UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
Commission file number 1-10473
PRIDE COMPANIES, L.P.
(Name of registrant)
Delaware 75-2313597
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1209 North Fourth Street, Abilene, Texas 79601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(915) 677-5444
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Name of Each
Title of Each Class: Exchange on Which Registered:
------------------- ----------------------------
Common Units NASDAQ OTC Bulletin Board
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Number of Common Units outstanding as of March 27, 2000:4,950,000
The aggregate market value of the 4,694,000 Common Units
held by non-affiliates of the Partnership as of March 27, 2000
was approximately $587,000, which was computed using the
closing sales price of the Common Units on March 27, 2000.
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SIGNATURES
Pride Companies, L.P., pursuant to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, has
duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PRIDE COMPANIES, L.P.
(Registrant)
By: Pride Refining, Inc.
as Managing General Partner
By: /s/Brad Stephens
Chief Executive Officer, Treasurer, and Director
DATED: March 30, 2000
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Brad Stephens
and D. Wayne Malone and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities, to sign any or all amendments in connection
herewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or either of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report and power of attorney has been signed below
by the following persons on behalf of the Partnership and in the
capacities and on the date indicated.
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PRIDE REFINING, INC.
Signature Title Date
_________ _____ ____
/s/E. Peter Corcoran Chairman and Director March 30, 2000
/s/Brad Stephens Chief Executive Officer, March 30, 2000
Treasurer, and Director
/s/D. Wayne Malone President, Chief Operating March 30, 2000
Officer, and Director
/s/Douglas Y. Bech Director March 30, 2000
/s/Clark Johnson Director March 30, 2000
/s/Robert Rice Director March 30, 2000
/s/Craig Sincock Director March 30, 2000
/s/Dave Caddell Vice President and March 30, 2000
General Counsel
/s/George Percival Chief Financial Officer March 30, 2000
(Principal Financial Officer
and Accounting Officer)
/
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INDEX TO EXHIBITS TO REPORT ON FORM 10-K
Exhibit Number
(Reference to
Item 601 of
Regulation S-K) Description
_______________ ___________
3.1 Certificate of Limited Partnership of the Partnership
(incorporated by reference to Exhibit 3.1 of the
Partnership's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990 (Commission File No. 1-10473)).
3.2 Second Amended and Restated Agreement of Limited Partnership
of the Partnership.
3.3 Third Amended and Restated Agreement of Limited Partnership of
the Partnership.
4.1 Deposit Agreement among the Partnership and the Depository
(incorporated by reference to Exhibit 4.1 of the Partnership's
Annual Report on Form 10-K for the fiscal year ended December
31, 1990 (Commission File No. 1-10473)).
4.2 Transfer Application (included as Exhibit A to the Deposit
Agreement, which is incorporated by reference to Exhibit 4.2
of the Partnership's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990 (Commission File No. 1-10473)).
4.4 Form of Depositary Receipt for Old Common Units of Pride
Companies, L.P. (included as Exhibit B to the Deposit Agreement,
which is incorporated by reference to Exhibit 4.1 of the
Partnership's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990 (Commission File No. 1-10473)).
4.5 Form of Depositary Receipt for Common Units of Pride Companies,
L.P. (incorporated by reference to Exhibit 4.5 of the
Partnership's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 (Commission File No. 1-10473)).
10.1 Pipeline Lease Agreement by and between the Partnership
and Pride SGP, Inc. (incorporated by reference to Exhibit
10.2 of the Partnership's Annual Report on Form 10-K for
the fiscal year ended December 31, 1990 (Commission File
No. 1-10473)).
10.2 Amendment 1 to Pipeline Lease Agreement by and between the
Partnership and Pride SGP, Inc. (incorporated by reference to
Exhibit 10.3 of the Partnership's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992 (Commission File No.
1-10473)).
10.3 Registration Rights Agreement dated March 30, 1990, by and
between the Partnership and Pride SGP, Inc. (incorporated by
reference to Exhibit 10.5 of the Partnership's Registration
Statement on Form S-1 (Commission File No. 33-42115), as
amended).
10.5 Promissory Note between Pride SGP, Inc. ("Lender") and the
Partnership ("Borrower") dated March 26, 1993 (incorporated by
reference to Exhibit 10.14 of the Partnership's Annual Report on
Form 10K for the fiscal year ended December 31, 1992 (Commission
File No. 1-10473)).
10.6 Amendment 2 to Pipeline Lease Agreement by and between the
Partnership and Pride SGP, Inc. (incorporated by reference to
Exhibit 10.16 of the Partnership's Annual Report on Form 10K for
the fiscal year ended December 31, 1992 (Commission File No. 1-
10473)).
10.7 Partnership Agreement for Desulfur Partnership, dated as of
August 10, 1993, which is 99% owned by the Partnership and 1%
owned by Pride Marketing of Texas, a wholly-owned subsidiary of
the Partnership (incorporated by reference to Exhibit 28.1 of
the Partnership's Quarterly Report on Form 10Q for the quarter
ended September 30, 1993 (Commission File No. 1-10473)).
10.8 Bill of Sale, dated as of August 10, 1993, for the sale of the
desulfurization unit by the Partnership to the Desulfur
Partnership, a subsidiary of the Partnership (incorporated by
reference to Exhibit 28.2 of the Partnership's Quarterly Report
on Form 10Q for the quarter ended September 30, 1993 (Commission
File No. 1-10473)).
10.9 Promissory Note, dated as of August 10, 1993, related to the
sale of the desulfurization unit by the Partnership ("Payee") to
the Desulfur Partnership ("Maker") (incorporated by reference to
Exhibit 28.3 of the Partnership's Quarterly Report on Form 10Q
for the quarter ended September 30, 1993 (Commission File No. 1-
10473)).
10.10 Master Lease Agreement, dated as of August 10, 1993, between the
Partnership (Lessee) and the Desulfur Partnership (a subsidiary
partnership) (Lessor), for the lease of the desulfurization unit
(incorporated by reference to Exhibit 28.4 of the Partnership's
Quarterly Report on Form 10Q for the quarter ended September 30,
1993 (Commission File No. 1-10473)).
10.11 Letter, dated November 10, 1993, from Ernst & Young (the
Partnership's independent auditors) to the Partnership
concerning the change to the LIFO method of accounting for
inventories (incorporated by reference to Exhibit 28.7 of the
Partnership's Quarterly Report on Form 10Q for the quarter
ended September 30, 1993 (Commission File No. 1-10473)).
10.12 Stock Purchase Agreement, dated as of September 1, 1994, between
Pride Refining, Inc. (Purchaser), Diamond Shamrock Refining and
Marketing Company (Seller), and D-S Pipeline Corporation
(Acquired Company) (incorporated by reference to Exhibit 10.15
of the Partnership's Annual Report on Form 10K for the fiscal
year ended December 31, 1994 (Commission File No. 1-10473)).
10.13 First Amendment to Stock Purchase Agreement between Pride
Refining, Inc. (Purchaser), Diamond Shamrock Refining and
Marketing Company (Seller), and D-S Pipeline Corporation
(Acquired Company) (incorporated by reference to Exhibit 10.16
of the Partnership's Annual Report on Form 10K for the fiscal
year ended December 31, 1994 (Commission File No. 1-10473)).
10.14 Promissory Note dated as of January 9, 1995, between United Bank
& Trust ("Lender") and the Partnership ("Borrower") related to
the renovation and refinancing of the Partnership's
administrative offices (incorporated by reference to Exhibit
28.1 of the Partnership's Quarterly Report on Form 10Q for the
quarter ended June 30, 1995 (Commission File No. 1-10473)).
10.15 Promissory Note between Pride SGP, Inc. ("Lender") and the
Partnership ("Borrower") dated September 7, 1995 (incorporated
by reference to Exhibit 28.2 of the Partnership's Quarterly
Report on Form 10Q for the quarter ended September 30, 1995
(Commission File No. 1-10473)).
10.16 Note Agreement dated August 13, 1996, among the Partnership
("Borrower"), Pride Refining, Inc., Pride SGP, Inc., Desulfur
Partnership, Pride Marketing of Texas (Cedar Wind), Inc., and
Pride Borger, Inc. (collectively Guarantors), and NationsBank of
Texas, N.A. as Agent, and NationsBank of Texas, N.A. and Bank
One Texas, N.A. as Lenders (incorporated by reference to
Exhibit 28.2 of the Partnership's Quarterly Report on Form
10Q for the quarter ended June 30, 1996 (Commission File
No. 1-10473)).
10.17 Unit Appreciation Rights Plan (incorporated by reference to
Exhibit 10.26 of the Partnership's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996 (Commission File
No. 1-10473)).
10.18 Sixth Restated and Amended Credit Agreement, dated as of
December 30, 1997, by and among Pride Companies, L.P.
("Borrower"), Pride Refining, Inc., Pride SGP, Inc., Desulfur
Partnership, Pride Marketing of Texas (Cedar Wind), Inc., and
Pride Borger, Inc., as Guarantors, and Varde Partners, Inc. as
Lender (incorporated by reference to Exhibit 10.29 of the
Partnership's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997 (Commission File No. 1-10473)).
10.19 Seventh Amendment to the Fifth Restated and Amended Credit
Agreement, dated as of December 30, 1997, by and among Pride
Companies, L.P. ("Borrower"), Pride Refining, Inc., Pride SGP,
Inc., Desulfur Partnership, Pride Marketing of Texas (Cedar
Wind), Inc., and Pride Borger, Inc., as Guarantors, and Varde
Partners, Inc. as Lender (incorporated by reference to Exhibit
10.30 of the Partnership's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 (Commission File No. 1-
10473)).
10.20 Restructuring and Override Agreement, dated as of December 30,
1997, by and among Varde Partners, Inc., Pride Companies, L.P.,
Pride Refining, Inc., and Pride SGP, Inc. (Commission File No.
1-10473).
10.21 Certificates of Designation - Series B and Series C Cumulative
Convertible Preferred Units of Pride Companies, L.P., pursuant
to the Second Amended and Restated Agreement of Limited
Partners, effective as of December 30, 1997 (Commission File
No. 1-10473).
10.22 Revolving Credit and Term Loan Agreement, dated as of December
30, 1997, among Pride Companies, L.P., Pride SGP, Inc., Pride
Refining, Inc., Desulfur Partnership, Pride Borger, Inc. and
Pride Marketing of Texas (Cedar Wind), Inc., BankBoston, N.A.,
as an Agent and as a Lender, Lehman Commercial Paper Inc., as a
Lender and as Documentation Agent (Commission File No. 1-10473).
10.23 Guarantee and Security Agreement, dated as of December 30, 1997,
among Pride Companies, L.P., Pride SGP, Inc., Pride Refining,
Inc., Desulfur Partnership, Pride Marketing of Texas (Cedar
Wind), Inc., Pride Borger, Inc. and BankBoston, N.A., as Agent.
(Commission File No. 1-10473).
10.24 Intercreditor and Agency Agreement, dated as of December 30,
1997, among BankBoston, N.A., as Agent and Collateral Agent,
Varde Partners, Inc., as Term Lender, and acknowledged and
consented to by Pride Companies, L.P., as Company, and Pride
SGP, Inc., Pride Refining, Inc., Pride Borger, Inc., Desulfur
Partnership, and Pride Marketing of Texas (Cedar Wind), Inc., as
Guarantors (Commission File No. 1-10473).
10.25 Pride SGP Subordination Agreement, dated December 30, 1997,
among Pride Companies, L.P., Pride Refining, Inc., Pride
Borger, Inc., Desulfur Partnership, Pride Marketing of Texas
(Cedar Wind), Inc., as the Obligors, Pride SGP, Inc., and
BankBoston, N.A., as Agent (Commission File No. 1-10473).
10.26 Varde Subordination Agreement, dated as of December 30, 1997,
among Pride Companies, L.P., Pride SGP, Inc., Pride Refining,
Inc., Pride Borger, Inc., Desulfur Partnership, Pride Marketing
of Texas (Cedar Wind), Inc., as Obligors, Varde Partners, Inc.,
and BankBoston, N.A., as Agent (Commission File No. 1-10473).
10.27 Equity Conversion Agreement, dated December 31, 1997, between
Pride SGP, Inc., Pride Companies, L.P., and Varde Partners, Inc.
(Commission File No. 1-10473).
10.28 Amendment No. 3 to Pipeline Lease Agreement, effective as of
December 31, 1997, between Pride SGP, Inc. and Pride Companies,
L.P.(Commission File No. 1-10473).
10.29 First Amendment to Sixth Restated and Amended Credit Agreement
dated as of April 15, 1998, by and among Pride Companies, L.P.
("Borrower"), Pride Refining, Inc., Pride SGP, Inc., Desulfur
Partnership, Pride Marketing of Texas (Cedar Wind), Inc., and
Pride Borger, Inc. (collectively Guarantors) and Varde Partners,
Inc. as Lender (incorporated by reference to Exhibit 28.1 of the
Partnership's Quarterly Report on Form 10Q for the quarter ended
June 30, 1998 (Commission File No. 1-10473)).
10.30 Amendment No. 1 to the Revolving Credit and Term Loan Agreement,
dated as of April 15, 1998, among Pride Companies, L.P., Pride
SGP, Inc., Pride Refining, Inc., Desulfur Partnership, Pride
Borger, Inc., Pride Marketing of Texas (Cedar Wind), Inc., and
BankBoston, N.A., as an Agent and as a Lender, Lehman Brothers
Commercial Paper, Inc. as a Lender and as a Documentation Agent
(incorporated by reference to Exhibit 28.2 on Form 10Q for the
quarter ended June 30, 1998 (Commission File No. 1-10473)).
10.31 Waiver dated as of October 29, 1998 to the First Amendment to
Sixth Restated and Amended Credit Agreement among Pride
Companies, L.P. as borrower, Pride Refining, Inc., Pride SGP,
Inc., Desulfur Partnership, Pride Marketing of Texas (Cedar
Wind), Inc. and Pride Borger, Inc., as guarantors, and Varde
Partners, Inc., as lender (incorporated by reference to Exhibit
28.1 of the Partnership's Quarterly Report on Form 10Q for the
quarter ended September 30, 1998 (Commission File No. 1-10473)).
10.32 Waiver dated as of August 1, 1998 to the Revolving Credit and
Term Loan Agreement dated December 30, 1997, as amended, among
Pride Companies, L.P., as borrower, Pride SGP, Inc., Pride
Refining, Inc., Desulfur Partnership, Pride Borger, Inc. and
Pride Marketing of Texas (Cedar Wind), Inc., BankBoston, N.A.,
as Agent, Lehman Commercial Paper, Inc., as Documentation Agent,
and BankBoston, N.A., Lehman Commercial Paper Inc. and Union
Bank of California, N.A. (incorporated by reference to Exhibit
28.2 of the Partnership's Quarterly Report on Form 10Q for the
quarter ended September 30, 1998 (Commission File No. 1-10473)).
10.33 Second Amendment to the Sixth Restated and Amended Credit
Agreement dated as of November 20, 1998 by and among Pride
Companies, L.P. ("Borrower"), Pride Refining, Inc., Pride SGP,
Inc., Desulfur Partnership, Pride Marketing of Texas (Cedar
Wind), Inc., and Pride Borger, Inc. (collectively Guarantors)
and Varde Partners, Inc. as Lender (incorporated by reference to
Exhibit 10.33 of the Partnership's Annual Report on Form 10K for
the year ended December 31, 1998 (Commission File No. 1-10473)).
10.34 Third Amendment to the Sixth Restated and Amended Credit
Agreement dated as of December 1, 1998 by and among Pride
Companies, L.P. ("Borrower"), Pride Refining, Inc., Pride SGP,
Inc., Desulfur Partnership, Pride Marketing of Texas (Cedar
Wind), Inc., and Pride Borger, Inc. (collectively Guarantors)
and Varde Partners, Inc. as Lender (incorporated by reference to
Exhibit 10.34 of the Partnership's Annual Report on Form 10K for
the year ended December 31, 1998 (Commission File No. 1-10473)).
10.35 Fourth Amendment to the Sixth Restated and Amended Credit
Agreement dated as of December 31, 1998 by and among Pride
Companies, L.P. ("Borrower"), Pride Refining, Inc., Pride SGP,
Inc., Desulfur Partnership, Pride Marketing of Texas (Cedar
Wind), Inc., and Pride Borger, Inc. (collectively Guarantors)
and Varde Partners, Inc. as Lender (incorporated by reference to
Exhibit 10.35 of the Partnership's Annual Report on Form 10K for
the year ended December 31, 1998 (Commission File No. 1-10473)).
10.36 Fifth Amendment to the Sixth Restated and Amended Credit
Agreement dated as of March 1999 by and among Pride Companies,
L.P. ("Borrower"), Pride Refining, Inc., Pride SGP, Inc.,
Desulfur Partnership, Pride Marketing of Texas (Cedar Wind),
Inc., and Pride Borger, Inc. (collectively Guarantors) and Varde
Partners, Inc. as Lender (incorporated by reference to Exhibit
10.36 of the Partnership's Annual Report on Form 10K for the
year ended December 31, 1998 (Commission File No. 1-10473)).
10.37 Amendment No. 2 to the Revolving Credit and Term Loan Agreement,
dated as of November 20, 1998, among Pride Companies, L.P.,
Pride SGP, Inc., Pride Refining, Inc., Desulfur Partnership,
Pride Borger, Inc., Pride Marketing of Texas (Cedar Wind), Inc.,
and BankBoston, N.A., as an Agent and as a Lender, Lehman
Brothers Commercial Paper, Inc. as a Lender and as a
Documentation Agent (incorporated by reference to Exhibit
10.37 of the Partnership's Annual Report on Form 10K for the
year ended December 31, 1998 (Commission File No. 1-10473)).
10.38 Amendment No. 3 to the Revolving Credit and Term Loan Agreement,
dated as of December 31, 1998, among Pride Companies, L.P.,
Pride SGP, Inc., Pride Refining, Inc., Desulfur Partnership,
Pride Borger, Inc., Pride Marketing of Texas (Cedar Wind), Inc.,
and BankBoston, N.A., as an Agent and as a Lender, Lehman
Brothers Commercial Paper, Inc. as a Lender and as a
Documentation Agent (incorporated by reference to Exhibit 10.38
of the Partnership's Annual Report on Form 10K for the year
ended December 31, 1998 (Commission File No. 1-10473)).
10.39 Amendment No. 4 to the Revolving Credit and Term Loan Agreement,
dated as of March 1999, among Pride Companies, L.P., Pride SGP,
Inc., Pride Refining, Inc., Desulfur Partnership, Pride Borger,
Inc., Pride Marketing of Texas (Cedar Wind), Inc., and
BankBoston, N.A., as an Agent and as a Lender, Lehman Brothers
Commercial Paper, Inc. as a Lender and as a Documentation Agent
(incorporated by reference to Exhibit 10.39 of the Partnership's
Annual Report on Form 10K for the year ended December 31, 1998
(Commission File No. 1-10473)).
10.40 Amendment No. 5 to the Revolving Credit and Term Loan Agreement
dated as of April 15, 1999 among Pride Companies, L.P., Pride
SGP, Inc., Pride Refining, Inc., Desulfur Partnership, Pride
Borger, Inc., Pride Marketing of Texas (Cedar Wind), Inc., and
BankBoston, N.A., as an Agent and as a Lender, Lehman Brothers
Commercial Paper, Inc. as a Lender and as a Documentation Agent
(incorporated by reference to Exhibit 10.1 of the Partnership's
Quarterly Report on Form 10Q for the quarter ending March 31,
1999 (Commission File No. 1-10473)).
10.41 The Sixth Amendment to the Sixth Restated and Amended Credit
Agreement as of April 15, 1999 among Pride Companies,L.P. (the
"Borrower"), Pride Refining, Inc., Pride SGP, Inc., Desulfur
Partnership, Pride Marketing of Texas (Cedar Wind), Inc. and
Pride Borger, Inc. (collectively, the "Guarantors"), and Varde
Partners, Inc. (incorporated by reference to Exhibit 10.1 of the
Partnership's Quarterly Report on Form 10Q for the quarter
ending June 30, 1999 (Commission File No. 1-10473)).
10.42 Amended and Restated Certificates of Designation of Series B, C,
D, E and F Cumulative Convertible Preferred Units of Pride
Companies, L.P. pursuant to the Third Amended and Restated
Agreement of Limited Partnership effective as of April 15, 1999
(incorporated by reference to Exhibit 10.2 of the Partnership's
Quarterly Report on Form 10Q for the quarter ending June 30 1999
(Commission File No. 1-10473)).
10.43 Purchase and Sale Agreement dated August 4, 1999 by and among
Pride Companies, L.P. and Pride SGP, Inc., as Sellers, and Sun
Pipe Line Services Co., as Buyer (incorporated by reference to
Exhibit 10.3 of the Partnership's Quarterly Report on Form 10Q
for the quarter ending June 30, 1999 (Commission File No. 1-
10473)).
10.44 Waiver and Consent dated as of October 1, 1999 among Pride
Companies, L.P. (the "Borrower"), Pride Refining, Inc., Pride
SGP, Inc., Pride Marketing of Texas (Cedar Wind), Inc. and Pride
Borger, Inc. (collectively, the "Guarantors"), and Varde
Partners, Inc., ("Lender") (incorporated by reference to Exhibit
10.1 of the Partnership's Quarterly Report on Form 10Q for the
quarter ending September 30, 1999 (Commission File No.
1-10473)).
10.45 Amendment No. 6 to the Revolving Credit and Term Loan Agreement,
dated as of October 1, 1999 among Pride Companies, L.P., Pride
SGP, Inc., Pride Refining, Inc., Desulfur Partnership, Pride
Borger, Inc., Pride Marketing of Texas (Cedar Wind), Inc., and
BankBoston, N.A., as Agent and as a Lender, Lehman Brothers
Commercial Paper, Inc. as a Lender and as a Documentation Agent
(incorporated by reference to Exhibit 10.2 of the Partnership's
Quarterly Report on Form 10Q for the quarter ending September
30, 1999 (Commission File No. 1-10473)).
10.46 Certificates of Designation of Series G Subordinate Preferred
Units of Pride Companies, L.P. pursuant to the Third Amended and
Restated Agreement of Limited Partnership effective as of
October 1, 1999.
25.1 Power of Attorney (included on the signature page of this
Report).
27.1 Financial Data Schedule.
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SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PRIDE COMPANIES, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
amends, replaces and restates, as of the Effective Date, the Amended
and Restated Agreement of Limited Partnership, effective as of March
29, 1990, and as further amended by the First Amendment to the Amended
and Restated Agreement of Limited Partnership, effective as of
September 25, 1991 (as amended, the "Prior Agreement"). This
Agreement of Limited Partnership is entered into by and among Pride
Refining, Inc., a Texas corporation, as the Managing General Partner,
Pride SGP, Inc., a Texas corporation, as the Special General Partner
and the Limited Partners, together with any other Persons who become
Partners in the Partnership as provided herein. In consideration of
the covenants, conditions and agreements contained herein, the parties
hereto hereby agree as follows:
ARTICLE I
Organizational Matters
1.1 Formation and Continuation. The Partnership as previously
been formed and is-currently in existence as a limited partnership
pursuant to the provisions of the Delaware Act. The Partnership is
hereby expressly continued as a limited partnership pursuant to the
Delaware Act, subject to the provisions of this Agreement, which
replaces, amends, and restates the Prior Agreement. Except as
expressly provided herein to the contrary, the rights and obligations
of the Partners and the administration and termination of the
Partnership shall be governed by the Delaware Act. The Partnership
Interest of each Partner shall be personal property for all purposes.
1.2 Name. The name of the Partnership shall be "Pride
Companies, L.P." The Partnership's business may be conducted under any
other name or names deemed advisable by the Managing General Partner,
including the name of the Managing General Partner or any Affiliate
thereof. The words "Limited Partnership," "L.P.," "Ltd." or similar
words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any
jurisdiction that so requires. The Managing General Partner in its
sole discretion may change the name of the Partnership at any time and
from time to time and shall notify the Limited Partners of such change
in the next regular communication to the Limited Partners.
1.3 Registered Office; Principal Office. The address of the
registered office of the Partnership in the State of Delaware shall be
located at The Corporation Trust Center, 1209 Orange Street, New
Castle County, 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 1209 North Fourth Street,
Abilene, Texas 79601 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 places
within or outside the State of Delaware as the Managing General
Partner deems advisable.
1.4 Power of Attorney. (a) Each Limited Partner and each
Assignee hereby constitutes and appoints each of the Managing General
Partner and, if a Liquidator shall have been selected pursuant to
Section 14.3 hereof, the Liquidator severally (and any successor to
either thereof by merger, transfer, assignment, election or otherwise)
and authorized officers and attorneys-in-fact of each, with full power
of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and record in
the appropriate public offices (A) all certificates, documents and
other instruments (including, without limitation, this Agreement and
the Certificate of Limited Partnership and all amendments or
restatements thereof) that the Managing General Partner or the
Liquidator deems appropriate or necessary 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 instruments that the Managing General Partner or the
Liquidator deems appropriate or necessary to reflect any amendment,
change, modification or restatement of this Agreement or the Deposit
Agreement in accordance with their respective terms; (C) all
conveyances and other instruments or documents that the Managing
General Partner or the Liquidator deems appropriate or necessary to
reflect the dissolution and liquidation of the Partnership pursuant to
the terms of this Agreement, including, without limitation, a
certificate of cancellation; (D) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant
to, or other events described in, Article XI, XII, XIII or XIV hereof
or the Capital Contribution of any Partner, (E) all certificates,
documents and other instruments relating to the determination of the
rights, preferences and privileges of any class or series of Units or
other securities issued pursuant to Section 4.2 hereof; and (F) all
agreements and other instruments (including, without limitation, a
certificate of merger) relating to a merger or consolidation of the
Partnership pursuant to Article XVI hereof;
(ii) execute, swear to, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole discretion of the Managing
General Partner or the Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or other action which is
made or given by the Partners hereunder or is consistent with the
terms of this Agreement or appropriate or necessary, in the sole
discretion of the Managing General Partner or the Liquidator, to
effectuate the terms or intent of this Agreement; provided, that when
required by Section 15.3 hereof or any other provision of this
Agreement which 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 or the Liquidator may exercise
the power of attorney made in this subSection (ii) only after the
necessary vote, consent or approval of the Limited Partners or of the
Limited Partners of such class or series; and
(iii) on behalf of the Limited Partners and the Assignees,
enter into the Deposit Agreement and to deposit Certificates in the
Deposit Account pursuant to the Deposit Agreement. Nothing contained
herein shall be construed as authorizing the Managing General Partner
to amend this Agreement except in accordance with Article XV hereof or
as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive
and not be affected by the subsequent death, incompetency, disability,
incapacity, dissolution, bankruptcy or termination of any Limited
Partner or Assignee and the transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Interest and shall extend
to such Limited Partner's or Assignee's heirs, successors, assigns and
personal representatives. Each such Limited Partner or Assignee
hereby agrees to be bound by any representation made by the Managing
General Partner or the Liquidator, acting in good faith pursuant to
such power of attorney; and each such Limited Partner or Assignee
hereby waives any and all defenses which 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
Limited Partner or Assignee shall execute and deliver to the Managing
General Partner or the Liquidator, within 15 days after receipt of the
Managing General Partner's or the Liquidator's 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.
1.5 Term. The Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware Act
on January 17, 1990 and shall continue in existence until the close of
Partnership business on December 31, 2090, or until the earlier
termination of the Partnership in accordance with the provisions of
Article XIV hereof.
1.6 Possible Restrictions on Transfer. Notwithstanding anything
to the contrary contained herein, in the event of (i) the enactment
(or imminent enactment) of any legislation, (ii) the publication of
any temporary or final regulation by the Treasury Department, (iii)
any ruling by the Internal Revenue Service or (iv) any judicial
decision, that, in any such case, in the Opinion of Counsel, would
result in the taxation of the Partnership for federal income tax
purposes as a corporation or as an association taxable as a
corporation, then, either (a) the Managing General Partner may impose
such restrictions on the transfer of Partnership Interests as may be
required, in the Opinion of Counsel, to prevent the taxation of the
Partnership for federal income tax purposes as a corporation or as an
association taxable as a corporation, including making any amendments
to this Agreement as the Managing General Partner in its sole
discretion may determine to be necessary or appropriate in order to
impose such restrictions; provided, that any such amendment to this
Agreement which would result in the delisting or suspension of trading
of any class of Units on any National Securities Exchange on which
such class of Units is then traded must be approved by the holders of
at least 66?% of the Outstanding Units of such class (excluding for
purposes of such determination any Units of such class owned by the
General Partners and their Affiliates) or (b) upon the recommendation
of the Managing General Partner and the approval by the holders of at
least 66?% of the Outstanding Units (excluding for purposes of such
determination any Units owned by the General Partners and their
Affiliates), the Partnership may be converted into and reconstituted
as a trust or any other type of legal entity (the "New Entity") in the
manner and on other terms so recommended and approved. In such event,
the business of the Partnership shall be continued by the New Entity
and the Units shall be converted into equity interests of the New
Entity in the manner and on the terms so recommended and approved.
ARTICLE II
Definitions
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used
in this Agreement.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.4 hereof.
"Adjusted Capital Account" shall mean the Capital Account
maintained for each Partner as of the end of each taxable year of the
Partnership (a) increased by any amounts which 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 taxable year, are reasonably expected to be allocated
to such Partner in subsequent years under Sections 704(e)(2) and
706(d) of the Code and Treasury Regulation Section 1.751-1(b)(2)(ii),
and (ii) the amount of all distributions that, as of the end of such
taxable year, are reasonably expected to be made to such Partner in
subsequent years in accordance with the terms of this Agreement or
otherwise to the extent they exceed offsetting increases to such
Partner's Capital Account that are reasonably expected to occur during
(or prior to) the year in which such distributions are reasonably
expected to be made (other than increases pursuant to a minimum gain
chargeback pursuant to Sections 5.1(e)(i) or 5.1(e)(ii) hereof). 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.
A Partner who has more than one interest in the Partnership shall have
a single Adjusted Capital Account that reflects all such interests,
regardless of the class of interests and the time and manner in which
such interests were acquired.
"Adjusted Property" means any property the Carrying Value of
which has been adjusted pursuant to Section 4.4(d)(i) or 4.4(d)(ii)
hereof. Once an Adjusted Property is deemed distributed by, and
recontributed to, the Partnership for federal income tax purposes upon
a termination thereof pursuant to Section 708 of the Code, such
property shall thereafter constitute a Contributed Property until the
Carrying Value of such property is further adjusted pursuant to
Section 4.4(d)(i) or 4.4(d)(ii) hereof.
"Affiliate" means, with respect to any Person, any other Person
that directly or indirectly controls, is controlled by, or is under
common control with, the Person in question. As used herein, the term
"control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"Agreed Allocation" shall mean allocation made pursuant to
Section 5.1(a), (b), (c) or (d) hereof.
"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. The Managing General
Partner shall, in its sole discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate Agreed Value of
Contributed Properties contributed to the Partnership in a single or
integrated transaction among such properties on a basis proportional
to their fair market values.
"Agreement" means this Second Amended and Restated Agreement of
Limited Partnership, 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 Units have been transferred in a manner permitted under this
Agreement and who has executed and delivered a Transfer Application as
required by this Agreement, but who has not become a Substituted
Limited Partner.
"Available Cash" means, with respect to any calendar quarter,
(i) the sum of:
(A) the Partnership's net income for such quarter as determined
in accordance with generally accepted accounting principles (excluding
gain and loss on the sale of capital assets).
(B) depreciation, amortization and other noncash charges (less
noncash credits) of the Partnership for such quarter.
(C) the amount of any reduction in reserves of the Partnership of
the types referred to in (ii) (DD) below during such quarter:
(ii) less the sum of:
(AA) all principal debt payments, preference payments accrued on
Series B Preferred Units or Series C Preferred Units (if not already
included in the computation of net income), or redemptions of Series B
or C Preferred Units, if any, made during such quarter by the
Partnership (other than principal debt payments made with Proceeds
from Capital Transactions),
(BB) capital expenditures made by the Partnership during such
quarter (excluding for such purpose capital expenditures financed or
anticipated to be refinanced with Proceeds from Capital Transactions),
(CC) investments for such quarter in any entity to the extent
that such investments are not otherwise included under clauses
(ii)(AA) or (BB) (excluding investments financed or anticipated to be
refinanced with Proceeds from Capital Transactions), and
(DD) the amount of Partnership reserves established by the
Managing General Partner during such quarter which are necessary or
appropriate (1) to provide funds for the future payment of items of
the types specified in clauses (ii)(AA) and (ii)(BB) above, (2) to
provide for additional working capital, (3) to provide funds for cash
distributions with respect to any one or more of the next four
calendar quarters or (4) to provide funds for the future payment of
interest.
Notwithstanding the foregoing, Available Cash shall not include
any cash receipts or reductions in reserves or take into account any
disbursements made or reserves established after commencement of the
dissolution and liquidation of the Partnership.
"Book-Tax Disparity" shall mean, with respect to any item of
Contributed Property or Adjusted Property, as of the date of any
determination, the difference between the Carrying Value of such
Contributed Property or Adjusted Property and the adjusted basis
thereof for federal income tax purposes as of such date. A Partner's
share of the Partnership's Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as
maintained pursuant to Section 4.4 hereof and the hypothetical balance
of such Partner's Capital Account computed as if it had been
maintained strictly in accordance with federal income tax accounting
principles.
"Business Day" means Monday through Friday of each week, except
that a legal holiday recognized as such by the government of the
United States or the States of New York or Texas shall not be regarded
as a Business Day.
"Capital Account" means the capital account maintained pursuant
to Section 4.4 hereof.
"Capital Contribution" means any cash, cash equivalents, or the
Net Agreed Value of Contributed Property which a Partner contributes
to the Partnership pursuant to Sections 4.1, 4.2, 4.4(c) or 13.3(c)
hereof, or the outstanding principal balance of debt, amount of
accrued interest, or amount of cumulative distribution arrearages
canceled by a Limited Partner in exchange for a Series B Preferred
Unit or Series C Preferred Unit.
"Capital Transactions" means (a) borrowings and sales of debt
securities (other than working capital borrowings, borrowings
representing items purchased on open account in the ordinary course of
business by the Partnership, (b) sales of equity interests by the
Partnership (other than the conversion of certain indebtedness of the
Partnership into Common Units, Series B Preferred Units, or Series C
Preferred Units as described in Section 4.1 hereof) and (c) sales or
other voluntary or involuntary dispositions of any assets of the
Partnership (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 and (z) sales
or other dispositions of assets as a part of normal retirements or
replacements), in each case prior to the commencement of the
dissolution and liquidation of the Partnership.
"Carrying Value" means (a) with respect to a Contributed
Property, the Agreed Value of such property reduced (but not below
zero) by all depreciation, amortization and cost recovery deductions
charged to the Partners' Capital Accounts and (b) with respect to any
other Partnership property, the adjusted basis of such property ror
federal income tax purposes. The Carrying Value of any property shall
be adjusted from time to time in accordance with Sections 4.4(d)(i)
and 4.4(d)(ii) hereof and shall thereafter be reduced (but not below
zero) by all depreciation, amortization, and cost recovery deductions
charged to the Partners' Capital Accounts.
"Certificate" means a certificate issued by the Partnership
evidencing ownership of one or more Partnership Interests.
"Certificate of Designations" means the Certificates of
Designations pursuant to which the Partnership issues Series B
Preferred Units, Series C Preferred Units, and any other certificate
of designations pursuant to which the Partnership issues Partnership
Securities pursuant to Section 4.2.
"Certificate of Limited Partnership" means the Certificate of
Limited Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section 6.2 hereof, as such Certificate may
be amended and/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.
"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 to trading on the New York Stock Exchange or, if the Units of
a class are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
National Securities Exchange on which the Units of such class are
listed or admitted to trading or, if the Units of a class are not
listed or admitted to trading on any National Securities Exchange, 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 National Association of Securities Dealers,
Inc. Automated Quotation System or such other system then in use, or,
if on any such day the Units of a class are not quoted by any such
organization, the average of the closing bid and asked prices on such
day as furnished by a professional market maker making a market in the
Units of such class selected by the Board of Directors of the Managing
General Partner, or, if on any such day no market maker is making a
market in the Units of such class, the fair value of such Units on
such day as determined reasonably and in good faith by the Board of
Directors of the Managing General Partner using any reasonable method
of valuation.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific Section or Sections of
the Code shall be deemed to include a reference to any corresponding
provision of future law.
"Common Unit" means a Unit representing a fractional part of the
Partnership Interests of the Limited Partners and Assignees thereof
and having the rights and obligations specified with respect to Common
Units in this Agreement.
"Conflicts and Audit Committee" means a committee of the Board of
Directors of the Managing General Partner composed entirely of
directors who are neither officers or employees of, nor direct or
indirect owners of more than 5% of the voting securities of, the
General Partners or their Affiliates.
"Consent Solicitation Statement" means the consent solicitation
statement dated October 7, 1996 sent to the Partners in connection
with the adoption of this Agreement and the approval of other matters
described in the Consent Solicitation Statement.
"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). Once the Carrying Value of a Contributed
Property is adjusted pursuant to Section 4.4(d) hereof, such property
shall no longer constitute a Contributed Property for purposes of
Section 5.1 hereof, but shall be deemed an Adjusted Property for such
purposes.
"Current Market Price" shall have the meaning assigned to such
term in Section 17.1(a) hereof.
"Debt" means, as to any Person, as of any date of determination,
(a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services; (b) all amounts owed
by such Person to banks or other Persons in respect of reimbursement
obligations under letters of credit, surety bonds and other similar
instruments guaranteeing payment or other performance of obligations
by such Person; (c) all indebtedness for borrowed money or for the
deferred purchase price of property or services secured by any lien on
any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not
assumed or become liable for the payment thereof; and (d) lease
obligations of such Person which, in accordance with generally
accepted accounting principles, should be capitalized.
"Delaware Act" means the Delaware Revised Uniform Limited
Partnership Act, 6 Del. C.17-101, et seq., as it may be amended from
time to time, and any successor to such statute.
"Deposit Account" means the account established by the Depositary
pursuant to the Deposit Agreement.
"Deposit Agreement" means the Deposit Agreement among the
Managing General Partner, in its capacity both as Managing General
Partner and as attorney-in-fact for the Limited Partners, the
Partnership and the Depositary, as it may be amended or restated from
time to time.
"Depositary" means the bank or other institution appointed by the
Managing General Partner in its sole discretion to act as depositary
for the Depositary Units pursuant to the Deposit Agreement, or any
successor to it as depositary.
"Depositary Receipt" means a depositary receipt, issued by the
Depositary or agents appointed by the Depositary in accordance with
the Deposit Agreement, evidencing ownership of one or more Depositary
Units.
"Depositary Unit" means a depositary unit representing a Unit on
deposit with the Depositary pursuant to the Deposit Agreement.
"Discretionary Allocation" shall mean any allocation of an item of
income, gain, deduction, or loss pursuant to the provisions of Section
5.1(d)(iii) hereof.
"Economic Risk of Loss" shall have the meaning set forth in
Treasury Regulation Section 1.752-2(a).
"Effective Date" means the later to occur of (i) the date upon
which the Partners have approved this Agreement as an amendment and
restatement of the Prior Agreement in accordance with the terms of the
Prior Agreement, (ii) the date all legal requirements related to the
solicitation of consents have been met, and (iii) the date that is the
last day of the month immediately succeeding the later of (i) or (ii);
upon which date this Agreement shall become effective as the
Partnership Agreement of the Partnership.
"Eligible Citizen" means a Person qualified to own interests in
real property in jurisdictions in which the Partnership does business
or proposes to do business from time to time, and whose status as a
Limited Partner or Assignee does not or would not subject the
Partnership to a substantial risk of cancellation or forfeiture of any
of their property or any interest therein.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor to such statute.
"General Partner" means either the Managing General Partner or
the Special General Partner and "General Partners" means the Managing
General Partner and the Special General Partner.
"General Partner Equity Value" means, as of any date of
determination, the fair market value of a General Partner's
Partnership Interest, as a General Partner, as determined by the
Managing General Partner using whatever reasonable method of valuation
it may adopt.
"Indemnitee" means any General Partner, any departing General
Partner, any Person who is or was an Affiliate of any General Partner
or any departing General Partner, any Person who is or was an officer,
director, employee, agent or trustee of any General Partner or any
departing General Partner or any Affiliate of any General Partner or
departing General Partner, or any Person who is or was serving at the
request of any General Partner or any departing General Partner or any
Affiliate of any General Partner or any departing General Partner as a
director, officer, employee, agent or trustee of another Person.
"Initial Offering" means the initial offering of Depositary Units
to the public, as described in the Registration Statement.
"Issue Price" means the price at which a Unit is purchased from
the Partnership, less any sales commission or underwriting discount
charged to the Partnership; provided that the Issue Price of Series B
Preferred Units and Series C Preferred Units shall equal the
outstanding principal balance and any accrued interest canceled by a
Partner in exchange for such Unit.
"Limited Partner" means each Person who is a Limited Partner of
the Partnership upon the Effective Date, each Substituted Limited
Partner, each Additional Limited Partner and any departing General
Partner upon the change of its status from General Partner to Limited
Partner pursuant to Article XIII hereof and, solely for purposes of
Articles IV, V and VI hereof and Sections 14.3 and 14.4 hereof, shall
include an Assignee thereof.
"Limited Partner Equity Value" means, as of any date of
determination, the total value of all classes of Units, with the value
of each class being an amount equal to the product of (a) the total
number of Outstanding Units of such class (immediately prior to an
issuance of Units or distribution of cash or Partnership property),
multiplied by (b) (i) in the case of a valuation required by Section
4.4(d)(i) hereof (other than valuations caused by sales of a de
minimis quantity of Units) the Issue Price or (ii) in the case of a
valuation required by Section 4.4(d)(ii) hereof (or a valuation
required by Section 4.4(d)(i) hereof caused by sales of a de minimis
quantity of Units) the Closing Price.
"Liquidator" means the Managing General Partner or other Person
approved pursuant to Section 14.3 hereof who performs the functions
described therein.
"Managing General Partner" means Pride Refining Inc., a Texas
corporation, or any successor in its capacity as managing general
partner of the Partnership.
"Merger Agreement" has the meaning assigned to such term in
Section 16.1 hereof.
"Minimum Gain Attributable to Partner Nonrecourse Debt" means
that amount determined in accordance with the principles of Treasury
Regulation Section 1.704-2(i).
"National Securities Exchange" means an exchange registered with
the Securities and Exchange Commission under Section 6(a) of the
Exchange Act.
"Net Agreed Value" means (a) in the case of any Contributed
Property, the Agreed Value of such property reduced by any liabilities
either assumed by the Partnership upon such contribution or to which
such property is subject when contributed and (b) in the case of any
property distributed to a Partner or Assignee by the Partnership, the
Partnership's Carrying Value of such property at the time such
property is distributed, reduced by any indebtedness either assumed by
such Partner or Assignee upon such distribution or to which such
property is subject at the time of distribution as determined under
Section 752 of the Code.
"Net Income" shall mean, for any taxable period, the excess, if
any, of the Partnership's items of income and gain (other than those
items attributable to dispositions constituting Terminating Capital
Transactions) for such taxable period over the Partnership's items of
loss and deduction (other than those items attributable to
dispositions constituting Terminating Capital Transactions) for such
taxable period. The items included in the calculation of Net Income
shall be determined in accordance with Section 4.4(b) hereof and shall
not include any items specially allocated under Section 5.1(d) or
5.1(e) hereof. Once an item of income, gain, loss or deduction that
has been included in the initial computation of Net Income is
subjected to a Required Allocation or a Discretionary Allocation, Net
Income or the resulting Net Loss, whichever the case may be, shall be
recomputed without regard to such item.
"Net Loss" shall mean, for any taxable period, the excess, if
any, of the Partnership's items of loss and deduction (other than
those items attributable to dispositions constituting Terminating
Capital Transactions) for such taxable period over the Partnership's
items of income and gain (other than those items attributable to
dispositions constituting Terminating Capital Transactions) for such
taxable period. The items included in the calculation of Net Loss
shall be determined in accordance with Section 4.4(b) hereof and shall
not include any items specially allocated under Section 5.1(d) or
5.1(e) hereof. Once an item of income, gain, loss or deduction that
has been included in the initial computation of Net Loss is subjected
to a Required Allocation or a Discretionary Allocation, Net Loss or
the resulting Net Income, whichever the case may be, shall be
recomputed without regard to such item.
"Net Termination Gain" means, for each Partnership Year or
shorter period, the sum, if positive, of all items of gain or loss
recognized by the Partnership from Terminating Capital Transactions
and all items of income, gain, loss and deduction (as determined in
accordance with Section 4.4(b) hereof) recognized by the Partnership
as a result of a dissolution of the Partnership for the purpose of
liquidation.
"Net Termination Loss" means, for each Partnership Year or
shorter period, the sum, if negative, of all items of gain or loss
recognized by the Partnership from Terminating Capital Transactions
and all items of income, gain, loss and deduction (as determined in
accordance with Section 4.4(b) hereof) recognized by the Partnership
as a result of a dissolution of the Partnership for the purpose of
liquidation.
"Non-citizen Assignee" means a Person who the Managing General
Partner has determined in its sole discretion does not meet the
requirements of the definition of an Eligible Citizen and as to whose
Partnership Interest the Managing General Partner has become the
Substituted Limited Partner, pursuant to Section 11.5 hereof.
"Nonrecourse Built-in Gain" shall mean, with respect to any
Contributed Properties or Adjusted Properties that are subject to a
mortgage or negative pledge securing a Nonrecourse Liability, the
amount of any taxable gain that would be allocated to the Partners
pursuant to Sections 5.2(b)(i)(A), 5.2(b)(ii)(A) or 5.2(b)(iii) hereof
if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
"Nonrecourse Deductions" shall mean 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" shall have the meaning set forth in
Treasury Regulation Section 1.752-1(a)(2).
"Note Agreement" means that certain Note Agreement dated as of
August 13, 1996 among the Partnership, the General Partner, the
Special General Partner and the purchasers of certain convertible
notes, as such agreement may be amended from time to time.
"Notice of Election to Purchase" has the meaning assigned to such
term in Section 17.1(b) hereof.
"Opinion of Counsel" means a written opinion of counsel (who may
be regular counsel to the Partnership or the Managing General Partner)
in form and substance acceptable to the Managing General Partner.
"Outstanding" means all Units or other 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.
"Partner" means a General Partner or a Limited Partner and
Assignees thereof, if applicable.
"Partner Nonrecourse Debt" shall have the meaning set forth in
Treasury Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" shall mean any and all items of
loss, deduction or expenditure (described in Section 705(a)(2)(B) of
the Code) that, in accordance with the principles of Treasury
Regulation Section 1.704-2(i), are attributable to a Partner
Nonrecourse Debt and to a net increase in Minimum Gain Attributable to
Partner Nonrecourse Debt.
"Partnership" means the limited partnership heretofore formed and
continued pursuant to this Agreement, and any successor thereto.
"Partnership Debt Securities" has the meaning assigned to such
term in Section 4.2(a) hereof.
"Partnership Equity Securities" has the meaning assigned to such
term in Section 4.2(a) hereof.
"Partnership Interest" means the interest of a Partner in the
Partnership which, in the case of a Limited Partner or Assignee, shall
include Units.
"Partnership Minimum Gain" shall mean that amount determined in
accordance with the principles of Treasury Regulation Section
1.704-2(d).
"Partnership Securities" has the meaning assigned to such term in
Section 4.2(a) hereof.
"Partnership Year" means the fiscal year of the Partnership,
which shall be the calendar year.
"Percentage Interest" means, as of the date of such
determination, (a) as to the Managing General Partner in its capacity
as such, 1.9%, (b) as to the Special General Partner in its capacity
as such, 0.1%, (c) as to any Limited Partner or Assignee holding
Units, the product of (i) 98% multiplied by (ii) the quotient of the
number of Units held by such Limited Partner or Assignee divided by
the total number of all Units then outstanding; provided, however,
that following any issuance of additional Units by the Partnership
pursuant to Section 4.2 hereof, proper adjustment shall be made to the
Percentage Interest represented by each Unit to reflect such issuance.
"Person" means an individual or a corporation, partnership,
trust, unincorporated organization, association or other entity.
"Prior Agreement" shall have the meaning assigned to it in the
preamble hereof.
"Proceeds from Capital Transactions" means, at any date, such
amounts of cash, debt securities or other property as are determined
by the Managing General Partner to be made available to the
Partnership from or by reason of a Capital Transaction.
"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
Section 17.1(b) hereof.
"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 identify of Limited Partners (or
Assignees, if applicable) entitled to notice of, or to vote at, any
meeting of Limited Partners or entitled to vote by ballot or give
approval of Partnership action in writing without a meeting or
entitled to exercise rights in respect of any other lawful action of
Limited Partners, or (b) the identify of Record Holders entitled to
receive any report or distribution.
"Record Holder" means the Person in whose name a Unit is
registered on the books of the Transfer Agent, as of the opening of
business on a particular Business Day.
"Redeemable Units" means any Units for which a redemption notice
has been given and has not been withdrawn, under Section 11.6 hereof.
"Registration Statement" means the Registration Statement on Form
S-1 (Registration No. 33-33099), as it has been or as it may be
amended from time to time, filed by the Partnership with the
Securities and Exchange Commission under the Securities Act to
register the offering and sale of the Units in the Initial Offering.
"Required Allocation" shall mean any allocation (or limitation
imposed on any allocation) of an item of income, gain, deduction or
loss pursuant to (a) the proviso-clause of Section 5.1(b)(ii) hereof
or (b) Section 5.1(e) hereof, such allocations (or limitations
thereon) being directly or indirectly required by the Treasury
Regulations promulgated under Section 704(b) of the Code.
"Residual Gain" or "Residual Loss" shall mean 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 Contributed Property or Adjusted Property, to the
extent such item of gain or loss is not allocated pursuant to Sections
5.2(b)(i)(A) or 5.2(b)(ii)(A) hereof to eliminate Book-Tax
Disparities.
"Securities Act" means the Securities Act of 1933, as amended,
and any successor to such statute.
"Series B Preferred Units" means the Series B Cumulative
Convertible Preferred Units issued pursuant to the Certificate of
Designations of Series B Cumulative Convertible Preferred Units of the
Partnership set forth in Annex One to this Agreement.
"Series C Preferred Units" means the Series C Cumulative
Convertible Preferred Units issued pursuant to the Certificate of
Designations of Series C Cumulative Convertible Preferred Units of the
Partnership set forth in Annex Two to this Agreement.
"Special Approval" means approval by (i) a majority of the
members of the Board of Directors of the Managing General Partner and
(ii) a majority of the members of the Conflicts and Audit Committee.
"Special General Partner" means Pride SGP, Inc., a Texas
corporation, or any successor in its capacity as special general
partner of the Partnership.
"Subsidiary" means, with respect to any Person, any corporation
or other entity of which a majority of (i) the voting power of the
voting equity securities or (ii) the outstanding equity interests is
owned, directly or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 12.2 hereof in
place of and with all the rights of a Limited Partner and who is shown
as a Limited Partner on the books and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such term
in Section 16.2(b) hereof.
"Terminating Capital Transactions" means any sales or other
dispositions of assets of the Partnership is a result of a dissolution
of the Partnership for the purpose of liquidation.
"Trading Day" has the meaning assigned to such term in Section
17.1(a) hereof.
"Transfer Agent" means the Depositary or any bank, trust company
or other Person appointed by the Partnership to act as transfer agent
for the Units.
"Transfer Application" means an application and agreement for
transfer of Depositary Units in the form set forth on the back of a
Depositary Receipt or in a form substantially to the same effect in a
separate instrument.
"Unit" means a Partnership Interest of a Limited Partner or
Assignee in the Partnership representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees; provided,
however, that in the event any class or series of Units issued
pursuant to Section 4.2 hereof shall have designations, preferences or
special rights such that a Unit of such class or series shall
represent a greater or lesser part of the Partnership Interests of all
Limited Partners or Assignees than a Unit of any other class or series
of Units, the Partnership Interest represented by such class or series
of Units shall be determined in accordance with such designations,
preferences or special rights. Unless otherwise specifically
indicated to the contrary, Units includes Depositary Units.
"Unrealized Gain" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any,
of (a) the fair market value of such property as of such date, over
(b) the Carrying Value of such property as of such date (prior to any
adjustment to be made pursuant to Section 4.4(d) hereof) as of such
date. In determining such Unrealized Gain, the aggregate cash amount
and fair market value of all Partnership assets (including cash or
cash equivalents) shall be determined by the Managing General Partner
using such reasonable method of valuation as if it may adopt;
provided, however, the Managing General Partner, in arriving at such
valuation, must take fully into account (to the extent appropriate
under the regulations promulgated under Section 704(b) of the Code)
the Limited Partner Equity Value and the General Partner Equity Value
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 sole discretion to be reasonable) to arrive at a
fair market value for individual properties.
"Unrealized Loss" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any,
of (a) the Carrying Value of such property as of such date (prior to
any adjustment to be made pursuant to Section 4.4(d) hereof) as of
such date, over (b) the fair market value of such property as of such
date. In determining such Unrealized Loss, the aggregate cash amount
and fair market value of all Partnership assets (including cash or
cash equivalents) shall be determined by the Managing General Partner
using such reasonable method of valuation as it may adopt: provided,
however, the Managing General Partner, in arriving at such valuation,
must take fully into account (to the extent appropriate under the
regulations promulgated under Section 704(b) of the Code) the Limited
Partner Equity Value and the General Partner Equity Value 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 sole discretion to be reasonable) to arrive at a
fair market value for individual properties.
ARTICLE III
Purpose
3.1 Purpose and Business. The purpose and nature of the
business to be conducted by the Partnership shall be (i) to conduct
any business that may be lawfully conducted by a limited partnership
organized pursuant to the Delaware Act, including, without limitation,
the refining, transport, gathering and sale of hydrocarbon-based
products, (ii) to enter into any partnership, joint venture or other
similar arrangement to engage in any of the foregoing or the ownership
of interests in any entity engaged in any of the foregoing, and (iii)
to do anything necessary or incidental to the foregoing.
3.2 Powers. The Partnership shall be empowered to do any and
all acts and things necessary, appropriate, proper, advisable,
incidental to or convenient for the furtherance and accomplishment of
the purposes and business described herein and for the protection and
benefit of the Partnership.
ARTICLE IV
Capital Contributions
4.1 Partnership Equity Securities. Upon the Effective Date, the
Partnership Equity Securities of the Partnership consist of 4,950,000
Common Units, and the 1.9% and .1% Percentage Interests held by the
Managing General Partner and the Special General Partner,
respectively, which general partner interests are not denominated in
Units. The Partnership has established the terms of Series B
Preferred Units and Series C Preferred Units, none of which have been
issued as of the Effective Date. The Certificates of Designations of
the Series B Preferred Units and the Series C Preferred Units are
attached hereto as Annex One and Annex Two, which Annexes are
incorporated herein and are made a part of this Agreement.
Notwithstanding the foregoing, the terms of any Certificate of
Designations attached hereto as an Annex and incorporated by reference
herein may be amended with the approval of a majority in interest of
the holders of the Partnership Securities issued pursuant to the terms
of such Certificate of Designations and the approval of the Managing
General Partner. The Series B Preferred Units and Series C Preferred
Units shall automatically be issued, without further action necessary
on the part of the Managing General Partner or of the Partnership in
the number described in, and in accordance with, the terms and
conditions, of the Note Agreement. Notwithstanding anything to the
contrary in this Agreement, in the event that any conflict exists
between this Agreement on the one hand and a Certificate of
Designations on the other, the terms of the Certificate of
Designations shall control.
4.2 Issuances of Additional Units and Other Securities. (a) The
Managing General Partner is hereby authorized to cause the Partnership
to issue such additional Units, or classes or series thereof, or
options, rights, warrants or appreciation rights relating thereto, or
any other type of equity security that the Partnership may lawfully
issue ("Partnership Equity Securities"), any unsecured or secured debt
obligations of the Partnership or debt obligations of the Partnership
convertible into any class or series of equity securities of the
Partnership ("Partnership Debt Securities") (collectively,
"Partnership Securities"), for any Partnership purpose at any time or
from time to time, to the Partners or to other Persons for such
consideration and on such terms and conditions as shall be established
by the Managing General Partner in its sole discretion, all without
the approval of any Limited Partners. The Managing General Partner
shall have sole discretion, subject to the guidelines set forth in
this Section 4.2 and the requirements of the Delaware Act, in
determining the consideration and terms and conditions with respect to
any future issuance of Partnership Securities. The Managing General
Partner may evidence terms and conditions of any Partnership
Securities to be issued by the Partnership by a Certificate of
Designations to be incorporated herein and made a part hereof by
attaching the Certificate of Designations as an annex to this
Agreement.
(b) Additional Partnership Securities to be issued by the
Partnership pursuant to this Section 4.2 shall be issuable from time
to time in one or more classes, or one or more series of any of such
classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties,
including rights, powers and duties senior to existing classes and
series of Partnership Securities, unless any such senior securities
are otherwise prohibited by the terms of this Agreement, all as shall
be fixed by the Managing General Partner in the exercise of its sole
and complete discretion, subject to Delaware law, including, without
limitation, (i) the allocations of items of Partnership income, gain,
loss, and deduction to each such class or series of Partnership
Securities; (ii) the right of each such class or series of Partnership
Securities to share in Partnership distributions; (iii) the rights of
each such class or series of Partnership Securities upon dissolution
and liquidation of the Partnership; (iv) whether such class or series
of additional Partnership Securities is redeemable by the Partnership
and, if so, the price at which, and the terms and conditions upon
which, such class or series of additional Partnership Securities may
be redeemed by the Partnership; (v) whether such class or series of
additional Partnership Securities is issued with the privilege of
conversion and, if so, the rate at which, and the terms and conditions
upon which, such class or series of Partnership Securities may be
converted into any other class or series of Partnership Securities;
(vi) the terms and conditions upon which each such class or series of
Partnership Securities will be issued, deposited with the Depositary,
evidenced by Depositary Receipts and assigned or transferred; and
(vii) the right, if any, of each such class or series of Partnership
Securities to vote on Partnership matters, including matters relating
to the relative rights, preferences and privileges of each such class
or series.
The Managing General Partner is hereby authorized and directed to
take all actions which it deems appropriate or necessary in connection
with each issuance of Units or other Partnership Securities pursuant
to Section 4.2(a) hereof and to amend this Agreement in any manner
which it deems appropriate or necessary to provide for each such
issuance, to admit Additional Limited Partners in connection therewith
and to specify the relative rights, powers and duties of the holders
of the Partnership Securities being so issued. Without limiting the
foregoing, the Managing General Partner may prepare a Certificate of
Designations with respect to such Partnership Securities and attach
such Certificate of Designations as an additional annex to this
Agreement.
(d) The Managing General Partner shall do all things necessary to
comply with the Delaware Act and is authorized and directed to do all
things it deems to be necessary or advisable in connection with any
future issuance of Partnership Securities, including compliance with
any statute, rule, regulation or guideline of any federal, state or
other governmental agency or any National Securities Exchange on which
the Depositary Units or other Partnership Securities are listed for
trading.
4.3 No Preemptive Rights. Unless otherwise granted pursuant to
a Certificate of Designations, no Person shall have any preemptive,
preferential or other similar right with respect to (a) additional
Capital Contributions; (b) issuance or sale of any class or series of
Units or other Partnership Securities, whether unissued, held in the
treasury or hereafter created; (c) issuance of any obligations,
evidences of indebtedness or other securities of the Partnership
convertible into or exchangeable for, or carrying or accompanied by
any rights to receive, purchase or subscribe to, any such Units or
Partnership Securities; (d) issuance of any right of subscription to
or right to receive, or any warrant or option for the purchase of, any
such Units or Partnership Securities; or (e) issuance or sale of any
other securities that may be issued or sold by the Partnership.
4.4 Capital Accounts. (a) The Partnership shall maintain for
each Partner (or a beneficial owner of Units held by a nominee in any
case in which the nominee has furnished the identity of such owner to
the Partnership in accordance with Section 6031 (c) of the Code or any
other method acceptable to the Managing General Partner in its sole
discretion) a separate Capital Account in accordance with the rules of
Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account
shall be increased by (i) the amount of all Capital Contributions made
by such Partner to the Partnership pursuant to this Agreement and (ii)
all items of Partnership income and gain (including income and gain
exempt from tax) computed in accordance with Section 4.4(b) hereof and
allocated to such Partner pursuant to Article V hereof, and decreased
by (x) the amount of cash or Net Agreed Value of all distributions of
cash or property made to such Partner pursuant to this Agreement and
(y) all items of Partnership deduction and loss computed in accordance
with Section 4(b) hereof and allocated to such Partner pursuant to
Article V hereof.
(b) For purposes of computing the amount of any item of income,
gain, deduction or loss 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 any method
of depreciation, cost recovery or amortization used for that purpose),
provided, that:
(i) 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.
(ii) 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.
(iii) 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.
(iv) 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 as of the date it
was acquired by the Partnership was equal to the Agreed Value of such
property. Upon an adjustment pursuant to Section 4.4(d) hereof 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.
(c) A transferee of a Partnership Interest shall succeed to the
Capital Account of the transferor attributable 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 shall be deemed to have been
distributed in liquidation of the Partnership to the Partners
(including the transferee of a Partnership Interest) pursuant to
Sections 14.3 and 14.4 hereof and recontributed by such Partners in
reconstitution of the Partnership. Any such deemed distribution shall
be treated as an actual distribution for purposes of this Section 4.4.
In such event, the Carrying Values of the Partnership properties shall
be adjusted immediately prior to such deemed distribution pursuant to
Section 4.4(d)(ii) hereof and such adjusted Carrying Values shall then
constitute the Agreed Values of such properties upon such deemed
contribution to the reconstituted Partnership. The Capital Accounts
of such reconstituted Partnership shall be maintained in accordance
with the principles of this Section 4.4. In the case of a transferor
who holds both Common Units and Series B Preferred Units or Series C
Preferred Units, the Capital Account attributable to a Common Unit
transferred shall be deemed to equal the Capital Account attributable
to each other Common Unit then outstanding so as to preserve the
uniformity of the Common Units outstanding from time to time.
(d) (i) Consistent with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), on an issuance of additional Units for
cash or Contributed Property (including the cancellation of debt,
accrued interest, or distribution arrearages by a Partner in exchange
for a Unit or the conversion of Series B Preferred Units or Series C
Preferred Units to Common Units), the Capital Accounts 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
as provided in Section 5.1(c).
(ii) In accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(f), immediately prior to any distribution to a
Partner of any Partnership property (other than a distribution of cash
that is not in redemption or retirement of a Partnership Interest),
the Capital Accounts of all Partners and the Carrying Value of each
Partnership property shall, immediately prior to any such
distribution, 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 each such property immediately prior to such distribution for
an amount equal to its fair market value. Any Unrealized Gain or
Unrealized Loss attributable to such property shall be allocated to
the Partners as provided in Section 5.1(c).
(iii) The adjustments provided for in this Section 4.4(d) shall
be made in such a manner as shall be required to establish and
preserve the uniformity of the Common Units outstanding from time to
time.
4.5 Interest. No interest shall be paid by the Partnership on
Capital Contributions or on balances in Partners' Capital Accounts,
except as otherwise provided in a Certificate of Designations.
4.6 No Withdrawal. No Partner shall be entitled to withdraw any
part of his Capital Contribution or his Capital Account or to receive
any distribution from the Partnership, except as provided in Articles
V, XIII and XIV hereof or in a Certificate of Designations.
4.7 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 for such Partner. The amount of any
such excess advances shall be a debt obligation of the Partnership to
such Partner and shall be payable or collectible only out of the
Partnership assets in accordance with the terms and conditions upon
which such advances are made.
4.8 No Fractional Units. No fractional Units shall be issued by
the Partnership.
4.9 Splits and Combinations. (a) Subject to Sections 4.9(f) and
5.8 hereof, the Managing General Partner may make a pro rata
distribution of Units or Partnership Securities to all Record Holders
or may effect a subdivision or combination of Units or other
Partnership Securities; provided, however, that after any such
distribution, subdivision or combination, each Partner shall have the
same Percentage Interest in the Partnership as before such
distribution, subdivision or combination; and provided, however, that
nothing in this Section 4.9 shall be deemed to authorize the Managing
General Partner to combine Units or Partnership Securities of any
class or series with those of any other class or series.
(b) If Partnership Debt Securities are distributed pursuant to
Section 4.9(a), such distribution shall be treated as a distribution
of property for purposes of this Agreement.
(c) Whenever such a distribution, subdivision or combination of
Units or 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 of
the distribution, subdivision or combination at least 20 days prior to
such Record Date, to each Record Holder as of the date not less than
10 days prior to the date of such notice. The Managing General
Partner also may cause a firm of independent public accountants
selected by it to calculate the number of Units to be held by each
Record Holder after giving effect to such distribution, subdivision or
combination. The Managing General Partner shall be entitled to rely
on any certificate provided by such firm as conclusive evidence of the
accuracy of such calculation.
(d) Promptly following any such distribution, subdivision or
combination, the Managing General Partner may cause Depositary
Receipts to be issued to the Record Holders of Units as of the
applicable Record Date representing the new number of Units held by
such Record Holders, or the Managing General Partner may adopt such
other procedures as it may deem appropriate to reflect such
distribution, subdivision or combination; provided, however, that in
the event any such distribution, subdivision or combination results in
a smaller total number of Units outstanding, the Managing General
Partner shall require, as a condition to the delivery to a Record
Holder of such new Depositary Receipt, the surrender of any Depositary
Receipt held by such Record Holder immediately prior to such Record
Date.
(e) 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 4.8 hereof and this
Section 4.9(f), each fractional Unit shall be rounded to the nearest
whole Unit (and a 0.5 Unit shall be rounded to the next higher Unit).
ARTICLE V
Allocations and Distributions
5.1 Allocations for Capital Account Purposes. For purposes of
maintaining the Capital Accounts and in determining the rights of the
Partners among themselves, the Partnership's items of income, gain,
loss and deduction (computed in accordance with Section 4.4(b) hereof)
shall be allocated among the Partners in each taxable year (or portion
thereof) as provided herein below. Amounts paid on the Series B
Preferred Units and Series C Preferred Units shall be treated as
guaranteed payments for the use of capital pursuant to Section 707(c)
of the Code and therefore shall not be treated as the allocation of
income affecting the respective capital accounts of the recipients
pursuant to the provisions of this Article V.
(a) Net Income. All items of income, gain, loss and deduction
taken into account in computing Net Income for such taxable period
shall be allocated in the same manner as such Net Income is allocated
hereunder which Net Income shall be allocated as follows:
(i) First, 100% to the General Partners, in the proportion that
their respective Percentage Interest bears to 2%, until the aggregate
Net Income allocated to the General Partners pursuant to this Section
5.1(a)(i) for the current taxable year and all previous taxable years
is equal to the aggregate Net Losses allocated to the General Partners
pursuant to Section 5.1(b)(iii) hereof for all previous taxable years;
(ii) Second, 100% to the Limited Partners holding Common Units
in the proportion that the respective number of Common Units held by
them bears to the total number of Common Units then outstanding until
the aggregate Net Income allocated to the holder of a Common Unit
pursuant to this Section 5.1(a)(ii) for the current taxable year and
all previous taxable years is equal to the aggregate Net Losses
allocated to the holder of such Common Unit pursuant to Section
5.1(b)(ii) hereof for all previous taxable years: and
(iii) Third, the balance, if any, 100% to the General Partners
and the Limited Partners holding Common Units in proportion to their
respective Percentage Interests.
(b) Net Losses. All items of income, gain, loss and deduction
taken into account in computing Net Losses for such taxable period
shall be allocated in the same manner as such Net Losses are allocated
hereunder which Net Losses shall be allocated as follows:
(i) First, 100% to the General Partners and the Limited Partners
holding Common Units in accordance with their respective Percentage
Interests, until the aggregate Net Losses allocated to the holder of a
Common Unit pursuant to this Section 5.1(b)(i) for the current taxable
year and all previous taxable years is equal to the aggregate Net
Income allocated to the holder of such Common Unit pursuant to Section
5.1(a)(iii) hereof for all previous taxable years;
(ii) Second, 100% to the Limited Partners holding Common Units,
in the proportion that the respective number of Common Units held by
them bears to the total number of Common Units then outstanding
provided, that Net Losses shall not be allocated pursuant to this
Section 5.1(b)(ii) to the extent that such allocation would cause any
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); and
(iii) Third, the balance, if any, 100% to the General Partners,
in the proportion that their respective Percentage Interests bears to
2%.
(c) Net Termination Gain and Losses. All items of income, gain,
loss and deduction taken into account in computing Net Termination
Gain or Net Termination Loss for such taxable period shall be
allocated in the same manner as such Net Termination Gain or Net
Termination Loss is allocated hereunder. All allocations under this
Section 5.1(c) shall be made after Capital Account balances have been
adjusted by all other allocations provided under this Section 5.1 and
after all distributions of Available Cash provided under Section 5.4
or 5.5 hereof have been made with respect to such taxable period.
(i) If a Net Termination Gain is recognized, such Net
Termination Gain shall be allocated between the General Partners and
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
Adjusted Capital Account, in the proportion of such deficit balance to
the deficit balances in the Adjusted Capital Accounts of all Partners,
until each such Partner has been allocated Net Termination Gain equal
to any such deficit balance in its Adjusted Capital Account; and
(B) Second, 98% to Limited Partners holding Common Units in the
proportion that the respective number of Common Units held by them
bears to the total number of Common Units outstanding, 1.9% to the
Managing General Partner and 0.1% to the Special General Partner.
(ii) If a Net Termination Loss is recognized, such Net
Termination Loss shall be allocated to the Partners in the following
manner:
(A) First, 98% to Limited Partners holding Common Units in
proportion to, and to the extent of, the positive balances in their
respective Adjusted Capital Accounts, 1.9% to the Managing General
Partner and 0.1% to the Special General Partner until such Limited
Partner's Adjusted Capital Accounts are reduced to zero;
(B) Second, the balance, if any, 100% to the General Partners in
the proportion that their respective Percentage Interest bears to 2%.
(d) Agreed Allocations. Notwithstanding any other provisions of
this Section 5.1 (other than Section 5.1 (e) hereof), the following
special allocations shall be made for such taxable period:
(i) Priority Allocations.
(A) If the amount of cash or the Net Agreed Value of any
property distributed (except cash or property distributed pursuant to
Section 14.3 or 14.4 hereof) to any Limited Partner holding Common
Units during a taxable year is greater (on a per Common Unit basis)
than the amount of cash or the Net Agreed Value of property
distributed to the other Limited Partners holding Common Units (on a
per Common Unit basis), then (1) each such Limited Partner receiving
such greater cash or property distribution shall be allocated gross
income in an amount equal to the product of (x) the amount by which
the distribution (on a per Common Unit basis) to such Limited Partner
exceeds the distribution (on a per Common Unit basis) to the Limited
Partners receiving the smallest distribution and (y) the number of
Common Units owned by the Limited Partner receiving the greater
distribution; and (2) the General Partners shall be allocated gross
income (95% to the Managing General Partner and 5% to the Special
General Partner) in an amount equal to 2.0408% of the sum of the
amounts allocated in clause (1) above.
(B) If the amount of cash and the Net Agreed Value of any
property distributed (except cash or property distributed pursuant to
Section 14.3 or 14.4 hereof) to the Limited Partners holding Common
Units or the General Partners during a taxable year exceeds that which
would have been distributed to either class of partners had such
distributions been made in the ratio of 98% and 2% (as between the
Limited Partners holding Common Units and the General Partners,
respectively), such class receiving the excess distribution will be
allocated gross income in an amount equal to such excess. Gross
income allocated to the Limited Partners holding Common Units pursuant
to this Section 5.1(d)(i)(B) shall be allocated among such Limited
Partners holding Common Units in the proportion that the respective
number of Common Units held by them bears to the total number of
Common Units. Gross income allocated to the General Partners pursuant
to this Section 5.1(d)(i)(B) shall be allocated among such General
Partners in the ratio that their respective Percentage Interests bear
to 2%.
(ii) Nonrecourse Liabilities. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (A) the amount
of Partnership Minimum Gain and (B) the total amount of Nonrecourse
Built-in Gain shall be allocated among the Partners in accordance with
their respective Percentage Interests.
(iii) Discretionary Allocation. (A) Notwithstanding any other
provisions of Section 5.1(a), (b) or (c) hereof, the Agreed
Allocations shall be adjusted so that, to the extent possible, the net
amount of items of income, gain, loss and deduction allocated to each
Partner pursuant to the Required Allocations and the Agreed
Allocations, together, shall be equal to the net amount of such items
that would have been allocated to each such Partner under the Agreed
Allocations had there been no Required Allocations; provided, however,
that for purposes of applying this Section 5.1(d)(iii)(A), it shall be
assumed that all chargebacks pursuant to Section 5.1(e)(i) and (ii)
hereof have occurred.
(B) The Managing General Partner shall have reasonable
discretion, with respect to each taxable year, to (1) apply the
provisions of Section 5.1(d)(iii)(A) hereof in whatever fashion as is
most likely to minimize the economic distortions that might otherwise
result from the Required Allocations, and (2) divide all allocations
pursuant to Section 5.1(d)(iii)(A) hereof among the Partners in a
manner that is likely to minimize such economic distortions.
(e) Required Allocations. Notwithstanding any other provision
of this Section 5.1, the following special allocations shall be made
for such taxable period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding the
other provisions of this Section 5.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period, each
Partner shall be allocated items of Partnership income and gain for
such period (and, if necessary subsequent periods) in the manner and
amounts provided in Treasury Regulation Sections 1.704-2(f),
1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor provision. For
purposes of this Section 5.1(e), each Partner's Adjusted Capital
Account balance shall be determined, and the allocation of income or
gain required hereunder shall be effected, prior to the application of
any other allocations pursuant to this Section 5.1 with respect to
such taxable period (other than an allocation pursuant to Sections
5.1(e)(v) and 5.1 (e)(vi)). This Section 5.1(e)(i) is intended to
comply with the Partnership Minimum Gain chargeback requirement in
Treasury Regulation Section 1.704-2(f) and shall be interpreted
consistently therewith.
(ii) Chargeback of Minimum Gain Attributable to Partner
Nonrecourse Debt. Notwithstanding the other provisions of this
Section 5.1 (other than 5.1(e)(i) hereof), except as provided in
Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease
in Minimum Gain Attributable to Partner Nonrecourse Debt during any
Partnership taxable period, any Partner with a share of Minimum Gain
Attributable to Partner Nonrecourse Debt at the beginning of such
taxable period shall be allocated items of Partnership income and gain
for such period (and, if necessary, subsequent periods) in the manner
and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions. For purposes of this
Section 5.1(e), each Partner's Adjusted Capital Account balance shall
be determined and the allocation of income or gain required hereunder
shall be effected, prior to the application of any other allocations
pursuant to this Section 5.1(e), other than Section 5.1(e)(i) hereof
and other than an allocation pursuant to Sections 5.1(e)(v) and
5.1(e)(vi), with respect to such taxable period. This Section
5.1(e)(ii) is intended to comply with the chargeback of items of
income and gain required 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 adjustments, allocations or distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of
Partnership income and gain shall be specifically allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent
required by the Treasury regulations promulgated under Section 704(b)
of the Code, the deficit balance, if any, in its Adjusted Capital
Account created by such adjustments, allocations or distributions as
quickly as possible unless such deficit balance is otherwise
eliminated pursuant to Section 5.1(e)(i) or 5.1(e)(ii) hereof.
(iv) Gross Income Allocations. In the event any Partner has a
deficit balance in its Adjusted Capital Account at the end of any
Partnership taxable period that is in excess of the sum of (A) the
amount such Partner is obligated to restore and (B) the amount such
Partner is deemed to be obligated to restore pursuant to Treasury
Regulation Sections 1.704-2(g)(1) 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 5.1(e)(iv) shall be made
only if and to the extent that such Partner would have a deficit
balance in its Adjusted Capital Account after all other allocations
provided in this Section 5.1 have been tentatively made as if this
Section 5.1(e)(iv) was not in the Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with
their respective Percentage Interests. If the 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 Limited Partners, to revise
the prescribed ratio to the numerically closest ratio which does
satisfy such requirements.
(vi) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the
Partner that bears the Economic Risk of Loss for such Partnership
Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Treasury Regulation Section
1.704-2(i). If more than one Partner bears the Economic Risk of Loss
with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse
Deductions attributable thereto shall be allocated between or among
such Partners in accordance with the ratios in which they share such
Economic Risk of Loss.
5.2 Allocations for Tax Purposes. (a) Except as otherwise
provided herein, for federal income tax purposes, each item of income,
gain, loss and deduction which is recognized by the Partnership, for
federal income tax purposes, shall be allocated among the Partners in
the same manner as its correlative item of "book" income, gain, loss
or deduction is allocated pursuant to Section 5.1 hereof.
(b) In an attempt to eliminate Book-Tax Disparities attributable
to a Contributed Property or Adjusted Property, each item of income,
gain, loss, depreciation, depletion and cost recovery deduction which
is recognized by the Partnership, for federal income tax purposes,
shall be allocated for federal income tax purposes among the Partners
as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the
manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property and
its adjusted basis at the time of contribution; and (B) except as
otherwise provided in Section 5.2(b)(iii) hereof, any item of Residual
Gain or Residual Loss attributable to a Contributed Property shall be
allocated among the Partners in the same manner as its correlative
item of "book" gain or loss is allocated pursuant to Section 5.1
hereof.
(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 7.04(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and
the allocations thereof pursuant to Section 4.4(d)(i) or (ii) hereof,
and (2) second, in the event such property was originally a
Contributed Property, be allocated among the Partners in a manner
consistent with Section 5.2(b)(i)(A) hereof; and (B) except as
otherwise provided in Section 5.2(b)(iii) hereof, any item of Residual
Gain or Residual Loss attributable to an Adjusted Property shall be
allocated among the Partners in the same manner as its correlative
item of "book" gain or loss is allocated pursuant to Section 5.1
hereof.
(iii) Any items of income, gain, loss or deduction otherwise
allocable under Section 5.2(b)(i)(B) or 5.2(b)(ii)(B) hereof shall be
subject to allocation by the Managing General Partner in a manner
designed to eliminate, to the maximum extent possible, Book-Tax
Disparities in a Contributed Property or Adjusted Property otherwise
resulting from the application of the "ceiling" limitation (under
Section 704(c) of the Code or Section 704(c) principles) to the
allocations provided under Section 5.2(b)(i)(A) or 5.2(b)(ii)(A)
hereof.
(c) For the proper administration of the Partnership and for the
preservation of uniformity of the Units (or any class or classes
thereof), the Managing General Partner shall have the 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 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)
of the Code or (y) otherwise to preserve or achieve uniformity of the
Units (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 5.2(c) only
if such conventions, allocations or amendments would not have a
material adverse effect on the Partners, the holders of any class or
classes of Units issued and outstanding 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 sole discretion may
determine to depreciate the portion of an adjustment under Section
743(b) of the Code attributable to unrealized appreciation in any
Adjusted Property (to the extent of the unamortized Book-Tax
Disparity) using a predetermined rate derived from the depreciation
method and useful life applied to the Partnership's common basis of
such property, despite the inconsistency of such approach with
Proposed Treasury Regulation Section 1.168-2(n), Treasury Regulation
Section 1.167(c)-1(a)(6) or the legislative history of Section 197 of
the Code. If the Managing General Partner later determines that such
reporting position cannot reasonably be taken, the Managing General
Partner may adopt a depreciation convention under which all purchasers
acquiring Units in the same month would receive depreciation based
upon the same applicable rate as if they had purchased a direct
interest in the Partnership's property. If the Managing General
Partner chooses not to utilize such aggregate method, the Managing
General Partner may use any other reasonable depreciation convention
to preserve the uniformity of the intrinsic tax characteristics of any
Units that would not have a material adverse effect on the Limited
Partners or the Record Holders of any class or classes of Units.
(e) Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall, to the extent
possible, after taking into account other required allocations of gain
pursuant to this Section 5.2, be characterized as Recapture Income in
the same proportions and to the same extent as such Partners have been
allocated any deductions directly or indirectly giving rise to the
treatment of such gains as Recapture Income.
(f) All items of income, gain, loss, deduction and credit
recognized by the Partnership for federal income tax purposes and
allocated to the Partners in accordance with the provisions hereof
shall be determined without regard to any election under Section 754
of the Code which may be made by the Partnership, provided, however,
that such allocations once made, shall be adjusted as necessary or
appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction
attributable to a transferred Partnership Interest of the General
Partners or to transferred Units shall, for federal income tax
purposes, be determined on an annual basis and prorated on a monthly
basis and shall be allocated to the Partners as of the opening of the
New York Stock Exchange on the first Business Day of each month;
provided, however, that gain or loss on a sale or other disposition of
any assets of the Partnership other than in the ordinary course of
business shall be allocated to the Partners as of the opening of the
New York Stock Exchange on the first Business Day of the month in
which such gain or loss is recognized for federal income tax purposes.
The Managing General Partner may revise, alter or otherwise modify
such methods of allocation as it determines necessary, to the extent
permitted or required by Section 706 of the Code and the regulations
or rulings promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited
Partner under the provisions of this Article V shall instead be made
to the beneficial owner of Units held by a nominee in any case in
which the nominee has furnished the identity of such owner to the
Partnership in accordance with Section 6031(c) of the Code or any
other method acceptable to the Managing General Partner in its sole
discretion.
5.3 Requirement and Characterization of Distributions. Within
60 days following the end of each calendar quarter an amount equal to
100% of Available Cash with respect to such quarter shall be
distributed in accordance with this Article V by the Partnership to
the Partners, as of the Record Date selected by the Managing General
Partner in its reasonable discretion, unless such distribution shall
be prohibited by a Certificate of Designations, a loan agreement or
other instrument then in effect to which the Partnership is a party or
by which its properties are bound, or unless a Certificate of
Designation requires a different distribution. The Managing General
Partner shall have the right to determine in its sole discretion the
amount of Available Cash for each quarter except to the extent it is
established that such determination is contrary to any express
requirement of this Agreement.
5.4 Distributions. Available Cash with respect to a calendar
quarter shall be distributed 98% to Limited Partners holding Common
Units, in the proportion that the respective number of Common Units
held by them bears to the total number of Common Units outstanding,
1.9% to the Managing General Partner and 0.1% to the Special General
Partner, unless such distribution shall be prohibited by a Certificate
of Designations, a loan agreement or other instrument then in effect
to which the Partnership is a party or by which properties are bound,
or unless a Certificate of Designation requires a different
distribution.
5.5 [intentionally blank]
5.6 Distributions of Proceeds from Capital Transactions. (a)
Proceeds from Capital Transactions which the Managing General Partner
determines to distribute shall be distributed, first as provided in
Section 5.6(b) hereof and second 98% to the Limited Partners holding
Common Units, in the proportion that the respective number of Common
Units held by them bears to the total number of Common Units, 1.9% to
the Managing General Partner and 0.1% to the Special General Partner.
(b) If one or more Capital Transactions shall occur in any
taxable year, then before any distribution is made pursuant to Section
5.6(a) hereof (except as otherwise provided below in this Section
5.6(b)) the Managing General Partner shall be required to make a
distribution of Proceeds from Capital Transactions on or before the
April 1st next following the end of the taxable year in which such
Capital Transactions occur in accordance with the following procedure:
(i) The Managing General Partner shall determine the net capital
gain and net ordinary income recognized by the Partnership (without
taking account of any Code Section 743 adjustments) for federal income
tax purposes from all Capital Transactions during such year, and shall
then determine the portion of such net capital gain and net ordinary
income allocable to any then outstanding Common Units.
(ii) The Managing General Partner shall then cause the
Partnership (except as provided in paragraph (iii) immediately below)
to distribute cash to the Partners, in accordance with the provisions
of this Section 5.6(b) until an amount has been distributed pursuant
hereto with respect to every Common Unit outstanding on the Record
Date established by the Managing General Partner with respect to such
distribution equal to 125% of the federal income tax liability that
would be due with respect to the "net capital gain" and "net ordinary
income" attributed to any outstanding Common Unit on the Record Date
(assuming for such purpose that the maximum marginal federal income
tax rates for individuals, relating to either long-term capital gain
or ordinary income, whichever the case may be, would apply at the time
of such recognition without regard to any elimination of the benefit
of lower rates, any surtaxes or any alternative minimum taxes.
(iii) No distribution of Proceeds from Capital Transactions
shall be required by this Section 5.6(c) with respect to any tax year
if the amount or value otherwise distributable for such taxable year
under this Section 5.6(c) does not exceed $.10 per Common Unit, or if
such distribution shall be prohibited by a Certificate of
Designations, a loan agreement or other instrument then in effect to
which the Partnership is a party or by which its properties are bound.
5.7 Distributions Upon Liquidation. In the event of the
liquidation of the Partnership, distribution of the assets of the
Partnership shall be in accordance with Section 14.3 hereof, subject
to the terms of any applicable Certificates of Designations.
5.8 Other Capital Distributions. Subject to the Certificates of
Designations, distributions of equity securities of the Partnership or
securities in respect of a liquidation of the Partnership, including
without limitation, distributions of Common Units, distributions of
interests in the Partnership other than Common Units, distributions of
rights or warrants entitling the holders thereof to subscribe for the
Common Units or any securities entitling the holders thereof to
convert such securities into, or exchange such securities for, Common
Units, or distributions of rights or warrants to purchase debt
securities or assets of the Partnership, if distributed by the
Partnership, shall be distributed 98% to holders of Common Units, in
the proportion that the respective number of Common Units held by them
bears to the total number of Common Units, and 1.9% to the Managing
General Partner and 0.1% to the Special General Partner.
ARTICLE VI
Management and Operation of Business
6.1 Management. (a) The Managing General Partner shall conduct,
direct and exercise full control over all activities of the
Partnership. Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of the
Partnership shall be exclusively vested in the Managing General
Partner, and neither Limited Partners nor (except as expressly set
forth herein) the Special General Partner shall have any right of
control or management power over the business and affairs of the
Partnership. In addition to the powers now or hereafter granted 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
6.3 hereof, shall have full power and authority to do all things
deemed necessary or desirable by it to conduct the business of the
Partnership, to exercise all powers set forth in Section 3.2 hereof
and to effectuate the purposes set forth in Section 3.1 hereof
including, without limitation, (i) the making of any expenditures, the
borrowing of money, the guaranteeing of indebtedness and other
liabilities, the issuance of evidences of indebtedness and the
incurring of any obligations it deems necessary for the conduct of the
activities of the Partnership; (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 assets
of the Partnership or the merger or other combination of the
Partnership with or into another entity (all of the foregoing subject
to any prior approval which may be required by Section 6.3 hereof);
(iv) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the terms of
this Agreement and on any terms it sees fit, including, without
limitation, the financing of the conduct of the operations of the
Partnership or any of its Subsidiaries, the lending of funds to other
persons (including its Subsidiaries) and the repayment of obligations
of the Partnership and its Subsidiaries and the making of capital
contributions to its Subsidiaries; (v) the negotiation and execution
on any terms deemed desirable in its sole discretion and the
performance of any contracts, conveyances or other instruments that it
considers useful or necessary to the conduct of the Partnership
operations or the implementation of its powers under this Agreement;
(vi) the distribution of Partnership cash or other Partnership assets;
(vii) the selection and dismissal of employees and agents (including,
without limitation, 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 and the Partners as it deems necessary or appropriate;
(ix) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general
partnerships, joint ventures or other relationships that it deems
desirable (including, without limitation, the acquisition of interests
in, and the contributions of property to its Subsidiaries from time to
time); (x) the control of any matters affecting the rights and
obligations of the Partnership, including the conduct of litigation
and the incurring of legal expense and the settlement of claims and
litigation; (xi) the lending or borrowing of money, the assumption or
guarantee of, or other contracting for, indebtedness and other
liabilities, the issuance of evidences of indebtedness and the
securing of same by mortgage, deed of trust or other lien or
encumbrance, the bringing and defending of actions at law or in equity
and the indemnification of any Person against liabilities and
contingencies to the extent permitted by law; (xii) the entering into
listing agreements with the New York Stock Exchange and any other
securities exchange and delisting some or all of the Units from, or
requesting that trading be suspended on, any such exchange (subject to
any prior approval which may be required under Section 1.6 hereof);
(xiii) the undertaking of any action in connection with the
Partnership's investment in its Subsidiaries (including, without
limitation, the contribution or loan by the Partnership to its
Subsidiaries of funds); (xiv) the undertaking of any action in
connection with the Partnership's direct or indirect investment in its
Subsidiaries; and (xv) determine the fair market value of any
Partnership property distributed in kind using such reasonable method
of valuation as it may adopt.
(b) The Special General Partner shall have power and authority
coextensive with that of the Managing General Partner to represent the
Partnership in dealings with third parties (for the purposes of this
Section 6.1, "third parties" shall be deemed to be persons other than
the Partners and the Assignees thereof), and accordingly may bind the
Partnership. However, in the absence of notice given to the
Partnership by either of the Managing General Partner or the Special
General Partner to the contrary, the Special General Partner's power
and authority to manage the Partnership shall be presumed to have been
delegated to the Managing General Partner. In the absence of such
delegation of the Special General Partner's power and authority, the
Special General Partner shall have voting power in all matters of
management of the Partnership proportionate with its general partner
Partnership Interest.
(c) Each of the Partners and each other Person who may acquire
an interest in Units hereby approves, ratifies and confirms the
execution, delivery and performance by the parties thereto of the
Deposit Agreement, the Underwriting Agreement, and the other
agreements described in the Registration Statement, and agrees that
the Managing General Partner is authorized to execute, deliver and
perform the above-mentioned agreements and transactions and such other
agreements described in the Registration Statement on behalf of the
Partnership without any further act, approval or vote of the Partners
or the other Persons who may acquire an interest in Units,
notwithstanding any other provisions of this Agreement, the Delaware
Act or any applicable law, rule or regulation. None of the execution,
delivery or performance by the Managing General Partner, the
Partnership or any Affiliate of any of them of any agreement
authorized or permitted under this Agreement shall constitute a breach
by the Managing General Partner of any duty that the Managing General
Partner may owe the Partnership or the Limited Partners or any other
Persons under this Agreement or of any duty stated or implied by law
or equity.
(d) If the Managing General Partner determines such action to be
necessary or appropriate in connection with the proposed qualification
or formation and operation of the Partnership in any state other than
the State of Delaware in which the Partnership is transacting or may
transact business, the Managing General Partner may cause the
Partnership to form one or more operating partnerships pursuant to and
in conformity with the laws of such jurisdiction or jurisdictions as
the Managing General Partner may determine ("Operating Partnership").
An Operating Partnership may have conveyed to it and may acquire,
hold, operate and dispose of all or part of the Partnership assets
located in a state. Each Operating Partnership shall be composed of
the Managing General Partner as managing general partner thereof,
having a 1.9% interest in the Operating Partnership, the Special
General Partner as special general partner thereof, have a 0.1%
general partner interest in the Operating Partnership, which shall in
turn reduce the interests of the Managing General Partner and the
Special General Partner in the Partnership so that the economic
interest of the Managing General Partner as managing general partner
and the Special General Partner as special general partner in the
Partnership and the Operating Partnership or Operating Partnerships
remains 1.9% and 0.1%, respectively, and the Partnership as the sole
limited partner thereof having a 98% interest in the Operating
Partnership. Each Operating Partnership shall be formed pursuant to
an agreement of limited partnership in substantially the form of this
Agreement, provided that the Operating Partnership agreement may
contain (i) a provision providing for a name of the Operating
Partnership different from the name of the Partnership, (ii) such
provisions as the Managing General Partner determines are reasonable
and necessary or appropriate to comply with the laws of the
jurisdiction in which the Operating Partnership is being formed or to
reflect the manner in which the Operating Partnership will be or is
required to conduct the activities of the Operating Partnership with
respect to the properties located in a state, (iii) such provisions as
the Managing General Partner would be permitted to adopt as amendments
to this Agreement (provided that the Managing General Partner complies
with any applicable requirements of such sections) and (iv) any other
provision that the Managing General Partner has determined is
necessary or appropriate and is fair and reasonable to all parties
concerned. The Managing General Partner is hereby authorized on
behalf of the Partnership to execute the agreement of limited
partnership of each Operating Partnership and any other certificates,
instruments and documents necessary to form the Operating Partnership,
and the Partners hereby approve, ratify and confirm the execution,
delivery and performance thereof.
(e) At all times from and after the date hereof, the Managing
General Partner shall cause the Partnership and any Operating
Partnership to obtain and maintain to the extent available on a
commercially reasonable basis (i) casualty and liability insurance on
the properties of the Partnership and (ii) liability insurance for the
General Partners and the Indemnitees hereunder.
(f) At all times from and after the date hereof, the Managing
General Partner shall cause the Partnership to maintain working
capital reserves in such amounts as the Managing General Partner deems
appropriate and reasonable from time to time.
6.2 Certificate of Limited Partnership. The Managing General
Partner has filed the Certificate of Limited Partnership 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 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 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 the things to maintain the Partnership as a
limited partnership (or a partnership in which the limited partners
have limited liability) under the laws of the State of Delaware or any
other state in which the Partnership may elect to do business or own
property. Subject to the terms of Section 7.5(a) hereof, the Managing
General Partner shall not be required, before or after filing, to
deliver or mail a copy of the Certificate of Limited Partnership or
any amendment thereto to any Limited Partner.
6.3 Restrictions on the General Partners' Authority. (a) No
General Partner may, without the written approval of the specific act
by all of the Limited Partners or by other written instrument executed
and delivered by all of the Limited Partners subsequent to the date of
this Agreement, take any action in contravention of this Agreement,
including, without limitation, (i) take any act that would make it
impossible to carry on the ordinary business of the Partnership,
except as otherwise provided in this Agreement, (ii) possess
Partnership property, or assign any rights in specific Partnership
property, for other than a Partnership purpose; (iii) admit a person
as a Partner, except as otherwise provided in this Agreement; (iv)
amend this Agreement in any manner, except as otherwise provided in
this Agreement; or (v) transfer its interest as a General Partner of
the Partnership, except as otherwise provided in this Agreement.
(b) Except as provided in Article XIV hereof, no General Partner
may sell, exchange or otherwise dispose of all or substantially all of
the Partnership's assets in a single transaction or a series of
related transactions (including by way of merger, consolidation or
other combination with any other Person) without the approval of the
holders of at least a majority of the Outstanding Units, voting
together as a single class unless the holders of a particular class or
series of Outstanding Partnership Securities have the right to approve
such transaction or series of transactions pursuant to the Certificate
of Designations creating such Partnership Securities; provided,
however, that this provision shall not preclude or limit the mortgage,
pledge, hypothecation or grant of a security interest in all or
substantially all of the Partnership's assets (unless otherwise
prohibited in a Certificate of Designations) and shall not apply to
any forced sale of any or all of the Partnership's assets pursuant to
the foreclosure of, or other realization upon, any such encumbrance.
(c) Unless approved by the affirmative vote of the holders of at
least a majority of the Outstanding Units, no General Partner shall
take any action or refuse to take any reasonable action the effect of
which, if taken or not taken, as the case may be, would cause the
Partnership to be treated as a corporation or as an association
taxable as a corporation for federal income tax purposes.
(d) At all times while serving as a general partner of the
Partnership, the General Partners will not make any dividend or
distribution on, or repurchase any stock or take any other action if
the effect of such dividend or distribution, repurchase or other
action would be to reduce its net worth below an amount necessary to
receive an Opinion of Counsel that the Partnership will be treated as
a partnership for federal income tax purposes.
6.4 Reimbursement of the General Partners. (a) Except as
provided in this Section 6.4 and elsewhere in this Agreement, none of
the General Partners shall be compensated for its services as a
general partner of the Partnership.
(b) The General Partners shall be reimbursed on a monthly basis,
or such other 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
amounts paid to any Person to perform services to or for the
Partnership) and (ii) except as provided in (d) below, that portion of
the General Partners' or their Affiliates' legal, accounting, investor
communications, utilities, telephone, secretarial, travel,
entertainment, bookkeeping, reporting, data processing, office rent
and other office expenses (including overhead charges), salaries, fees
and other compensation and benefit expenses of employees, officers and
directors, other administrative or overhead expenses and all other
expenses, in each such case, necessary or appropriate to the conduct
of the Partnership's business and allocable to the Partnership or
otherwise incurred by the General Partners in connection with
operating the Partnership's business (including, without limitation,
expenses allocated to the General Partners by their Affiliates). The
Managing General Partner shall determine the fees and expenses that
are allocable to the Partnership in any reasonable manner determined
by the Managing General Partner in its sole discretion. Such
reimbursement shall be in addition to any reimbursement to the General
Partners as a result of indemnification pursuant to Section 6.7
hereof.
(c) The Managing General Partner in its sole discretion and
without the approval of the Limited Partners may propose and adopt on
behalf of the Partnership, employee benefit plans (including, without
limitation, plans involving the issuance of Units), for the benefit of
employees of the General Partners, the Partnership, its Subsidiaries
or any Affiliate of any of them in respect of services performed,
directly or indirectly, for the benefit of the Partnership or any of
its Subsidiaries.
(d) The Managing General Partner shall not be reimbursed for any
salaries, fees and other compensation and benefit expenses of
employees, officers and directors of the Managing General Partner
which are paid to individuals who also serve as a director of the
Managing General Partner or who are shareholders of the Managing
General Partner to the extent that such payments are made pursuant to
an employment agreement. The reimbursement to the Managing General
Partner pursuant to the terms of 6.4(b) for any compensation or
benefits paid, directly or indirectly, to its shareholders or
directors in their capacity as such, shall be limited to the amount of
reasonable directors' fees and expenses and costs of directors' and
officers' liability insurance.
6.5 Outside Activities. (a) No General Partner shall, for so
long as it is a general partner of the Partnership, enter into or
conduct any business or incur any debts or liabilities which adversely
affect or are in direct competition with the Partnership.
(b) Except as described in the Registration Statement or as
provided in Section 6.5(a) hereof, no Indemnitee shall be expressly or
implicitly restricted or proscribed pursuant to this Agreement or the
partnership relationship established hereby from engaging in other
activities for profit, whether in the businesses engaged in by the
Partnership or anticipated to be engaged in by the Partnership or
otherwise, including, without limitation, those businesses described
in or contemplated by the Registration Statement. None of the
Partnership, any Limited Partner or any other Person shall have any
rights by virtue of this Agreement or the partnership relationship
established hereby or thereby in any business ventures of any
Indemnitee, and, except as set forth in the Registration Statement,
such Indemnitees shall have no obligation to offer any interest in any
such business ventures to the Partnership, any Limited Partner or any
such other Person. The General Partners and any other Persons
affiliated with the General Partners may acquire Units or Partnership
Securities and shall be entitled to exercise all rights of an Assignee
or Limited Partner, as applicable, relating to such Units or
Partnership Securities, as the case may be.
6.6 Contracts with Affiliates. (a) The Partnership may lend or
contribute to its Subsidiaries, and its Subsidiaries may borrow funds,
on terms and conditions established in the sole discretion of the
Managing General Partner. The foregoing authority shall be exercised
by the Managing General Partner in its reasonable discretion and shall
not create any right or benefit in favor of any Subsidiary or any
other Person. The Partnership may not lend funds to the General
Partners or any of their Affiliates.
(b) Each General Partner may itself, or may enter into an
agreement with any of its Affiliates to, render services to the
Partnership. Any services rendered to the Partnership by a General
Partner or any Affiliate thereof shall be on terms that are fair and
reasonable to the Partnership. The provisions of Section 6.4 hereof
shall apply to the rendering of services described in this Section
6.6(b).
(c) The Partnership may transfer assets to joint ventures, other
partnerships, corporations or other business entities in which it is
or thereby becomes a participant upon such terms and subject to such
conditions consistent with this Agreement and applicable law.
(d) Neither a General Partner nor any Affiliate thereof shall
sell, transfer or convey any property to, or purchase any property
from, the Partnership, directly or indirectly, except pursuant to
transactions that are fair and reasonable to the Partnership;
provided, however, that the requirements of this Section 6.6(d) shall
be deemed to be satisfied as to any transactions described in or
contemplated by the Registration Statement and the Consent
Solicitation Statement.
6.7 Indemnification. (a) To the fullest extent permitted by law
but subject to the limitations expressly provided in this Agreement,
each Indemnitee shall be indemnified and held harmless by the
Partnership from and against any and all losses, claims, damages,
liabilities, joint or several, expenses (including legal fees and
expenses), judgments, fines, settlements and other amounts arising
from any and all claims, demands, actions, suits or proceedings,
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 (x) a General Partner,
a departing General Partner or any of their Affiliates, (y) an
officer, director, employee, partner, agent or trustee of a General
Partner, any departing General Partner or any of their Affiliates or
(z) a Person serving at the request of the Partnership in another
entity in a similar capacity, provided that in each case the
Indemnitee acted in good faith and in the manner which such Indemnitee
believed to be in, or not opposed to, the best interests of the
Partnership and, with respect to any criminal proceeding, had no
reasonable cause to believe its conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contender, or its equivalent, shall
not, of itself, create a presumption that the Indemnitee acted in a
manner contrary to that specified above. Any indemnification pursuant
to this Section 6.7 shall be made only out of the assets of the
Partnership.
(b) To the fullest extent permitted by law, expenses (including
legal fees and expenses) incurred by an Indemnitee in defending any
claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Partnership prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the
Partnership of an undertaking by or on behalf of the Indemnitee to
repay such amount if it shall be determined that the Indemnitee is not
entitled to be indemnified as authorized in this Section 6.7.
(c) The indemnification provided by this Section 6.7 shall be in
addition to any other rights to which an Indemnitee may be entitled
under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity.
(d) The Partnership may purchase and maintain insurance, on
behalf of a General Partner 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, 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 6.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an
employee benefit plan whenever the performance by it of its duties to
the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan;
excise taxes assessed on an Indemnitee with respect to an employee
benefit plan pursuant to applicable law shall constitute "fines"
within the meaning of Section 6.7(a); and action taken or omitted by
it with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest
of the participants, and beneficiaries of the plan shall be deemed to
be for a purpose which is in, or not opposed to, the best interests of
the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners
to personal liability by reason of the indemnification provisions set
forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole
or in part under this Section 6.7 because the Indemnitee had an
interest in the transaction with respect to which the indemnification
applies if the transaction were otherwise permitted by the terms of
this Agreement.
(h) The provisions of this Section 6.7 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of any
other Persons.
(i) No amendment, modification or repeal of this Section 6.7 or
any provision hereof shall in any manner terminate, reduce or impair
the right of any past, present or future Indemnitee to be indemnified
by the Partnership, nor the obligation of the Partnership to indemnify
any such Indemnitee under and in accordance with the provisions of
this Section 6.7 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating
to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
6.8 Liability of Indemnitees. (a) Notwithstanding anything to
the contrary set forth in this Agreement or as otherwise prohibited by
law, no Indemnitee shall be liable for monetary damages to the
Partnership, Limited Partners or to any Persons who have acquired
interests in the Units for losses sustained or liabilities incurred as
a result of errors of judgment or of any act or omission if such
Indemnitee acted in good faith and in the manner which such Indemnitee
believed to be in, or not opposed to, the best interests of the
Partnership.
(b) Subject to its obligations and duties as Managing General
Partner set forth in Section 6.1(a) hereof, 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 it in good faith.
(c) Any amendment, modification or repeal of this Section 6.8 or
any provision hereof shall be prospective only and shall not in any
way affect the limitations or the liability to the Partnership and the
Limited Partners of a General Partner, its directors, officers,
partners and employees under this Section 6.8 as in effect immediately
prior to such amendment, modification or repeal with respect to claims
arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when
such claims may arise or be asserted.
6.9 Resolution of Conflicts of Interest. (a) Unless otherwise
expressly provided in this Agreement, whenever a potential conflict of
interest exists or arises between a General Partner or any Affiliate
thereof, on the one hand, and the Partnership, any Subsidiary or any
Partner, on the other hand, any resolution or course of action in
respect of such conflict of interest shall be permitted and deemed
approved by all Partners, and shall not constitute a breach of this
Agreement, of any agreement contemplated herein, 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 a resolution of such conflict or
course of action. Any conflict of interest and any resolution of such
conflict of interest shall be deemed fair and reasonable to the
Partnership upon Special Approval of such conflict of interest or
resolution. The Managing General Partner may also adopt a resolution
or course of action that has not received Special Approval. Any such
resolution or course of action in respect of any conflict of interest
shall not constitute a breach of this Agreement, of any other
agreement contemplated herein, or of any duty stated or implied by law
or equity, if such resolution or course of action is fair and
reasonable to the Partnership. The Managing General Partner
(including the Conflicts and Audit Committee in connection with
Special Approval) shall be authorized in connection with its
resolution of any conflict of interest to consider (i) the relative
interests of any party to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interest; (ii)
any customary or accepted industry practices; (iii) any applicable
generally accepted accounting practices or principles; and (iv) such
additional factors as the Managing General Partner (including the
Conflicts and Audit Committee in connection with Special Approval)
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 Conflicts and
Audit Committee in connection with Special Approval) to consider the
interests of any Person other than the Partnership and the Limited
Partners as a group. So long as the Managing General Partner acted in
good faith and in a manner that it believed to be in, or not opposed
to, the best interests of the Partnership and had no reasonable
grounds to believe its conduct was unlawful, 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 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
"discretion" or under a grant of similar authority or latitude, 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 or any Limited Partner, or (ii) 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 or any other agreement contemplated hereby.
(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.
6.10 Other Matters Concerning General Partners. (a) A 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) A General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers
and other consultants and advisers selected in good faith 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 which
such 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) A General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly
authorized officers and a duly appointed attorney or
attorneys-in-fact. Each such attorney shall, to the extent provided
by such General Partner in the power of attorney, have full power and
authority to do and perform all and every act and duty which is
permitted or required to be done by such General Partner hereunder.
(d) A General Partner shall have the right, but not the
obligation, to make loans to the Partnership; provided, that in no
event shall such loans be on terms and conditions less favorable than
those that the Partnership could obtain from unaffiliated third
parties or banks for the same purpose.
6.11 Title to Partnership Assets. Title to Partnership assets,
whether real, personal or mixed and whether tangible or intangible,
shall be deemed to be owned by the Partnership as an entity, and no
Partner, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the
Partnership, the Managing General Partner or one or more nominees, as
the Managing General Partner may determine, including Affiliates of
the Managing General Partner. The Managing General Partner hereby
declares and warrants that any Partnership assets for which legal
title is held in the name of the Managing General Partner or any
nominee or Affiliate of the Managing General Partner shall be held by
the Managing General Partner for the use and benefit of the
Partnership in accordance with the provisions of this Agreement;
provided, however, that the Managing General Partner shall use its
best efforts to cause beneficial and record title to such assets to be
vested in the Partnership as soon as reasonably practicable. All
Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in
which legal title to such Partnership assets is held.
6.12 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 has full
power and authority to encumber, sell or otherwise use in any manner
any and all assets of the Partnership and to enter into any contracts
on behalf of the Partnership, and such Person shall be entitled to
deal with the Managing General Partner as if it were the Partnership's
sole party in interest, both legally and beneficially. The Special
General Partner, each Limited Partner and each Assignee hereby waives
any and all defenses or other remedies which may be available against
such Person to contest, negate or disaffirm any action of the Managing
General Partner in connection with any such dealing. In no event
shall any Person dealing with the Managing General Partner or its
representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or
expedience of any act or action of the Managing General Partner 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.
6.13 Covenants and Representations of General Partners. (a) The
General Partners hereby covenant and represent that (i) at all times
while acting as general partners of the Partnership, they will
collectively maintain assets (excluding any interest in, or
receivables due from, the Partnership) the fair market value of which
exceeds their liabilities by the amount of at least $10 million; (ii)
the Partnership will be operated in accordance with applicable state
partnership statutes and with this Partnership Agreement; (iii) at
least ninety percent (90%) of the Partnership's gross income for each
taxable year will consist of (w) income or gain derived from the
exploration, development, production, processing, refining,
transportation or marketing of crude oil and refined petroleum
products, (x) gains from the sale of real property, (y) real property
rents or (z) gains from the sale or other disposition of a capital
asset held for the production of income or gain of the character
described in clauses (w), (x) and (y) above; and (iv) the General
Partners will act independently of the Limited Partners.
(b) The Managing General Partner hereby covenants and agrees that it
will not permit the Partnership to exercise its purchase option to
acquire the Comyn pipeline (as described in the Registration
Statement) unless the Partnership has first received an opinion from a
nationally recognized investment banking firm which is independent of
the General Partners to the effect that the exercise of the option is
fair from a financial point of view to the holders of the Units in
their capacity as such.
ARTICLE VII
Rights and Obligations of Limited Partners
7.1 Limitation of Liability. The Limited Partners shall have no
liability under this Agreement except as expressly provided in this
Agreement or the Delaware Act.
7.2 Management of Business. No Limited Partner or Assignee (in
his capacity as such) shall take part in the operation, management or
control (within the meaning of the Delaware Act) of the Partnership's
business, transact any business in the Partnership's name or have the
power to sign documents for or otherwise bind the Partnership. The
transaction of any such business by a General Partner, any Affiliate
thereof or any officer, director, employee, partner, agent or trustee
of such General Partner or any Affiliate thereof, in its capacity as
such, shall not affect, impair or eliminate the limitations on the
liability of the Limited Partners or Assignees under this Agreement.
7.3 Outside Activities. Subject to the provisions of Section
6.5 hereof 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 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.
Neither the Partnership nor any Partners shall have any rights by
virtue of this Agreement in any business ventures of any Limited
Partner or Assignee.
7.4 Return of Capital. No Limited Partner shall be entitled to
the withdrawal or return of his Capital Contribution, except to the
extent of distributions made pursuant to this Agreement or upon
termination of the Partnership as provided herein. Except to the
extent provided by Article V hereof, or as set forth in a Certificate
of Designations, or as otherwise expressly provided in this Agreement,
no Limited Partner or Assignee shall have priority over any other
Limited Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses or distributions.
7.5 Rights of Limited Partners Relating to the Partnership. (a)
In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 7.5(b) hereof, each
Limited Partner shall have the right, for a purpose reasonably related
to such Limited Partner's interest as a limited partner in the
Partnership, upon reasonable demand and at such Limited Partner's own
expense:
(i) to obtain true and full information regarding the status of
the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of the
Partnership's federal, state and local income tax returns for each
year,
(iii) to have furnished to him, upon notification to the
Managing General Partner, a current list of the name and last known
business, residence or mailing address of each Partner,
(iv) to have furnished to him, upon notification to the Managing
General Partner, a copy of this Agreement and the Certificate of
Limited Partnership and all amendments thereto, together with 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 Agreed Value of any other
Capital Contribution by each Partner and which each Partner has agreed
to contribute in the future, and the date on which each became a
Partner, and
(vi) to obtain such other information regarding the affairs of
the Partnership as is just and reasonable.
(b) Notwithstanding any other provision of this Section 7.5, the
Managing General Partner may keep confidential from the Limited
Partners for such period of time as the Managing General Partner
determines in its sole discretion to be reasonable, any information
that the Managing General Partner reasonably believes to be in the
nature of trade secrets or other information the disclosure of which
the Managing General Partner in good faith believes is not in the best
interests of the Partnership or which the Partnership is required by
law or by agreements with unaffiliated third parties to maintain
confidentiality.
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, without limitation, all books and records
necessary to provide to the Limited Partners any information, lists
and copies of documents required to be provided pursuant to Section
7.5(a) hereof. Any records maintained by or on behalf of the
Partnership in the regular course of business, including the record of
the Record Holders and Assignees of Units, Depositary Units or
Partnership Securities, books of account and records of Partnership
proceedings, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, micrographics or any other information
storage device, provided that the 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 and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles.
8.2 Fiscal Year. The fiscal year of the Partnership shall be
the calendar year.
8.3 Reports. (a) As soon as practicable, but in no event later
than 120 days after the close of each Partnership Year, the Managing
General Partner shall cause to be mailed to each Record Holder of a
Unit as of a date selected by the Managing General Partner in its sole
discretion, an annual report containing financial statements of the
Partnership for such Partnership Year, presented in accordance with
generally accepted accounting principles, including a balance sheet
and statements of operations, Partners' equity and changes in
financial position, such statements to be audited by a nationally
recognized 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 calendar quarter except the last calendar
quarter of each year, the Managing General Partner shall cause to be
mailed to each Record Holder of a Unit, as of a date selected by the
Managing General Partner in its sole discretion, a report containing
unaudited financial statements of the Partnership and such other
information as may be required by applicable law, regulation or rule
of any National Securities Exchange on which the Units are listed for
trading, or as the Managing General Partner determines to be
appropriate.
ARTICLE IX
Tax Matters
9.1 Preparation of Tax Returns. The Managing General Partner
shall arrange for the preparation and timely filing of all returns of
Partnership income, gains, deductions, losses and other items required
of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within 90 days of the close of
each taxable year, the tax information reasonably required by
Unitholders for federal and state income tax reporting purposes. The
classification, realization and recognition of income, gains, losses
and deductions and other items shall be on the accrual method of
accounting for federal income tax purposes. The taxable year of the
Partnership shall be the calendar year.
9.2 Tax Elections. Except as otherwise provided herein, the
Managing General Partner shall, in its sole discretion, determine
whether to make any available election pursuant to the Code; provided,
however, that the Managing General Partner shall make the election
under Section 754 of the Code in accordance with applicable
regulations thereunder. The Managing General Partner shall have the
right to seek to revoke any such election (including, without
limitation, the election under Section 754 of the Code) upon the
Managing General Partner's determination in its sole discretion that
such revocation is in the best interests of the Limited Partners and
Assignees. For 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 Units will be deemed to be the lowest quoted trading
price of the Units on any National Securities Exchange on which such
Units are traded during the calendar month in which such transfer is
deemed to occur pursuant to Section 5.1(d) hereof without regard to
the actual price paid by such transferee.
9.3 Tax Controversies. Subject to the provisions hereof, the
Managing General Partner is designated the Tax Matters Partners (as
defined in Section 6231 of the Code), and is authorized and required
to represent the Partnership (at the Partnership's expense) in
connection with all examinations of the Partnership's affairs by tax
authorities, including resulting administrative and judicial
proceedings, and to expend Partnership funds for professional services
and costs associated therewith. Each Partner or Assignee 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 Organizational Expenses. The Partnership shall elect to
deduct expenses, if any, incurred by it in organizing the Partnership
ratably over a 60-month period as provided in Section 709 of the Code.
9.5 Withholding. Notwithstanding any other provision of this
Agreement, the Managing General Partner is authorized to take any
action that it determines in its sole 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 Section 1441,
1442, 1445 and 1446 of the Code. To the extent that the Partnership
is required to withhold and pay over to any taxing authority any
amount resulting from the allocation or distribution of income to any
Partner or Assignee (including by reason of Section 1446 of the Code),
the amount withheld shall be treated as a distribution of cash
pursuant to Section 5.3 hereof in the amount of such withholding from
such Partner.
9.6 [intentionally blank].
9.7 Entity-Level Deficiency Collections. If the Partnership is
required by applicable law to pay any federal, state or local income
tax on behalf of any Partner or Assignee or any former Partner or
Assignee, (i) the Managing General Partner shall pay such tax on
behalf of such Partner or Assignee or former Partner or Assignee from
the funds of the Partnership; (ii) any amount so paid on behalf of any
Partner or Assignee shall constitute a distribution of Available Cash
to such Partner or Assignee pursuant to Section 5.3 hereof or 14.3
hereof; and (iii) to the extent any such Partner or Assignee (but not
a former Partner or Assignee) is not then entitled to such
distribution under this Agreement, the Managing General Partner shall
be authorized, without the approval of any Partner or Assignee, to
amend this Agreement insofar as is necessary to maintain the
uniformity of intrinsic tax characteristics as to each class or series
of Units and to make subsequent adjustments to distributions in a
manner which, in the reasonable judgment of the Managing General
Partner, will make as little alteration in the priority and amount of
distributions otherwise applicable under this Agreement, and will not
otherwise alter the distributions to which Partners and Assignees are
entitled under this Agreement. If the Partnership is permitted (but
not required) by applicable law to pay any such tax on behalf of any
Partner or Assignee or former Partner or Assignee, the Managing
General Partner shall be authorized (but not required) to pay such tax
from the funds of the Partnership and to take any action consistent
with this Section 9.7. The Managing General Partner shall be
authorized (but not required) to take all necessary or appropriate
actions to collect all or any portion of a deficiency in the payment
of any such tax which relates to prior periods which is attributable
to Persons who were Limited Partners or Assignees when such
deficiencies arose from such Persons.
9.8 Opinions of Counsel. Notwithstanding any other provision of this
Agreement, if the Partnership is taxable for federal income tax
purposes as a corporation or an association taxable as a corporation
at any time and, pursuant to the provisions hereof, an Opinion of
Counsel would otherwise be required at that time to the effect that an
action will not cause the Partnership to become so taxable as a
corporation or to be treated as an association taxable as a
corporation, such requirement for an Opinion of Counsel shall be
deemed automatically waived.
ARTICLE X
Certificates And Depositary Receipts
10.1 Certificates and Depositary Receipts. (a) Upon the issuance
of Units by the Partnership to a Limited Partner or any other Person,
the Partnership shall issue one or more Certificates in the name of
such Person evidencing the number and class, if applicable, of Units
being so issued. Certificates shall be executed on behalf of the
Partnership by the Managing General Partner.
(b) The Managing General Partner (i) may cause the deposit of
some or all of the Certificates in the Deposit Account pursuant to the
Deposit Agreement; (ii) with respect to those Certificates deposited
in the Deposit Account, shall receive Depositary Receipts registered
in the name of the Person(s) to whom such Units have been issued,
evidencing the same number of Depositary Units, as the case may be, as
the number of Units represented by the Certificates so deposited; and
(iii) shall cause the distribution of such Depositary Receipts to such
Person(s).
10.2 Registration of Transfer and Exchange. (a) The Managing
General Partner shall cause to be kept on behalf of the Partnership a
register (the "Unit Register") in which, subject to such reasonable
regulations as it may prescribe and subject to the provisions of
Section 10.2(b) hereof, the Managing General Partner will provide for
the registration of Units and the transfer of such Units. The
Depositary is hereby appointed Transfer Agent and registrar for the
purpose of registering Units and transfers of such Units as herein
provided. The Partnership shall not recognize transfers of
Certificates representing Units which have been deposited pursuant to
Section 10.1(a) hereof and not withdrawn or interests therein except
by transfers of Depositary Units in the manner described in this
Section 10.2 and in the Deposit Agreement. Upon surrender for
registration of transfer of any Depositary Units evidenced by a
Depositary Receipt and, subject to the provisions of Section 10.2(b)
hereof, the Managing General Partner on behalf of the Partnership will
execute, and the Transfer Agent will countersign and deliver, in the
name of the holder or the designated transferee or transferees, as
required pursuant to the holder's instructions, one or more new
Depositary Receipts evidencing the same aggregate number of Depositary
Units as was evidenced by the Depositary Receipt so surrendered.
(b) The Partnership shall not recognize any transfer of
Depositary Units until the Depositary Receipts evidencing such
Depositary Units are surrendered for registration of transfer and such
Depositary Receipts 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 Depositary Receipt under this Section 10.2, the Managing
General Partner may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed with respect
thereto.
10.3 Mutilated, Destroyed, Lost or Stolen Depositary Receipts.
(a) If any mutilated Depositary Receipt is surrendered to the Transfer
Agent, the Depositary shall execute, and the Transfer Agent shall
countersign and deliver in exchange therefor, a new Depositary Receipt
evidencing the same number of Depositary Units, as the case may be, as
the Depositary Receipt so surrendered.
(b) If there shall be delivered to the Managing General Partner
and the Transfer Agent (i) evidence (including, without limitation,
proof by affidavit if requested by the Managing General Partner in
form and substance satisfactory to the Managing General Partner) to
their satisfaction of the destruction, loss or theft of any Depositary
Receipt and (ii) such security or indemnity as may be required by them
to indemnify and hold each of them and any of their agents harmless,
then, in the absence of notice to the Managing General Partner or the
Transfer Agent that such Depositary Receipt has been acquired by a
bona fide purchaser, the Managing General Partner on behalf of the
Partnership shall execute and, upon its request, the Transfer Agent
shall countersign and deliver, in exchange for and in lieu of any such
destroyed, lost or stolen Depositary Receipt, a new Depositary Receipt
evidencing the same number of Depositary Units, as the Depositary
Receipt so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Depositary Receipt
under this Section 10.3, the Managing General Partner may require the
payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Transfer Agent) connected
therewith.
10.4 Registered Owner. In accordance with Section 10.2(b)
hereof, the Partnership shall be entitled to recognize the Record
Holder as the Limited Partner or Assignee with respect to any Units
and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Units on the part of any other
Person, whether or not the Partnership shall have actual or other
notice thereof, except as otherwise provided by law or any applicable
rule, regulation, guideline or requirement of any National Securities
Exchange on which the Units are listed for trading. Without limiting
the foregoing, when a Person (such as a broker, dealer, bank, trust
company or clearing corporation or an agent of any of the foregoing)
is acting as nominee, agent or in some other representative capacity
for another Person in acquiring and/or holding Units, as between the
Partnership on the one hand and such other Persons on the other hand,
such representative Person (a) shall be the Limited Partner or
Assignee (as the case may be) of record and beneficially, (b) must
execute and deliver a Transfer Application and (c) shall be bound by
this Agreement and shall have the rights and obligations of a Limited
Partner or Assignee (as the case may be) hereunder and as provided for
herein.
10.5 Withdrawal of Units From and Redeposit of Units in
Depositary Account. Any Units may be withdrawn from the Depositary
Account by surrender of the Depositary Receipts evidencing the
corresponding Depositary Units duly executed by the Record Holder
thereof (or his attorney-in-fact duly authorized in writing), provided
that such Record Holder is then reflected on the books and records of
the Partnership as the Limited Partner in respect of the Units for
which such withdrawal is requested. Upon any such withdrawal, the
Managing General Partner shall cause the Partnership to issue a
Certificate evidencing such Units. Any such withdrawn Units, or Units
which have not previously been so deposited, may be redeposited or
deposited (as the case may be) in the Deposit Account by the surrender
of the Certificate evidencing such withdrawn Units or non-deposited
Units to the Depositary and payment to the Depositary of such fee and
upon such terms as may be required therefor pursuant to the Deposit
Agreement. Upon any such redeposit or deposit, the Depositary shall
issue a Depositary Receipt evidencing the same number of Units as was
evidenced by the Certificate so redeposited or deposited.
10.6 Amendment of Deposit Agreement. Subject to its fiduciary
obligations, the Managing General Partner may amend or modify any
provision of the Deposit Agreement in any respect it reasonably
determines to be necessary or appropriate, provided, however, that the
Managing General Partner shall not amend or modify the Deposit
Agreement if the effect of any such amendment or modification would
materially adversely affect the Limited Partners or would impair the
right of Limited Partners to withdraw their Units from deposit
thereunder.
ARTICLE XI
Transfer of Interests
11.1 Transfer. (a) The term "transfer," when used in this Article
XI with respect to a Partnership Interest, shall be deemed to refer to
an appropriate transaction by which a General Partner assigns its
general partner Partnership Interest to another Person or by which the
holder of a Unit assigns such Unit to another Person who is or becomes
an Assignee and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other
disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in
this Article XI. Any transfer or purported transfer of a Partnership
Interest not made in accordance with this Article XI shall be null and
void.
11.2 Transfer of a General Partner's Partnership Interest. (a)
Each of the General Partners may transfer all, but not less than all,
of its general partner Partnership Interest (unless to an Affiliate,
in which case less than all of such interest may be transferred) to a
single transferee if, but only if, (i) the transferee agrees to assume
and be bound by the rights and duties of such general partner under
the provisions of this 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 the taxation of the
Partnership as a corporation or as an association taxable as a
corporation for federal income tax purposes and (iii) the transfer is
made to an Affiliate or upon such General Partner's merger,
consolidation or other combination into any other entity or the
transfer by it of all or substantially all of its assets to another
entity.
(b) Notwithstanding Section 11.2(a) hereof, the Special General
Partner may not transfer its general partner Partnership Interest
without the consent of the Managing General Partner.
(c) Any transferee of the Managing General Partner's general
partner interest pursuant to Section 11.2(a) hereof shall be admitted
to the Partnership as successor Managing General Partner hereunder and
shall continue the business of the Partnership and the transferor of
such general partner interest shall cease to be a General Partner
following the admission of such transferee.
(d) Any transferee of the Special General Partner's general
partner interest pursuant to Section 11.2(a) hereof shall be admitted
to the Partnership as successor Special General Partner hereunder and
the Managing General Partner shall continue the business of the
Partnership notwithstanding such transfer by the Special General
Partner and the transferor of such general partner interest shall
cease to be a General Partner following the admission of such
transferee.
(e) Any successor General Partner pursuant to this Section 11.2
shall become a General Partner effective, to the extent permitted by
the Delaware Act, as of the date immediately prior to the date of the
transfer of the general partner interest. This Agreement and the
Certificate of Limited Partnership shall be amended as appropriate to
reflect the cessation of the former General Partner and the
substitution of the successor General Partner.
11.3 Transfer of Units. (a) Any Units which have been deposited
in the Deposit Account may be transferred, but only in the manner
described in Section 10.2 hereof. Units with respect to which no such
deposit has been made or which have been withdrawn from the Deposit
Account and not redeposited are not transferable except upon death or
by operation of law, by transfer to the Managing General Partner for
the account of the Partnership, pursuant to Section 11.7 or otherwise
in accordance with this Agreement. The transfer of any Units and the
admission of any new Partner shall not constitute an amendment to this
Agreement.
(b) Until admitted as a Substituted Limited Partner pursuant to
Article XII hereof, the Record Holder of a Depositary Unit shall
constitute an Assignee in respect of such Unit.
(c) Each distribution in respect of Units shall be paid by the
Partnership, directly or through the Transfer Agent or through any
other Person or agent, only to the Record Holders thereof as of the
Record Date set for the distribution. Such payment shall constitute
full payment and satisfaction of the Partnership's liability with
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.
11.4 Restrictions on Transfers. Notwithstanding the other
provisions of this Article XI, no transfer of any Unit or interest
therein of any Limited Partner in the Partnership shall be made if
such transfer (i) would violate the then applicable federal or state
securities laws or rules and regulations of the Securities and
Exchange Commission, any state securities commission or any other
governmental authorities with jurisdiction over such transfer, (ii)
would result in the taxation of the Partnership as a corporation or as
an association taxable as a corporation for federal income tax
purposes or (iii) would affect the Partnership's existence or
qualification as a limited partnership under the Delaware Act.
11.5 Citizenship Certification; Non-citizen Assignees. (a) In the
event that, because of the nationality (or any other status) of a
Limited Partner or Assignee, the Partnership is or becomes subject to
federal, state or local laws or regulations the effect of which would,
in the reasonable determination of the Managing General Partner, cause
cancellation or forfeiture of any property in which the Partnership
has an interest, the Managing General Partner may request any such
Limited Partner or Assignee to furnish to the Managing General Partner
or, with respect to Depositary Units, to the Depositary within 30 days
after receipt of such request an executed Citizenship Certification or
such other information concerning his nationality, citizenship or
other status (or, if the Limited Partner or Assignee is a nominee
holding for the account of another Person, the nationality,
citizenship or other status of such Person) as the Managing General
Partner may request. If a Limited Partner or Assignee fails to
furnish such Citizenship Certification or other information as may be
requested, 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 an Assignee is not an
Eligible Citizen, the Units owned by such Limited Partner or Assignee
shall be subject to redemption in accordance with the provisions of
Section 11.6 hereof. In addition to becoming subject to redemption,
the Managing General Partner may require that the status of any such
Limited Partner or Assignee be changed to that of a Non-citizen
Assignee, and, thereupon, the Managing General Partner shall be
substituted for such Noncitizen Assignee as the Limited Partner in
respect of his Units.
(b) The Managing General Partner shall, in exercising voting
rights in respect of Units held by it on behalf of Non-citizen
Assignees, distribute the votes in the same ratios as the votes of the
Limited Partners in respect of Units other than those of Non-citizen
Assignees are cast, either for, against or abstaining as to the
matter.
(c) Upon dissolution of the Partnership, a Non-citizen Assignee
shall have no right to receive a distribution in kind pursuant to
Section 14.4 hereof but shall be entitled to the cash equivalent
thereof, and the Managing General Partner shall provide cash in
exchange for an assignment of the Non- citizen Assignee's share of the
distribution in kind. Such payment and assignment shall be treated
for Partnership purposes as a purchase by the Managing General Partner
from the Non-citizen Assignee of his Partnership Interest
(representing his right to receive his share of such distribution in
kind).
(d) At any time after he can and does certify that he has become
an Eligible Citizen, a Non-citizen Assignee may, upon application to
the Managing General Partner, request admission as a Substituted
Limited Partner with respect to any Partnership Interest of such
Non-citizen Assignee not redeemed pursuant to Section 11.6 hereof and
upon his admission pursuant to Section 12.2 hereof the Managing
General Partner shall cease to be deemed to be the Limited Partner in
respect of the Non-citizen Assignee's Units.
11.6 Redemption of Interests. (a) If at any time a Limited
Partner or Assignee fails to furnish a Citizenship Certification or
other information requested within the 30-day period specified in
Section 11.5(a) hereof, 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 Units to a Person 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 Depositary, by registered or
certified mail, postage prepaid. The notice shall be deemed to have
been given when so mailed. The notice shall specify the Redeemable
Units, the date fixed for redemption, the place of payment, that
payment of the redemption price will be made upon surrender of the
Depositary Receipt or the Certificate evidencing the Redeemable Units
and that on and after the date fixed for redemption no further
allocations or distributions to which the Limited Partner or Assignee
would otherwise be entitled in respect of the Redeemable Units will
accrue or be made.
(ii) The aggregate redemption price for Redeemable Units shall
be an amount equal to the Current Market Price (the date of
determination of which shall be the date fixed for redemption) of
Units of the class to be so redeemed multiplied by the number of Units
of each such class included among the Redeemable Units. The
redemption price shall be paid, in the sole discretion of the 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
Depositary Receipt or the Certificate evidencing the Redeemable Units,
duly endorsed in blank or accompanied by an assignment duly executed
in blank, the Limited Partner or Assignee or his duly authorized
representative shall be entitled to receive the payment therefor.
(iv) After the redemption date, Redeemable Units shall no longer
constitute issued and Outstanding Units.
(b) The provisions of this Section 11.6 shall be applicable to
Units held by a Limited Partner or Assignee as nominee of a Person
determined to be other than an Eligible Citizen.
(c) Nothing in this Section 11.6 shall prevent the recipient of
a notice of redemption from transferring his Units before the
redemption date if such transfer is otherwise permitted under this
Agreement. Upon receipt of notice of such a transfer, the Managing
General Partner shall withdraw the notice of redemption; provided, the
transferee of such Units or Depositary Units certifies in the Transfer
Application that he is an Eligible Citizen. If the transferee fails
to make such certification, such redemption shall be effected from the
transferee on the original redemption date.
(d) [intentionally blank]
(e) If the Partnership or the Managing General Partner
determines that because of the nationality (or other status) of a
General Partner, whether or not in its capacity as such, the
Partnership is or becomes subject to federal, state or local
regulations the effect of which would, in the reasonable determination
of the Managing General Partner, cause cancellation or forfeiture of
any property in which the Partnership has an interest, the Partnership
may, unless such General Partner has furnished a Citizenship
Certification or transferred his Partnership Interest or Units to a
Person who furnishes a Citizenship Certification prior to the date
fixed for redemption, redeem the Partnership Interest or Interests of
such General Partner in the Partnership as provided in Section 11.6(a)
hereof. The redemption price shall be paid in cash.
11.7 Registration Rights. The Special General Partner or any of
its shareholders or their relatives who may acquire Common Units from
the Special General Partner have the right to cause the Partnership,
upon request, to register an offering and sale of their Common Units
with the Securities and Exchange Commission subject to the terms set
forth in an agreement dated March 29, 1990 by and among the Special
General Partner and the Partnership.
ARTICLE XII
Admission of Partners
12.1 [Intentionally blank]
12.2 Admission of Substituted Limited Partners. By transfer of
a Depositary Unit in accordance with Article XI hereof, 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 Depositary Receipt shall, however, only have the authority to
convey to a purchaser or other transferee who does not execute and
deliver a Transfer Application (i) the right to negotiate such Unit to
a purchaser or other transferee and (ii) the right to transfer the
right to request admission as a Substituted Limited Partner to such
purchaser or other transferee in respect of the transferred Depositary
Units. Each transferee of a Depositary Unit (including any nominee
holder or an agent acquiring such Depositary Unit for the account of
another Person) who executes a Transfer Application shall be an
Assignee and shall be deemed to have applied to become a Substituted
Limited Partner with respect to the Depositary Units so transferred to
such Person by virtue of executing and delivering such Transfer
Application. Such Assignee shall become a Substituted Limited Partner
at such time as the Managing General Partner consents thereto, which
consent may be given or withheld in the Managing General Partner's
sole discretion, and when any such admission is shown on the books and
records of the Partnership. If such consent is withheld, such
transferee shall be an Assignee. An Assignee shall have an interest
in the Partnership equivalent to that of a Limited Partner with
respect to allocations and distributions, including liquidating
distributions, of the Partnership. With respect to voting rights
attributable to Units that are held by Assignees, the 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 Units on
any matter, vote such Units at the written direction of the Assignee
who is the Record Holder of such Units. If no such written direction
is received, such Units will not be voted. An Assignee shall have no
other rights of a Limited Partner.
12.3 Admission of Successor Managing General Partner and Special
General Partner. (a) A successor Managing General Partner approved
pursuant to Sections 13.1 or 13.2 hereof or the transferee of or
successor to all of the Managing General Partner's Partnership
Interest pursuant to Section 11.2 hereof who is proposed to be
admitted as a successor Managing General Partner shall be admitted to
the Partnership as the Managing General Partner, effective immediately
prior to the withdrawal or removal of the Managing General Partner
pursuant to Sections 13.1 or 13.2 hereof or the transfer pursuant to
Section 11.2 hereof; provided, however, that no such successor shall
be admitted to the Partnership until the terms of Section 11.2 hereof
have been complied with. Any such successor shall carry on the
business of the Partnership without dissolution. In each case, the
admission shall be subject to the successor Managing General Partner
executing and delivering to the Partnership an acceptance of all of
the terms and conditions of this Agreement and such other documents or
instruments as may be required to effect the admission.
(b) A successor Special General Partner or the transferee hereof
or successor to all of the Special General Partner's Partnership
Interest pursuant to Section 11.2 hereof who is proposed to be
admitted to the Partnership as a successor Special General Partner
shall be admitted to the Partnership as the Special General Partner
effective immediately prior to the withdrawal or removal of the
Special General Partner pursuant to Section 13.2 hereof or the
transfer pursuant to Section 11.2 hereof; provided, however, that no
such successor shall be admitted to the Partnership until the terms of
Section 1 1.2 hereof have been complied with. In each case, the
admission shall be subject to the successor Special General Partner
executing and delivering to the Partnership an acceptance of all of
the terms and conditions of this Agreement and such other documents or
instruments as may be required to effect the admission.
12.4 Admission of Additional Limited Partners. (a) A Person
(other than 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, without
limitation, the power of attorney granted in Section 1.4 hereof and
(ii) such other documents or instruments as may be required in the
discretion of the Managing General Partner in order to effect such
Person's admission as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section
12.4(a), 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 sole
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 on the books and records of the Partnership,
following the consent of the Managing General Partner to such
admission.
(c) Notwithstanding anything to the contrary in this Section
12.4, the holder of any Series B Preferred Units or Series C Preferred
Units shall be automatically admitted to the Partnership as an
Additional Limited Partner upon furnishing to the Managing General
Partner evidence of acceptance in form reasonably satisfactory to the
Managing General Partner of all of the terms and conditions of this
Agreement, including, without limitation, the power of attorney
granted in Section 1.4 hereof.
12.5 Amendment of Agreement and Certificate of Limited
Partnership. For 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 and, if necessary, to prepare as soon as practical an
amendment of this Agreement and, if required by law, shall prepare and
file an amendment to the Certificate of Limited Partnership and may
for this purpose exercise the power of attorney granted pursuant to
Section 1.4 hereof.
ARTICLE XIII
Withdrawal or Removal of Partners
13.1 Withdrawal of the Managing General Partner. (a) The Managing
General Partner covenants and agrees that it will not withdraw as
Managing General Partner before December 31, 2000, subject to its
right to transfer its Partnership Interest pursuant to Section 11.2
hereof.
(b) 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 other Partners;
(ii) the Managing General Partner transfers all of its rights as
Managing General Partner pursuant to Section 11.2 hereof;
(iii) the Managing General Partner is removed pursuant to Section
13.2 hereof;
(iv) the Managing General Partner
(A) makes a general assignment for the benefit of creditors;
(B) files a voluntary bankruptcy petition;
(C) files a petition or answer seeking for itself a
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any law;
(D) files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against the
Managing General Partner in a proceeding of the type described in
paragraphs (A)-(C) of this subsection; or
(E) seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of the Managing General Partner or of
all or any substantial part of its properties;
(v) a final and non-appealable judgment is entered by a court
with appropriate jurisdiction ruling that the Managing General Partner
is bankrupt or insolvent, or a final and non- appealable order for
relief is entered by a court with appropriate jurisdiction against the
Managing General Partner, in each case under any federal or state
bankruptcy or insolvency laws as now or hereafter in effect; or
(vi) a certificate of dissolution or its equivalent is filed for
the 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. If an Event of Withdrawal specified in paragraphs (iv),
(v) or (vi) occurs, the withdrawing Managing General Partner shall
give written notice to the Limited Partners within 30 days after such
occurrence. The Partners hereby agree that only the Events of
Withdrawal described in this Section 13.1 shall result in withdrawal
of the Managing General Partner from the Partnership.
(c) Withdrawal of the Managing General Partner from the
Partnership (including withdrawal upon the occurrence of an Event of
Withdrawal) will constitute a breach of this Agreement if such
withdrawal occurs; (i) at any time prior to December 31, 2000, unless
the Managing General Partner gives at least 90 days' advance written
notice of its intention to withdraw to the Limited Partners and prior
to the effective date of such withdrawal, the Limited Partners approve
such withdrawal by the vote of at least a majority of the Outstanding
Units (excluding for purposes of such determination any Units owned by
the General Partners and their Affiliates); or (ii) at any time after
December 31, 2000, unless the Managing General Partner gives at least
90 days' advance written notice to the Limited Partners and the
Partnership receives an Opinion of Counsel that such withdrawal
(following the selection of the successor Managing General Partner)
would not result in the loss of the limited liability of holders of
Units or cause the Partnership to be taxable as a corporation or to be
treated as an association taxable as a corporation for federal income
tax purposes, such withdrawal to take effect on the date specified in
such notice.
(d) Withdrawal of the Managing General Partner from the
Partnership upon the occurrence of an Event of Withdrawal will not
constitute a breach of this Agreement under the following
circumstances: (i) at any time that the Managing General Partner
ceases to be a Managing General Partner pursuant to Section
13.1(b)(ii) hereof or is removed pursuant to Section 13.2 hereof or
(ii) notwithstanding Section 13.1(c) above, at any time that the
Managing General Partner voluntarily withdraws by giving at least 90
days' advance written 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 more than 50% of
the Outstanding Units held by Persons other than the withdrawing
Managing General Partner and its Affiliates are owned beneficially or
of record or controlled at any time by one Person or its Affiliates.
If the Managing General Partner gives a notice of withdrawal pursuant
to Section 13.1(b)(i) hereof or if the Managing General Partner is
removed pursuant to Section 13.2 hereof, holders of at least a
majority in interest of the Outstanding Units (excluding for purposes
of such determination Units owned by the Managing General Partner and
its Affiliates) may, prior to the effective date of such withdrawal,
elect a successor Managing General Partner and agree to continue the
business of the Partnership, provided that such majority in interest
satisfies the provisions of Section 4 of Internal Revenue Service
Revenue Procedure 94-46. 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 does not
receive an Opinion of Counsel that such withdrawal (following the
selection of the successor Managing General Partner) would not result
in the loss of the limited liability of the holders of Units or cause
the Partnership to be taxable as a corporation or to be treated as an
association taxable as a corporation for federal income tax purposes,
the Partnership shall be dissolved in accordance with Section 14.1
hereof. If a successor Managing General Partner is elected and the
Opinion of Counsel rendered as provided herein, such successor shall
be admitted (subject to Section 12.3 hereof) immediately prior to the
effective time of the withdrawal of the departing Managing General
Partner and shall continue the business of the Partnership without
dissolution.
13.2 Removal of the Managing General Partner. The Managing
General Partner may be removed only if such removal is approved by the
written consent or affirmative vote of Limited Partners holding not
less than 66?% of the Outstanding Units; provided, however, that after
March 31, 1998, if the Series B Preferred Units and the Series C
Preferred Units have not, on or before such date, become issuable by
the Partnership in exchange for the convertible senior notes pursuant
to the terms of the Note Agreement, the Managing General Partner may
be removed if such removal is approved by the written consent or
affirmative vote of Limited Partners holding not less than 51% of the
Outstanding Units. Any action by the Limited Partners for removal of
the Managing General Partner must also provide for the election and
succession of a new Managing General Partner. Such removal shall be
effective immediately following the admission of the successor
Managing General Partner pursuant to Section 12.3 hereof. The right
of the Limited Partners to remove the Managing General Partner shall
not exist or be exercised unless the Partnership has received an
Opinion of Counsel that the removal of the Managing General Partner
and the selection of a successor Managing General Partner will not
result in (i) the loss of limited liability of any Limited Partner in
the Partnership or (ii) the taxation of the Partnership as a
corporation or the treatment of the Partnership as an association
taxable as a corporation for federal income tax purposes.
13.3 Interest of Departing Managing General Partner and Successor
Managing 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 Limited Partners, the departing Managing
General Partner shall, at its option exercisable prior to the
effective date of the departure of such departing Managing General
Partner, promptly receive from its successor in exchange for its
Partnership Interest as Managing General Partner an amount in cash
equal to the fair market value of the departing Managing General
Partner's Partnership Interest as Managing General Partner, such
amount to be determined and payable as of the effective date of its
departure. If the Managing General Partner withdraws under
circumstances where such withdrawal violates this Agreement, its
successor shall have the option described in the immediately preceding
sentence, and the departing Managing General Partner shall not have
such option. In either event, the departing Managing General Partner
shall be entitled to receive all reimbursements due such departing
Managing General Partner pursuant to Section 6.4 hereof, including any
employee-related liabilities (including severance liabilities only 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 Limited Partners),
incurred in connection with the termination of any employees employed
by the departing Managing General Partner for the benefit of the
Partnership. Subject to Section 13.3(b) hereof, the departing
Managing General Partner shall, as of the effective date of its
departure, cease to share in any allocations or distributions with
respect to its Partnership Interest as the Managing General Partner
and Partnership income, gain, loss, deduction and credit will be
prorated and allocated as set forth in Section 5.1(d) hereof. For
purposes of this Section 13.3(a), the fair market value of the
departing Managing General Partner's Partnership Interest as Managing
General Partner herein shall be determined by agreement between the
departing Managing General Partner and its successor or, failing
agreement within 30 days after the effective date of such departing
Managing General Partner's departure, by an independent investment
banking firm or other independent expert selected by the departing
Managing General 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 such firm shall be
designated by the independent investment banking firms or other
independent experts selected by each of the departing Managing General
Partner and its successor. In making its determination, such
independent investment banking firm or other independent expert shall
consider the then current trading price of Units on any National
Securities Exchange on which Units are then listed, the value of the
Partnership's assets, the rights and obligations of the Managing
General Partner and other factors it may deem relevant.
(b) If its Partnership Interest is not acquired in the manner
set forth in Section 13.3(a) hereof, the departing Managing General
Partner shall become a Limited Partner and its Partnership Interest in
the Partnership shall be converted into Common Units equal to the fair
market value of such interest pursuant to a valuation made by an
investment banking firm or other independent expert selected pursuant
to Section 13.3(a) hereof, without reduction in such Partnership
Interest (but subject to proportionate dilution by reason of the
admission of its successor). The Partnership shall indemnify the
departing Managing General Partner as to all debts and liabilities of
the Partnership arising on or after the date on which the departing
Managing General Partner becomes a Limited Partner, including employee
related liabilities, including severance liabilities, incurred in
connection with the termination of the employees employed by the
departing Managing General Partner for the benefit of the Partnership.
For purposes of this Agreement, the departing Managing General
Partner's conversion of its Partnership Interest to Common Units will
be characterized as if the departing Managing General Partner
contributed its Partnership Interest to the Partnership in exchange
for the newly-issued Common Units.
(c) If the option described in Section 13.3(a) hereof 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 capital of the Partnership cash in an
amount such that its Capital Account, after giving effect to such
contribution and any adjustments made to the Capital Accounts of all
Partners pursuant to Section 4.4(d)(i) hereof, shall be equal to that
percentage of the Capital Accounts of all Partners that is equal to
its Percentage Interest as the Managing General Partner. In such
event, each successor Managing General Partner shall, subject to the
following sentence, be entitled to such Percentage Interest of all
Partnership allocations and distributions and any other allocations
and distributions to which the departing Managing General Partner was
entitled. In addition, such 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 1.9%, and that of the Special
General Partner and the Limited Partners shall be 0.1% and 98%,
respectively.
13.4 Withdrawal or Removal of Special General Partner. (a) The
Special General Partner may withdraw from the Partnership in the
capacity of Special General Partner (i) upon 30 days' advance written
notice to the Managing General Partner or (ii) by transferring its
general partner interest in the Partnership pursuant to Section 11.2
hereof. Such withdrawal shall take effect on the date specified in
such notice. Upon receiving such notice, the Managing General Partner
shall select a successor Special General Partner within such 30-day
period. Any withdrawal of the Special General Partner shall not
become effective unless the Partnership has received by the end of
such 30-day period an Opinion of Counsel that such withdrawal will not
result in the loss of limited liability of any Limited Partner or
cause the Partnership to be treated as a corporation or as an
association taxable as a corporation for federal income tax purposes.
Following any withdrawal of the Special General Partner, the business
and operations of the Partnership shall be continued by the Managing
General Partner.
(b) In addition to the voluntary withdrawal described above, the
Special General Partner shall be deemed to have withdrawn (i) when and
if, the Special General Partner (A) makes a general assignment for the
benefit of creditors, (B) files a voluntary bankruptcy petition, (C)
files a petition or answer seeking for itself a reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any law, (D) files an answer or other pleading
admitting or failing to contest the material allegations of a petition
filed against the Special General Partner in a proceeding of the type
described in clauses (A)-(C) of this subsection, or (E) seeks,
consents to or acquiesces in the appointment of a trustee, receiver or
liquidator of the Special General Partner or of all or any substantial
part of its properties; or, (ii), when a final and nonappealable
judgment is entered by a court with appropriate jurisdiction ruling
that the Special General Partner is bankrupt or insolvent, or a final
and non- appealable order for relief is entered by a court with
appropriate jurisdiction against the Special General Partner, in each
case under any federal or state bankruptcy or insolvency laws as now
or hereinafter in effect; or (iii) when a certificate of dissolution
or its equivalent is filed for the Special General Partner, or 90 days
expire after the date of notice to the Special General Partner of
revocation of its charter without a reinstatement of its charter,
under the laws of its state of incorporation.
(c) The Special General Partner may be removed only if such
removal is approved by the written consent or affirmative vote of
Limited Partners holding not less than 66?% of the Outstanding Units.
Any such action by the Limited Partners for removal of the Special
General Partner must also provide for the approval of the successor
Special General Partner. Such removal shall be effective immediately
following the admission of the successor Special General Partner
pursuant to Article XII hereof. The right of the Limited Partners to
remove the Special General Partner shall not exist or be exercised
unless the Partnership has received an Opinion of Counsel that the
removal of the Special General Partner and the selection of a
successor Special General Partner will not result in (i) the loss of
limited liability of any Limited Partner or (ii) the taxation of the
Partnership as a corporation or the treatment of the Partnership as an
association taxable as a corporation for federal income tax purposes
unless already so taxed.
(d) Upon the withdrawal or removal of the Special General
Partner under this Section 13.4 (except by reason of a transfer of the
interest made pursuant to Section 11.2 hereof), the Partnership shall
distribute to the Special General Partner an amount of cash equal to
the positive balance in its Capital Account (following the adjustment
of its Capital Account in accordance with Section 4.4 hereof).
(e) Notwithstanding the other provisions of this Section 13.4, a
successor Special General Partner or a successor special general
partner of any Operating Partnership need not be selected if the
Partnership has received an Opinion of Counsel that the failure to
select a successor would not cause the Partnership or any Operating
Partnership to be treated as a corporation or as an association
taxable as a corporation for, federal income tax purposes.
13.5 Withdrawal of Limited Partners. Except as provided in
Section 13.5 hereof, no Limited Partner shall have any right to
withdraw from the Partnership; provided, however, that when a
transferee of a Limited Partner's Units becomes a Record Holder, such
transferring Limited Partner shall cease to be a Limited Partner with
respect to the Units so transferred.
ARTICLE XIV
Dissolution and Liquidation
14.1 Dissolution. The Partnership shall not be dissolved by the
admission of Substituted Limited Partners or Additional Limited
Partners, the admission of successor General Partners in accordance
with the terms of this Agreement or the withdrawal of the Special
General Partner pursuant to Section 13.4 hereof. Upon the removal or
withdrawal of the Managing General Partner, any successor Managing
General Partner shall continue the business of the Partnership. The
Partnership shall dissolve, and its affairs shall be wound up, upon:
(a) the expiration of its terms as provided in Section 1.5
hereof;
(b) an Event of Withdrawal of the Managing General Partner as
provided in Section 13.1(b) hereof, unless a successor is named as
provided in 13.1(d) hereof;
(c) an election to dissolve the Partnership by the Managing
General Partner that is approved by the written consent or affirmative
vote of holders of at least a majority of the Outstanding Units.
(d) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act; or
(e) the sale of all or substantially all of the assets and
properties of the Partnership.
14.2 Continuation of the Business of the Partnership after
Dissolution. Upon (i) dissolution of the Partnership following an
Event of Withdrawal caused by the withdrawal or removal of the
Managing General Partner and a failure of the requisite number of
Partners to agree to continue the business of the Partnership and
appoint a successor Managing General Partner as provided in Sections
13.1 and 13.2 hereof, then within an additional 90 days or (ii)
dissolution of the Partnership upon an event constituting an Event of
Withdrawal as defined in Section 13.1(b)(iv) hereof, then within 180
days thereafter, at least a majority in interest of the Outstanding
Units may elect to reconstitute the Partnership and continue its
business on the same terms and conditions set forth in this Agreement
by forming a new limited partnership on terms identical to those set
forth in this Agreement and having as a managing general partner a
Person approved by the holders of at least a majority of the
Outstanding Units, provided that such majority in interest satisfies
the provisions of Section 4 of Internal Revenue Service Revenue
Procedure 94-46. Upon any such election by the holders of at least a
majority of the Outstanding Units, all Partners shall be bound thereby
and shall be deemed to have approved thereof. Unless such an election
is made 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:
(a) the reconstituted Partnership shall continue until the end
of the term set forth in Section 1.5 hereof unless earlier dissolved
in accordance with this Article XIV;
(b) 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 thenceforth as the interests of a
Limited Partner and converted into Common Units in the manner provided
in Section 13.3 (b) hereof; and
(c) all necessary steps shall be taken to cancel this Agreement
and the Certificate of Limited Partnership and to enter into and, as
necessary, to file a new partnership agreement and certificate of
limited partnership, and the successor Managing General Partner may
for this purpose exercise the powers of attorney granted the Managing
General Partner pursuant to Section 1.4 hereof, provided, that the
right of the holders of at least a majority of Outstanding Units 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 nor the reconstituted limited partnership would become
taxable as a corporation or treated as an association taxable as a
corporation for federal income tax purposes upon the exercise of such
right to continue.
14.3 Liquidation. Upon dissolution of the Partnership, unless
the Partnership is continued under an election to reconstitute and
continue the Partnership pursuant to Section 14.2 hereof, the Managing
General Partner, or in the event the Managing General Partner has been
dissolved or removed, become bankrupt as set forth in Section 13.1
hereof or withdrawn from the Partnership, a liquidator or liquidating
committee approved by the holders of at least a majority of the
Outstanding Units, shall be the 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 holders of at
least a majority of the Outstanding Units. The Liquidator shall agree
not to resign at any time without 15 days' prior written notice and
(if other than the Managing General Partner) may be removed at any
time, with or without cause by notice of removal approved by at least
a majority of the Outstanding Units. Upon dissolution, removal or
resignation of the Liquidator, a successor and substitute Liquidator
(who shall have and succeed to all rights, power and duties of the
original Liquidator) shall within 30 days thereafter be approved by
the holders of at least a majority of the Outstanding Units. The
right to approve a successor or substitute Liquidator in the manner
provided herein shall be deemed to refer also to any such successor or
substitute Liquidator approved in the manner herein provided. Except
as expressly provided in this Article XIV, the Liquidator approved in
the manner provided herein shall have and may exercise, without
further authorization or consent of any of the parties hereto, all of
the powers conferred upon the 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 6.3(b) hereof) to the
extent necessary or desirable in the good faith judgment of the
Liquidator to carry out the duties and functions of the Liquidator
hereunder for and during such period of time as shall be reasonably
required in the good faith judgment of the Liquidator to complete the
winding-up and liquidation of the Partnership as provided for herein.
The Liquidator shall liquidate the assets of the Partnership, and
apply and distribute the proceeds of such liquidation in the following
order of priority, unless otherwise required by mandatory provisions
of applicable law:
(a) the payment to creditors of the Partnership, including
Partners who are creditors, in order of priority provided by law; and
the creation of a reserve of cash or other assets of the Partnership
for contingent liabilities in an amount, if any, determined by the
Liquidator to be appropriate for such purposes;
(b) to holders of Series B Preferred Units and Series C
Preferred Units, if any, in accordance with the terms of the
Certificate of Designations of such Units;
(c) to holders of other classes of Partnership Securities, if
any, in accordance with the terms of their respective Certificates of
Designations; and
(d) to all Partners in accordance with and to the extent of the
positive balances in their respective Capital Accounts after taking
into account adjustments to such Capital Accounts pursuant to Article
V hereof.
14.4 Distributions in Kind. Notwithstanding the provisions of
Section 14.3 hereof which require the liquidation of the assets of the
Partnership, but subject to the order of priorities set forth therein,
if the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue
loss to the Partners, the Liquidator may, in its absolute discretion,
defer for a reasonable time the liquidation of any assets except those
necessary to satisfy liabilities of the Partnership (including those
to Partners as creditors) and/or distribute to the Partners or to
specific classes of Partners, in lieu of cash, as tenants in common
and in accordance with the provisions of Section 14.3 hereof,
undivided interests in such Partnership assets as the Liquidator deems
not suitable for liquidation. Any such distributions in kind shall be
made only if, in the good faith judgment of the Liquidator, such
distributions in kind are in the best interest of the Limited
Partners, and shall be subject to such conditions relating to the
disposition and management of such properties as the Liquidator deems
reasonable and equitable and to any agreements governing the operation
of such properties at such time. The Liquidator shall determine the
fair market value of any property distributed in kind using such
reasonable method of valuation as it may adopt, and the Partners'
Capital Accounts shall be adjusted to reflect the manner in which the
unrealized income, gain, loss, and deduction interest in that property
that has not previously been reflected in the Capital Accounts would
be allocated among the Partners if there were a taxable disposition of
that property for fair market value on the date of distribution.
14.5 Cancellation of Certificate of Limited Partnership. Upon
the completion of the distribution of Partnership cash and property as
provided in Sections 14.3 and 14.4 hereof, the Partnership shall be
terminated and the Certificate of Limited Partnership and all
qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be canceled and
such other actions as may be necessary to terminate the Partnership
shall be taken.
14.6 Reasonable Time for Winding Up. A reasonable time shall be
allowed for the orderly winding-up of the business and affairs of the
Partnership and the liquidation of its assets pursuant to Section 14.3
hereof, in order to minimize any losses otherwise attendant upon such
winding-up and the provisions of this Agreement shall remain in effect
between the Partners during the period of liquidation.
14.7 Return of Capital. No General Partner shall be personally
liable for the return of the Capital Contribution of the Limited
Partners, or any portion thereof, it being expressly understood that
any such return shall be made solely from Partnership assets.
14.8 No Capital Account Restoration. No Partner shall have any
obligation to restore any negative balance in its Capital Account upon
liquidation of the Partnership.
14.9 Waiver of Partition. Each Partner hereby waives any right to
partition of the Partnership property.
ARTICLE XV
Amendment of Partnership Agreement; Meetings; Record Date
15.1 Amendment to be Adopted Solely by Managing General Partner.
Each Limited Partner agrees that the Managing General Partner
(pursuant to its powers of attorney from the Limited Partners and
Assignees), without the approval of any Limited Partner or Assignee,
may amend any provision of this Agreement, and execute, swear to,
acknowledge, deliver, file and record whatever documents may be
required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent
or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Limited or
General Partners in accordance with this Agreement:
(c) a change that, in the sole discretion of the Managing
General Partner, is reasonable and necessary or appropriate to qualify
or continue the qualification of the Partnership as a limited
partnership or a partnership in which the limited partners have
limited liability under the laws of any state or, subject to the
provisions of Section 1.6 hereof, that is necessary or advisable in
the opinion of the Managing General Partner to ensure that the
Partnership will not be taxable as a corporation or treated as an
association taxable as a corporation for federal income tax purposes.
(d) a change (i) that does not adversely affect the Limited
Partners in any material respect, (ii) that is necessary or desirable
to satisfy any requirements, conditions or guidelines contained in any
opinion, directive, order, ruling or regulation of any federal or
state agency or judicial authority or contained in any federal or
state statute (including, without limitation, the Delaware Act) or
that is necessary or desirable to facilitate the trading of the
Depositary Units (including, without limitation, the division of
Outstanding Units into different classes in order 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 Depositary Units are or will be
listed for trading, compliance with any of which the Managing General
Partner determines to be in the best interests of the Partnership and
the Limited Partners or (iii) that is required to effect the intent of
the provisions of this Agreement or is otherwise contemplated by this
Agreement;
(e) an amendment that is necessary, in the Opinion of Counsel,
to prevent the Partnership or any General Partner or its directors or
officers from in any manner being subjected to the provisions of the
Investment Company Act of 1940, as amended, the Investment Advisers
Act of 1940, as amended, or "plan asset" regulations adopted under the
Employee Retirement Income Security Act of 1974, as amended, whether
or not substantially similar to plan asset regulations currently
applied or proposed by the United States Department of Labor;
(f) subject to the terms of Section 4.2 hereof, an amendment
that the Managing General Partner determines in its sole discretion to
be necessary or desirable in connection with the authorization for
issuance of any class or series of Units pursuant to Section 4.2
hereof, including the creation of any Certificate of Designations;
(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 16.3 hereof; or
(i) any other amendments similar to the foregoing.
15.2 Amendment Procedures. Except as provided in Sections 15.1
and 15.3 hereof, all amendments to this Agreement shall be made in
accordance with the following requirements: If an amendment is
proposed, the Managing General Partner shall seek the written approval
of the requisite Percentage Interests or call a meeting of the Limited
Partners to consider and vote on such proposed amendment. Each such
proposal to the Limited Partners shall contain the text of the
proposed amendment. A proposed amendment shall be effective upon its
approval by the holders of at least a majority of the Outstanding
Units unless a greater or different percentage is required under this
Agreement. The Managing General Partner shall notify all Record
Holders upon final adoption of any proposed amendment. Amendments to
Certificates of Designations shall be made in accordance with Section
4.1.
15.3 Amendment Requirements. (a) Amendments to this Agreement may
be proposed solely by the Managing General Partner. Notwithstanding
the provisions of Sections 15.1 and 15.2 hereof, no provision of this
Agreement which establishes a Percentage Interest required to take any
action shall be amended, altered, changed, repealed or rescinded in
any respect which would have the effect of reducing such voting
requirement unless such amendment is approved by the written consent
or the affirmative vote of Partners whose aggregate Percentage
Interests constitute not less than the voting requirement sought to be
reduced.
(b) Notwithstanding the provisions of Sections 15.1 and 15.2
hereof, the approval of the Special General Partner shall be required
for any amendment, if such amendment would change the Special General
Partner's Percentage Interest or increase the Special General
Partner's duties or liabilities or if the Partnership has received an
Opinion of Counsel that such amendment would have a materially adverse
consequence to the Special General Partner.
(c) Notwithstanding the provisions of Sections 15.1 and 15.2
hereof, no amendment to this Agreement may (i) enlarge the obligations
of any Limited Partner, (ii) modify the compensation payable to the
Managing General Partner or any Affiliates of the Managing General
Partner by the Partnership, (iii) change Section 14.1(a) or (c)
hereof, (iv) restrict in any way any action by or rights of the
Managing General Partner as set forth in this Agreement or (v) except
as set forth in Section 14.1(c) hereof, give any person the right to
dissolve the Partnership.
(d) In the event at any time there exists any class or series of
Outstanding Units having any rights or preferences different from the
rights or preferences of any other class or series of Outstanding
Units, no amendment shall be effective which the Managing General
Partner determines would have a material adverse effect on the rights
and preferences of any such class or series of Outstanding Units
without, in addition to any other required approval, the approval by
written consent or affirmative vote of 66?% in interest of the holders
of the Outstanding Units of such class or series.
(e) Notwithstanding any other provision of this Agreement,
except for amendments pursuant to Section 15.1 hereof, no amendment
shall become effective without the approval of the Record Holders of
all Units unless the Partnership obtains an Opinion of Counsel to the
effect that (i) such amendment would not cause the Partnership to
become taxable as a corporation or treated as an association taxable
as a corporation for federal income tax purposes and (ii) such
amendment will not affect the limited liability of any Limited Partner
in the Partnership under applicable law.
(f) This Section 15.3 shall only be amended with the approval by
written consent or affirmative vote of the holders of not less than
90% of the Outstanding Units.
15.4 Meetings. All acts of Limited Partners to be taken
hereunder shall be taken in the manner provided in this Article XV.
Meetings of the Limited Partners may be called by the Managing General
Partner or by Limited Partners owning 20% or more of the Outstanding
Units of the class for which a meeting is proposed. Limited Partners
shall call a meeting by delivering to the Managing General Partner one
or more requests in writing stating that the signing Limited Partners
wish to call a meeting and indicating the general or specific purposes
for which the meeting is to be called. Within 60 days after receipt
of such a call from Limited Partners or within such greater time as
may be reasonably necessary for the Partnership to comply with any
statutes, rules, regulations, listing agreements or similar
requirements governing the holding of a meeting or the solicitation of
proxies for use at such a meeting, the 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 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 laws of any other state in which the Partnership is
qualified to do business.
15.5 Notice of a Meeting. Notice of a meeting called pursuant to
Section 15.4 hereof shall be given to the Record Holders in writing by
mail or other means of written communication in accordance with
Section 19.1 hereof. The notice shall be deemed to have been given at
the time when deposited in the mail or sent by other means of written
communication.
15.6 Record Date. For purposes of determining the Limited
Partners entitled to notice of or to vote at a meeting of the Limited
Partners or to give approvals without a meeting as provided in Section
15.11 hereof, 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 Units are listed for trading, in which case the
rule, regulation, guideline or requirement of such exchange shall
govern) or (b) in the event that approvals are sought without a
meeting, the date on which Limited Partners are requested in writing
by the Managing General Partner to give such approvals.
15.7 Adjournment. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting and a new
Record Date need not be fixed, if the time and place thereof are
announced at the meeting at which the adjournment is taken, unless
such adjournment shall be for more than 45 days. At the adjourned
meeting, the Partnership may transact any business which might have
been transacted at the original meeting. If the adjournment is for
more than 45 days or if a new Record Date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given in
accordance with this Article XV.
15.8 Waiver of Notice; Approval of Meeting; Approval of Minutes.
The transactions of any meeting of Limited Partners, however called
and noticed, and whenever held, shall be as valid as if had at a
meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy, and if, either before or after
the meeting, each of the Limited Partners entitled to vote, present in
person or by proxy, signs a written waiver of notice or an approval of
the holding of the meeting or an approval of the minutes thereof. All
waivers and approvals shall be filed with the Partnership records or
made a part of the minutes of the meeting. Attendance of a Limited
Partner at a meeting shall constitute a waiver of notice of the
meeting, except when the Limited Partner 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.
15.9 Quorum. 66?% of the Outstanding Units of the class for which
a meeting has been called represented in person or by proxy shall
constitute a quorum at a meeting of Limited Partners of such class
unless any such action by the Limited Partners requires approval by
holders of a smaller percentage of Outstanding Units, in which case,
the quorum shall be the percentage of Outstanding Units required for
approval. 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 whose Percentage Interests represent at least
a majority of the Percentage 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 different percentage is
required with respect to such action under the provisions of this
Agreement, in which case the act of the Limited Partners owning such
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 Interests of the Limited Partners specified in this
Agreement. In the absence of a quorum, any meeting of Limited
Partners may be adjourned from time to time by the affirmative vote of
a majority of the Percentage Interests represented either in person or
by proxy, but no other business may be transacted, except as provided
in Section 15.7 hereof.
15.10 Conduct of 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, without limitation, the determination of Persons
entitled to vote, the existence of a quorum, the satisfaction of the
requirements of Section 15.4 hereof, 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, in
either case including, without limitation, a Partner or a director or
officer of the Managing General Partner. 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 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.
15.11 Action Without a Meeting. Any action that may be taken at
a meeting of the Limited Partners may be taken without a meeting if an
approval in writing setting forth the action so taken is signed by
Limited Partners owning not less than the minimum Percentage Interests
that would be necessary to authorize or take such action at a meeting
at which all the Limited Partners were present and voted. Prompt
notice of the taking of action without a meeting shall be given to the
Limited Partners who have not approved in writing. The 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 not be less than 20 days, specified by the Managing
General Partner. If a ballot returned to the Partnership does not
vote all of the Units held by the Limited Partner, the Partnership
shall be deemed to have failed to receive a ballot for the Units which
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 as to whether the exercise of such right and
the action proposed to be taken with respect to any particular matter
(i) 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, (ii) would jeopardize the status of the Partnership as a
partnership under applicable tax laws and regulations and (iii) is
otherwise permissible under the state statutes then governing the
rights, duties and liabilities of the Partnership and the Partners.
15.12 Voting and Other Rights. (a) Only those Record Holders of
Units on the Record Date set pursuant to Section 15.6 hereof shall be
entitled to notice of, and to vote at, a meeting of Limited Partners
or to act with respect to matters as to which approvals are solicited.
(b) With respect to Units that are held for a Person's account
by another Person (such as a broker, dealer, bank, trust company or
clearing corporation, or an agent of any of the foregoing), in whose
name such Units are registered, such broker, dealer or other agent
shall, in exercising the voting rights in respect of such Units on any
matter, and unless the arrangement between such Persons provides
otherwise, vote such Units in favor of, and at the direction of, the
Person who is the beneficial owner, and the Partnership shall be
entitled to assume it is so acting without further inquiry. The
provisions of this Section 15.12(b) are subject to the provisions of
Section 10.4 hereof.
ARTICLE XVI
Merger
16.1 Authority. The Partnership may merge or consolidate with
one or more corporations, business trusts or associations, real estate
investment trusts, common law trusts or unincorporated businesses,
including, without limitation, a general partnership or limited
partnership, formed under the laws of the State of Delaware or any
other state of the United States of America pursuant to a written
agreement of merger or consolidation ("Merger Agreement") in
accordance with this Article XVI.
16.2 Procedure for Merger or Consolidation. Merger or
consolidation of the Partnership pursuant to this Article requires the
prior approval of the Managing General Partner. If the Managing
General Partner shall determine, in the exercise of its sole
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 jurisdictions of formation or organization of
the business entity that is to survive the proposed merger or
consolidation (hereafter designated as the "Surviving Business
Entity");
(c) The terms and conditions of the proposed merger or
consolidation;
(d) The manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash,
property or general or limited partnership interests, rights,
securities or obligations of the Surviving Business Entity; and (i) if
any general or limited partnership interests, securities or rights of
any constituent business entity are not to be exchanged or converted
solely for, or into, cash, property or general or limited partnership
interests, rights, securities or obligations of the Surviving Business
Entity, the cash, property, or general or limited partnership
interests, rights, securities or obligations of any limited
partnership, corporation, trust or other entity (other than the
Surviving Business Entity) which the holders of such general or
limited partnership interests are to receive in exchange for, or upon
conversion of, their securities or rights, and (ii) in the case of
securities represented by certificates, upon the surrender of such
certificates, which cash, property or general or limited partnership
interests, rights, securities or obligations of the Surviving Business
Entity or any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof are
to be delivered;
(e) A statement of any changes in the constituent documents (the
articles or certificate of incorporation, articles of trust,
declaration of trust, certificate or agreement of limited partnership
or other similar charter or governing document) of the Surviving
Business Entity to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date of
the filing of the certificate of merger pursuant to Section 16.4
hereof or a later date specified in or determinable in accordance with
the Merger Agreement (provided that if the effective time of the
merger is to be later than the date of the filing of the certificate
of merger, it shall be fixed no later than the time of the filing of
the certificate of merger and stated therein); and
(g) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or desirable.
16.3 Approval by Limited Partners of Merger or Consolidation. (a)
The Managing General Partner of the Partnership, upon its approval of
the Merger Agreement, shall direct that the Merger Agreement be
submitted to a vote of Limited Partners whether at a meeting or by
written consent, in either case in accordance with the requirements of
Article XV hereof. A copy or a summary of the Merger Agreement shall
be included in or enclosed with the notice of a meeting or the written
consent.
(b) The Merger Agreement shall be approved upon receiving the
affirmative vote or consent of the holders of at least a majority of
the Outstanding Units, unless the Merger Agreement contains any
provision which, if contained in an amendment to the Agreement, the
provisions of this Agreement or the Delaware Act would require the
vote or consent of a greater percentage of the Percentage Interests of
the Limited Partners or of any class of Limited Partners, in which
case such greater percentage vote or consent shall be required for
approval of the Merger Agreement.
(c) After such approval by vote or consent of the Limited
Partners, and at any time prior to the filing of the certificate of
merger pursuant to Section 16.4 hereof, the merger or consolidation
may be abandoned pursuant to provisions therefor, if any, set forth in
the Merger Agreement.
16.4 Certificate of Merger. Upon the required approval by the
Managing General Partner and Limited Partners of a Merger Agreement, a
certificate of merger shall be executed and filed with the Secretary
of State of the State of Delaware in conformity with the requirements
of the Delaware Act.
16.5 Effect of Merger. (a) Upon the effective date of the
certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all property,
real, personal and mixed, and all debts due to any of those business
entities and all other things and causes of action belonging to each
of those business entities shall be vested in the Surviving Business
Entity and after the merger or consolidation shall be the property of
the Surviving Business Entity to the extent they were 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 having occurred.
ARTICLE XVII
Right to Acquire Common Units
17.1 Right to Acquire Common Units. (a) Notwithstanding the
provisions of Section 13.1(a) hereof or any other provision of this
Agreement, in the event that at any time less than 10% of the total
Common Units outstanding are held by Persons other than the General
Partners and any Affiliate of the General Partners, the Managing
General Partner shall then have the right, which right it may assign
and transfer to the Partnership or any Affiliates of the Managing
General Partner, exercisable in its sole discretion, to purchase all,
but not less than all, of the Common Units outstanding held by Persons
other than the General Partners and any Affiliates of the General
Partners, at the greater of (y) the Current Market Price as of the
date the notice described in Section 17.1(b) hereof is mailed or (z)
the highest cash price paid by either of the General Partners or any
of their Affiliates for any Unit purchased during the 90-day period
preceding the date that the notice described in Section 17.1(b) hereof
is mailed. As used herein, (i) " Current Market Price" of any class
of Units listed or admitted to trading on any National Securities
Exchange means the average of the daily Closing Prices per Unit of
such class for the 30 consecutive Trading Days (as hereinafter
defined) immediately prior to such date and (ii) "Trading Day" means a
day on which the principal National Securities Exchange on which the
Units of any class are listed or admitted to trading is open for the
transaction of business or, if Units of a class are not listed or
admitted to trading on any National Securities Exchange, a day on
which banking institutions in New York City generally are open.
(b) If the Managing General Partner, any Affiliate of the
Managing General Partner or the Partnership elects to exercise either
right to purchase Common Units granted pursuant to Section 17.1 (a)
hereof, the Managing General Partner shall deliver to the Transfer
Agent written notice of such election to purchase (hereinafter in this
Section 17.1 called the "Notice of Election to Purchase") and shall
cause the Transfer Agent to mail a copy of such Notice of Election to
Purchase to the Record Holders of Common Units (as of a Record Date
selected by the 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 in daily newspapers of general
circulation printed in the English language and published in the
Borough of Manhattan, New York. The Notice of Election to Purchase
shall specify the Purchase Date and the price (determined in
accordance with Section 17.1(a) hereof) at which Common Units will be
purchased and state that the Managing General Partner, any Affiliate
of the Managing General Partner or the Partnership, as the case may
be, elects to purchase such Common Units, upon surrender of Depositary
Receipts with respect to such Common Units in exchange for payment, at
such office or offices of the Transfer Agent as the Transfer Agent may
specify, or as may be required by any National Securities Exchange on
which the Common Units are listed or admitted to trading. Any such
Notice of Election to Purchase mailed to a Record Holder of Common
Units at his address as reflected in the records of the Transfer Agent
shall be conclusively presumed to have been given whether or not the
owner receives such notice. On or prior to the Purchase Date, the
Managing General Partner, any Affiliate of the Managing General
Partner or the Partnership, as the case may be, shall deposit with the
Transfer Agent cash in an amount sufficient to pay the aggregate
purchase price of all of the Common Units to be purchased in
accordance with this Section 17.1. If the Notice of Election to
Purchase shall have been duly given as aforesaid at least 10 days
prior to the Purchase Date, and if on or prior to the Purchase Date
the deposit described in the preceding sentence has been made for the
benefit of the holders of Common Units subject to purchase as provided
herein, then from and after the Purchase Date, notwithstanding that
any Depositary Receipt shall not have been surrendered for purchase,
all rights of the holders of such Common Units (including, without
limitation, any rights pursuant to Articles IV, V and XIV hereof)
shall thereupon cease, except the right to receive the purchase price
(determined in accordance with Section 17.1 (a) hereof) for Common
Units therefor, without interest, upon surrender to the Transfer Agent
of the Depositary Receipts representing such Common Units, and such
Common Units shall thereupon be deemed to be transferred to the
Managing General Partner, any Affiliate of the Managing General
Partner 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 Common Units from and after the Purchase Date and shall have
all rights as the owner of such Common Units (including, without
limitation, all rights as owner of such Common Units pursuant to
Articles IV, V and XIV hereof).
(c) At any time from and after the Purchase Date, a holder of an
Outstanding Unit subject to purchase as provided in this Section 17.1
may surrender his Depositary Receipt or Certificate, as the case may
be, evidencing such Unit to the Transfer Agent in exchange for payment
of the amount described in Section 17.1(a) therefor without interest
thereon.
ARTICLE XVIII
Changes to Previous Capitalization
Of the Partnership
18.1 Changes in Capitalization Effective Upon the Effective Date.
Upon the Effective Date:
(a) Each Outstanding common unit of the Partnership shall become
one-twenty first of one Common Unit, and
(b) Each Outstanding convertible preferred unit of the
Partnership shall become one Common Unit.
18.2 Elimination of Cumulative Distribution Arrearages. Upon the
Effective Date, all cumulative distribution arrearages with respect to
the Partnership's common units and convertible preferred units
Outstanding immediately prior to the Effective Date shall be
eliminated in accordance with the terms of the Consent Solicitation.
ARTICLE XIX
General Provisions
19.1 Addresses and Notices. Any notice, demand, request or
report required or permitted to be given or made to a Partner or
Assignee under this Agreement shall be in writing and shall be deemed
given or made when delivered in person or when sent by first class
United States mail or by other means of written communication to the
Partner or Assignee at the address described below. Any notice,
payment or report to be given or made to a Partner or Assignee
hereunder shall be deemed conclusively to have been given or made, and
the obligation to give such notice or report or to make such payment
shall be deemed conclusively to have been fully satisfied, upon
sending of such notice, payment or report to the Record Holder of such
Unit at his address as shown on the records of the Transfer Agent or
as otherwise shown on the records of the Partnership, regardless of
any claim of any Person who may have an interest in such Unit or the
Partnership Interest of a General Partner by reason of an assignment
or otherwise. An affidavit or certificate of making of any notice,
payment or report in accordance with the provisions of this Section
19.1 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 1.3 hereof. The Partnership and the Managing General
Partner may rely and shall be protected in relying on any notice or
other document from a Partner or other Person if believed by them to
be genuine.
19.2 Titles and Captions. All article or Section titles or
captions in this Agreement are for convenience only. They shall not
be deemed part of this Agreement and in no way define, limit, extend
or describe the scope or intent of any provisions hereof. Except as
specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
19.3 Pronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns,
pronouns and verbs shall include the plural and vice versa.
19.4 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking
action as may be necessary or appropriate to achieve the purposes of
this Agreement.
19.5 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted
assigns.
19.6 Integration. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements and understandings
pertaining thereto.
19.7 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 or any other
covenant, duty, agreement or condition.
19.8 Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute one 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 executing and delivering a Transfer Application as herein
described, independently of the signature of any other party.
19.9 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.
19.10 Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby.
<PAGE>
<PAGE>
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PRIDE COMPANIES, L.P.
dated
as of
April 15, 1999
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PRIDE COMPANIES, L.P.
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
amends, replaces and restates, as of the Effective Date, the Second
Amended and Restated Agreement of Limited Partnership, effective as of
December 30, 1997, (as amended, the "Prior Agreement"). This Agreement
of Limited Partnership is entered into by and among Pride Refining,
Inc., a Texas corporation, as the Managing General Partner, Pride SGP,
Inc., a Texas corporation, as the Special General Partner and the
Limited Partners, together with any other Persons who become Partners in
the Partnership as provided herein. In consideration of the covenants,
conditions and agreements contained herein, the parties hereto hereby
agree as follows:
ARTICLE I
Organizational Matters
1.1 Formation and Continuation. The Partnership has previously
been formed and is currently in existence as a limited partnership
pursuant to the provisions of the Delaware Act. The Partnership is
hereby expressly continued as a limited partnership pursuant to the
Delaware Act, subject to the provisions of this Agreement, which
replaces, amends, and restates the Prior Agreement. Except as expressly
provided herein to the contrary, the rights and obligations of the
Partners and the administration and termination of the Partnership shall
be governed by the Delaware Act. The Partnership Interest of each
Partner shall be personal property for all purposes.
1.2 Name. The name of the Partnership shall be "Pride Companies,
L.P." The Partnership's business may be conducted under any other name
or names deemed advisable by the Managing General Partner, including the
name of the Managing General Partner or any Affiliate thereof. The
words "Limited Partnership," "L.P., Ltd." or similar words or letters
shall be included in the Partnership's name where necessary for the
purposes of complying with the laws of any jurisdiction that so
requires. The Managing General Partner in its sole discretion may
change the name of the Partnership at any time and from time to time and
shall notify the Limited Partners of such change in the next regular
communication to the Limited Partners.
1.3 Registered Office; Principal Office. The address of the
registered office of the Partnership in the State of Delaware shall be
located at The Corporation Trust Center, 1209 Orange Street, New Castle
County, 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 1209 North Fourth Street, Abilene,
Texas 79601 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 places within or outside
the State of Delaware as the Managing General Partner deems advisable.
1.4 Power of Attorney. (a) Each Limited Partner and each Assignee
hereby constitutes and appoints each of the Managing General Partner
and, if a Liquidator shall have been selected pursuant to Section 14.3
hereof, the Liquidator severally (and any successor to either thereof by
merger, transfer, assignment, election or otherwise) and authorized
officers and attorneys-in-fact of each, with full power of substitution,
as its true and lawful agent and attorney-in-fact, with full power and
authority in its name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and record in
the appropriate public offices (A) all certificates, documents and other
instruments (including, without limitation, this Agreement and the
Certificate of Limited Partnership and all amendments or restatements
thereof) that the Managing General Partner or the Liquidator deems
appropriate or necessary 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 instruments
that the Managing General Partner or the Liquidator deems appropriate or
necessary to reflect any amendment, change, modification or restatement
of this Agreement or the Deposit Agreement in accordance with their
respective terms; (C) all conveyances and other instruments or documents
that the Managing General Partner or the Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement, including, without limitation,
a certificate of cancellation; (D) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant
to, or other events described in, Article XI, XII, XIII or XIV hereof or
the Capital Contribution of any Partner, (E) all certificates, documents
and other instruments relating to the determination of the rights,
preferences and privileges of any class or series of Units or other
securities issued pursuant to Section 4.2 hereof; and (F) all agreements
and other instruments (including, without limitation, a certificate of
merger) relating to a merger or consolidation of the Partnership
pursuant to Article XVI hereof;
(ii) execute, swear to, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole discretion of the Managing General
Partner or the Liquidator, to make, evidence, give, confirm or ratify
any vote, consent, approval, agreement or other action which is made or
given by the Partners hereunder or is consistent with the terms of this
Agreement or appropriate or necessary, in the sole discretion of the
Managing General Partner or the Liquidator, to effectuate the terms or
intent of this Agreement; provided, that when required by Section 15.3
hereof or any other provision of this Agreement which 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 or the Liquidator may exercise the power of attorney made in
this subsection (ii) only after the necessary vote, consent or approval
of the Limited Partners or of the Limited Partners of such class or
series; and
(iii) on behalf of the Limited Partners and the Assignees, enter
into the Deposit Agreement and to deposit Certificates in the Deposit
Account pursuant to the Deposit Agreement. Nothing contained herein
shall be construed as authorizing the Managing General Partner to amend
this Agreement except in accordance with Article XV hereof or as may be
otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive
and not be affected by the subsequent death, incompetency, disability,
incapacity, dissolution, bankruptcy or termination of any Limited
Partner or Assignee and the transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Interest and shall extend to
such Limited Partner's or Assignee's heirs, successors, assigns and
personal representatives. Each such Limited Partner or Assignee hereby
agrees to be bound by any representation made by the Managing General
Partner or the Liquidator, acting in good faith pursuant to such power
of attorney; and each such Limited Partner or Assignee hereby waives any
and all defenses which 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 Limited Partner or
Assignee shall execute and deliver to the Managing General Partner or
the Liquidator, within 15 days after receipt of the Managing General
Partner's or the Liquidator's 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.
1.5 Term. The Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware Act
on January 17, 1990 and shall continue in existence until the close of
Partnership business on December 31, 2090, or until the earlier
termination of the Partnership in accordance with the provisions of
Article XIV hereof.
1.6 Possible Restrictions on Transfer. Notwithstanding anything
to the contrary contained herein, in the event of (i) the enactment (or
imminent enactment) of any legislation, (ii) the publication of any
temporary or final regulation by the Treasury Department, (iii) any
ruling by the Internal Revenue Service or (iv) any judicial decision,
that, in any such case, in the Opinion of Counsel, would result in the
taxation of the Partnership for federal income tax purposes as a
corporation or as an association taxable as a corporation, then, either
(a) the Managing General Partner may impose such restrictions on the
transfer of Partnership Interests as may be required, in the Opinion of
Counsel, to prevent the taxation of the Partnership for federal income
tax purposes as a corporation or as an association taxable as a
corporation, including making any amendments to this Agreement as the
Managing General Partner in its sole discretion may determine to be
necessary or appropriate in order to impose such restrictions; provided,
that any such amendment to this Agreement which would result in the
delisting or suspension of trading of any class of Units on any National
Securities Exchange on which such class of Units is then traded must be
approved by the holders of at least 66?% of the Outstanding Units of
such class (excluding for purposes of such determination any Units of
such class owned by the General Partners and their Affiliates) or (b)
upon the recommendation of the Managing General Partner and the approval
by the holders of at least 66?% of the Outstanding Units (excluding for
purposes of such determination any Units owned by the General Partners
and their Affiliates), the Partnership may be converted into and
reconstituted as a trust or any other type of legal entity (the "New
Entity") in the manner and on other terms so recommended and approved.
In such event, the business of the Partnership shall be continued by the
New Entity and the Units shall be converted into equity interests of the
New Entity in the manner and on the terms so recommended and approved.
ARTICLE II
Definitions
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used
in this Agreement.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.4 hereof.
"Adjusted Capital Account" shall mean the Capital Account
maintained for each Partner as of the end of each taxable year of the
Partnership (a) increased by any amounts which 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
taxable year, are reasonably expected to be allocated to such Partner in
subsequent years under Sections 704(e)(2) and 706(d) of the Code and
Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of
all distributions that, as of the end of such taxable year, are
reasonably expected to be made to such Partner in subsequent years in
accordance with the terms of this Agreement or otherwise to the extent
they exceed offsetting increases to such Partner's Capital Account that
are reasonably expected to occur during (or prior to) the year in which
such distributions are reasonably expected to be made (other than
increases pursuant to a minimum gain chargeback pursuant to
Sections 5.1(e)(i) or 5.1(e)(ii) hereof). 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. A Partner who has more than one
interest in the Partnership shall have a single Adjusted Capital Account
that reflects all such interests, regardless of the class of interests
and the time and manner in which such interests were acquired.
"Adjusted Property" means any property the Carrying Value of which
has been adjusted pursuant to Section 4.4(d)(i) or 4.4(d)(ii) hereof.
Once an Adjusted Property is deemed distributed by, and recontributed
to, the Partnership for federal income tax purposes upon a termination
thereof pursuant to Section 708 of the Code, such property shall
thereafter constitute a Contributed Property until the Carrying Value of
such property is further adjusted pursuant to Section 4.4(d)(i) or
4.4(d)(ii) hereof.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common
control with, the Person in question. As used herein, the term
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"Agreed Allocation" shall mean allocation made pursuant to
Section 5.1(a), (b), (c) or (d) hereof.
"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. The Managing General
Partner shall, in its sole discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate Agreed Value of
Contributed Properties contributed to the Partnership in a single or
integrated transaction among such properties on a basis proportional to
their fair market values.
"Agreement" means this Third Amended and Restated Agreement of
Limited Partnership, 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 Units have been transferred in a manner permitted under this
Agreement and who has executed and delivered a Transfer Application as
required by this Agreement, but who has not become a Substituted Limited
Partner.
"Available Cash" means, with respect to any calendar quarter,
(i) the sum of:
(A) the Partnership's net income for such quarter as determined
in accordance with generally accepted accounting principles (excluding
gain and loss on the sale of capital assets).
(B) depreciation, amortization and other noncash charges (less
noncash credits) of the Partnership for such quarter.
(C) the amount of any reduction in reserves of the Partnership of
the types referred to in (ii) (DD) below during such quarter:
(ii) less the sum of:
(AA) all principal debt payments, redemptions of Series B or C
Preferred Units, if any, made during such quarter by the Partnership
(other than principal debt payments made with Proceeds from Capital
Transactions),
(BB) capital expenditures made by the Partnership during such
quarter (excluding for such purpose capital expenditures financed or
anticipated to be refinanced with Proceeds from Capital Transactions),
(CC) investments for such quarter in any entity to the extent that
such investments are not otherwise included under clauses (ii)(AA) or
(BB) (excluding investments financed or anticipated to be refinanced
with Proceeds from Capital Transactions), and
(DD) the amount of Partnership reserves established by the
Managing General Partner during such quarter which are necessary or
appropriate (1) to provide funds for the future payment of items of the
types specified in clauses (ii)(AA) and (ii)(BB) above, (2) to provide
for additional working capital, (3) to provide funds for cash
distributions with respect to any one or more of the next four calendar
quarters or (4) to provide funds for the future payment of interest.
Notwithstanding the foregoing, Available Cash shall not include any
cash receipts or reductions in reserves or take into account any
disbursements made or reserves established after commencement of the
dissolution and liquidation of the Partnership.
"Book-Tax Disparity" shall mean, with respect to any item of
Contributed Property or Adjusted Property, as of the date of any
determination, the difference between the Carrying Value of such
Contributed Property or Adjusted Property and the adjusted basis thereof
for federal income tax purposes as of such date. A Partner's share of
the Partnership's Book-Tax Disparities in all of its Contributed
Property and Adjusted Property will be reflected by the difference
between such Partner's Capital Account balance as maintained pursuant to
Section 4.4 hereof and the hypothetical balance of such Partner's
Capital Account computed as if it had been maintained strictly in
accordance with federal income tax accounting principles.
"Business Day" means Monday through Friday of each week, except
that a legal holiday recognized as such by the government of the United
States or the States of New York or Texas shall not be regarded as a
Business Day.
"Capital Account" means the capital account maintained pursuant to
Section 4.4 hereof.
"Capital Contribution" means any cash, cash equivalents, or the Net
Agreed Value of Contributed Property which a Partner contributes to the
Partnership pursuant to Sections 4.1, 4.2, 4.4(c) or 13.3(c) hereof, or
the outstanding principal balance of debt, amount of accrued interest,
or amount of cumulative distribution arrearages canceled by a Limited
Partner in exchange for a Preferred Unit, if applicable.
"Capital Transactions" means (a) borrowings and sales of debt
securities (other than working capital borrowings, borrowings
representing items purchased on open account in the ordinary course of
business by the Partnership, (b) sales of equity interests by the
Partnership (other than the conversion of certain indebtedness of the
Partnership into Common Units or Preferred Units as described in
Section 4.1 hereof) and (c) sales or other voluntary or involuntary
dispositions of any assets of the Partnership (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 and (z) sales or other dispositions of assets
as a part of normal retirements or replacements), in each case prior to
the commencement of the dissolution and liquidation of the Partnership.
"Carrying Value" means (a) with respect to a Contributed Property,
the Agreed Value of such property reduced (but not below zero) by all
depreciation, amortization and cost recovery deductions charged to the
Partners' Capital Accounts and (b) with respect to any other Partnership
property, the adjusted basis of such property for federal income tax
purposes. The Carrying Value of any property shall be adjusted from
time to time in accordance with Sections 4.4(d)(i) and 4.4(d)(ii) hereof
and shall thereafter be reduced (but not below zero) by all
depreciation, amortization, and cost recovery deductions charged to the
Partners' Capital Accounts.
"Certificate" means a certificate issued by the Partnership
evidencing ownership of one or more Partnership Interests.
"Certificate of Designations" means the Certificates of
Designations pursuant to which the Partnership issues Series B Preferred
Units, Series C Preferred Units, and any other certificate of
designations pursuant to which the Partnership issues Partnership
Securities pursuant to Section 4.2.
"Certificate of Limited Partnership" means the Certificate of
Limited Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section 6.2 hereof, as such Certificate may be
amended and/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.
"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 to
trading on the New York Stock Exchange or, if the Units of a class are
not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal National Securities
Exchange on which the Units of such class are listed or admitted to
trading or, if the Units of a class are not listed or admitted to
trading on any National Securities Exchange, 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
National Association of Securities Dealers, Inc. Automated Quotation
System or such other system then in use, or, if on any such day the
Units of a class are not quoted by any such organization, the average of
the closing bid and asked prices on such day as furnished by a
professional market maker making a market in the Units of such class
selected by the Board of Directors of the Managing General Partner, or,
if on any such day no market maker is making a market in the Units of
such class, the fair value of such Units on such day as determined
reasonably and in good faith by the Board of Directors of the Managing
General Partner using any reasonable method of valuation.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific Section or Sections of
the Code shall be deemed to include a reference to any corresponding
provision of future law.
"Common Unit" means a Unit representing a fractional part of the
Partnership Interests of the Limited Partners and Assignees thereof and
having the rights and obligations specified with respect to Common Units
in this Agreement.
"Conflicts and Audit Committee" means a committee of the Board of
Directors of the Managing General Partner composed entirely of directors
who are neither officers or employees of, nor direct or indirect owners
of more than 5% of the voting securities of, the General Partners or
their Affiliates.
"Consent Solicitation Statement" means the consent solicitation
statement dated October 7, 1996 sent to the Partners in connection with
the adoption of this Agreement and the approval of other matters
described in the Consent Solicitation Statement.
"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). Once the Carrying Value of a Contributed Property is adjusted
pursuant to Section 4.4(d) hereof, such property shall no longer
constitute a Contributed Property for purposes of Section 5.1 hereof,
but shall be deemed an Adjusted Property for such purposes.
"Current Market Price" shall have the meaning assigned to such term
in Section 17.1(a) hereof.
"Debt" means, as to any Person, as of any date of determination,
(a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services; (b) all amounts owed by
such Person to banks or other Persons in respect of reimbursement
obligations under letters of credit, surety bonds and other similar
instruments guaranteeing payment or other performance of obligations by
such Person; (c) all indebtedness for borrowed money or for the deferred
purchase price of property or services secured by any lien on any
property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not
assumed or become liable for the payment thereof; and (d) lease
obligations of such Person which, in accordance with generally accepted
accounting principles, should be capitalized.
"Delaware Act" means the Delaware Revised Uniform Limited
Partnership Act, 6 Del. C.17-101, et seq., as it may be amended from
time to time, and any successor to such statute.
"Deposit Account" means the account established by the Depositary
pursuant to the Deposit Agreement.
"Deposit Agreement" means the Deposit Agreement among the Managing
General Partner, in its capacity both as Managing General Partner and as
attorney-in-fact for the Limited Partners, the Partnership and the
Depositary, as it may be amended or restated from time to time.
"Depositary" means the bank or other institution appointed by the
Managing General Partner in its sole discretion to act as depositary for
the Depositary Units pursuant to the Deposit Agreement, or any successor
to it as depositary.
"Depositary Receipt" means a depositary receipt, issued by the
Depositary or agents appointed by the Depositary in accordance with the
Deposit Agreement, evidencing ownership of one or more Depositary Units.
"Depositary Unit" means a depositary unit representing a Unit on
deposit with the Depositary pursuant to the Deposit Agreement.
"Discretionary Allocation" shall mean any allocation of an item of
income, gain, deduction, or loss pursuant to the provisions of
Section 5.1(d)(iii) hereof.
"Economic Risk of Loss" shall have the meaning set forth in
Treasury Regulation Section 1.752-2(a).
"Effective Date" means April 15, 1999.
"Eligible Citizen" means a Person qualified to own interests in
real property in jurisdictions in which the Partnership does business or
proposes to do business from time to time, and whose status as a Limited
Partner or Assignee does not or would not subject the Partnership to a
substantial risk of cancellation or forfeiture of any of their property
or any interest therein.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor to such statute.
"General Partner" means either the Managing General Partner or the
Special General Partner and "General Partners" means the Managing
General Partner and the Special General Partner.
"General Partner Equity Value" means, as of any date of
determination, the fair market value of a General Partner's Partnership
Interest, as a General Partner, as determined by the Managing General
Partner using whatever reasonable method of valuation it may adopt.
"Indemnitee" means any General Partner, any departing General
Partner, any Person who is or was an Affiliate of any General Partner or
any departing General Partner, any Person who is or was an officer,
director, employee, agent or trustee of any General Partner or any
departing General Partner or any Affiliate of any General Partner or
departing General Partner, or any Person who is or was serving at the
request of any General Partner or any departing General Partner or any
Affiliate of any General Partner or any departing General Partner as a
director, officer, employee, agent or trustee of another Person.
"Initial Offering" means the initial offering of Depositary Units
to the public, as described in the Registration Statement.
"Issue Price" means the price at which a Unit is purchased from the
Partnership, less any sales commission or underwriting discount charged
to the Partnership; provided that the Issue Price of Series B Preferred
Units and Series C Preferred Units shall equal the outstanding principal
balance and any accrued interest canceled by a Partner in exchange for
such Unit.
"Limited Partner" means each Person who is a Limited Partner of the
Partnership upon the Effective Date, each Substituted Limited Partner,
each Additional Limited Partner and any departing General Partner upon
the change of its status from General Partner to Limited Partner
pursuant to Article XIII hereof and, solely for purposes of Articles IV,
V and VI hereof and Sections 14.3 and 14.4 hereof, shall include an
Assignee thereof.
"Limited Partner Equity Value" means, as of any date of
determination, the total value of all classes of Units, with the value
of each class being an amount equal to the product of (a) the total
number of Outstanding Units of such class (immediately prior to an
issuance of Units or distribution of cash or Partnership property),
multiplied by (b) (i) in the case of a valuation required by
Section 4.4(d)(i) hereof (other than valuations caused by sales of a de
minimis quantity of Units) the Issue Price or (ii) in the case of a
valuation required by Section 4.4(d)(ii) hereof (or a valuation required
by Section 4.4(d)(i) hereof caused by sales of a de minimis quantity of
Units) the Closing Price.
"Liquidator" means the Managing General Partner or other Person
approved pursuant to Section 14.3 hereof who performs the functions
described therein.
"Managing General Partner" means Pride Refining Inc., a Texas
corporation, or any successor in its capacity as managing general
partner of the Partnership.
"Merger Agreement" has the meaning assigned to such term in
Section 16.1 hereof.
"Minimum Gain Attributable to Partner Nonrecourse Debt" means that
amount determined in accordance with the principles of Treasury
Regulation Section 1.704-2(i).
"National Securities Exchange" means an exchange registered with
the Securities and Exchange Commission under Section 6(a) of the
Exchange Act.
"Net Agreed Value" means (a) in the case of any Contributed
Property, the Agreed Value of such property reduced by any liabilities
either assumed by the Partnership upon such contribution or to which
such property is subject when contributed and (b) in the case of any
property distributed to a Partner or Assignee by the Partnership, the
Partnership's Carrying Value of such property at the time such property
is distributed, reduced by any indebtedness either assumed by such
Partner or Assignee upon such distribution or to which such property is
subject at the time of distribution as determined under Section 752 of
the Code.
"Net Income" shall mean, for any taxable period, the excess, if
any, of the Partnership's items of income and gain (other than those
items attributable to dispositions constituting Terminating Capital
Transactions) for such taxable period over the Partnership's items of
loss and deduction (other than those items attributable to dispositions
constituting Terminating Capital Transactions) for such taxable period.
The items included in the calculation of Net Income shall be determined
in accordance with Section 4.4(b) hereof and shall not include any items
specially allocated under Section 5.1(d) or 5.1(e) hereof. Once an item
of income, gain, loss or deduction that has been included in the initial
computation of Net Income is subjected to a Required Allocation or a
Discretionary Allocation, Net Income or the resulting Net Loss,
whichever the case may be, shall be recomputed without regard to such
item.
"Net Loss" shall mean, for any taxable period, the excess, if any,
of the Partnership's items of loss and deduction (other than those items
attributable to dispositions constituting Terminating Capital
Transactions) for such taxable period over the Partnership's items of
income and gain (other than those items attributable to dispositions
constituting Terminating Capital Transactions) for such taxable period.
The items included in the calculation of Net Loss shall be determined in
accordance with Section 4.4(b) hereof and shall not include any items
specially allocated under Section 5.1(d) or 5.1(e) hereof. Once an item
of income, gain, loss or deduction that has been included in the initial
computation of Net Loss is subjected to a Required Allocation or a
Discretionary Allocation, Net Loss or the resulting Net Income,
whichever the case may be, shall be recomputed without regard to such
item.
"Net Termination Gain" means, for each Partnership Year or shorter
period, the sum, if positive, of all items of gain or loss recognized by
the Partnership from Terminating Capital Transactions and all items of
income, gain, loss and deduction (as determined in accordance with
Section 4.4(b) hereof) recognized by the Partnership as a result of a
dissolution of the Partnership for the purpose of liquidation.
"Net Termination Loss" means, for each Partnership Year or shorter
period, the sum, if negative, of all items of gain or loss recognized by
the Partnership from Terminating Capital Transactions and all items of
income, gain, loss and deduction (as determined in accordance with
Section 4.4(b) hereof) recognized by the Partnership as a result of a
dissolution of the Partnership for the purpose of liquidation.
"Non-citizen Assignee" means a Person who the Managing General
Partner has determined in its sole discretion does not meet the
requirements of the definition of an Eligible Citizen and as to whose
Partnership Interest the Managing General Partner has become the
Substituted Limited Partner, pursuant to Section 11.5 hereof.
"Nonrecourse Built-in Gain" shall mean, with respect to any
Contributed Properties or Adjusted Properties that are subject to a
mortgage or negative pledge securing a Nonrecourse Liability, the amount
of any taxable gain that would be allocated to the Partners pursuant to
Sections 5.2(b)(i)(A), 5.2(b)(ii)(A) or 5.2(b)(iii) hereof if such
properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
"Nonrecourse Deductions" shall mean 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" shall have the meaning set forth in
Treasury Regulation Section 1.752-1(a)(2).
"Note Agreement" means that certain Note Agreement dated as of
August 13, 1996 among the Partnership, the General Partner, the Special
General Partner and the purchasers of certain convertible notes, as such
agreement may be amended from time to time.
"Notice of Election to Purchase" has the meaning assigned to such
term in Section 17.1(b) hereof.
"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to the Partnership or the Managing General Partner) in
form and substance acceptable to the Managing General Partner.
"Outstanding" means all Units or other 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.
"Partner" means a General Partner or a Limited Partner and
Assignees thereof, if applicable.
"Partner Nonrecourse Debt" shall have the meaning set forth in
Treasury Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" shall mean any and all items of
loss, deduction or expenditure (described in Section 705(a)(2)(B) of the
Code) that, in accordance with the principles of Treasury Regulation
Section 1.704-2(i), are attributable to a Partner Nonrecourse Debt and
to a net increase in Minimum Gain Attributable to Partner Nonrecourse
Debt.
"Partnership" means the limited partnership heretofore formed and
continued pursuant to this Agreement, and any successor thereto.
"Partnership Debt Securities" has the meaning assigned to such term
in Section 4.2(a) hereof.
"Partnership Equity Securities" has the meaning assigned to such
term in Section 4.2(a) hereof.
"Partnership Interest" means the interest of a Partner in the
Partnership which, in the case of a Limited Partner or Assignee, shall
include Units.
"Partnership Minimum Gain" shall mean that amount determined in
accordance with the principles of Treasury Regulation Section 1.704-
2(d).
"Partnership Securities" has the meaning assigned to such term in
Section 4.2(a) hereof.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as of the date of such determination,
(a) as to the Managing General Partner in its capacity as such, 1.9%,
(b) as to the Special General Partner in its capacity as such, 0.1%, (c)
as to any Limited Partner or Assignee holding Units, the product of
(i) 98% multiplied by (ii) the quotient of the number of Units held by
such Limited Partner or Assignee divided by the total number of all
Units then outstanding; provided, however, that following any issuance
of additional Units by the Partnership pursuant to Section 4.2 hereof,
proper adjustment shall be made to the Percentage Interest represented
by each Unit to reflect such issuance.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
"Preferred Units" means the Series B Preferred Units, Series C
Preferred Units, Series D Preferred Units, Series E Preferred Units and
Series F Preferred Units and any other Preferred Units issued pursuant
to any Certificate of Designation.
"Prior Agreement" shall have the meaning assigned to it in the
preamble hereof.
"Proceeds from Capital Transactions" means, at any date, such
amounts of cash, debt securities or other property as are determined by
the Managing General Partner to be made available to the Partnership
from or by reason of a Capital Transaction.
"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
Section 17.1(b) hereof.
"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 identify of Limited Partners (or
Assignees, if applicable) entitled to notice of, or to vote at, any
meeting of Limited Partners or entitled to vote by ballot or give
approval of Partnership action in writing without a meeting or entitled
to exercise rights in respect of any other lawful action of Limited
Partners, or (b) the identify of Record Holders entitled to receive any
report or distribution.
"Record Holder" means the Person in whose name a Unit is registered
on the books of the Transfer Agent, as of the opening of business on a
particular Business Day.
"Redeemable Units" means any Units for which a redemption notice
has been given and has not been withdrawn, under Section 11.6 hereof.
"Registration Statement" means the Registration Statement on Form
S-1 (Registration No. 33-33099), as it has been or as it may be amended
from time to time, filed by the Partnership with the Securities and
Exchange Commission under the Securities Act to register the offering
and sale of the Units in the Initial Offering.
"Required Allocation" shall mean any allocation (or limitation
imposed on any allocation) of an item of income, gain, deduction or loss
pursuant to (a) the proviso-clause of Section 5.1(b)(ii) hereof or (b)
Section 5.1(e) hereof, such allocations (or limitations thereon) being
directly or indirectly required by the Treasury Regulations promulgated
under Section 704(b) of the Code.
"Residual Gain" or "Residual Loss" shall mean 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 Contributed Property or Adjusted Property, to the extent such item of
gain or loss is not allocated pursuant to Sections 5.2(b)(i)(A) or
5.2(b)(ii)(A) hereof to eliminate Book-Tax Disparities.
"Securities Act" means the Securities Act of 1933, as amended, and
any successor to such statute.
"Series B Preferred Units" means the Series B Cumulative
Convertible Preferred Units issued pursuant to the Amended and Restated
Certificate of Designations of Series B Cumulative Convertible Preferred
Units of the Partnership dated April 15, 1999.
"Series C Preferred Units" means the Series C Cumulative
Convertible Preferred Units issued pursuant to the Amended and Restated
Certificate of Designations of Series C Cumulative Convertible Preferred
Units of the Partnership dated April 15, 1999.
"Series D Preferred Units" means the Series D Cumulative Preferred
Units issued pursuant to the Amended and Restated Certificate of
Designations of Series D Cumulative Preferred Units of the Partnership
dated April 15, 1999.
"Series E Preferred Units" means the Series E Cumulative Preferred
Units issued pursuant to the Amended and Restated Certificate of
Designations of Series E Cumulative Preferred Units of the Partnership
dated April 15, 1999.
"Series F Preferred Units" means the Series F Cumulative Preferred
Units issued pursuant to the Amended and Restated Certificate of
Designations of Series F Cumulative Preferred Units of the Partnership
dated April 15, 1999.
"Special Approval" means approval by (i) a majority of the members
of the Board of Directors of the Managing General Partner and (ii) a
majority of the members of the Conflicts and Audit Committee.
"Special General Partner" means Pride SGP, Inc., a Texas
corporation, or any successor in its capacity as special general partner
of the Partnership.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of (i) the voting power of the voting
equity securities or (ii) the outstanding equity interests is owned,
directly or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 12.2 hereof in
place of and with all the rights of a Limited Partner and who is shown
as a Limited Partner on the books and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such term
in Section 16.2(b) hereof.
"Terminating Capital Transactions" means any sales or other
dispositions of assets of the Partnership is a result of a dissolution
of the Partnership for the purpose of liquidation.
"Trading Day" has the meaning assigned to such term in
Section 17.1(a) hereof.
"Transfer Agent" means the Depositary or any bank, trust company or
other Person appointed by the Partnership to act as transfer agent for
the Units.
"Transfer Application" means an application and agreement for
transfer of Depositary Units in the form set forth on the back of a
Depositary Receipt or in a form substantially to the same effect in a
separate instrument.
"Unit" means a Partnership Interest of a Limited Partner or
Assignee in the Partnership representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees; provided,
however, that in the event any class or series of Units issued pursuant
to Section 4.2 hereof shall have designations, preferences or special
rights such that a Unit of such class or series shall represent a
greater or lesser part of the Partnership Interests of all Limited
Partners or Assignees than a Unit of any other class or series of Units,
the Partnership Interest represented by such class or series of Units
shall be determined in accordance with such designations, preferences or
special rights. Unless otherwise specifically indicated to the
contrary, Units includes Depositary Units.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the
fair market value of such property as of such date, over (b) the
Carrying Value of such property as of such date (prior to any adjustment
to be made pursuant to Section 4.4(d) hereof) as of such date. In
determining such Unrealized Gain, the aggregate cash amount and fair
market value of all Partnership assets (including cash or cash
equivalents) shall be determined by the Managing General Partner using
such reasonable method of valuation as if it may adopt; provided,
however, the Managing General Partner, in arriving at such valuation,
must take fully into account (to the extent appropriate under the
regulations promulgated under Section 704(b) of the Code) the Limited
Partner Equity Value and the General Partner Equity Value 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
sole discretion to be reasonable) to arrive at a fair market value for
individual properties.
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the
Carrying Value of such property as of such date (prior to any adjustment
to be made pursuant to Section 4.4(d) hereof) as of such date, over (b)
the fair market value of such property as of such date. In determining
such Unrealized Loss, the aggregate cash amount and fair market value of
all Partnership assets (including cash or cash equivalents) shall be
determined by the Managing General Partner using such reasonable method
of valuation as it may adopt: provided, however, the Managing General
Partner, in arriving at such valuation, must take fully into account (to
the extent appropriate under the regulations promulgated under
Section 704(b) of the Code) the Limited Partner Equity Value and the
General Partner Equity Value 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 sole discretion to be
reasonable) to arrive at a fair market value for individual properties.
ARTICLE III
Purpose
3.1 Purpose and Business. The purpose and nature of the
business to be conducted by the Partnership shall be (i) to conduct
any business that may be lawfully conducted by a limited partnership
organized pursuant to the Delaware Act, including, without limitation,
the refining, transport, gathering and sale of hydrocarbon-based
products, (ii) to enter into any partnership, joint venture or other
similar arrangement to engage in any of the foregoing or the ownership
of interests in any entity engaged in any of the foregoing, and
(iii) to do anything necessary or incidental to the foregoing.
3.2 Powers. The Partnership shall be empowered to do any and
all acts and things necessary, appropriate, proper, advisable,
incidental to or convenient for the furtherance and accomplishment of
the purposes and business described herein and for the protection and
benefit of the Partnership.
ARTICLE IV
Capital Contributions
4.1 Partnership Equity Securities. Upon the Effective Date, the
Partnership Equity Securities of the Partnership will consist of (i)
4,950,000 Common Units (ii) the 1.9% and .1% Percentage Interests held
by the Managing General Partner and the Special General Partner,
respectively, which general partner interests are not denominated in
Units (iii) Series B Preferred Units (iv) Series C Preferred Units (v)
Series D Preferred Units (vii) Series E Preferred Units and (vii)
Series F Preferred Units. The Certificates of Designations of the
Series B Preferred Units, Series C Preferred Units, Series D Preferred
Units, Series E Preferred Units, and Series F Preferred Units are
attached hereto as Annex I through Annex V, which Annexes are
incorporated herein and are made a part of this Agreement.
Notwithstanding the foregoing, the terms of any Certificate of
Designations attached hereto as an Annex and incorporated by reference
herein may be amended with the approval of a majority in interest of
the holders of the Partnership Securities issued pursuant to the terms
of such Certificate of Designations and the approval of the Managing
General Partner. Notwithstanding anything to the contrary in this
Agreement, in the event that any conflict exists between this
Agreement on the one hand and a Certificate of Designations on the
other, the terms of the Certificate of Designations shall control.
4.2 Issuances of Additional Units and Other Securities. (a) The
Managing General Partner is hereby authorized to cause the Partnership
to issue such additional Units, or classes or series thereof, or
options, rights, warrants or appreciation rights relating thereto, or
any other type of equity security that the Partnership may lawfully
issue ("Partnership Equity Securities"), any unsecured or secured debt
obligations of the Partnership or debt obligations of the Partnership
convertible into any class or series of equity securities of the
Partnership ("Partnership Debt Securities") (collectively,
"Partnership Securities"), for any Partnership purpose at any time or
from time to time, to the Partners or to other Persons for such
consideration and on such terms and conditions as shall be established
by the Managing General Partner in its sole discretion, all without
the approval of any Limited Partners. The Managing General Partner
shall have sole discretion, subject to the guidelines set forth in
this Section 4.2 and the requirements of the Delaware Act, in
determining the consideration and terms and conditions with respect to
any future issuance of Partnership Securities. The Managing General
Partner may evidence terms and conditions of any Partnership
Securities to be issued by the Partnership by a Certificate of
Designations to be incorporated herein and made a part hereof by
attaching the Certificate of Designations as an annex to this
Agreement.
(b) Additional Partnership Securities to be issued by the
Partnership pursuant to this Section 4.2 shall be issuable from time
to time in one or more classes, or one or more series of any of such
classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties,
including rights, powers and duties senior to existing classes and
series of Partnership Securities, unless any such senior securities
are otherwise prohibited by the terms of this Agreement, all as shall
be fixed by the Managing General Partner in the exercise of its sole
and complete discretion, subject to Delaware law, including, without
limitation, (i) the allocations of items of Partnership income, gain,
loss, and deduction to each such class or series of Partnership
Securities; (ii) the right of each such class or series of Partnership
Securities to share in Partnership distributions; (iii) the rights of
each such class or series of Partnership Securities upon dissolution
and liquidation of the Partnership; (iv) whether such class or series
of additional Partnership Securities is redeemable by the Partnership
and, if so, the price at which, and the terms and conditions upon
which, such class or series of additional Partnership Securities may
be redeemed by the Partnership; (v) whether such class or series of
additional Partnership Securities is issued with the privilege of
conversion and, if so, the rate at which, and the terms and conditions
upon which, such class or series of Partnership Securities may be
converted into any other class or series of Partnership Securities;
(vi) the terms and conditions upon which each such class or series of
Partnership Securities will be issued, deposited with the Depositary,
evidenced by Depositary Receipts and assigned or transferred; and
(vii) the right, if any, of each such class or series of Partnership
Securities to vote on Partnership matters, including matters relating
to the relative rights, preferences and privileges of each such class
or series.
The Managing General Partner is hereby authorized and directed to
take all actions which it deems appropriate or necessary in connection
with each issuance of Units or other Partnership Securities pursuant
to Section 4.2(a) hereof and to amend this Agreement in any manner
which it deems appropriate or necessary to provide for each such
issuance, to admit Additional Limited Partners in connection therewith
and to specify the relative rights, powers and duties of the holders
of the Partnership Securities being so issued. Without limiting the
foregoing, the Managing General Partner may prepare a Certificate of
Designations with respect to such Partnership Securities and attach
such Certificate of Designations as an additional annex to this
Agreement.
(d) The Managing General Partner shall do all things necessary
to comply with the Delaware Act and is authorized and directed to do
all things it deems to be necessary or advisable in connection with
any future issuance of Partnership Securities, including compliance
with any statute, rule, regulation or guideline of any federal, state
or other governmental agency or any National Securities Exchange on
which the Depositary Units or other Partnership Securities are listed
for trading.
4.3 No Preemptive Rights. Unless otherwise granted pursuant
to a Certificate of Designations, no Person shall have any preemptive,
preferential or other similar right with respect to (a) additional
Capital Contributions; (b) issuance or sale of any class or series of
Units or other Partnership Securities, whether unissued, held in the
treasury or hereafter created; (c) issuance of any obligations,
evidences of indebtedness or other securities of the Partnership
convertible into or exchangeable for, or carrying or accompanied by
any rights to receive, purchase or subscribe to, any such Units or
Partnership Securities; (d) issuance of any right of subscription to
or right to receive, or any warrant or option for the purchase of, any
such Units or Partnership Securities; or (e) issuance or sale of any
other securities that may be issued or sold by the Partnership.
4.4 Capital Accounts. (a) The Partnership shall maintain for
each Partner (or a beneficial owner of Units held by a nominee in any
case in which the nominee has furnished the identity of such owner to
the Partnership in accordance with Section 6031 (c) of the Code or any
other method acceptable to the Managing General Partner in its sole
discretion) a separate Capital Account in accordance with the rules of
Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account
shall be increased by (i) the amount of all Capital Contributions made
by such Partner to the Partnership pursuant to this Agreement and
(ii) all items of Partnership income and gain (including income and
gain exempt from tax) computed in accordance with Section 4.4(b)
hereof and allocated to such Partner pursuant to Article V hereof, and
decreased by (x) the amount of cash or Net Agreed Value of all
distributions of cash or property made to such Partner pursuant to
this Agreement and (y) all items of Partnership deduction and loss
computed in accordance with Section 4(b) hereof and allocated to such
Partner pursuant to Article V hereof.
(b) For purposes of computing the amount of any item of income,
gain, deduction or loss 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 any method
of depreciation, cost recovery or amortization used for that purpose),
provided, that:
(i) 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.
(ii) 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.
(iii) 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.
(iv) 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 as of the date it
was acquired by the Partnership was equal to the Agreed Value of such
property. Upon an adjustment pursuant to Section 4.4(d) hereof 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.
(c) A transferee of a Partnership Interest shall succeed to the
Capital Account of the transferor attributable 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 shall be deemed to have been
distributed in liquidation of the Partnership to the Partners
(including the transferee of a Partnership Interest) pursuant to
Sections 14.3 and 14.4 hereof and recontributed by such Partners in
reconstitution of the Partnership. Any such deemed distribution shall
be treated as an actual distribution for purposes of this Section 4.4.
In such event, the Carrying Values of the Partnership properties shall
be adjusted immediately prior to such deemed distribution pursuant to
Section 4.4(d)(ii) hereof and such adjusted Carrying Values shall then
constitute the Agreed Values of such properties upon such deemed
contribution to the reconstituted Partnership. The Capital Accounts
of such reconstituted Partnership shall be maintained in accordance
with the principles of this Section 4.4. In the case of a transferor
who holds both Common Units and Preferred Units, the Capital Account
attributable to a Common Unit transferred shall be deemed to equal the
Capital Account attributable to each other Common Unit then
outstanding so as to preserve the uniformity of the Common Units
outstanding from time to time.
(d) (i) Consistent with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), on an issuance of additional Units for
cash or Contributed Property (including the cancellation of debt,
accrued interest, or distribution arrearages by a Partner in exchange
for a Unit or the conversion of Preferred Units to Common Units), the
Capital Accounts 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 as provided in
Section 5.1(c).
(ii) In accordance with Treasury Regulations Section 1.704-
1(b)(2)(iv)(f), immediately prior to any distribution to a Partner of
any Partnership property (other than a distribution of cash that is
not in redemption or retirement of a Partnership Interest), the
Capital Accounts of all Partners and the Carrying Value of each
Partnership property shall, immediately prior to any such
distribution, 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 each such property immediately prior to such distribution for
an amount equal to its fair market value. Any Unrealized Gain or
Unrealized Loss attributable to such property shall be allocated to
the Partners as provided in Section 5.1(c).
(iii) The adjustments provided for in this Section 4.4(d) shall
be made in such a manner as shall be required to establish and
preserve the uniformity of the Common Units outstanding from time to
time.
4.5 Interest. No interest shall be paid by the Partnership on
Capital Contributions or on balances in Partners' Capital Accounts,
except as otherwise provided in a Certificate of Designations.
4.6 No Withdrawal. No Partner shall be entitled to withdraw any
part of his Capital Contribution or his Capital Account or to receive
any distribution from the Partnership, except as provided in Articles
V, XIII and XIV hereof or in a Certificate of Designations.
4.7 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 for such Partner. The amount of any
such excess advances shall be a debt obligation of the Partnership to
such Partner and shall be payable or collectible only out of the
Partnership assets in accordance with the terms and conditions upon
which such advances are made.
4.8 No Fractional Units. No fractional Units shall be issued by
the Partnership.
4.9 Splits and Combinations. (a) Subject to Sections 4.9(f) and
5.8 hereof, the Managing General Partner may make a pro rata
distribution of Units or Partnership Securities to all Record Holders
or may effect a subdivision or combination of Units or other
Partnership Securities; provided, however, that after any such
distribution, subdivision or combination, each Partner shall have the
same Percentage Interest in the Partnership as before such
distribution, subdivision or combination; and provided, however, that
nothing in this Section 4.9 shall be deemed to authorize the Managing
General Partner to combine Units or Partnership Securities of any
class or series with those of any other class or series.
(b) If Partnership Debt Securities are distributed pursuant to
Section 4.9(a), such distribution shall be treated as a distribution
of property for purposes of this Agreement.
(c) Whenever such a distribution, subdivision or combination of
Units or 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 of
the distribution, subdivision or combination at least 20 days prior to
such Record Date, to each Record Holder as of the date not less than
10 days prior to the date of such notice. The Managing General
Partner also may cause a firm of independent public accountants
selected by it to calculate the number of Units to be held by each
Record Holder after giving effect to such distribution, subdivision or
combination. The Managing General Partner shall be entitled to rely
on any certificate provided by such firm as conclusive evidence of the
accuracy of such calculation.
(d) Promptly following any such distribution, subdivision or
combination, the Managing General Partner may cause Depositary
Receipts to be issued to the Record Holders of Units as of the
applicable Record Date representing the new number of Units held by
such Record Holders, or the Managing General Partner may adopt such
other procedures as it may deem appropriate to reflect such
distribution, subdivision or combination; provided, however, that in
the event any such distribution, subdivision or combination results in
a smaller total number of Units outstanding, the Managing General
Partner shall require, as a condition to the delivery to a Record
Holder of such new Depositary Receipt, the surrender of any Depositary
Receipt held by such Record Holder immediately prior to such Record
Date.
(e) 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 4.8 hereof and this
Section 4.9(f), each fractional Unit shall be rounded to the nearest
whole Unit (and a 0.5 Unit shall be rounded to the next higher Unit).
ARTICLE V
Allocations and Distributions
5.1 Allocations for Capital Account Purposes. For purposes of
maintaining the Capital Accounts and in determining the rights of the
Partners among themselves, subject to the provisions of any special or
preferential income allocations contained in any Certificates of
Designations the Partnership's items of income, gain, loss and deduction
(computed in accordance with Section 4.4(b) hereof) shall be allocated
among the Partners in each taxable year (or portion thereof) as provided
herein below.
(a) Net Income. All items of income, gain, loss and deduction
taken into account in computing Net Income for such taxable period shall
be allocated in the same manner as such Net Income is allocated
hereunder which Net Income shall be allocated as follows:
(i) First, 100% to the General Partners, in the proportion that
their respective Percentage Interest bears to 2%, until the aggregate
Net Income allocated to the General Partners pursuant to this
Section 5.1(a)(i) for the current taxable year and all previous taxable
years is equal to the aggregate Net Losses allocated to the General
Partners pursuant to Section 5.1(b)(iii) hereof for all previous taxable
years;
(ii) Second, 100% to the Limited Partners holding Common Units in
the proportion that the respective number of Common Units held by them
bears to the total number of Common Units then outstanding until the
aggregate Net Income allocated to the holder of a Common Unit pursuant
to this Section 5.1(a)(ii) for the current taxable year and all previous
taxable years is equal to the aggregate Net Losses allocated to the
holder of such Common Unit pursuant to Section 5.1(b)(ii) hereof for all
previous taxable years: and
(iii) Third, the balance, if any, 100% to the General Partners and
the Limited Partners holding Common Units in proportion to their
respective Percentage Interests.
(b) Net Losses. All items of income, gain, loss and deduction
taken into account in computing Net Losses for such taxable period shall
be allocated in the same manner as such Net Losses are allocated
hereunder which Net Losses shall be allocated as follows:
(i) First, 100% to the General Partners and the Limited Partners
holding Common Units in accordance with their respective Percentage
Interests, until the aggregate Net Losses allocated to the holder of a
Common Unit pursuant to this Section 5.1(b)(i) for the current taxable
year and all previous taxable years is equal to the aggregate Net Income
allocated to the holder of such Common Unit pursuant to
Section 5.1(a)(iii) hereof for all previous taxable years;
(ii) Second, 100% to the Limited Partners holding Common Units, in
the proportion that the respective number of Common Units held by them
bears to the total number of Common Units then outstanding provided,
that Net Losses shall not be allocated pursuant to this
Section 5.1(b)(ii) to the extent that such allocation would cause any
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); and
(iii) Third, the balance, if any, 100% to the General Partners, in
the proportion that their respective Percentage Interests bears to 2%.
(c) Net Termination Gain and Losses. All items of income, gain,
loss and deduction taken into account in computing Net Termination Gain
or Net Termination Loss for such taxable period shall be allocated in
the same manner as such Net Termination Gain or Net Termination Loss is
allocated hereunder. All allocations under this Section 5.1(c) shall be
made after Capital Account balances have been adjusted by all other
allocations provided under this Section 5.1 and after all distributions
of Available Cash provided under Section 5.4 or 5.5 hereof have been
made with respect to such taxable period.
(i) If a Net Termination Gain is recognized, such Net Termination
Gain shall be allocated between the General Partners and 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
Adjusted Capital Account, in the proportion of such deficit balance to
the deficit balances in the Adjusted Capital Accounts of all Partners,
until each such Partner has been allocated Net Termination Gain equal to
any such deficit balance in its Adjusted Capital Account; and
(B) Second, 98% to Limited Partners holding Common Units in the
proportion that the respective number of Common Units held by them bears
to the total number of Common Units outstanding, 1.9% to the Managing
General Partner and 0.1% to the Special General Partner.
(ii) If a Net Termination Loss is recognized, such Net Termination
Loss shall be allocated to the Partners in the following manner:
(A) First, 98% to Limited Partners holding Common Units in
proportion to, and to the extent of, the positive balances in their
respective Adjusted Capital Accounts, 1.9% to the Managing General
Partner and 0.1% to the Special General Partner until such Limited
Partner's Adjusted Capital Accounts are reduced to zero;
(B) Second, the balance, if any, 100% to the General Partners in
the proportion that their respective Percentage Interest bears to 2%.
(d) Agreed Allocations. Notwithstanding any other provisions of
this Section 5.1 (other than Section 5.1 (e) hereof), the following
special allocations shall be made for such taxable period:
(i) Priority Allocations.
(A) If the amount of cash or the Net Agreed Value of any property
distributed (except cash or property distributed pursuant to
Section 14.3 or 14.4 hereof) to any Limited Partner holding Common Units
during a taxable year is greater (on a per Common Unit basis) than the
amount of cash or the Net Agreed Value of property distributed to the
other Limited Partners holding Common Units (on a per Common Unit
basis), then (1) each such Limited Partner receiving such greater cash
or property distribution shall be allocated gross income in an amount
equal to the product of (x) the amount by which the distribution (on a
per Common Unit basis) to such Limited Partner exceeds the distribution
(on a per Common Unit basis) to the Limited Partners receiving the
smallest distribution and (y) the number of Common Units owned by the
Limited Partner receiving the greater distribution; and (2) the General
Partners shall be allocated gross income (95% to the Managing General
Partner and 5% to the Special General Partner) in an amount equal to
2.0408% of the sum of the amounts allocated in clause (1) above.
(B) If the amount of cash and the Net Agreed Value of any property
distributed (except cash or property distributed pursuant to
Section 14.3 or 14.4 hereof) to the Limited Partners holding Common
Units or the General Partners during a taxable year exceeds that which
would have been distributed to either class of partners had such
distributions been made in the ratio of 98% and 2% (as between the
Limited Partners holding Common Units and the General Partners,
respectively), such class receiving the excess distribution will be
allocated gross income in an amount equal to such excess. Gross income
allocated to the Limited Partners holding Common Units pursuant to this
Section 5.1(d)(i)(B) shall be allocated among such Limited Partners
holding Common Units in the proportion that the respective number of
Common Units held by them bears to the total number of Common Units.
Gross income allocated to the General Partners pursuant to this
Section 5.1(d)(i)(B) shall be allocated among such General Partners in
the ratio that their respective Percentage Interests bear to 2%.
(ii) Nonrecourse Liabilities. For purposes of Treasury Regulation
Section 1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities
of the Partnership in excess of the sum of (A) the amount of Partnership
Minimum Gain and (B) the total amount of Nonrecourse Built-in Gain shall
be allocated among the Partners in accordance with their respective
Percentage Interests.
(iii) Discretionary Allocation. (A) Notwithstanding any other
provisions of Section 5.1(a), (b) or (c) hereof, the Agreed Allocations
shall be adjusted so that, to the extent possible, the net amount of
items of income, gain, loss and deduction allocated to each Partner
pursuant to the Required Allocations and the Agreed Allocations,
together, shall be equal to the net amount of such items that would have
been allocated to each such Partner under the Agreed Allocations had
there been no Required Allocations; provided, however, that for purposes
of applying this Section 5.1(d)(iii)(A), it shall be assumed that all
chargebacks pursuant to Section 5.1(e)(i) and (ii) hereof have occurred.
(B) The Managing General Partner shall have reasonable discretion,
with respect to each taxable year, to (1) apply the provisions of
Section 5.1(d)(iii)(A) hereof in whatever fashion as is most likely to
minimize the economic distortions that might otherwise result from the
Required Allocations, and (2) divide all allocations pursuant to
Section 5.1(d)(iii)(A) hereof among the Partners in a manner that is
likely to minimize such economic distortions.
(e) Required Allocations. Notwithstanding any other provision of
this Section 5.1, the following special allocations shall be made for
such taxable period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding the
other provisions of this Section 5.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period, each
Partner shall be allocated items of Partnership income and gain for such
period (and, if necessary subsequent periods) in the manner and amounts
provided in Treasury Regulation Sections 1.704-2(f), 1.704-2(g)(2) and
1.704-2(j)(2)(i), or any successor provision. For purposes of this
Section 5.1(e), each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder
shall be effected, prior to the application of any other allocations
pursuant to this Section 5.1 with respect to such taxable period (other
than an allocation pursuant to Sections 5.1(e)(v) and 5.1 (e)(vi)).
This Section 5.1(e)(i) is intended to comply with the Partnership
Minimum Gain chargeback requirement in Treasury Regulation
Section 1.704-2(f) and shall be interpreted consistently therewith.
(ii) Chargeback of Minimum Gain Attributable to Partner
Nonrecourse Debt. Notwithstanding the other provisions of this
Section 5.1 (other than 5.1(e)(i) hereof), except as provided in
Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in
Minimum Gain Attributable to Partner Nonrecourse Debt during any
Partnership taxable period, any Partner with a share of Minimum Gain
Attributable to Partner Nonrecourse Debt at the beginning of such
taxable period shall be allocated items of Partnership income and gain
for such period (and, if necessary, subsequent periods) in the manner
and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions. For purposes of this
Section 5.1(e), each Partner's Adjusted Capital Account balance shall be
determined and the allocation of income or gain required hereunder shall
be effected, prior to the application of any other allocations pursuant
to this Section 5.1(e), other than Section 5.1(e)(i) hereof and other
than an allocation pursuant to Sections 5.1(e)(v) and 5.1(e)(vi), with
respect to such taxable period. This Section 5.1(e)(ii) is intended to
comply with the chargeback of items of income and gain required 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 adjustments, allocations or distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of
Partnership income and gain shall be specifically allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent
required by the Treasury regulations promulgated under Section 704(b) of
the Code, the deficit balance, if any, in its Adjusted Capital Account
created by such adjustments, allocations or distributions as quickly as
possible unless such deficit balance is otherwise eliminated pursuant to
Section 5.1(e)(i) or 5.1(e)(ii) hereof.
(iv) Gross Income Allocations. In the event any Partner has a
deficit balance in its Adjusted Capital Account at the end of any
Partnership taxable period that is in excess of the sum of (A) the
amount such Partner is obligated to restore and (B) the amount such
Partner is deemed to be obligated to restore pursuant to Treasury
Regulation Sections 1.704-2(g)(1) 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 5.1(e)(iv) shall be made only if and
to the extent that such Partner would have a deficit balance in its
Adjusted Capital Account after all other allocations provided in this
Section 5.1 have been tentatively made as if this Section 5.1(e)(iv) was
not in the Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with
their respective Percentage Interests. If the 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 Limited Partners, to revise the
prescribed ratio to the numerically closest ratio which does satisfy
such requirements.
(vi) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the Partner
that bears the Economic Risk of Loss for such Partnership Nonrecourse
Debt to which such Partner Nonrecourse Deductions are attributable in
accordance with Treasury Regulation Section 1.704-2(i). If more than one
Partner bears the Economic Risk of Loss with respect to a Partner
Nonrecourse Debt, such Partner Nonrecourse Deductions attributable
thereto shall be allocated between or among such Partners in accordance
with the ratios in which they share such Economic Risk of Loss.
5.2 Allocations for Tax Purposes. (a) Except as otherwise provided
herein, for federal income tax purposes, each item of income, gain, loss
and deduction which is recognized by the Partnership, for federal income
tax purposes, shall be allocated among the Partners in the same manner
as its correlative item of "book" income, gain, loss or deduction is
allocated pursuant to Section 5.1 hereof.
(b) In an attempt to eliminate Book-Tax Disparities attributable
to a Contributed Property or Adjusted Property, each item of income,
gain, loss, depreciation, depletion and cost recovery deduction which is
recognized by the Partnership, for federal income tax purposes, shall be
allocated for federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the manner
provided under Section 704(c) of the Code that takes into account the
variation between the Agreed Value of such property and its adjusted
basis at the time of contribution; and (B) except as otherwise provided
in Section 5.2(b)(iii) hereof, any item of Residual Gain or Residual
Loss attributable to a Contributed Property shall be allocated among the
Partners in the same manner as its correlative item of "book" gain or
loss is allocated pursuant to Section 5.1 hereof.
(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 7.04(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and the
allocations thereof pursuant to Section 4.4(d)(i) or (ii) hereof, and
(2) second, in the event such property was originally a Contributed
Property, be allocated among the Partners in a manner consistent with
Section 5.2(b)(i)(A) hereof; and (B) except as otherwise provided in
Section 5.2(b)(iii) hereof, any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be allocated among the
Partners in the same manner as its correlative item of "book" gain or
loss is allocated pursuant to Section 5.1 hereof.
(iii) Any items of income, gain, loss or deduction otherwise
allocable under Section 5.2(b)(i)(B) or 5.2(b)(ii)(B) hereof shall be
subject to allocation by the Managing General Partner in a manner
designed to eliminate, to the maximum extent possible, Book-Tax
Disparities in a Contributed Property or Adjusted Property otherwise
resulting from the application of the "ceiling" limitation (under
Section 704(c) of the Code or Section 704(c) principles) to the
allocations provided under Section 5.2(b)(i)(A) or 5.2(b)(ii)(A) hereof.
(c) For the proper administration of the Partnership and for the
preservation of uniformity of the Units (or any class or classes
thereof), the Managing General Partner shall have the 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 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) of the Code or
(y) otherwise to preserve or achieve uniformity of the Units (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 5.2(c) only if such conventions,
allocations or amendments would not have a material adverse effect on
the Partners, the holders of any class or classes of Units issued and
outstanding 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 sole discretion may
determine to depreciate the portion of an adjustment under
Section 743(b) of the Code attributable to unrealized appreciation in
any Adjusted Property (to the extent of the unamortized Book-Tax
Disparity) using a predetermined rate derived from the depreciation
method and useful life applied to the Partnership's common basis of such
property, despite the inconsistency of such approach with Proposed
Treasury Regulation Section 1.168-2(n), Treasury Regulation
Section 1.167(c)-1(a)(6) or the legislative history of Section 197 of
the Code. If the Managing General Partner later determines that such
reporting position cannot reasonably be taken, the Managing General
Partner may adopt a depreciation convention under which all purchasers
acquiring Units in the same month would receive depreciation based upon
the same applicable rate as if they had purchased a direct interest in
the Partnership's property. If the Managing General Partner chooses not
to utilize such aggregate method, the Managing General Partner may use
any other reasonable depreciation convention to preserve the uniformity
of the intrinsic tax characteristics of any Units that would not have a
material adverse effect on the Limited Partners or the Record Holders of
any class or classes of Units.
(e) Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall, to the extent
possible, after taking into account other required allocations of gain
pursuant to this Section 5.2, be characterized as Recapture Income in
the same proportions and to the same extent as such Partners have been
allocated any deductions directly or indirectly giving rise to the
treatment of such gains as Recapture Income.
(f) All items of income, gain, loss, deduction and credit
recognized by the Partnership for federal income tax purposes and
allocated to the Partners in accordance with the provisions hereof shall
be determined without regard to any election under Section 754 of the
Code which may be made by the Partnership, provided, however, that such
allocations once made, shall be adjusted as necessary or appropriate to
take into account those adjustments permitted or required by
Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction
attributable to a transferred Partnership Interest of the General
Partners or to transferred Units shall, for federal income tax purposes,
be determined on an annual basis and prorated on a monthly basis and
shall be allocated to the Partners as of the opening of the New York
Stock Exchange on the first Business Day of each month; provided,
however, that gain or loss on a sale or other disposition of any assets
of the Partnership other than in the ordinary course of business shall
be allocated to the Partners as of the opening of the New York Stock
Exchange on the first Business Day of the month in which such gain or
loss is recognized for federal income tax purposes. The Managing
General Partner may revise, alter or otherwise modify such methods of
allocation as it determines necessary, to the extent permitted or
required by Section 706 of the Code and the regulations or rulings
promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited Partner
under the provisions of this Article V shall instead be made to the
beneficial owner of Units held by a nominee in any case in which the
nominee has furnished the identity of such owner to the Partnership in
accordance with Section 6031(c) of the Code or any other method
acceptable to the Managing General Partner in its sole discretion.
5.3 Requirement and Characterization of Distributions. Within 60
days following the end of each calendar quarter an amount equal to 100%
of Available Cash with respect to such quarter shall be distributed in
accordance with this Article V by the Partnership to the Partners, as of
the Record Date selected by the Managing General Partner in its
reasonable discretion, unless such distribution shall be prohibited by
a Certificate of Designations, a loan agreement or other instrument then
in effect to which the Partnership is a party or by which its properties
are bound, or unless a Certificate of Designation requires a different
distribution. The Managing General Partner shall have the right to
determine in its sole discretion the amount of Available Cash for each
quarter except to the extent it is established that such determination
is contrary to any express requirement of this Agreement.
5.4 Distributions. Available Cash with respect to a calendar
quarter shall be distributed 98% to Limited Partners holding Common
Units, in the proportion that the respective number of Common Units held
by them bears to the total number of Common Units outstanding, 1.9% to
the Managing General Partner and 0.1% to the Special General Partner,
unless such distribution shall be prohibited by a Certificate of
Designations, a loan agreement or other instrument then in effect to
which the Partnership is a party or by which properties are bound, or
unless a Certificate of Designation requires a different distribution.
5.5 [intentionally blank]
5.6 Distributions of Proceeds from Capital Transactions. (a)
Proceeds from Capital Transactions which the Managing General Partner
determines to distribute shall be subject to the preferential
distributions in any Certificates of Designation distributed, first as
provided in Section 5.6(b) hereof and second 98% to the Limited Partners
holding Common Units, in the proportion that the respective number of
Common Units held by them bears to the total number of Common Units,
1.9% to the Managing General Partner and 0.1% to the Special General
Partner.
(b) If one or more Capital Transactions shall occur in any
taxable year, then before any distribution is made pursuant to
Section 5.6(a) hereof (except as otherwise provided below in this
Section 5.6(b)) the Managing General Partner shall be required to make
a distribution of Proceeds from Capital Transactions on or before the
April 1st next following the end of the taxable year in which such
Capital Transactions occur in accordance with the following procedure:
(i) The Managing General Partner shall determine the net capital
gain and net ordinary income recognized by the Partnership (without
taking account of any Code Section 743 adjustments) for federal income
tax purposes from all Capital Transactions during such year, and shall
then determine the portion of such net capital gain and net ordinary
income allocable to any then outstanding Common Units.
(ii) The Managing General Partner shall then cause the Partnership
(except as provided in paragraph (iii) immediately below) to distribute
cash to the Partners, in accordance with the provisions of this
Section 5.6(b) until an amount has been distributed pursuant hereto with
respect to every Common Unit outstanding on the Record Date established
by the Managing General Partner with respect to such distribution equal
to 125% of the federal income tax liability that would be due with
respect to the "net capital gain" and "net ordinary income" attributed
to any outstanding Common Unit on the Record Date (assuming for such
purpose that the maximum marginal federal income tax rates for
individuals, relating to either long-term capital gain or ordinary
income, whichever the case may be, would apply at the time of such
recognition without regard to any elimination of the benefit of lower
rates, any surtaxes or any alternative minimum taxes.
(iii) No distribution of Proceeds from Capital Transactions shall
be required by this Section 5.6(c) with respect to any tax year if the
amount or value otherwise distributable for such taxable year under this
Section 5.6(c) does not exceed $.10 per Common Unit, or if such
distribution shall be prohibited by a Certificate of Designations, a
loan agreement or other instrument then in effect to which the
Partnership is a party or by which its properties are bound.
5.7 Distributions Upon Liquidation. In the event of the
liquidation of the Partnership, distribution of the assets of the
Partnership shall be in accordance with Section 14.3 hereof, subject to
the terms of any applicable Certificates of Designations.
5.8 Other Capital Distributions. Subject to the Certificates of
Designations, distributions of equity securities of the Partnership or
securities in respect of a liquidation of the Partnership, including
without limitation, distributions of Common Units, distributions of
interests in the Partnership other than Common Units, distributions of
rights or warrants entitling the holders thereof to subscribe for the
Common Units or any securities entitling the holders thereof to convert
such securities into, or exchange such securities for, Common Units, or
distributions of rights or warrants to purchase debt securities or
assets of the Partnership, if distributed by the Partnership, shall be
distributed 98% to holders of Common Units, in the proportion that the
respective number of Common Units held by them bears to the total number
of Common Units, and 1.9% to the Managing General Partner and 0.1% to
the Special General Partner.
ARTICLE VI
Management and Operation of Business
6.1 Management. (a) The Managing General Partner shall conduct,
direct and exercise full control over all activities of the Partnership.
Except as otherwise expressly provided in this Agreement, all management
powers over the business and affairs of the Partnership shall be
exclusively vested in the Managing General Partner, and neither Limited
Partners nor (except as expressly set forth herein) the Special General
Partner shall have any right of control or management power over the
business and affairs of the Partnership. In addition to the powers now
or hereafter granted 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 6.3 hereof, shall have full power and
authority to do all things deemed necessary or desirable by it to
conduct the business of the Partnership, to exercise all powers set
forth in Section 3.2 hereof and to effectuate the purposes set forth in
Section 3.1 hereof including, without limitation, (i) the making of any
expenditures, the borrowing of money, the guaranteeing of indebtedness
and other liabilities, the issuance of evidences of indebtedness and the
incurring of any obligations it deems necessary for the conduct of the
activities of the Partnership; (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 assets of the Partnership
or the merger or other combination of the Partnership with or into
another entity (all of the foregoing subject to any prior approval which
may be required by Section 6.3 hereof); (iv) the use of the assets of
the Partnership (including, without limitation, cash on hand) for any
purpose consistent with the terms of this Agreement and on any terms it
sees fit, including, without limitation, the financing of the conduct of
the operations of the Partnership or any of its Subsidiaries, the
lending of funds to other persons (including its Subsidiaries) and the
repayment of obligations of the Partnership and its Subsidiaries and the
making of capital contributions to its Subsidiaries; (v) the negotiation
and execution on any terms deemed desirable in its sole discretion and
the performance of any contracts, conveyances or other instruments that
it considers useful or necessary to the conduct of the Partnership
operations or the implementation of its powers under this Agreement;
(vi) the distribution of Partnership cash or other Partnership assets;
(vii) the selection and dismissal of employees and agents (including,
without limitation, 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 and the
Partners as it deems necessary or appropriate; (ix) the formation of, or
acquisition of an interest in, and the contribution of property to, any
further limited or general partnerships, joint ventures or other
relationships that it deems desirable (including, without limitation,
the acquisition of interests in, and the contributions of property to
its Subsidiaries from time to time); (x) the control of any matters
affecting the rights and obligations of the Partnership, including the
conduct of litigation and the incurring of legal expense and the
settlement of claims and litigation; (xi) the lending or borrowing of
money, the assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidences of
indebtedness and the securing of same by mortgage, deed of trust or
other lien or encumbrance, the bringing and defending of actions at law
or in equity and the indemnification of any Person against liabilities
and contingencies to the extent permitted by law; (xii) the entering
into listing agreements with the New York Stock Exchange and any other
securities exchange and delisting some or all of the Units from, or
requesting that trading be suspended on, any such exchange (subject to
any prior approval which may be required under Section 1.6 hereof);
(xiii) the undertaking of any action in connection with the
Partnership's investment in its Subsidiaries (including, without
limitation, the contribution or loan by the Partnership to its
Subsidiaries of funds); (xiv) the undertaking of any action in
connection with the Partnership's direct or indirect investment in its
Subsidiaries; and (xv) determine the fair market value of any
Partnership property distributed in kind using such reasonable method of
valuation as it may adopt.
(b) The Special General Partner shall have power and authority
coextensive with that of the Managing General Partner to represent the
Partnership in dealings with third parties (for the purposes of this
Section 6.1, "third parties" shall be deemed to be persons other than
the Partners and the Assignees thereof), and accordingly may bind the
Partnership. However, in the absence of notice given to the Partnership
by either of the Managing General Partner or the Special General Partner
to the contrary, the Special General Partner's power and authority to
manage the Partnership shall be presumed to have been delegated to the
Managing General Partner. In the absence of such delegation of the
Special General Partner's power and authority, the Special General
Partner shall have voting power in all matters of management of the
Partnership proportionate with its general partner Partnership Interest.
(c) Each of the Partners and each other Person who may acquire an
interest in Units hereby approves, ratifies and confirms the execution,
delivery and performance by the parties thereto of the Deposit
Agreement, the Underwriting Agreement, and the other agreements
described in the Registration Statement, and agrees that the Managing
General Partner is authorized to execute, deliver and perform the above-
mentioned agreements and transactions and such other agreements
described in the Registration Statement on behalf of the Partnership
without any further act, approval or vote of the Partners or the other
Persons who may acquire an interest in Units, notwithstanding any other
provisions of this Agreement, the Delaware Act or any applicable law,
rule or regulation. None of the execution, delivery or performance by
the Managing General Partner, the Partnership or any Affiliate of any of
them of any agreement authorized or permitted under this Agreement shall
constitute a breach by the Managing General Partner of any duty that the
Managing General Partner may owe the Partnership or the Limited Partners
or any other Persons under this Agreement or of any duty stated or
implied by law or equity.
(d) If the Managing General Partner determines such action to be
necessary or appropriate in connection with the proposed qualification
or formation and operation of the Partnership in any state other than
the State of Delaware in which the Partnership is transacting or may
transact business, the Managing General Partner may cause the
Partnership to form one or more operating partnerships pursuant to and
in conformity with the laws of such jurisdiction or jurisdictions as the
Managing General Partner may determine ("Operating Partnership"). An
Operating Partnership may have conveyed to it and may acquire, hold,
operate and dispose of all or part of the Partnership assets located in
a state. Each Operating Partnership shall be composed of the Managing
General Partner as managing general partner thereof, having a 1.9%
interest in the Operating Partnership, the Special General Partner as
special general partner thereof, have a 0.1% general partner interest in
the Operating Partnership, which shall in turn reduce the interests of
the Managing General Partner and the Special General Partner in the
Partnership so that the economic interest of the Managing General
Partner as managing general partner and the Special General Partner as
special general partner in the Partnership and the Operating Partnership
or Operating Partnerships remains 1.9% and 0.1%, respectively, and the
Partnership as the sole limited partner thereof having a 98% interest in
the Operating Partnership. Each Operating Partnership shall be formed
pursuant to an agreement of limited partnership in substantially the
form of this Agreement, provided that the Operating Partnership
agreement may contain (i) a provision providing for a name of the
Operating Partnership different from the name of the Partnership,
(ii) such provisions as the Managing General Partner determines are
reasonable and necessary or appropriate to comply with the laws of the
jurisdiction in which the Operating Partnership is being formed or to
reflect the manner in which the Operating Partnership will be or is
required to conduct the activities of the Operating Partnership with
respect to the properties located in a state, (iii) such provisions as
the Managing General Partner would be permitted to adopt as amendments
to this Agreement (provided that the Managing General Partner complies
with any applicable requirements of such sections) and (iv) any other
provision that the Managing General Partner has determined is necessary
or appropriate and is fair and reasonable to all parties concerned. The
Managing General Partner is hereby authorized on behalf of the
Partnership to execute the agreement of limited partnership of each
Operating Partnership and any other certificates, instruments and
documents necessary to form the Operating Partnership, and the Partners
hereby approve, ratify and confirm the execution, delivery and
performance thereof.
(e) At all times from and after the date hereof, the Managing
General Partner shall cause the Partnership and any Operating
Partnership to obtain and maintain to the extent available on a
commercially reasonable basis (i) casualty and liability insurance on
the properties of the Partnership and (ii) liability insurance for the
General Partners and the Indemnitees hereunder.
(f) At all times from and after the date hereof, the Managing
General Partner shall cause the Partnership to maintain working capital
reserves in such amounts as the Managing General Partner deems
appropriate and reasonable from time to time.
6.2 Certificate of Limited Partnership. The Managing General
Partner has filed the Certificate of Limited Partnership 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 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 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 the things to maintain the Partnership as a
limited partnership (or a partnership in which the limited partners have
limited liability) under the laws of the State of Delaware or any other
state in which the Partnership may elect to do business or own property.
Subject to the terms of Section 7.5(a) hereof, the Managing General
Partner shall not be required, before or after filing, to deliver or
mail a copy of the Certificate of Limited Partnership or any amendment
thereto to any Limited Partner.
6.3 Restrictions on the General Partners' Authority. (a) No
General Partner may, without the written approval of the specific act by
all of the Limited Partners or by other written instrument executed and
delivered by all of the Limited Partners subsequent to the date of this
Agreement, take any action in contravention of this Agreement,
including, without limitation, (i) take any act that would make it
impossible to carry on the ordinary business of the Partnership, except
as otherwise provided in this Agreement, (ii) possess Partnership
property, or assign any rights in specific Partnership property, for
other than a Partnership purpose; (iii) admit a person as a Partner,
except as otherwise provided in this Agreement; (iv) amend this
Agreement in any manner, except as otherwise provided in this Agreement;
or (v) transfer its interest as a General Partner of the Partnership,
except as otherwise provided in this Agreement.
(b) Except as provided in Article XIV hereof, no General Partner
may sell, exchange or otherwise dispose of all or substantially all of
the Partnership's assets in a single transaction or a series of related
transactions (including by way of merger, consolidation or other
combination with any other Person) without the approval of the holders
of at least a majority of the Outstanding Units, voting together as a
single class unless the holders of a particular class or series of
Outstanding Partnership Securities have the right to approve such
transaction or series of transactions pursuant to the Certificate of
Designations creating such Partnership Securities; provided, however,
that this provision shall not preclude or limit the mortgage, pledge,
hypothecation or grant of a security interest in all or substantially
all of the Partnership's assets (unless otherwise prohibited in a
Certificate of Designations) and shall not apply to any forced sale of
any or all of the Partnership's assets pursuant to the foreclosure of,
or other realization upon, any such encumbrance.
(c) Unless approved by the affirmative vote of the holders of at
least a majority of the Outstanding Units, no General Partner shall take
any action or refuse to take any reasonable action the effect of which,
if taken or not taken, as the case may be, would cause the Partnership
to be treated as a corporation or as an association taxable as a
corporation for federal income tax purposes.
(d) At all times while serving as a general partner of the
Partnership, the General Partners will not make any dividend or
distribution on, or repurchase any stock or take any other action if the
effect of such dividend or distribution, repurchase or other action
would be to reduce its net worth below an amount necessary to receive an
Opinion of Counsel that the Partnership will be treated as a partnership
for federal income tax purposes.
6.4 Reimbursement of the General Partners. (a) Except as provided
in this Section 6.4 and elsewhere in this Agreement, none of the General
Partners shall be compensated for its services as a general partner of
the Partnership.
(b) The General Partners shall be reimbursed on a monthly basis,
or such other 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 amounts paid
to any Person to perform services to or for the Partnership) and
(ii) except as provided in (d) below, that portion of the General
Partners' or their Affiliates' legal, accounting, investor
communications, utilities, telephone, secretarial, travel,
entertainment, bookkeeping, reporting, data processing, office rent and
other office expenses (including overhead charges), salaries, fees and
other compensation and benefit expenses of employees, officers and
directors, other administrative or overhead expenses and all other
expenses, in each such case, necessary or appropriate to the conduct of
the Partnership's business and allocable to the Partnership or otherwise
incurred by the General Partners in connection with operating the
Partnership's business (including, without limitation, expenses
allocated to the General Partners by their Affiliates). The Managing
General Partner shall determine the fees and expenses that are allocable
to the Partnership in any reasonable manner determined by the Managing
General Partner in its sole discretion. Such reimbursement shall be in
addition to any reimbursement to the General Partners as a result of
indemnification pursuant to Section 6.7 hereof.
(c) The Managing General Partner in its sole discretion and without
the approval of the Limited Partners may propose and adopt on behalf of
the Partnership, employee benefit plans (including, without limitation,
plans involving the issuance of Units), for the benefit of employees of
the General Partners, the Partnership, its Subsidiaries or any Affiliate
of any of them in respect of services performed, directly or indirectly,
for the benefit of the Partnership or any of its Subsidiaries.
(d) The Managing General Partner shall not be reimbursed for any
salaries, fees and other compensation and benefit expenses of employees,
officers and directors of the Managing General Partner which are paid to
individuals who also serve as a director of the Managing General Partner
or who are shareholders of the Managing General Partner to the extent
that such payments are made pursuant to an employment agreement. The
reimbursement to the Managing General Partner pursuant to the terms of
6.4(b) for any compensation or benefits paid, directly or indirectly, to
its shareholders or directors in their capacity as such, shall be
limited to the amount of reasonable directors' fees and expenses and
costs of directors' and officers' liability insurance.
6.5 Outside Activities. (a) No General Partner shall, for so long
as it is a general partner of the Partnership, enter into or conduct any
business or incur any debts or liabilities which adversely affect or are
in direct competition with the Partnership.
(b) Except as described in the Registration Statement or as
provided in Section 6.5(a) hereof, no Indemnitee shall be expressly or
implicitly restricted or proscribed pursuant to this Agreement or the
partnership relationship established hereby from engaging in other
activities for profit, whether in the businesses engaged in by the
Partnership or anticipated to be engaged in by the Partnership or
otherwise, including, without limitation, those businesses described in
or contemplated by the Registration Statement. None of the Partnership,
any Limited Partner or any other Person shall have any rights by virtue
of this Agreement or the partnership relationship established hereby or
thereby in any business ventures of any Indemnitee, and, except as set
forth in the Registration Statement, such Indemnitees shall have no
obligation to offer any interest in any such business ventures to the
Partnership, any Limited Partner or any such other Person. The General
Partners and any other Persons affiliated with the General Partners may
acquire Units or Partnership Securities and shall be entitled to
exercise all rights of an Assignee or Limited Partner, as applicable,
relating to such Units or Partnership Securities, as the case may be.
6.6 Contracts with Affiliates. (a) The Partnership may lend or
contribute to its Subsidiaries, and its Subsidiaries may borrow funds,
on terms and conditions established in the sole discretion of the
Managing General Partner. The foregoing authority shall be exercised by
the Managing General Partner in its reasonable discretion and shall not
create any right or benefit in favor of any Subsidiary or any other
Person. The Partnership may not lend funds to the General Partners or
any of their Affiliates.
(b) Each General Partner may itself, or may enter into an
agreement with any of its Affiliates to, render services to the
Partnership. Any services rendered to the Partnership by a General
Partner or any Affiliate thereof shall be on terms that are fair and
reasonable to the Partnership. The provisions of Section 6.4 hereof
shall apply to the rendering of services described in this
Section 6.6(b).
(c) The Partnership may transfer assets to joint ventures, other
partnerships, corporations or other business entities in which it is or
thereby becomes a participant upon such terms and subject to such
conditions consistent with this Agreement and applicable law.
(d) Neither a General Partner nor any Affiliate thereof shall
sell, transfer or convey any property to, or purchase any property from,
the Partnership, directly or indirectly, except pursuant to transactions
that are fair and reasonable to the Partnership; provided, however, that
the requirements of this Section 6.6(d) shall be deemed to be satisfied
as to any transactions described in or contemplated by the Registration
Statement and the Consent Solicitation Statement.
6.7 Indemnification. (a) To the fullest extent permitted by law
but subject to the limitations expressly provided in this Agreement,
each Indemnitee shall be indemnified and held harmless by the
Partnership from and against any and all losses, claims, damages,
liabilities, joint or several, expenses (including legal fees and
expenses), judgments, fines, settlements and other amounts arising from
any and all claims, demands, actions, suits or proceedings, 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 (x) a General Partner, a departing General
Partner or any of their Affiliates, (y) an officer, director, employee,
partner, agent or trustee of a General Partner, any departing General
Partner or any of their Affiliates or (z) a Person serving at the
request of the Partnership in another entity in a similar capacity,
provided that in each case the Indemnitee acted in good faith and in the
manner which such Indemnitee believed to be in, or not opposed to, the
best interests of the Partnership and, with respect to any criminal
proceeding, had no reasonable cause to believe its conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contender, or its
equivalent, shall not, of itself, create a presumption that the
Indemnitee acted in a manner contrary to that specified above. Any
indemnification pursuant to this Section 6.7 shall be made only out of
the assets of the Partnership.
(b) To the fullest extent permitted by law, expenses (including
legal fees and expenses) incurred by an Indemnitee in defending any
claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Partnership prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the
Partnership of an undertaking by or on behalf of the Indemnitee to repay
such amount if it shall be determined that the Indemnitee is not
entitled to be indemnified as authorized in this Section 6.7.
(c) The indemnification provided by this Section 6.7 shall be in
addition to any other rights to which an Indemnitee may be entitled
under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity.
(d) The Partnership may purchase and maintain insurance, on behalf
of a General Partner 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, 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 6.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an
employee benefit plan whenever the performance by it of its duties to
the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute "fines" within the meaning
of Section 6.7(a); and action taken or omitted by it with respect to an
employee benefit plan in the performance of its duties for a purpose
reasonably believed by it to be in the interest of the participants, and
beneficiaries of the plan shall be deemed to be for a purpose which is
in, or not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth
in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or
in part under this Section 6.7 because the Indemnitee had an interest in
the transaction with respect to which the indemnification applies if the
transaction were otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and
shall not be deemed to create any rights for the benefit of any other
Persons.
(i) No amendment, modification or repeal of this Section 6.7 or
any provision hereof shall in any manner terminate, reduce or impair the
right of any past, present or future Indemnitee to be indemnified by the
Partnership, nor the obligation of the Partnership to indemnify any such
Indemnitee under and in accordance with the provisions of this
Section 6.7 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating
to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
6.8 Liability of Indemnitees. (a) Notwithstanding anything to the
contrary set forth in this Agreement or as otherwise prohibited by law,
no Indemnitee shall be liable for monetary damages to the Partnership,
Limited Partners or to any Persons who have acquired interests in the
Units for losses sustained or liabilities incurred as a result of errors
of judgment or of any act or omission if such Indemnitee acted in good
faith and in the manner which such Indemnitee believed to be in, or not
opposed to, the best interests of the Partnership.
(b) Subject to its obligations and duties as Managing General
Partner set forth in Section 6.1(a) hereof, 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 it in good faith.
(c) Any amendment, modification or repeal of this Section 6.8 or
any provision hereof shall be prospective only and shall not in any way
affect the limitations or the liability to the Partnership and the
Limited Partners of a General Partner, its directors, officers, partners
and employees under this Section 6.8 as in effect immediately prior to
such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to
such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
6.9 Resolution of Conflicts of Interest. (a) Unless otherwise
expressly provided in this Agreement, whenever a potential conflict of
interest exists or arises between a General Partner or any Affiliate
thereof, on the one hand, and the Partnership, any Subsidiary or any
Partner, on the other hand, any resolution or course of action in
respect of such conflict of interest shall be permitted and deemed
approved by all Partners, and shall not constitute a breach of this
Agreement, of any agreement contemplated herein, 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 a resolution of such conflict or
course of action. Any conflict of interest and any resolution of such
conflict of interest shall be deemed fair and reasonable to the
Partnership upon Special Approval of such conflict of interest or
resolution. The Managing General Partner may also adopt a resolution or
course of action that has not received Special Approval. Any such
resolution or course of action in respect of any conflict of interest
shall not constitute a breach of this Agreement, of any other agreement
contemplated herein, or of any duty stated or implied by law or equity,
if such resolution or course of action is fair and reasonable to the
Partnership. The Managing General Partner (including the Conflicts and
Audit Committee in connection with Special Approval) shall be authorized
in connection with its resolution of any conflict of interest to
consider (i) the relative interests of any party to such conflict,
agreement, transaction or situation and the benefits and burdens
relating to such interest; (ii) any customary or accepted industry
practices; (iii) any applicable generally accepted accounting practices
or principles; and (iv) such additional factors as the Managing General
Partner (including the Conflicts and Audit Committee in connection with
Special Approval) 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 Conflicts and Audit
Committee in connection with Special Approval) to consider the interests
of any Person other than the Partnership and the Limited Partners as a
group. So long as the Managing General Partner acted in good faith and
in a manner that it believed to be in, or not opposed to, the best
interests of the Partnership and had no reasonable grounds to believe
its conduct was unlawful, 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 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
"discretion" or under a grant of similar authority or latitude, 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 or any Limited Partner, or (ii) 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 or
any other agreement contemplated hereby.
(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.
6.10 Other Matters Concerning General Partners. (a) A 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) A General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other
consultants and advisers selected in good faith 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 which such 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) A General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly
authorized officers and a duly appointed attorney or attorneys-in-fact.
Each such attorney shall, to the extent provided by such General Partner
in the power of attorney, have full power and authority to do and
perform all and every act and duty which is permitted or required to be
done by such General Partner hereunder.
(d) A General Partner shall have the right, but not the
obligation, to make loans to the Partnership; provided, that in no event
shall such loans be on terms and conditions less favorable than those
that the Partnership could obtain from unaffiliated third parties or
banks for the same purpose.
6.11 Title to Partnership Assets. Title to Partnership assets,
whether real, personal or mixed and whether tangible or intangible,
shall be deemed to be owned by the Partnership as an entity, and no
Partner, individually or collectively, shall have any ownership interest
in such Partnership assets or any portion thereof. Title to any or all
of the Partnership assets may be held in the name of the Partnership,
the Managing General Partner or one or more nominees, as the Managing
General Partner may determine, including Affiliates of the Managing
General Partner. The Managing General Partner hereby declares and
warrants that any Partnership assets for which legal title is held in
the name of the Managing General Partner or any nominee or Affiliate of
the Managing General Partner shall be held by the Managing General
Partner for the use and benefit of the Partnership in accordance with
the provisions of this Agreement; provided, however, that the Managing
General Partner shall use its best efforts to cause beneficial and
record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be recorded as the
property of the Partnership in its books and records, irrespective of
the name in which legal title to such Partnership assets is held.
6.12 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 has full
power and authority to encumber, sell or otherwise use in any manner any
and all assets of the Partnership and to enter into any contracts on
behalf of the Partnership, and such Person shall be entitled to deal
with the Managing General Partner as if it were the Partnership's sole
party in interest, both legally and beneficially. The Special General
Partner, each Limited Partner and each Assignee hereby waives any and
all defenses or other remedies which may be available against such
Person to contest, negate or disaffirm any action of the Managing
General Partner in connection with any such dealing. In no event shall
any Person dealing with the Managing General Partner or its
representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or
expedience of any act or action of the Managing General Partner 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.
6.13 Covenants and Representations of General Partners. (a) The
General Partners hereby covenant and represent that (i) at all times
while acting as general partners of the Partnership, they will
collectively maintain assets (excluding any interest in, or receivables
due from, the Partnership) the fair market value of which exceeds their
liabilities by the amount of at least $10 million; (ii) the Partnership
will be operated in accordance with applicable state partnership
statutes and with this Partnership Agreement; (iii) at least ninety
percent (90%) of the Partnership's gross income for each taxable year
will consist of (w) income or gain derived from the exploration,
development, production, processing, refining, transportation or
marketing of crude oil and refined petroleum products, (x) gains from
the sale of real property, (y) real property rents or (z) gains from the
sale or other disposition of a capital asset held for the production of
income or gain of the character described in clauses (w), (x) and (y)
above; and (iv) the General Partners will act independently of the
Limited Partners.
(b) The Managing General Partner hereby covenants and agrees that
it will not permit the Partnership to exercise its purchase option to
acquire the Comyn pipeline (as described in the Registration Statement)
unless the Partnership has first received an opinion from a nationally
recognized investment banking firm which is independent of the General
Partners to the effect that the exercise of the option is fair from a
financial point of view to the holders of the Units in their capacity as
such.
ARTICLE VII
Rights and Obligations of Limited Partners
7.1 Limitation of Liability. The Limited Partners shall have no
liability under this Agreement except as expressly provided in this
Agreement or the Delaware Act.
7.2 Management of Business. No Limited Partner or Assignee (in
his capacity as such) shall take part in the operation, management or
control (within the meaning of the Delaware Act) of the Partnership's
business, transact any business in the Partnership's name or have the
power to sign documents for or otherwise bind the Partnership. The
transaction of any such business by a General Partner, any Affiliate
thereof or any officer, director, employee, partner, agent or trustee of
such General Partner or any Affiliate thereof, in its capacity as such,
shall not affect, impair or eliminate the limitations on the liability
of the Limited Partners or Assignees under this Agreement.
7.3 Outside Activities. Subject to the provisions of Section 6.5
hereof 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 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. Neither the
Partnership nor any Partners shall have any rights by virtue of this
Agreement in any business ventures of any Limited Partner or Assignee.
7.4 Return of Capital. No Limited Partner shall be entitled to
the withdrawal or return of his Capital Contribution, except to the
extent of distributions made pursuant to this Agreement or upon
termination of the Partnership as provided herein. Except to the extent
provided by Article V hereof, or as set forth in a Certificate of
Designations, or as otherwise expressly provided in this Agreement, no
Limited Partner or Assignee shall have priority over any other Limited
Partner or Assignee either as to the return of Capital Contributions or
as to profits, losses or distributions.
7.5 Rights of Limited Partners Relating to the Partnership. (a)
In addition to other rights provided by this Agreement or by applicable
law, and except as limited by Section 7.5(b) hereof, each Limited
Partner shall have the right, for a purpose reasonably related to such
Limited Partner's interest as a limited partner in the Partnership, upon
reasonable demand and at such Limited Partner's own expense:
(i) to obtain true and full information regarding the status of
the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of the
Partnership's federal, state and local income tax returns for each year,
(iii) to have furnished to him, upon notification to the Managing
General Partner, a current list of the name and last known business,
residence or mailing address of each Partner,
(iv) to have furnished to him, upon notification to the Managing
General Partner, a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with 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 Agreed Value of any other
Capital Contribution by each Partner and which each Partner has agreed
to contribute in the future, and the date on which each became a
Partner, and
(vi) to obtain such other information regarding the affairs of the
Partnership as is just and reasonable.
(b) Notwithstanding any other provision of this Section 7.5, the
Managing General Partner may keep confidential from the Limited Partners
for such period of time as the Managing General Partner determines in
its sole discretion to be reasonable, any information that the Managing
General Partner reasonably believes to be in the nature of trade secrets
or other information the disclosure of which the Managing General
Partner in good faith believes is not in the best interests of the
Partnership or which the Partnership is required by law or by agreements
with unaffiliated third parties to maintain confidentiality.
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, without limitation, all books and records necessary to
provide to the Limited Partners any information, lists and copies of
documents required to be provided pursuant to Section 7.5(a) hereof.
Any records maintained by or on behalf of the Partnership in the regular
course of business, including the record of the Record Holders and
Assignees of Units, Depositary Units or Partnership Securities, books of
account and records of Partnership proceedings, may be kept on, or be in
the form of, punch cards, magnetic tape, photographs, micrographics or
any other information storage device, provided that the 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 and tax reporting purposes, on an accrual
basis in accordance with generally accepted accounting principles.
8.2 Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
8.3 Reports. (a) As soon as practicable, but in no event later
than 120 days after the close of each Partnership Year, the Managing
General Partner shall cause to be mailed to each Record Holder of a Unit
as of a date selected by the Managing General Partner in its sole
discretion, an annual report containing financial statements of the
Partnership for such Partnership Year, presented in accordance with
generally accepted accounting principles, including a balance sheet and
statements of operations, Partners' equity and changes in financial
position, such statements to be audited by a nationally recognized 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 calendar quarter except the last calendar
quarter of each year, the Managing General Partner shall cause to be
mailed to each Record Holder of a Unit, as of a date selected by the
Managing General Partner in its sole discretion, a report containing
unaudited financial statements of the Partnership and such other
information as may be required by applicable law, regulation or rule of
any National Securities Exchange on which the Units are listed for
trading, or as the Managing General Partner determines to be
appropriate.
ARTICLE IX
Tax Matters
9.1 Preparation of Tax Returns. The Managing General Partner
shall arrange for the preparation and timely filing of all returns of
Partnership income, gains, deductions, losses and other items required
of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within 90 days of the close of
each taxable year, the tax information reasonably required by
Unitholders for federal and state income tax reporting purposes. The
classification, realization and recognition of income, gains, losses and
deductions and other items shall be on the accrual method of accounting
for federal income tax purposes. The taxable year of the Partnership
shall be the calendar year.
9.2 Tax Elections. Except as otherwise provided herein, the
Managing General Partner shall, in its sole discretion, determine
whether to make any available election pursuant to the Code; provided,
however, that the Managing General Partner shall make the election under
Section 754 of the Code in accordance with applicable regulations
thereunder. The Managing General Partner shall have the right to seek
to revoke any such election (including, without limitation, the election
under Section 754 of the Code) upon the Managing General Partner's
determination in its sole discretion that such revocation is in the best
interests of the Limited Partners and Assignees. For 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 Units will be
deemed to be the lowest quoted trading price of the Units on any
National Securities Exchange on which such Units are traded during the
calendar month in which such transfer is deemed to occur pursuant to
Section 5.1(d) hereof without regard to the actual price paid by such
transferee.
9.3 Tax Controversies. Subject to the provisions hereof, the
Managing General Partner is designated the Tax Matters Partners (as
defined in Section 6231 of the Code), and is authorized and required to
represent the Partnership (at the Partnership's expense) in connection
with all examinations of the Partnership's affairs by tax authorities,
including resulting administrative and judicial proceedings, and to
expend Partnership funds for professional services and costs associated
therewith. Each Partner or Assignee 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 Organizational Expenses. The Partnership shall elect to
deduct expenses, if any, incurred by it in organizing the Partnership
ratably over a 60-month period as provided in Section 709 of the Code.
9.5 Withholding. Notwithstanding any other provision of this
Agreement, the Managing General Partner is authorized to take any action
that it determines in its sole 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 Section 1441, 1442, 1445 and
1446 of the Code. To the extent that the Partnership is required to
withhold and pay over to any taxing authority any amount resulting from
the allocation or distribution of income to any Partner or Assignee
(including by reason of Section 1446 of the Code), the amount withheld
shall be treated as a distribution of cash pursuant to Section 5.3
hereof in the amount of such withholding from such Partner.
9.6 [intentionally blank].
9.7 Entity-Level Deficiency Collections. If the Partnership is
required by applicable law to pay any federal, state or local income tax
on behalf of any Partner or Assignee or any former Partner or Assignee,
(i) the Managing General Partner shall pay such tax on behalf of such
Partner or Assignee or former Partner or Assignee from the funds of the
Partnership; (ii) any amount so paid on behalf of any Partner or
Assignee shall constitute a distribution of Available Cash to such
Partner or Assignee pursuant to Section 5.3 hereof or 14.3 hereof; and
(iii) to the extent any such Partner or Assignee (but not a former
Partner or Assignee) is not then entitled to such distribution under
this Agreement, the Managing General Partner shall be authorized,
without the approval of any Partner or Assignee, to amend this Agreement
insofar as is necessary to maintain the uniformity of intrinsic tax
characteristics as to each class or series of Units and to make
subsequent adjustments to distributions in a manner which, in the
reasonable judgment of the Managing General Partner, will make as little
alteration in the priority and amount of distributions otherwise
applicable under this Agreement, and will not otherwise alter the
distributions to which Partners and Assignees are entitled under this
Agreement. If the Partnership is permitted (but not required) by
applicable law to pay any such tax on behalf of any Partner or Assignee
or former Partner or Assignee, the Managing General Partner shall be
authorized (but not required) to pay such tax from the funds of the
Partnership and to take any action consistent with this Section 9.7. The
Managing General Partner shall be authorized (but not required) to take
all necessary or appropriate actions to collect all or any portion of a
deficiency in the payment of any such tax which relates to prior periods
which is attributable to Persons who were Limited Partners or Assignees
when such deficiencies arose from such Persons.
9.8 Opinions of Counsel. Notwithstanding any other provision of
this Agreement, if the Partnership is taxable for federal income tax
purposes as a corporation or an association taxable as a corporation at
any time and, pursuant to the provisions hereof, an Opinion of Counsel
would otherwise be required at that time to the effect that an action
will not cause the Partnership to become so taxable as a corporation or
to be treated as an association taxable as a corporation, such
requirement for an Opinion of Counsel shall be deemed automatically
waived.
ARTICLE X
Certificates And Depositary Receipts
10.1 Certificates and Depositary Receipts. (a) Upon the issuance
of Units by the Partnership to a Limited Partner or any other Person,
the Partnership shall issue one or more Certificates in the name of such
Person evidencing the number and class, if applicable, of Units being so
issued. Certificates shall be executed on behalf of the Partnership by
the Managing General Partner.
(b) The Managing General Partner (i) may cause the deposit of some
or all of the Certificates in the Deposit Account pursuant to the
Deposit Agreement; (ii) with respect to those Certificates deposited in
the Deposit Account, shall receive Depositary Receipts registered in the
name of the Person(s) to whom such Units have been issued, evidencing
the same number of Depositary Units, as the case may be, as the number
of Units represented by the Certificates so deposited; and (iii) shall
cause the distribution of such Depositary Receipts to such Person(s).
10.2 Registration of Transfer and Exchange. (a) The Managing
General Partner shall cause to be kept on behalf of the Partnership a
register (the "Unit Register") in which, subject to such reasonable
regulations as it may prescribe and subject to the provisions of
Section 10.2(b) hereof, the Managing General Partner will provide for
the registration of Units and the transfer of such Units. The
Depositary is hereby appointed Transfer Agent and registrar for the
purpose of registering Units and transfers of such Units as herein
provided. The Partnership shall not recognize transfers of Certificates
representing Units which have been deposited pursuant to Section 10.1(a)
hereof and not withdrawn or interests therein except by transfers of
Depositary Units in the manner described in this Section 10.2 and in the
Deposit Agreement. Upon surrender for registration of transfer of any
Depositary Units evidenced by a Depositary Receipt and, subject to the
provisions of Section 10.2(b) hereof, the Managing General Partner on
behalf of the Partnership will execute, and the Transfer Agent will
countersign and deliver, in the name of the holder or the designated
transferee or transferees, as required pursuant to the holder's
instructions, one or more new Depositary Receipts evidencing the same
aggregate number of Depositary Units as was evidenced by the Depositary
Receipt so surrendered.
(b) The Partnership shall not recognize any transfer of Depositary
Units until the Depositary Receipts evidencing such Depositary Units are
surrendered for registration of transfer and such Depositary Receipts
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
Depositary Receipt under this Section 10.2, the Managing General Partner
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed with respect thereto.
10.3 Mutilated, Destroyed, Lost or Stolen Depositary Receipts.
(a) If any mutilated Depositary Receipt is surrendered to the Transfer
Agent, the Depositary shall execute, and the Transfer Agent shall
countersign and deliver in exchange therefor, a new Depositary Receipt
evidencing the same number of Depositary Units, as the case may be, as
the Depositary Receipt so surrendered.
(b) If there shall be delivered to the Managing General Partner
and the Transfer Agent (i) evidence (including, without limitation,
proof by affidavit if requested by the Managing General Partner in form
and substance satisfactory to the Managing General Partner) to their
satisfaction of the destruction, loss or theft of any Depositary Receipt
and (ii) such security or indemnity as may be required by them to
indemnify and hold each of them and any of their agents harmless, then,
in the absence of notice to the Managing General Partner or the Transfer
Agent that such Depositary Receipt has been acquired by a bona fide
purchaser, the Managing General Partner on behalf of the Partnership
shall execute and, upon its request, the Transfer Agent shall
countersign and deliver, in exchange for and in lieu of any such
destroyed, lost or stolen Depositary Receipt, a new Depositary Receipt
evidencing the same number of Depositary Units, as the Depositary
Receipt so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Depositary Receipt
under this Section 10.3, the Managing General Partner may require the
payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Transfer Agent) connected
therewith.
10.4 Registered Owner. In accordance with Section 10.2(b) hereof,
the Partnership shall be entitled to recognize the Record Holder as the
Limited Partner or Assignee with respect to any Units and, accordingly,
shall not be bound to recognize any equitable or other claim to or
interest in such Units on the part of any other Person, whether or not
the Partnership shall have actual or other notice thereof, except as
otherwise provided by law or any applicable rule, regulation, guideline
or requirement of any National Securities Exchange on which the Units
are listed for trading. Without limiting the foregoing, when a Person
(such as a broker, dealer, bank, trust company or clearing corporation
or an agent of any of the foregoing) is acting as nominee, agent or in
some other representative capacity for another Person in acquiring
and/or holding Units, as between the Partnership on the one hand and
such other Persons on the other hand, such representative Person
(a) shall be the Limited Partner or Assignee (as the case may be) of
record and beneficially, (b) must execute and deliver a Transfer
Application and (c) shall be bound by this Agreement and shall have the
rights and obligations of a Limited Partner or Assignee (as the case may
be) hereunder and as provided for herein.
10.5 Withdrawal of Units From and Redeposit of Units in Depositary
Account. Any Units may be withdrawn from the Depositary Account by
surrender of the Depositary Receipts evidencing the corresponding
Depositary Units duly executed by the Record Holder thereof (or his
attorney-in-fact duly authorized in writing), provided that such Record
Holder is then reflected on the books and records of the Partnership as
the Limited Partner in respect of the Units for which such withdrawal is
requested. Upon any such withdrawal, the Managing General Partner shall
cause the Partnership to issue a Certificate evidencing such Units. Any
such withdrawn Units, or Units which have not previously been so
deposited, may be redeposited or deposited (as the case may be) in the
Deposit Account by the surrender of the Certificate evidencing such
withdrawn Units or non-deposited Units to the Depositary and payment to
the Depositary of such fee and upon such terms as may be required
therefor pursuant to the Deposit Agreement. Upon any such redeposit or
deposit, the Depositary shall issue a Depositary Receipt evidencing the
same number of Units as was evidenced by the Certificate so redeposited
or deposited.
10.6 Amendment of Deposit Agreement. Subject to its fiduciary
obligations, the Managing General Partner may amend or modify any
provision of the Deposit Agreement in any respect it reasonably
determines to be necessary or appropriate, provided, however, that the
Managing General Partner shall not amend or modify the Deposit Agreement
if the effect of any such amendment or modification would materially
adversely affect the Limited Partners or would impair the right of
Limited Partners to withdraw their Units from deposit thereunder.
ARTICLE XI
Transfer of Interests
11.1 Transfer. (a) The term "transfer," when used in this
Article XI with respect to a Partnership Interest, shall be deemed to
refer to an appropriate transaction by which a General Partner assigns
its general partner Partnership Interest to another Person or by which
the holder of a Unit assigns such Unit to another Person who is or
becomes an Assignee and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition
by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in
this Article XI. Any transfer or purported transfer of a Partnership
Interest not made in accordance with this Article XI shall be null and
void.
11.2 Transfer of a General Partner's Partnership Interest.
(a) Each of the General Partners may transfer all, but not less than
all, of its general partner Partnership Interest (unless to an
Affiliate, in which case less than all of such interest may be
transferred) to a single transferee if, but only if, (i) the transferee
agrees to assume and be bound by the rights and duties of such general
partner under the provisions of this 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 the taxation of
the Partnership as a corporation or as an association taxable as a
corporation for federal income tax purposes and (iii) the transfer is
made to an Affiliate or upon such General Partner's merger,
consolidation or other combination into any other entity or the transfer
by it of all or substantially all of its assets to another entity.
(b) Notwithstanding Section 11.2(a) hereof, the Special General
Partner may not transfer its general partner Partnership Interest
without the consent of the Managing General Partner.
(c) Any transferee of the Managing General Partner's general
partner interest pursuant to Section 11.2(a) hereof shall be admitted to
the Partnership as successor Managing General Partner hereunder and
shall continue the business of the Partnership and the transferor of
such general partner interest shall cease to be a General Partner
following the admission of such transferee.
(d) Any transferee of the Special General Partner's general
partner interest pursuant to Section 11.2(a) hereof shall be admitted to
the Partnership as successor Special General Partner hereunder and the
Managing General Partner shall continue the business of the Partnership
notwithstanding such transfer by the Special General Partner and the
transferor of such general partner interest shall cease to be a General
Partner following the admission of such transferee.
(e) Any successor General Partner pursuant to this Section 11.2
shall become a General Partner effective, to the extent permitted by the
Delaware Act, as of the date immediately prior to the date of the
transfer of the general partner interest. This Agreement and the
Certificate of Limited Partnership shall be amended as appropriate to
reflect the cessation of the former General Partner and the substitution
of the successor General Partner.
11.3 Transfer of Units. (a) Any Units which have been deposited in
the Deposit Account may be transferred, but only in the manner described
in Section 10.2 hereof. Units with respect to which no such deposit has
been made or which have been withdrawn from the Deposit Account and not
redeposited are not transferable except upon death or by operation of
law, by transfer to the Managing General Partner for the account of the
Partnership, pursuant to Section 11.7 or otherwise in accordance with
this Agreement. The transfer of any Units and the admission of any new
Partner shall not constitute an amendment to this Agreement.
(b) Until admitted as a Substituted Limited Partner pursuant to
Article XII hereof, the Record Holder of a Depositary Unit shall
constitute an Assignee in respect of such Unit.
(c) Each distribution in respect of Units shall be paid by the
Partnership, directly or through the Transfer Agent or through any other
Person or agent, only to the Record Holders thereof as of the Record
Date set for the distribution. Such payment shall constitute full
payment and satisfaction of the Partnership's liability with 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.
11.4 Restrictions on Transfers. Notwithstanding the other
provisions of this Article XI, no transfer of any Unit or interest
therein of any Limited Partner in the Partnership shall be made if such
transfer (i) would violate the then applicable federal or state
securities laws or rules and regulations of the Securities and Exchange
Commission, any state securities commission or any other governmental
authorities with jurisdiction over such transfer, (ii) would result in
the taxation of the Partnership as a corporation or as an association
taxable as a corporation for federal income tax purposes or (iii) would
affect the Partnership's existence or qualification as a limited
partnership under the Delaware Act.
11.5 Citizenship Certification; Non-citizen Assignees. (a) In the
event that, because of the nationality (or any other status) of a
Limited Partner or Assignee, the Partnership is or becomes subject to
federal, state or local laws or regulations the effect of which would,
in the reasonable determination of the Managing General Partner, cause
cancellation or forfeiture of any property in which the Partnership has
an interest, the Managing General Partner may request any such Limited
Partner or Assignee to furnish to the Managing General Partner or, with
respect to Depositary Units, to the Depositary within 30 days after
receipt of such request an executed Citizenship Certification or such
other information concerning his nationality, citizenship or other
status (or, if the Limited Partner or Assignee is a nominee holding for
the account of another Person, the nationality, citizenship or other
status of such Person) as the Managing General Partner may request. If
a Limited Partner or Assignee fails to furnish such Citizenship
Certification or other information as may be requested, 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 an Assignee is not an Eligible Citizen, the Units
owned by such Limited Partner or Assignee shall be subject to redemption
in accordance with the provisions of Section 11.6 hereof. In addition
to becoming subject to redemption, the Managing General Partner may
require that the status of any such Limited Partner or Assignee be
changed to that of a Non-citizen Assignee, and, thereupon, the Managing
General Partner shall be substituted for such Noncitizen Assignee as the
Limited Partner in respect of his Units.
(b) The Managing General Partner shall, in exercising voting
rights in respect of Units held by it on behalf of Non-citizen
Assignees, distribute the votes in the same ratios as the votes of the
Limited Partners in respect of Units other than those of Non-citizen
Assignees are cast, either for, against or abstaining as to the matter.
(c) Upon dissolution of the Partnership, a Non-citizen Assignee
shall have no right to receive a distribution in kind pursuant to
Section 14.4 hereof but shall be entitled to the cash equivalent
thereof, and the Managing General Partner shall provide cash in exchange
for an assignment of the Non-citizen Assignee's share of the
distribution in kind. Such payment and assignment shall be treated for
Partnership purposes as a purchase by the Managing General Partner from
the Non-citizen Assignee of his Partnership Interest (representing his
right to receive his share of such distribution in kind).
(d) At any time after he can and does certify that he has become
an Eligible Citizen, a Non-citizen Assignee may, upon application to the
Managing General Partner, request admission as a Substituted Limited
Partner with respect to any Partnership Interest of such Non-citizen
Assignee not redeemed pursuant to Section 11.6 hereof and upon his
admission pursuant to Section 12.2 hereof the Managing General Partner
shall cease to be deemed to be the Limited Partner in respect of the
Non-citizen Assignee's Units.
11.6 Redemption of Interests. (a) If at any time a Limited Partner
or Assignee fails to furnish a Citizenship Certification or other
information requested within the 30-day period specified in
Section 11.5(a) hereof, 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 Units to a Person 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 Depositary, by registered or certified
mail, postage prepaid. The notice shall be deemed to have been given
when so mailed. The notice shall specify the Redeemable Units, the date
fixed for redemption, the place of payment, that payment of the
redemption price will be made upon surrender of the Depositary Receipt
or the Certificate evidencing the Redeemable Units and that on and after
the date fixed for redemption no further allocations or distributions to
which the Limited Partner or Assignee would otherwise be entitled in
respect of the Redeemable Units will accrue or be made.
(ii) The aggregate redemption price for Redeemable Units shall be
an amount equal to the Current Market Price (the date of determination
of which shall be the date fixed for redemption) of Units of the class
to be so redeemed multiplied by the number of Units of each such class
included among the Redeemable Units. The redemption price shall be
paid, in the sole discretion of the 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
Depositary Receipt or the Certificate evidencing the Redeemable Units,
duly endorsed in blank or accompanied by an assignment duly executed in
blank, the Limited Partner or Assignee or his duly authorized
representative shall be entitled to receive the payment therefor.
(iv) After the redemption date, Redeemable Units shall no longer
constitute issued and Outstanding Units.
(b) The provisions of this Section 11.6 shall be applicable to
Units held by a Limited Partner or Assignee as nominee of a Person
determined to be other than an Eligible Citizen.
(c) Nothing in this Section 11.6 shall prevent the recipient of a
notice of redemption from transferring his Units before the redemption
date if such transfer is otherwise permitted under this Agreement. Upon
receipt of notice of such a transfer, the Managing General Partner shall
withdraw the notice of redemption; provided, the transferee of such
Units or Depositary Units certifies in the Transfer Application that he
is an Eligible Citizen. If the transferee fails to make such
certification, such redemption shall be effected from the transferee on
the original redemption date.
(d) [intentionally blank]
(e) If the Partnership or the Managing General Partner determines
that because of the nationality (or other status) of a General Partner,
whether or not in its capacity as such, the Partnership is or becomes
subject to federal, state or local regulations the effect of which
would, in the reasonable determination of the Managing General Partner,
cause cancellation or forfeiture of any property in which the
Partnership has an interest, the Partnership may, unless such General
Partner has furnished a Citizenship Certification or transferred his
Partnership Interest or Units to a Person who furnishes a Citizenship
Certification prior to the date fixed for redemption, redeem the
Partnership Interest or Interests of such General Partner in the
Partnership as provided in Section 11.6(a) hereof. The redemption price
shall be paid in cash.
11.7 Registration Rights. The Special General Partner or any of
its shareholders or their relatives who may acquire Common Units from
the Special General Partner have the right to cause the Partnership,
upon request, to register an offering and sale of their Common Units
with the Securities and Exchange Commission subject to the terms set
forth in an agreement dated March 29, 1990 by and among the Special
General Partner and the Partnership.
ARTICLE XII
Admission of Partners
12.1 [Intentionally blank]
12.2 Admission of Substituted Limited Partners. By transfer of a
Depositary Unit in accordance with Article XI hereof, 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
Depositary Receipt shall, however, only have the authority to convey to
a purchaser or other transferee who does not execute and deliver a
Transfer Application (i) the right to negotiate such Unit to a purchaser
or other transferee and (ii) the right to transfer the right to request
admission as a Substituted Limited Partner to such purchaser or other
transferee in respect of the transferred Depositary Units. Each
transferee of a Depositary Unit (including any nominee holder or an
agent acquiring such Depositary Unit for the account of another Person)
who executes a Transfer Application shall be an Assignee and shall be
deemed to have applied to become a Substituted Limited Partner with
respect to the Depositary Units so transferred to such Person by virtue
of executing and delivering such Transfer Application. Such Assignee
shall become a Substituted Limited Partner at such time as the Managing
General Partner consents thereto, which consent may be given or withheld
in the Managing General Partner's sole discretion, and when any such
admission is shown on the books and records of the Partnership. If such
consent is withheld, such transferee shall be an Assignee. An Assignee
shall have an interest in the Partnership equivalent to that of a
Limited Partner with respect to allocations and distributions, including
liquidating distributions, of the Partnership. With respect to voting
rights attributable to Units that are held by Assignees, the 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
Units on any matter, vote such Units at the written direction of the
Assignee who is the Record Holder of such Units. If no such written
direction is received, such Units will not be voted. An Assignee shall
have no other rights of a Limited Partner.
12.3 Admission of Successor Managing General Partner and Special
General Partner. (a) A successor Managing General Partner approved
pursuant to Sections 13.1 or 13.2 hereof or the transferee of or
successor to all of the Managing General Partner's Partnership Interest
pursuant to Section 11.2 hereof who is proposed to be admitted as a
successor Managing General Partner shall be admitted to the Partnership
as the Managing General Partner, effective immediately prior to the
withdrawal or removal of the Managing General Partner pursuant to
Sections 13.1 or 13.2 hereof or the transfer pursuant to Section 11.2
hereof; provided, however, that no such successor shall be admitted to
the Partnership until the terms of Section 11.2 hereof have been
complied with. Any such successor shall carry on the business of the
Partnership without dissolution. In each case, the admission shall be
subject to the successor Managing General Partner executing and
delivering to the Partnership an acceptance of all of the terms and
conditions of this Agreement and such other documents or instruments as
may be required to effect the admission.
(b) A successor Special General Partner or the transferee hereof
or successor to all of the Special General Partner's Partnership
Interest pursuant to Section 11.2 hereof who is proposed to be admitted
to the Partnership as a successor Special General Partner shall be
admitted to the Partnership as the Special General Partner effective
immediately prior to the withdrawal or removal of the Special General
Partner pursuant to Section 13.2 hereof or the transfer pursuant to
Section 11.2 hereof; provided, however, that no such successor shall be
admitted to the Partnership until the terms of Section 1 1.2 hereof have
been complied with. In each case, the admission shall be subject to the
successor Special General Partner executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to
effect the admission.
12.4 Admission of Additional Limited Partners. (a) A Person (other
than 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, without limitation, the power
of attorney granted in Section 1.4 hereof and (ii) such other documents
or instruments as may be required in the discretion of the Managing
General Partner in order to effect such Person's admission as an
Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this
Section 12.4(a), 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 sole
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 on the books and records of the Partnership,
following the consent of the Managing General Partner to such admission.
(c) Notwithstanding anything to the contrary in this Section 12.4,
the holder of any Preferred Units shall be automatically admitted to the
Partnership as an Additional Limited Partner upon furnishing to the
Managing General Partner evidence of acceptance in form reasonably
satisfactory to the Managing General Partner of all of the terms and
conditions of this Agreement, including, without limitation, the power
of attorney granted in Section 1.4 hereof.
12.5 Amendment of Agreement and Certificate of Limited Partnership.
For 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 and, if necessary,
to prepare as soon as practical an amendment of this Agreement and, if
required by law, shall prepare and file an amendment to the Certificate
of Limited Partnership and may for this purpose exercise the power of
attorney granted pursuant to Section 1.4 hereof.
ARTICLE XIII
Withdrawal or Removal of Partners
13.1 Withdrawal of the Managing General Partner. (a) The Managing
General Partner covenants and agrees that it will not withdraw as
Managing General Partner before December 31, 2000, subject to its right
to transfer its Partnership Interest pursuant to Section 11.2 hereof.
(b) 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 other Partners;
(ii) the Managing General Partner transfers all of its rights as
Managing General Partner pursuant to Section 11.2 hereof;
(iii) the Managing General Partner is removed pursuant to
Section 13.2 hereof;
(iv) the Managing General Partner
(A) makes a general assignment for the benefit of creditors;
(B) files a voluntary bankruptcy petition;
(C) files a petition or answer seeking for itself a
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any law;
(D) files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against the
Managing General Partner in a proceeding of the type described in
paragraphs (A)-(C) of this subsection; or
(E) seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of the Managing General Partner or of
all or any substantial part of its properties;
(v) a final and non-appealable judgment is entered by a court with
appropriate jurisdiction ruling that the Managing General Partner is
bankrupt or insolvent, or a final and non-appealable order for relief is
entered by a court with appropriate jurisdiction against the Managing
General Partner, in each case under any federal or state bankruptcy or
insolvency laws as now or hereafter in effect; or
(vi) a certificate of dissolution or its equivalent is filed for
the 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.
If an Event of Withdrawal specified in paragraphs (iv), (v) or
(vi) occurs, the withdrawing Managing General Partner shall give written
notice to the Limited Partners within 30 days after such occurrence.
The Partners hereby agree that only the Events of Withdrawal described
in this Section 13.1 shall result in withdrawal of the Managing General
Partner from the Partnership.
(c) Withdrawal of the Managing General Partner from the
Partnership (including withdrawal upon the occurrence of an Event of
Withdrawal) will constitute a breach of this Agreement if such
withdrawal occurs; (i) at any time prior to December 31, 2000, unless
the Managing General Partner gives at least 90 days' advance written
notice of its intention to withdraw to the Limited Partners and prior to
the effective date of such withdrawal, the Limited Partners approve such
withdrawal by the vote of at least a majority of the Outstanding Units
(excluding for purposes of such determination any Units owned by the
General Partners and their Affiliates); or (ii) at any time after
December 31, 2000, unless the Managing General Partner gives at least 90
days' advance written notice to the Limited Partners and the Partnership
receives an Opinion of Counsel that such withdrawal (following the
selection of the successor Managing General Partner) would not result in
the loss of the limited liability of holders of Units or cause the
Partnership to be taxable as a corporation or to be treated as an
association taxable as a corporation for federal income tax purposes,
such withdrawal to take effect on the date specified in such notice.
(d) Withdrawal of the Managing General Partner from the
Partnership upon the occurrence of an Event of Withdrawal will not
constitute a breach of this Agreement under the following circumstances:
(i) at any time that the Managing General Partner ceases to be a
Managing General Partner pursuant to Section 13.1(b)(ii) hereof or is
removed pursuant to Section 13.2 hereof or (ii) notwithstanding
Section 13.1(c) above, at any time that the Managing General Partner
voluntarily withdraws by giving at least 90 days' advance written 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 more than 50% of the Outstanding Units held by Persons
other than the withdrawing Managing General Partner and its Affiliates
are owned beneficially or of record or controlled at any time by one
Person or its Affiliates. If the Managing General Partner gives a
notice of withdrawal pursuant to Section 13.1(b)(i) hereof or if the
Managing General Partner is removed pursuant to Section 13.2 hereof,
holders of at least a majority in interest of the Outstanding Units
(excluding for purposes of such determination Units owned by the
Managing General Partner and its Affiliates) may, prior to the effective
date of such withdrawal, elect a successor Managing General Partner and
agree to continue the business of the Partnership, provided that such
majority in interest satisfies the provisions of Section 4 of Internal
Revenue Service Revenue Procedure 94-46. 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
does not receive an Opinion of Counsel that such withdrawal (following
the selection of the successor Managing General Partner) would not
result in the loss of the limited liability of the holders of Units or
cause the Partnership to be taxable as a corporation or to be treated as
an association taxable as a corporation for federal income tax purposes,
the Partnership shall be dissolved in accordance with Section 14.1
hereof. If a successor Managing General Partner is elected and the
Opinion of Counsel rendered as provided herein, such successor shall be
admitted (subject to Section 12.3 hereof) immediately prior to the
effective time of the withdrawal of the departing Managing General
Partner and shall continue the business of the Partnership without
dissolution.
13.2 Removal of the Managing General Partner. The Managing
General Partner may be removed only if such removal is approved by the
written consent or affirmative vote of Limited Partners holding not less
than 66?% of the Outstanding Units; of the Outstanding Units. Any
action by the Limited Partners for removal of the Managing General
Partner must also provide for the election and succession of a new
Managing General Partner. Such removal shall be effective immediately
following the admission of the successor Managing General Partner
pursuant to Section 12.3 hereof. The right of the Limited Partners to
remove the Managing General Partner shall not exist or be exercised
unless the Partnership has received an Opinion of Counsel that the
removal of the Managing General Partner and the selection of a successor
Managing General Partner will not result in (i) the loss of limited
liability of any Limited Partner in the Partnership or (ii) the taxation
of the Partnership as a corporation or the treatment of the Partnership
as an association taxable as a corporation for federal income tax
purposes.
13.3 Interest of Departing Managing General Partner and Successor
Managing 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 Limited Partners, the departing Managing General Partner
shall, at its option exercisable prior to the effective date of the
departure of such departing Managing General Partner, promptly receive
from its successor in exchange for its Partnership Interest as Managing
General Partner an amount in cash equal to the fair market value of the
departing Managing General Partner's Partnership Interest as Managing
General Partner, such amount to be determined and payable as of the
effective date of its departure. If the Managing General Partner
withdraws under circumstances where such withdrawal violates this
Agreement, its successor shall have the option described in the
immediately preceding sentence, and the departing Managing General
Partner shall not have such option. In either event, the departing
Managing General Partner shall be entitled to receive all reimbursements
due such departing Managing General Partner pursuant to Section 6.4
hereof, including any employee-related liabilities (including severance
liabilities only 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 Limited
Partners), incurred in connection with the termination of any employees
employed by the departing Managing General Partner for the benefit of
the Partnership. Subject to Section 13.3(b) hereof, the departing
Managing General Partner shall, as of the effective date of its
departure, cease to share in any allocations or distributions with
respect to its Partnership Interest as the Managing General Partner and
Partnership income, gain, loss, deduction and credit will be prorated
and allocated as set forth in Section 5.1(d) hereof.
For purposes of this Section 13.3(a), the fair market value of the
departing Managing General Partner's Partnership Interest as Managing
General Partner herein shall be determined by agreement between the
departing Managing General Partner and its successor or, failing
agreement within 30 days after the effective date of such departing
Managing General Partner's departure, by an independent investment
banking firm or other independent expert selected by the departing
Managing General 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 such firm shall be designated
by the independent investment banking firms or other independent experts
selected by each of the departing Managing General Partner and its
successor. In making its determination, such independent investment
banking firm or other independent expert shall consider the then current
trading price of Units on any National Securities Exchange on which
Units are then listed, the value of the Partnership's assets, the rights
and obligations of the Managing General Partner and other factors it may
deem relevant.
(b) If its Partnership Interest is not acquired in the manner set
forth in Section 13.3(a) hereof, the departing Managing General Partner
shall become a Limited Partner and its Partnership Interest in the
Partnership shall be converted into Common Units equal to the fair
market value of such interest pursuant to a valuation made by an
investment banking firm or other independent expert selected pursuant to
Section 13.3(a) hereof, without reduction in such Partnership Interest
(but subject to proportionate dilution by reason of the admission of its
successor).
The Partnership shall indemnify the departing Managing General
Partner as to all debts and liabilities of the Partnership arising on or
after the date on which the departing Managing General Partner becomes
a Limited Partner, including employee related liabilities, including
severance liabilities, incurred in connection with the termination of
the employees employed by the departing Managing General Partner for the
benefit of the Partnership. For purposes of this Agreement, the
departing Managing General Partner's conversion of its Partnership
Interest to Common Units will be characterized as if the departing
Managing General Partner contributed its Partnership Interest to the
Partnership in exchange for the newly-issued Common Units.
(c) If the option described in Section 13.3(a) hereof 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 capital of the Partnership cash in an
amount such that its Capital Account, after giving effect to such
contribution and any adjustments made to the Capital Accounts of all
Partners pursuant to Section 4.4(d)(i) hereof, shall be equal to that
percentage of the Capital Accounts of all Partners that is equal to its
Percentage Interest as the Managing General Partner. In such event,
each successor Managing General Partner shall, subject to the following
sentence, be entitled to such Percentage Interest of all Partnership
allocations and distributions and any other allocations and
distributions to which the departing Managing General Partner was
entitled. In addition, such 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 1.9%, and that of the Special
General Partner and the Limited Partners shall be 0.1% and 98%,
respectively.
13.4 Withdrawal or Removal of Special General Partner. (a) The
Special General Partner may withdraw from the Partnership in the
capacity of Special General Partner (i) upon 30 days' advance written
notice to the Managing General Partner or (ii) by transferring its
general partner interest in the Partnership pursuant to Section 11.2
hereof. Such withdrawal shall take effect on the date specified in such
notice. Upon receiving such notice, the Managing General Partner shall
select a successor Special General Partner within such 30-day period.
Any withdrawal of the Special General Partner shall not become effective
unless the Partnership has received by the end of such 30-day period an
Opinion of Counsel that such withdrawal will not result in the loss of
limited liability of any Limited Partner or cause the Partnership to be
treated as a corporation or as an association taxable as a corporation
for federal income tax purposes. Following any withdrawal of the
Special General Partner, the business and operations of the Partnership
shall be continued by the Managing General Partner.
(b) In addition to the voluntary withdrawal described above, the
Special General Partner shall be deemed to have withdrawn (i) when and
if, the Special General Partner (A) makes a general assignment for the
benefit of creditors, (B) files a voluntary bankruptcy petition,
(C) files a petition or answer seeking for itself a reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any law, (D) files an answer or other pleading
admitting or failing to contest the material allegations of a petition
filed against the Special General Partner in a proceeding of the type
described in clauses (A)-(C) of this subsection, or (E) seeks, consents
to or acquiesces in the appointment of a trustee, receiver or liquidator
of the Special General Partner or of all or any substantial part of its
properties; or, (ii), when a final and nonappealable judgment is entered
by a court with appropriate jurisdiction ruling that the Special General
Partner is bankrupt or insolvent, or a final and non-appealable order
for relief is entered by a court with appropriate jurisdiction against
the Special General Partner, in each case under any federal or state
bankruptcy or insolvency laws as now or hereinafter in effect; or
(iii) when a certificate of dissolution or its equivalent is filed for
the Special General Partner, or 90 days expire after the date of notice
to the Special General Partner of revocation of its char-ter without a
reinstatement of its charter, under the laws of its state of
incorporation.
(c) The Special General Partner may be removed only if such
removal is approved by the written consent or affirmative vote of
Limited Partners holding not less than 66?% of the Outstanding Units.
Any such action by the Limited Partners for removal of the Special
General Partner must also provide for the approval of the successor
Special General Partner. Such removal shall be effective immediately
following the admission of the successor Special General Partner
pursuant to Article XII hereof. The right of the Limited Partners to
remove the Special General Partner shall not exist or be exercised
unless the Partnership has received an Opinion of Counsel that the
removal of the Special General Partner and the selection of a successor
Special General Partner will not result in (i) the loss of limited
liability of any Limited Partner or (ii) the taxation of the Partnership
as a corporation or the treatment of the Partnership as an association
taxable as a corporation for federal income tax purposes unless already
so taxed.
(d) Upon the withdrawal or removal of the Special General Partner
under this Section 13.4 (except by reason of a transfer of the interest
made pursuant to Section 11.2 hereof), the Partnership shall distribute
to the Special General Partner an amount of cash equal to the positive
balance in its Capital Account (following the adjustment of its Capital
Account in accordance with Section 4.4 hereof).
(e) Notwithstanding the other provisions of this Section 13.4, a
successor Special General Partner or a successor special general partner
of any Operating Partnership need not be selected if the Partnership has
received an Opinion of Counsel that the failure to select a successor
would not cause the Partnership or any Operating Partnership to be
treated as a corporation or as an association taxable as a corporation
for, federal income tax purposes.
13.5 Withdrawal of Limited Partners. Except as provided in
Section 13.5 hereof, no Limited Partner shall have any right to withdraw
from the Partnership; provided, however, that when a transferee of a
Limited Partner's Units becomes a Record Holder, such transferring
Limited Partner shall cease to be a Limited Partner with respect to the
Units so transferred.
ARTICLE XIV
Dissolution and Liquidation
14.1 Dissolution. The Partnership shall not be dissolved by the
admission of Substituted Limited Partners or Additional Limited
Partners, the admission of successor General Partners in accordance with
the terms of this Agreement or the withdrawal of the Special General
Partner pursuant to Section 13.4 hereof. Upon the removal or withdrawal
of the Managing General Partner, any successor Managing General Partner
shall continue the business of the Partnership. The Partnership shall
dissolve, and its affairs shall be wound up, upon:
(a) the expiration of its terms as provided in Section 1.5
hereof;
(b) an Event of Withdrawal of the Managing General Partner as
provided in Section 13.1(b) hereof, unless a successor is named as
provided in 13.1(d) hereof;
(c) an election to dissolve the Partnership by the Managing
General Partner that is approved by the written consent or affirmative
vote of holders of at least a majority of the Outstanding Units.
(d) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act; or
(e) the sale of all or substantially all of the assets and
properties of the Partnership.
14.2 Continuation of the Business of the Partnership after
Dissolution. Upon (i) dissolution of the Partnership following an Event
of Withdrawal caused by the withdrawal or removal of the Managing
General Partner and a failure of the requisite number of Partners to
agree to continue the business of the Partnership and appoint a
successor Managing General Partner as provided in Sections 13.1 and 13.2
hereof, then within an additional 90 days or (ii) dissolution of the
Partnership upon an event constituting an Event of Withdrawal as defined
in Section 13.1(b)(iv) hereof, then within 180 days thereafter, at least
a majority in interest of the Outstanding Units may elect to
reconstitute the Partnership and continue its business on the same terms
and conditions set forth in this Agreement by forming a new limited
partnership on terms identical to those set forth in this Agreement and
having as a managing general partner a Person approved by the holders of
at least a majority of the Outstanding Units, provided that such
majority in interest satisfies the provisions of Section 4 of Internal
Revenue Service Revenue Procedure 94-46. Upon any such election by the
holders of at least a majority of the Outstanding Units, all Partners
shall be bound thereby and shall be deemed to have approved thereof.
Unless such an election is made 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:
(a) the reconstituted Partnership shall continue until the end of
the term set forth in Section 1.5 hereof unless earlier dissolved in
accordance with this Article XIV;
(b) 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 thenceforth as the interests of a
Limited Partner and converted into Common Units in the manner provided
in Section 13.3 (b) hereof; and
(c) all necessary steps shall be taken to cancel this Agreement
and the Certificate of Limited Partnership and to enter into and, as
necessary, to file a new partnership agreement and certificate of
limited partnership, and the successor Managing General Partner may for
this purpose exercise the powers of attorney granted the Managing
General Partner pursuant to Section 1.4 hereof, provided, that the right
of the holders of at least a majority of Outstanding Units 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 nor the
reconstituted limited partnership would become taxable as a corporation
or treated as an association taxable as a corporation for federal income
tax purposes upon the exercise of such right to continue.
14.3 Liquidation. Upon dissolution of the Partnership, unless the
Partnership is continued under an election to reconstitute and continue
the Partnership pursuant to Section 14.2 hereof, the Managing General
Partner, or in the event the Managing General Partner has been dissolved
or removed, become bankrupt as set forth in Section 13.1 hereof or
withdrawn from the Partnership, a liquidator or liquidating committee
approved by the holders of at least a majority of the Outstanding Units,
shall be the 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 holders of at least a majority of the
Outstanding Units. The Liquidator shall agree not to resign at any time
without 15 days' prior written notice and (if other than the Managing
General Partner) may be removed at any time, with or without cause by
notice of removal approved by at least a majority of the Outstanding
Units. Upon dissolution, removal or resignation of the Liquidator, a
successor and substitute Liquidator (who shall have and succeed to all
rights, power and duties of the original Liquidator) shall within 30
days thereafter be approved by the holders of at least a majority of the
Outstanding Units. The right to approve a successor or substitute
Liquidator in the manner provided herein shall be deemed to refer also
to any such successor or substitute Liquidator approved in the manner
herein provided. Except as expressly provided in this Article XIV, the
Liquidator approved in the manner provided herein shall have and may
exercise, without further authorization or consent of any of the parties
hereto, all of the powers conferred upon the 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 6.3(b)
hereof) to the extent necessary or desirable in the good faith judgment
of the Liquidator to carry out the duties and functions of the
Liquidator hereunder for and during such period of time as shall be
reasonably required in the good faith judgment of the Liquidator to
complete the winding-up and liquidation of the Partnership as provided
for herein. The Liquidator shall liquidate the assets of the
Partnership, and apply and distribute the proceeds of such liquidation
in the following order of priority, unless otherwise required by
mandatory provisions of applicable law:
(a) the payment to creditors of the Partnership, including
Partners who are creditors, in order of priority provided by law; and
the creation of a reserve of cash or other assets of the Partnership for
contingent liabilities in an amount, if any, determined by the
Liquidator to be appropriate for such purposes;
(b) to holders of Series B Preferred Units and Series C Preferred
Units, if any, in accordance with the terms of the Certificate of
Designations of such Units;
(c) to holders of other Preferred Units and other classes of
Partnership Securities, if any, in accordance with the terms of their
respective Certificates of Designations; and
(d) to all Partners in accordance with and to the extent of the
positive balances in their respective Capital Accounts after taking into
account adjustments to such Capital Accounts pursuant to Article V
hereof.
14.4 Distributions in Kind. Notwithstanding the provisions of
Section 14.3 hereof which require the liquidation of the assets of the
Partnership, but subject to the order of priorities set forth therein,
if the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss
to the Partners, the Liquidator may, in its absolute discretion, defer
for a reasonable time the liquidation of any assets except those
necessary to satisfy liabilities of the Partnership (including those to
Partners as creditors) and/or distribute to the Partners or to specific
classes of Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 14.3 hereof, undivided
interests in such Partnership assets as the Liquidator deems not
suitable for liquidation. Any such distributions in kind shall be made
only if, in the good faith judgment of the Liquidator, such
distributions in kind are in the best interest of the Limited Partners,
and shall be subject to such conditions relating to the disposition and
management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such
properties at such time. The Liquidator shall determine the fair market
value of any property distributed in kind using such reasonable method
of valuation as it may adopt, and the Partners' Capital Accounts shall
be adjusted to reflect the manner in which the unrealized income, gain,
loss, and deduction interest in that property that has not previously
been reflected in the Capital Accounts would be allocated among the
Partners if there were a taxable disposition of that property for fair
market value on the date of distribution.
14.5 Cancellation of Certificate of Limited Partnership. Upon the
completion of the distribution of Partnership cash and property as
provided in Sections 14.3 and 14.4 hereof, the Partnership shall be
terminated and the Certificate of Limited Partnership and all
qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be canceled and
such other actions as may be necessary to terminate the Partnership
shall be taken.
14.6 Reasonable Time for Winding Up. A reasonable time shall be
allowed for the orderly winding-up of the business and affairs of the
Partnership and the liquidation of its assets pursuant to Section 14.3
hereof, in order to minimize any losses otherwise attendant upon such
winding-up and the provisions of this Agreement shall remain in effect
between the Partners during the period of liquidation.
14.7 Return of Capital. No General Partner shall be personally
liable for the return of the Capital Contribution of the Limited
Partners, or any portion thereof, it being expressly understood that any
such return shall be made solely from Partnership assets.
14.8 No Capital Account Restoration. No Partner shall have any
obligation to restore any negative balance in its Capital Account upon
liquidation of the Partnership.
14.9 Waiver of Partition. Each Partner hereby waives any right to
partition of the Partnership property.
ARTICLE XV
Amendment of Partnership Agreement; Meetings; Record Date
15.1 Amendment to be Adopted Solely by Managing General
Partner. Each Limited Partner agrees that the Managing General Partner
(pursuant to its powers of attorney from the Limited Partners and
Assignees), without the approval of any Limited Partner or Assignee, may
amend any provision of this Agreement, and execute, swear to,
acknowledge, deliver, file and record whatever documents may be required
in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent or
the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Limited or
General Partners in accordance with this Agreement:
(c) a change that, in the sole discretion of the Managing General
Partner, is reasonable and necessary or appropriate to qualify or
ontinue 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, subject to the provisions of Section 1.6
hereof, that is necessary or advisable in the opinion of the Managing
General Partner to ensure that the Partnership will not be taxable as a
corporation or treated as an association taxable as a corporation for
federal income tax purposes.
(d) a change (i) that does not adversely affect the Limited
Partners in any material respect, (ii) that is necessary or desirable to
satisfy any requirements, conditions or guidelines contained in any
opinion, directive, order, ruling or regulation of any federal or state
agency or judicial authority or contained in any federal or state
statute (including, without limitation, the Delaware Act) or that is
necessary or desirable to facilitate the trading of the Depositary Units
(including, without limitation, the division of Outstanding Units into
different classes in order 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 Depositary Units are or will be listed for trading, compliance with
any of which the Managing General Partner determines to be in the best
interests of the Partnership and the Limited Partners or (iii) that is
required to effect the intent of the provisions of this Agreement or is
otherwise contemplated by this Agreement;
(e) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership or any General Partner or its directors or
officers from in any manner being subjected to the provisions of the
Investment Company Act of 1940, as amended, the Investment Advisers Act
of 1940, as amended, or "plan asset" regulations adopted under the
Employee Retirement Income Security Act of 1974, as amended, whether or
not substantially similar to plan asset regulations currently applied or
proposed by the United States Department of Labor;
(f) subject to the terms of Section 4.2 hereof, an amendment that
the Managing General Partner determines in its sole discretion to be
necessary or desirable in connection with the authorization for issuance
of any class or series of Units pursuant to Section 4.2 hereof,
including the creation of any Certificate of Designations;
(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 16.3 hereof; or
(i) any other amendments similar to the foregoing.
15.2 Amendment Procedures. Except as provided in Sections 15.1
and 15.3 hereof, all amendments to this Agreement shall be made in
accordance with the following requirements: If an amendment is proposed,
the Managing General Partner shall seek the written approval of the
requisite Percentage Interests or call a meeting of the Limited Partners
to consider and vote on such proposed amendment. Each such proposal to
the Limited Partners shall contain the text of the proposed amendment.
A proposed amendment shall be effective upon its approval by the holders
of at least a majority of the Outstanding Units unless a greater or
different percentage is required under this Agreement. The Managing
General Partner shall notify all Record Holders upon final adoption of
any proposed amendment. Amendments to Certificates of Designations
shall be made in accordance with Section 4.1.
15.3 Amendment Requirements. (a) Amendments to this Agreement may
be proposed solely by the Managing General Partner. Notwithstanding the
provisions of Sections 15.1 and 15.2 hereof, no provision of this
Agreement which establishes a Percentage Interest required to take any
action shall be amended, altered, changed, repealed or rescinded in any
respect which would have the effect of reducing such voting requirement
unless such amendment is approved by the written consent or the
affirmative vote of Partners whose aggregate Percentage Interests
constitute not less than the voting requirement sought to be reduced.
(b) Notwithstanding the provisions of Sections 15.1 and 15.2
hereof, the approval of the Special General Partner shall be required
for any amendment, if such amendment would change the Special General
Partner's Percentage Interest or increase the Special General Partner's
duties or liabilities or if the Partnership has received an Opinion of
Counsel that such amendment would have a materially adverse consequence
to the Special General Partner .
(c) Notwithstanding the provisions of Sections 15.1 and 15.2
hereof, no amendment to this Agreement may (i) enlarge the obligations
of any Limited Partner, (ii) modify the compensation payable to the
Managing General Partner or any Affiliates of the Managing General
Partner by the Partnership, (iii) change Section 14.1(a) or (c) hereof,
(iv) restrict in any way any action by or rights of the Managing General
Partner as set forth in this Agreement or (v) except as set forth in
Section 14.1(c) hereof, give any person the right to dissolve the
Partnership.
(d) In the event at any time there exists any class or series of
Outstanding Units having any rights or preferences different from the
rights or preferences of any other class or series of Outstanding Units,
no amendment shall be effective which the Managing General Partner
determines would have a material adverse effect on the rights and
preferences of any such class or series of Outstanding Units without, in
addition to any other required approval, the approval by written consent
or affirmative vote of 66?% in interest of the holders of the
Outstanding Units of such class or series.
(e) Notwithstanding any other provision of this Agreement, except
for amendments pursuant to Section 15.1 hereof, no amendment shall
become effective without the approval of the Record Holders of all Units
unless the Partnership obtains an Opinion of Counsel to the effect that
(i) such amendment would not cause the Partnership to become taxable as
a corporation or treated as an association taxable as a corporation for
federal income tax purposes and (ii) such amendment will not affect the
limited liability of any Limited Partner in the Partnership under
applicable law.
(f) This Section 15.3 shall only be amended with the approval by
written consent or affirmative vote of the holders of not less than 90%
of the Outstanding Units.
15.4 Meetings. All acts of Limited Partners to be taken hereunder
shall be taken in the manner provided in this Article XV. Meetings of
the Limited Partners may be called by the Managing General Partner or by
Limited Partners owning 20% or more of the Outstanding Units of the
class for which a meeting is proposed. Limited Partners shall call a
meeting by delivering to the Managing General Partner one or more
requests in writing stating that the signing Limited Partners wish to
call a meeting and indicating the general or specific purposes for which
the meeting is to be called. Within 60 days after receipt of such a
call from Limited Partners or within such greater time as may be
reasonably necessary for the Partnership to comply with any statutes,
rules, regulations, listing agreements or similar requirements governing
the holding of a meeting or the solicitation of proxies for use at such
a meeting, the 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 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 laws of any other state
in which the Partnership is qualified to do business.
15.5 Notice of a Meeting. Notice of a meeting called pursuant to
Section 15.4 hereof shall be given to the Record Holders in writing by
mail or other means of written communication in accordance with
Section 19.1 hereof. The notice shall be deemed to have been given at
the time when deposited in the mail or sent by other means of written
communication.
15.6 Record Date. For purposes of determining the Limited
Partners entitled to notice of or to vote at a meeting of the Limited
Partners or to give approvals without a meeting as provided in
Section 15.11 hereof, 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 Units are listed for trading, in which case the
rule, regulation, guideline or requirement of such exchange shall
govern) or (b) in the event that approvals are sought without a meeting,
the date on which Limited Partners are requested in writing by the
Managing General Partner to give such approvals.
15.7 Adjournment. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting and a new
Record Date need not be fixed, if the time and place thereof are
announced at the meeting at which the adjournment is taken, unless such
adjournment shall be for more than 45 days. At the adjourned meeting,
the Partnership may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than
45 days or if a new Record Date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given in accordance with this
Article XV.
15.8 Waiver of Notice; Approval of Meeting; Approval of Minutes.
The transactions of any meeting of Limited Partners, however called and
noticed, and whenever held, shall be as valid as if had at a meeting
duly held after regular call and notice, if a quorum is present either
in person or by proxy, and if, either before or after the meeting, each
of the Limited Partners entitled to vote, present in person or by proxy,
signs a written waiver of notice or an approval of the holding of the
meeting or an approval of the minutes thereof. All waivers and
approvals shall be filed with the Partnership records or made a part of
the minutes of the meeting. Attendance of a Limited Partner at a
meeting shall constitute a waiver of notice of the meeting, except when
the Limited Partner 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.
15.9 Quorum. 66?% of the Outstanding Units of the class for which
a meeting has been called represented in person or by proxy shall
constitute a quorum at a meeting of Limited Partners of such class
unless any such action by the Limited Partners requires approval by
holders of a smaller percentage of Outstanding Units, in which case, the
quorum shall be the percentage of Outstanding Units required for
approval. 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 whose Percentage Interests represent at least a
majority of the Percentage 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 different percentage is required with
respect to such action under the provisions of this Agreement, in which
case the act of the Limited Partners owning such 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 Interests of
the Limited Partners specified in this Agreement. In the absence of a
quorum, any meeting of Limited Partners may be adjourned from time to
time by the affirmative vote of a majority of the Percentage Interests
represented either in person or by proxy, but no other business may be
transacted, except as provided in Section 15.7 hereof.
15.10 Conduct of 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, without limitation, the determination of Persons entitled to
vote, the existence of a quorum, the satisfaction of the requirements of
Section 15.4 hereof, 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, in either case including, without limitation, a
Partner or a director or officer of the Managing General Partner. 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 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.
15.11 Action Without a Meeting. Any action that may be taken at
a meeting of the Limited Partners may be taken without a meeting if an
approval in writing setting forth the action so taken is signed by
Limited Partners owning not less than the minimum Percentage Interests
that would be necessary to authorize or take such action at a meeting at
which all the Limited Partners were present and voted. Prompt notice of
the taking of action without a meeting shall be given to the Limited
Partners who have not approved in writing. The 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 not be less than 20
days, specified by the Managing General Partner. If a ballot returned
to the Partnership does not vote all of the Units held by the Limited
Partner, the Partnership shall be deemed to have failed to receive a
ballot for the Units which 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 as to whether the exercise of
such right and the action proposed to be taken with respect to any
particular matter (i) 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, (ii) would jeopardize the status of the Partnership as a
partnership under applicable tax laws and regulations and (iii) is
otherwise permissible under the state statutes then governing the
rights, duties and liabilities of the Partnership and the Partners.
15.12 Voting and Other Rights. (a) Only those Record Holders of
Units on the Record Date set pursuant to Section 15.6 hereof shall be
entitled to notice of, and to vote at, a meeting of Limited Partners or
to act with respect to matters as to which approvals are solicited.
(b) With respect to Units that are held for a Person's account by
another Person (such as a broker, dealer, bank, trust company or
clearing corporation, or an agent of any of the foregoing), in whose
name such Units are registered, such broker, dealer or other agent
shall, in exercising the voting rights in respect of such Units on any
matter, and unless the arrangement between such Persons provides
otherwise, vote such Units in favor of, and at the direction of, the
Person who is the beneficial owner, and the Partnership shall be
entitled to assume it is so acting without further inquiry. The
provisions of this Section 15.12(b) are subject to the provisions of
Section 10.4 hereof.
ARTICLE XVI
Merger
16.1 Authority. The Partnership may merge or consolidate with one
or more corporations, business trusts or associations, real estate
investment trusts, common law trusts or unincorporated businesses,
including, without limitation, a general partnership or limited
partnership, formed under the laws of the State of Delaware or any other
state of the United States of America pursuant to a written agreement of
merger or consolidation ("Merger Agreement") in accordance with this
Article XVI.
16.2 Procedure for Merger or Consolidation. Merger or
consolidation of the Partnership pursuant to this Article requires the
prior approval of the Managing General Partner. If the Managing General
Partner shall determine, in the exercise of its sole 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 jurisdictions of formation or organization of the
business entity that is to survive the proposed merger or consolidation
(hereafter designated as the "Surviving Business Entity");
(c) The terms and conditions of the proposed merger or
consolidation;
(d) The manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash,
property or general or limited partnership interests, rights, securities
or obligations of the Surviving Business Entity; and (i) if any general
or limited partnership interests, securities or rights of any
constituent business entity are not to be exchanged or converted solely
for, or into, cash, property or general or limited partnership
interests, rights, securities or obligations of the Surviving Business
Entity, the cash, property, or general or limited partnership interests,
rights, securities or obligations of any limited partnership,
corporation, trust or other entity (other than the Surviving Business
Entity) which the holders of such general or limited partnership
interests are to receive in exchange for, or upon conversion of, their
securities or rights, and (ii) in the case of securities represented by
certificates, upon the surrender of such certificates, which cash,
property or general or limited partnership interests, rights, securities
or obligations of the Surviving Business Entity or any limited
partnership, corporation, trust or other entity (other than the
Surviving Business Entity), or evidences thereof are to be delivered;
(e) A statement of any changes in the constituent documents (the
articles or certificate of incorporation, articles of trust, declaration
of trust, certificate or agreement of limited partnership or other
similar charter or governing document) of the Surviving Business Entity
to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date of the
filing of the certificate of merger pursuant to Section 16.4 hereof or
a later date specified in or determinable in accordance with the Merger
Agreement (provided that if the effective time of the merger is to be
later than the date of the filing of the certificate of merger, it shall
be fixed no later than the time of the filing of the certificate of
merger and stated therein); and
(g) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or desirable.
16.3 Approval by Limited Partners of Merger or Consolidation. (a)
The Managing General Partner of the Partnership, upon its approval of
the Merger Agreement, shall direct that the Merger Agreement be
submitted to a vote of Limited Partners whether at a meeting or by
written consent, in either case in accordance with the requirements of
Article XV hereof. A copy or a summary of the Merger Agreement shall be
included in or enclosed with the notice of a meeting or the written
consent.
(b) The Merger Agreement shall be approved upon receiving the
affirmative vote or consent of the holders of at least a majority of the
Outstanding Units, unless the Merger Agreement contains any provision
which, if contained in an amendment to the Agreement, the provisions of
this Agreement or the Delaware Act would require the vote or consent of
a greater percentage of the Percentage Interests of the Limited Partners
or of any class of Limited Partners, in which case such greater
percentage vote or consent shall be required for approval of the Merger
Agreement.
(c) After such approval by vote or consent of the Limited
Partners, and at any time prior to the filing of the certificate of
merger pursuant to Section 16.4 hereof, the merger or consolidation may
be abandoned pursuant to provisions therefor, if any, set forth in the
Merger Agreement.
16.4 Certificate of Merger. Upon the required approval by the
Managing General Partner and Limited Partners of a Merger Agreement, a
certificate of merger shall be executed and filed with the Secretary of
State of the State of Delaware in conformity with the requirements of
the Delaware Act.
16.5 Effect of Merger. (a) Upon the effective date of the
certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all property,
real, personal and mixed, and all debts due to any of those business
entities and all other things and causes of action belonging to each of
those business entities shall be vested in the Surviving Business Entity
and after the merger or consolidation shall be the property of the
Surviving Business Entity to the extent they were 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 having occurred.
ARTICLE XVII
Right to Acquire Common Units
17.1 Right to Acquire Common Units. (a) Notwithstanding the
provisions of Section 13.1(a) hereof or any other provision of this
Agreement, in the event that at any time less than 10% of the total
Common Units outstanding are held by Persons other than the General
Partners and any Affiliate of the General Partners, the Managing General
Partner shall then have the right, which right it may assign and
transfer to the Partnership or any Affiliates of the Managing General
Partner, exercisable in its sole discretion, to purchase all, but not
less than all, of the Common Units outstanding held by Persons other
than the General Partners and any Affiliates of the General Partners, at
the greater of (y) the Current Market Price as of the date the notice
described in Section 17.1(b) hereof is mailed or (z) the highest cash
price paid by either of the General Partners or any of their Affiliates
for any Unit purchased during the 90-day period preceding the date that
the notice described in Section 17.1(b) hereof is mailed. As used
herein, (i) "Current Market Price" of any class of Units listed or
admitted to trading on any National Securities Exchange means the
average of the daily Closing Prices per Unit of such class for the 30
consecutive Trading Days (as hereinafter defined) immediately prior to
such date and (ii) "Trading Day" means a day on which the principal
National Securities Exchange on which the Units of any class are listed
or admitted to trading is open for the transaction of business or, if
Units of a class are not listed or admitted to trading on any National
Securities Exchange, a day on which banking institutions in New York
City generally are open.
(b) If the Managing General Partner, any Affiliate of the Managing
General Partner or the Partnership elects to exercise either right to
purchase Common Units granted pursuant to Section 17.1 (a) hereof, the
Managing General Partner shall deliver to the Transfer Agent written
notice of such election to purchase (hereinafter in this Section 17.1
called the "Notice of Election to Purchase") and shall cause the
Transfer Agent to mail a copy of such Notice of Election to Purchase to
the Record Holders of Common Units (as of a Record Date selected by the
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 in daily newspapers of general circulation printed in the
English language and published in the Borough of Manhattan, New York.
The Notice of Election to Purchase shall specify the Purchase Date and
the price (determined in accordance with Section 17.1(a) hereof) at
which Common Units will be purchased and state that the Managing General
Partner, any Affiliate of the Managing General Partner or the
Partnership, as the case may be, elects to purchase such Common Units,
upon surrender of Depositary Receipts with respect to such Common Units
in exchange for payment, at such office or offices of the Transfer Agent
as the Transfer Agent may specify, or as may be required by any National
Securities Exchange on which the Common Units are listed or admitted to
trading. Any such Notice of Election to Purchase mailed to a Record
Holder of Common Units at his address as reflected in the records of the
Transfer Agent shall be conclusively presumed to have been given whether
or not the owner receives such notice. On or prior to the Purchase
Date, the Managing General Partner, any Affiliate of the Managing
General Partner or the Partnership, as the case may be, shall deposit
with the Transfer Agent cash in an amount sufficient to pay the
aggregate purchase price of all of the Common Units to be purchased in
accordance with this Section 17.1. If the Notice of Election to Purchase
shall have been duly given as aforesaid at least 10 days prior to the
Purchase Date, and if on or prior to the Purchase Date the deposit
described in the preceding sentence has been made for the benefit of the
holders of Common Units subject to purchase as provided herein, then
from and after the Purchase Date, notwithstanding that any Depositary
Receipt shall not have been surrendered for purchase, all rights of the
holders of such Common Units (including, without limitation, any rights
pursuant to Articles IV, V and XIV hereof) shall thereupon cease, except
the right to receive the purchase price (determined in accordance with
Section 17.1 (a) hereof) for Common Units therefor, without interest,
upon surrender to the Transfer Agent of the Depositary Receipts
representing such Common Units, and such Common Units shall thereupon be
deemed to be transferred to the Managing General Partner, any Affiliate
of the Managing General Partner 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 Common Units from and after the Purchase Date and
shall have all rights as the owner of such Common Units (including,
without limitation, all rights as owner of such Common Units pursuant to
Articles IV, V and XIV hereof).
(c) At any time from and after the Purchase Date, a holder of an
Outstanding Unit subject to purchase as provided in this Section 17.1
may surrender his Depositary Receipt or Certificate, as the case may be,
evidencing such Unit to the Transfer Agent in exchange for payment of
the amount described in Section 17.1(a) therefor without interest
thereon.
ARTICLE XVIII
Changes to Previous Capitalization
Of the Partnership
18.1 Changes in Capitalization. On December 30, 1996:
(a) Each Outstanding common unit of the Partnership became one-
twenty first of one Common Unit, and
(b) Each Outstanding convertible Preferred Unit of the Partnership
became one Common Unit.
18.2 Elimination of Cumulative Distribution Arrearages. On
December 30, 1996, all cumulative distribution arrearages with respect
to the Partnership's common units and convertible preferred units
Outstanding immediately prior to December 30, 1996 will be eliminated in
accordance with the terms of the Consent Solicitation.
ARTICLE XIX
General Provisions
19.1 Addresses and Notices. Any notice, demand, request or report
required or permitted to be given or made to a Partner or Assignee under
this Agreement shall be in writing and shall be deemed given or made
when delivered in person or when sent by first class United States mail
or by other means of written communication to the Partner or Assignee at
the address described below. Any notice, payment or report to be given
or made to a Partner or Assignee hereunder shall be deemed conclusively
to have been given or made, and the obligation to give such notice or
report or to make such payment shall be deemed conclusively to have been
fully satisfied, upon sending of such notice, payment or report to the
Record Holder of such Unit at his address as shown on the records of the
Transfer Agent or as otherwise shown on the records of the Partnership,
regardless of any claim of any Person who may have an interest in such
Unit or the Partnership Interest of a General Partner by reason of an
assignment or otherwise. An affidavit or certificate of making of any
notice, payment or report in accordance with the provisions of this
Section 19.1 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 1.3
hereof. The Partnership and the Managing General Partner may rely and
shall be protected in relying on any notice or other document from a
Partner or other Person if believed by them to be genuine.
19.2 Titles and Captions. All article or Section titles or
captions in this Agreement are for convenience only. They shall not be
deemed part of this Agreement and in no way define, limit, extend or
describe the scope or intent of any provisions hereof. Except as
specifically provided otherwise, references to "Articles" and "Sections"
are to Articles and Sections of this Agreement.
19.3 Pronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns,
pronouns and verbs shall include the plural and vice versa.
19.4 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking
action as may be necessary or appropriate to achieve the purposes of
this Agreement.
19.5 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
19.6 Integration. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
19.7 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 or any other
covenant, duty, agreement or condition.
19.8 Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute one 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
executing and delivering a Transfer Application as herein described,
independently of the signature of any other party.
19.9 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.
19.10 Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby.
<PAGE>
<PAGE>
CERTIFICATE OF DESIGNATIONS
of
SERIES G SUBORDINATED PREFERRED UNITS
of
PRIDE COMPANIES, L.P.
Pursuant to the Third Amended and Restated Agreement
of Limited Partnership
effective as of October 1, 1999
Pride Refining, Inc., a Texas corporation, as Managing General
Partner of Pride Companies, L.P. (the "Company"), certifies that
pursuant to authority contained in the Third Amended and Restated
Agreement of Limited Partnership effective as of April 15, 1999, the
Series G Subordinated Preferred Units are hereby established so that
such series will have the designations, rights, powers, preferences,
qualifications, limitations and restrictions set forth below:
SERIES G SUBORDINATED PREFERRED UNITS
Section 1. Number of Units and Designation. There is hereby
established a series of preferred limited partnership Units of the
Company with the designation "Series G Subordinated Preferred Units"
(herein referred to as the "Series G Units"), which shall consist of a
maximum of 3,145 Units, with a Stated Value per Unit of $1,000.00 (the
"Stated Value").
Section 2. Definitions. In addition to the definitions set forth
elsewhere herein, the following terms shall have the meanings indicated:
"Affiliate" of any Person is a Person that, directly or indirectly,
controls, is controlled by or is under common control with such Person
(and "control" means the power, directly or indirectly, to direct or
cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, or
to elect a majority of a Person's Board of Directors or equivalent
governing body).
"BankBoston Credit Agreement" means that certain Revolving Credit
and Term Loan Agreement, dated as of December 30, 1997, by and among the
Company (as borrower), BankBoston, N.A. (as a lender and as agent), the
guarantors parties thereto and the lenders from time to time parties
thereto, as such agreement may be amended from time to time.
"Business Day" means any day other than a Saturday, Sunday or a day
on which commercial banks in Dallas, Texas are required or authorized to
close.
"Common Units" means the common limited partnership Units of the
Company issued or authorized for issuance pursuant to the Partnership
Agreement.
"Credit Agreement" means the Sixth Restated and Amended Credit
Agreement dated as of December 30, 1997, among the Company (as
borrower), the Managing General Partner, the Special General Partner,
Desulfur Partnership, Pride Marketing of Texas (Cedar Wind), Inc., and
Pride Borger, Inc. (as guarantors), and Varde (as lender), as such
agreement may be amended from time to time.
"Distribution Rate" means the lesser of (i) 10% per annum and (ii)
the Partnership's net income for such distribution period less any
distributions paid or accrued for such distribution period on any of the
Senior Securities.
"Indebtedness" means all obligations, contingent or otherwise,
which in accordance with GAAP are required to be classified upon the
balance sheet of the Borrower (or other specified Person) as
liabilities, but in any event including (without duplication);
i. borrowed money;
ii. indebtedness evidenced by notes, debentures or similar
instruments;
iii. Capitalized Lease Obligations;
iv. the deferred purchase price of assets, services or securities,
including related noncompetition, consulting and stock repurchase
obligations (other than ordinary trade accounts payable within six
months after the incurrence thereof in the ordinary course of business);
v. mandatory redemption or dividend rights on capital stock (or
other equity);
vi. reimbursement obligations, whether contingent or matured, with
respect to letters of credit, bankers acceptances, surety bonds, other
financial guarantees and Interest Rate Protection Agreements (without
duplication of other Indebtedness supported or guaranteed thereby);
vii. unfunded pension liabilities;
viii. obligations that are immediately and directly due and
payable out of the proceeds of or production from property;
ix. liabilities secured by any Lien existing on property owned
or acquired by the Borrower (or such specified Person), whether or not
the liability secured thereby shall have been assumed; and
x. all Guarantees in respect of Indebtedness of others.
The term "Capitalized Lease Obligations" means the amount of
liability reflecting the aggregate discounted amount of future payments
under all Capitalized Leases calculated in accordance with GAAP,
including Statement Nos. 13 and 98 of the Financial Accounting Standards
Board.
The term "Capitalized Lease" means any lease which is required to
be capitalized on the balance sheet of the lessee in accordance with
GAAP, including Statement Nos. 13 and 98 of the Financial Accounting
Standards Board.
The term "Interest Rate Protection Agreement" means any interest
rate swap, interest rate cap, interest rate hedge or other contractual
arrangement that converts variable interest rates into fixed rates,
fixed interest rates into variable rates or other similar arrangements.
The term "Lien" means any lien, mortgage, security interest, tax
lien, pledge, encumbrance, conditional sale or title retention
arrangement, or any other interest in property designed to secure the
repayment of Indebtedness, whether arising by agreement or under any
statute or law, or otherwise.
The term "Guarantee" of any Person means any contract, agreement or
understanding of such Person pursuant to which such Person guarantees,
or in effect guarantees, any Indebtedness of any other Person in any
manner, whether directly or indirectly, including without limitation
agreements: (i) to purchase such Indebtedness or any property
constituting security therefor, (ii) to advance or supply funds (A) for
the purchase or payment of such Indebtedness, or (B) to maintain net
worth or working capital or other balance sheet conditions, or otherwise
to advance or make available funds for the purchase or payment of such
Indebtedness, (iii) to purchase property, securities or service
primarily for the purpose of assuring the holder of such Indebtedness of
the ability of the primary obligor to make payment of the Indebtedness,
or (iv) otherwise to assure the holder of the Indebtedness of the
primary obligor against loss in respect thereof; except that "Guarantee"
shall not include the endorsement by the Company in the ordinary course
of business of negotiable instruments or documents for deposit or
collection.
"Initial Issuance Date" means the date on which the first issuance
of Series G Units occurs, whether such phrase is used in reference to
Units issued on such date or on any subsequent date.
"Junior Securities" means the Common Units and any other class or
series of equity of the Company ranking junior to the Series G Units as
to distributions or upon liquidation, dissolution or winding up, and the
Units thereof.
"Managing General Partner" means the corporation or other entity
designated to serve as managing general partner of the Company pursuant
to the Partnership Agreement.
"Parity Securities" means any class or series of equity of the
Company ranking on a parity with the Series G Units as to distributions
or upon liquidation, dissolution or winding up, and the Units thereof.
"Partnership Agreement" means that certain Third Amended and
Restated Agreement of Limited Partnership of Pride Companies, L.P.,
effective as of April 15, 1999, as such agreement may be amended.
"Person" means an any individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated
organization or government or any department or agency thereof.
"Restructuring Agreement" means that certain Restructuring and
Override Agreement, dated as of December 30, 1997, by and among the
Company, the Managing General Partner, the Special General Partner and
Varde.
"Senior Securities" means any class or series of equity of the
Company ranking senior to the Series G Units as to distributions or upon
liquidation, dissolution or winding up, and the Units thereof.
"Series A Term Loan" means the term loan in the aggregate principal
amount of $20,000,000 owed by the Company to Varde pursuant to the
Credit Agreement.
"Series A Unsecured Note" means the Convertible Unsecured Series A
Promissory Notes of the Company in the aggregate initial principal
amount of $2,500,000, issued by the Company to Varde pursuant to the
Note Purchase Agreement.
"Series B Units" means the Series B Cumulative Convertible
Preferred Units of the Company issued in accordance with the Partnership
Agreement and the Amended and Restated Certificate of Designations dated
as of April 15, 1999, relating to such series. Series B Units are
Senior Securities.
"Series C Units" means the Series C Cumulative Convertible
Preferred Units of the Company issued in accordance with the Partnership
Agreement and the Amended and Restated Certificate of Designations dated
as of April 15, 1999, relating to such series. Series C Units are
Senior Securities.
"Series D Units" means the Series D Cumulative Preferred Units of
the Company issued in accordance with the Partnership Agreement and the
Amended and Restated Certificate of Designations dated as of April 15,
1999. Series D Units are Junior Securities in relation to the Series B
Units and Series C Units and Senior Securities in relation to Series G
Units.
"SGP Guarantee" means the guarantee by the Special General Partner
of, among other things, (i) the distribution rights and liquidation
preferences of the Series B Units, the Series C Units and the Series D
Units and (ii) the obligations of the Company to Varde under the
Series A Unsecured Note.
"Special General Partner" means Pride SGP, Inc., a Texas
corporation, or any successor in its capacity as special general partner
of the Company.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, joint venture, limited liability company or
other business or corporate entity, enterprise or organization which is
directly or indirectly (through one or more intermediaries) controlled
by or owned fifty percent or more by such person.
"Transfer Agent" means such agent or agents of the Company as may
be designated by the Managing General Partner as the transfer agent for
the Series G Units.
"Units" means all or any or each, as the context may require, of
the Series B Units, the Series C Units, the Series D Units and the
Series G Units.
"Varde" means Varde Partners, Inc., a Delaware corporation, and its
successors and assigns.
Section 3. Distributions; Allocation of Income. (a) The Company
shall pay to the holders of the Series G Units, out of the assets of the
Company at any time legally available for the payment of distributions,
preferential quarterly distributions at the times and at the rates
provided for in this Section 3.
(b) No preferred distributions will be payable with respect to or
accrue or accumulate with respect to the Series G Units until after the
fifth anniversary of the date hereof.
(c) Following the fifth anniversary of the date hereof and to the
extent that funds are legally available therefor, distributions shall
thereafter be paid quarterly, on and as of the fifth calendar day of
each February, May, August and November (each, a "Distribution Payment
Date"), on each Series G Unit outstanding at the Distribution Rate.
The amount of the distribution payable on each Distribution Payment
Date shall be determined by applying the Distribution Rate from and
including the date immediately following the last previous Distribution
Payment Date (or from and including the date of original issuance of the
Series G Unit, with respect to the first distribution period) to and
including the Distribution Payment Date, on the basis of a year of 360
days.
(d) Distributions on the Series G Units shall be payable currently
in cash. Distributions payable on any Redemption Date (as defined in
Section 6 below) shall be calculated on the basis of the actual number
of days elapsed including the Redemption Date or such final distribution
date. Distributions payable on the Series G Units for any period of
less than a full quarterly distribution period shall be computed on the
basis of actual days elapsed, excluding the last preceding Distribution
Payment Date and including the last day of such period, and on the basis
of 360 days.
(e) Distributions payable on each Distribution Payment Date shall
be paid to record holders of the Series G Units as they appear on the
books of the Company at the close of business on the tenth Business Day
immediately preceding the respective Distribution Payment Date.
(f) Except as otherwise provided in Section 1.1(f) of the
Restructuring Agreement, so long as any Series G Units are outstanding:
(i) No distribution shall be declared or paid, or set apart for
payment on or in respect of any Junior Securities, including, without
limitation, distributions payable in cash or other property or in Units
of any Junior Security or other securities of the Company.
(ii) No distribution, except as described in the next succeeding
sentence, shall be declared or paid, or set apart for payment on or in
respect of any Parity Securities, for any period unless distributions on
all outstanding Series G Units have been or contemporaneously are
declared and paid for all distribution periods terminating on or prior
to the date set for payment of such distribution on the Parity
Securities. All distributions declared upon such Parity Securities
shall be declared and paid pro rata with the Series G Units so that the
amounts of distributions per Unit declared and paid on the Series G
Units and such Parity Securities shall in all cases bear to each other
the same ratio that distributions per Unit on the Series G Units and on
such Parity Securities bear to each other, and shall in all cases be
paid to the same extent in cash, other assets and/or securities of the
same class as the securities on which the respective distributions are
being paid.
For purposes of this subsection (f), unless expressly stated
otherwise herein, "distribution" shall include, without limitation, any
distribution by the Company of cash, evidences of indebtedness,
securities or other properties or assets of the Company, or of rights to
purchase or otherwise acquire any of the foregoing, whether or not made
out of profits, surplus or other funds of the Company legally available
for the payment of distributions.
(g) The holders of Series G Units will be allocated an amount of
gross income equal to the amount of preferred distributions paid on the
Series G Units prior to any allocation of income to the holders of
Junior Securities.
Section 4. Certain Covenants and Restrictions. So long as any
Series G Units are outstanding:
(a) The Company shall not reclassify or modify any Junior Security
so that it becomes a Parity Security or Senior Security.
(b) The Company shall not (i) pay any principal or interest on, or
redeem, purchase or otherwise acquire for any consideration any Parity
Securities or Junior Securities (or pay any money to a sinking fund or
otherwise set apart any money, property or other consideration for the
purchase or redemption of any Parity Securities or Junior Securities) or
(ii) pay, provide or distribute to the holders of any Parity Securities
or Junior Securities, as such, any money, property, rights or other
consideration, except for distributions to holders of Parity Securities
permitted by Section 3(f)(ii) hereof.
(c) Neither the Company nor the Managing General Partner shall
amend, alter or rescind (whether by merger, consolidation or otherwise)
any of the provisions of the Partnership Agreement, this Certificate of
Designations, the Articles of Incorporation, bylaws or other
organizational document of the Managing General Partner or any agreement
entered into for the benefit of holders of Series G Units in any manner
so as to affect adversely any of the preferences, rights or powers of
the Series G Units.
(d) From and after the fifth anniversary of the date hereof, the
Company shall deliver to each holder of Series G Units one (1) copy of
each of the following:
1. Monthly Statements. As soon as available, and in any event
within 30 days after the end of each calendar month, copies of the
consolidated balance sheet of the Company as of the end of such month,
and statements of income and retained earnings and changes in financial
position and cash flows of the Company for that month and for the
portion of the fiscal year ending with such period, in each case setting
forth in comparative form the figures for the corresponding period of
the preceding fiscal year. Such statements shall be in reasonable
detail, with a certificate of the chief financial officer of the
Managing General Partner certifying that such statements are true and
correct in all material respects to the best of his knowledge and
prepared in accordance with generally accepted accounting principles
("GAAP"), consistently maintained and applied, subject to year-end audit
adjustments.
2. Annual Statements. As soon as available after each fiscal year
end, and in any event within 90 days thereafter, copies of the
consolidated balance sheet of the Company as of the close of such fiscal
year and statements of income and retained earnings and cash flows of
the Company for such fiscal year, in each case setting forth in
comparative form the figures for the preceding fiscal year, all in
reasonable detail and accompanied by an opinion thereon of independent
public accountants selected by the Company.
(i). SEC and Other Reports. Promptly upon its becoming available,
one copy of each financial statement, report, notice or proxy statement
sent by the Company to equity owners generally and of each regular or
periodic report, registration statement or prospectus filed by the
Company with any securities exchange or the Securities and Exchange
Commission or any successor agency, and of any order issued by any court
or governmental authority in any proceeding to which the Company is a
party.
(ii). Other Information. Such other information concerning the
business, properties or financial condition of the Company as the
holders of Series G Units representing 51% or more of the aggregate
Stated Value of the outstanding Series G Units shall reasonably request.
Compliance by the Company with any covenant contained in this
Section 4 may be waived in writing by the holders of Series G Units
representing 51% or more of the aggregate Stated Value of the
outstanding Series G Units. No such waiver shall be deemed to be a
continuing waiver nor a waiver with respect to any other covenant of the
Company or any other term, condition or provision hereof.
Section 5. Liquidation Preference. (a) In the event of any
liquidation, dissolution or winding up of the Company (in connection
with the bankruptcy or insolvency of the Company or otherwise), whether
voluntary or involuntary, before any payment or distribution of the
assets of the Company (whether capital or surplus) shall be made to or
set apart for the holders of Common Units or any other class or series
of Junior Securities, the holder of each Series G Unit shall be entitled
to receive in cash an amount equal to the Stated Value per Unit plus an
amount equal to the aggregate dollar amount of a prorated distribution
from the most recent Distribution Payment Date to such date of final
distribution. No payment on account of any such liquidation,
dissolution or winding up of the Company shall be made to the holders of
any class or series of Parity Securities unless there shall be paid at
the same time to the holders of the Series G Units proportionate amounts
in cash determined ratably in proportion to the full amounts to which
the holders of all outstanding Series G Units and the holders of all
such outstanding Parity Securities are respectively entitled with
respect to such distribution. Subject to the rights of the holders of
any class or series of Parity Securities or Senior Securities, for
purposes of this Section 5, neither a consolidation or merger of the
Company with one or more partnerships, corporations or other entities
nor a sale, lease, exchange or transfer of all or any part of the
Company's assets for cash, securities or other property shall be deemed
to be a liquidation, dissolution or winding up, voluntary or involuntary
if the surviving entity in any such consolidation, merger, sale, lease,
exchange or transfer assumes in writing all the Company's obligations
under this Certificate of Designations, the Amended and Restated
Registration Rights Agreement, dated as of December 30, 1997, by and
between the Company and Varde and the Pride SGP Equity Conversion
Agreement, and the Warrants to Purchase Common Units, issued by the
Company to each holder of Series B Units or Series C Units.
(b) Subject to the rights of the holders of any class or series of
Parity Securities or Senior Securities, upon any liquidation,
dissolution or winding up of the Company, after payment shall have been
made in full to the holders of Series G Units, as provided in this
Section 5, any class or series of Junior Securities shall, subject to
the respective terms and provisions (if any) applicable thereto, be
entitled to receive any and all assets remaining to be paid or
distributed, and the holders of Series G Units shall not be entitled to
share therein.
(c) At least 30 days prior to written notice of the commencement
of any proceeding for or that may result in any liquidation, dissolution
or winding up of the Company shall be given to holders of Series G
Units, but neither the giving of such notice nor anything in this
Section 5 or any other provision hereof shall relieve the Company of its
obligation to obtain consent from holders of Units as provided in
Section 9.
Section 6. Optional Redemption. (a) The Company may redeem for
cash at the latter of the retirement of the senior securities or any
time after October 1, 2004, from any source of funds legally available
therefor, in whole or in part, in the manner provided below any and all
of the outstanding Series G Units at a redemption price per Unit (the
"Redemption Price") equal to the Stated Value per Unit redeemed plus an
amount in cash equal to the aggregate dollar amount of a prorated
distribution from the most recent Distribution Payment Date to the
Redemption Date added to the Stated Value. "Redemption Date" means the
date fixed by the Company for redemption.
(b) In connection with any optional redemption of Series G Units,
at least 20 days and not more than 60 days prior to the Redemption Date,
written notice (the "Redemption Notice") shall be sent simultaneously by
certified mail, return receipt requested, and by telecopy to each holder
of record of the Series G Units at the post office address last shown on
the records of the Company for such holder. The Redemption Notice shall
state:
(i) whether all or less than all the outstanding Series G Units
are to be redeemed and the total number of Series G Units being
redeemed;
(ii) the number of Series G Units held by the holder that the
Company intends to redeem;
(iii) the Redemption Date and the Redemption Price;
(iv) that the holder is to surrender to the Company, in the manner
and at the place designated, the certificate or certificates
representing the Series G Units to be redeemed; and
(v) that an Escrow Account as described in the following paragraph
has been established at a bank specified in the Redemption Notice.
Not later than the date on which a Redemption Notice is mailed by
the Company, the Company shall deposit in an escrow account (the "Escrow
Account") for the pro rata benefit of the holders of the Series G Units
to be redeemed the funds necessary for such redemption with a bank or
trust company having capital and surplus of at least $500 million and
approved in writing by the holders of Series G Units representing 51% or
more of the aggregate Stated Value of the then outstanding Series G
Units (the "Escrow Agent"). Any such funds that are unclaimed at the end
of two years after the applicable Redemption Date shall revert to the
general funds of the Company and, upon such reversion, the Escrow Agent
shall, upon demand, pay such funds over to the Company and be relieved
of all responsibility in respect thereof and any holder of Series G
Units entitled to receive any of such funds shall thereafter look only
to the Company for the payment of the Redemption Price. Any interest on
funds included in the Escrow Account shall be for the account of the
Company. The failure to establish the Escrow Account by the date
specified in this paragraph shall cause the Redemption Notice that
required such Escrow Account to have been established to be ineffective,
and the Company shall not have any right to redeem any Series G Units
pursuant to such Redemption Notice.
On or before the Redemption Date each holder of Series G Units
shall surrender to the Company the certificate or certificates
representing such Series G Units to be redeemed, in the manner and at
the place designated in the Redemption Notice, and thereupon the
Redemption Price for such Series G Units shall be payable in cash on the
Redemption Date to the Person whose name appears on such certificate or
certificates as the owner thereof, and each surrendered certificate
shall be canceled and retired. In the event that less than all Series
G Units represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed Series G Units.
In the event of a redemption of only a portion of the then
outstanding Series G Units, the Company shall effect such redemption pro
rata according to the number of Series G Units held by each holder.
Unless the Company defaults in the payment in full of the
Redemption Price, distributions on the Series G Units called for
redemption shall cease to accumulate on the Redemption Date, and the
holders of such Units redeemed shall cease to have any further rights
with respect thereto on the Redemption Date, other than to receive the
Redemption Price without interest.
Section 7. Prohibitions on Issuance. All Series G Units
repurchased, redeemed or otherwise acquired by the Company shall be
retired and canceled and shall not be reissued.
Section 8. Ranking. (a) The following equity securities of the
Company shall rank senior to the Series G Units with respect to the
payments required or permitted to be made to the holders thereof
pursuant to their respective governing instruments and the payments
required to be made to holders of the Series G Units pursuant hereto:
the Series B Units, the Series C Units and the Series D Units.
(b) Without limiting the definition of "Junior Securities"
contained in Section 2, the following equity securities of the Company
shall rank junior to the Series G Units with respect to the payments
required or permitted to be made to the holders thereof pursuant to
their respective governing instruments and the payments required to be
made to holders of the Series G Units pursuant hereto: the Common Units.
Section 9. Voting. (a) So long as any Series G Units remain
outstanding, the Company will not, without the affirmative vote at a
meeting, or by written consent with or without a meeting, of the holders
of Series G Units representing two-thirds or more of the aggregate
Stated Value of the then outstanding Series G Units, amend, alter or
rescind (whether by merger, consolidation or otherwise) any of the
provisions of the Partnership Agreement, the Certificate of Designations
of the Series G Units that prescribe the terms and conditions of the
Series G Units.
(b) So long as any Series G Units remain outstanding, the Company
will not, without the affirmative vote at a meeting, or by written
consent with or without a meeting, of the holders of the Series G Units
representing 51% or more of the aggregate Stated Value of the then
outstanding Series G Units, (i) amend, alter or rescind (whether by
merger, consolidation or otherwise) any of the provisions of the
Partnership Agreement, the Certificate of Designations of the Series G
Units that set forth the restrictions and covenants of the Company that
benefit or protect the rights of holders of the Series G Units;
(ii) commence any voluntary proceeding (under bankruptcy, insolvency or
similar laws or otherwise) for or that may result in the liquidation,
dissolution or winding up of the Company, consent to the entry of an
order for relief in an involuntary proceeding under any federal or state
bankruptcy, insolvency or similar laws or to the appointment of a
receiver, liquidator, assignee, custodian, trustee or other similar
official of the Company or of any substantive part of its properties, or
make an assignment for the benefit of its creditors or admit in writing
its inability to pay its debts generally as they become due; or
(iv) reorganize, reclassify or change any outstanding securities,
consolidate or merge with or into another partnership, corporation or
other entity or sell or transfer the property of the Company as an
entirety or substantially as an entirety.
(c) Except as expressly set forth herein or in the Partnership
Agreement or as required by applicable law, holders of Series G Units
shall not have any right to vote on any question presented to the
holders of voting securities of the Company.
Section 10. Record Holders. The Company and the Transfer Agent
may deem and treat the record holder of any Series G Units as the true
and lawful owner thereof for all purposes.
Section 11. Notices. Except as otherwise expressly provided
herein, all notices required or permitted to be given hereunder shall be
in writing, and all notices hereunder shall be deemed to have been given
upon the earlier of receipt of such notice or three Business Days after
the mailing of such notice if sent by registered or certified mail,
return receipt requested, with postage prepaid, addressed: (a) if to the
Company, to the offices of the Managing General Partner at 1209 N. 4th,
Abilene, Texas 79601 (Attention: Brad Stephens), fax no. (915) 676-8792,
or other agent of the Company designated as permitted hereby; or (b) if
to any holder of the Series G Units, to such holder at the address of
such holder as listed in the record books of the Company (which shall
include the records of the Transfer Agent), or to such other address as
the Company or holder, as the case may be, shall have designated by
notice similarly given. As of the Initial Issuance Date, SGP's address
for notice is:
Pride SGP, Inc.
1209 N. 4th
Abilene, Texas 79601
Attn: Dave Caddell
Tel: (915) 677-5444
Fax: (915) 676-8792.
Section 12. Successors and Transferees. The provisions applicable
to Series G Units shall bind and inure to the benefit of and be
enforceable by the Company, the respective successors to the Company and
by any holder of Series G Units.
IN WITNESS WHEREOF, this Certificate has been executed by the
Managing General Partner, on behalf of the Company, by its Managing
General Partner as of the 1st day of October, 1999.
PRIDE COMPANIES, L.P.
By: Pride Refining, Inc.,
its Managing General Partner
By: s/Dave Caddell
Name: Dave Caddell
Title: Vice President
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