor, lessor under any lease not intended to be an
operating lease, lender or other secured party to or of such Person
under any conditional sale or other title retention agreement or
Capital Lease with respect to, any property or asset owned or held by
such Person, or the signing or filing of a financing statement with
respect to any of the foregoing which names such Person as debtor, or
the signing of any security agreement with respect to any of the
foregoing authorizing any other party as the secured party thereunder
to file any financing statement or any other agreement to give or
grant any of the foregoing. Negative pledge agreements, however,
shall not constitute Liens for purposes of this Agreement or any other
Operative Agreement. For the purposes of this Agreement, a Person
shall be deemed to be the owner of any asset which it has placed in
trust for the benefit of the holders of Indebtedness of such Person
and such trust shall be deemed to be a Lien if such Person remains
legally liable therefor, notwithstanding that such Indebtedness is or
may be deemed to be extinguished under GAAP.
MAKE WHOLE AMOUNT: with respect to any Note, an amount equal to
the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments of the Called Principal of such Note over such Called
Principal. The Make Whole Amount shall in no event be less than zero.
MANAGING GENERAL PARTNER: Cornerstone Propane GP, Inc., so long
as it holds a general partner interest in the Company and shall be the
managing general partner as provided in the Partnership Agreement, and
any successor to such position as managing general partner, so long as
such successor shall hold such position.
MATERIAL ADVERSE EFFECT: a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or
prospects (financial or otherwise) of the Company and the Restricted
Subsidiaries, taken a whole (after giving effect to the transactions
contemplated by the Operative Agreements) or the Business, (b) the
ability of the Company, either General Partner or any Restricted
Subsidiary to perform its obligations under this Agreement or any
other Operative Agreement to which it is a party, or (c) the validity,
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enforceability, perfection or priority of this Agreement or any other
Operative Agreement or of the rights or remedies of the holder of any
Notes or the Trustee.
MAXIMUM CONSOLIDATED PRO FORMA DEBT SERVICE: as of any date of
determination, the highest total amount payable by the Company and the
Restricted Subsidiaries on a consolidated basis, during any period of
four consecutive fiscal quarters, commencing with the fiscal quarter
in which such date of determination occurs and ending on the maturity
date of the Notes, in respect of scheduled principal payments and all
cash interest charges with respect to all Indebtedness of the Company
and the Restricted Subsidiaries outstanding or to be outstanding as a
result of the transactions occurring on such date of determination,
after giving effect to any Indebtedness to be incurred on the
Incurrence Date and to any Indebtedness proposed to be repaid from
Dedicated Funds and (a) including actual payments under Capital Lease
obligations, (b) assuming, in the case of Indebtedness (other than
Indebtedness incurred under the Bank Credit Facilities) bearing
interest at fluctuating interest rates which cannot be determined in
advance, that the rate in effect on such date will remain in effect
throughout such period, (c) assuming in the case of Indebtedness
incurred under the Bank Credit Facilities, that (1) the interest
payments payable during such four consecutive calendar quarters will
equal the actual interest payments associated with the Bank Credit
Facilities during the most recent four fiscal quarters, (2) except for
the twelve-month period immediately prior to the termination or final
maturity thereof (unless extended, renewed or refinanced) no principal
payments will be made under the Working Capital Facility and (3)
principal payments relating to the Initial Acquisition Facility will
(unless already converted to a fixed amortization schedule) become due
based on the assumption that the conversion to the fixed amortization
schedule pursuant to Section 3.1(f) of the Bank Credit Facilities is
effected on the dates set forth therein, (d) treating the principal
amount of all Indebtedness outstanding as of such date of determina-
tion under a revolving credit or similar agreement (other than the
Bank Credit Facilities) as maturing and becoming due and payable on
the scheduled maturity date or dates thereof (including the maturity
of any payment required by any commitment reduction or similar
amortization provision), without regard to any provision permitting
such maturity date to be extended and (e) including any other
designated repayments of Indebtedness.
MEMORANDUM: the meaning specified in Section 5.4(b).
MLP AGREEMENT: the Amended and Restated Agreement of Limited
Partnership of the Public Partnership.
MULTIEMPLOYER PLAN: a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA.
NORTHWESTERN: Northwestern Growth Corporation, a South Dakota
corporation.
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NOTES: the meaning specified in Section 1.
OBSOLETE ASSETS: means assets, property or equipment that have
been determined by the Company, in good faith, to no longer be useful
in the operations or the business of the Company or a Restricted
Subsidiary.
OFFICERS' CERTIFICATE: as to any corporation, a certificate
executed on its behalf by the Chairman of the Board of Directors (if
an officer) or its President or one of its Vice Presidents and its
Treasurer, or Controller, or one of its Assistant Treasurers or
Assistant Controllers, and, as to any partnership, a certificate
executed on behalf of such partnership by its Managing General Partner
in a manner which would qualify such certificate as an Officers'
Certificate of such Managing General Partner hereunder.
OPERATIVE AGREEMENTS: this Agreement, the Other Agreements, the
Notes, the Bank Credit Facilities, the Security Documents, the
Underwriting Agreement, the Conveyance Agreements, the MLP Agreement
and the Partnership Agreement.
OTHER AGREEMENTS: the meaning specified in Section 2.
OTHER PURCHASERS: the meaning specified in Section 2.
OVERALLOTMENT OPTION: the overallotment option granted to the
Underwriters by the Public Partnership pursuant to the Underwriting
Agreement.
PARITY DEBT: Indebtedness of the Company incurred in accordance
with Section 10.1(b), 10.1(e), 10.1(f), 10.1(i), 10.1(j) or 10.1(m)
and secured by the lien of the Security Documents in accordance with
Section 10.2(h), 10.2(i) or 10.2(m).
PARTNERSHIP AGREEMENT: the Amended and Restated Agreement of
Limited Partnership of the Company, as in effect on the date of the
Closing, and as the same may from time to time be amended, modified or
supplemented in accordance with the terms thereof and Section 10.12
hereof, in the form of Exhibit G.
PBGC: the Pension Benefit Guaranty Corporation or any
governmental authority succeeding to any of its functions.
PERFECTION CERTIFICATE: a certificate from the Company in
substantially the form attached hereto as Exhibit H.
PERMITTED BANKS: the meaning specified in Section 10.3(a).
PERMITTED ENCUMBRANCES: the encumbrances and exceptions to
title to the Assets (a) described in the Security Documents or
(b) existing on the date of Closing as permitted by the applicable
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provisions hereof with respect to real property owned or leased by the
Company or otherwise permitted hereunder pursuant to Section 10.2(j).
PERMITTED EXCEPTIONS: the meaning specified in Section 5.8(a).
PERMITTED HOLDERS: Northwestern Public Service Company, a
Delaware corporation, and any Person directly or indirectly
controlling or controlled by Northwestern Public Service Company,
provided that for purposes of this definition "control" shall have the
same meaning assigned to such term in the definition of Affiliate.
PERMITTED INSURERS: insurers with ratings of A- or better
according to Best's Insurance Reports or a comparable rating agency
for insurance companies located outside of the United States of
America and Canada and with assets of no less than $500 million.
PERSON: a corporation, a limited liability company, a firm, a
joint venture, an association, a partnership, an organization, a busi-
ness, a trust or other entity or enterprise, an individual, a
government or political subdivision thereof or a governmental agency,
department or instrumentality.
PLAN: an "employee pension benefit plan" (as defined in Sec-
tion 3(2) of ERISA) which is or has been established or maintained, or
to which contributions are or have been made, by either General
Partner, the Company or any Related Person of the Company or either
General Partner or to which either General Partner, the Company or any
Related Person of the Company or either General Partner is or has been
obligated to contribute, or an employee benefit plan as to which
either General Partner, the Company or any Related Person of the
Company or either General Partner could be treated as a contributory
sponsor under Section 4069 or Section 4212 of ERISA if such plan were
terminated.
POTENTIAL EVENT OF DEFAULT: any condition or event which, with
notice or lapse of time or both, would become an Event of Default.
PREMIUM AMOUNT: the meaning specified in Section 9.3(d).
PUBLIC PARTNERSHIP: Cornerstone Propane Partners, L.P., a
Delaware limited partnership.
PURCHASE MONEY LIEN: the meaning specified in Section 10.2(j).
QPAM EXEMPTION: the meaning specified in Section 6.2(c).
QUALIFYING RESTRICTED SUBSIDIARIES: the Restricted Subsidiaries
other than Cornerstone Sales & Service Corporation.
RCRA: the Federal Resource Conservation and Recovery Act, as
amended.
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REGISTRATION STATEMENT: the Registration Statement on Form S-1
under the Securities Act of 1933, as amended, of the Public Partner-
ship (Registration Number 33-2768), as initially filed with the
Securities and Exchange Commission on October 12, 1996, and as may be
amended from time to time through the date of Closing by subsequent
filings with the Securities and Exchange Commission.
REINVESTMENT YIELD: with respect to the Called Principal of any
Note, the yield to maturity implied by (i) the yields reported, as of
10:00 a.m. (New York City time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal, on the display
designated as "USD" on the Bloomberg Financial Markets (or such other
display as may replace USD on the Bloomberg Financial Markets) for
actively traded U.S. Treasury securities having a maturity equal to
the Remaining Average Life of such Called Principal as of such
Settlement Date, or if such yields shall not be reported as of such
time or the yields reported as of such time shall not be ascertain-
able, including by interpolation (ii) the Treasury constant maturity
series yields reported, for the latest day for which such yields shall
have been so reported as of the Business Date next preceding the
Settlement Date with respect to such Called Principal, in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield shall be
determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with the maturity closest to
and equal to or greater than the Remaining Average Life and (2) the
actively traded U.S. Treasury security with the maturity closest to
and equal to or less than the Remaining Average Life.
RELATED PERSON: with respect to a Person, any trade or
business, whether or not incorporated, which, as of any date of
determination, would be treated as a single employer together with
such Person under Section 414 of the Code.
REMAINING AVERAGE LIFE: with respect to the Called Principal of
any Note, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) each Remaining Scheduled
Payment of such Called Principal (but not of interest thereon) by
(b) the number of years (calculated to the nearest one-twelfth year)
which will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining
Scheduled Payment.
REMAINING SCHEDULED PAYMENTS: with respect to the Called
Principal of any Note, all payments of such Called Principal and
interest thereon that would be due on or after the Settlement Date
with respect to such Called Principal if no payment of such Called
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Principal were made prior to its scheduled due date, provided that if
such Settlement Date is not a date on which interest payments are due
to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Sections 9 or 11.
REQUIRED HOLDERS: the holders of at least 66-2/3% in principal
amount of the Notes at the time outstanding.
REQUISITE PERIOD: the meaning specified in Section
10.1(e)(ii)(l).
RESPONSIBLE OFFICER: with respect to any Person, the President,
any Vice President, the Chief Financial Officer, the Treasurer and the
Secretary of such Person and any other officer of such Person who is
responsible for compliance with or performance of any obligation under
this Agreement or the other Operative Agreements, with respect to the
Company, any such officer of the Managing General Partner and, in any
case, any employee of the Company performing any of the above
functions.
RESTRICTED AFFILIATE: Northwestern or any of its Subsidiaries
as long as any such Person would otherwise be an Affiliate of the
Company.
RESTRICTED PAYMENT: as to any Person, (a) any payment, dividend
or other distribution, direct or indirect, in respect of any
partnership interest (general or limited) in, or on account of any
shares of any class of stock of, such Person, except a distribution
payable solely in additional partnership interests in, or shares of
stock of, such Person, and (b) any payment, direct or indirect, on
account of the redemption, retirement, purchase or other acquisition
of any partnership interest in, or any shares of any class of stock
of, such Person now or hereafter outstanding or of any warrants,
rights or options to acquire any such shares, except to the extent
that the consideration therefor consists of shares of stock or
partnership interests in of such Person, provided payments by the
Company or a Restricted Subsidiary of the Company to either General
Partner or any of its Affiliates for services rendered to or on behalf
of the Company or any Restricted Subsidiary of the Company or expenses
incurred in connection with the operation of the business of the
Company or any Restricted Subsidiary of the Company (including,
without limitation, reimbursement of expenses incurred under any
employee benefit plan, including plans providing for the issuance of
Units or options to acquire Units in the Public Partnership shall not
be deemed to be Restricted Payments. Notwithstanding the foregoing
provisions of this definition, no payment made by the Company on the
Closing Date and described in Section 5.13 hereof or described under
the caption "Use of Proceeds" in the Registration Statement shall be
deemed to constitute a Restricted Payment.
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RESTRICTED SUBSIDIARY: any Wholly Owned Subsidiary of the
Company (a) organized under the laws of the United States of America
or any state thereof or the District of Columbia, (b) none of the
capital stock or ownership interests of which is owned by Unrestricted
Subsidiaries, (c) substantially all of the operating assets of which
are located in, and substantially all of the business of which is
conducted within the United States of America and the business of
which consists principally of the wholesale and retail sale,
distribution and storage of propane gas and/or natural gas and related
petroleum derivative products and/or the related retail sale of
supplies and equipment, including home appliances, and for the
provision of related services and (d) designated by the Company as a
Restricted Subsidiary, provided that (i) to the extent a newly formed
or acquired Wholly Owned Subsidiary satisfying the requirements of the
foregoing clauses (a), (b) and (c) is not declared either a Restricted
Subsidiary or an Unrestricted Subsidiary within 90 days of its
formation or acquisition, such Wholly Owned Subsidiary shall be deemed
a Restricted Subsidiary and (ii) a Restricted Subsidiary may be
designated as an Unrestricted Subsidiary in accordance with the
provisions of Section 10.19(a).
SECURITY DOCUMENTS: the Trust Agreement, the Company Security
Agreement, the Subsidiary Guarantee Agreement, the Perfection
Certificate, and all other security agreements and documents and
instruments executed and delivered in order to secure the Indebtedness
and/or perfect the Liens referred to in the Trust Agreement or to
guarantee the Company's obligations hereunder and under the Notes.
SETTLEMENT DATE: shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is to
be prepaid pursuant to Section 9.2, 9.3 or 9.4 or is declared to be or
becomes immediately due and payable pursuant to Section 11, as the
context requires.
SUBSIDIARY: of any Person, means any corporation, limited
liability company, business trust, association, partnership, joint
venture or other business entity at least a majority (by number of
votes) of the stock of any class or classes (or equivalent interests)
of which is at the time owned by such Person or by one or more
Subsidiaries of such Person or by such Person and one or more Sub-
sidiaries of such Person, if the holders of the stock of such class or
classes (or equivalent interests) (a) are ordinarily, in the absence
of contingencies, entitled to vote for the election of a majority of
the directors (or Persons performing similar functions) of such
business entity, even though the right so to vote has been suspended
by the happening of such a contingency, or (b) are at the time
entitled, as such holders, to vote for the election of the majority of
the directors (or Persons performing similar functions) of such
business entity, whether or not the right so to vote exists by reason
of the happening of a contingency. Unless the context otherwise
requires, any reference to a Subsidiary shall mean a Subsidiary of the
Company.
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SUBSIDIARY GUARANTEE AGREEMENT: the Guarantee Agreement among
the Qualifying Restricted Subsidiaries and the Trustee substantially
in the form attached hereto as Exhibit I, as amended from time to
time.
SUBSTANTIAL PORTION: the meaning specified in Section 7(a).
SUPPLEMENTAL AGREEMENT: an agreement between a Qualifying
Restricted Subsidiary and the Trustee substantially in the form
attached hereto as Exhibit J, as amended from time to time.
TRUST AGREEMENT: the Intercreditor and Trust Agreement, dated
as of December 11, 1996, among the Company, the Qualifying Restricted
Subsidiaries, the Trustee, the holders of the Notes, the
Administrative Agent and the Banks, substantially in the form attached
hereto as Exhibit C, as amended from time to time.
TRUSTEE: U.S. Trust Company of Texas, N.A., as Trustee under
the Trust Agreement, and its successors and assigns thereunder.
UNDERWRITERS: the underwriters named in the Underwriting
Agreement.
UNDERWRITING AGREEMENT: the Purchase Agreement, dated December
11, 1996, among the Public Partnership, the General Partners, the
Company, Northwestern and the Underwriters, relating to securities of
the Public Partnership registered under the Registration Statement.
UNIFORM COMMERCIAL CODE: the Uniform Commercial Code or similar
statute in effect from time to time in any jurisdiction.
UNITS: the units to be issued and sold by the Public
Partnership pursuant to the Underwriting Agreement, representing
preference limited partnership interests in the Public Partnership.
UNRESTRICTED SUBSIDIARY: any Subsidiary other than a Restricted
Subsidiary which is organized under the laws of the United States of
America or any state thereof or the District of Columbia and
substantially all of the operating assets of which are located in, and
substantially all of the business of which is conducted within the
United States of America and which business consists principally of
the distribution of propane gas or related supplies and equipment.
WHOLLY OWNED: as applied to any Subsidiary, a Subsidiary all of
the outstanding shares (other than directors' qualifying shares, if
required by law) of every class of stock or other equity interests of
which are at the time owned by the Company or by one or more Wholly
Owned Restricted Subsidiaries or by the Company and one or more Wholly
Owned Restricted Subsidiaries.
WORKING CAPITAL FACILITY: that Working Capital Facility under
the Bank Credit Facilities which shall permit borrowings and the
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issuance of letters of credit for the Company thereunder in an
aggregate amount outstanding at any time no greater than as permitted
by Section 10.1(e) and which shall be secured by the Collateral
pursuant to the Security Documents and any extension, renewal,
refunding or replacement thereof otherwise permitted to be incurred
and outstanding under Section 10.1.
SECTION 14. REGISTRATION, TRANSFER AND SUBSTITUTION OF
NOTES.
14.1. NOTE REGISTER; OWNERSHIP OF NOTES. Any Notes issued in
substantially the form of Exhibit A are in "registered form". The
Company will keep at its principal office a register in which the
Company will provide for the registration of Notes in registered form
and the registration of transfers of Notes in registered form. The
Company and the Trustee may treat the Person in whose name any Note is
registered on such register as the owner thereof for the purpose of
receiving payment of the principal of and the Make Whole Amount or
premium, if any, and interest on such Note and for all other purposes,
whether or not such Note shall be overdue, and the Company shall not
be affected by any notice to the contrary. All references in this
Agreement or in a Note to a "holder" of any Note shall mean the Person
in whose name such Note is at the time registered on such register.
14.2. TRANSFER AND EXCHANGE OF NOTES. Upon surrender of any
Note for registration of transfer or for exchange to the Company at
its principal office, the Company at its expense will execute and
deliver in exchange therefor a new Note or Notes in denominations of
at least $500,000 (except one Note may be issued in a lesser principal
amount if the unpaid principal amount of the surrendered Note is not
evenly divisible by, or is less than, $500,000), as requested by the
holder or transferee, which aggregate the unpaid principal amount of
such surrendered Note. Each such new Note shall be in registered
form. Each such Note shall be dated so that there will be no loss of
interest on such surrendered Note and otherwise of like tenor, and
shall be registered in the name or names of such Person as such holder
or transferee may request. Any Note in lieu of which any such new
Note has been executed and delivered shall not be deemed to be an
outstanding Note for any purpose of this Agreement.
14.3. REPLACEMENT OF NOTES. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Note and, in the case of any such loss, theft or
destruction of any Note, upon delivery of an indemnity bond in such
reasonable amount as the Company may determine (or, in the case of any
Note held by you or another Institutional Investor holder or your or
its nominee, of an unsecured indemnity agreement from you or such
other holder), or, in the case of any such mutilation, upon the
surrender of such Note for cancellation to the Company at its
principal office, the Company at its expense will execute and deliver,
in lieu thereof, a new Note in the unpaid principal amount of such
lost, stolen, destroyed or mutilated Note, dated so that there will be
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no loss of interest on such Note and otherwise of like tenor. Any
Note in lieu of which any such new Note has been so executed and
delivered by the Company shall not be deemed to be an outstanding Note
for any purpose of this Agreement.
14.4. NOTES HELD BY COMPANY, ETC., DEEMED NOT OUTSTANDING.
For the purposes of determining whether the holders of the Notes of
the requisite principal amount at the time outstanding have taken any
action authorized by this Agreement or any other Operative Agreement
with respect to the giving of consents or approvals or with respect to
the acceleration upon an Event of Default, any Notes directly or
indirectly owned by the Company, either General Partner or any of
their respective Affiliates shall be disregarded and deemed not to be
outstanding.
SECTION 15. PAYMENTS ON NOTES.
15.1. PLACE OF PAYMENT. Payments of principal, Make Whole
Amount, Premium Amount or premium, if any, and interest becoming due
and payable on the Notes shall be made at the principal office of the
Trustee in the Borough of Manhattan, the City and State of New York by
12:00 noon, unless the Company, by written notice to each holder of
any Notes, shall designate the principal office of another bank or
trust company in such Borough as such place of payment, in which case
the principal office of such other bank or trust company shall
thereafter be such place of payment.
15.2. HOME OFFICE PAYMENT. So long as you or your nominee
shall be the holder of any Note, and notwithstanding anything
contained in Section 15.1 or in such Note to the contrary, the Company
will pay all sums becoming due on such Note for principal, Make Whole
Amount and Premium Amount, if any, and interest no later than 12:00
noon (New York City time) and by the method and at the address
specified for such purpose in Schedule A, or by such other reasonable
method or at such other address as you shall have from time to time
specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation
thereon, except that any Note paid or prepaid in full shall, after
such payment or prepayment in full, be surrendered to the Company at
its principal office or at the place of payment maintained by the
Company pursuant to Section 15.1 for cancellation. Prior to any sale
or other disposition of any Note held by you or your nominee you will,
at your election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or
surrender such Note to the Company in exchange for a new Note or Notes
pursuant to Section 14.2. The Company will afford the benefits of
this Section 15.2 to any Institutional Investor which is the direct or
indirect transferee of any Note purchased by you under this Agreement
and which has made the same agreement relating to such Note as you
have made in this Section 15.2.
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SECTION 16. EXPENSES, INDEMNIFICATION, ETC.
(a) Whether or not the transactions contemplated hereby shall
be consummated, the Company will pay all reasonable expenses in
connection with such transactions and in connection with any
amendments or waivers (whether or not the same become effective) under
or in respect of this Agreement, the other Operative Agreements or the
Notes, including, without limitation: (i) the cost and expenses of
preparing and reproducing this Agreement, the other Operative
Agreements and the Notes, of furnishing all opinions by counsel for
the Company, the Restricted Subsidiaries, Northwestern or the General
Partners (including any opinions requested by your special counsel,
Debevoise & Plimpton, as to any legal matter arising hereunder) and
all certificates on behalf of the Company, either General Partner,
Northwestern or any Restricted Subsidiary, and of the Company's,
either General Partner's, Northwestern's or any Restricted
Subsidiary's performance of and compliance with all agreements and
conditions contained herein on its part to be performed or complied
with; (ii) the cost of delivering to your principal office, insured to
your satisfaction, the Notes issued in exchange for the Notes sold to
you hereunder and any Notes delivered to you upon any substitution
thereof pursuant to Section 14 and of your delivering any Notes,
insured to your satisfaction, upon any such substitution; (iii) the
reasonable fees, expenses and disbursements of your special counsel,
Debevoise & Plimpton (or such other counsel as may be selected by the
Note holders) and your local counsel in connection with such transac-
tions and any such amendments or waivers; (iv) the costs and expenses,
including attorneys' fees, incurred by you or any subsequent holder of
a Note in enforcing (or determining whether or how to enforce) any
rights under this Agreement, any other Operative Agreement or the
Notes or in responding to any subpoena or other legal process in
connection with this Agreement, any other Operative Agreement or the
Notes or the transactions contemplated hereby or by reason of you or
any subsequent holder of Notes having acquired any Note, including
without limitation costs and expenses incurred in any bankruptcy case;
(v) the cost and expenses of obtaining a Private Placement Number for
the Notes; and (vi) the reasonable out-of-pocket expenses incurred by
you in connection with such transactions and any such amendments or
waivers, provided that the Company shall be required to pay the cost
and expenses of only one firm (and any local counsel) retained by the
Note holders in connection with any waivers or amendments. The
Company also will pay, and will save you and each holder of any Notes
harmless from, all claims in respect of the fees, if any, of brokers
and finders (unless engaged by you) and any and all liabilities with
respect to any taxes (including interest and penalties) (other than
income taxes) which may be payable in respect of the execution and
delivery hereof, the issue of the Notes hereunder and any amendment or
waiver under or in respect hereof or of the Notes. In furtherance of
the foregoing, on the date of the Closing the Company will pay the
reasonable fees and disbursements of your special counsel which are
reflected as unpaid in the statement of Debevoise & Plimpton, your
special counsel, delivered to the Company prior to the date of the
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Closing; and thereafter the Company will pay, promptly upon receipt of
supplemental statements therefor from time to time, additional fees,
if any, and disbursements of your special counsel in connection with
the transactions hereby contemplated (including unposted disbursements
as of the date of the Closing).
(b) The Company will protect, indemnify and save harmless the
Trustee and each present, future and former holder of any Note and
their respective officers, directors, trustees, employees, agents and
representatives (individually, an "Indemnified Party" and
collectively, the "Indemnified Parties") from and against all losses,
liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including, without limitation, attorneys'
fees and expenses) imposed upon or incurred by or asserted against any
Indemnified Party by reason of (a) ownership of the Collateral, or any
interest therein, or receipt of any rent or other sum therefrom,
(b) any accident or injury to or death of persons or loss of or damage
to property occurring on or about the Collateral or any part thereof,
(c) any use, non-use or condition of the Collateral or any part there-
of, (d) any failure on the part of the Company, either General Partner
or any of their respective Subsidiaries or Affiliates to perform or
comply with any of the terms of this Agreement or any other Operative
Agreement, (e) the performance of any labor or services or the fur-
nishing of any materials or other property in respect of the
Collateral or any part thereof, (f) any negligence or tortious act on
the part of the Company, either General Partner, any of their
respective Subsidiaries or Affiliates or any of their respective
agents, contractors, sublessees, licensees or invitees, (g) any work
in connection with any alterations, changes or construction of the
Collateral, (h) any other relationship that has arisen or may arise
between the Company, either General Partner or any of their respective
Subsidiaries or Affiliates and the Indemnified Parties or the
Collateral as a result of the delivery or performance of this
Agreement, any other Operative Agreement or any action contemplated
hereby or thereby or by any other document executed in connection
herewith or therewith, (i) the presence or removal, or the discharge,
spillage, leakage, emission, release, threat of release or disposal,
of any Hazardous Materials on, under, about or from the Collateral or
the noncompliance with any Legal Requirement relating thereto, whether
arising prior to the issuance of the Notes or at any time thereafter
and whether or not the Company, either General Partner or any of their
respective Subsidiaries or Affiliates is responsible therefor or
(j) the holding of, or any interest in, any sum deposited or paid
under this Agreement, the Notes or any other Operative Agreement,
provided that nothing contained herein shall be deemed to require the
Company to indemnify the Indemnified Parties for conditions (other
than matters covered by clause (f) above) first occurring subsequent
to the earlier of (x) the taking of exclusive possession and control
of the Collateral for operational purposes pursuant to Section 6.03 of
the Company Security Agreement, (y) the foreclosure of the Lien under
any Security Document and the transfer of title to the Trustee, or (z)
for their respective gross negligence or willful misconduct, or for
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their breach of their respective obligations under this Agreement or
the other Operative Agreements.
In case any action, claim, suit or proceeding is brought against
an Indemnified Party by reason of any such occurrence, the Company
may, and upon the request of such Indemnified Party will, at the
Company's expense resist and defend such action, suit or proceeding or
cause the same to be resisted and defended by counsel for the insurer
of the liability or by counsel designated by the Company and
reasonably satisfactory to the Indemnified Party, as the case may be,
provided that any Indemnified Party shall be entitled to participate
in any such action, suit or proceeding with counsel of its own choice
but at its own expense, and provided further that if any Indemnified
Party reasonably determines that a conflict of interest exists with
respect to the representation by such counsel of such Indemnified
Party, the Company shall pay the fees and expenses of counsel selected
by such Indemnified Party. In any event, if the Company fails to
assume the defense within a reasonable time after any such request,
the Indemnified Party may assume such defense or other indemnification
obligation and the fees and expenses of its attorney will be paid by
the Company. The obligations of the Company under this Section 16
shall survive any termination or satisfaction of this Agreement. Any
amounts payable to any Indemnified Party under this Section 16 which
are not paid within 15 days after written demand therefor by any
Indemnified Party shall bear interest at the rate of 9.53% per annum
from the date of such demand. In the event that the Company shall be
required to pay any indemnity under this Section 16, the Company shall
pay the Indemnified Party an amount which, after deduction of all
taxes required to be paid by such Indemnified Party in respect of the
receipt or accrual thereof (but not for any taxes payable with respect
to amounts received for the payment of income taxes), shall be equal
to the amount of such indemnity.
(c) In connection with the Closing, the Managing General
Partner and the Company are requesting that you make available for
funding an amount equal to the principal amount specified opposite
your name in Schedule A. If, for any reason, on the date scheduled by
the Managing General Partner and the Company as the date for the
Closing, you shall at their request have made such amount available,
and (i) the closing conditions are not satisfied by 11:00 a.m. on such
scheduled date, (ii) the Managing General Partner and the Company do
not, by 11:00 a.m. on such scheduled date reschedule such Closing for
a subsequent date, and (iii) the Closing in fact does not occur on
such scheduled date, the General Partners and the Company will
protect, indemnify and hold you harmless from and against any and all
losses resulting from your failure or inability to invest on the
scheduled date for the Closing the purchase price of the Notes to be
purchased by you, for the period ending on the next following Business
Day at a rate of interest equal to or greater than the rate of
interest on the Notes.
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SECTION 17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties contained in this Agreement
or the other Operative Agreements, or made in writing by or on behalf
of either General Partner, the Company, any Restricted Subsidiary or
any of their Affiliates in connection with the transactions
contemplated by this Agreement or the other Operative Agreements,
shall survive the execution and delivery of this Agreement and the
other Operative Agreements, any investigation at any time made by you
or on your behalf, the purchase of the Notes by you under this
Agreement and any disposition or payment of the Notes. All statements
contained in any certificate or other instrument delivered by or on
behalf of the General Partners, the Company or any Restricted
Subsidiary pursuant to this Agreement and/or the other Operative
Agreements or in connection with any amendment, waiver or modification
of this Agreement or any of the other Operative Agreements shall be
deemed representations and warranties of the Company under this
Agreement.
SECTION 18. AMENDMENTS AND WAIVERS.
Any term of this Agreement or of the Notes may be amended and
the observance of any term of this Agreement or of the Notes may be
waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the
Company and the Required Holders, provided that, without the prior
written consent of the holders of all the Notes at the time
outstanding, no such amendment or waiver shall (a) change the maturity
or the principal amount of, or change the rate of interest or the time
of payment of interest on, or change the amount or the time of payment
of any principal or Make Whole Amount or Premium Amount on any
prepayment of, any Note, (b), subject to other requirements set forth
in the Trust Agreement, release any Lien against the Collateral for
the benefit of the holders of the Notes, (c) reduce the aforesaid per-
centage of the principal amount of the Notes the holders of which are
required to consent to any such amendment or waiver or change the
rights of the holders of a Note with respect thereto, (d) change the
percentage of the principal amount of the Notes the holders of which
may declare the Notes to be due and payable as provided in Section 11
or change the rights of the holders of a Note with respect thereto,
(e) change the percentage of the principal amount of the Notes the
holders of which may rescind and annul any such declaration as
provided in Section 11 or (f) modify the provisions of Section 9.8 or
this Section 18. Any amendment or waiver effected in accordance with
this Section 18 shall be binding upon each holder of any Note at the
time outstanding, each future holder of any Note, either General
Partner and the Company.
SECTION 19. NOTICES, ETC.
Except as otherwise provided in this Agreement, notices and
other communications under this Agreement shall be in writing and
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shall be delivered by hand, by express courier service or by
registered or certified mail, return receipt requested, postage
prepaid, addressed, (a) if to you, at the address set forth in Sched-
ule A or at such other address as you shall have furnished to the
Company in writing, except as otherwise provided in Section 15.2 with
respect to payments on Notes held by you or your nominee, or (b) if to
any other holder of any Note, at such address as such other holder
shall have furnished to the Company in writing, or, until any such
other holder so furnishes to the Company an address, then to and at
the address of the last holder of such Note who has furnished an
address to the Company, or (c) if to the Company or either General
Partner, at the address set forth at the beginning of this Agreement
to the attention of Senior Vice President and Chief Financial Officer,
or at such other address, or to the attention of such other officer,
as the Company shall have furnished to you and each such other holder
in writing.
SECTION 20. REPRODUCTION OF DOCUMENTS.
This Agreement, each Operative Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers
and notifications which may hereafter be executed, (b) documents
received by you at the Closing (except the Notes themselves), and
(c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by
any photographic, photostatic, microfilm, microcard, miniature photo-
graphic or other similar process and you may destroy any original
document so reproduced. Each General Partner and the Company agrees
and stipulates that, to the extent permitted by applicable law, any
such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not
the original is in existence and whether or not such reproduction was
made by you in the regular course of business) and any enlargement,
facsimile or further reproduction of such reproduction shall likewise
be admissible in evidence.
SECTION 21. MISCELLANEOUS.
This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the
parties hereto, whether so expressed or not, and, in particular, shall
inure to the benefit of and be enforceable by any holder or holders at
the time of the Notes or any part thereof, provided that the benefits
of Sections 7, 14.3 and 15.2 shall be limited as therein provided.
Except as stated in Section 17, this Agreement embodies the entire
agreement and understanding among you, the General Partners and the
Company and supersedes all prior agreements and understandings
relating to the subject matter hereof. The headings in this Agreement
are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of
which together shall constitute one instrument.
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<PAGE> 467
SECTION 22. SUBMISSION TO JURISDICTION.
For the purpose of assuring that any holder of Notes may enforce
its rights under this Agreement, the Notes and the other Operative
Agreements, each General Partner and the Company, for itself and its
successors and assigns, hereby, to the fullest extent permitted by
applicable law, irrevocably (a) agrees that any legal or equitable
action, suit or proceeding brought against it arising out of or
relating to this Agreement, any other Operative Agreement and the
Notes, or any transaction contemplated hereby or the subject matter of
any of the foregoing or for recognition or enforcement of any judgment
rendered in any such action, suit or proceeding may be instituted in
any state or federal court sitting in the Borough of Manhattan in the
State of New York, (b) waives any objection which it may now or
hereafter have to the laying of venue of any such action, suit or
proceeding brought in any such court, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim that any
such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum, or any right to require the
proceeding to be conducted in any other jurisdiction by reason of its
present or future domicile, (c) irrevocably submits itself to the non-
exclusive jurisdiction of any state or federal court of competent
jurisdiction sitting in the Borough of Manhattan in the State of New
York for purposes of any such action, suit or proceeding, and
(d) irrevocably waives any immunity from jurisdiction to which it
might otherwise be entitled in any such action, suit or proceeding
which may be instituted in any state or federal court sitting in the
Borough of Manhattan in the State of New York, and irrevocably waives
any immunity from, or objection to, the maintaining of an action
against it to enforce any judgment for money obtained in any such
action, suit or proceeding and any immunity from execution.
SECTION 23. WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY
WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE ACTION,
SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
NOTES OR ANY OTHER OPERATIVE AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY OR THEREBY OR THE SUBJECT MATTER OF ANY OF THE FOREGOING.
SECTION 24. GOVERNING LAW.
THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED IN THE CITY OF
NEW YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA. THIS AGREEMENT
AND (UNLESS OTHERWISE EXPRESSLY PROVIDED) ALL AMENDMENTS AND
SUPPLEMENTS TO, AND ALL CONSENTS AND WAIVERS PURSUANT TO, THIS
AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
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<PAGE> 468
SECTION 25. CONFIDENTIAL INFORMATION.
For the purposes of this Section 25, "Confidential Information"
means information delivered to you by or on behalf of the Company or
any Restricted Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is
proprietary in nature and that was clearly marked or labeled or
otherwise adequately identified when received by you as being
confidential information of the Company or such Restricted Subsidiary,
provided that such term does not include information that (a) was
publicly known or otherwise known to you prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act or
omission by you or any person acting on your behalf, (c) otherwise
becomes known to you other than through disclosure by the Company or
any Restricted Subsidiary or (d) constitutes financial statements
delivered to you under Section 7 that are otherwise publicly
available. You will maintain the confidentiality of such Confidential
Information in accordance with procedures adopted by you in good faith
to protect confidential information of third parties delivered to you,
provided that you may deliver or disclose Confidential Information to
(i) your directors, trustees, officers, employees, agents, attorneys
and affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes), (ii)
your financial advisors and other professional advisors who agree to
hold confidential the Confidential Information substantially in
accordance with the terms of this Section 25, (iii) any other holder
of any Note, (iv) any Institutional Investor to which you sell or
offer to sell such Note or any part thereof or any participation
therein (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this
Section 25), (v) any Person from which you offer to purchase any
security of the Company (if such Person has agreed in writing prior to
its receipt of such Confidential Information to be bound by the
provisions of this Section 25), (vi) any federal or state regulatory
authority having jurisdiction over you, (vii) the National Association
of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to
information about your investment portfolio or (viii) any other Person
to which such delivery or disclosure may be necessary or appropriate
(w) to effect compliance with any law, rule, regulation or order
applicable to you, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which you are a
party or (z) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure
to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this
Agreement. Each holder of a Note, by its acceptance of a Note, will
be deemed to have agreed to be bound by and to be entitled to the
benefits of this Section 25 as though it were a party to this
Agreement. On reasonable request by the Company in connection with
the delivery to any holder of a Note of information required to be
delivered to such holder under this Agreement or requested by such
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<PAGE> 469
holder (other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with the Company
embodying the provisions of this Section 25.
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<PAGE> 470
If you are in agreement with the foregoing, please sign the form
of acceptance on the enclosed counterpart of this Agreement and return
the same to the undersigned, whereupon this Agreement shall become a
binding agreement between you and the undersigned.
Very truly yours,
CORNERSTONE PROPANE, L.P.
By: CORNERSTONE PROPANE GP, INC.
as General Partner
By: /s/ R. J. Goedde
------------------------------
Name: Ronald J. Goedde
Title: Executive Vice President
& CFO
CORNERSTONE PROPANE GP, INC.
By: /s/ R. J. Goedde
------------------------------
Name: Ronald J. Goedde
Title: Executive Vice President
& CFO
SYN INC.
By: /s/ Daniel K. Newell
------------------------------
Name: Daniel K. Newell
Title: Vice President
The foregoing Agreement is
hereby accepted and agreed
to as of the date first
above written.
By
--------------------------------------------
Name:
Title:
102
EXHIBIT 10.3
CONTRIBUTION, CONVEYANCE AND ASSUMPTION AGREEMENT
This Contribution, Conveyance and Assumption Agreement,
dated as of December 17, 1996 is entered into by and among CORNERSTONE
PROPANE PARTNERS, L.P., a Delaware limited partnership (the "MLP"),
CORNERSTONE PROPANE, L.P., a Delaware limited partnership (the "OLP"),
CORNERSTONE PROPANE GP, INC., a California corporation formerly known
as Coast Gas, Inc. (the "MANAGING GP"), EMPIRE ENERGY SC CORPORATION,
a Delaware corporation ("SC"), and SYN INC., a Delaware corporation
("SYN"; the Managing GP, SC and SYN are sometimes referred to herein
individually as a "TRANSFEROR" and collectively as the "TRANSFERORS").
RECITALS
WHEREAS, Cornerstone Propane GP, Inc., a Delaware
corporation (the "OGP"), as general partner, and Northwestern Growth
Corporation, a South Dakota corporation ("NGC"), as organizational
limited partner, formed the MLP pursuant to the Delaware Revised
Uniform Limited Partnership Act (the "DELAWARE ACT");
WHEREAS, the OGP, as general partner, and the MLP, as
organizational limited partner, formed the OLP pursuant to the
Delaware Act;
WHEREAS, as part of the actions taken prior to the execution
of this Agreement, (i) certain of the Operating Subsidiaries (as
defined below) of Empire Energy Corporation, a Tennessee corporation
("EEC"), contributed to SC, then an indirect, wholly-owned subsidiary
of EEC, certain assets as a capital contribution and in exchange SC
assumed certain indebtedness to EEC which originally was incurred by
such subsidiaries in connection with their acquisition of such assets;
and, after the aforesaid capital contributions to SC and assumption of
<PAGE> 472
indebtedness by SC, the Operating Subsidiaries of EEC (other than SC)
merged with and into EEC; (ii) the Operating Subsidiaries of SYN
merged with and into SYN; (iii) NGC, the owner of all of the
outstanding capital stock of EEC, Myers Propane Gas Company, a
Delaware corporation ("MYERS"), and the OGP and certain common stock
of SYN, contributed to CGI Holdings, Inc., a Delaware corporation
("CGI Holdings"), then a wholly owned subsidiary of NGC, that stock
and certain property as a capital contribution and in exchange CGI
Holdings assumed certain indebtedness incurred by NGC in connection
with the acquisition of such stock and property; and (iv) after the
aforesaid capital contributions to CGI Holdings and assumption of
indebtedness by CGI Holdings, CGI Holdings contributed the stock and
property contributed to it, together with the outstanding capital
stock of Paugh Enterprises, Inc., a Nevada corporation ("PEI"), its
wholly-owned subsidiary, and the Acquired Businesses (as defined
below) to the Managing GP and in exchange the Managing GP assumed
certain indebtedness incurred in connection with the acquisition of
said stock and property and the Acquired Businesses;
WHEREAS, after the aforesaid contributions to capital and
assumptions of indebtedness, Coast Energy Group, Inc., a Delaware
corporation ("CEG"), PEI, EEC, Myers and the OGP, all then wholly
owned subsidiaries of the Managing GP, merged with and into the
Managing GP and the Managing GP changed its name to Cornerstone
Propane GP, Inc., and as a result of all of the aforesaid
contributions to capital, mergers and assumptions of indebtedness, the
Managing GP became the successor to the business, assets and
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<PAGE> 473
liabilities of CEG, PEI, EEC, Myers and the OGP, including the general
partner interests in the MLP and the OLP formerly held by the OGP, and
the Acquired Businesses;
WHEREAS, immediately prior to the execution of this
Agreement, the Managing GP, as managing general partner, SYN, as
special general partner, and the MLP, as organizational limited
partner, entered into that certain Amended and Restated Agreement of
Limited Partnership of the OLP (the "OLP PARTNERSHIP AGREEMENT"), and
the Managing GP, as managing general partner, SYN, as special general
partner, and NGC, as organizational limited partner, entered into that
certain Amended and Restated Agreement of Limited Partnership of the
MLP (the "MLP PARTNERSHIP AGREEMENT");
WHEREAS, the Managing GP, SC and SYN desire, as contemplated
in the OLP Partnership Agreement, to contribute certain of their
respective assets as capital contributions to the OLP, and, as
contemplated in the MLP Partnership Agreement, to contribute the
limited partner interests each acquired in the OLP as a result of the
aforesaid contributions as capital contributions to the MLP, in each
case subject to the terms and conditions set forth below; and
WHEREAS, in connection with the transactions contemplated
below, the MLP is closing the Public Offering (as defined below) and
the OLP is closing the Note Offering (as defined below) and obtaining
certain loans and other financial accommodations under the Credit
Agreement (as defined below) to provide the funds and other financial
accommodations needed to consummate the transactions on the terms and
conditions set forth below;
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<PAGE> 474
NOW, THEREFORE, in consideration of their mutual
undertakings and agreements hereunder, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement undertake and agree as
follows:
1. DEFINITIONS.
1.1 General Terms. When used herein, the following
terms shall have the following meanings:
"Acquired Businesses" shall mean the business conducted by
CGI Acquisition with the assets acquired pursuant to (i) that certain
Agreement of Purchase and Sale of Assets dated October 11, 1996
between Antelope Valley Gas Company, Inc., a California corporation,
and CGI Acquisition and (ii) that certain Agreement of Purchase and
Sale of Assets dated December 2, 1996 between Garvin Plumbing Inc., a
California corporation, and CGI Acquisition; and which business and
assets were acquired by CGI Holdings as a result of the merger of CGI
Acquisition with and into CGI Holdings.
"Additional Acquisition Documents" means, collectively, that
certain Asset Purchase Agreement dated as of July 25, 1995 between SYN
and EEC and all agreements and documents entered into in connection
with the acquisition contemplated therein, in each case as amended
from time to time.
"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"
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<PAGE> 475
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. Notwithstanding anything contained in this definition to
the contrary, the term Affiliate, (i) with respect to the OLP shall
mean only the MLP and the OLP Subsidiary and any Person directly or
indirectly controlled by the MLP, the OLP or the OLP Subsidiary, (ii)
with respect to the MLP shall mean only the OLP and the OLP Subsidiary
and any Person directly or indirectly controlled by the MLP, the OLP
or the OLP Subsidiary, and (iii) with respect to each Transferor shall
exclude the OLP, the MLP and all other Affiliates of the OLP and the
MLP.
"Agreement" means this Contribution, Conveyance and
Assumption Agreement, as amended, modified or supplemented from time
to time.
"ASG" means All Star Gas Corporation, a Missouri corporation
formerly known as Empire Gas Corporation.
"Assets" has the meaning assigned to such term in SCHEDULE
1.1 as applied to any individual Transferor and as applied to the
Transferors, collectively, means the Managing GP Assets, the SC Assets
and the SYN Assets.
"Assumed Additional Managing GP Debt" means the indebtedness
of the Managing GP, in the approximate amount of $4,100,000, under
certain capitalized leases relating to LPG tanks, bobtail trucks,
office equipment and certain other vehicles and equipment.
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<PAGE> 476
"Assumed Additional SYN Debt" means the indebtedness of SYN,
in the approximate amount of $800,000, owed to Planters and Stockmen
Bank and the holders of certain mortgages with respect to SYN's
property.
"Assumed CGI Acquisition Debt" means the indebtedness
evidenced by that certain Amended and Restated Promissory Note dated
December 1, 1996 made by CGI Acquisition to the order of NGC in the
principal amount of $1,885,000, representing certain indebtedness
incurred by CGI Acquisition in connection with its acquisition of PEI
and the Acquired Businesses, which indebtedness was assumed by the
Managing GP as a result of the Related Transactions.
"Assumed EEC Debt" means the indebtedness of EEC (other than
the Excluded EEC Debt) under or in connection with that certain Credit
Agreement dated as of August 1, 1996 among EEC, certain subsidiaries
of EEC, the lenders from time to time parties thereto and The First
National Bank of Boston, as agent for such lenders, as amended to
date, and the "Credit Documents" referred to therein, including any
accrued interest and any premium, fees and other amounts which may
become payable in connection therewith, and which indebtedness was
assumed by the Managing GP as a result of the Related Transactions.
"Assumed L/C Facility" shall mean the Continuing Letter of
Credit Agreement dated August 28, 1992 between CEG and Banque Paribas,
as amended to date, the "Credits" referred to therein, the Continuing
Guaranty of the Corporation dated August 28, 1992 made by the Managing
GP in favor of Banque Paribas and the agreements and documents entered
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<PAGE> 477
into with respect to the facilities provided to CEG referred to
therein.
"Assumed Liabilities" means as to any individual Transferor,
all of the liabilities or obligations of such Transferor, including
those to which the Transferor has succeeded, whether by contract,
merger or liquidation of its subsidiaries or otherwise, arising from
or relating to the Assets of such Transferor or the operation of the
Business of such Transferor, whether by such Transferor or its
predecessors (whether or not in the ordinary course), of every kind,
character and description, and (i) whether matured or unmatured, known
or unknown, fixed or contingent, or liquidated or unliquidated, (ii)
whether or not reflected on the books and records of such Transferor
as of the Effective Time, and (iii) regardless of whether asserted or
determined prior to, at or subsequent to the Effective Time; provided,
however, notwithstanding the foregoing, the Assumed Liabilities of any
Transferor shall not include any liabilities or obligations to the
extent that they constitute Excluded Liabilities of such Transferor;
and means as to the Transferors, collectively, all of the foregoing as
to all of the Transferors.
"Assumed Managing GP Debt" means, collectively, the
indebtedness of the Managing GP under or in connection with (i) that
certain Credit Agreement dated as of September 14, 1994 among the
Managing GP, CEG, the lenders from time to time parties thereto and
Bank of America, Illinois, as agent to the lenders, as amended to
date, and the "Loan Documents" referred to therein, including any
accrued interest and any premium, fees and other amounts which may
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<PAGE> 478
become payable in connection therewith, (ii) the Securities Purchase
Agreement dated as of September 14, 1994 among the Managing GP, CEG,
CGI Holdings and the several buyers referred to therein, as amended to
date, with respect to the 12.05% Senior Secured Notes due December 15,
2004 issued by the Managing GP and the "Transaction Documents"
referred to therein, including any accrued interest and any premium,
fees and other amounts which may become payable in connection
therewith, and (iii) the Assumed L/C Facility, including any accrued
interest and any premium, fees and other amounts which may become
payable in connection therewith.
"Assumed NGC Debt" means, collectively, the indebtedness of
NGC under or in connection with (i) that certain Promissory Note dated
December 13, 1996 made by NGC to the order of ASG in the principal
amount of $18,000,000 and that certain Promissory Note dated
December 13, 1996 made by NGC to the order of Paul S. Lindsey, Jr. in
the principal amount of $2,000,000, representing indebtedness incurred
in the connection with NGC's acquisition of, among other things, the
common stock of SYN and Myers then owned by ASG and certain additional
rights; (ii) that certain Promissory Note dated as of October 7, 1996
made by NGC to the order of NPS in the principal amount of
$22,000,000, representing the aggregate amount of indebtedness
incurred by NGC in connection with NGC's acquisition of EEC, certain
indebtedness of EEC owed to a former stockholder of EEC and certain
rights of such stockholder against SYN under the Additional
Acquisition Documents; and (iii) that certain Promissory Note dated
December 16, 1996 made by NGC to the order of Keith G. Baxter, Gerald
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<PAGE> 479
Parsky and Richard K. Roeder in the principal amount of $37,026,658.42
representing indebtedness incurred in connection with NGC's
acquisition of CGI Holdings; and which indebtedness was assumed by the
Managing Partner as a result of the Related Transactions.
"Assumed SC Debt" means the indebtedness of SC under or in
connection with the SC Note.
"Assumed SYN Debt" means, collectively, the indebtedness of
SYN under or in connection with (i) that certain Term Loan Agreement
dated as of July 31, 1996 between SYN and NPS, as amended to date, and
the "Credit Documents" referred to therein, including any accrued
interest and any premium, fees and other amounts which may become
payable in connection therewith, and (ii) that certain Credit
Agreement dated as of December 28, 1995 among SYN, certain
subsidiaries of SYN named therein, the lenders from time to time
parties thereto and The First National Bank of Boston, as agent for
such lenders, as amended to date, and the "Credit Documents" referred
to therein, including any accrued interest and any premium, fees and
other amounts which may become payable in connection therewith.
"Business" means, with respect to any Transferor, the
businesses currently conducted by such Transferor and any that were
previously conducted by such Transferor or any of the subsidiaries of
such Transferor which were merged or liquidated into such Transferor,
in each case that are included among the following, namely, the sale
and distribution of natural gas, crude oil, natural gas liquids, LPG,
and other petroleum derived products, LPG storage and transportation
equipment, appliances, parts and fittings relating to the foregoing
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<PAGE> 480
and transportation, storage, repair, labor and other services relating
to any of the foregoing.
"Case Handler" has the meaning assigned to such term in
Section 6.5.
"CEG" has the meaning assigned to such term in the Recitals
to this Agreement.
"CGI Acquisition" means CGI Acquisition Corporation, a
Delaware corporation which merged with and into CGI Holdings when NGC
acquired CGI Holdings.
"CGI Holdings" has the meaning assigned to such term in the
Recitals to this Agreement.
"Closing Date" means December 17, 1996 or such other date as
the parties may mutually agree.
"Commitments" has the meaning assigned to such term in
Section 3.2.
"Common Unit" has the meaning assigned to such term in the
MLP Partnership Agreement.
"Credit Agreement" means the Credit Agreement dated as of
December 11, 1996 among the OLP, Bank of America National Trust and
Savings Association, as agent, and the financial institutions listed
therein, providing for borrowings and letters of credit under a
working capital facility in an aggregate principal amount of up to
$50,000,000 and borrowings under an acquisition and expansion facility
in an aggregate principal amount of up to $75,000,000.
"Delaware Act" has the meaning assigned to such term in the
Recitals to this Agreement.
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<PAGE> 481
"Dispute" has the meaning assigned to such term in Section
9(a).
"EEC" has the meaning assigned to such term in the Recitals
to this Agreement.
"Effective Time" means 8:00 a.m., Eastern Standard Time, on
the Closing Date.
"Environmental Laws" means any and all Laws relating to the
protection of the environment, pollution or the release of materials
into the environment or occupational health and safety matters.
"Excluded Assets" means, collectively, the Excluded Managing
GP Assets, the Excluded SC Assets and the Excluded SYN Assets.
"Excluded EEC Debt" means the indebtedness of EEC in the
aggregate amount equal to the Assumed SC Debt under or in connection
with that certain Credit Agreement dated as of August 1, 1996 among
EEC, certain subsidiaries of EEC, the lenders from time to time
parties thereto and The First National Bank of Boston, as agent for
such lenders, as amended to date, and the "Credit Documents" referred
to therein, and which indebtedness was assumed by the Managing GP as a
result of the Related Transactions.
"Excluded Liabilities" means, collectively, the Excluded
Managing GP Liabilities, the Excluded SC Liabilities and the Excluded
SYN Liabilities.
"Excluded Managing GP Assets" has the meaning assigned to
such term in Schedule 1.2(A).
"Excluded Managing GP Liabilities" has the meaning assigned
to such term in Schedule 1.3(A).
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<PAGE> 482
"Excluded SC Assets" has the meaning assigned to such term
in Schedule 1.2(B).
"Excluded SC Liabilities" has the meaning assigned to such
term in Schedule 1.3(B).
"Excluded SYN Assets" has the meaning assigned to such term
in Schedule 1.2(C).
"Excluded SYN Liabilities" has the meaning assigned to such
term in Schedule 1.3(C).
"Fees and Expenses" means the Financing Expenses and the
Public Offering Expenses.
"Financing Expenses" means all commissions, fees and other
out-of-pocket expenses (including fees and expenses of accountants,
attorneys, consultants or other agents) incurred, paid or payable by
or on behalf of the OLP to the administrative agent, the co-agent, the
lenders, the placement agent, the note purchasers or other Persons in
connection with the Credit Agreement or the Note Offering.
"GP Interest" means with respect to the OLP or the MLP, an
interest in the OLP or the MLP, as the case may be, that provides the
holder thereof with the rights and obligations of a general partner in
accordance with the OLP Partnership Agreement or the MLP Partnership
Agreement, as the case may be.
"Incentive Distribution Rights" has the meaning assigned to
such term in the MLP Partnership Agreement.
"Indemnified Party" has the meaning assigned to such term in
Section 6.4(a).
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<PAGE> 483
"Indemnifying Party" has the meaning assigned to such term
in Section 6.4(a).
"Information" has the meaning assigned to such term in
Section 10.2.
"Interests" has the meaning assigned to such term in Section
3.2.
"Laws" means any and all laws, statutes, ordinances, rules
or regulations promulgated by a governmental authority, orders,
decrees or decisions of a court or other adjudicative, regulatory or
other governmental authority, decisions or determinations of any
arbitrator in an arbitration proceeding or other binding
determinations of any court or adjudicative, regulatory or other
governmental authority.
"Litigation and Claims" means litigation and actions pending
or threatened or claims alleged against any of the Transferor Parties
or any of the OLP Parties, including civil and criminal actions,
workers' compensation proceedings, administrative and regulatory
proceedings, investigations, audits, inquiries, demands, claims
(including any title claims relating to real properties), whether
pending, threatened or alleged before, at or after the Effective Time.
"Litigation Records" has the meaning assigned to such term
in Section 6.6(b).
"LP Interest" means an interest in the OLP that provides the
holder thereof with the rights and obligations of a limited partner in
accordance with the OLP Partnership Agreement.
"LPG" means liquefied petroleum gas.
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"Managers" means the managers for the several Underwriters
listed in Schedule I to the Underwriting Agreement.
"Managing GP" has the meaning assigned to such term in the
opening paragraph of this Agreement.
"Managing GP Assets" means the Managing GP's Assets.
"MLP" has the meaning assigned to such term in the opening
paragraph of this Agreement.
"MLP Partnership Agreement" has the meaning assigned to such
term in the Recitals to this Agreement.
"Myers" has the meaning assigned to such term in the
Recitals to this Agreement.
"Net Over-Allotment Proceeds" means the gross proceeds
received by the MLP from the Underwriters in connection with the
exercise by the Underwriters of the Over-Allotment Option, net of the
Over-Allotment UW Discount.
"NGC" has the meaning assigned to such term in the Recitals
to this Agreement.
"Note Agreement" means the Note Agreement dated as of
December 11, 1996 among the OLP, the Managing GP, SYN and the several
purchasers named therein, relating to the Note Offering.
"Note Offering" means the issuance and sale of an aggregate
$220,000,000 of senior secured notes due December 30, 2010 of the OLP
pursuant to the Note Agreement.
"NPS" means Northwestern Public Service Company, a Delaware
corporation.
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"OGP" has the meaning assigned to such term in the Recitals
to this Agreement.
"OLP" has the meaning assigned to such term in the opening
paragraph of this Agreement.
"OLP Damages" has the meaning assigned to such term in
Section 6.1.
"OLP Parties" means the OLP and any Affiliate of the OLP,
and any of their respective general partners, directors, officers or
employees, in their capacities as such, or successors or assigns.
"OLP Partnership Agreement" has the meaning assigned to such
term in the Recitals to this Agreement.
"OLP Subsidiary" means Cornerstone Sales & Service
Corporation, a Delaware corporation, a wholly-owned subsidiary of the
OLP.
"Operating Subsidiaries" means (i) with respect to EEC, the
direct or indirect wholly-owned subsidiaries of EEC which were merged
with and into EEC on or about December 11, 1996; and (ii) with
respect to SYN, the direct or indirect wholly-owned subsidiaries of
SYN which were merged with and into SYN on or about December 5, 1996
or December 11, 1996.
"Over-Allotment Option" shall mean the over-allotment option
granted to the Underwriters under the Underwriting Agreement.
"Over-Allotment UW Discount" means the amount of
underwriting discounts and commissions on the securities sold to the
Underwriters in connection with the exercise of the Over-Allotment
Option.
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"PEI" has the meaning assigned to such term in the Recitals
to this Agreement.
"Percentage Interest" has, with respect to the OLP, the
meaning assigned to such term in the OLP Partnership Agreement and,
with respect to the MLP, the meaning assigned to such term in the MLP
Partnership Agreement.
"Person" means an individual, corporation, limited liability
company, partnership, joint venture, trust, unincorporated
organization, association, government agency or political subdivision
thereof or other entity.
"Public Offering" means the initial public offering and sale
of 9,821,000 Common Units.
"Public Offering Expenses" means all underwriting discounts
and commissions (other than the Over-Allotment UW Discount) and fees
and other out-of-pocket expenses (including fees and expenses of
accountants, attorneys, printers, consultants or other agents)
incurred, paid or payable by or on behalf of the MLP to the
Underwriters or other Persons in connection with the Public Offering.
"Related Transactions" means the transactions referred to in
the third and fourth paragraphs in the Recitals to this Agreement.
"Remaining Assumed Debt" means the Assumed SYN Debt, the
Assumed Additional SYN Debt, the Assumed Managing GP Debt, the Assumed
Additional Managing GP Debt and the Assumed SC Debt.
"SC" has the meaning assigned to such term in the opening
paragraph of this Agreement.
"SC Assets" means SC's Assets.
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"SC Note" means that certain Amended and Restated Promissory
Note dated December 10, 1996 made by SC to the order of EEC in the
principal amount of $34,294,609.27, representing the remaining portion
of the indebtedness originally incurred by certain subsidiaries of EEC
in connection with the acquisition of certain assets from SYN pursuant
to the Additional Acquisition Documents, and which indebtedness was
assumed by SC as a part of the Related Transactions.
"Selling Stockholders" means Sherman C. Vogel, Stephen A.
Vogel, Jeffrey K. Vogel, Jon M. Vogel and Jeanette Vogel.
"Service Assets" means, with respect to any Transferor, that
portion of such Transferor's Assets described in Schedule 1.4.
"Service Business" has the meaning assigned to such term in
Schedule 1.4.
"Specific Conveyances" has the meaning assigned to such term
in Section 3.1.
"Subordinated Unit" has the meaning assigned to such term in
the MLP Partnership Agreement.
"SYN" has the meaning assigned to such term in the opening
paragraph of this Agreement.
"SYN Acquisition Documents" means, collectively, the
Purchase and Sale Agreement dated as of May 17, 1995 among the Selling
Stockholders, Synergy Group Incorporated, a Delaware corporation, S &
J Investments, SYN and NGC (as amended from time to time, the "SYN
Purchase Agreement") and all agreements and documents entered into in
connection with the acquisition contemplated therein, in each case as
amended from time to time.
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"SYN Assets" means SYN's Assets.
"SYN Purchase Agreement" has the meaning assigned to such
term in the definition of SYN Acquisition Documents.
"Transaction Documents" means this Agreement, the
Underwriting Agreement, the MLP Partnership Agreement, the OLP
Partnership Agreement, the Note Agreement and the Credit Agreement.
"Transaction Expenses" means the Financing Expenses, the
Public Offering Expenses and the Transfer Expenses.
"Transfer Expenses" means all out-of-pocket expenses, fees
and costs, including all sales, use and similar taxes and documentary,
filing, recording, transfer, deed or conveyance fees or taxes, in each
case, that were or are incurred or paid or proposed to be incurred or
paid in connection with the contributions, conveyances and deliveries
to be made hereunder or in connection with any of the Related
Transactions; provided, however, that Transfer Expenses do not include
any such items that are included in Financing Expenses, Public
Offering Expenses or the Over-Allotment UW Discount.
"Transferor" and "Transferors" have the meanings assigned to
such terms in the opening paragraph of this Agreement.
"Transferor Damages" has the meaning assigned to such term
in Section 6.2.
"Transferor Parties" means each Transferor and any Affiliate
of any Transferor, and any of their respective general partners,
directors, officers or employees, in their capacities as such, and,
except to the extent such Persons are OLP Parties, their successors or
assigns.
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"Underwriters" means each Person named as an underwriter in
Schedule I to the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement
dated December 11, 1996 among the MLP, the OLP, the Managing GP, SYN
and each of the Managers relating to the Public Offering.
1.2 Headings; References; Interpretation. All Article and
Section headings in this Agreement are for convenience only and shall
not be deemed to control or affect the meaning or construction of any
of the provisions hereof. The words "hereof," "herein" and
"hereunder" and words of similar import, when used in this Agreement,
shall refer to this Agreement as a whole, including all Schedules
attached hereto, and not to any particular provision of this
Agreement. All references herein to Sections and Schedules shall,
unless the context requires a different construction, be deemed to be
references to the Sections of this Agreement and the Schedules
attached hereto, and all such Schedules attached hereto are hereby
incorporated herein and made a part hereof for all purposes. All
personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders,
and the singular shall include the plural and vice versa. The use
herein of the word "including" following any general statement, term
or matter shall not be construed to limit such statement, term or
matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not
non-limiting language (such as "without limitation," "but not limited
to," or words of similar import) is used with reference thereto, but
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rather shall be deemed to refer to all other items or matters that
could reasonably fall within the broadest possible scope of such
general statement, term or matter.
2. Transactions. The transactions described in this
Section 2 are occurring on the Closing Date in the order set forth
below.
2.1 Contributions to the OLP.
(a) Effective as of the Effective Time, (i) the Managing
GP hereby grants, conveys, assigns, transfers, sets over, contributes
and delivers to, and further bargains and sells to and remises and
releases unto, the OLP all right, title and interest of the Managing
GP in and to the Managing GP Assets, together with all rights and
appurtenances thereto in any wise belonging; (ii) SYN hereby grants,
conveys, assigns, transfers, sets over, contributes and delivers to,
and further bargains and sells to and remises and releases unto, the
OLP all right, title and interest of SYN in and to the SYN Assets,
together with all rights and appurtenances thereto in any wise
belonging; and (iii) SC hereby grants, conveys, assigns, transfers,
sets over, contributes and delivers to, and further bargains and sells
to and remises and releases unto, the OLP all right, title and
interest of SC in and to the SC Assets, together with all rights and
appurtenances thereto in any wise belonging; in each case in exchange
for the consideration stated in Section 2.1(b) and Section 2.2, and
other good and valuable consideration, the sufficiency of which is
hereby acknowledged by each of the Transferors, and TO HAVE AND TO
HOLD such Assets unto the OLP, its successors and assigns, for its
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and their own use forever, subject, however, to the terms and
conditions stated in this Agreement.
(b) Effective as of the Effective Time, and simultaneously
in exchange for the conveyance, assignment, transfer and contribution
of the Assets pursuant to Section 2.1(a), and other good and valuable
consideration, the sufficiency of which is hereby acknowledged by the
OLP, the OLP hereby (i) accepts the Managing GP Assets as a
contribution to the capital of the OLP, continues the Managing GP's
.7764% GP Interest in the OLP, issues to the Managing GP an LP
Interest in the OLP and assumes the Managing GP's Assumed Liabilities
as provided in Section 4; (ii) accepts the SYN Assets as a
contribution to the capital of the OLP, issues to SYN a .2337% GP
Interest in the OLP, issues to SYN an LP Interest in the OLP and
assumes SYN's Assumed Liabilities as provided in Section 4; and (iii)
accepts the SC Assets as a contribution to the capital of the OLP,
issues to SC an LP Interest in the OLP and assumes SC's Assumed
Liabilities as provided in Section 4; with the interest of the
Managing GP, SYN and SC in the 98.9899% aggregate LP Interest in the
OLP determined as provided in the OLP Partnership Agreement.
2.2 Financings and Repayment of Certain Debt. On the
Closing Date, immediately following the transactions described in
Section 2.1 becoming effective, the OLP, using the proceeds of the
Note Offering in the approximate amount of $220,000,000, advances
made under the Credit Agreement in the approximate amount of
$12,800,000 and letters of credit issued under the Credit Agreement
(i) is repaying in full the Assumed NGC Debt, the Assumed CGI
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Acquisition Debt and the Assumed EEC Debt, in the approximate
aggregate amount of $153,405,000, and is issuing letters of credit
necessary to provide substitute collateral for any outstanding letters
of credit which are part of the Assumed Liabilities, (ii) is
distributing $76,696,502 to SYN, and (iii) is distributing $2,698,136
in the aggregate to the Managing GP and SYN, in proportion to their
relative percentage of the aggregate GP interest in the OLP.
2.3 Contributions to MLP.
(a) On the Closing Date, effective immediately following
the consummation of the transactions described in Section 2.2, (i) the
Managing GP hereby grants, conveys, assigns, transfers, sets over,
contributes and delivers to the MLP all right, title and interest of
the Managing GP in and to its LP Interest in the OLP, together with
all rights and appurtenances thereto in any wise belonging; (ii) SYN
hereby grants, conveys, assigns, transfers, sets over, contributes and
delivers to the MLP all right, title and interest of SYN in and to its
LP Interest in the OLP, together with all rights and appurtenances
thereto in any wise belonging; and (iii) SC hereby grants, conveys,
assigns, transfers, sets over, contributes and delivers to the MLP all
right, title and interest of SC in and to its LP Interest in the OLP,
together with all rights and appurtenances thereto in any wise
belonging; in each case in exchange for the consideration stated in
Section 2.3(b) and other good and valuable consideration, the
sufficiency of which is hereby acknowledged by each of the
Transferors, and TO HAVE AND TO HOLD such LP Interests unto the MLP,
its successors and assigns, for its and their own use forever,
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subject, however, to the terms and conditions stated in this
Agreement.
(b) On the Closing Date, effective simultaneously with and
in exchange for the transfer of the LP Interests pursuant to Section
2.3(a), and other good and valuable consideration, the sufficiency of
which is hereby acknowledged by the MLP, the MLP hereby (i) accepts
the LP Interest of the Managing GP in the OLP as an additional
contribution to the capital of the MLP, and issues to the Managing GP
a .7686% GP Interest in the MLP, its share (as determined in
accordance with the MLP Partnership Agreement) of 5,071,233
Subordinated Units and 7,686 Incentive Distribution Rights; (ii)
accepts the LP Interest of SYN in the OLP as an additional
contribution to the capital of the MLP, and issues to SYN a .2314% GP
Interest in the MLP, 1,526,386 Subordinated Units and 2,314 Incentive
Distribution Rights; and (iii) accepts the LP Interest of SYN in the
OLP as a contribution to the capital of the MLP and issues to SC its
share (as determined in accordance with the MLP Partnership Agreement)
of 5,071,233 Subordinated Units.
2.4 Public Offering. On the Closing Date, effective
immediately following the consummation of the transactions described
in Section 2.3, the Public Offering is closing and the MLP is issuing
9,821,000 Common Units in exchange for the proceeds of the Public
Offering (net of the Over-Allotment UW Discount and certain of the
Public Offering Expenses).
2.5 MLP Transfers to the OLP. On the Closing Date,
effective immediately following the consummation of the transactions
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described in Section 2.4, (a) the MLP is redeeming the interest of NGC
as organizational limited partner in the MLP using a portion the
proceeds of the Public Offering received from the Underwriters for
such purpose and is contributing in immediately available funds the
remaining proceeds of the Public Offering to the OLP, and (b)
effective upon the receipt of such funds the OLP hereby accepts such
funds as a contribution to capital of the OLP.
2.6 Repayment of Remaining Assumed Debt. On the Closing
Date, effective immediately following the consummation of the
transactions described in Section 2.5, (a) the OLP (i) will repay in
full the Remaining Assumed Debt, in the approximate amount of
$174,200,000, using the funds contributed to the OLP by the MLP
pursuant to Section 2.5 and (ii) will pay in full the remaining Fees
and Expenses and any other Transaction Expenses then due and payable
using any monies remaining from the funds contributed to the OLP by
the MLP pursuant to Section 2.5, and (b) with the monies the Managing
GP receives under clause (a)(i) of this Section 2.6(a) from the OLP in
payment of the Assumed SC Debt, the Managing GP will repay in full the
Excluded EEC Debt in the amount of $34,294,609.27.
2.7 Certificates. After giving effect to the transactions
contemplated by this Section 2, (a) the Managing GP shall have a GP
Interest in the OLP with a Percentage Interest of .7764% SYN shall
have a GP Interest in the OLP with a Percentage Interest of .2337%,
and the MLP shall have an LP Interest in the OLP with a Percentage
Interest of 98.9899%, and (b) (i) the Managing GP shall have a GP
Interest in the MLP with a Percentage Interest of .7686%, its portion
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(as determined in accordance with the MLP Partnership Agreement) of
5,071,233 Subordinated Units and 7,686 Incentive Distribution Rights,
(ii) SYN shall have a GP Interest in the MLP with a Percentage
Interest of .2314%, 1,526,386 Subordinated Units and 2,314 Incentive
Distribution Rights, and (iii) SC shall have its portion (as
determined in accordance with the MLP Partnership Agreement) of
5,071,233 Subordinated Units. Upon the request of any Transferor, the
MLP shall deliver to such Transferor, one or more certificates
representing the GP Interests in the MLP held by such Transferor and
any Subordinated Units and any Incentive Distribution Rights issued to
such Transferor.
3. Provisions Relating to Transfer of Assets.
3.1 Specific Conveyances. To further evidence the
conveyances, assignments, transfers and contributions herein and more
fully and effectively convey record title with respect to the real
property and certain other property included in the Assets transferred
by the Transferors, each Transferor has executed and delivered to the
OLP certain additional conveyance instruments (the "Specific
Conveyances") with respect to certain of the Assets being transferred
by it. The Specific Conveyances shall evidence and perfect the
conveyances, assignments, transfers and contributions made by this
Agreement and shall not constitute an additional conveyance,
assignment, transfer or contribution of such Assets, and each Specific
Conveyance shall be subject to the terms of this Agreement. The
Specific Conveyances are not intended to modify, and shall not modify,
any of the terms, covenants and conditions herein set forth and are
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not intended to create, and shall not create, any additional covenants
or warranties of or by any Transferor.
3.2 Nonassignability of Assets. To the extent that any
license, permit, agreement, lease, sales or purchase order, commitment
or other contract, property interest, qualification or asset described
in this Agreement as being sold, assigned, transferred or conveyed to
the OLP by any Transferor (collectively the "Commitments") or any
claim, right or benefit arising thereunder or resulting therefrom
(collectively, together with the Commitments, the "Interests"), is not
capable of being sold, assigned, transferred or conveyed without the
approval, consent or waiver of the issuer thereof or the other party
thereto, or any third Person, including a government or governmental
or regulatory authority, or if such sale, assignment, transfer or
conveyance or attempted sale, assignment, transfer or conveyance would
be invalid, or would destroy, terminate or eliminate (or permit any
other Person to destroy, terminate or eliminate) the Interests related
thereto, or would constitute a breach of a Commitment or a violation
of any Law, then any provision in this Agreement or any Specific
Conveyance to the contrary notwithstanding, this Agreement shall not
constitute a sale, assignment, transfer or conveyance thereof or an
attempted sale, assignment, transfer or conveyance thereof, but the
applicable Transferor and the OLP shall do such acts and things as may
be reasonably necessary give the OLP the full benefit in respect of
the Interests and the applicable Transferor the full benefit of the
assumption of the Assumed Liabilities with respect thereto, including
using reasonable efforts in order that any necessary third party shall
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execute such documents and do such acts and things as may be
reasonably required for such purpose (including any consent, approval
or amendment required to novate, reissue or assign the affected
Commitments); provided, however, that neither such Transferor nor the
OLP shall be obligated to pay any consideration therefor (except for
filing fees and other similar charges which shall be paid by the OLP)
to, or commence litigation against, the third party or Person from
whom such consents, approvals or waivers are requested. If the
applicable Transferor or the OLP is unable to obtain any such required
consent, approval or waiver, then until such required consent,
approval or waiver is obtained, and in the absence of any alternative
arrangement established by agreement between such Transferor and the
OLP, the applicable Transferor shall continue to be bound by such
Commitments and the OLP shall, as agent for the applicable Transferor
or as subcontractor, pay, perform and discharge fully all the
obligations of such Transferor thereunder from and after the Effective
Time and indemnify and hold harmless such Transferor and its
Affiliates and their respective general partners, directors, officers
and employees, in their capacities as such, from and against, all
losses, claims, damages, taxes, liabilities and expenses whatsoever
arising out of or in connection with the OLP's performance of or
omission to perform such Transferor's obligations thereunder and
hereunder, and the applicable Transferor shall, without further
consideration, pay and remit to the OLP (or its designee) promptly all
money, rights and other consideration received in respect of such
performance after payment of any taxes, costs or expenses due from the
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applicable Transferor (or its Affiliates) with respect to such
receipt. The applicable Transferor shall conduct itself in the
exercise of its rights under all such Commitments only as reasonably
directed by the OLP and at the OLP's expense. If and when any such
approval, consent or waiver shall be obtained or such Commitment shall
otherwise become assignable or able to be novated or such restriction
shall have been satisfied or waived or no longer apply, the assignment
of the Assets and the assumption of the Assumed Liabilities related to
such approval, consent or waiver or restriction on assignment and/or
assumption shall become effective automatically as of the Effective
Time, without further action on the part of the Transferor, the OLP or
any other Person, and without payment of further consideration.
4. Assumption of Assumed Liabilities. Effective the
Effective Time, in connection with the transfer and contribution of
the Assets to the OLP by the Transferors, the OLP hereby absolutely
and irrevocably assumes and agrees to be solely liable and responsible
for and to duly and timely pay, perform and discharge all of the
Assumed Liabilities; provided, however, that said assumption and
agreement to duly and timely pay, perform and discharge the Assumed
Liabilities shall not (a) increase the obligation of the OLP with
respect to the Assumed Liabilities beyond the obligation that the
Transferors would have had if this Agreement and the aforesaid
assumption were not in effect, (b) waive any valid defense that was
available to any Transferor with respect to the Assumed Liabilities or
(c) enlarge any rights or remedies of any third party with respect to
any of the Assumed Liabilities.
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5. Title Matters.
5.1 Encumbrances. The conveyance, assignment, transfer and
contribution of the Assets and assumption of the Assumed Liabilities
pursuant to this Agreement are made expressly subject to (a) all
recorded and unrecorded liens, encumbrances, agreements, defects,
restrictions, adverse claims and all Laws, in each case to the extent
the same are valid, enforceable and affect the Assets, including all
matters that a current survey or visual inspection of the Assets would
reflect, (b) the Assumed Liabilities and (c) all matters contained in
the Specific Conveyances. It is further agreed that the Specific
Conveyances are subject to the provisions of this Agreement, including
this Section 5.1 and Section 3.2 and Section 5.2.
5.2 Disclaimer of Warranties; Subrogation; Waiver of Bulk
Sales Laws.
(a) EACH TRANSFEROR IS CONVEYING THE ASSETS "AS IS WHERE
IS" WITHOUT REPRESENTATION OR WARRANTY, WHETHER EXPRESS, IMPLIED OR
STATUTORY (ALL OF WHICH EACH TRANSFEROR HEREBY DISCLAIMS), AS TO (i)
TITLE, (ii) FITNESS FOR ANY PARTICULAR PURPOSE, MERCHANTABILITY,
DESIGN OR QUALITY, OR (iii) ANY OTHER MATTER WHATSOEVER. THE
PROVISIONS OF THIS SECTION 5.2 HAVE BEEN AGREED TO BY EACH TRANSFEROR
AND THE OLP AFTER DUE CONSIDERATION OF THE EFFECT THEREOF AND THE
AMOUNT OF CONSIDERATION BEING EXCHANGED FOR THE CONTRIBUTIONS BEING
MADE AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY
REPRESENTATIONS OR WARRANTIES OF EACH TRANSFEROR, WHETHER EXPRESS,
IMPLIED OR STATUTORY, WITH RESPECT TO THE ASSETS THAT MAY ARISE
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PURSUANT TO ANY LAW NOW OR HEREAFTER IN EFFECT, OR OTHERWISE, EXCEPT
AS EXPRESSLY SET FORTH HEREIN.
(b) The conveyance, assignment, transfer and contribution
of the Assets made pursuant to this Agreement is made with full rights
of substitution and subrogation of the OLP, and all persons claiming
by, through and under the OLP, to the extent assignable, in and to all
covenants and warranties by the predecessors-in-title of each
Transferor (other than by any Transferor Parties), and with full
subrogation of all rights accruing under applicable statutes of
limitation and all rights of action of warranty against all former
owners of the Assets (other than the Transferor Parties and rights
constituting Excluded Assets); and excluding in each case all rights
constituting Excluded Assets.
(c) The Transferors and the OLP agree that the disclaimers
contained in this Section 5.2 are "conspicuous" disclaimers. Any
covenants implied by statute or law by the use of the words "grant,"
"convey," "bargain," "sell," "assign," "transfer," "deliver," or "set
over" or any of them or any other words used in this Agreement are
hereby expressly disclaimed, waived and negated.
(d) Each of the parties hereto hereby waives compliance
with any applicable bulk sales law or any similar law in any
applicable jurisdiction in respect of the transactions contemplated by
this Agreement.
(e) Except for the Excluded Liabilities as to such Person,
the OLP hereby forever waives any claim or right of action which it
now or in the future may ever have against any Transferor or any of
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the other Transferor Parties arising out of or in connection with any
Environmental Law with respect to the Assets or the Business, and
unconditionally releases the Transferors and the other Transferor
Parties from any and all liabilities, penalties, losses or other
damages for which any Transferor or any of the Transferor Parties may
be otherwise responsible pursuant to any Environmental Laws.
6. Indemnification.
6.1 Indemnification by the Transferor. Subject to Section
6.3, without any further responsibility or liability of, or recourse
to, any of the OLP Parties, the Managing GP shall absolutely and
irrevocably be liable and responsible for the Excluded Managing GP
Liabilities, SYN shall absolutely and irrevocably be liable and
responsible for the Excluded SYN Liabilities and SC shall absolutely
and irrevocably be liable and responsible for the Excluded SC
Liabilities. Nothing in this Agreement is intended or shall be
construed to make the OLP or any of the other OLP Parties liable for
any of any of the Excluded Liabilities.
Each Transferor shall indemnify, defend, save and hold
harmless each of the OLP Parties from and against all claims,
liabilities, obligations, losses, expenses, costs and costs of defense
(as and when incurred), including fines, charges, penalties,
allegations, demands, damages (including actual, punitive or
consequential, foreseen or unforeseen, known or unknown), settlements,
awards, judgments, court costs and reasonable attorneys' and
consultants' fees, in each case of any kind, character or nature
whatsoever, to the extent arising out of (a) the Excluded Managing GP
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Liabilities if such Transferor is the Managing GP, the Excluded SYN
Liabilities if such Transferor is SYN or the Excluded SC Liabilities
if such Transferor is SC, (b) any failure of such Transferor to comply
with any applicable bulk sales law of any jurisdiction in connection
with the transfers of such Transferor's Assets to the OLP to the
extent such failure results in the assertion of claims against the
Assets in respect of the Excluded Managing GP Liabilities if such
Transferor is the Managing GP, the Excluded SYN Liabilities if such
Transferor is SYN or the Excluded SC Liabilities if such Transferor is
SC, or (c) the breach by such Transferor of any of its obligations
under this Agreement, all of which are hereinafter collectively
referred to as the "OLP Damages".
OLP Damages with respect to which, but only to the extent
that, any proceeds are received by, or on behalf of, the OLP, the MLP
or the OLP Subsidiary or their respective successors or assigns from
any insurance policy (which are non-reimbursable by the OLP, the MLP,
the OLP Subsidiary or such successor or assign under any self
insurance coverage), shall not be the subject of indemnification under
this Agreement.
6.2 Indemnification by the OLP. Subject to Section 6.3,
effective as of the Effective Time, the OLP hereby without any further
responsibility or liability of, or recourse to, any of the Transferor
Parties, absolutely and irrevocably assumes and becomes liable and
responsible for the Assumed Liabilities. Nothing in this Agreement is
intended or shall be construed to cause any Transferor or any of the
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other Transferor Parties to become liable for any of any of the
Assumed Liabilities after the Effective Time.
The OLP shall indemnify, defend, save and hold harmless each
of the Transferor Parties from and against all claims, liabilities,
obligations, losses, expenses, costs and costs of defense (as and when
incurred), including fines, charges, penalties, allegations, demands,
damages (including actual, punitive or consequential, foreseen or
unforeseen, known or unknown), settlements, awards, judgments, court
costs and reasonable attorneys' and consultants' fees, in each case of
any kind, character or nature whatsoever, to the extent arising out of
(a) the Assumed Liabilities or (b) the breach by any of the OLP
Parties of any of their obligations under this Agreement, all of which
are hereinafter collectively referred to as the "Transferor Damages".
Transferor Damages incurred by any Transferor or its
subsidiaries or their respective successors or assigns (which are
Transferor Parties) with respect to which, but only to the extent
that, any proceeds are received by, or on behalf of, such Transferor,
subsidiary, successor or assign from any insurance policy (which are
non-reimbursable by such Transferor, subsidiary, successor or assign
under any self insurance coverage), shall not be the subject of
indemnification under this Agreement.
6.3 Specific Indemnification Issues. (a) In the event a
claim, demand, action or proceeding is brought by a third party in
which the liability as between any Transferor and the OLP is
determined in any judgment, award or decree of a court or other
governmental authority having jurisdiction to be joint or concurrent
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<PAGE> 504
or in which the entitlement to indemnification hereunder is not
readily determinable, the parties may negotiate in good faith in an
effort to agree, as between such Transferor and the OLP, on the proper
allocation of liability or entitlement to indemnification, as well as
the proper allocation of the costs of any joint defense or settlement
pursuant to Section 6.5(d), all in accordance with the provisions of,
and the principles set forth in, this Agreement. In the absence of
any such agreement or if the Transferor or the OLP elects, such
allocation of liability, entitlement to indemnification and allocation
of costs shall be subject to resolution between such Transferor and
the OLP pursuant to Section 9 of this Agreement.
(b) It is acknowledged that after the Effective Time, the
parties hereto may have negotiated business relationships, which
relationships will be described in contracts, agreements and other
documents entered into in the normal course of business. Such
contracts, agreements and other documents may include agreements by
the parties hereto or their Affiliates to supply, after the Effective
Time, materials, products or other goods, services or leases of
personal or real property. Such business relationships and such
contracts, agreements and other documents shall not be subject to the
indemnity provisions hereof, unless the parties expressly agree to the
contrary in the agreements governing such relationships.
6.4 Notice and Payment of Claims. (a) If any Person
entitled to a defense and/or indemnification under this Agreement (the
"Indemnified Party") determines that it is or may be entitled to a
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<PAGE> 505
defense or indemnification by the OLP or any Transferor, as the case
may be (the "Indemnifying Party"), under this Agreement:
(i) The Indemnified Party shall deliver promptly to the
Indemnifying Party a written notice and demand for a defense or
indemnification, specifying the basis for the claim for defense
and/or indemnification, the nature of the claim, and if known,
the amount for which the Indemnified Party reasonably believes it
is entitled to be indemnified. Nothing in this subparagraph
shall be interpreted to invalidate any claim for indemnification
by the Indemnified Party, unless, and then only to the extent
that, the failure of the Indemnified Party to deliver such notice
results in actual prejudice to the Indemnifying Party's ability
to defend such claim.
(ii) The Indemnifying Party shall have ten (10) days from
receipt of the notice requesting indemnification within which to
either: (A) assume the defense of such litigation or claim; (B)
pay the claim in immediately available funds; (C) reserve its
rights pending resolution under Section 6.5(d); or (D) object in
accordance with Section 6.4(b). This ten (10) day period may be
extended by agreement of the Indemnifying Party and the
Indemnified Party. Nothing in this subparagraph shall be
interpreted to abrogate or delay a party's obligation to provide
the other with a defense under this Agreement.
(b) The Indemnifying Party may object to the claim for
defense and/or indemnification set forth in any notice; provided,
however, that if the Indemnifying Party does not give the Indemnified
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<PAGE> 506
Party written notice setting forth its objection to such claim (or the
amount thereof) and the grounds therefor within the same ten (10) day
period (or any extended period), the Indemnifying Party shall be
deemed to have acknowledged its liability to provide a defense or to
pay the amount of such claim and, subject to Section 9, the
Indemnified Party may exercise any and all of its rights under
applicable law to collect such amount or obtain such defense. Any
objection to a claim for a defense or indemnification shall be
resolved in accordance with Section 9.
(c) To the extent provided in the last sentence of Section
6.1 or the last sentence of Section 6.2, the right to a defense or
indemnification under this Agreement applies only insofar as defense
and indemnification are not provided for by insurance (whether through
a third party or a captive insurance company). Nevertheless, the
potential availability of insurance coverage to the applicable
Transferor or the OLP shall not relieve the other party of its
obligations for defense or indemnification hereunder, or delay either
party's obligation to the other to assume a defense or pay any sums
due hereunder.
(d) Payments due to be made to any Indemnified Party under
this Section 6 shall bear interest from the date on which the
Indemnified Party pays any amount or actually suffers a loss in
respect of OLP Damages or Transferor Damages, as the case may be, to
but excluding the date of actual payment (whether before or after
judgment) at the rate per annum equal to (i) the rate per annum
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<PAGE> 507
announced from time to time by Bank of America National Trust and
Savings Association as its reference rate plus (ii) two (2) percent.
(e) Payments due to be made under this Agreement shall be
free and clear of all deductions, withholdings, set-off or
counterclaims whatsoever, except as may be required by law. If any
deductions or withholdings are required by law, the Indemnifying Party
shall be obliged to pay such sum as will, after such deduction,
withholding, set-off or counterclaim has been made, leave the
Indemnified Party with the same amount as it would have been entitled
to receive in the absence of any such requirement to make a deduction
or withholding. The parties to this Agreement may enter into
agreements or other arrangements providing for the set-off of payments
due to be made by way of indemnification to both the applicable
Transferor and the OLP.
(f) Payments due to be made under this Agreement shall be
reduced by the amount by which any taxes for which the Indemnified
Party would have been accountable or liable to be assessed are either
(i) actually reduced prior to payment falling due hereunder or (ii)
likely to be reduced subsequent to payment falling due hereunder in
the reasonable opinion of the Indemnified Party acting in good faith
in the light of the circumstances prevailing at the time of delivery
of written notice in accordance with Section 6.4(a). The
determination of the amount by which taxes are actually or likely to
be reduced shall take into account the time value of money.
6.5 Defense of Third Party Claims. (a) If the Indemnified
Party's claim for indemnification is based, under this Agreement, on a
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<PAGE> 508
claim, demand, investigation, action or proceeding, judicial or
otherwise, brought by a third party, and the Indemnifying Party does
not object under Section 6.4(b), the Indemnifying Party shall, within
the ten 10 day period (or any extended period) referred to in Section
6.4(a), assume the defense of such third-party claim at its sole cost
and expense and shall thereafter be designated as the "Case Handler."
Any such defense shall be conducted by attorneys employed by the
Indemnifying Party. The Indemnified Party may retain attorneys of its
own choosing to participate in such defense at the Indemnified Party's
sole cost and expense.
(b) If the Indemnifying Party assumes the defense of any
such third-party claim, the Indemnifying Party may settle or
compromise any such claim which requires only the payment of money by
the Indemnifying Party without the prior consent of the Indemnified
Party so long as all present and future claims relating to the
compromised claim against the Indemnified Party are irrevocably and
unconditionally released in full and may settle or compromise other
such claims only with the prior written consent of the Indemnified
Party.
(c) The Indemnifying Party shall pay to the Indemnified
Party (or to such party as is identified by the Indemnified Party) in
immediately available funds the amount for which the Indemnified Party
is entitled to be indemnified within thirty (30) days after the
settlement or compromise of such third-party claim or the judgment of
a court of competent jurisdiction (or within such earlier period as is
required by such settlement, compromise or judgment or such longer
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<PAGE> 509
period as agreed to by Indemnifying Party and the Indemnified Party).
If the Indemnifying Party does not assume the defense of any such
third-party claim, the Indemnifying Party shall be bound by the result
obtained with respect thereto by the Indemnified Party, except that
the Indemnifying Party shall have the right to contest that it is
obligated to the Indemnified Party under the terms of this Agreement,
provided the Indemnifying Party shall have raised its objection in a
timely manner under Section 6.4.
(d) In the event a claim, demand, action or proceeding is
brought by a third party in which the liability as between the OLP and
any Transferor is alleged to be joint or in which the entitlement to
indemnification hereunder is not readily determinable, such parties
shall cooperate in a joint defense. Such joint defense shall be under
the general management and supervision of the party which is expected
to bear the greater share of the liability, and which will be
considered the Case Handler, unless otherwise agreed; provided,
however, that neither party shall settle or compromise any such joint
defense matter without the consent of the other. The costs of such
joint defense, any settlement and any award or judgment (unless the
award or judgment specifies otherwise) shall be borne as the parties
may agree; or in the absence of such agreement, such costs shall be
borne by the party incurring such costs, subject to ultimate
resolution between the OLP and the applicable Transferor pursuant to
Section 9.
6.6 Cooperation and Preservation of Records. (a) The OLP
Parties and the Transferor Parties shall cooperate with one another
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<PAGE> 510
fully and in a timely manner as requested by the others in connection
with the defense of any Litigation and Claims.
(b) Such cooperation shall include, without limitation,
making available to the other party, during normal business hours and
upon reasonable notice, all books, records and information
("Litigation Records"), officers and employees (without substantial
interruption of employment) necessary or useful in connection with any
actual or threatened Litigation and Claims and any investigation,
audit, action or proceeding relating thereto.
(c) Each party shall continue in force, or, at the request
of any other party, shall issue, notices exempting from destruction
any Litigation Records which the requesting party represents may be
necessary to the defense of, or required to be produced in discovery
in connection with, any such claim, investigation, audit, action or
proceeding and shall refrain from destroying any such Litigation
Records until authorized by the requesting party. The requesting
party shall notify the other parties promptly when the Litigation
Records are no longer required to be maintained.
(d) The party requesting access to Litigation Records or
officers and employees pursuant to Section 6.6(b) or preservation of
Litigation Records pursuant to Section 6.6(c) shall bear all
reasonable out-of-pocket expenses (except reimbursement of salaries,
employee benefits and general overhead) incurred by the other parties
in connection with providing such Litigation Records or officers and
employees.
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<PAGE> 511
(e) Any party providing Litigation Records hereunder may
elect, upon a reasonable basis and within a reasonable time, to
designate all or a portion of the Litigation Records as confidential
or proprietary. If Litigation Records are so designated, each of the
parties receiving them will treat them as it would its own
confidential or proprietary information and will take all reasonable
steps to protect and safeguard the Litigation Records while in its own
custody and will attempt to shield such information from disclosure by
motions to quash, motions for a protective order, redaction or other
appropriate actions.
7. Tax Matters.
7.1 Refunds of Taxes. Upon the request of any Transferor,
the OLP shall assist such Transferor in connection with (or to the
extent necessary shall file, or cause to be filed in such form as such
Transferor may reasonably request), claims for refunds of federal,
state, local or foreign income taxes attributable to the operation of
the Business of such Transferor prior to the Effective Time. Each
Transferor shall have the sole right to prosecute any claims for such
refunds (by suit or otherwise) at such Transferor's expense and with
counsel of such Transferor's choice, and the OLP and its Affiliates
shall cooperate fully with such Transferor in connection therewith.
7.2 Notice of Tax Audits. The OLP shall promptly notify
each Transferor in writing upon the receipt by the OLP or any of its
Affiliates of a notice of any pending or threatened audit or
assessment against the OLP or any of its Affiliates with respect to
any taxes for which the OLP or any of its Affiliates is or may be
-41-
<PAGE> 512
entitled to indemnification under this Agreement. The affected
Transferor shall have the sole right, at its election, (a) to
represent the interests of the OLP and its Affiliates with respect to
any such audits or assessments, including in any administrative or
court proceeding relating thereto, and (b) employ counsel of its
choice at its expense and to control the conduct of such audit,
assessment, or proceeding, including the settlement or disposition
thereof. The OLP and its Affiliates shall cooperate fully with each
such Transferor and its counsel in the defense against or compromise
of any claim in any such audit, assessment, or proceeding.
8. Further Assurances and Power of Attorney.
8.1 Further Assurances. From time to time after the date
hereof, and without any further consideration, each party hereto shall
execute, acknowledge and deliver all such additional documents, and
will do all such other acts and things, all in accordance with
applicable Law, as may be necessary or appropriate to more fully and
effectively carry out the purposes and intent of this Agreement.
8.2 Power of Attorney. Each Transferor hereby constitutes
and appoints the OLP, its successors and assigns, its true and lawful
attorney-in-fact with full power of substitution for it and in its
name, place and stead or otherwise on behalf of such Transferor, its
successors and assigns, and for the benefit of the OLP, its successors
and assigns, to demand and receive from time to time the Assets of
such Transferor and to execute in the name of such Transferor and its
successors and assigns instruments of conveyance, instruments of
further assurance and to give receipts and releases in respect of the
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<PAGE> 513
same, and from time to time to institute and prosecute in the name of
the OLP or such Transferor for the benefit of the OLP, as may be
appropriate, any and all proceedings at law, in equity or otherwise
which the OLP, its successors and assigns may deem proper in order to
collect, assert or enforce any claims, rights or titles of any kind in
and to the Assets of such Transferor, and to defend and compromise any
and all actions, suits or proceedings in respect of any of such Assets
and to do any and all such acts and things in furtherance of this
Agreement as the OLP, its successors or assigns shall reasonably deem
advisable. Each Transferor hereby declares that the appointment
hereby made and the powers hereby granted are coupled with an interest
and are and shall be irrevocable and perpetual and shall not be
terminated by any act of such Transferor, its successors or assigns or
by operation of law.
9. Arbitration.
(a) Any dispute, controversy or claim arising out of or
relating to this Agreement or its breach, interpretation, termination
or validity, including any question whether a matter is subject to
arbitration hereunder, is referred to herein as a "Dispute."
(b) If the parties fail to settle any Dispute within thirty
(30) days after any party has given notice to the other parties hereto
of the claimed existence of a Dispute, the Dispute shall be resolved
by a confidential, binding arbitration. All such Disputes shall be
arbitrated in Chicago, Illinois pursuant to the arbitration rules and
procedures of J.A.M.S./Endispute with the arbitrator or arbitrators
selected in the manner provided in such rules, except that the "Final
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<PAGE> 514
Offer (or Baseball)" Arbitration Option shall not be used unless
agreed to in writing by the parties to the Dispute.
(c) Judgment upon any award rendered by the arbitrators may
be entered in any court having jurisdiction, and each party hereto
consents and submits to the jurisdiction of such court for purposes of
such action. The statute of limitations, estoppel, waiver, laches and
similar doctrines, which would otherwise be applicable in any action
brought by a party, shall be applicable in any arbitration proceeding,
and the commencement of an arbitration proceeding shall be deemed the
commencement of an action for those purposes. The Federal Arbitration
Act shall apply to the construction, interpretation and enforcement of
this arbitration provision. Each party shall bear its own expenses
(including the fees and expenses of legal counsel and accountants) in
connection with such arbitration and bear one-half of the arbitrators'
fees and expenses, provided that the arbitral award shall allocate
such fees and expenses of counsel, accountants, other advisors and the
arbitrators according to the relative success of the parties in the
arbitration, as determined by the arbitrators. The arbitrators shall
award an amount equal to the actual monetary damages suffered by each
party, which may include interest costs incurred by such party but the
arbitrators shall not have the authority to award punitive damages.
10. Miscellaneous.
10.1 Costs. The OLP shall be responsible for and shall pay
all Financing Expenses and Transfer Expenses and the MLP shall be
responsible for and shall pay all Public Offering Expenses and the
Over-Allotment UW Discount, in each case whether incurred prior to, as
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<PAGE> 515
of or after the Effective Time. In addition, the OLP shall be
responsible for all costs, liabilities and expenses (including court
costs and reasonable attorneys' fees) incurred in connection with the
satisfaction of the parties obligations pursuant to Section 3.2.
Notwithstanding the foregoing, the Transferors and their respective
Affiliates shall be entitled to pay any such expenses which are
required to be paid by the OLP or the MLP and be reimbursed by the OLP
or the MLP, as appropriate. If any Transferor or any of its
Affiliates have paid or advanced any Transfer Expenses, Financing
Expenses or Public Offering Expenses, then the OLP or the MLP, as
appropriate, shall reimburse such Transferor or such Affiliate
promptly upon request therefor and the MLP hereby guarantees the
payment of all amounts required to be so paid by the OLP.
10.2 Access to Records. After the Effective Time, the OLP
and its Affiliates shall permit each of the Transferors and their
respective Affiliates and agents to have full access, at any
reasonable time and from time to time, to such books, records, and
other data relating to the Assets or the Business (the "Information")
as any such Transferor or Affiliate may request. If the OLP intends
at any time to discard any Information relating to the Assets or to
the operation of the Business prior to the Effective Time, the OLP
shall (i) give the Transferors written notice of such intention at
least thirty (30) days prior to discarding such Information, and (ii)
allow the Transferors to take possession of such Information if they
so request within such thirty (30) day period.
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<PAGE> 516
10.3 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties signatory hereto
and their respective successors and assigns.
10.4 No Third Party Rights. The provisions of this
Agreement are intended to bind the parties signatory hereto and their
respective successors and assigns and are not intended to and do not
create rights in any other Person or confer upon any other Person any
benefits, rights or remedies and no other Person is or is intended to
be a third party beneficiary of any of the provisions of this
Agreement.
10.5 Counterparts. This Agreement may be executed in any
number of counterparts, all of which together shall constitute one
agreement binding on the parties hereto.
10.6 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of
Delaware without regard to conflict of law principles thereof, except,
if it is mandatory in any other jurisdiction to have the law of such
other jurisdiction govern this Agreement in order for this Agreement
to be effective with respect to a particular Asset, then the laws of
such other jurisdiction shall govern this Agreement with respect to
such Asset.
10.7 Severability. If any of the provisions of this
Agreement are held by any court of competent jurisdiction to
contravene, or to be invalid under, the laws of any political body
having jurisdiction over the subject matter hereto, such contravention
or invalidity shall not invalidate the entire Agreement. Instead,
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<PAGE> 517
this Agreement shall be construed as if it did not contain the
particular provision or provisions held to be invalid, and an
equitable adjustment shall be made and necessary provision added so as
to give effect to the intention of the parties as expressed in this
Agreement at the time of execution of this Agreement.
10.8 Deed; Bill of Sale; Assignment. To the extent required
by applicable law, this Agreement shall also constitute a "deed,"
"bill of sale" or "assignment" of the Assets.
10.9 Amendment or Modification. This Agreement may be
amended or modified from time to time only by the written agreement of
all the parties hereto and the provisions of this Agreement may be
waived only if such waiver is set forth in a writing signed by the
party sought to be bound by such waiver.
10.10 Integration. This Agreement supersedes all
previous understandings or agreements between the parties, whether
oral or written, with respect to its subject matter and this document
is an integrated agreement which contains the entire understanding of
the parties. No understanding, representation, promise or agreement,
whether oral or written, is intended to be or shall be included in or
form part of this Agreement unless it is contained in a written
amendment hereto executed by the parties hereto after the date of this
Agreement.
10.11 Nonrecourse. Notwithstanding any provision to the
contrary contained in this Agreement, no recourse in respect of the
payment or performance of the obligations of the OLP or the MLP
hereunder shall be had against any partner of the MLP or the OLP, as
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<PAGE> 518
the case may be, as a result of any such Person's status as a partner
of the MLP or the OLP, respectively, except to the extent of such
partner's interests (in its capacity as a partner of the MLP), if any,
in the MLP and the MLP's property, in the case of the MLP's
obligations, and such partner's interests (in its capacity as a
partner of the OLP), if any, in the OLP and the OLP's property, in the
case of the OLP's obligations, it being expressly understood that
liability for the payment and performance of the obligations of the
MLP and the OLP hereunder is non-recourse to any partner thereof and
any and all assets of each such partner, save and except as
hereinabove provided.
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<PAGE> 519
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.
CORNERSTONE PROPANE PARTNERS, L.P.
By: Cornerstone Propane GP, Inc.,
a California corporation,
as managing general partner
By: /s/ Daniel K. Newell
---------------------------
Daniel K. Newell
Vice President
Witnesses:
/s/ Rogene A. Thaden
-----------------------------------
/s/ Stacie Rice
-----------------------------------
CORNERSTONE PROPANE, L.P.
By: Cornerstone Propane GP, Inc.,
a California corporation,
as managing general partner
By: /s/ Daniel K. Newell
------------------------------
Daniel K. Newell
Vice President
Witnesses:
/s/ Rogene A. Thaden
-----------------------------------
/s/ Stacie Rice
-----------------------------------
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<PAGE> 520
CORNERSTONE PROPANE GP, INC.
By: /s/ Daniel K. Newell
-----------------------------
Daniel K. Newell
Vice President
Witnesses:
/s/ Debra A. Kleban
-----------------------------------
/s/ Stacie Rice
-----------------------------------
ATTEST:
/s/ Rogene A. Thaden
------------------------------------
Assistant Secretary
EMPIRE ENERGY SC CORPORATION
By: /s/ Daniel K. Newell
-----------------------------
Daniel K. Newell
President
Witnesses:
/s/ Debra A. Kleban
-----------------------------------
/s/ Stacie Rice
-----------------------------------
ATTEST:
/s/ Rogene A. Thaden
-----------------------------------
Rogene A. Thaden
Assistant Secretary
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<PAGE> 521
SYN INC.
By: /s/ Daniel K. Newell
-----------------------------
Daniel K. Newell
Vice President
Witnesses:
/s/ Debra A. Kleban
-----------------------------------
/s/ Stacie Rice
-----------------------------------
ATTEST:
/s/ Rogene A. Thaden
-----------------------------------
Rogene A. Thaden
Assistant Secretary
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<PAGE> 522
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
On this 17th day of December, 1996, before me, a Notary
Public in and for said state, personally appeared Daniel K. Newell,
who being by me duly sworn did say that he is the Vice President of
CORNERSTONE PROPANE GP, INC., a California corporation and the
managing general partner of CORNERSTONE PROPANE PARTNERS, L.P., a
Delaware limited partnership, and that the foregoing instrument was
signed on behalf of said corporation and limited partnership and
acknowledged said instrument to be the free act and deed of said
corporation and limited partnership for the purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal, the day and year last above written.
/s/ Brian D. Kluever
-----------------------------------------
Printed Name: Brian D. Kluever
--------------------------
Notary Public in and for said State
[SEAL]
My commission expires:
January 18, 2000
----------------------
<PAGE> 523
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
On this 17th day of December, 1996, before me, a Notary
Public in and for said state, personally appeared Daniel K. Newell,
who being by me duly sworn did say that he is the Vice President of
CORNERSTONE PROPANE GP, INC., a California corporation and the
managing general partner of CORNERSTONE PROPANE, L.P., a Delaware
limited partnership, and that the foregoing instrument was signed on
behalf of said corporation and limited partnership and acknowledged
said instrument to be the free act and deed of said corporation and
limited partnership for the purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal, the day and year last above written.
/s/ Brian D. Kluever
-----------------------------------------
Printed Name: Brian D. Kluever
--------------------------
Notary Public in and for said State
[SEAL]
My commission expires:
January 18, 2000
----------------------
<PAGE> 524
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
On this 17th day of December, 1996, before me, a Notary
Public in and for said state, personally appeared Daniel K. Newell and
Rogene A. Thaden, who being by me duly sworn did say that Daniel K.
Newell and Rogene A. Thaden are the Vice President and Assistant
Secretary, respectively, of CORNERSTONE PROPANE GP, INC., a California
corporation, and that the foregoing instrument was signed on behalf of
said corporation and acknowledged said instrument to be the free act
and deed of said corporation for the purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal, the day and year last above written.
/s/ Brian D. Kluever
-----------------------------------------
Printed Name: Brian D. Kluever
--------------------------
Notary Public in and for said State
[SEAL]
My commission expires:
January 18, 2000
----------------------
<PAGE> 525
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
On this 17th day of December, 1996, before me, a Notary
Public in and for said state, personally appeared Daniel K. Newell and
Rogene A. Thaden, who being by me duly sworn did say that Daniel K.
Newell and Rogene A. Thaden are the President and Secretary,
respectively, of EMPIRE ENERGY SC CORPORATION, a Delaware corporation,
and that the foregoing instrument was signed on behalf of said
corporation and acknowledged said instrument to be the free act and
deed of said corporation for the purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal, the day and year last above written.
/s/ Brian D. Kluever
-----------------------------------------
Printed Name: Brian D. Kluever
--------------------------
Notary Public in and for said State
[SEAL]
My commission expires:
January 18, 2000
----------------------
<PAGE> 526
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
On this 17th day of December, 1996, before me, a Notary
Public in and for said state, personally appeared Daniel K. Newell and
Rogene A. Thaden, who being by me duly sworn did say that Daniel K.
Newell and Rogene A. Thaden are the Vice President and Assistant
Secretary, respectively, of SYN INC., a Delaware corporation, and that
the foregoing instrument was signed on behalf of said corporation and
acknowledged said instrument to be the free act and deed of said
corporation for the purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal, the day and year last above written.
/s/ Brian D. Kluever
-----------------------------------------
Printed Name: Brian D. Kluever
--------------------------
Notary Public in and for said State
[SEAL]
My commission expires:
January 18, 2000
----------------------
<PAGE> 527
Schedule 1.1
ASSETS
"Assets" means and includes, as to any Transferor, the
following:
The interest of such Transferor in any and all of the assets
owned, leased or held by such Transferor and used or held for use in
the operation or planned operation of the Business of such Transferor
as of the Effective Time, of every kind, character and description,
whether tangible or intangible, whether real, personal or mixed,
whether accrued or contingent, and wheresoever located, including all
right, title and interest of such Transferor in and to the following
assets to the extent they are used in or relate to the Business of
such Transferor as operated and/or planned to be operated as of the
Effective Time:
(a) all liquefied petroleum gas inventory and all other
inventories and supplies of any kind (including appliance and parts
inventories);
(b) all storage tanks and containers and propane cylinders
(including tanks, containers and cylinders located at customer
locations);
(c) all office furniture, furnishings, computers, tools,
machinery and other equipment of any kind;
(d) all real property, wherever located, together with all
buildings, structures, improvements, equipment, appurtenances and
fixtures of every kind or nature located thereon;
(e) all rights in real property or personal property
arising under leases, easements or other contracts or arrangements;
(f) all motor and other vehicles, trailers, rolling stock
and related equipment, including any tanks or other equipment mounted
or attached thereon, whether owned or leased;
(g) all purchase orders, agreements with customers and
other contracts, agreements, arrangements and understandings of any
kind;
(h) all insurance coverages maintained by or for such
Transferor, and all proceeds and other rights and benefits relating to
such coverage;
(i) all rights, claims and causes of action against any
Person or property, whether known or unknown, accrued or contingent,
and whether or not reflected on the books and records as of the
Effective Time, insofar as any of the same arise out of or otherwise
<PAGE> 528
relate to the condition or use of the Assets or the operation of the
Business of such Transferor prior to the Effective Time;
(j) all rights to sell or distribute any product or
service;
(k) all tradenames, trademarks, service marks, logos, marks
and symbols of any kind, together with all goodwill associated
therewith;
(l) all know-how, trade secrets, customer lists and all
other confidential information of every kind;
(m) all customer relationships, employee relationships,
supplier relationships and other relationships of any kind;
(n) all other proprietary rights of any kind;
(o) all governmental licenses, approvals, registrations,
permits and authorizations of every kind;
(p) all bank accounts and all cash or cash equivalents
(including short term investments and marketable securities) contained
in such bank accounts;
(q) all monies, rents, revenues, accounts, accounts
receivable, refunds or rights thereto or other amounts receivable by
or owing to such Transferor;
(r) all deposits, prepayments and prepaid expenses;
(s) all stock or other securities (whether equity, debt or
otherwise) of any other Person and any partnership interest or other
interest in any other Person, including all interests in joint
ventures held by such Transferor;
(t) all goodwill and all other intangible assets; and
(u) copies of all books, records, papers and instruments,
including accounting and financial records and other documentation;
provided, however, that notwithstanding anything to the contrary
contained herein or in any of the Transaction Documents, the term
"Assets" as to any Transferor shall not include the Excluded Assets of
such Transferor and for purposes of determining the Excluded Assets of
any Transferor the words "primarily in the continuing operation of the
Business" of a Transferor or words of similar import shall mean used
in the operation or planned operation of the Business and not
otherwise used primarily in the operation or planned operation of one
or more other businesses of the Transferor.
2
<PAGE> 529
Schedule 1.2(A)
EXCLUDED MANAGING GP ASSETS
"Excluded Managing GP Assets" means and includes the
following:
(a) All refunds and rights to refunds of federal, state,
local and foreign income taxes and corporate franchise taxes relating
to any period of time prior to the Effective Time;
(b) All income tax returns and corporate franchise tax
returns of the Managing GP and its predecessors;
(c) All books and records which the Managing GP is required
to retain by law;
(d) The corporate seals, certificates of incorporation,
bylaws, minute books and stock ledger records of the Managing GP and
its predecessors;
(e) All assets, rights and properties of the Managing GP
not used or held primarily for the continuing operation of the
Business of the Managing GP;
(f) All books of account and other records, papers and
instruments of the Managing GP and its predecessors relating to the
Excluded Managing GP Liabilities or the matters described in this
Schedule;
(g) The Additional Acquisition Documents and all rights and
claims of the Managing GP, as the successor to EEC, made or which may
be made thereunder, including any recovery on account of such rights
and claims;
(h) The outstanding capital stock of SYN and SC and all
rights of the Managing GP as a stockholder of SYN and SC, including
all rights under that certain Agreement among SYN Inc. and its
Stockholders dated August 15, 1995 originally among SYN, NGC, ASG and
certain other parties, as amended;
(i) The SC Note;
(j) Insurance coverages maintained by or for the Managing
GP and all proceeds and other rights and benefits relating to such
coverage with respect to any Excluded Managing GP Liabilities;
(k) All rights of the Managing GP under that certain
Indemnification Agreement dated December 11, 1996 among the MLP, the
OLP, the Managing GP, SYN and NGC;
(l) All rights of the Managing GP under that certain Non-
Competition Agreement dated May 7, 1994 among the Managing GP, as the
<PAGE> 530
successor to EEC, ASG and certain principals of EEC and ASG, as
amended;
(m) All defined benefit plans, defined contribution plans
and health and welfare plans maintained by the Managing GP or its
predecessors existing at the Effective Time;
(n) All rights of the Managing GP under the MLP Partnership
Agreement; and
(o) All rights of the Managing GP under the OLP Partnership
Agreement.
2
<PAGE> 531
Schedule 1.2(B)
EXCLUDED SC ASSETS
"Excluded SC Assets" means and includes the following:
(a) All refunds and rights to refunds of federal, state,
local and foreign income taxes and corporate franchise taxes relating
to any period of time prior to the Effective Time;
(b) All income tax returns and corporate franchise tax
returns of SC;
(c) All books and records which SC is required to retain by
law;
(d) The corporate seal, certificate of incorporation,
bylaws, minute books and stock ledger records of SC;
(e) All assets, rights and properties of SC not used or
held primarily for the continuing operation of the Business of SC;
(f) All books of account and other records, papers and
instruments of SC relating to the Excluded SC Liabilities or the
matters described in this Schedule;
(g) Insurance coverages maintained by or for SC and all
proceeds and other rights and benefits relating to such coverage with
respect to any Excluded SC Liabilities;
(h) All defined benefit plans, defined contribution plans
and health and welfare plans maintained by SC existing at the
Effective Time;
(i) All rights of SC under the MLP Partnership Agreement;
and
(j) All rights of SC under the OLP Partnership Agreement.
<PAGE> 532
Schedule 1.2(C)
EXCLUDED SYN ASSETS
"Excluded SYN Assets" means and includes the following:
(a) All refunds and rights to refunds of federal, state,
local and foreign income taxes and corporate franchise taxes relating
to any period of time prior to the Effective Time;
(b) All income tax returns and corporate franchise tax
returns of SYN and its predecessors;
(c) All books and records which SYN is required to retain
by law;
(d) The corporate seals, certificates of incorporation,
bylaws, minute books and stock ledger records of SYN and its
predecessors;
(e) All assets, rights and properties of SYN not used or
held primarily for the continuing operation of the Business of SYN;
(f) All books of account and other records, papers and
instruments of SYN and its predecessors relating to the Excluded SYN
Liabilities or to the matters described in this Schedule;
(g) All rights and claims of SYN made under the SYN
Acquisition Documents, and all related rights and claims of SYN which
may be made under the SYN Acquisition Documents and all rights under
the SYN Acquisition Documents related to any of the foregoing,
including any recovery on account of such rights and claims, any
rights under any escrow arrangements and any rights to any amounts
held or to be paid pursuant to such escrow arrangements.
(h) All rights and claims of SYN with respect to litigation
and claims which the Selling Stockholders are required to defend
pursuant to Section 10.1 of the SYN Purchase Agreement;
(i) The Additional Acquisition Documents and all rights and
claims of SYN made or which may be made thereunder, including any
recovery on account of such rights and claims;
(j) The outstanding capital stock of Claremont Gas
Corporation and any inactive subsidiaries of SYN;
(k) All rights of SYN under the Termination Agreement dated
September 28, 1996 among ASG, NGC and SYN;
(l) All rights of SYN under that certain Termination
Agreement dated December 13, 1996 among ASG, NGC and SYN;
<PAGE> 533
(m) All rights of SYN under that certain Agreement among
SYN Inc. and its Stockholders dated August 15, 1995 originally among
SYN, NGC, ASG and certain other parties, as amended;
(n) All rights of SYN under that certain Indemnification
Agreement dated December 11, 1996 among the MLP, the OLP, the Managing
GP, SYN and NGC;
(o) All interests, if any, of SYN at the Effective Time in
any real property located in Claremont, New Hampshire or Bennington,
Vermont, and the improvements located thereon;
(p) Insurance coverages maintained by or for SYN and all
proceeds and other rights and benefits relating to such coverages with
respect to any Excluded SYN Liabilities;
(q) All defined benefit plans, defined contribution plans
and health and welfare plans maintained by SYN or its predecessors
existing at the Effective time;
(r) All rights of SYN under the MLP Partnership Agreement;
and
(s) All rights of SYN under the OLP Partnership Agreement.
2
<PAGE> 534
Schedule 1.3(A)
EXCLUDED MANAGING GP LIABILITIES
"Excluded Managing GP Liabilities" means and includes the
following:
(a) The federal, state, local and foreign income tax and
corporate franchise tax liabilities of the Managing GP (including all
federal, state and local income tax liabilities attributable to the
operation of the Business prior to the Effective Time), including any
such income tax liabilities of the Managing GP that may result from
the consummation of the transactions contemplated by this Agreement;
(b) All liabilities and obligations of the Managing GP with
respect to the Excluded Managing GP Assets or any operation or
business other than the Business of the Managing GP;
(c) All liabilities and obligations of the Managing GP, as
the successor to EEC, pursuant to the Additional Acquisition
Documents;
(d) All liabilities and obligations of the Managing GP, as
the successor to EEC, with respect to the Excluded EEC Debt;
(e) All liabilities and obligations of the Managing GP as a
stockholder of SYN under that certain Agreement among SYN Inc. and its
Stockholders dated August 15, 1995 among SYN, NGC, ASG and certain
other parties as amended;
(f) All liabilities and obligations of the Managing GP
under that certain Non-Competition Agreement dated May 7, 1994 among
the Managing GP, as the successor to EEC, ASG and certain principals
of EEC and ASG, as amended;
(g) All liabilities and obligations of the Managing GP
under all defined benefit plans, defined contribution plans and health
and welfare plans maintained by the Managing GP or its predecessors at
the Effective Time;
(h) All liabilities and obligations of the Managing GP
under the MLP Partnership Agreement; and
(i) All liabilities and obligations of the Managing GP
under the OLP Partnership Agreement.
<PAGE> 535
Schedule 1.3(B)
EXCLUDED SC LIABILITIES
"Excluded SC Liabilities" means and includes the following:
(a) The federal, state, local and foreign income tax and
corporate franchise tax liabilities of SC (including all federal,
state and local income tax liabilities attributable to the operation
of the Business prior to the Effective Time), including any such
income tax liabilities of SC that may result from the consummation of
the transactions contemplated by this Agreement;
(b) All liabilities and obligations of SC with respect to
the Excluded SC Assets or any operation or business other than the
Business of SC;
(c) All liabilities and obligations of SC under all defined
benefit plans, defined contribution plans and health and welfare plans
maintained by SC at the Effective Time;
(d) All liabilities and obligations of SC under the MLP
Partnership Agreement; and
(e) All liabilities and obligations of SC under the OLP
Partnership Agreement.
<PAGE> 536
Schedule 1.3(C)
EXCLUDED SYN LIABILITIES
"Excluded SYN Liabilities" means and includes the following:
(a) The federal, state, local and foreign income tax and
corporate franchise tax liabilities of SYN (including all federal,
state and local income tax liabilities attributable to the operation
of the Business prior to the Effective Time), including any such
income tax liabilities of SYN that may result from the consummation of
the transactions contemplated by this Agreement;
(b) All liabilities and obligations of SYN with respect to
the Excluded SYN Assets or any operation or business other than the
Business of SYN;
(c) All liabilities and obligations of SYN pursuant to the
SYN Acquisition Documents (other than SYN's liabilities with respect
to the promissory note made by SYN to the order of The Bank of New
York in the principal amount of $1,250,000 in connection therewith);
(d) All liabilities and obligations of SYN pursuant to the
Additional Acquisition Documents (other than liabilities and
obligations reflected in the financial statements for which
adjustments were made in determining the consideration given to SYN
pursuant to this Agreement), but only when and to the extent of any
recovery (net of costs of collection allocated thereto) that is
received by SYN pursuant to the SYN Acquisition Documents on account
of the particular liability or obligation;
(e) The liabilities and obligations of SYN which form the
basis of SYN's existing claims against the Selling Stockholders
pursuant to the SYN Acquisition Documents (other than liabilities and
obligations reflected in the financial statements for which
adjustments were made in determining the consideration given to SYN
pursuant to this Agreement), but only when and to the extent of any
recovery (net of costs of collection allocated thereto) that is
received by SYN pursuant to the SYN Acquisition Documents on account
of the particular liability or obligation;
(f) All liabilities and obligations of SYN with respect to
litigation and claims which the Selling Stockholders are required to
defend pursuant to Section 10.1 of the SYN Purchase Agreement;
(g) All liabilities and obligations of SYN under the
Termination Agreement dated September 28, 1996 among ASG, NGC and SYN;
(h) All liabilities and obligations of SYN under that
certain Agreement among SYN Inc. and its Stockholders dated August 15,
1995 among SYN, NGC, ASG and certain other parties, as amended;
<PAGE> 537
(i) All liabilities and obligations of SYN under that
certain Termination Agreement dated December 13, 1996 among ASG, NGC
and SYN and all liabilities and obligations under the Management
Agreement referred to therein which are not terminated thereby;
(j) All liabilities and obligations of SYN under all
defined benefit plans, defined contribution plans and health and
welfare plans maintained by SYN or its predecessors at the Effective
Time;
(k) All liabilities and obligations of SYN under the MLP
Partnership Agreement; and
(l) All liabilities and obligations of SYN under the OLP
Partnership Agreement.
2
<PAGE> 538
Schedule 1.4
SERVICE ASSETS
"Service Assets" means, with respect to any Transferor, all
Assets, if any, used solely in the conduct of the appliance sales
business, parts and fittings sales business and service labor business
(collectively, the "Service Business") of such Transferor in the
States of Alabama, Arkansas, California, Missouri, New York or
Tennessee in relation to its propane business in such States,
including:
(a) copies of all books, records, papers and instruments of
such Transferor of whatever nature and wherever located that relate to
the Service Business, including accounting and financial records and
other documentation related to the Service Business;
(b) all inventory relating to the Service Business,
including appliances and parts and fittings;
(c) all purchase orders, agreements with customers and
other contracts, agreements, arrangements and understandings of any
kind relating to the Service Business; and
(d) every right to purchase, sell or distribute any
appliances, parts or fittings or to provide service relating to the
Service Businesses.
EXHIBIT 10.4
CORNERSTONE PROPANE PARTNERS, L.P.
RESTRICTED UNIT PLAN
1. PURPOSE. The purpose of the Plan is to
strengthen Cornerstone Propane Partners, L.P., a Delaware limited
partnership (the "PARTNERSHIP"), by providing an incentive to certain
Senior Executives and Directors (as hereinafter defined) of
Cornerstone GP, Inc.; a Delaware corporation, the Managing General
Partner of the Partnership, and thereby encouraging them to devote
their abilities and industry to the success of the Partnership's
business enterprise in such a manner as to maximize the Partnership's
value. It is intended that this purpose be achieved by extending to
certain Senior Executives and Directors an added long-term incentive
for continued service to the Partnership and the Managing General
Partner, and for high levels of performance and unusual efforts which
enhance the Partnership's value through the grant of rights to receive
Common Units (as hereinafter defined) of the Partnership.
2. DEFINITIONS. For purposes of this Plan, unless
otherwise specified in an agreement, capitalized terms shall have the
following meanings:
2.1 "ACT" means the Securities Act of 1933, as
amended.
2.2 "AGREEMENT" means the written agreement between
the Partnership and a Grantee evidencing the grant of an Award and
setting forth the terms and conditions thereof.
2.3 "AWARD" means a grant of Time Vesting Rights
and/or Performance Vesting Rights.
2.4 "BOARD" means the Board of Directors of the
Managing General Partner.
2.5 "CAUSE" means, unless otherwise provided in an
Agreement, (i) in the case of a Senior Executive, (a) the Grantee's
gross negligence or willful misconduct in the performance of his or
her duties, (b) the Grantee's willful or grossly negligent failure to
perform his or her duties, (c) the breach by the Grantee of any
written covenants to the Partnership or the Managing General Partner,
(d) dishonest, fraudulent or unlawful behavior by the Grantee (whether
or not in conjunction with employment) or the Grantee being subject to
a judgment, order or decree (by consent or otherwise) by any
governmental or regulatory authority that restricts his or her
ability to engage in the business conducted by the Partnership or the
Managing General Partner or any of their affiliates or (e) willful or
reckless breach by the Grantee of any policy adopted by the
Partnership or the Managing General Partner concerning conflicts of
interest, standards of business conduct or fair employment practices
<PAGE> 540
or procedures with respect to compliance with applicable laws, and
(ii) in the case of a Director, the commission of an act of fraud or
intentional misrepresentation or an act of embezzlement,
misappropriation or conversion of assets of the Partnership, the
Managing General Partner or any of their affiliates.
2.6 "CHANGE IN CAPITALIZATION" means any increase or
reduction in the number of Common Units, or any change (including, but
not limited to, a change in value) in the Common Units, or exchange of
Common Units for a different number or kind of units or other
securities of the Partnership, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spinoff,
split-up, issuance of warrants or rights or other convertible
securities, unit distribution, unit split or reverse unit split, cash
dividend, property dividend, combination or exchange of units,
repurchase of units, change in corporate structure or otherwise.
2.7 "CHANGE OF CONTROL" means the occurrence during
the term of the Plan of:
(i) an acquisition (other than directly from the
Partnership) of Common Units, Subordinated
Units or voting equity interests of the
Partnership ("VOTING SECURITIES") by any
"PERSON" (as the term person 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
Partnership, the Managing General Partner 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 Partnership'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 that 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
Managing General Partner 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 Partnership, or
Northwestern Public Service Company (for
purposes of this definition, a "SUBSIDIARY"),
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<PAGE> 541
(ii) the Partnership or Subsidiaries, or
(iii) any Person in connection with a "NON-
CONTROL TRANSACTION" (as hereinafter
defined);
(ii) approval by the partners of the Partnership
of (A) a merger, consolidation or
reorganization involving the Partnership,
unless (x) the holders of Common and
Subordinated 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 Common and
Subordinated Units of the entity resulting
from such merger, consolidation or
reorganization (the "SURVIVING ENTITY") in
substantially the same proportion as their
ownership of the Common and Subordinated
Units immediately before such merger,
consolidation or reorganization, and (y) no
person or entity (other than the Partnership,
any Subsidiary, any employee benefit plan (or
any trust forming a part thereof) maintained
by the Partnership, the Managing General
Partner, 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 Common
and Subordinated 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 Partnership; or (c) the
sale or other disposition of 50% or more of
the net assets of the Partnership to any
Person (other than a transfer to a
Subsidiary). A transaction described in
clauses (x) or (y) of subsection (A) hereof
shall be referred to as a "NON-CONTROL
TRANSACTION;" or
(iii) A Qualified Owner or Qualified Owners (as
defined below) not having, in the aggregate,
Beneficial Ownership of at least 50.1% of the
capital stock of the General Partner (by vote
and value). For purposes of this Section
2.7, "QUALIFIED OWNER" shall mean
Northwestern Public Service Company, or any
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<PAGE> 542
corporation of which Northwestern Public
Service Company owns (directly or indirectly)
a majority of the combined voting power of
its outstanding voting securities.
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
Partnership which, by reducing the number of
Voting Securities outstanding, increases the
proportional number of Common or Subordinated
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
Voting Securities by the Partnership, and
after such acquisition by the Partnership,
the Subject Person becomes the Beneficial
Owner of any additional Voting Securities
that increases the percentage of the then
outstanding Voting Securities Beneficially
Owned by the Subject Person, then a Change of
Control shall occur.
2.8 "CODE" means the Internal Revenue Code of 1986, as
amended.
2.9 "COMMITTEE" means a compensation 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.
2.10 "COMMON UNITS" means the common units representing
limited partnership interests of the Partnership.
2.11 "DIRECTOR" means any member of the Board who at no
time prior to or during his or her service on the Board was or is an
employee or officer of the Partnership or the Managing General
Partner.
2.12 "DISABILITY" shall have the same meaning that such
term (or similar term) has under the long-term disability plan in
which the Senior Executive or Director is covered.
2.13 "EFFECTIVE DATE" shall mean the date upon which
the Public Offering is consummated.
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<PAGE> 543
2.14 "EXCHANGE ACT" means the Securities Exchange Act
of 1934, as amended.
2.15 "FAIR MARKET VALUE" per Common Unit on any date
means the average of the high and low sale prices of the Common Units
on such date on the principal national securities exchange on which
such Common Units are listed or admitted to trading, or if such Common
Units are not so listed or admitted to trading, the arithmetic mean of
the per Common Unit closing bid price and per Common Unit closing
asked price on such date as quoted on the National Association of
Securities Dealers Automated Quotation System or such other market on
which such prices are regularly quoted, or, if there have been no
published bid or asked quotations with respect to Common Units on such
date, the Fair Market Value shall be the value established by the
Board in good faith.
2.16 "GOOD REASON" means, unless otherwise provided in
an Agreement, in the case of a Senior Executive, (a) any failure by
the Partnership or the Managing General Partner to comply in any
material respect with the compensation provisions of a written
employment agreement between the Senior Executive and the Partnership
or the Managing General Partner, or (b) the assignment to the Senior
Executive, without his or her consent, of duties and responsibilities
materially inconsistent with his or her level of responsibility as an
executive officer.
2.17 "GRANTEE" means a person to whom an Award has been
granted under the Plan.
2.18 "INITIAL RIGHTS" means the Initial Executive
Rights granted to Senior Executives pursuant to Section 4.1 on or
effective as of the Effective Date, to receive a number of Common
Units with an aggregate value of $7.0 million, and the Initial
Director Rights granted to Directors pursuant to Section 9.1.1, on or
effective as of the Effective Date, to receive a number of Common
Units with an aggregate value of $.9 million (based on the initial
public offering price of the Common Units in the Public Offering,
regardless of the Fair Market Value of a Common Unit at any other
time).
2.19 "MANAGING GENERAL PARTNER" means Cornerstone
Propane GP, Inc., a Delaware Corporation, and its successors.
2.20 "PARTNERSHIP" means Cornerstone Propane Partners,
L.P., a Delaware limited partnership, and its successors.
2.21 "PARTNERSHIP AGREEMENT" means the Partnership
Agreement of the Partnership.
2.22 "PERFORMANCE VESTING RIGHTS" means Rights which
vest in accordance with the provisions of Sections 6-9.
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<PAGE> 544
2.23 "PLAN" means the Cornerstone Propane Partners,
L.P. 1996 Restricted Unit Plan.
2.24 "PUBLIC OFFERING" means the initial public
offering of the Common Units pursuant to an effective registration
statement under the Act.
2.25 "RESERVED RIGHTS" means the rights granted
subsequent to the Effective Date to receive a number of Common Units
with an aggregate value of $4.6 million (based on the initial public
offering price of the Common Units in the Public Offering, regardless
of the Fair Market Value of a Common Unit at any other time) plus such
number of Common Units as are subject to previously granted but
forfeited Initial Rights or Reserved Rights.
2.26 "RIGHTS" means either the Initial Rights or the
Reserved Rights.
2.27 "SENIOR EXECUTIVES" means the President and Chief
Executive Officer, the Executive Vice President and Chief Operating
Officer, the Executive Vice President and Chief Financial Officer and
the Senior Vice President of the Managing General Partner, and such
other officers or managers of the Managing General Partner or the
Partnership as the Committee may designate.
2.28 "SUBORDINATED UNITS" means the subordinated units
representing limited partnership interests of the Partnership.
2.29 "TIME VESTING RIGHTS" means Rights which vest in
accordance with the provisions of Section 5 and Sections 7-9.
3. ADMINISTRATION.
3.1 The Plan shall be administered by the Committee,
which shall hold meetings at such times as may be necessary for the
proper administration of the Plan. The Committee shall keep minutes
of its meetings. A quorum shall consist of not less than two members
of the Committee and a majority of a quorum may authorize any action.
Any decision or determination reduced to writing and signed by a
majority of all of the members of the Committee shall be as fully
effective as if made by a majority vote at a meeting duly called and
held. No member of the Committee shall be liable for any action,
failure to act, determination or interpretation made in good faith
with respect to the Plan or any transaction hereunder, except for
liability arising from his or her own willful misfeasance, gross
negligence or reckless disregard of his or her duties. The
Partnership hereby agrees to indemnify each member of the Committee
for all costs and expenses and, to the extent permitted by applicable
law, any liability incurred in connection with defending against,
responding to, negotiating for the settlement of or otherwise dealing
with, any claim, cause of action or dispute of any kind arising in
- 6 -
<PAGE> 545
connection with any actions in administering the Plan or in
authorizing or denying authorization for any transaction hereunder.
3.2 Subject to the express terms and conditions set
forth herein, the Committee shall have the power, consistent with Rule
16b-3 under the Exchange Act, from time to time to:
(i) select those Senior Executives to whom Awards
shall be granted and to determine the terms
and conditions (which need not be identical)
of each such Award;
(ii) make any amendment or modification to any
Agreement consistent with the terms of the
Plan;
(iii) construe and interpret the Plan and the
Awards and establish, amend and revoke rules
and regulations for the administration of the
Plan, including, but not limited to,
correcting any defect or supplying any
omission, or reconciling any inconsistency in
the Plan or in any Agreement or between the
Plan and any Agreement, in the manner and to
the extent it shall deem necessary or
advisable so that the Plan complies with
applicable law, including Rule 16b-3 under
the Exchange Act to the extent applicable,
and otherwise to make the Plan fully
effective. All decisions and determinations
by the Committee in the exercise of this
power shall be final, binding and conclusive
upon the Partnership, the Managing General
Partner, their affiliates, the Grantees and
all other persons having any interest
therein;
(iv) exercise its discretion with respect to the
powers and rights granted to it as set
forth in the Plan; and
(v) generally, exercise such powers and perform
such acts as it deems necessary or advisable
to promote the best interests of the
Partnership and the Managing General Partner
with respect to the Plan.
3.3 The maximum number of Common Units that may be
made the subject of Awards granted under the Plan is such number of
Common Units as shall have an aggregate value of $12.5 million (based
on the initial public offering price of the Common Units in the Public
Offering, regardless of the Fair Market Value of a Common Unit at any
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<PAGE> 546
other time). The Partnership shall reserve for purposes of the Plan,
out of its authorized but unissued units, such number of Common Units.
4. INITIAL EXECUTIVE RIGHTS
4.1 INITIAL EXECUTIVE RIGHTS. As of the Effective
Date, the Initial Executive Rights to receive a number of Common Units
are granted with a value (based on the initial public offering price
of the Common Units in the Public Offering) as follows:
(i) $2.8 million to the President and Chief
Executive Officer of the Managing General
Partner;
(ii) $1.6 million to the Executive Vice President
and Chief Operating Officer of the Managing
General Partner;
(iii) $1.6 million to the Executive Vice President
and Chief Financial Officer of the Managing
General Partner; and
(iv) $1.0 million to the Senior Vice President of
the Managing General Partner.
Such Rights shall be granted, and the Common Units underlying such
Rights shall be issued, in consideration of the performance of
services and for no other consideration. Twenty-five (25%) percent of
such Initial Executive Rights shall be Time Vesting Rights and shall
vest in accordance with Section 5.2 and Section 8. Seventy-five (75%)
percent of such Initial Executive Rights shall be Performance Vesting
Rights and shall vest in accordance with Section 6.2 and Section 8.
5. TIME VESTING RIGHTS.
5.1 FORFEITURE. A Grantee's rights with respect to
the Time Vesting Rights granted as of the Effective Date shall remain
forfeitable at all times prior to the date on which the restrictions
thereon shall have lapsed in accordance with Section 5.2 or Section 8.
5.2 VESTING SCHEDULE. Subject to Section 8, the Time
Vesting Rights granted as of the Effective Date shall vest and become
non-forfeitable, and the restrictions thereon shall lapse:
(i) on the third anniversary of the
Effective Date with respect to one-
third of the Common Units subject
thereto;
(ii) on the fifth anniversary of the
Effective Date with respect to an
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<PAGE> 547
additional one-third of the Common Units
subject thereto; and
(iii) on the seventh anniversary of the
Effective Date with respect to the
balance of the Common Units subject
thereto.
6. PERFORMANCE VESTING RIGHTS
6.1 FORFEITURE. A Grantee's rights with respect to
the Performance Vesting Rights granted as of the Effective Date shall
remain forfeitable at all times prior to the date on which the
restrictions thereon shall have lapsed in accordance with Section 6.2
or Section 8.
6.2 VESTING SCHEDULE. Subject to Section 8, the
Performance Vesting Rights granted as of the Effective Date shall vest
automatically upon the conversion of the Subordinated Units to Common
Units in accordance with Section 5.8 of the Partnership Agreement as
in effect on the Effective Date. The percentage of Performance
Vesting Rights granted as of the Effective Date that vest upon any
such a conversion shall equal a fraction the numerator of which is the
number of Subordinated Units converted pursuant to such conversion and
the denominator of which is the number of Subordinated Units issued
and outstanding immediately after the underwriters' overallotment
option in the Public Offering is exercised or expires.
7. RESERVED RIGHTS.
7.1 RESERVED RIGHTS. At any time after the Effective
Date, the Committee may, in its sole discretion, grant Reserved
Rights to Senior Executives on such terms and conditions consistent
with the Plan as the Committee shall determine.
8. OTHER PROVISIONS APPLICABLE TO VESTING.
8.1 CHANGE OF CONTROL. Notwithstanding anything in
the Plan to the contrary, upon a Change of Control, all restrictions
on all granted Time Vesting Rights and Performance Vesting Rights
shall lapse immediately and all such Rights shall become fully vested
and non-forfeitable.
8.2 FORFEITURE. Subject to Sections 8.1, 8.3 and 8.5,
unless otherwise provided in an Agreement, any and all Initial Rights
and Reserved Rights in respect of which the restrictions have not
previously lapsed shall be forfeited (and automatically transferred to
and reacquired by the Partnership at no cost to the Partnership, and
neither the Grantee nor any successors, heirs, assigns, or personal
representatives of such Grantee, shall thereafter have any further
right or interest therein) upon the occurrence of any of the following
events: (a) termination of the Grantee's employment with the Managing
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<PAGE> 548
General Partner (in the case of a Senior Executive), or service on the
Board (in the case of a Director) for any reason; PROVIDED; HOWEVER,
that in the event that a Grantee's employment by the Managing General
Partner or service on the Board was terminated by the Managing General
Partner without Cause or, in the case of a Senior Executive, by the
Grantee for Good Reason, in either case, within six months prior to a
Change of Control, no forfeiture of Rights shall be treated as
occurring by reason of such termination and the Rights shall vest in
accordance with Section 8.1, or (b) any attempted or completed
transfer, sale, pledge, hypothecation, or assignment (a "TRANSFER") by
the Grantee of his Initial Rights or Reserved Rights without the prior
written approval of the Committee. Except with respect to Awards
granted pursuant to Section 9 and except as provided by Section 7.1,
the Committee may provide in an Agreement or otherwise for such terms
and conditions relating to the vesting of Awards as it shall determine
in its sole discretion (which may be, except as provided by Section
7.1, more or less restrictive than those described in Sections 5 , 6.2
or 8.2 and which need not be the same for each Award). The Committee
may accelerate the vesting of Initial Rights or Reserved Rights (other
than those granted pursuant to Section 9) at any time for any reason
with the consent of the Board.
8.3 DEATH OR DISABILITY. Notwithstanding the
provisions of Section 8.2, unless otherwise provided in an Agreement,
if a Grantee's employment with the Managing General Partner (in the
case of a Senior Executive), or a Grantee's service on the Board (in
the case of a Director) terminates as a result of death or Disability,
all restrictions on Time Vesting Rights and Performance Vesting Rights
held by such Grantee shall lapse immediately and all such Rights shall
become fully vested and nonforfeitable.
8.4 RECYCLING OF FORFEITED SHARES. Any Common Units
subject to the Initial Rights or Reserved Rights (including Rights
granted pursuant to Section 9) forfeited hereunder may be the subject
of an Award pursuant to the Plan.
8.5 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. In
the event a Grantee's employment by the Managing General Partner or
service on the Board is terminated by the Managing General Partner
without Cause or, in the case of a Senior Executive by the Senior
Executive for Good Reason, the restrictions on the Time Vesting Rights
awarded to the Grantee shall lapse.
9. DIRECTOR RIGHTS.
9.1 GRANTS. As of the Effective Date each Director
is hereby granted Director Rights in accordance with the provisions of
this Section 9 and subject to the other provisions of the Plan. Such
Director Rights are granted, and the Common Units underlying such
Rights shall be issued, in consideration of the performance of
services and for no other consideration.
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<PAGE> 549
(i) INITIAL DIRECTOR RIGHTS. As of the Effective
Date, the Committee shall grant to each Director
who is serving on the Board on such Date Initial
Director Rights to receive a number of Common
Units with a value (based on the initial public
offering price of the Common Units in the Public
Offering) equal to $.4 million to the Chairman of
the Board, $.3 million to the Vice Chairman of
the Board and $.2 million to the remaining
Director. Twenty-five (25%) percent of such
Initial Director Rights shall be Time Vesting
Rights and shall vest in accordance with Section
5.2 and Section 8. Seventy-five (75%) percent of
such Initial Director Rights shall be Performance
Vesting Rights and shall vest in accordance with
Section 6.2 and Section 8.
(ii) RESERVED DIRECTOR RIGHTS. Each Director appointed
or elected to the Board after the Effective Date
shall be granted Director Rights on the effective
date of his or her appointment or election as
follows:
(a) TIME VESTING RIGHTS. Each such Director
shall be granted Time Vesting Rights to receive a
number of Common Units with a Fair Market Value
(determined on the grant date) equal to $50,000.
Such Time Vesting Rights shall contain the same
terms and conditions as those Time Vesting Rights
granted pursuant to Section (i), except that such
Rights shall vest three, five and seven years from
their grant date.
(b) PERFORMANCE VESTING RIGHTS. Each such
Director shall be granted Performance Vesting
Rights to receive a number of Common Units with a
Fair Market Value (determined on the grant date)
equal to $150,000. Such Performance Vesting
Rights shall contain the same terms and conditions
as those Performance Vesting Rights granted
pursuant to Section (i), except that the
percentage of such Performance Vesting Rights that
vest upon any conversion of Subordinated Units
shall equal a fraction the numerator of which is
the number of Subordinated Units converted
pursuant to such conversion and the denominator of
which is the total number of Subordinated Units
outstanding on the grant date.
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<PAGE> 550
10. DELIVERY OF UNITS, ETC.
10.1 DELIVERY OF COMMON UNITS. Subject to Section 17,
upon the vesting of Initial Rights or Reserved Rights, the Partnership
shall deliver to the Grantee a certificate representing such number of
Common Units as are subject to such Rights, to the extent of such
vesting, free of all restrictions hereunder.
10.2 TRANSFERABILITY.
(i) Subject to Section 16, the Common Units acquired
upon vesting of Initial Rights or Reserved Rights
shall not be Transferred by a Grantee except under
the following circumstances:
(a) with the express written consent of the
Board;
(b) by will or pursuant to the laws of descent
and distribution; or
(c) the Common Units are actively traded on a
national securities exchange or qualify for
trading on NASDAQ-NMS or NASDAQ.
(ii) Any attempted Transfer not in accordance with this
Section 10.2 shall be null and void and of no
force and effect.
10.3 RIGHTS OF GRANTEES. Until such time as Initial
Rights or Reserved Rights have vested and become non-forfeitable, and
certificates representing Common Units in respect thereof have been
issued pursuant to Section 10.1, a Grantee shall not be entitled to
exercise any rights of a unit holder with respect thereto, including
the right to vote such units and the right to receive allocations or
distributions thereon.
11. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(i) In the event of a Change in Capitalization, the
Committee shall conclusively determine the
appropriate adjustments, if any, to (i) the
maximum number and class of Common Units or other
units or securities with respect to which Awards
may be granted under the Plan, (ii) the number of
Common Units or other units or securities that are
subject to outstanding Awards granted under the
Plan, and the purchase price therefor, if
applicable.
(ii) If, by reason of Change in Capitalization, a
Grantee of an Award shall be entitled to new,
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<PAGE> 551
additional or different rights to acquire units or
other securities, such new, additional or
different rights or securities shall thereupon be
subject to all of the conditions, restrictions and
performance criteria that were applicable to the
units subject to the Award prior to such Change in
Capitalization.
12. TERMINATION AND AMENDMENT OF THE PLAN. The Plan shall
terminate on the day preceding the twentieth anniversary of the
Effective Date and no Award may be granted thereafter. The Board may
sooner terminate the Plan and the Board may at any time and from time
to time amend, terminate, modify or suspend the Plan or any Agreement;
PROVIDED, HOWEVER, that no such amendment, modification, suspension or
termination shall impair or adversely affect any Awards theretofore
granted under the Plan, except with the consent of the Grantee, nor
shall any amendment, modification, suspension or termination deprive
any Grantee of any Common Units which he or she may have acquired
through or as a result of the Plan.
13. DEATH OF GRANTEE. In the event of the death of a
Grantee, a certificate representing such number of Common Units,
applicable to Initial Rights or Reserved Rights held by the Grantee,
for which certificates have not previously been delivered to the
Grantee pursuant to Section 10.1, shall, subject to Section 17, be
delivered by the Partnership, free of all restrictions hereunder, to
the beneficiary or beneficiaries last designated by the Grantee by
written instrument delivered to the Committee prior to his or her
death. If no such designated beneficiaries survive the Grantee, then
such certificate shall be delivered by the Partnership to the
Grantee's spouse, or if none is living, to his or her then living
lawful descendants, PER STIRPES, or if none are living, to the duly
appointed personal representative of the estate of the Grantee, or if
no such personal representative is validly appointed within 6 months
of the date of death of the Grantee, to the Grantee's heirs under the
laws of the state in which the Grantee is domiciled at the date of his
or her death.
14. NON-EXCLUSIVITY OF THE PLAN. The adoption of the Plan
by the Board shall not be construed as amending, modifying or
rescinding any previously approved incentive arrangement, or as
creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without
limitation, the granting of options to acquire the Common Units, and
such arrangements may be either applicable generally or only in
specific cases.
15. LIMITATION OF LIABILITY. As illustrative of the
limitations of liability of the Partnership and the Managing General
Partner, but not intended to be exhaustive thereof, nothing in the
Plan shall be construed to:
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<PAGE> 552
(i) give any person any right to be granted an
Award other than at the sole discretion of
the Committee;
(ii) give any person any rights whatsoever with
respect to the Common Units except as
specifically provided in the Plan or an
Agreement;
(iii) limit in any way the right of the Partnership
or the Managing General Partner to terminate
the employment of any person at any time; or
(iv) be evidence of any agreement or
understanding, express or implied, that the
Partnership or the Managing General Partner
will employ any person at any particular rate
of compensation or for any particular period
of time.
16. REGULATIONS AND OTHER APPROVALS; GOVERNING LAW.
16.1 Except as to matters of federal law, the Plan and
the rights of all persons claiming hereunder shall be construed and
determined in accordance with the laws of the State of Delaware
without giving effect to conflicts of law principles.
16.2 Notwithstanding any other provision of the Plan,
the obligation of the Partnership to deliver the Initial Rights, the
Reserved Rights or the Common Units in respect thereof under the Plan
shall, in each case, be subject to all applicable laws, rules and
regulations, including all applicable federal and state securities
laws, and the obtaining of all such approvals by governmental agencies
as may be deemed necessary or appropriate by the Committee.
16.3
(a) Except as provided in Section 14 hereof, the Board
may make such changes to the Plan or an Agreement as may be necessary
or appropriate to comply with the rules and regulations of any
government authority.
(b) Each Award is subject to the requirement that,
if at any time the Committee determines, in its sole and absolute
discretion, that the listing, registration or qualification of the
Common Units issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent
or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an
Award or the issuance of the Common Units, no Awards shall be granted
and no Common Units shall be issued, in whole or in part, unless such
listing, registration, qualification, consent or approval has been
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<PAGE> 553
effected or obtained free of any conditions not acceptable to the
Committee.
(c) Notwithstanding anything contained in the Plan
or any Agreement to the contrary, in the event that the disposition of
the Common Units or any other securities acquired pursuant to the Plan
is not covered by a then current registration statement under the Act,
or is not otherwise exempt from such registration, such Common Units
shall be restricted against transfer to the extent required by the Act
and Rule 144 or other regulations thereunder. The Committee may
require any person or entity receiving Common Units pursuant to an
Award granted under the Plan, as a condition precedent to receipt of
such Common Units, to represent and warrant to the Partnership in
writing that the Common Units acquired by such person or entity are
acquired without a view to any distribution thereof and will not be
sold or transferred other than pursuant to an effective registration
thereof under the Act, or pursuant to an exemption applicable under
the Act or the rules and regulations promulgated thereunder. The
certificates evidencing any of such Common Units shall be
appropriately legended to reflect their status as restricted
securities as aforesaid.
17. WITHHOLDING OF TAXES. At such times as a Grantee or
his or her beneficiary recognizes taxable income in connection with
the Rights to acquire Common Units granted hereunder (a "TAXABLE
EVENT"), the Grantee or his or her beneficiary shall pay to the
Partnership an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be withheld by
the Partnership in connection with the Taxable Event (the "WITHHOLDING
TAXES") prior to the issuance of such units. The Partnership shall
have the right to deduct from any payment of cash to a Grantee or his
or her beneficiary an amount equal to the Withholding Taxes in
satisfaction of the obligation to pay Withholding Taxes. In
satisfaction of the obligation to pay Withholding Taxes to the
Partnership, the Grantee or his or her beneficiary may make a written
election (the "TAX ELECTION"), which may be accepted or rejected in
the discretion of the Committee, to have withheld a portion of the
Common Units then issuable to him or her having an aggregate Fair
Market Value, on the date preceding the date of such issuance, equal
to the Withholding Taxes.
18. INTERPRETATION. The Plan is intended to comply with
Rule 16b-3 promulgated under the Exchange Act, and the Committee shall
interpret and administer the provisions of the Plan or any Agreement
in a manner consistent therewith. Any provisions inconsistent with
such Rule shall be amended to be consistent with such Rule, and shall
not affect the validity of the Plan.
19. SUCCESSORS. In the event of a sale of substantially
all of the assets of the Partnership or the Managing General Partner,
or a merger, consolidation or share or unit exchange involving the
Partnership or the Managing General Partner, all obligations of the
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<PAGE> 554
Partnership and/or the Managing General Partner shall be binding on
the successor to the transaction.
20. NOTICES. Notices given pursuant to the Plan shall be
in writing and shall be deemed received when personally delivered, or
five days after mailed by United States registered or certified mail,
return receipt requested, postage prepaid.
Notice to the Partnership shall be directed to:
Cornerstone Propane Partners, L.P.
432 Westridge Drive
Watsonville, CA 95076
Attention: Ronald J. Goedde
Notices with respect to the Managing General Partner
shall be directed to:
Cornerstone Propane GP, Inc.
432 Westridge Drive
Watsonville, CA 95076
Attention: Ronald J. Goedde
21. EFFECTIVE DATE. The effective date of the Plan shall
be the Effective Date.
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EXHIBIT 10.5
FORM OF AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into
by and between ____________________________, an individual
("Executive"), and Cornerstone Propane GP, Inc., a California
corporation ("Cornerstone").
RECITALS:
A. The business purpose of Cornerstone is to serve as the
managing general partner of Cornerstone Propane Partners, L.P., a
Delaware limited partnership, and Cornerstone Propane, L.P., a
Delaware limited partnership (collectively the "Partnerships").
B. Executive will provide management services to
Cornerstone and the Partnerships.
AGREEMENT:
1. Employment by Cornerstone and Duration.
a. Full Time and Best Efforts. Subject to the terms set
forth herein, Cornerstone agrees to employ Executive to provide
management services for Cornerstone and the Partnerships as
_______________, and Executive hereby accepts such employment.
During the duration of his employment with Cornerstone, Executive
will devote his best efforts and substantially all of his
business time and attention to the performance of his duties
hereunder, except for vacation periods as set forth herein and
reasonable absences due to injury or illness as permitted by
Cornerstone's general policies.
<PAGE> 556
b. Duties. Executive shall serve as
_________________________ for Cornerstone and the Partnerships
and shall perform such duties as are customarily associated with
his current title, consistent with the Bylaws of Cornerstone and
as required by Cornerstone's Board of Directors (the "Board").
c. Duration. This Agreement shall be effective on December
16, 1996, and end on the third anniversary of such date, subject
to the provisions for termination set forth herein.
d. Locations of Performance. Executive shall be domiciled
in the vicinity of Watsonville, California. The parties
acknowledge, however, that the Executive will be required to
undertake reasonable travel to the Partnerships' market areas in
connection with the performance of his duties hereunder.
2. Compensation and Benefits.
a. Salary. Executive shall receive for services to be
rendered hereunder an annual base salary of $ ,payable on
a twice-monthly basis, subject to increase at the sole discretion
of the Board.
b. Bonus. Executive shall receive such discretionary
bonuses, if any, as the Board, in its sole discretion and from
time to time, may deem appropriate.
c. Acquisition Management Fees. Commencing January 1,
1997, the Executive will be paid an Acquisition Management Fee of
$ per month for months.
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<PAGE> 557
d. Annual Operating Performance Incentive Plan. Executive
shall be eligible to participate in Cornerstone's Annual
Operating Performance Incentive Plan.
e. New Acquisitions Incentive Plan. Executive shall be
eligible to participate in Cornerstone's New Acquisitions
Incentive Plan.
f. Participation in Benefit Plans. During the duration of
employment hereunder, Executive shall be entitled to participate
in the plans and programs established by Cornerstone to the
extent that he is eligible under the general provisions thereof.
Cornerstone may, in its sole discretion and from time to time,
establish additional senior management benefit programs as it
deems appropriate.
g. Life Insurance. Cornerstone shall maintain term life
insurance in the amount of $____________ on the life of Executive
payable to such beneficiary or beneficiaries as Executive may
designate from time to time.
h. Vacation. Executive shall be entitled to an annual
vacation per year, in no event to exceed four (4) weeks per year.
The days selected for Executive's vacation must be mutually
agreeable to Cornerstone and Executive.
i. Withholding. All payments and benefits under this
Section 2 for which withholding is required under applicable law
will be made subject to the required withholding.
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<PAGE> 558
3. Reasonable Business Expenses and Support.
Executive shall be reimbursed for documented and reasonable
business expenses in connection with the performance of his
duties hereunder. Executive shall be furnished reasonable office
space at 432 Westridge Drive, Watsonville, California or
successor location in Watsonville, California, or other location
as mutually agreed by Executive and Cornerstone ("Primary
Office"), as well as support assistance and facilities.
4. Termination of Employment.
The date on which Executive's employment by Cornerstone
ceases, under any of the following circumstances, shall be
defined herein as the "Termination Date".
a. Termination Without Cause.
i. Termination Payment. Upon notice to Executive,
the Board may terminate Executive's employment with Cornerstone
at will at any time for any reason and without "cause", as
defined below. In the event Executive's employment is terminated
by Cornerstone without cause, Executive shall receive payment for
all accrued salary and vacation time through the termination
date, and Cornerstone shall pay Executive as severance an amount
that is equal to the compensation of Executive under this
Agreement for the remaining balance of the duration of employment
under this Agreement.
ii. Fundamental Changes. In the event that
Cornerstone makes a fundamental change as defined herein below,
Executive may at any time thereafter terminate his employment;
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<PAGE> 559
provided, however that Executive shall provide Cornerstone ten
(10) days notice prior to any such termination, and Cornerstone
shall have a reasonable period of time not to exceed thirty (30)
days to cure such fundamental change. "Fundamental change" shall
be defined as any of the following:
(a) Diminution in the Executive's duties,
authority, responsibility and/or compensation without performance
or market justification;
(b) Cornerstone moves Executive's primary
office more than fifty (50) miles from Watsonville, California;
(c) NGC or an affiliate sells the
Partnerships or the Partnerships' assets or a portion of any of
the foregoing after the effective date of this Agreement such
that the total EBITDA of the Partnerships falls below 70% of the
EBITDA of the Partnerships on the effective date of this
Agreement.
(d) any one or more of the following:
(i) any person (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended), other than as a trustee or other
fiduciary holding securities under an employee benefit plan
of Northwestern Public Service Company (the "Parent"), is or
becomes the "beneficial owner" (as defined in Rule 13d-3
under said Act), directly or indirectly, of securities of
the Parent representing 10% or more of the total voting
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<PAGE> 560
power represented by the Parent's then outstanding voting
securities, or
(ii) during any period of two
consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Parent and
any new directors whose election by the Board of Directors
or nomination for election by the Parent's stockholders was
approved by a vote of at least two-thirds (2/3) of the
directors still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a majority of the Board of Directors of the
Parent, or
(iii) the stockholders of the Parent
approve a merger or consolidation of the Parent with any
other corporation, other than a merger or consolidation
which would result in the voting securities of the Parent
outstanding immediately prior to such a merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) at least 90% of the total voting power
represented by the voting securities of the Parent or such
surviving entity outstanding immediately after such merger
or consolidation, or
(iv) the stockholders of the Parent
approve a plan of complete liquidation of the Parent, an
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<PAGE> 561
agreement for the sale or disposition of the Parent (in one
transaction or a series of transactions) of all or
substantially all of the Parent's assets, or a plan of
reorganization pursuant to which (in one transaction or a
series of transactions) all or substantially all of the
Parent's assets shall be transferred to a person (as that
term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) not wholly owned by the
Parent, or
(v) the Parent shall no longer be the
beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of at least 80%
of the outstanding shares of each class of equity securities
of Cornerstone, provided that a public offering of
securities after which the Parent, directly or through one
or more subsidiaries, is the controlling entity shall not
trigger this Section 4(a)(ii)(d)(v), or
(vi) the Parent shall, by issuing a
proxy, power or attorney, or similar authorization or
entering into a contract or other arrangement of any kind,
shall no longer effectively control Cornerstone.
* * *
A termination by Executive in the event of a
fundamental change shall be treated as a Cornerstone termination
without cause, and Executive shall be entitled to the same
severance payments as provided in paragraph 4(a)(i), provided
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<PAGE> 562
Executive terminates his employment within 120 days after he
receives notice of such fundamental change.
b. Termination for Cause.
i. Termination Payment of Accrued Salary and
Vacation. The Board may terminate Executive's employment with
Cornerstone at any time for "cause" as defined below,
immediately upon notice to Executive of the circumstances leading
to such termination for cause. In the event that Executive's
employment is terminated for cause, Executive shall receive
payment for all accrued salary and vacation time through the
Termination Date, which in this event shall be the date upon
which notice of termination is given. Executive shall also
receive any compensation as provided in paragraphs 2(c), (d), (e)
and (f). Cornerstone shall have no further obligation to pay
severance of any kind nor to make any payment in lieu of notice.
ii. Definition of Cause. "Cause" means the occurrence
or existence of any of the following with respect to Executive,
as determined by a majority of the Directors of the Board: (a)
any act of dishonesty, misappropriation, embezzlement,
intentional fraud or similar conduct involving Cornerstone or
the Partnerships; (b) the conviction or the plea of nolo
contendere or the equivalent in respect to a felony involving
moral turpitude; (c) any intentional damage of a material nature
to any property of Cornerstone or the Partnerships; or (d)
conduct by Executive which demonstrates gross unfitness to serve
in his capacity as employee of Cornerstone.
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<PAGE> 563
c. Termination Upon Disability. Cornerstone may
terminate Executive's employment in the event Executive suffers a
disability that renders Executive unable to perform the essential
functions of his position, even with reasonable accommodation,
for nine (9) months within any twelve (12) month period.
Commencing on the Termination Date, which in this event shall be
the date upon which notice of termination is given, Cornerstone
shall pay Executive an amount equivalent to 100% of Executive's
then annual base salary, subject to standard withholdings for tax
and social security purposes, payable over twelve (12) months in
monthly pro rata payments commencing as of the Termination Date.
Executive shall also receive any compensation as provided in
paragraphs 2(c), (d), (e) and (f).
d. Benefits Upon Termination. All benefits provided under
paragraph 2(g) hereof shall be extended, to the extent permitted
by Cornerstone's insurance policies and benefit plans, for one
(1) year after Executive's Termination Date, except (a) as
required by law (e.g., COBRA health insurance continuation
election), or (b) in the event of a termination described in
paragraph 4(b) if Cornerstone does not decide to require the
noncompetition agreement as described in section 6.
e. Termination Upon Death. If Executive dies prior to the
expiration of the duration of employment under this Agreement,
Cornerstone shall continue coverage of Executive's dependents
(if any) under all benefit plans or programs of the type listed
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above in paragraph 2(g) herein for a period of twelve (12)
months.
5. Proprietary Information Obligations. During the duration of
employment under this Agreement, Executive will have access to
and become acquainted with Cornerstone's and the Partnerships'
confidential and proprietary information, including but not
limited to information or plans regarding customer relationships,
personnel, sales, marketing, and financial operations and
methods, trade secrets, formulas, devices, secret inventions,
processes, and other compilations of information, records, and
specifications (collectively, except to the extent it was already
known from other sources, or is or becomes general knowledge, in
each case without known violation of any confidentiality
obligation, "Proprietary Information"). Executive shall not
disclose any of the Proprietary Information directly or
indirectly, or use it in any way, either during the duration of
this Agreement or at any time thereafter, except as required in
the course of his employment with Cornerstone or as authorized
in writing by Cornerstone. All files, records, documents,
computer-recorded information, drawings specifications, equipment
and similar items relating to the business of Cornerstone and/or
the Partnerships, whether prepared by Executive or otherwise
coming into his possession, shall remain the exclusive property
of Cornerstone and/or of the Partnerships, respectively, and
shall not be removed under any circumstances whatsoever without
the prior written consent of Cornerstone, except when (and only
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for the period) necessary to carry out Executive's duties
hereunder, and if removed shall be immediately returned to
Cornerstone upon any termination of his employment and no copies
thereof shall be kept by Executive; provided, however, that
Executive shall be entitled to retain documents that were
personally owned or acquired.
6. Covenant Not to Compete.
Cornerstone and the Partnerships are presently engaged in
the retail business of selling and distributing propane to end-
user customers in bobtail delivery vehicles with capacities below
5,000 gallons (the "Business"). The term "Business" does not
include the sale, distribution, or transport of natural gas
liquids, including without limitation propane(collectively
"NGL's") in transport loads of 5,000 gallons or more, whether for
end use or resale, or the rendition of any services to persons or
entities engaged in the business of selling or distributing
NGL's, or the trading, selling, hedging, processing or otherwise
dealing with NGL's or other petroleum products (or contracts for
any of the foregoing) for any purpose.
The Executive agrees that for a twelve (12) month period
from the end of his employment with Cornerstone, he will not
carry on the "Business" with fifty (50) miles of any of the
foregoing existing locations of Cornerstone or the Partnerships.
For purposes of this Agreement, Executive will be deemed to be
"carrying on" the Business if he does so directly or if he is the
owner or an officer or an employee of, a consultant to or a
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stockholder or holder of another equity interest in, any person
or entity engaged in the business, provided however, that
Executive may own, directly or indirectly, solely as an
investment, securities of any person traded on a national
exchange or listed on the NASDAQ National Market so long as he
does not, directly or indirectly, own 5% or more of the fully
diluted interest in such person.
7. Noninterference. While employed by Cornerstone, and during
the time any noncompetition covenant as described under Section 6
is in effect, Executive agrees not to interfere with the business
of Cornerstone by directly or indirectly soliciting, attempting
to solicit, inducing, or otherwise causing any employee of
Cornerstone to terminate his or her employment in order to
become an employee, consultant or independent contractor to or
for any other employer.
8. Arbitration of Disputes.
a. Scope. Any disputes of any kind regarding this
Agreement, including, but not limited to, its termination or any
events occurring during the employment relationship, shall be
subject to final and binding arbitration, to the extent permitted
by law, pursuant to the Employment Dispute Resolution Rules and
Regulations of the American Arbitration Association. Such
disputes shall include, but are not limited to, claims for breach
of contract (express or implied), tort claims, claims for
discrimination, and claims for violation of any federal or state
law or regulation.
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b. Request. Any request for arbitration must be made in
writing within 365 calendar days of the occurrence giving rise to
the dispute.
c. Applicable Law. The arbitrator shall apply the
substantive law (and the law of remedies, if applicable) of
Delaware, or federal law, or both, as applicable to the claim or
claims asserted.
d. Final and Binding. The arbitration shall be final and
binding upon all of the parties and shall be enforceable to the
extent permitted by law.
9. Miscellaneous.
a. Notices. Any notices provided hereunder must be in
writing and shall be deemed effective upon the earlier of
personal delivery (including personal delivery by fax) or the
third day after mailing by first-class mail to the recipient at
the address indicated below:
To Cornerstone:
Cornerstone Propane GP, Inc.
432 Westridge Drive
Watsonville, California 95076
Attention: Ronald J. Goedde
To Executive:
____________________
____________________
____________________
Voice: ____________
Fax: ______________
or to such other address or to the attention of such other person
as the recipient party shall have specified by prior written
notice to the sending party.
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b. Severability. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction,
such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement
will be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable provisions had never
been contained herein.
c. Entire Agreement. This document constitutes the final,
complete, and exclusive embodiment of the entire agreement and
understanding between the parties related to the subject matter
hereof and supersedes and preempts any prior or contemporaneous
understandings, agreements, or representations by or between the
parties, written or oral.
d. Counterparts. This Agreement may be executed on
separate counterparts, any one of which need not contain
signatures of more than one party, but all of which taken
together will constitute one and the same agreement.
e. Successors and Assigns. This Agreement is intended to
bind and inure to the benefit of and be enforceable by Executive
and Cornerstone, and their respective successors and assigns,
except that Executive may not assign any of his duties hereunder
and he may not assign any of his rights under without the written
consent of Cornerstone, which shall not be withheld unreasonably.
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f. Attorneys' Fees. If any legal proceeding is necessary
to enforce or interpret the terms of this Agreement, or to
recover damages for breach hereof, the prevailing party shall be
entitled to reasonable attorneys' fees, as well as costs and
disbursements, in addition to any other relief to which he or it
may be entitled.
g. Amendments. No amendments or other modifications to
this Agreement may be made except by a writing signed by both
parties. Nothing in this Agreement, express or implied, is
intended to confer upon any third person any rights or remedies
under or by reason of this Agreement. No amendment or waiver of
this Agreement requires the consent of any individual,
partnership, corporation or other entity not a party to this
Agreement.
h. Choice of Law. All questions concerning the
construction, validity and interpretation of this Agreement will
be governed by the internal law, and not the law of conflicts, of
the State of Delaware.
__________________________________
Executive
Cornerstone Propane GP, Inc.
By:______________________________
Ronald J. Goedde
Executive Vice President
and Chief Financial Officer
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