<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A/A
(AMENDMENT NO. 2)
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
LAKEHEAD PIPE LINE PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 39-1715850
(State of incorporation or (I.R.S. Employer Identification No.)
organization)
Lake Superior Place
21 West Superior Street
Duluth, Minnesota 55802-2067
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------------------- ---------------------------------
Class A Common Units New York Stock Exchange
representing Class A common
limited partner interests in the
Registrant
Securities to be registered pursuant to Section 12(g) of the Act:
None
----------------
(Title of class)
<PAGE> 2
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The Registrant has previously registered under Section 12(b) of the
Securities Exchange Act of 1934 (the "Exchange Act") its Preference Units
representing preference limited partner interests in the Partnership
("Preference Units"). The Preference Units were registered on Form 8-A
originally filed under the Exchange Act on November 14, 1991 and amended by
Amendment No. 1 to Form 8-A on Form 8 filed under the Exchange Act on December
9, 1991. The Form 8-A, as amended, was declared effective on December 18,
1991. The Registrant's Amended and Restated Agreement of Limited Partnership
(the "Partnership Agreement") was amended and restated effective April 15, 1997
to rename the Preference Units as Class A Common Units due to the expiration of
the Preference Period under the Partnership Agreement. The Preference Units are
listed on the New York Stock Exchange ("NYSE") and following their renaming as
Class A Common Units continue to be listed on the NYSE.
Item 1 of the Registrant's Form 8-A, as amended, is hereby
amended to reflect the renaming of the Preference Units as Class A Common
Units.
ITEM 2. EXHIBITS
The following exhibits required in accordance with the Instructions as
to Exhibits on Form 8-A are filed herewith:
EXHIBIT NO.
1. Form of Certificate for Class A Common Units of the
Registrant.
2. Amended and Restated Agreement of Limited Partnership of the
Registrant, dated as of April 15, 1997.
-1-
<PAGE> 3
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.
LAKEHEAD PIPE LINE PARTNERS, L.P.
(REGISTRANT)
By: Lakehead Pipe Line Company, Inc.,
as General Partner
By: /s/ PAUL W. NORGREN
----------------------------------
Paul W. Norgren
Secretary
Date: May 2, 1997
-2-
<PAGE> 4
EXHIBIT INDEX
EXHIBIT NO.
1. Form of Certificate for Class A Common Units of the
Registrant.
2. Amended and Restated Agreement of Limited Partnership of the
Registrant, dated as of April 15, 1997.
-3-
<PAGE> 1
EXHIBIT 1
========= ======================
LP000000
NUMBER CLASS A COMMON UNITS
========= ======================
[LOGO] LPL
SEE REVERSE FOR -----------------
CERTAIN DEFINITIONS CUSIP 511557 10 0
-----------------
LAKEHEAD PIPE LINE PARTNERS, L.P.
CERTIFICATE EVIDENCING CLASS B COMMON UNITS REPRESENTING CLASS B
COMMON LIMITED PARTNER INTERESTS
THIS CERTIFIES THAT
IS THE REGISTERED HOLDER OF
CLASS A COMMON UNITS,
representing Class A common limited partner interests in LAKEHEAD PIPE LINE
PARTNERS, L.P., a limited partnership formed under the laws of the State of
Delaware (the "Partnership"), transferable on the books of the Partnership, in
person or by duly authorized attorney, upon surrender of this Certificate
properly endorsed and accompanied by a properly executed application for
transfer of the Class A Common Units represented by this Certificate. This
Certificate and the Class A Common Units represented hereby are issued and
shall in all respects be subject to all of the provisions of the Agreement of
Limited Partnership of the Partnership, as amended or restated from time to
time, to all of which the holder, by acceptance hereof, assents, and to the
additional terms and provisions on the reverse side hereof.
Witness the facsimile signatures of the duly authorized officers of the
General Partner of the Partnership.
Dated: LAKEHEAD PIPE LINE COMPANY, INC.
As General Partner
Countersigned and Registered: By /s/ P.D. DANIEL
CHASEMELLON SHAREHOLDER SERVICES, L.L.C. --------------------------------
New York P.D. Daniel
Transfer Agent and Registrar President
By /s/ PAUL W. NORGREN
By Authorized Signature --------------------------------
Paul W. Norgren
Secretary
FURTHER CONDITIONS AND AGREEMENTS FORMING PART OF THIS CERTIFICATE APPEAR
ON THE REVERSE SIDE.
<PAGE> 2
LAKEHEAD PIPE LINE PARTNERS, L.P.
------------------------------------
KEY TO ABBREVIATIONS
The following abbreviations shall be construed as though the words set forth
below opposite each abbreviation were written in full where such abbreviation
appears:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Guardian
----- ------
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with rights of under Uniform Gifts to Minors
survivorship and not as tenants Act
in common --------------------------
(State)
Additional abbreviations may also be used though not in the above list.
------------------------------------
Lakehead Pipe Line Partners, L.P., a limited partnership formed under the
laws of the State of Delaware (the "Partnership"), will furnish to the holder
and each assignee of this Certificate and the Class A Common Units evidenced
hereby, without charge, on written request to the Partnership at its principal
place of business, Lake Superior Place, 21 West Superior Street, Duluth,
Minnesota 55802-2067, a copy of the Agreement of Limited Partnership of the
Partnership, as amended or restated from time to time (the "Partnership
Agreement").
The holder, by accepting this Certificate, is deemed to have (i) requested
admission as, and agreed to become, a Limited Partner or a Substituted Limited
Partner (as defined in the Partnership Agreement, the terms of which are
incorporated herein by reference), as applicable, and to have agreed to comply
with and be bound by and to have executed the Partnership Agreement, (ii)
represented and warranted that the holder has all right, power and authority
necessary to enter into the Partnership Agreement, (iii) appointed the General
Partner and, if a liquidator shall be appointed, the liquidator of the
Partnership as the holder's attorney to execute, swear to, acknowledge and file
any document, including, without limitation, the Partnership Agreement, any
amendment of the Partnership Agreement and the Certificate of Limited
Partnership of the Partnership, necessary or appropriate for the holder's
admission as a Limited Partner or a Substituted Limited Partner, as applicable,
in the Partnership and as a party to the Partnership Agreement, (iv) given the
powers of attorney provided for in the Partnership Agreement and (v) made the
waivers and given the consents and approvals contained in the Partnership
Agreement.
FOR VALUE RECEIVED, _________________________________ hereby sell(s),
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------
- ---------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
_______________________________ Class A Common Units representing Class A
common limited partner interests evidenced by this Certificate, subject to the
Partnership Agreement, and do hereby irrevocably constitute and appoint
___________________ his attorney, to transfer the said Class A Common Units on
the books of the Partnership with full power of substitution in the premises.
Dated:
------------------------------
NOTICE: The Signature(s) to
this Assignment must
correspond with the name(s) as
written upon the face of this
Certificate in every
particular, without alteration
or enlargement or any change
whatsoever.
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER -------------------------------
FIRM OF THE NATIONAL ASSOCIATION OF SECURITIES (Signature)
DEALERS, INC. OR BY A COMMERCIAL BANK OR
TRUST COMPANY
-------------------------------
SIGNATURE(S) GUARANTEED (Signature)
NO TRANSFER OF THE CLASS A COMMON UNITS EVIDENCED HEREBY WILL BE
REGISTERED ON THE BOOKS OF THE PARTNERSHIP, UNLESS THE CERTIFICATE EVIDENCING
THE CLASS A COMMON UNITS TO BE TRANSFERRED IS SURRENDERED FOR REGISTRATION OR
TRANSFER AND AN APPLICATION FOR TRANSFER OF CLASS A COMMON UNITS HAS BEEN
EXECUTED BY A TRANSFEREE EITHER (a) ON THE FORM SET FORTH BELOW OR (b) ON A
SEPARATE APPLICATION THAT THE PARTNERSHIP WILL FURNISH ON REQUEST WITHOUT
CHARGE. A TRANSFEROR OF THE CLASS A COMMON UNITS SHALL HAVE NO DUTY TO THE
TRANSFEREE WITH RESPECT TO EXECUTION OF THE TRANSFER APPLICATION IN ORDER FOR
SUCH TRANSFEREE TO OBTAIN REGISTRATION OF THE TRANSFER OF THE CLASS A COMMON
UNITS.
APPLICATION FOR TRANSFER OF CLASS A COMMON UNITS
The undersigned ("Assignee") hereby applies for transfer to the name of
the Assignee of the Class A Common Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited Partner and
agrees to comply with and be bound by, and hereby executes, the Partnership
Agreement, as amended or restated to the date hereof, (b) represents and
warrants that the Assignee has all right, power and authority and, if an
individual, the capacity necessary to enter into the Partnership Agreement, (c)
appoints the General Partner and the liquidator if one is appointed his
attorney to execute, swear to, acknowledge and file any document, including,
without limitation, the Partnership Agreement, any amendment to the Partnership
Agreement and the Certificate of Limited Partnership of the Partnership,
necessary or appropriate for the Assignee's admission as a Substituted Limited
Partner in the Partnership and as a party to the Partnership Agreement, (d)
gives the powers of attorney provided for in the Partnership Agreement and (e)
makes the waivers and gives the consents and approvals contained in the
Partnership Agreement. Capitalized terms not defined herein have the meanings
assigned to such terms in the Partnership Agreement.
Dated:
----------------------------- -------------------------------------
(Signature of Assignee)
SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------
- ---------------------------------------
---------------------------------------
- --------------------------------------------------------------------------------
Name and Address of Assignee
- ------------------------------------------------
Purchase Price (including commissions, if any)
Type of Entity (check one): [ ] Individual [ ] Partnership [ ] Corporation [ ]
Trust [ ] Other (specify):
------------------------------------------------------
Note: If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee holder or an agent of any of the foregoing, and is
holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or, in the case of any other nominee holder, a person performing a similar
function. If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee holder or an agent of any of the foregoing, the
above certification as to any Person for whom the Assignee will hold the Class
A Common Units shall be made to the best of the Assignee's knowledge.
------------------------------------
- --------------------------------------------------------------------------------
You have acquired an interest in Lakehead Pipe Line Partners, L.P., Duluth,
Minnesota 55802-2067, whose taxpayer identification number is 39-1715850. The
Internal Revenue Service has issued Lakehead Pipe Line Partners, L.P. the
following tax shelter registration number: 92008000124.
YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL REVENUE SERVICE IF
YOU CLAIM ANY DEDUCTION, LOSS, CREDIT, OR OTHER TAX BENEFIT OR REPORT ANY
INCOME BY REASON OF YOUR INVESTMENT IN LAKEHEAD PIPE LINE PARTNERS, L.P.
You must report the registration number (as well as the name and taxpayer
identification number of Lakehead Pipe Line Partners, L.P.) on Internal Revenue
Service Form 8271. FORM 8271 MUST BE ATTACHED TO THE RETURN ON WHICH YOU CLAIM
THE DEDUCTION, LOSS, CREDIT, OR OTHER TAX BENEFIT OR REPORT ANY INCOME BY
REASON OF YOUR INVESTMENT IN LAKEHEAD PIPE LINE PARTNERS, L.P.
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS INVESTMENT OR
THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED BY THE
INTERNAL REVENUE SERVICE.
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 2
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
LAKEHEAD PIPE LINE PARTNERS, L.P.
DATED AS OF APRIL 15, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I -- ORGANIZATIONAL MATTERS . . . . . . . . . . . . . . . . . . . . . 1
1.1 Formation . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Registered Office; Principal Office . . . . . . . . . . . . . 1
1.4 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Possible Restrictions on Transfer . . . . . . . . . . . . . . 3
ARTICLE II -- DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Additional Limited Partner" . . . . . . . . . . . . . . . . . . . . 4
"Adjusted Capital Account . . . . . . . . . . . . . . . . . . . . . . 4
"Adjusted Property" . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Agreed Allocation" . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Agreed Value" . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"API" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Assignee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Available Cash" . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Book-Tax Disparity" . . . . . . . . . . . . . . . . . . . . . . . . 5
"Business Day" . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Capital Account" . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Capital Contribution" . . . . . . . . . . . . . . . . . . . . . . . 6
"Carrying Value" . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Cash from Interim Capital Transactions" . . . . . . . . . . . . . . 6
"Cash from Operations" . . . . . . . . . . . . . . . . . . . . . . . 6
"Cause" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Certificate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Certificate of Limited Partnership" . . . . . . . . . . . . . . . . 6
"Citizenship Certification" . . . . . . . . . . . . . . . . . . . . . 6
"Class A Common Unit" . . . . . . . . . . . . . . . . . . . . . . . . 7
"Class A Common Unit Deficiency" . . . . . . . . . . . . . . . . . . 7
"Class B Common Unit" . . . . . . . . . . . . . . . . . . . . . . . . 7
"Class B Common Unit Deficiency" . . . . . . . . . . . . . . . . . . 7
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Closing Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Combined Interest" . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Contributed Property" . . . . . . . . . . . . . . . . . . . . . . . 7
"Contributing Partner" . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
"Conveyance Agreement" . . . . . . . . . . . . . . . . . . . . . . . 7
"Cumulative Class A Common Unit Deficiency" . . . . . . . . . . . . . 8
"Cumulative Class B Common Unit Deficiency" . . . . . . . . . . . . . 8
"Current Market Price" . . . . . . . . . . . . . . . . . . . . . . . 8
"Delaware Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Departing Partner" . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Discretionary Allocation" . . . . . . . . . . . . . . . . . . . . . 8
"Distribution Support Agreement" . . . . . . . . . . . . . . . . . . 8
"Economic Risk of Loss" . . . . . . . . . . . . . . . . . . . . . . . 8
"Eligible Citizen" . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Event of Withdrawal" . . . . . . . . . . . . . . . . . . . . . . . . 8
"Exchange Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"First Liquidation Target Amount" . . . . . . . . . . . . . . . . . . 8
"First Target Distribution" . . . . . . . . . . . . . . . . . . . . . 8
"General Partner" . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"General Partner Equity Value" . . . . . . . . . . . . . . . . . . . 9
"Incentive Distribution" . . . . . . . . . . . . . . . . . . . . . . 9
"Indemnitee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Initial Limited Partners" . . . . . . . . . . . . . . . . . . . . . 9
"Initial Offering" . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Initial Unit Price" . . . . . . . . . . . . . . . . . . . . . . . . 9
"Interim Capital Transaction" . . . . . . . . . . . . . . . . . . . . 9
"IPL" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Issue Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Limited Partner" . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Limited Partner Equity Value" . . . . . . . . . . . . . . . . . . . 10
"Liquidator" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
"LPL Contribution Agreement" . . . . . . . . . . . . . . . . . . . . 10
"LPL Partnership" . . . . . . . . . . . . . . . . . . . . . . . . . . 10
"Merger Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . 10
"Minimum Gain Attributable to Partner Nonrecourse Debt" . . . . . . . 10
"Minimum Quarterly Distribution" . . . . . . . . . . . . . . . . . . 10
"National Securities Exchange" . . . . . . . . . . . . . . . . . . . 10
"Net Agreed Value" . . . . . . . . . . . . . . . . . . . . . . . . . 10
"Net Income" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
"Net Loss" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
"Net Termination Gain" . . . . . . . . . . . . . . . . . . . . . . . 11
"Net Termination Loss" . . . . . . . . . . . . . . . . . . . . . . . 11
"New Entity" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"Non-citizen Assignee" . . . . . . . . . . . . . . . . . . . . . . . 11
"Nonrecourse Built-in Gain" . . . . . . . . . . . . . . . . . . . . . 11
"Nonrecourse Deductions" . . . . . . . . . . . . . . . . . . . . . . 11
"Nonrecourse Liability" . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
"Notice of Election to Purchase" . . . . . . . . . . . . . . . . . . 11
"Operating Partnership" . . . . . . . . . . . . . . . . . . . . . . . 11
"Operating Partnership Agreement" . . . . . . . . . . . . . . . . . . 11
"Opinion of Counsel" . . . . . . . . . . . . . . . . . . . . . . . . 11
"Organizational Limited Partner" . . . . . . . . . . . . . . . . . . 11
"Outstanding" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"Partner" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
"Partner Nonrecourse Debt" . . . . . . . . . . . . . . . . . . . . . 12
"Partner Nonrecourse Deductions" . . . . . . . . . . . . . . . . . . 12
"Partnership" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
"Partnership Assets" . . . . . . . . . . . . . . . . . . . . . . . . 12
"Partnership Inception" . . . . . . . . . . . . . . . . . . . . . . . 12
"Partnership Interest" . . . . . . . . . . . . . . . . . . . . . . . 12
"Partnership Minimum Gain" . . . . . . . . . . . . . . . . . . . . . 12
"Partnership Securities" . . . . . . . . . . . . . . . . . . . . . . 12
"Partnership Year" . . . . . . . . . . . . . . . . . . . . . . . . . 12
"Percentage Interest" . . . . . . . . . . . . . . . . . . . . . . . . 12
"Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
"Pipeline System" . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Preference Period" . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Purchase Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Recapture Income" . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Recaptured Credits" . . . . . . . . . . . . . . . . . . . . . . . . 13
"Record Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Record Holder" . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Redeemable Units" . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Registration Statement" . . . . . . . . . . . . . . . . . . . . . . 13
"Required Allocations" . . . . . . . . . . . . . . . . . . . . . . . 13
"Residual Gain" or "Residual Loss" . . . . . . . . . . . . . . . . . 14
"Second Target Distribution" . . . . . . . . . . . . . . . . . . . . 14
"Securities Act" . . . . . . . . . . . . . . . . . . . . . . . . . . 14
"Special Limited Partner" . . . . . . . . . . . . . . . . . . . . . . 14
"Special Limited Partner Book Capital" . . . . . . . . . . . . . . . 14
"Substituted Limited Partner" . . . . . . . . . . . . . . . . . . . . 14
"Surviving Business Entity" . . . . . . . . . . . . . . . . . . . . . 14
"Termination Capital Transaction" . . . . . . . . . . . . . . . . . . 14
"Trading Day" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
"Transfer Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . 14
"Transfer Application" . . . . . . . . . . . . . . . . . . . . . . . 14
"Treasury Regulation" . . . . . . . . . . . . . . . . . . . . . . . . 14
"Underwriter" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
"Underwriting Agreement" . . . . . . . . . . . . . . . . . . . . . . 14
"Unit" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C>
"Unitholder" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
"Unrealized Gain" . . . . . . . . . . . . . . . . . . . . . . . . . . 15
"Unrealized Loss" . . . . . . . . . . . . . . . . . . . . . . . . . . 15
"Unrecovered Capital" . . . . . . . . . . . . . . . . . . . . . . . . 16
"Unrecovered Initial Unit Price" . . . . . . . . . . . . . . . . . . 16
"Withdrawal Opinion of Counsel" . . . . . . . . . . . . . . . . . . . 16
ARTICLE III -- PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.1 Purpose and Business . . . . . . . . . . . . . . . . . . . . . 16
3.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV -- CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . 17
4.1 Initial Contributions . . . . . . . . . . . . . . . . . . . . 17
4.2 Return of Initial Contributions . . . . . . . . . . . . . . . 17
4.3 Contribution by the General Partner and the Initial Limited
Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.4 Issuances of Additional Units, APIs and Other Securities . . . 18
4.5 Limited Preemptive Rights . . . . . . . . . . . . . . . . . . 19
4.6 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . 20
4.7 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.8 No Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . 22
4.9 Loans from Partners . . . . . . . . . . . . . . . . . . . . . 22
4.10 No Fractional Units . . . . . . . . . . . . . . . . . . . . . 22
4.11 Splits and Combinations. . . . . . . . . . . . . . . . . . . . 22
ARTICLE V -- ALLOCATIONS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . 23
5.1 Allocations for Capital Account Purposes . . . . . . . . . . . 23
(a) Net Income . . . . . . . . . . . . . . . . . . . . . . 23
(b) Net Losses . . . . . . . . . . . . . . . . . . . . . . 24
(c) Net Termination Gains and Losses . . . . . . . . . . . 25
(d) Special Allocations . . . . . . . . . . . . . . . . . . 27
(i) Priority Allocations . . . . . . . . . . . . . . 27
(ii) Nonrecourse Liabilities . . . . . . . . . . . . 28
(iii) Discretionary Allocation . . . . . . . . . . . . 28
(e) Required Allocations . . . . . . . . . . . . . . . . . 29
(i) Partnership Minimum Gain Chargeback . . . . . . 29
(ii) Chargeback of Minimum Gain Attributable to
Partner Nonrecourse Debt . . . . . . . . . . . . 29
(iii) Qualified Income Offset . . . . . . . . . . . . 29
(iv) Gross Income Allocations . . . . . . . . . . . . 30
(v) Nonrecourse Deductions . . . . . . . . . . . . . 30
(vi) Partner Nonrecourse Deductions . . . . . . . . . 30
5.2 Allocations for Tax Purposes . . . . . . . . . . . . . . . . . 31
5.3 Requirement and Characterization of Distributions . . . . . . 34
</TABLE>
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5.4 Distributions During Preference Period . . . . . . . . . . . . 35
5.5 Distributions After Preference Period . . . . . . . . . . . . 36
5.6 Change of Class A Common Units . . . . . . . . . . . . . . . . 37
5.7 Distributions of Cash from Interim Capital Transactions . . . 37
5.8 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 38
(a) "Available Cash" . . . . . . . . . . . . . . . . . . . 38
(b) "Cash from Interim Capital Transactions" . . . . . . . 38
(c) "Cash from Operations" . . . . . . . . . . . . . . . . 38
(d) "Class A Common Unit Deficiency" . . . . . . . . . . . 39
(e) "Class B Common Unit Deficiency" . . . . . . . . . . . 39
(f) "Cumulative Class A Common Unit Deficiency" . . . . . . 39
(g) "Cumulative Class B Common Unit Deficiency" . . . . . . 40
(h) "First Target Distribution" . . . . . . . . . . . . . . 40
(i) "Interim Capital Transactions" . . . . . . . . . . . . 40
(j) "Minimum Quarterly Distribution" . . . . . . . . . . . 40
(k) "Net Income" . . . . . . . . . . . . . . . . . . . . . 40
(l) "Net Loss" . . . . . . . . . . . . . . . . . . . . . . 41
(m) "Net Termination Gain" . . . . . . . . . . . . . . . . 41
(n) "Net Termination Loss" . . . . . . . . . . . . . . . . 41
(o) "Second Target Distribution" . . . . . . . . . . . . . 41
(p) "Termination Capital Transaction" . . . . . . . . . . . 41
5.9 Adjustment of Minimum Quarterly Distribution and Target
Distribution Levels . . . . . . . . . . . . . . . . . . . 41
ARTICLE VI -- MANAGEMENT AND OPERATION OF BUSINESS . . . . . . . . . . . . . 42
6.1 Management . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.2 Certificate of Limited Partnership . . . . . . . . . . . . . . 44
6.3 Restrictions on General Partner's Authority . . . . . . . . . 44
6.4 Reimbursement of the General Partner . . . . . . . . . . . . . 45
6.5 Outside Activities . . . . . . . . . . . . . . . . . . . . . . 46
6.6 Loans to and from the General Partner; Contracts
with Affiliates . . . . . . . . . . . . . . . . . . . . . . . 46
6.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 47
6.8 Liability of Indemnitees . . . . . . . . . . . . . . . . . . . 49
6.9 Resolution of Conflicts of Interest . . . . . . . . . . . . . 49
6.10 Other Matters Concerning the General Partner . . . . . . . . . 51
6.11 Title to Partnership Assets . . . . . . . . . . . . . . . . . 51
6.12 Purchase or Sale of Class A Common Units . . . . . . . . . . . 52
6.13 Reliance by Third Parties . . . . . . . . . . . . . . . . . . 52
6.14 Registration Rights of the General Partner and its
Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VII -- RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS . . . . . . . . . . 55
7.1 Limitation of Liability . . . . . . . . . . . . . . . . . . . 55
7.2 Management of Business . . . . . . . . . . . . . . . . . . . . 55
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7.3 Outside Activities . . . . . . . . . . . . . . . . . . . . . . 55
7.4 Return of Capital . . . . . . . . . . . . . . . . . . . . . . 55
7.5 Rights of Limited Partners Relating to the Partnership . . . . 55
ARTICLE VIII -- BOOKS, RECORDS, ACCOUNTING AND REPORTS . . . . . . . . . . . 56
8.1 Records and Accounting . . . . . . . . . . . . . . . . . . . . 56
8.2 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.3 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE IX -- TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.1 Preparation of Tax Returns . . . . . . . . . . . . . . . . . . 57
9.2 Tax Elections . . . . . . . . . . . . . . . . . . . . . . . . 57
9.3 Tax Controversies . . . . . . . . . . . . . . . . . . . . . . 58
9.4 Organizational Expenses . . . . . . . . . . . . . . . . . . . 58
9.5 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . 58
9.6 Entity-Level Taxation . . . . . . . . . . . . . . . . . . . . 58
9.7 Entity-Level Deficiency Collections . . . . . . . . . . . . . 58
9.8 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE X -- UNIT CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . 59
10.1 Unit Certificates . . . . . . . . . . . . . . . . . . . . . . 59
10.2 Registration, Registration of Transfer and Exchange . . . . . 59
10.3 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . 60
10.4 Record Holder . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE XI -- TRANSFER OF INTERESTS . . . . . . . . . . . . . . . . . . . . . 61
11.1 Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.2 Transfer of General Partner's Partnership Interest . . . . . . 61
11.3 Transfer of Units . . . . . . . . . . . . . . . . . . . . . . 62
11.4 Restrictions on Transfers . . . . . . . . . . . . . . . . . . 62
11.5 Citizenship Certificates; Non-citizen Assignees . . . . . . . 63
11.6 Redemption of Interests . . . . . . . . . . . . . . . . . . . 64
ARTICLE XII -- ADMISSION OF PARTNERS . . . . . . . . . . . . . . . . . . . . 65
12.1 Admission of Initial Limited Partners . . . . . . . . . . . . 65
12.2 Admission of Substituted Limited Partners . . . . . . . . . . 65
12.3 Admission of Successor General Partner . . . . . . . . . . . . 66
12.4 Admission of Additional Limited Partners . . . . . . . . . . . 66
12.5 Amendment of Agreement and Certificate of Limited
Partnership . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE XIII -- WITHDRAWAL OR REMOVAL OF PARTNERS . . . . . . . . . . . . . . 67
13.1 Withdrawal of the General Partner . . . . . . . . . . . . . . 67
13.2 Removal of the General Partner . . . . . . . . . . . . . . . . 69
</TABLE>
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13.3 Interest of Departing Partner and Successor General Partner . 69
13.4 Redemption of APIs . . . . . . . . . . . . . . . . . . . . . . 71
13.5 Withdrawal of Limited Partners . . . . . . . . . . . . . . . . 71
ARTICLE XIV -- DISSOLUTION AND LIQUIDATION . . . . . . . . . . . . . . . . . 71
14.1 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . 71
14.2 Continuation of the Business of the Partnership
after Dissolution . . . . . . . . . . . . . . . . . . . . . . 72
14.3 Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . 72
14.4 Distributions in Kind . . . . . . . . . . . . . . . . . . . . 73
14.5 Cancellation of Certificate of Limited Partnership . . . . . . 74
14.6 Reasonable Time for Winding Up . . . . . . . . . . . . . . . . 74
14.7 Return of Capital . . . . . . . . . . . . . . . . . . . . . . 74
14.8 Capital Account Restoration . . . . . . . . . . . . . . . . . 74
14.9 Waiver of Partition . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE XV -- AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE . . . 75
15.1 Amendment to be Adopted Solely by General Partner . . . . . . 75
15.2 Amendment Procedures . . . . . . . . . . . . . . . . . . . . . 76
15.3 Amendment Requirements . . . . . . . . . . . . . . . . . . . . 76
15.4 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
15.5 Notice of a Meeting . . . . . . . . . . . . . . . . . . . . . 78
15.6 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . 78
15.7 Adjournment . . . . . . . . . . . . . . . . . . . . . . . . . 78
15.8 Waiver of Notice; Approval of Meeting; Approval of Minutes . . 78
15.9 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
15.10 Conduct of Meeting . . . . . . . . . . . . . . . . . . . . . . 79
15.11 Action Without a Meeting . . . . . . . . . . . . . . . . . . . 79
15.12 Voting and Other Rights . . . . . . . . . . . . . . . . . . . 80
ARTICLE XVI -- MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
16.1 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 80
16.2 Procedure for Merger or Consolidation . . . . . . . . . . . . 80
16.3 Approval by Limited Partners of Merger or Consolidation . . . 82
16.4 Certificate of Merger . . . . . . . . . . . . . . . . . . . . 82
16.5 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE XVII -- RIGHT TO ACQUIRE UNITS . . . . . . . . . . . . . . . . . . . 83
17.1 Right to Acquire Units . . . . . . . . . . . . . . . . . . . . 83
ARTICLE XVIII -- GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . 84
18.1 Addresses and Notices . . . . . . . . . . . . . . . . . . . . 84
18.2 Titles and Captions . . . . . . . . . . . . . . . . . . . . . 85
18.3 Pronouns and Plurals . . . . . . . . . . . . . . . . . . . . . 85
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18.4 Further Action . . . . . . . . . . . . . . . . . . . . . . . . 85
18.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . 85
18.6 Integration . . . . . . . . . . . . . . . . . . . . . . . . . 86
18.7 Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . 86
18.8 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
18.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 86
18.10 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . 86
18.11 Invalidity of Provisions . . . . . . . . . . . . . . . . . . . 86
</TABLE>
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<PAGE> 10
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
LAKEHEAD PIPE LINE PARTNERS, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF LAKEHEAD
PIPE LINE PARTNERS, L.P., dated as of April 15, 1997, is entered into by and
among Lakehead Pipe Line Company, Inc., a Delaware corporation, as the General
Partner, and the Limited Partners, together with any other Persons who become
Partners in the Partnership as provided herein. In consideration of the
covenants, conditions and agreements contained herein, the parties hereto
hereby agree as follows:
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 Formation. The General Partner and the Organizational Limited
Partner formed this Partnership as a limited partnership pursuant to the
provisions of the Delaware Act. The General Partner hereby restates the
Amended and Restated Agreement of Limited Partnership of Lakehead Pipe Line
Partners, L.P. in its entirety to incorporate the amendments thereto adopted by
the General Partner on April 15, 1997 pursuant to Section 15.1(d)(i) to reflect
the renaming of the Preference Units as Class A Common Units and the Common
Units as Class B Common Units following the expiration of the Preference
Period. Except as expressly provided to the contrary in this Agreement, the
rights and obligations of the Partners and the administration, dissolution and
termination of the Partnership shall be governed by the Delaware Act. The
Partnership Interest of each Partner shall be personal property for all
purposes.
1.2 Name. The name of the Partnership shall be "Lakehead Pipe Line
Partners, L.P." The Partnership's business may be conducted under any other
name or names deemed necessary or appropriate by the General Partner,
including, without limitation, the name of the General Partner or any Affiliate
thereof. The words "Limited Partnership," "L.P.," "Ltd." or similar words or
letters shall be included in the Partnership's name where necessary for the
purposes of complying with the laws of any jurisdiction that so requires. The
General Partner in its sole discretion may change the name of the Partnership
at any time and from time to time and shall notify the Limited Partners of such
change in the next regular communication to Limited Partners.
1.3 Registered Office; Principal Office. Unless and until changed by
the General Partner, the registered office of the Partnership in the State of
Delaware shall be located at The Corporation Trust Center, 1209 Orange Street,
New Castle County, 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 and the address of the General Partner shall be Lake
Superior Place, 21 West Superior Street, Duluth, Minnesota 55802-2067, or such
other place as the General Partner may from time to time designate by notice to
the Limited Partners. The Partnership may maintain offices at such other place
or places within or outside the State of Delaware as the General Partner deems
advisable.
<PAGE> 11
1.4 Power of Attorney. (a) Each Limited Partner and each Assignee
hereby constitutes and appoints each of the General Partner and, if a
Liquidator shall have been selected pursuant to Section 14.3, the Liquidator
severally (and any successor to either thereof by merger, transfer, assignment,
election or otherwise) and each of their authorized officers and attorneys-in-
fact, with full power of substitution, as his true and lawful agent and
attorney-in-fact, with full power and authority in his name, place and stead,
to:
(i) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (A) all certificates, documents and
other instruments (including, without limitation, this Agreement and the
Certificate of Limited Partnership and all amendments or restatements
thereof) that the General Partner or the Liquidator deems necessary or
appropriate to form, qualify or continue the existence or qualification
of the Partnership as a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Delaware
and in all other jurisdictions in which the Partnership may conduct
business or own property; (B) all certificates, documents and other
instruments that the General Partner or the Liquidator deems necessary
or appropriate to reflect, in accordance with its terms, any amendment,
change, modification or restatement of this Agreement; (C) all
certificates, documents and other instruments (including, without
limitation, conveyances and a certificate of cancellation) that the
General Partner or the Liquidator deems necessary or appropriate to
reflect the dissolution and liquidation of the Partnership pursuant to
the terms of this Agreement; (D) all certificates, documents and other
instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other events described in,
Article XI, XII, XIII or XIV or the Capital Contribution of any Partner;
(E) all certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of any class or
series of Units or other securities issued pursuant to Section 4.4; and
(F) all certificates, documents and other instruments (including,
without limitation, agreements and a certificate of merger) relating to
a merger or consolidation of the Partnership pursuant to Article XVI;
and
(ii) execute, swear to, acknowledge, deliver, file and record
all ballots, consents, approvals, waivers, certificates and other
instruments necessary or appropriate, in the sole discretion of the
General Partner or the Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or other action that is
made or given by the Partners hereunder or is consistent with the terms
of this Agreement or is necessary or appropriate, in the sole discretion
of the General Partner or the Liquidator, to effectuate the terms or
intent of this Agreement; provided, that when required by Section 15.3
or any other provision of this Agreement that establishes a percentage
of the Limited Partners or of the Limited Partners of any class or
series required to take any action, the General Partner or the
Liquidator may exercise the power of attorney made in this Section
1.4(a)(ii) only after the necessary vote, consent or approval of the
Limited Partners or of the Limited Partners of such class or series.
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<PAGE> 12
Nothing contained in this Section 1.4 shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article XV,
or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and not
be affected by the subsequent death, incompetency, disability, incapacity,
dissolution, bankruptcy or termination of any Limited Partner or Assignee and
the transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Interest and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or the Liquidator acting in good faith pursuant to such power
of attorney; and each such Limited Partner or Assignee hereby waives any and
all defenses that may be available to contest, negate or disaffirm the action
of the General Partner or the Liquidator taken in good faith under such power
of attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within 15 days after receipt of the General
Partner's or the Liquidator's request therefor, such further designation,
powers of attorney and other instruments as the General Partner or the
Liquidator deems necessary to effectuate this Agreement and the purposes of the
Partnership.
1.5 Term. The Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware Act and
shall continue in existence until the close of Partnership business on December
31, 2081, or until the earlier termination of the Partnership in accordance
with the provisions of Article XIV.
1.6 Possible Restrictions on Transfer. Notwithstanding anything to
the contrary contained in this Agreement, in the event of (i) the enactment (or
imminent enactment) of any legislation, (ii) the publication of any temporary
or final regulation by the Treasury Department ("Treasury Regulation"), (iii)
any ruling by the Internal Revenue Service or (iv) any judicial decision, that,
in any such case, in the Opinion of Counsel, would result in the taxation of
the Partnership for federal income tax purposes as a corporation or would
otherwise subject the Partnership to being taxed as an entity for federal
income tax purposes, then, either (a) the General Partner may impose such
restrictions on the transfer of Units or Partnership Interests as may be
required, in the Opinion of Counsel, to prevent the Partnership from being
taxed as a corporation or otherwise being taxed as an entity for federal income
tax purposes, including, without limitation, making any amendments to this
Agreement as the General Partner in its sole discretion may determine to be
necessary or appropriate to impose such restrictions, provided, that any such
amendment to this Agreement that would result in the delisting or suspension of
trading of the Units on any National Securities Exchange on which the Units are
then traded must be approved by the holders of at least 66 2/3% of the
Outstanding Units (excluding for this purpose Units held by the General Partner
and its Affiliates) or (b) upon the recommendation of the General Partner and
the approval of the holders of at least 66 2/3% of the Outstanding Units
(excluding for this purpose Units held by the General Partner and its
Affiliates), the Partnership may be converted into and reconstituted as a trust
or any other type of legal entity (the "New Entity") the manner and on other
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<PAGE> 13
terms so recommended and approved. In such event, the business of the
Partnership shall be continued by the New Entity and the Units shall be
converted into equity interests of the New Entity in the manner and on the
terms so recommended and approved. Notwithstanding the foregoing, no such
reconstitution shall take place unless the Partnership shall have received an
Opinion of Counsel to the effect that the liability of the Limited Partners for
the debts and obligations of the New Entity shall not, unless such Limited
Partners take part in the control of the business of the New Entity, exceed
that which otherwise had been applicable to such Limited Partners as limited
partners of the Partnership under the Delaware Act.
ARTICLE II
DEFINITIONS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Additional Limited Partner" means a Person admitted to the Partnership
as a Limited Partner pursuant to Section 12.4 and who is shown as such on the
books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for each
Partner as of the end of each taxable year of the Partnership, (a) increased by
any amounts that such Partner is obligated to restore under the standards set
by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-1T(b)(4)(iv)(f) and
1.704-1T(b)(4)(iv)(h)(5)), and (b) decreased by (i) the amount of all losses
and deductions that, as of the end of such taxable year, are reasonably
expected to be allocated to such Partner in subsequent years under Sections
704(e)(2) and 706(d) of the Code and Treasury Regulation Section
1.751-1(b)(2)(ii), and (ii) the amount of all distributions that, as of the end
of such taxable year, are reasonably expected to be made to such Partner in
subsequent years in accordance with the terms of this Agreement or otherwise to
the extent they exceed offsetting increases to such Partner's Capital Account
that are reasonably expected to occur during (or prior to) the year in which
such distributions are reasonably expected to be made (other than increases as
a result of a minimum gain chargeback pursuant to Section 5.1(e)(i) or
5.1(e)(ii)). The foregoing definition of Adjusted Capital Account is intended
to comply with the provisions of Treasury Regulation Section
1.704-(b)(2)(ii)(d) and shall be interpreted consistently therewith. The
Adjusted Capital Account in respect of a Class A Common Unit, a Class B Common
Unit, an API or any other specified interest in the Partnership shall be the
amount which such Adjusted Capital Account would be if such Class A Common
Unit, Class B Common Unit, API or other interest in the Partnership was the
only interest in the Partnership held by a Limited Partner.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Section 4.6(d)(i) or 4.6(d)(ii). Once an Adjusted
Property is deemed distributed by, and recontributed to, the Partnership for
federal income tax purposes upon a termination thereof pursuant
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<PAGE> 14
to Section 708 of the Code, such property shall thereafter constitute a
Contributed Property until the Carrying Value of such property is further
adjusted pursuant to Section 4.6(d)(i) or 4.6(d)(ii) hereof.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with, the Person in question. As used herein, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Agreed Allocation" means any allocation made pursuant to Section
5.1(a), (b), (c), (d) or (f).
"Agreed Value" of any Contributed Property means the fair market value
of such property or other consideration at the time of contribution as
determined by the General Partner using such reasonable method of valuation as
it may adopt. The General Partner shall, in its sole discretion, use such
method as it deems reasonable and appropriate to allocate the aggregate Agreed
Value of Contributed Properties contributed to the Partnership in a single or
integrated transaction among such properties on a basis proportional to their
fair market value.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership of Lakehead Pipe Line Partners, L.P., as it may be further amended,
supplemented or restated from time to time.
"API" means a Partnership Interest issued (at a rate of contribution of
$100 per API) pursuant to Section 4.4 and in accordance with the Distribution
Support Agreement, which Partnership Interest shall confer upon the holder
thereof only the rights and obligations specifically provided in this Agreement
with respect to APIs (and no other rights otherwise available to holders of a
Partnership Interest).
"Assignee" means a Non-citizen Assignee or a Person to whom one or more
Units have been transferred in a manner permitted under this Agreement and who
has executed and delivered a Transfer Application as required by this
Agreement, but who has not become a Substituted Limited Partner.
"Available Cash" has the meaning assigned to such term in Section 5.8
(a).
"Book-Tax Disparity" means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all
of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained
pursuant to Section 4.6 and the hypothetical
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<PAGE> 15
balance of such Partner's Capital Account computed as if it had been maintained
strictly in accordance with federal income tax accounting principles.
"Business Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States or
Canada or the State of New York or the Province of Alberta shall not be
regarded as a Business Day.
"Capital Account" means the capital account maintained for any Partner
pursuant to Section 4.6.
"Capital Contribution" means any cash, cash equivalents or the Net
Agreed Value of Contributed Property that a Partner contributes to the
Partnership pursuant to Section 4.1, 4.3, 4.4, 4.6(c) or 13.3(c).
"Carrying Value" means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' Capital
Accounts, and (b) with respect to any other Partnership property, the adjusted
basis of such property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted from time
to time in accordance with Sections 4.6(d)(i) and 4.6(d)(ii) and to reflect
changes, additions or other adjustments to the Carrying Value for dispositions
and acquisitions of Partnership properties, as deemed appropriate by the
General Partner.
"Cash from Interim Capital Transactions" has the meaning assigned to
such term in Section 5.8(b).
"Cash from Operations" has the meaning assigned to such term in Section
5.8(c).
"Cause" means a court of competent jurisdiction has entered a final,
non-appealable judgment finding the General Partner liable for actual fraud,
gross negligence or willful or wanton misconduct in its capacity as general
partner of the Partnership.
"Certificate" means a certificate issued by the Partnership evidencing
ownership of one or more Partnership Interests.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership filed with the Secretary of State of the State of Delaware as
referenced in Section 6.2, as such Certificate may be amended or restated from
time to time.
"Citizenship Certification" means a properly completed certificate in
such form as may be specified by the General Partner by which an Assignee or a
Limited Partner certifies that he (and if he is a nominee holding for the
account of another Person, that to the best of his knowledge such other Person)
is an Eligible Citizen.
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"Class A Common Unit" means a Unit representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees and having the
rights and obligations specified with respect to Class A Common Units in this
Agreement.
"Class A Common Unit Deficiency" shall have the meaning assigned to such
term in Section 5.8(d).
"Class B Common Unit" means a Unit representing a fractional part of the
Partnership Interests of the Limited Partners and Assignees and having the
rights and obligations specified with respect to Class B Common Units in this
Agreement.
"Class B Common Unit Deficiency" shall have the meaning assigned to such
term in Section 5.8(e).
"Closing Date" means the date on which the "First Closing Date" occurs,
as such term is defined in the Underwriting Agreement.
"Closing Price" has the meaning assigned to such term in Section
17.1(a).
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, as interpreted by the applicable regulations thereunder.
Any reference herein to a specific section or sections of the Code shall be
deemed to include a reference to any corresponding provision of future law.
"Combined Interest" has the meaning assigned to such term in Section
13.3(a).
"Company" means Lakehead Pipe Line Company, Inc., a Delaware
corporation.
"Contributed Property" means each property or other asset, in such form
as may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership (or deemed contributed to the Partnership on termination and
reconstitution thereof pursuant to Section 708 of the Code or otherwise). Once
the Carrying Value of a Contributed Property is adjusted pursuant to Section
4.6(d), such property shall no longer constitute a Contributed Property for
purposes of Section 5.1, but shall be deemed an Adjusted Property for such
purposes.
"Contributing Partner" means each Partner contributing (or deemed to
have contributed on termination and reconstitution of the Partnership pursuant
to Section 708 of the Code or otherwise) a Contributed Property.
"Conveyance Agreement" means the Contribution, Conveyance and Assumption
Agreement dated as of December 27, 1991, among the Company, the Partnership and
the Operating Partnership.
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"Cumulative Class A Common Unit Deficiency" shall have the meaning
assigned to such term in Section 5.8(f).
"Cumulative Class B Common Unit Deficiency" shall have the meaning
assigned to such term in Section 5.8(g).
"Current Market Price" has the meaning assigned to such term in Section
17.1(a).
"Delaware Act" means the Delaware Revised Uniform Limited Partnership
Act, 6 Del. C. Section 17-101, et. seq., as amended, supplemented or restated
from time to time, and any successor to such statute.
"Departing Partner" means a former General Partner, from and after the
effective date of any withdrawal or removal of such former General Partner
pursuant to Section 13.1 or Section 13.2.
"Discretionary Allocation" shall mean any allocation of an item of
income, gain, deduction, or loss pursuant to the provisions of Section
5.1(d)(iii).
"Distribution Support Agreement" means the Distribution Support
Agreement dated as of December 27, 1991, between IPL, the Company and the
Partnership, which, inter alia, (a) specifies certain business opportunities
that the Company or its Affiliates are prohibited from engaging in and (b) sets
forth the agreement of IPL, the Company and the Partnership relating to the
purchase of APIs.
"Economic Risk of Loss" has the meaning set forth in Treasury Regulation
Section 1.704-1T(b)(4)(iv)(k)(1).
"Eligible Citizen" means a Person qualified to own interests in real
property in jurisdictions in which the Partnership or the Operating 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 or
the Operating Partnership to a substantial risk of cancellation or forfeiture
of any of its properties or any interest therein.
"Event of Withdrawal" has the meaning assigned to such term in Section
13.1(a).
"Exchange Act" means the Securities Exchange Act of 1934 as amended,
supplemented or restated from time to time, and any successor to such statute.
"First Liquidation Target Amount" has the meaning assigned to such term
in Section 5.1(c)(i)(H).
"First Target Distribution" has the meaning assigned to such term in
Section 5.8(h).
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<PAGE> 18
"General Partner" means the Company, and its successors as general
partner of the Partnership.
"General Partner Equity Value" means, as of any date of determination,
the fair market value of the General Partner's Partnership Interest as a
general partner as determined by the General Partner using whatever reasonable
method of valuation it may adopt.
"Incentive Distribution" means any amount of cash distributed to the
General Partner, in its capacity as general partner of the Partnership,
pursuant to paragraph (e), (f) or (g) of Section 5.4 and paragraph (d), (e) or
(f) of Section 5.5 which exceeds an amount equal to 1.0% of the aggregate
amount of cash then being distributed pursuant to such provisions.
"Indemnitee" means the General Partner, any Departing Partner, any
Person who is or was an Affiliate of the General Partner or any Departing
Partner, any Person who is or was an officer, director, employee, partner,
agent or trustee of the General Partner or any Departing Partner or any such
Affiliate, or any Person who is or was serving at the request of the General
Partner or any Departing Partner or any such Affiliate as a director, officer,
employee, partner, agent or trustee of another Person.
"Initial Limited Partners" means the Organizational Limited Partner, and
the Underwriters, unless the context shall otherwise require.
"Initial Offering" means the initial offering of Class A Common Units to
the public, as described in the Registration Statement.
"Initial Unit Price" means the initial price per Class A Common Unit at
which the Underwriters will offer the Class A Common Units to the public for
sale as set forth on the cover page of the prospectus first issued at or after
the time the Registration Statement filed in connection with the sale of Class
A Common Units contemplated by the Underwriting Agreement first became
effective.
"Interim Capital Transaction" has the meaning assigned to such term in
Section 5.8(i).
"IPL" means Interprovincial Pipe Line Inc., a Canadian corporation.
"Issue Price" means the price at which a Unit is purchased from the
Partnership, less any sales commission or underwriting discount charged to the
Partnership.
"Limited Partner" means each Initial Limited Partner, each Substituted
Limited Partner, each Additional Limited Partner and any Departing Partner upon
the change of its status from General Partner to Limited Partner pursuant to
Section 13.3 and, solely for purposes of Articles IV, V and VI and Sections
14.3 and 14.4, shall include an Assignee and, solely for purposes of Articles
VI and VII, Sections 5.2(b), 14.7 and 14.8, shall include each Special Limited
Partner.
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"Limited Partner Equity Value" means, as of any date of determination,
the amount equal to the sum of (a) the product obtained by multiplying (i) the
total number of Class A Common Units Outstanding (immediately prior to an
issuance of Units or distribution of cash or Partnership property), by (ii)(A)
in the case of a valuation required by Section 4.6(d)(i) (other than valuations
caused by sales of a de minimis quantity of Units), the Issue Price or (B) in
the case of a valuation required by Section 4.6(d)(ii) (or a valuation required
by Section 4.6(d)(i) caused by sales of a de minimis quantity of Units), the
Closing Price and (b) the fair market value of the Class B Common Units
Outstanding (immediately prior to an issuance of Units or distribution of cash
or Partnership property) as determined by the General Partner using whatever
reasonable method of valuation it may adopt.
"Liquidator" means the General Partner or other Person approved pursuant
to Section 14.3 who performs the functions described therein.
"LPL Contribution Agreement" means the LPL Contribution and Assumption
Agreement dated as of December 27, 1991 among the Company, the Partnership and
LPL Partnership.
"LPL Partnership" means Lakehead Services, Limited Partnership, a
Delaware limited partnership in which the Partnership holds a 1% general
partner interest and the Company holds a 99% limited partner interest.
"Merger Agreement" has the meaning assigned to such term in Section
16.1.
"Minimum Gain Attributable to Partner Nonrecourse Debt" means that
amount determined in accordance with the principles of Treasury Regulation
Section 1.704-1T(b)(iv)(4)(h)(6).
"Minimum Quarterly Distribution" has the meaning assigned to such term
in Section 5.8(j).
"National Securities Exchange" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Exchange Act.
"Net Agreed Value" means, (a) in the case of any Contributed Property,
the Agreed Value of such property reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property is subject
when contributed, and (b) in the case of any property distributed to a Partner
or Assignee by the Partnership, the Partnership's Carrying Value of such
property at the time such property is distributed, reduced by any indebtedness
either assumed by such Partner or Assignee upon such distribution or to which
such property is subject at the time of distribution as determined under
Section 752 of the Code.
"Net Income" has the meaning assigned to such term in Section 5.8(k).
"Net Loss" has the meaning assigned to such term in Section 5.8(l).
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"Net Termination Gain" has the meaning assigned to such term in Section
5.8(m).
"Net Termination Loss" has the meaning assigned to such term in Section
5.8(n).
"New Entity" has the meaning assigned to such term in Section 1.6.
"Non-citizen Assignee" means a Person who the General Partner has
determined in its sole discretion does not constitute an Eligible Citizen and
as to whose Partnership Interest the General Partner has become the Substituted
Limited Partner, pursuant to Section 11.5.
"Nonrecourse Built-in Gain" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 5.2(b)(i)(A),
5.2(b)(ii)(A) or 5.2(b)(iii) if such properties were disposed of in a taxable
transaction in full satisfaction of such liabilities and for no other
consideration.
"Nonrecourse Deductions" means any and all items of loss, deduction or
expenditure (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Treasury Regulation Section 1.704-1T(b)(4)(iv)(b), are
attributable to a Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury Regulation
Section 1.704-1T(b)(4)(iv)(k)(3).
"Notice of Election to Purchase" has the meaning assigned to such term
in Section 17.1(b).
"Operating Partnership" means Lakehead Pipe Line Company, Limited
Partnership, a Delaware limited partnership established pursuant to the
Operating Partnership Agreement, and any successor thereto.
"Operating Partnership Agreement" means the Agreement of Limited
Partnership of Lakehead Pipe Line Company, Limited Partnership, as it may be
amended, supplemented or restated from time to time.
"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to the Partnership or the General Partner) acceptable to the
General Partner.
"Organizational Limited Partner" means LPL Investments, Inc., a Delaware
corporation, in its capacity as the organizational limited partner of the
Partnership pursuant to this Agreement.
"Outstanding" means, with respect to the Units or other Partnership
Securities, as the case may be, all Units or other Partnership Securities, as
the case may be, that are issued by the Partnership and reflected as
outstanding on the Partnership's books and records as of the date of
determination.
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"Partner" means a General Partner, a Limited Partner or a Special
Limited Partner and, Assignees thereof, if applicable.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-1T(b)(4)(iv)(k)(4).
"Partner Nonrecourse Deductions" means any and all items of loss,
deduction or expenditure (including any expenditure described in Section
705(a)(2)(B) of the Code) that, in accordance with the principles of Treasury
Regulation Section 1.704-1T(b)(4)(iv)(h)(3), are attributable to a Partner
Nonrecourse Debt.
"Partnership" means Lakehead Pipe Line Partners, L.P., a Delaware
limited partnership established pursuant to this Agreement, and any successor
thereto.
"Partnership Assets" means, initially, all the assets and rights (other
than cash and certain accounts receivable) of the Company transferred to the
Operating Partnership as set forth in the Conveyance Agreement and, thereafter,
means all assets of the Partnership whether tangible or intangible and whether
real, personal or mixed.
"Partnership Inception" means the Closing Date.
"Partnership Interest" means the interest of a Partner in the
Partnership, which, in the case of a Limited Partner, a Special Limited Partner
or an Assignee, shall be expressed in terms of Units, APIs or other Partnership
Securities or a combination thereof, as the case may be.
"Partnership Minimum Gain" means the amount determined pursuant to the
provisions of Treasury Regulation Sections 1.704-1T(b)(4)(iv)(a) and 1.704-
1T(b)(4)(iv)(c).
"Partnership Securities" has the meaning assigned to such term in
Section 4.4(a).
"Partnership Year" means the fiscal year of the Partnership, which shall
be the calendar year.
"Percentage Interest" means, as of the date of such determination, (a)
as to the General Partner, 1% and (b) as to any Limited Partner or Assignee
holding Units, the product of (i) 99% multiplied by (ii) the quotient of (x)
the number of Units held by such Limited Partner or Assignee divided by (y) the
total number of all Units then Outstanding; provided, however, that following
any issuance of additional Units or other equity securities by the Partnership
in accordance with Section 4.4, proper adjustment shall be made to the
Percentage Interest represented by each Unit to reflect such issuance.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
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"Pipeline System" means those common carrier crude oil and natural gas
liquids pipeline assets and related facilities, all as more fully described in
the Conveyance Agreement, that prior to or on the Closing Date will be
contributed to the Operating Partnership, as such assets and facilities may be
maintained or improved from time to time.
"Preference Period" means the period commencing upon the Closing Date
and ending on December 31, 1996.
"Purchase Date" means the date determined by the General Partner, an
Affiliate of the General Partner or the Partnership, as the case may be, as the
date for purchase of all Outstanding Units (other than Units owned by the
General Partner and its Affiliates) pursuant to Article XVII.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 734 or 743 of
the Code) upon the disposition of any property or asset of the Partnership,
which gain is characterized as ordinary income because it represents the
recapture of deductions previously taken with respect to such property or
asset.
"Recaptured Credits" means credits previously taken against federal
income tax liability which are required to be recaptured upon the disposition
of any property by the Partnership prior to the end of such property's useful
life used in determining the amount of the credit relating thereto.
"Record Date" means the date established by the General Partner for
determining (a) the identity of Limited Partners (or Assignees if applicable)
entitled to notice of, or to vote at, any meeting of Limited Partners or
entitled to vote by ballot or give approval of Partnership action in writing
without a meeting or entitled to exercise rights in respect of any lawful
action of Limited Partners, or (b) the identity of Record Holders entitled to
receive any report or distribution.
"Record Holder" means the Person in whose name a Unit is registered on
the books of the Transfer Agent as of the opening of business on a particular
Business Day.
"Redeemable Units" means any Units for which a redemption notice has
been given, and has not been withdrawn, under Section 11.6.
"Registration Statement" means the Registration Statement on Form S-1
(Registration No. 33-43425), as it has been and as it may be amended or
supplemented from time to time, filed by the Partnership with the Securities
and Exchange Commission under the Securities Act to register the offering and
sale of Class A Common Units in the Initial Offering.
"Required Allocations" means any allocation (or limitation imposed on
any allocation) of an item of income, gain, deduction or loss pursuant to (a)
the proviso-clause of Sections 5.1(b)(ii) and 5.1(b)(iii) or (b) Section
5.1(e), such allocations (or limitations thereon) being directly or indirectly
required by the Treasury Regulations promulgated under Section 704(b) of the
Code.
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<PAGE> 23
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 5.2(b)(i)(A) or 5.2(b)(ii)(A), to eliminate Book-Tax
Disparities.
"Second Target Distribution" has the meaning assigned to such term in
Section 5.8(o).
"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time, and any successor to such statute.
"Special Limited Partner" means each holder of an Outstanding API.
"Special Limited Partner Book Capital" means, as of any date of
determination, the amount equal to the sum of the balances of the Capital
Accounts of all Special Limited Partners attributable to APIs, determined
pursuant to Section 4.6.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 12.2 in place of and
with all the rights of a Limited Partner and who is shown as a Limited Partner
on the books and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such term in
Section 16.2(b).
"Termination Capital Transaction" has the meaning assigned to such term
in Section 5.8(p).
"Trading Day" has the meaning assigned to such term in Section 17.1(a).
"Transfer Agent" means such bank, trust company or other Person
(including, without limitation, the General Partner or one of its Affiliates)
as shall be appointed from time to time by the Partnership to act as registrar
and transfer agent for the Units.
"Transfer Application" means an application and agreement for transfer
of Units in the form set forth on the back of a Unit Certificate or in a form
substantially to the same effect in a separate instrument.
"Treasury Regulation" has the meaning assigned to such term in Section
1.6.
"Underwriter" means each Person named as an underwriter in the
Underwriting Agreement who purchases Units pursuant thereto.
"Underwriting Agreement" means the Underwriting Agreement dated December
19, 1991 among the Underwriters, the Partnership, the General Partner and IPL
providing for the purchase of Class A Common Units by such Underwriters.
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"Unit" means a Partnership Interest of a Limited Partner or Assignee in
the Partnership (other than APIs) representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees.
"Unitholder" means a Person who is the holder of a Class A Common Unit
or a Class B Common Unit on the records of the Partnership.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the fair
market value of such property as of such date over (b) the Carrying Value of
such property as of such date (prior to any adjustment to be made pursuant to
Section 4.6(d) as of such date). In determining such Unrealized Gain, the
aggregate cash amount and fair market value of all Partnership Assets
(including cash or cash equivalents) shall be determined by the General Partner
using such reasonable method of valuation as it may adopt; provided, however,
the General Partner, in arriving at such valuation, must take fully into
account the Limited Partner Equity Value, the General Partner Equity Value, and
the Special Limited Partner Book Capital at such time. In determining the fair
market value of the Partnership Assets, the General Partner shall treat the
amount determined pursuant to paragraph (a) of the definition of Limited
Partner Equity Value as the fair market value of the Partnership assets that
would be distributed with respect to the Class A Common Units Outstanding
pursuant to Article XIV upon a hypothetical dissolution and liquidation of the
Partnership as of the relevant date of determination (assuming that all
Partnership indebtedness is paid pursuant to Section 14.3(a) prior to any
distributions to Partners pursuant to Sections 14.3(b) or 14.3(c)). The General
Partner shall allocate such aggregate value among the assets of the Partnership
(in such manner as it determines in its sole discretion to be reasonable) to
arrive at a fair market value for individual properties.
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the Carrying
Value of such property as of such date (prior to any adjustment to be made
pursuant to Section 4.6(d) as of such date) over (b) the fair market value of
such property as of such date. In determining such Unrealized Loss, the
aggregate cash amount and fair market value of all Partnership Assets
(including cash or cash equivalents) shall be determined by the General Partner
using such reasonable method of valuation as it may adopt; provided, however,
the General Partner, in arriving at such valuation, must take fully into
account the Limited Partner Equity Value, the General Partner Equity Value, and
the Special Limited Partner Book Capital at such time. In determining the fair
market value of the Partnership Assets, the General Partner shall treat the
amount determined pursuant to paragraph (a) of the definition of Limited
Partner Equity Value as the fair market value of the Partnership assets that
would be distributed with respect to the Class A Common Units Outstanding
pursuant to Article XIV upon a hypothetical dissolution and liquidation of the
Partnership as of the relevant date of determination (assuming that all
Partnership indebtedness is paid pursuant to Section 14.3(a) prior to any
distributions to Partners pursuant to Sections 14.3(b) or 14.3(c)). The General
Partner shall allocate such aggregate value among the assets of the Partnership
(in such manner as it determines in its sole discretion to be reasonable) to
arrive at a fair market value for individual properties.
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"Unrecovered Capital" means, at any time, (a) with respect to a Unit,
the Unrecovered Initial Unit Price, and (b) with respect to an API, the excess,
if any, of (i) the cash amount of the capital contribution made in exchange for
such API, over (ii) any amounts previously distributed towards the redemption
of such API pursuant to Sections 5.4(d), 5.5(c), 13.4(b), 14.3(b) and 14.4(a).
"Unrecovered Initial Unit Price" means, at any time, with respect to any
Unit, the Initial Unit Price, less the sum of all distributions theretofore
made in respect of such Unit constituting, and which for purposes of
determining the priority of such distribution is treated as constituting, Cash
from Interim Capital Transactions and of any distributions of cash (or the Net
Agreed Value of any distributions in kind) in connection with the dissolution
and liquidation of the Partnership theretofore made in respect of a Unit that
was sold in the initial offering of such Units.
"Withdrawal Opinion of Counsel" has the meaning assigned to such term in
Section 13.1(b).
ARTICLE III
PURPOSE
3.1 Purpose and Business. The purpose and nature of the business to
be conducted by the Partnership shall be (i) to serve as a limited partner in
the Operating Partnership and, in connection therewith, to exercise all of the
rights and powers conferred upon the Partnership as a limited partner in the
Operating Partnership pursuant to the Operating Partnership Agreement or
otherwise, (ii) to serve as a general partner of the LPL Partnership, and in
connection therewith, to exercise all of the rights and powers conferred upon
the Partnership as a general partner in the LPL Partnership pursuant to the
partnership agreement of the LPL Partnership or otherwise, (iii) to engage
directly in, or to enter into any partnership, joint venture or similar
arrangement to engage in, any business activity that may be lawfully conducted
by a limited partnership organized pursuant to the Delaware Act and, in
connection therewith, to exercise all of the rights and powers conferred upon
the Partnership pursuant to the agreements relating to such business activity,
(iv) to do anything necessary or appropriate to the foregoing (including,
without limitation, the making of capital contributions or loans to the
Operating Partnership or in connection with its involvement in the activities
referred to in clause (iii) of this sentence), and (v) to engage in any other
business activity as permitted under Delaware law.
3.2 Powers. The Partnership shall be empowered to do any and all
acts and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described in Section 3.1 and for the protection and benefit of the Partnership.
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ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 Initial Contributions. To form the Partnership under the
Delaware Act, the General Partner made an initial Capital Contribution to the
Partnership in the amount of $10 for an interest in the Partnership and was
admitted as the General Partner of the Partnership, and the Organizational
Limited Partner made a Capital Contribution to the Partnership in the amount of
$990 for an interest in the Partnership and was admitted as a Limited Partner
of the Partnership.
4.2 Return of Initial Contributions. As of the Closing Date, after
giving effect to (i) the transactions contemplated by Section 4.3 and (ii) the
admission to the Partnership of the Initial Limited Partners in accordance with
this Agreement, the interest in the Partnership of the Organizational Limited
Partner was terminated, the $10 Capital Contribution by the General Partner and
the $990 Capital Contribution by the Organizational Limited Partner as initial
Capital Contributions was refunded and the Organizational Limited Partner
withdrew as a Limited Partner of the Partnership. Ninety-nine percent of any
interest or other profit that resulted from the investment or other use of such
initial Capital Contributions was allocated and distributed to the
Organizational Limited Partner, and the balance thereof was allocated and
distributed to the General Partner.
4.3 Contribution by the General Partner and the Initial Limited
Partners. (a) On the Closing Date, the General Partner, as set forth in the
Conveyance Agreement, contributed, transferred, conveyed, assigned and
delivered to the Partnership, as a Capital Contribution, a Partnership Interest
(as defined in the Operating Partnership Agreement) as a limited partner in the
Operating Partnership representing a 98.9899% Percentage Interest (as defined
in the Operating Partnership Agreement) in the Operating Partnership in
exchange for the continuation of its 1.0% general partner interest in the
Partnership, 3,912,750 Class B Common Units and the assumption by the
Partnership of $205 million of the General Partner's short-term indebtedness.
(b) Subject to completion of the Capital Contributions referred to in
Section 4.3(a), on the Closing Date, each Underwriter contributed and delivered
to the Partnership cash in an amount equal to the Issue Price per Unit,
multiplied by the number of Class A Common Units specified in the Underwriting
Agreement to be purchased by such Underwriter at the "First Closing Date" as
such term is used in the Underwriting Agreement. In exchange for such Capital
Contribution, the Partnership issued Class A Common Units to each Underwriter
on whose behalf such Capital Contribution was made in an amount equal to the
quotient obtained by dividing (x) the cash contribution to the Partnership by
or on behalf of such Underwriter by (y) the Issue Price per Unit. Upon receipt
of such Capital Contribution, each Underwriter was admitted to the Partnership
as an Initial Limited Partner in respect of the Class A Common Units so issued
to it.
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(c) The initial cash balance of the Partnership on the Closing Date,
together with any net proceeds from the exercise of the Underwriters' over-
allotment option granted in the Underwriting Agreement, was reserved in a
separate account of the Partnership or the Operating Partnership and used
exclusively to fund capital expenditures and distribution of the Minimum
Quarterly Distribution on the Class A Common Units.
4.4 Issuances of Additional Units, APIs and Other Securities. (a)
Subject to Section 4.4(c), the General Partner is hereby authorized to cause
the Partnership to issue, in addition to the Class A Common Units and Class B
Common Units issued pursuant to Section 4.3, such additional Class A Common
Units or other Units, or classes or series thereof, or options, rights,
warrants or appreciation rights relating thereto, or APIs or any other type of
equity security that the Partnership may lawfully issue, any unsecured or
secured debt obligations of the Partnership or debt obligations of the
Partnership convertible into any class or series of equity securities of the
Partnership (collectively, "Partnership Securities"), for any Partnership
purpose, at any time or from time to time, to the Partners or to other Persons
for such consideration and on such terms and conditions as shall be established
by the General Partner in its sole discretion, all without the approval of any
Limited Partners. The General Partner shall have sole discretion, subject to
the guidelines set forth in this Section 4.4 and the requirements of the
Delaware Act, in determining the consideration and terms and conditions with
respect to any future issuance of Partnership Securities. The additional Class
A Common Units to be issued pursuant to this Section 4.4 may include Class A
Common Units issuable pursuant to the Underwriters' over-allotment option
granted in the Underwriting Agreement.
(b) Notwithstanding any provision of this Agreement to the contrary,
additional Partnership Securities to be issued by the Partnership pursuant to
this Section 4.4 shall be issuable from time to time in one or more classes, or
one or more series of any of such classes, with such designations, preferences
and relative, participating, optional or other special rights, powers and
duties, including, without limitation, rights, powers and duties senior to
existing classes and series of Partnership Securities (except as provided in
Section 4.4(c)), all as shall be fixed by the General Partner in the exercise
of its sole and complete discretion, subject to Delaware law and Section
4.4(c), including, without limitation, (i) the allocations of items of
Partnership income, gain, loss, deduction and credit to each such class or
series of Partnership Securities; (ii) the right of each such class or series
of Partnership Securities to share in Partnership distributions; (iii) the
rights of each such class or series of Partnership Securities upon dissolution
and liquidation of the Partnership; (iv) whether such class or series of
additional Partnership Securities is redeemable by the Partnership and, if so,
the price at which, and the terms and conditions upon which, such class or
series of additional Partnership Securities may be redeemed by the Partnership;
(v) whether such class or series of additional Partnership Securities is issued
with the privilege of conversion and, if so, the rate at which, and the terms
and conditions upon which, such class or series of Partnership Securities may
be converted into any other class or series of Partnership Securities; (vi) the
terms and conditions upon which each such class or series of Partnership
Securities will be issued, evidenced by Unit Certificates and assigned or
transferred; and (vii) the right, if any, of each such
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class or series of Partnership Securities to vote on Partnership matters,
including, without limitation, matters relating to the relative rights,
preferences and privileges of each such class or series.
(c) Notwithstanding the terms of Sections 4.4(a) and 4.4(b), the
issuance by the Partnership of any Partnership Securities shall be subject to
the following restrictions and limitations:
(i) During the Preference Period, the Partnership shall not
(A) issue an aggregate of more than 15,000,000 additional Class A Common
Units (excluding for purposes of such determination Class A Common Units
issued to the Underwriters pursuant to the exercise of the over-
allotment option granted in the Underwriting Agreement), or (B) issue
any other Partnership Interests (other than APIs) having rights to
distributions or in liquidation ranking prior to or senior to the Class
A Common Units, in each case without the prior approval of holders of at
least 66 2/3% of the Outstanding Class A Common Units; and
(ii) Upon the issuance of any Units by the Partnership (except
upon the change of Class A Common Units into Class B Common Units
pursuant to Section 5.6), the General Partner shall be required to make
additional Capital Contributions to the Partnership such that the
General Partner shall at all times have a balance in its Capital Account
equal to 1% of the total positive Capital Account balances of all
Partners.
(d) The General Partner is hereby authorized and directed to take all
actions that it deems necessary or appropriate in connection with each issuance
of Units or other Partnership Securities pursuant to Section 4.4(a) and to
amend this Agreement in any manner that it deems necessary or appropriate to
provide for each such issuance, to admit Additional Limited Partners in
connection therewith and to specify the relative rights, powers and duties of
the holders of the Units or other Partnership Securities being so issued.
(e) Subject to the terms of Sections 4.4(c) and 6.4(c), the General
Partner is authorized to cause the issuance of Partnership Securities pursuant
to any employee benefit plan for the benefit of employees responsible for the
operations of the Partnership or the Operating Partnership maintained or
sponsored by the General Partner, the Partnership, the Operating Partnership or
any Affiliate of any of them.
(f) The General Partner shall do all things necessary to comply with
the Delaware Act and is authorized and directed to do all things it deems to be
necessary or advisable in connection with any future issuance of Partnership
Securities, including, without limitation, compliance with any statute, rule,
regulation or guideline of any federal, state or other governmental agency or
any National Securities Exchange on which the Units or other Partnership
Securities are listed for trading.
4.5 Limited Preemptive Rights. Except as provided in Section
4.4(c)(ii), no Person shall have any preemptive, preferential or other similar
right with respect to (a) additional Capital
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Contributions; (b) issuance or sale of any class or series of Units, APIs 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, APIs or other Partnership Securities; (d) issuance of any right of
subscription to or right to receive, or any warrant or option for the purchase
of, any such Units, APIs or other Partnership Securities; or (e) issuance or
sale of any other securities that may be issued or sold by the Partnership.
4.6 Capital Accounts. (a) The Partnership shall maintain for each
Partner (or a beneficial owner of Units held by a nominee in any case in which
the nominee has furnished the identity of such owner to the Partnership in
accordance with Section 6031(c) of the Code or any other method acceptable to
the General Partner in its sole discretion) a separate Capital Account in
accordance with the rules of Treasury Regulation Section 1.704-1(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions made by such Partner to the Partnership pursuant to this
Agreement and (ii) all items of Partnership income and gain (including, without
limitation, income and gain exempt from tax) computed in accordance with
Section 4.6(b) and allocated to such Partner pursuant to Section 4.2 and
Section 5.1 and decreased by (x) the amount of cash or Net Agreed Value of all
distributions of cash or property made to such Partner pursuant to this
Agreement and (y) all items of Partnership deduction and loss computed in
accordance with Section 4.6(b) and allocated to such Partner pursuant to
Section 5.1.
(b) For purposes of computing the amount of any item of income, gain,
loss or deduction to be reflected in the Partners' Capital Accounts, the
determination, recognition and classification of any such item shall be the
same as its determination, recognition and classification for federal income
tax purposes (including, without limitation, any method of depreciation, cost
recovery or amortization used for that purpose), provided, that:
(i) Solely for purposes of this Section 4.6, the Partnership
shall be treated as owning directly its proportionate share (as
determined by the General Partner based upon the provisions of the
Operating Partnership Agreement) of all property owned by the Operating
Partnership.
(ii) All fees and other expenses incurred by the Partnership to
promote the sale of (or to sell) a Partnership Interest that can neither
be deducted nor amortized under Section 709 of the Code, if any, shall,
for purposes of Capital Account maintenance, be treated as an item of
deduction at the time such fees and other expenses are incurred and
shall be allocated among the Partners pursuant to Section 5.1.
(iii) Except as otherwise provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any election
under Section 754 of the Code which may be made by the Partnership and,
as to those items described in Section 705(a)(1)(B) or 705(a)(2)(B)
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of the Code, without regard to the fact that such items are not
includable in gross income or are neither currently deductible nor
capitalized for federal income tax purposes.
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition were
equal in amount to the Partnership's Carrying Value with respect to such
property as of such date.
(v) In accordance with the requirements of Section 704(b) of
the Code, any deductions for depreciation, cost recovery or amortization
attributable to any Contributed Property shall be determined as if the
adjusted basis of such property on the date it was acquired by the
Partnership were equal to the Agreed Value of such property. Upon an
adjustment pursuant to Section 4.6(d) to the Carrying Value of any
Partnership property subject to depreciation, cost recovery or
amortization, any further deductions for such depreciation, cost
recovery or amortization attributable to such property shall be
determined (A) as if the adjusted basis of such property were equal to
the Carrying Value of such property immediately following such
adjustment and (B) using a rate of depreciation, cost recovery or
amortization derived from the same method and useful life (or, if
applicable, the remaining useful life) as is applied for federal income
tax purposes; provided, however, that, if the asset has a zero adjusted
basis for federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable method
that the General Partner may adopt.
(vi) If the Partnership's adjusted basis in depreciable or cost
recovery property is reduced for federal income tax purposes pursuant to
Section 48(q)(1) or 48(q)(3) of the Code, the amount of such reduction
shall, solely for purposes hereof, be deemed to be an additional
depreciation or cost recovery deduction in the year such property is
placed in service and shall be allocated among the Partners pursuant to
Section 5.1. Any restoration of such basis pursuant to Section 48(q)(2)
of the Code shall to the extent possible, be allocated in the year of
such restoration as an item of income pursuant to Section 5.1.
(c) A transferee of a Partnership Interest shall succeed to a pro
rata portion of the Capital Account of the transferor relating to the
Partnership Interest so transferred; 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 any transferee of a
Partnership Interest that is a party to the transfer causing such termination)
pursuant to Sections 14.3 and 14.4 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 4.6. In such
event, the Carrying Values of the Partnership properties shall be adjusted
immediately prior to such deemed distribution pursuant to Section 4.6(d)(ii)
and such Carrying Values shall then constitute the Agreed Values of such
properties upon such deemed contribution to the reconstituted Partnership. The
Capital Accounts
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of such reconstituted Partnership shall be maintained in accordance with the
principles of this Section 4.6.
(d) (i) Consistent with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), on an issuance of additional Units for
cash or Contributed Property or the conversion of the General Partner's
Partnership Interest to Units pursuant to Section 13.3(b), the Capital
Accounts of all Partners and the Carrying Value of each Partnership
property immediately prior to such issuance shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable
to such Partnership property, as if such Unrealized Gain or Unrealized
Loss had been recognized on an actual sale of each such property
immediately prior to such issuance and had been allocated to the
Partners at such time pursuant to Section 5.1.
(ii) In accordance with Treasury Regulation Section 1.704-
1(b)(2)(iv)(f), immediately prior to any distribution to a Partner of
any Partnership property (other than a distribution of cash that is not
in redemption or retirement of a Partnership Interest), the Capital
Accounts of all Partners and the Carrying Value of each Partnership
property shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership property, as if
such Unrealized Gain or Unrealized Loss had been recognized in a sale of
such property immediately prior to such distribution for an amount equal
to its fair market value, and had been allocated to the Partners, at
such time, pursuant to Section 5.1(c).
4.7 Interest. No interest shall be paid by the Partnership on
Capital Contributions or on balances in Partners' Capital Accounts.
4.8 No Withdrawal. No Partner shall be entitled to withdraw any part
of its Capital Contributions or its Capital Account or to receive any
distribution from the Partnership, except as provided herein.
4.9 Loans from Partners. Loans by a Partner to the Partnership shall
not constitute Capital Contributions. If any Partner shall advance funds to
the Partnership in excess of the amounts required hereunder to be contributed
by it to the capital of the Partnership, the making of such excess advances
shall not result in any increase in the amount of the Capital Account of such
Partner. The amount of any such excess advances shall be a debt obligation of
the Partnership to such Partner and shall be payable or collectible only out of
the Partnership Assets in accordance with the terms and conditions upon which
such advances are made.
4.10 No Fractional Units. No fractional Units shall be issued by the
Partnership.
4.11 Splits and Combinations. (a) Subject to Section 4.11(d), the
General Partner may make a pro rata distribution of Units or other Partnership
Securities to all Record Holders or may effect a subdivision or combination of
Units or other Partnership Securities; provided, however, that,
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subject to Section 4.11(d), after any such distribution, subdivision or
combination, each Partner shall have the same Percentage Interest in the
Partnership as before such distribution, subdivision or combination.
(b) Whenever such a distribution, subdivision or combination of Units
or other Partnership Securities is declared, the General Partner shall select a
Record Date as of which the distribution, subdivision or combination shall be
effective and shall send notice of the distribution, subdivision or combination
at least 20 days prior to such Record Date to each Record Holder as of a date
not less than 10 days prior to the date of such notice. The General Partner
also may cause a firm of independent public accountants selected by it to
calculate the number of Units to be held by each Record Holder after giving
effect to such distribution, subdivision or combination. The General Partner
shall be entitled to rely on any certificate provided by such firm as
conclusive evidence of the accuracy of such calculation.
(c) Promptly following any such distribution, subdivision or
combination, the General Partner may cause Unit Certificates to be issued to
the Record Holders of Units as of the applicable Record Date representing the
new number of Units held by such Record Holders, or the General Partner may
adopt such other procedures as it may deem appropriate to reflect such
distribution, subdivision or combination; provided, however, if any such
distribution, subdivision or combination results in a smaller total number of
Units Outstanding, the General Partner shall require, as a condition to the
delivery to a Record Holder of such new Unit Certificate, the surrender of any
Unit Certificate held by such Record Holder immediately prior to such Record
Date.
(d) The Partnership shall not issue fractional Units upon any
distribution, subdivision or combination of Units. If a distribution,
subdivision or combination of Units would result in the issuance of fractional
Units but for the provision of Section 4.10 and this Section 4.11(d), each
fractional Unit 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 4.6(b)) shall be allocated among the
Partners in each taxable year (or portion thereof) as provided herein below.
(a) Net Income. After giving effect to the allocations in Section
4.2 and the special allocations set forth in Sections 5.1(d) and 5.1(e), all
items of income, gain, loss and deduction taken into account in computing Net
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:
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(i) First, 100% to the General Partner until the aggregate Net
Income allocated to the General Partner pursuant to this Section
5.1(a)(i) for the current taxable year and all previous taxable years is
equal to the aggregate Net Losses allocated to the General Partner
pursuant to Section 5.1(b)(iv) for all previous taxable years;
(ii) Second, 100% to the Special Limited Partners, each in the
proportion that the respective number of APIs held by such Special
Limited Partner bears to the total number of APIs then outstanding,
until Net Income is allocated to any API pursuant to this Section
5.1(a)(ii) for the current taxable year and all previous taxable years
in an amount equal to the Net Losses allocated to any API pursuant to
Section 5.1(b)(iii) for all previous taxable years;
(iii) Third, 100% to the Limited Partners holding Class A Common
Units or Class B Common Units in the proportion that the respective
number of Units held by them bears to the total number of Units then
outstanding, until Net Income is allocated to any Unit pursuant to this
Section 5.1(a)(iii) for the current taxable year and all previous
taxable years in an amount equal to the Net Losses allocated to any Unit
pursuant to Section 5.1(b)(ii) for all previous taxable years; and
(iv) Fourth, the balance, if any, 100% to the General Partner
and the Limited Partners in accordance with their respective Percentage
Interests.
(b) Net Losses. After giving effect to the special allocations set
forth in Sections 5.1(d) and 5.1(e), all items of income, gain, loss and
deduction taken into account in computing Net 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 Partner and the Limited
Partners in accordance with their respective Percentage Interests, until
Net Losses are allocated to any Unit pursuant to this Section 5.1(b)(i)
for the current taxable year and all previous taxable years in an amount
equal to the Net Income allocated to any Unit pursuant to Section
5.1(a)(iv) for all previous taxable years;
(ii) Second, 100% to the Limited Partners holding Class A
Common Units or Class B Common Units, in the proportion that the
respective number of Units held by them bears to the total number of
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);
(iii) Third, 100% to the Special Limited Partners, each in the
proportion that the respective number of APIs held by such Special
Limited Partner bears to the total number of APIs then outstanding;
provided, that Net Losses shall not be allocated pursuant to this
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Section 5.1(b)(iii) to the extent that such allocation would cause any
Special 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
(iv) Fourth, the balance, if any, 100% to the General Partner.
(c) Net Termination Gains and Losses. After giving effect to the
allocations in Section 4.2 and the special allocations set forth in Sections
5.1(d) and 5.1(e), all items of income, gain, loss and deduction taken into
account in computing Net Termination Gain or Net Termination Loss for such
taxable period shall be allocated in the same manner as such Net Termination
Gain or Net Termination Loss is allocated hereunder. All allocations under
this Section 5.1(c) shall be made after Capital Account balances have been
adjusted by all other allocations provided under this Section 5.1 and after all
distributions of Available Cash provided under Sections 5.4 and 5.5 have been
made with respect to such taxable period.
(i) If a Net Termination Gain is recognized, such Net
Termination Gain shall be allocated between the General Partner and the
Limited Partners in the following manner (and the Adjusted Capital
Accounts of the Partners shall be increased by the amount so allocated
in each of the following subclauses, in the order listed, before an
allocation is made pursuant to the next succeeding subclause):
(A) First, to each Partner having a deficit balance in
its Adjusted Capital Account, in the proportion that such deficit
balance bears to the total deficit balances in the Adjusted
Capital Accounts of all Partners, until each such Partner has
been allocated Net Termination Gain equal to any such deficit
balance in its Adjusted Capital Account;
(B) Second, 100% to the General Partner and the Limited
Partners, in accordance with their respective Percentage
Interests, until the Adjusted Capital Account in respect of each
Class A Common Unit then Outstanding is equal to the Unrecovered
Capital attributable to such Class A Common Unit;
(C) Third, 99% to all Limited Partners holding Class B
Common Units in the proportion that the respective number of
Class B Common Units held by them bears to the total number of
Class B Common Units then Outstanding and 1.0% to the General
Partner until the Adjusted Capital Account in respect of each
Class B Common Unit then Outstanding is equal to the Unrecovered
Capital attributable to such Class B Common Unit;
(D) Fourth, if such Net Termination Gain is recognized
prior to the redemption of all APIs then outstanding, 100% to the
Special Limited Partners holding such APIs, each in the
proportion that the respective number of APIs held by each such
Special Limited Partner bears to the total number of APIs then
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outstanding, in the amount which will increase such Special
Limited Partner's Adjusted Capital Account in respect of its APIs
to that amount which equals the Unrecovered Capital attributable
to such APIs, determined for the taxable year (or portion
thereof) to which this allocation of gain relates;
(E) Fifth, 99% to all Limited Partners holding Class A
Common Units in the proportion that the respective number of
Class A Common Units held by them bears to the total number of
Class A Common Units then Outstanding and 1.0% to the General
Partner until each such Limited Partner's Adjusted Capital
Account in respect of its Class A Common Units (determined on a
per Unit basis) is equal to the sum of (aa) its Unrecovered
Capital plus (bb) any then existing Cumulative Class A Common
Unit Deficiency;
(F) Sixth, 99% to all Limited Partners holding Class B
Common Units in the proportion that the respective number of
Class B Common Units held by them bears to the total number of
Class B Common Units then Outstanding and 1.0% to the General
Partner until each such Limited Partner's Adjusted Capital
Account in respect of its Class B Common Units (determined on a
per Unit basis) is equal to the sum of (aa) its Unrecovered
Capital plus (bb) any then existing Cumulative Class B Common
Unit Deficiency;
(G) Seventh, 100% to the General Partner and the
Limited Partners, in accordance with their respective Percentage
Interests, until each Limited Partner's Adjusted Capital Account
(determined on a per Unit basis) in respect of each Unit is equal
to the sum of (aa) the Unrecovered Capital attributable to each
such Unit plus (bb) the Cumulative Class A Common Unit Deficiency
or Cumulative Class B Common Unit Deficiency, as the case may be,
if any, plus (cc) any cumulative arrearages in the payment of the
Minimum Quarterly Distribution in respect of such Unit for any
quarter following the Preference Period;
(H) Eighth, 85.87% to all Limited Partners, in the
proportion that the respective number of Units held by them bears
to the number of Units then Outstanding, and 14.13% to the
General Partner until each such Limited Partner's Adjusted
Capital Account in respect of its Units (determined on a per Unit
basis) is equal to the sum of (aa) its Unrecovered Capital, plus
(bb) any Cumulative Class A Common Unit Deficiency or Cumulative
Class B Common Unit Deficiency, as the case may be, plus (cc) any
cumulative arrearages in the payment of the Minimum Quarterly
Distribution in respect of such Unit for any quarter following
the Preference Period, plus (dd) the excess of the First Target
Distribution over the Minimum Quarterly Distribution for each
quarter of the Partnership's existence, less (ee) the amount of
any distributions of Available Cash that is deemed to be Cash
from Operations that was distributed pursuant to Section 5.4(e)
or Section 5.5(d) (the
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sum of (bb) plus (cc) plus (dd) less (ee) is hereinafter defined
as the "First Liquidation Target Amount");
(I) Ninth, 75.77% to all Limited Partners, in the
proportion that the respective number of Units held by them bears
to the number of Units then Outstanding, and 24.23% to the
General Partner until each such Limited Partner's Adjusted
Capital Account in respect of its Units (determined on a per Unit
basis) is equal to the sum of (aa) its Unrecovered Capital, plus
(bb) the First Liquidation Target Amount, plus (cc) the excess of
the Second Target Distribution over the First Target Distribution
for each quarter of the Partnership's existence less (dd) the
amount of any distributions of Available Cash that is deemed to
be Cash from Operations distributed pursuant to Section 5.4(f) or
Section 5.5(e); and
(J) Tenth, the balance, if any, 50.51% to all Limited
Partners, in the proportion that the respective number of Units
held by them bears to the number of Units then Outstanding, and
49.49% to the General Partner.
(ii) If a Net Termination Loss is recognized, such Net
Termination Loss shall be allocated to the Partners in the following
manner:
(A) First, 100% to the General Partner and the Limited
Partners in proportion to, and to the extent of, the positive
balances in their respective Adjusted Capital Accounts until all
such balances are reduced to zero;
(B) Second, if such Net Termination Loss is recognized
prior to the redemption of all APIs then outstanding, 100% to the
Special Limited Partners to the extent of the positive balance in
each Special Limited Partner's respective Adjusted Capital
Account maintained with respect to its APIs; and
(C) Third, the balance, if any, 100% to the General
Partner.
(d) Special Allocations. Notwithstanding any other provisions of
this Section 5.1 (other than Section 5.1(e)), the following special
allocations shall be made for such taxable period:
(i) Priority Allocations. (A) If the amount of cash or the
Net Agreed Value of any property distributed (except cash or property
distributed pursuant to Section 14.3 or 14.4) to any Limited Partner
during a taxable year is greater (on a per Unit basis) than the amount
of cash or the Net Agreed Value of property distributed to the other
Limited Partners (on a per Unit basis), then (1) each 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 Unit basis) to such Limited Partner
exceeds the distribution (on a per Unit basis) to the Limited Partners
receiving the smallest distribution and (y) the number of Units owned by
the Limited Partner receiving the greater distribution;
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and (2) the General Partner shall be allocated gross income in an amount
equal to 1.01% of the sum of the amounts allocated in clause (1) above.
(B) All or a portion of the remaining items of
Partnership gross income or gain for the taxable period, if any,
shall be allocated 100% to the General Partner (or its assignee)
until the aggregate amount of such items allocated to the General
Partner (or its assignee) under this paragraph (d)(i)(B) for the
current taxable period and all previous taxable periods is equal
to the cumulative amount of all Incentive Distributions made to
the General Partner (or its assignee) from the Closing Date to a
date 45 days after the end of the current taxable period.
(C) At the election of the General Partner with respect
to any taxable period ending upon, or after, the termination of
the Preference Period, all or a portion of the remaining items of
Partnership gross income or gain for the taxable period, if any,
shall be allocated to each Partner holding Class B Common Units,
in the proportion that the respective number of Class B Common
Units held by such Partner bears to the total number of Class B
Common Units then outstanding, until such Partner has been
allocated an amount of gross income or gain which increases the
Capital Account maintained with respect to such Class B Common
Units to an amount such that the Capital Account attributable to
each Class B Common Unit held by the Partner, on a per Unit
basis, is equal to the Capital Account, stated on a per Unit
basis, underlying any Class A Common Unit Outstanding at the time
of determination. The purpose of this allocation is to establish
uniformity between the Capital Accounts underlying Class B Common
Units and the Capital Accounts underlying Class A Common Units
immediately prior to the change of all Class A Common Units into
Class B Common Units pursuant to Section 5.6.
(ii) Nonrecourse Liabilities. For purposes of Treasury
Regulation Section 1.752-1T(e)(ii)(C), 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
provision of Section 5.1(a), (b) or (c), the Agreed Allocations shall be
adjusted so that, to the extent possible, the net amount of items of
income, gain, loss and deduction allocated to each Partner pursuant to
the Required Allocations and the Agreed Allocations, together, shall be
equal to the net amount of such items that would have been allocated to
each such Partner under the Agreed Allocations had there been no
Required Allocations; provided, however, that for purposes of applying
this Section 5.1(d)(iii)(A), it shall be assumed that all chargebacks
pursuant to Sections 5.1(e)(i) and (ii) have occurred.
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(B) The General Partner shall have reasonable
discretion, with respect to each taxable year, to (1) apply the
provisions of Section 5.1(d)(iii)(A) in whatever fashion as is
most likely to minimize the economic distortions that might
otherwise result from the Required Allocations, and (2) divide
all allocations pursuant to Section 5.1(d)(iii)(A) among the
Partners in a manner that is likely to minimize such economic
distortions.
(e) Required Allocations. Notwithstanding any other provision of
this Section 5.1, the following special allocations shall be made for such
taxable period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding the
other provisions of this Section 5.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period, each
Partner shall be allocated items of Partnership income and gain for such
period (and, if necessary, subsequent periods) in the manner and amounts
provided in Treasury Regulation Section 1.704-1T(b)(4)(iv)(e)(2), or any
successor provisions. For purposes of this Section 5.1(e), each
Partner's Adjusted Capital Account balance shall be determined, and the
allocation of income or gain required hereunder shall be effected, prior
to the application of any other allocations pursuant to this Section 5.1
with respect to such taxable period.
(ii) Chargeback of Minimum Gain Attributable to Partner
Nonrecourse Debt. Notwithstanding the other provisions of this Section
5.1 (other than 5.1(e)(i)), 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 Section 1.704-1T(b)(4)(iv)(h)(4), or any successor
provisions. For purposes of this Section 5.1, each Partner's Adjusted
Capital Account balance shall be determined and the allocation of income
or gain required hereunder shall be effected, prior to the application
of any other allocations pursuant to this Section 5.1(e), other than
Section 5.1(e)(i), with respect to such taxable period.
(iii) Qualified Income Offset. In the event any Limited Partner
unexpectedly receives adjustments, allocations or distributions
described in Treasury Regulation Section 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) (modified as appropriate
by Treasury Regulation Sections 1.704-1T(b)(4)(iv)(e)(3) and
1.704-1T(b)(4)(iv)(h)(4)), 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).
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(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 1.704-1T(b)(4)(iv)(f) and 1.704-1T(b)(4)(h)(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 this Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with
their respective Percentage Interests. If the General Partner
determines in its good faith discretion that the Partnership's
Nonrecourse Deductions must be allocated in a different ratio to satisfy
the safe harbor requirements of the Treasury Regulations promulgated
under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio to
the numerically closest ratio which does satisfy such requirements.
(vi) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the Partner
that bears the Economic Risk of Loss for such Partnership Nonrecourse
Debt to which such Partner Nonrecourse Deductions are attributable in
accordance with Treasury Regulation Section 1.704-1T(b)(4)(iv)(h). If
more than one Partner bears the Economic Risk of Loss with respect to a
Partner Nonrecourse Debt, such Partner Nonrecourse Deductions
attributable thereto shall be allocated between or among such Partners
in accordance with the ratios in which they share such Economic Risk of
Loss.
(f) During the 1995 taxable year of the Partnership, the Limited
Partners holding Class A Common Units will be allocated $9 million of gross
income that would otherwise be allocated to the Limited Partners holding Class
B Common Units pursuant to this Agreement (other than Section 5.1(e)).
Thereafter, the Limited Partners holding Class A Common Units will be allocated
gross income during each taxable year of the Partnership that would otherwise
be allocated to the Limited Partners holding Class B Common Units pursuant to
this Agreement (other than Section 5.1(e)), to the extent such an amount of
gross income exists, in accordance with the following schedule:
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<TABLE>
<CAPTION>
YEAR AMOUNT
---- ------
<S> <C>
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9 million
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . 9 million
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . 11 million
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . 11 million
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 13 million
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . 13 million
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . 15 million
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . 15 million
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . 17 million
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . 17 million
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . 19 million
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . 19 million
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . 21 million
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . 21 million
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . 23 million
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . 23 million
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . 25 million
Thereafter . . . . . . . . . . . . . . . . . . . . . . . 25 million
</TABLE>
Notwithstanding the above, no allocation of gross income shall be made pursuant
to this Section 5.1(f) (or the amount of such allocation shall be reduced) in
any taxable year of the Partnership to the extent that a purchaser of a Class A
Common Unit in the offering made pursuant to the Registration Statement would
be allocated, pursuant to this Agreement, an amount of federal taxable income
with respect to such taxable year that would exceed 65% of the amount of
Available Cash distributed to such a Unitholder with respect to that taxable
year. In addition, no allocation of gross income shall be made pursuant to
this Section 5.1(f) for any taxable year including or following the change of
all Class A Common Units into Class B Common Units pursuant to Section 5.6.
5.2 Allocations for Tax Purposes. (a) Except as otherwise provided
herein, for federal income tax purposes, each item of income, gain, loss and
deduction which is recognized by the Partnership for federal income tax
purposes shall be allocated among the Partners in the same manner as its
correlative item of "book" income, gain, loss or deduction is allocated
pursuant to Section 5.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the manner
provided under Section 704(c) of the Code
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that takes into account the variation between the Agreed Value of such
property and its adjusted basis at the time of contribution; and (B)
except as otherwise provided in Section 5.2(b)(iii), any item of
Residual Gain or Residual Loss attributable to a Contributed Property
shall be allocated among the Partners in the same manner as its
correlative item of "book" gain or loss is allocated pursuant to Section
5.1.
(ii) (A) In the case of an Adjusted Property, such items shall
(1) first, be allocated among the Partners in a manner consistent with
the principles of Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and the
allocations thereof pursuant to Section 4.6(d)(i) or (ii), and (2)
second, in the event such property was originally a Contributed
Property, be allocated among the Partners in a manner consistent with
Section 5.2(b)(i)(A); and (B) except as otherwise provided in Section
5.2(b)(iii), any item of Residual Gain or Residual Loss attributable to
an Adjusted Property shall be allocated among the Partners in the same
manner as its correlative item of "book" gain or loss is allocated
pursuant to Section 5.1.
(iii) Any items of income, gain, loss or deduction otherwise
allocable under Section 5.2(b)(i)(B) or 5.2(b)(ii)(B) shall be subject
to allocation by the General Partner in a manner designed to eliminate,
to the maximum extent possible, Book-Tax Disparities in a Contributed
Property or Adjusted Property otherwise resulting from the application
of the "ceiling" limitation (under Section 704(c) of the Code or Section
704(c) principles) to the allocations provided under Section
5.2(b)(i)(A) or 5.2(b)(ii)(A).
(c) For the proper administration of the Partnership or for the
preservation of uniformity of the Units (or any class or classes thereof), the
General Partner shall have sole discretion to (i) adopt such conventions as it
deems appropriate in determining the amount of depreciation, amortization and
cost recovery deductions; (ii) make special allocations for federal income tax
purposes of income (including, without limitation, gross income) or deductions;
and (iii) amend the provisions of this Agreement as appropriate (x) to reflect
the proposal or promulgation of Treasury Regulations under Section 704(b) or
Section 704(c) of the Code or (y) otherwise to preserve or achieve uniformity
of the Units (or any class or classes thereof). The General Partner may adopt
such conventions, make such allocations and make such amendments to this
Agreement as provided in this Section 5.2(c) only if such conventions,
allocations or amendments would not have a material adverse effect on the
Partners, the holders of any class or classes of Units issued and Outstanding
of the Partnership, and if such allocations are consistent with the principles
of Section 704 of the Code.
(d) The General Partner in its sole discretion may determine to
depreciate the portion of an adjustment under Section 743(b) of the Code
attributable to unrealized appreciation in any Adjusted Property (to the extent
of the unamortized Book-Tax Disparity) using a predetermined rate derived from
the depreciation method and useful life applied to the Partnership's common
basis of such property, despite the inconsistency of such approach with
Proposed Treasury Regulation Section 1.168-2(n) and Treasury Regulation Section
1.167(c)-1(a)(6). If the General Partner
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<PAGE> 42
determines that such reporting position cannot reasonably be taken, the General
Partner may adopt a depreciation convention under which all purchasers acquiring
Units in the same month would receive depreciation, based upon the same
applicable rate as if they had purchased a direct interest in the Partnership's
property. If the General Partner chooses not to utilize such aggregate method,
the General Partner may use any other reasonable depreciation convention to
preserve the uniformity of the intrinsic tax characteristics of any Units that
would not have a material adverse effect on the Limited Partners or the Record
Holders of any class or classes of Units. In addition, for purposes of
computing the adjustments under Section 743(b) of the Code, the General Partner
shall be authorized (but not required) to adopt a convention whereby the price
paid by a transferee of Units will be deemed to be the lowest quoted trading
price of the Units on any National Securities Exchange on which such Units are
traded during the calendar month in which such transfer is deemed to occur
pursuant to Section 5.2(g) without regard to the actual price paid by such
transferee.
(e) Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after
taking into account other required allocations of gain pursuant to this Section
5.2 be characterized as Recapture Income in the same proportions and to the
same extent as such Partners (or their predecessors in interest) have been
allocated any deductions directly or indirectly giving rise to the treatment of
such gains as Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized
by the Partnership for federal income tax purposes and allocated to the
Partners in accordance with the provisions hereof shall be determined without
regard to any election under Section 754 of the Code which may be made by the
Partnership; provided, however, that such allocations, once made, shall be
adjusted as necessary or appropriate to take into account those adjustments
permitted or required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction
attributable to a transferred Partnership Interest of the General Partner or to
transferred Units shall, for federal income tax purposes, be determined on an
annual basis and prorated on a monthly basis and shall be allocated to the
Partners as of the close of the New York Stock Exchange on the last day of the
preceding month; provided, however, that (i) except as otherwise provided in
clause (ii), such items for the period beginning on the Closing Date and ending
on the last day of the month in which the Closing Date occurs shall be
allocated to Partners as of the close of the New York Stock Exchange on the
last day of that month or (ii) if the Underwriters' over-allotment option is
exercised, such items for the period beginning on the Closing Date and ending
on the last day of the month in which the Second Closing Date (as defined in
the Underwriting Agreement) occurs shall be allocated to the Partners as of the
close of the New York Stock Exchange on the last day of that month; and
provided, further, that gain or loss on a sale or other disposition of any
assets of the Partnership other than in the ordinary course of business shall
be allocated to the Partners as of the opening of the New York Stock Exchange
on the first Business Day of the month in which such gain or loss is recognized
for federal income tax purposes. The 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.
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<PAGE> 43
(h) Allocations that would otherwise be made to a Limited Partner
under the provisions of this Article V shall instead be made to the beneficial
owner of Units held by a nominee in any case in which the nominee has furnished
the identity of such owner to the Partnership in accordance with Section
6031(c) of the Code or any other method acceptable to the General Partner in
its sole discretion.
5.3 Requirement and Characterization of Distributions. (a) Within 45
days following the end of each calendar quarter (or by May 15, 1992 with
respect to the period from the Closing Date through December 31, 1991), an
amount equal to 100% of Available Cash with respect to such quarter (or period)
shall be distributed in accordance with this Article V by the Partnership to
the Partners, as of the Record Date selected by the General Partner in its
reasonable discretion. The immediately preceding sentence shall not modify in
any respect the provisions of Section 4.2 regarding the distribution of any
interest or other profit on the initial contributions referred to therein. All
amounts of Available Cash distributed by the Partnership on any date from any
source (other than amounts paid or distributed pursuant to Section 4.2) shall
be deemed to be Cash from Operations until the sum of all amounts of Available
Cash theretofore distributed by the Partnership to Partners pursuant to
Sections 5.4 and 5.5 and in respect of the redemption of APIs equals the
aggregate amount of all Cash from Operations of the Partnership from the
Partnership Inception through the end of the calendar quarter immediately
preceding such distribution. Any remaining amounts of Available Cash
distributed by the Partnership on such date (other than amounts paid or
distributed pursuant to Section 4.2) shall, except as otherwise provided in
Section 5.6, be deemed to be Cash from Interim Capital Transactions; provided,
that if (i) all or any portion of Available Cash with respect to any calendar
quarter distributed by the Partnership would otherwise be deemed to be Cash
from Interim Capital Transactions and (ii) APIs were purchased in respect of
such quarter under the Distribution Support Agreement and the proceeds
therefrom were distributed to the Limited Partners holding Units, then the
Available Cash so distributed that would otherwise be deemed to be Cash from
Interim Capital Transactions shall be deemed to be Cash from Operations to the
extent of the proceeds from the purchase of APIs so distributed.
(b) Notwithstanding the definitions of Available Cash and Cash from
Operations contained herein, (i) cash receipts of the Partnership from the
issuance of APIs shall be deemed to be received, for purposes of determining
Available Cash and Cash from Operations, during the quarter in respect of which
such APIs are issued, even if such cash is received by the Partnership after
the last day of such quarter, and (ii) disbursements (including, without
limitation, contributions to the Operating Partnership or disbursements on
behalf of the Operating Partnership) made or cash reserves established after
the end of any quarter as to which APIs were purchased in respect of such
quarter in accordance with the Distribution Support Agreement shall be deemed
to have been made or established, for purposes of determining Available Cash
and Cash from Operations, within such quarter if the General Partner so
determines; provided, that the aggregate amount of such disbursements made or
cash reserves established which are so determined as being made within such
quarter shall not exceed the aggregate dollar amount of APIs purchased in
respect of such quarter. Notwithstanding the foregoing, in the event of the
dissolution and liquidation of the Partnership, all
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<PAGE> 44
proceeds of such liquidation shall be applied and distributed in accordance
with, and subject to the terms and conditions of, Sections 14.3 and 14.4.
5.4 Distributions During Preference Period. Available Cash with
respect to any calendar quarter within the Preference Period that is deemed to
be Cash from Operations pursuant to the provisions of Section 5.3 or 5.7 shall
be distributed as follows, except as otherwise required by Section 13.4 in
respect of the redemption of APIs:
(a) First, 99% to all Limited Partners holding Class A Common
Units, in the proportion that the respective number of Class A Common
Units held by them bears to the total number of Class A Common Units
then Outstanding, and 1.0% to the General Partner until there has been
distributed in respect of each Class A Common Unit then Outstanding an
amount equal to the Minimum Quarterly Distribution;
(b) Second, 99% to all Limited Partners holding Class A Common
Units, in the proportion that the respective number of Class A Common
Units held by them bears to the total number of Class A Common Units
then Outstanding, and 1.0% to the General Partner until there has been
distributed in respect of each Class A Common Unit then Outstanding an
amount equal to any Cumulative Class A Common Unit Deficiency existing
on the last day of such quarter;
(c) Third, 99% to all Limited Partners holding Class B Common
Units, in the proportion that the respective number of Class B Common
Units held by them bears to the total number of Class B Common Units
then Outstanding, and 1.0% to the General Partner until there has been
distributed in respect of each Class B Common Unit then Outstanding an
amount equal to the Minimum Quarterly Distribution;
(d) Fourth, 100% to all Special Limited Partners, in
proportion to the Unrecovered Capital attributable to the respective
APIs held by them, to the extent necessary to reduce to zero the
Unrecovered Capital of any and all APIs then Outstanding;
(e) Fifth, 85.87% to all Limited Partners, in the proportion
that the respective number of Units held by them bears to the number of
Units then Outstanding, and 14.13% to the General Partner until there
has been distributed in respect of each Unit then Outstanding an amount
equal to the excess of the First Target Distribution over the Minimum
Quarterly Distribution;
(f) Sixth, 75.77% to all Limited Partners, in the proportion
that the respective number of Units held by them bears to the number of
Units then Outstanding, and 24.23% to the General Partner until there
has been distributed in respect of each Unit then Outstanding an amount
equal to the excess of the Second Target Distribution over the First
Target Distribution; and
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(g) Seventh, 50.51% to all Limited Partners, in the proportion
that the respective number of Units held by them bears to the number of
Units then Outstanding, and 49.49% to the General Partner;
provided, however, if the Minimum Quarterly Distribution, the First Target
Distribution and the Second Target Distribution have been reduced to zero
pursuant to Section 5.9(a)(ii), then distributions of Available Cash that is
deemed to be Cash from Operations with respect to any quarter will be made 99%
to all Limited Partners holding Class A Common Units, in the proportion that
the respective number of Class A Common Units held by them bears to the total
number of Class A Common Units then Outstanding, and 1.0% to the General
Partner until there has been distributed in respect of each Class A Common Unit
then Outstanding, pursuant to this Section 5.4 including this proviso,
Available Cash that is deemed to be Cash from Operations since Partnership
Inception equal to the Minimum Quarterly Distribution (as from time to time
adjusted) for all periods since Partnership Inception, and thereafter in
accordance with Section 5.4(g) above.
5.5 Distributions After Preference Period. Available Cash with
respect to any calendar quarter after the Preference Period that is deemed to
be Cash from Operations pursuant to the provisions of Section 5.3 or 5.7 shall
be distributed as follows, except as otherwise required by Section 13.4 in
respect of the redemption of APIs:
(a) First, 99% to all Limited Partners, in the proportion that
the respective number of Units held by them bears to the total number of
Units then Outstanding, and 1.0% to the General Partner until there has
been distributed in respect of each Unit then Outstanding an amount
equal to the Minimum Quarterly Distribution;
(b) Second, 99% to all Limited Partners holding Class A Common
Units, in the proportion that the respective number of Class A Common
Units held by them bears to the total number of Class A Common Units
then Outstanding, and 1.0% to the General Partner until there has been
distributed in respect of each of the Class A Common Units then
Outstanding an amount equal to any Cumulative Class A Common Unit
Deficiency;
(c) Third, 100% to all Special Limited Partners, in proportion
to the Unrecovered Capital attributable to the respective APIs held by
them, to the extent necessary to reduce to zero the Unrecovered Capital
of any and all APIs then Outstanding;
(d) Fourth, 85.87% to all Limited Partners, in the proportion
that the respective number of Units held by them bears to the total
number of Units then Outstanding, and 14.13% to the General Partner
until there has been distributed in respect of each Unit then
Outstanding an amount equal to the excess of the First Target
Distribution over the Minimum Quarterly Distribution;
(e) Fifth, 75.77% to all Limited Partners, in the proportion
that the respective number of Units held by them bears to the total
number of Units then Outstanding, and
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24.33% to the General Partner until there has been distributed in
respect of each Unit then Outstanding an amount equal to the excess of
the Second Target Distribution over the First Target Distribution; and
(f) Sixth, 50.51% to all Limited Partners, in the proportion
that the respective number of Units held by them bears to the total
number of Units then Outstanding, and 49.49% to the General Partner;
provided, however, if the Minimum Quarterly Distribution, the First Target
Distribution and the Second Target Distribution have been reduced to zero
pursuant to Section 5.9(a)(ii), then distributions of Available Cash that is
deemed to be Cash from Operations with respect to any quarter will be made 99%
to all Limited Partners holding Class A Common Units, in the proportion that
the respective number of Class A Common Units held by them bears to the total
number of Class A Common Units then Outstanding, and 1.0% to the General
Partner until there has been distributed in respect of each Class A Common Unit
then Outstanding, pursuant to Section 5.4 and this Section 5.5 including this
proviso, Available Cash that is deemed to be Cash from Operations since
Partnership Inception equal to the Minimum Quarterly Distribution (as from time
to time adjusted) for all periods since Partnership Inception, and thereafter
in accordance with Section 5.5(f) above.
5.6 Change of Class A Common Units. At such time as (i) the
Preference Period has ended, (ii) any then existing Cumulative Class A Common
Unit Deficiency with respect to each Class A Common Unit shall have been
eliminated by reason of distributions in accordance with subparagraph (b) of
Section 5.5 above, and (iii) the General Partner determines, based on advice of
counsel, that all Class B Common Units have, as a substantive matter, like
intrinsic economic and federal income tax characteristics, in all material
respects, to the intrinsic economic and federal income tax characteristics of
the Class A Common Units then Outstanding, all differences and distinctions
between Class A Common Units and Class B Common Units shall automatically cease
and all Units shall thereafter be called and be "Class B Common Units." From
and after such time, all Available Cash shall be distributed in the order of
and in accordance with Section 5.5 provided that paragraph (b) of Section 5.5
thereof shall be of no further force or effect.
5.7 Distributions of Cash from Interim Capital Transactions.
Available Cash that is deemed to be Cash from Interim Capital Transactions
shall be distributed, unless the provisions of Section 5.3 require otherwise,
99% to all Limited Partners, in accordance with their respective Percentage
Interests, and 1.0% to the General Partner until a hypothetical holder of a
Class A Common Unit acquired at the time of the Initial Offering has received
with respect to each Class A Common Unit, from Partnership Inception through
such date, distributions of Available Cash that are deemed to be Cash from
Interim Capital Transactions in an aggregate amount per Class A Common Unit
equal to the Initial Unit Price. Thereafter, all Available Cash shall be
distributed as if it were Cash from Operations and shall be distributed in
accordance with Section 5.4 or 5.5, whichever is applicable.
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5.8 Definitions. As used herein,
(a) "Available Cash" means, with respect to any calendar quarter, (i)
the sum of (A) all cash receipts of the Partnership during such quarter from
all sources (including, without limitation, distributions of the Operating
Partnership's "Available Cash" (as that term is defined in the Operating
Partnership Agreement) received by the Partnership pursuant to the Operating
Partnership Agreement) and (B) any reduction in cash reserves established in
prior quarters (either by reversal or utilization), less (ii) the sum of (aa)
all cash disbursements of the Partnership during such quarter (excluding cash
distributions to Partners and to holders of APIs), and (bb) any cash reserves
established in such quarter in such amounts as the General Partner determines
to be necessary or appropriate in its reasonable discretion (x) to provide for
the proper conduct of the business of the Partnership (including reserves for
possible rate refunds or future capital expenditures) or (y) to provide funds
for distributions with respect to any of the next four calendar quarters and
(cc) any other cash reserves established in such quarter in such amounts as the
General Partner determines in its reasonable discretion to be necessary because
the distribution of such amounts would be prohibited by applicable law or by
any loan agreement, security agreement, mortgage, debt instrument or other
agreement or obligation to which the Partnership is a party or by which it is
bound or its assets are subject. Taxes paid by the Partnership on behalf of,
or amounts withheld with respect to, all or less than all of the Partners shall
not be considered cash disbursements of the Partnership which reduce Available
Cash, but the payment or withholding thereof shall be deemed to be a
distribution of Available Cash to such Partners. Alternatively, in the
discretion of the General Partner, such taxes (if pertaining to all Partners)
may be considered to be cash disbursements of the Partnership which reduce
Available Cash, but the payment or withholding thereof shall not be deemed to
be a distribution of Available Cash to such Partners. Notwithstanding the
foregoing, Available Cash shall not include any cash receipts or reductions in
reserves or take into account any disbursements made or reserves established
after commencement of the dissolution and liquidation of the Partnership.
(b) "Cash from Interim Capital Transactions" means, at any date, such
amounts of Available Cash as are deemed to be Cash from Interim Capital
Transactions pursuant to Section 5.3.
(c) "Cash from Operations" means, at any date but prior to
commencement of the dissolution and liquidation of the Partnership, on a
cumulative basis, the cash balance of the Partnership and the Operating
Partnership at Partnership Inception, excluding any such cash proceeds to the
Partnership from the exercise of the Underwriters' over-allotment option
granted in the Underwriting Agreement, plus all cash receipts of the
Partnership and the Operating Partnership from their operations (excluding any
cash proceeds from any Interim Capital Transactions) during the period since
the Partnership Inception through such date less the sum of (i) all cash
operating expenditures of the Partnership and the Operating Partnership during
such period, including, without limitation, taxes imposed on the Partnership or
the Operating Partnership as an entity, (ii) all cash debt service payments of
the Partnership and the Operating Partnership during such period (other than
payments or prepayments of principal and premium required by reason of loan
agreements (including covenants and default provisions therein) or by lenders,
in each case in connection with
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sales or other dispositions of assets or made in connection with refinancings
or refundings of indebtedness; provided, that any payment or prepayment of
principal, whether or not then due, shall be determined at the election and in
the discretion of the General Partner to be refunded or refinanced by any
indebtedness incurred or to be incurred by the Partnership or the Operating
Partnership simultaneously with or within 180 days prior to or after such
payment or prepayment to the extent of the principal amount of such
indebtedness so incurred), (iii) all cash capital expenditures of the
Partnership and the Operating Partnership during such period necessary to
maintain the service capability of the Pipeline System, (iv) an amount equal to
the incremental revenues collected pursuant to a rate increase that are, at
such date, subject to possible refund and for which the General Partner has
established a cash reserve, (v) any cash reserves outstanding as of such date
which the General Partner determines in its reasonable discretion to be
necessary or appropriate to provide for the future cash payment of items of the
type referred to in clauses (i) through (iii) of this sentence and (vi) any
cash reserves outstanding as of such date that the General Partner determines
to be necessary or appropriate in its reasonable discretion to provide funds
for distributions with respect to any one or more of the next four calendar
quarters, all as determined on a consolidated basis and after elimination of
intercompany items and the General Partner's general partner interest in the
Operating Partnership. Taxes paid by the Partnership on behalf of, or amounts
withheld with respect to, all or less than all of the Partners shall not be
considered cash operating expenditures of the Partnership which reduce Cash
from Operations, but the payment or withholding thereof shall be deemed to be a
distribution of Available Cash to such Partners. Alternatively, in the
discretion of the General Partner, such taxes (if pertaining to all Partners)
may be considered to be cash disbursements of the Partnership which reduce Cash
from Operations, but the payment or withholding thereof shall not be deemed to
be a distribution of Available Cash to such Partners. For purposes of the
foregoing, reserves do not include reserves outstanding at Partnership
Inception.
(d) "Class A Common Unit Deficiency" means, with respect to any Class
A Common Unit and as to any calendar quarter within the Preference Period, the
excess of (a) the Minimum Quarterly Distribution over (b) the sum of all
Available Cash distributed with respect to such Class A Common Unit pursuant to
paragraph (a) of Section 5.4;
(e) "Class B Common Unit Deficiency" means, subject to the provisions
of Section 9.6, with respect to any Class B Common Unit and as to any calendar
quarter within the Preference Period, the excess of (a) the Minimum Quarterly
Distribution over (b) the sum of all Available Cash distributed with respect to
such Class B Common Unit pursuant to paragraph (c) of Section 5.4;
(f) "Cumulative Class A Common Unit Deficiency" means, with respect
to any Class A Common Unit and as to any calendar quarter within the Preference
Period, the excess of (a) the sum resulting from adding together the Class A
Common Unit Deficiency as to such Class A Common Unit for each of the quarters
within the Preference Period ending prior to such quarter over (b) the sum of
any distributions theretofore made with respect to such Class A Common Unit
pursuant to paragraph (b) of Section 5.4 and paragraph (b) of Section 5.5;
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(g) "Cumulative Class B Common Unit Deficiency" means, with respect
to any Class B Common Unit and as to any calendar quarter within the Preference
Period, the sum resulting from adding together the Class B Common Unit
Deficiency as to such Class B Common Unit for each of the quarters within the
Preference Period ending prior to such quarter;
(h) "First Target Distribution" means $0.70 per Unit per calendar
quarter (or, with respect to the period commencing on the Closing Date and
ending on December 31, 1991, the product of $0.70 multiplied by a fraction of
which the numerator is the number of days in such period and of which the
denominator is 90), subject to adjustment in accordance with Sections 5.9 and
9.6.
(i) "Interim Capital Transactions" means (i) borrowings and sales of
debt securities (other than for working capital purposes and for items
purchased on open account in the ordinary course of business) by the
Partnership or the Operating Partnership, (ii) sales of equity interests by the
Partnership or the Operating Partnership (other than sales of APIs) and (iii)
sales or other voluntary or involuntary dispositions of any assets of the
Partnership or Operating 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 accounts receivable or (z)
sales or other dispositions of assets as a part of normal retirements or
replacements), in each case prior to the commencement of the dissolution and
liquidation of the Partnership. The General Partner shall have the right to
determine in its reasonable discretion whether inventory reductions shall be
considered in the ordinary course of business or such a normal retirement.
(j) "Minimum Quarterly Distribution" means $0.59 per Unit per
calendar quarter (or, with respect to the period commencing on the Closing Date
and ending on December 31, 1991, the product of $0.59 multiplied by a fraction
of which the numerator is the number of days in such period and of which the
denominator is 90), subject to adjustment in accordance with Sections 5.9 and
9.6.
(k) "Net Income" means, for any taxable period, the excess, if any,
of the Partnership's items of income and gain (other than those items
attributable to dispositions constituting Termination Capital Transactions) for
such taxable period over the Partnership's items of loss and deduction (other
than those items attributable to dispositions constituting Termination Capital
Transactions) for such taxable period. The items included in the calculation
of Net Income shall be determined in accordance with Section 4.6(b) and shall
not include any items specially allocated under Section 5.1(d) or 5.1(e). Once
an item of income, gain, loss or deduction that has been included in the
initial computation of Net Income is subjected to a Required Allocation or a
Discretionary Allocation, the applicable Net Income or Net Loss shall be
recomputed without regard to such item. For purposes of Sections 5.1(a) and
5.1(b), in determining whether Net Income has been allocated to any Unit or any
Partner (as the case may be) for any previous taxable period, any Unrealized
Gain or Unrealized Loss allocated pursuant to Section 4.6(d) shall be treated
as an item of gain or loss in computing Net Income.
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(l) "Net Loss" means, for any taxable period, the excess, if any, of
the Partnership's items of loss and deduction (other than those items
attributable to dispositions constituting Termination Capital Transactions) for
such taxable period over the Partnership's items of income and gain (other than
those items attributable to dispositions constituting Termination Capital
Transactions) for such taxable period. The items included in the calculation
of Net Loss shall be determined in accordance with Section 4.6(b) and shall not
include any items specifically allocated under Section 5.1(d) or 5.1(e). Once
an item of income, gain, loss or deduction that has been included in the
initial computation of Net Loss is subjected to a Required Allocation or a
Discretionary Allocation, the applicable Net Income or Net Loss shall be
recomputed without regard to such item. For purposes of Sections 5.1(a) and
5.1(b), in determining whether Net Losses have been allocated to any Unit or
any Partner (as the case may be) for any previous taxable period, any
Unrealized Gain or Unrealized Loss allocated pursuant to Section 4.6(d) shall
be treated as an item of gain or loss in computing Net Losses.
(m) "Net Termination Gain" means, for each Partnership year or
shorter period, the sum, if positive, of all items of gain or loss recognized
by the Partnership from Termination Capital Transactions and all items of
income, gain, loss and deduction (as determined in accordance with Section
4.6(b)) recognized by the Partnership after the time in which the Partnership
has dissolved and can no longer be continued pursuant to Section 14.2.
(n) "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 Termination Capital Transactions and all items of
income, gain, loss and deduction (as determined in accordance with Section
4.6(b)) recognized by the Partnership after the time in which the Partnership
has dissolved and can no longer be continued pursuant to Section 14.2.
(o) "Second Target Distribution" means $0.99 per Unit per calendar
quarter (or, with respect to the period commencing on the Closing Date and
ending on December 31, 1991, the product of $0.99 multiplied by a fraction of
which the numerator is equal to the number of days in such period and of which
the denominator is 90), subject to adjustment in accordance with Sections 5.9
and 9.6.
(p) "Termination Capital Transaction" means any sale, transfer or
other disposition of property of the Partnership or the Operating Partnership
occurring after the time in which the Partnership has dissolved and can no
longer be continued pursuant to Section 14.2.
5.9 Adjustment of Minimum Quarterly Distribution and Target
Distribution Levels. (a) Adjustments of the Minimum Quarterly Distribution,
First Target Distribution and Second Target Distribution shall be made in the
following circumstances: (i) the Minimum Quarterly Distribution, First Target
Distribution and Second Target Distribution shall be proportionately adjusted
in the event of any distribution, combination or subdivision (whether effected
by a distribution payable in Units or otherwise) of Units or other Partnership
Securities in accordance with Section 4.11; and (ii) in the event of a
distribution of Available Cash that is deemed to be Cash
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from Interim Capital Transactions, the Minimum Quarterly Distribution, First
Target Distribution and Second Target Distribution shall be adjusted
proportionately downward to equal the product obtained by multiplying the
otherwise applicable Minimum Quarterly Distribution, First Target Distribution
and Second Target Distribution, as the same may have been previously adjusted,
by a fraction of which the numerator is the Unrecovered Initial Unit Price
immediately after giving effect to such distribution and of which the
denominator is the Unrecovered Initial Unit Price immediately prior to giving
effect to such distribution.
(b) The Minimum Quarterly Distribution, First Target Distribution and
Second Target Distribution may also be adjusted under the circumstances, and in
the manner, set forth in Section 9.6.
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
6.1 Management. (a) The General Partner shall conduct, direct and
exercise full control over all activities of the Partnership. Except as
otherwise expressly provided in this Agreement, all management powers over the
business and affairs of the Partnership shall be exclusively vested in the
General Partner, and no Limited Partner or Assignee shall have any right of
control or management power over the business and affairs of the Partnership.
In addition to the powers now or hereafter granted a general partner of a
limited partnership under applicable law or which are granted to the General
Partner under any other provision of this Agreement, the General Partner,
subject to Section 6.3, shall have full power and authority to do all things
and on such terms as it, in its sole discretion, may deem necessary or
desirable (i) to conduct the business of the Partnership, to exercise all
powers set forth in Section 3.2 and to effectuate the purposes set forth in
Section 3.1, including, without limitation, (A) the making of any expenditures,
the lending or borrowing of money, the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance of evidences
of indebtedness and the incurring of any other obligations and the securing of
same by mortgage, deed of trust or other lien or encumbrance; (B) the making of
tax, regulatory and other filings, or rendering of periodic or other reports to
governmental or other agencies having jurisdiction over the business or assets
of the Partnership; (C) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of the
Partnership or the merger or other combination of the Partnership with or into
another Person (the matters described in this clause (C) being subject,
however, to any prior approval that may be required by Section 6.3); (D) the
use of the assets of the Partnership (including, without limitation, cash on
hand) for any purpose consistent with the terms of this Agreement, including,
without limitation, the financing of the conduct of the operations of the
Partnership or the Operating Partnership, the lending of funds to other Persons
(including, without limitation, the Operating Partnership) and the repayment of
obligations of the Partnership and the Operating Partnership and the making of
capital contributions to the Operating Partnership; (E) the negotiation,
execution and performance of any contracts, conveyances or other instruments
(including, without limitation, instruments that limit the liability of the
Partnership under contractual arrangements to all or particular assets of the
Partnership, with
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the other party to the contract to have no recourse against the General Partner
or its assets other than its interest in the Partnership, even if same results
in the terms of the transaction being less favorable to the Partnership than
would otherwise be the case); (F) the distribution of Partnership cash; (G) the
selection and dismissal of employees 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; (H) the maintenance of insurance for the benefit of the
Partners and the Partnership and the Operating Partnership (including, without
limitation, the assets and operations of the Partnership and the Operating
Partnership); (I) 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 (including, without limitation, the acquisition
of interests in, and the contributions of property to, the Operating
Partnership from time to time); (J) the control of any matters affecting the
rights and obligations of the Partnership, including, without limitation, the
bringing and defending of actions at law or in equity and otherwise engaging in
the conduct of litigation and the incurring of legal expense and the settlement
of claims and litigation; (K) the indemnification of any Person against
liabilities and contingencies to the extent permitted by law; (L) the entering
into of listing agreements with the New York Stock Exchange and any other
securities exchange and the delisting of some or all of the Units from, or
requesting that trading be suspended on, any such exchange (subject to any
prior approval that may be required under Section 1.6); and (M) the purchase,
sale or other acquisition or disposition of Units; and (ii) to undertake any
action in connection with the Partnership's participation in the Operating
Partnership as the limited partner (including, without limitation,
contributions or loans of funds by the Partnership to the Operating
Partnership).
(b) Notwithstanding any other provision of this Agreement, the
Operating Partnership Agreement, the Delaware Act or any applicable law, rule
or regulation, each of the Partners and Assignees and each other Person who may
acquire an interest in Units hereby (i) approves, ratifies and confirms the
execution, delivery and performance by the parties thereto of the First
Mortgage Note Agreements, the First Mortgage Notes, the related mortgage, the
revolving credit facility, the Operating Partnership Agreement, the
Underwriting Agreement, the Conveyance Agreement, the LPL Contribution
Agreement, the Distribution Support Agreement and the other agreements
described in or filed as part of the Registration Statement; (ii) agrees that
the General Partner is authorized to execute, deliver and perform the
agreements referred to in clause (i) of this sentence and the other agreements,
acts, transactions and matters described in the Registration Statement on
behalf of the Partnership without any further act, approval or vote of the
Partners or the Assignees or the other Persons who may acquire an interest in
Units; and (iii) agrees that none of the execution, delivery or performance by
the General Partner, the Partnership, the Operating Partnership or any
Affiliate thereof of any agreement authorized or permitted under this Agreement
(including, without limitation, the exercise by the General Partner or any
Affiliate of the General Partner of the rights accorded pursuant to Article
XVII) shall constitute a breach by the General Partner of any duty that the
General Partner may owe the Partnership or the Limited Partners or the
Assignees or any other Persons under this Agreement or of any duty stated or
implied by law or equity.
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6.2 Certificate of Limited Partnership. The General Partner has
caused the Certificate of Limited Partnership to be filed with the Secretary of
State of the State of Delaware as required by the Delaware Act and shall use
all reasonable efforts to cause to be filed such other certificates or
documents as may be determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Delaware or any
other state in which the Partnership may elect to do business or own property.
To the extent that such action is determined by the General Partner in its sole
discretion to be reasonable and necessary or appropriate, the General Partner
shall file amendments to and restatements of the Certificate of Limited
Partnership and do all things to maintain the Partnership as a limited
partnership (or a partnership in which the limited partners have limited
liability) under the laws of the State of Delaware or of any other state in
which the Partnership may elect to do business or own property. Subject to the
terms of Section 7.5(a), the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate of Limited
Partnership, any qualification document or any amendment thereto to any Limited
Partner or Assignee.
6.3 Restrictions on General Partner's Authority. (a) The General
Partner may not, without written approval of the specific act by all of the
Limited Partners or by other written instrument executed and delivered by all
of the Limited Partners subsequent to the date of this Agreement, take any
action in contravention of this Agreement, including, without limitation, (i)
any act that would make it impossible to carry on the ordinary business of the
Partnership, except as otherwise provided in this Agreement; (ii) possess
Partnership property, or assign any rights in specific Partnership property,
for other than a Partnership purpose; (iii) admit a Person as a Partner, except
as otherwise provided in this Agreement; (iv) amend this Agreement in any
manner, except as otherwise provided in this Agreement or applicable law; or
(v) transfer its interest as general partner of the Partnership, except as
otherwise provided in this Agreement.
(b) Except as provided in Article XIV, the General Partner may not
sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related
transactions (including by way of merger, consolidation or other combination
with any other Person) or approve on behalf of the Partnership the sale,
exchange or other disposition of all or substantially all of the assets of the
Operating Partnership, without the approval of the holders of at least 66 2/3%
of the Outstanding Class A Common Units during the Preference Period and
thereafter without the approval of the holders of at least a majority of the
Outstanding Units; provided, however, that this provision shall not preclude or
limit the General Partner's ability to mortgage, pledge, hypothecate or grant a
security interest in all or substantially all of the Partnership's assets or
the Operating Partnership's assets and shall not apply to any forced sale of
any or all of the Partnership's assets or the Operating Partnership's assets
pursuant to the foreclosure of, or other realization upon, any such
encumbrance. Without the approval of the holders of at least 66 2/3% of the
Outstanding Class A Common Units during the Preference Period and thereafter
without the approval of the holders of at least a majority of the Outstanding
Units, the General Partner shall not, on behalf of the Partnership, (i) consent
to any amendment to the Operating Partnership Agreement or, except as expressly
permitted by Section 6.9(d), take any action permitted
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to be taken by the limited partner of the Operating Partnership, in either
case, that would adversely affect the Partnership as the limited partner of the
Operating Partnership or (ii) except as permitted under Sections 11.2 and 13.1,
elect or cause the Partnership to elect a successor general partner of the
Operating Partnership.
(c) Unless approved by the affirmative vote of the holders of at
least 66 2/3% of each class of the Outstanding Units, the General Partner shall
not take any action or refuse to take any reasonable action the effect of
which, if taken or not taken, as the case may be, would be to cause the
Partnership or the Operating Partnership to be taxable as a corporation or
otherwise taxed as an entity for federal income tax purposes.
(d) At all times while serving as the general partner of the
Partnership, the General Partner shall not make any dividend or distribution
on, or repurchase any shares of, its stock or take any other action within its
control if the effect of such dividend, distribution, repurchase or other
action would be to reduce its net worth below an amount necessary to receive an
Opinion of Counsel that the Partnership will be treated as a partnership for
federal income tax purposes.
6.4 Reimbursement of the General Partner. (a) Except as provided in
this Section 6.4 and elsewhere in this Agreement or in the Operating
Partnership Agreement, the General Partner shall not be compensated for its
services as general partner of the Partnership or the Operating Partnership.
(b) The General Partner shall be reimbursed on a monthly basis, or
such other basis as the General Partner may determine in its sole discretion,
for (i) all direct and indirect expenses it incurs or payments it makes on
behalf of the Partnership (including, without limitation, amounts paid to any
Person to perform services for the Partnership), and (ii) that portion of the
General Partner's or its Affiliates' legal, accounting, investor
communications, utilities, telephone, secretarial, travel, entertainment,
bookkeeping, reporting, data processing, office rent and other office expenses
(including, without limitation, overhead charges), salaries, fees and other
compensation and benefit expenses of employees, officers and directors,
insurance, other administrative or overhead expenses and all other expenses, in
each such case, necessary or appropriate to the conduct of the Partnership's
business and allocable to the Partnership or otherwise incurred by the General
Partner in connection with operating the Partnership's business (including,
without limitation, expenses allocated to the General Partner by its
Affiliates). Any accruals by the General Partner of the expected cost of
providing all forms of post-retirement benefits to employees or former
employees of the General Partner and their beneficiaries and qualified
dependents will be borne by the Partnership. The General Partner shall
determine the fees and expenses that are allocable to the Partnership in any
reasonable manner determined by the General Partner in its sole discretion.
Such reimbursements shall be in addition to any reimbursement to the General
Partner as a result of indemnification pursuant to Section 6.7.
(c) Subject to Section 4.4(c), the General Partner in its sole
discretion and without the approval of the Limited Partners may propose and
adopt on behalf of the Partnership employee
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benefit plans (including, without limitation, plans involving the issuance of
Units), for the benefit of employees of the General Partner, the Partnership,
the Operating Partnership or any Affiliate of any of them in respect of
services performed, directly or indirectly, for the benefit of the Partnership
or the Operating Partnership.
6.5 Outside Activities. (a) After the Closing Date, the General
Partner shall limit its activities to those required or authorized by the
Operating Partnership Agreement or this Agreement or the Distribution Support
Agreement.
(b) Except as described in the Distribution Support Agreement or as
provided in Section 6.5(a), each Indemnitee is free to engage in any business,
including any business that is in competition with the business of the
Partnership. The General Partner and any other Persons affiliated with the
General Partner may acquire Units or other Partnership Securities, in addition
to those acquired by any of such Persons on the Closing Date, and shall be
entitled to exercise all rights of an Assignee or Limited Partner, as
applicable, relating to such Units or Partnership Securities, as the case may
be.
(c) Without limiting Sections 6.5(a) and 6.5(b), but notwithstanding
anything to the contrary in this Agreement, the competitive activities of
Indemnitees described in the Registration Statement are hereby approved by all
Partners, and it shall not be deemed to be a breach of the General Partner's
fiduciary duty for the General Partner to permit an Indemnitee to engage in a
business opportunity in preference to or to the exclusion of the Partnership,
provided such activities are not prohibited by the Distribution Support
Agreement.
6.6 Loans to and from the General Partner; Contracts with Affiliates.
(a) The General Partner or any Affiliate thereof may lend to the Partnership or
the Operating Partnership, and the Partnership and the Operating Partnership
may borrow, funds needed or desired by the Partnership and the Operating
Partnership for such periods of time as the General Partner may determine;
provided, however, that the General Partner or any of its Affiliates may not
charge the Partnership or the Operating Partnership interest at a rate greater
than the rate that would be charged the Partnership or the Operating
Partnership, as the case may be (without reference to the General Partner's
financial abilities or guarantees), by unrelated lenders on comparable loans.
The Partnership or the Operating Partnership, as the case may be, shall
reimburse the General Partner or any of its Affiliates, as the case may be, for
any costs (other than any additional interest costs) incurred by it in
connection with the borrowing of funds obtained by the General Partner or any
of its Affiliates and loaned to the Partnership or the Operating Partnership.
(b) The Partnership may lend or contribute to the Operating
Partnership, and the Operating Partnership may borrow, funds on terms and
conditions established in the sole discretion of the General Partner. The
foregoing authority shall be exercised by the General Partner in its sole
discretion and shall not create any right or benefit in favor of the Operating
Partnership or any other Person. The Partnership may not lend funds to the
General Partner or any of its Affiliates, otherwise than for short-term funds
management purposes.
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(c) The General Partner may itself, or may enter into an agreement
with any of its Affiliates to, render services to the Partnership. Any service
rendered to the Partnership by the General Partner or any of its Affiliates
shall be on terms that are fair and reasonable to the Partnership; provided,
however, that the requirements of this Section 6.6(c) shall be deemed satisfied
as to any transaction the terms of which are no less favorable to the
Partnership than those generally being provided to or available from unrelated
third parties. The provisions of Section 6.4 shall apply to the rendering of
services described in this Section 6.6(c).
(d) The Partnership may transfer assets to joint ventures, other
partnerships, corporations or other business entities in which it is or thereby
becomes a participant upon such terms and subject to such conditions as are
consistent with this Agreement and applicable law.
(e) Neither the General Partner nor any of its Affiliates shall sell,
transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the
requirements of this Section 6.6(e) shall be deemed to be satisfied (i) as to
the transactions effected pursuant to Sections 4.2 and 4.3, the Conveyance
Agreement, and any other transactions described in or contemplated by the
Registration Statement and (ii) as to any transaction the terms of which are no
less favorable to the Partnership than those generally being provided to or
available from unrelated third parties.
(f) The General Partner and its Affiliates shall have no obligation
to permit the Partnership or the Operating Partnership to use any facilities of
the General Partner and its Affiliates, except as may be provided in contracts
entered into from time to time specifically dealing with such use, nor shall
there be any obligation of the General Partner or its Affiliates to enter into
such contracts.
6.7 Indemnification. (a) To the fullest extent permitted by law but
subject to the limitations expressly provided in this Agreement, each
Indemnitee shall be indemnified and held harmless by the Partnership from and
against any and all losses, claims, damages, liabilities (joint or several),
expenses (including, without limitation, legal fees and expenses), judgments,
fines, settlements and other amounts arising from any and all claims, demands,
actions, suits or proceedings, whether civil, criminal, administrative or
investigative, in which any Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, by reason of its status as (i) the General
Partner, a Departing Partner or any of their Affiliates, (ii) an officer,
director, employee, partner, agent or trustee of the General Partner, any
Departing Partner or any of their Affiliates or (iii) a Person serving at the
request of the Partnership in another entity in a similar capacity; provided,
that in each case the Indemnitee acted in good faith, in a manner which such
Indemnitee believed to be in, or not opposed to, the best interests of the
Partnership and, with respect to any criminal proceeding, had no reasonable
cause to believe its conduct was unlawful; provided, further, no
indemnification pursuant to this Section 6.7 shall be available to the General
Partner or IPL with respect to their respective obligations incurred pursuant
to the Underwriting Agreement or the Conveyance Agreement (other than
obligations incurred by the General Partner on behalf of the
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Partnership or the Operating Partnership). The termination of any action, suit
or proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that the
Indemnitee acted in a manner contrary to that specified above. Any
indemnification pursuant to this Section 6.7 shall be made only out of the
assets of the Partnership.
(b) To the fullest extent permitted by law, expenses (including,
without limitation, reasonable legal fees and expenses) incurred by an
Indemnitee in defending any claim, demand, action, suit or proceeding shall,
from time to time, be advanced by the Partnership prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Partnership of an undertaking by or on behalf of the Indemnitee to repay
such amount if it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 6.7.
(c) The indemnification provided by this Section 6.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, both as to actions in the Indemnitees' capacity as (i) the General
Partner, a Departing Partner or an Affiliate thereof, (ii) an officer,
director, employee, partner, agent or trustee of the General Partner, any
Departing Partner or an Affiliate thereof or (iii) a Person serving at the
request of the Partnership in another entity in a similar capacity, and shall
continue as to an Indemnitee who has ceased to serve in such capacity and as to
actions in any other capacity (including, without limitation, any capacity
under the Underwriting Agreement).
(d) The Partnership may purchase and maintain (or reimburse the
General Partner or its Affiliates for the cost of) insurance, on behalf of the
General Partner and such other Persons as the General Partner shall determine,
against any liability that may be asserted against or expense that may be
incurred by such Person in connection with the Partnership's activities,
whether or not the Partnership would have the power to indemnify such Person
against such liabilities under the provisions of this Agreement.
(e) For purposes of this Section 6.7, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by it of its duties to the Partnership also
imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of Section 6.7 (a); and action
taken or omitted by it with respect to an employee benefit plan in the
performance of its duties for a purpose reasonably believed by it to be in the
interest of the participants and beneficiaries of the plan shall be deemed to
be for a purpose which is in, or not opposed to, the best interests of the
Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in
this Agreement.
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(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 6.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 6.7 or any
other provision hereof shall in any manner terminate, reduce or impair the
right of any past, present or future Indemnitee to be indemnified by the
Partnership, nor the obligation of the Partnership to indemnify any such
Indemnitee under and in accordance with the provisions of this Section 6.7 as
in effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
6.8 Liability of Indemnitees. (a) Notwithstanding anything to the
contrary set forth in this Agreement, no Indemnitee shall be liable for
monetary damages to the Partnership, the Limited Partners, the Assignees or any
other Persons who have acquired interests in the Units, for losses sustained or
liabilities incurred as a result of any act or omission if such Indemnitee
acted in good faith.
(b) Subject to its obligations and duties as General Partner set
forth in Section 6.1(a), the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents, and the General Partner
shall not be responsible for any misconduct or negligence on the part of any
such agent appointed by the General Partner in good faith.
(c) Any amendment, modification or repeal of this Section 6.8 or any
other provision hereof shall be prospective only and shall not in any way
affect the limitations on the liability to the Partnership and the Limited
Partners of the General Partner, its directors, officers and employees under
this Section 6.8 as in effect immediately prior to such amendment, modification
or repeal with respect to claims arising from or relating to matters occurring,
in whole or in part, prior to such amendment, modification or repeal,
regardless of when such claims may arise or be asserted.
6.9 Resolution of Conflicts of Interest. (a) Unless otherwise
expressly provided in this Agreement or the Operating Partnership Agreement or
the Distribution Support Agreement, whenever a potential conflict of interest
exists or arises between the General Partner or any of its Affiliates, on the
one hand, and the Partnership, the Operating Partnership, any Partner or any
Assignee, on the other hand, any resolution or course of action in respect of
such conflict of interest shall be permitted and deemed approved by all
Partners, and shall not constitute a breach of this Agreement, of the Operating
Partnership Agreement, of any agreement contemplated herein or therein, or of
any duty stated or implied by law or equity, if the resolution or course of
action is or,
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by operation of this Agreement, is deemed to be, fair and reasonable to the
Partnership. The General Partner shall be authorized in connection with its
resolution of any conflict of interest to consider (i) the relative interests
of any party to such conflict, agreement, transaction or situation and the
benefits and burdens relating to such interest; (ii) any customary or accepted
industry practices and any customary or historical dealings with a particular
Person; (iii) any applicable generally accepted accounting or engineering
practices or principles; and (iv) such additional factors as the General
Partner determines in its sole discretion to be relevant, reasonable or
appropriate under the circumstances. Nothing contained in this Agreement,
however, is intended to nor shall it be construed to require the General
Partner to consider the interests of any Person other than the Partnership. In
the absence of bad faith by the General Partner, the resolution, action or
terms so made, taken or provided by the General Partner with respect to such
matter shall not constitute a breach of this Agreement or any other agreement
contemplated herein or a breach of any standard of care or duty imposed herein
or therein or under the Delaware Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated
hereby provides that the General Partner or any of its Affiliates is permitted
or required to make a decision (i) in its "sole discretion" or "discretion"
that it deems "necessary or appropriate" or under a grant of similar authority
or latitude, the General Partner or such Affiliate shall be entitled to
consider only such interests and factors as it desires and shall have no duty
or obligation to give any consideration to any interest of, or factors
affecting, the Partnership, the Operating Partnership, any Limited Partner or
any Assignee, or (ii) in "good faith" or under another express standard, the
General Partner or such Affiliate shall act under such express standard and
shall not be subject to any other or different standards imposed by this
Agreement, the Operating Partnership Agreement, any other agreement
contemplated hereby or under the Delaware Act or any other law, rule or
regulation. In addition, any actions taken by the General Partner consistent
with the standards of "reasonable discretion" set forth in the definitions of
Available Cash or Cash from Operations shall not constitute a breach of any
duty of the General Partner to the Partnership or the Limited Partners. During
or after the Preference Period, the General Partner shall have no duty, express
or implied, to sell or otherwise dispose of any asset of the Operating
Partnership or of the Partnership, other than in the ordinary course of
business. No borrowing by the Partnership or the Operating Partnership or the
approval thereof by the General Partner shall be deemed to constitute a breach
of any duty of the General Partner to the Partnership or the Limited Partners
by reason of the fact that the purpose or effect of such borrowing is directly
or indirectly to (i) avoid the obligation of the General Partner or any of its
Affiliates to purchase APIs under the Distribution Support Agreement or (ii)
enable the General Partner to receive incentive distributions.
(c) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
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(d) The Limited Partners hereby authorize the General Partner, on
behalf of the Partnership as limited partner of the Operating Partnership, to
approve actions by the general partner of the Operating Partnership similar to
those actions permitted to be taken by the General Partner pursuant to this
Section 6.9.
6.10 Other Matters Concerning the General Partner. (a) The General
Partner may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, debenture, or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants
and advisers selected by it, and any act taken or omitted in reliance upon the
opinion (including, without limitation, an Opinion of Counsel) of such Persons
as to matters that the General Partner reasonably believes to be within such
Person's professional or expert competence shall be conclusively presumed to
have been done or omitted in good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such
attorney shall, to the extent provided by the General Partner in the power of
attorney, have full power and authority to do and perform each and every act
and duty that is permitted or required to be done by the General Partner
hereunder.
(d) Any standard of care and duty imposed by this Agreement or under
the Delaware Act or any applicable law, rule or regulation shall be modified,
waived or limited as required to permit the General Partner to act under this
Agreement or any other agreement contemplated by this Agreement and to make any
decision pursuant to the authority prescribed in this Agreement, so long as
such action is reasonably believed by the General Partner to be in the best
interests of the Partnership.
6.11 Title to Partnership Assets. Title to Partnership Assets,
whether real, personal or mixed and whether tangible or intangible, shall be
deemed to be owned by the Partnership as an entity, and no Partner or Assignee,
individually or collectively, shall have any ownership interest in such
Partnership Assets or any portion thereof. Title to any or all of the
Partnership Assets may be held in the name of the Partnership, the General
Partner or one or more nominees, as the General Partner may determine. The
General Partner hereby declares and warrants that any Partnership assets for
which record title is held in the name of the General Partner shall be held by
the General Partner for the exclusive use and benefit of the Partnership in
accordance with the provisions of this Agreement; provided, however, that the
General Partner shall use its reasonable efforts to cause record title to such
assets (other than those assets in respect of which the General Partner
determines that the expense and difficulty of conveyancing makes transfer of
record title to the Partnership impracticable) to be vested in the Partnership
as soon as reasonably practicable. All Partnership
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Assets shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which record title to such Partnership
assets are held.
6.12 Purchase or Sale of Class A Common Units. The General Partner
may cause the Partnership to purchase or otherwise acquire Class A Common
Units. As long as Class A Common Units are held by the Partnership or the
Operating Partnership, such Class A Common Units shall not be considered
Outstanding for any purpose, except as otherwise provided herein. The General
Partner or any Affiliate of the General Partner may also purchase or otherwise
acquire and sell or otherwise dispose of Class A Common Units for its own
account, subject to the provisions of Articles XI and XII.
6.13 Reliance by Third Parties. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any contracts on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if it were
the Partnership's sole party in interest, both legally and beneficially. Each
Limited Partner hereby waives any and all defenses or other remedies that may
be available against such Person to contest, negate or disaffirm any action of
the General Partner in connection with any such dealing. In no event shall any
Person dealing with the General Partner or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to
inquire into the necessity or expedience of any act or action of the General
Partner or its representatives. Each and every certificate, document or other
instrument executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (a) at the time of the execution
and delivery of such certificate, document or instrument, this Agreement was in
full force and effect, (b) the Person executing and delivering such
certificate, document or instrument was duly authorized and empowered to do so
for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
6.14 Registration Rights of the General Partner and its Affiliates.
(a) If (i) the General Partner or any of its Affiliates (including, for
purposes of this Section 6.14, Persons that are Affiliates at the date hereof
notwithstanding that they may later cease to be Affiliates) hold Units or other
Partnership Securities which it desires to sell and (ii) Rule 144 of the
Securities Act (or any successor rule or regulation to Rule 144) is not
available to enable the General Partner or such Affiliates to dispose of the
number of Units or other Partnership Securities it desires to sell at the time
it desires to do so, then upon the request of the General Partner or any of its
Affiliates, the Partnership shall file with the Securities and Exchange
Commission as promptly as practicable after receiving such request, and use all
reasonable efforts to cause to become effective and remain effective for a
reasonable period following its effective date, a registration statement or
statements under the Securities Act registering the offering and sale of the
number of Units or other Partnership Securities specified in the request. All
registrations requested pursuant to this Section 6.14(a) are referred to as
"Demand Registrations." The Partnership may postpone for up to six months the
filing
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or the effectiveness of a registration statement pursuant to a Demand
Registration if (i) the General Partner or, (ii) if at the time a request for
Demand Registration is submitted to the Partnership the Person requesting
registration is an Affiliate of the General Partner, a majority of the
independent directors of the General Partner, determines in its good faith
judgment that a postponement of the requested registration for up to six months
would be in the best interests of the Partnership and its Partners due to a
pending transaction, investigation or other event. In connection with any
Demand Registration, the Partnership shall promptly prepare and file (x) such
documents as may be necessary to register or qualify the securities subject to
such registration under the securities laws of such states as the Persons
requesting registration shall reasonably request; provided, however, that no
such qualification shall be required in any jurisdiction where, as a result
thereof, the Partnership would become subject to general service of process or
to taxation or qualification to do business as a foreign corporation doing
business in such jurisdiction, and (y) such documents as may be necessary to
apply for listing or to list the securities subject to such registration on
such National Securities Exchange as the Persons requesting registration shall
reasonably request, and do any and all other acts and things that may
reasonably be necessary or advisable to enable such Persons to consummate a
public sale of such securities in such states. Except as set forth in
subsection (c) below, all costs and expenses of any such Demand Registration
and offering shall be paid by the Persons requesting registration, without
reimbursement by the Partnership.
(b) If the Partnership shall at any time propose to file a
registration statement under the Securities Act for an offering of securities
of the Partnership for cash (other than pursuant to a Demand Registration or an
offering relating solely to an employee benefit plan), the Partnership shall
use its best efforts to include such number or amount of securities held by the
General Partner and any of its Affiliates in such registration statement as the
General Partner or any of such Affiliates shall request. All registrations
requested by the Purchaser pursuant to this Section 6.14(b) are referred to
herein as "Piggyback Registrations." If the proposed offering shall be an
underwritten offering, then, in the event that the managing underwriter of such
offering advises the General Partner or any of such Affiliates in writing that
in its opinion the inclusion of all or some of the securities of the Persons
requesting Piggyback Registration would adversely and materially affect the
success of the offering, the Partnership shall include in such offering only
that number or amount, if any, of securities of the Persons requesting
Piggyback Registration which, in the opinion of the managing underwriter, will
not so adversely and materially affect the offering. In connection with any
Piggyback Registration, the General Partner or any of its Affiliates requesting
registration shall bear the expense of all underwriting discounts and
commissions attributable to the securities sold for their own respective
accounts and shall reimburse the Partnership for all incremental costs incurred
by the Partnership in connection with such registration resulting from the
inclusion of the securities held by the General Partner or any of its
Affiliates.
(c) If underwriters are engaged in connection with any Demand or
Piggyback Registration the Partnership shall provide indemnification,
representations, covenants, opinions and other assurance to the underwriters in
form and substance reasonably satisfactory to such underwriters. Further, in
addition to and not in limitation of the Partnership's obligation under Section
6.7, the Partnership shall, to the fullest extent permitted by law, indemnify
and hold harmless
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the General Partner or such other holder, its officers, directors and each
Person who controls the General Partner or such other holder (within the
meaning of the Securities Act) and any agent thereof (collectively,
"Indemnified Persons") against any losses, claims, demands, actions, causes of
action, assessments, damages, liabilities (joint or several), costs and
expenses (including without limitation, interest, penalties and reasonable
attorneys' fees and disbursements), resulting to, imposed upon, or incurred by
an Indemnified Person, directly or indirectly, under the Securities Act or
otherwise (hereinafter referred to in this Section 6.14(c) as a "claim" and in
the plural as "claims"), based upon, arising out of, or resulting from any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which any securities were registered under the
Securities Act or any state securities or Blue Sky laws, in any preliminary
prospectus (if used prior to the effective date of such registration
statement), or in any summary or final prospectus or in any amendment or
supplement thereto (if used during the period the Partnership is required to
keep the registration statement current), or arising out of, based upon or
resulting from the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements made
therein not misleading; provided, however, that the Partnership shall not be
liable to the extent that any such claim arises out of, is based upon or
results from an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, such preliminary, summary
or final prospectus or such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Partnership by or on
behalf of such Indemnified Person specifically for use in the preparation
thereof.
(d) The provisions of Sections 6.14(a) and 6.14(b) shall continue to
be applicable with aspect to the General Partner and any of its Affiliates
after the General Partner ceases to be a Partner of the Partnership, during a
period of two years subsequent to the effective date of such cessation and for
so long thereafter as is required for the General Partner or any of its
Affiliates to sell all of the Units or other Partnership Securities with
respect to which the General Partner or any of its Affiliates have requested
during such two-year period that a registration statement be filed; provided,
however, that the Partnership shall not be required to file successive
registration statements covering the same securities for which registration was
demanded during such two-year period. The provisions of Section 6.14(c) shall
continue in effect thereafter.
(e) Any request to register Partnership Securities pursuant to this
Section 6.14 shall (i) specify the Partnership Securities intended to be
offered and sold by the Person making the request, (ii) express such Person's
present intent to offer such shares for distribution, (iii) describe the nature
or method of the proposed offer and sale of Partnership Securities, and (iv)
contain the undertaking of such Person to provide all such information and
materials and take all action as may be required in order to permit the
Partnership to comply with all applicable requirements in connection with the
registration of such Partnership Securities.
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ARTICLE VII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
7.1 Limitation of Liability. The Limited Partners and the
Organizational Limited Partner and the Assignees shall have no liability under
this Agreement except as expressly provided in this Agreement or the Delaware
Act.
7.2 Management of Business. No Limited Partner or Assignee (other
than the General Partner, any of its Affiliates or any officer, director,
employee, partner, agent or trustee of the General Partner or any of its
Affiliates, in its capacity as such, if such Person shall also be a Limited
Partner or Assignee) shall take part in the operation, management or control
(within the meaning of the Delaware Act) of the Partnership's business,
transact any business in the Partnership's name or have the power to sign
documents for or otherwise bind the Partnership. The transaction of any such
business by the General Partner, any of its Affiliates or any officer,
director, employee, partner, agent or trustee of the General Partner or any of
its Affiliates, in its capacity as such, shall not affect, impair or eliminate
the limitations on the liability of the Limited Partners or Assignees under
this Agreement.
7.3 Outside Activities. Subject to the provisions of Section 6.5,
which shall continue to be applicable to the Persons referred to therein,
regardless of whether such Persons shall also be Limited Partners or Assignees,
any Limited Partner or Assignee shall be entitled to and may have business
interests and engage in business activities in addition to those relating to
the Partnership, including, without limitation, business interests and
activities in direct competition with the Partnership or the Operating
Partnership. Neither the Partnership nor any of the other Partners or
Assignees shall have any rights by virtue of this Agreement in any business
ventures of any Limited Partner or Assignee.
7.4 Return of Capital. No Limited Partner shall be entitled to the
withdrawal or return of his Capital Contribution, except to the extent, if any,
that distributions made pursuant to this Agreement or upon termination of the
Partnership may be considered as such by law and then only to the extent
provided for in this Agreement. Except to the extent provided by Article V or
as otherwise expressly provided in this Agreement or in the Distribution
Support Agreement, no Limited Partner or Assignee shall have priority over any
other Limited Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses or distributions. Any such return shall
be a compromise to which all Partners and Assignees agree within the meaning of
Section 17.502(b) of the Delaware Act.
7.5 Rights of Limited Partners Relating to the Partnership. (a) In
addition to other rights provided by this Agreement or by applicable law, and
except as limited by Section 7.5(b), each Limited Partner shall have the right,
for a purpose reasonably related to such Limited Partner's interest as a
limited partner in the Partnership, upon reasonable demand and at such Limited
Partner's own expense:
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(i) to obtain true and full information regarding the status
of the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of the
Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to him, upon notification to the General
Partner, a current list of the name and last known business, residence
or mailing address of each Partner;
(iv) to have furnished to him, upon notification to the General
Partner, a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto;
(v) to obtain true and full information regarding the amount
of cash and description and statement of the Agreed Value of any other
Capital Contribution by each Partner and which each Partner has agreed
to contribute in the future, and the date on which each became a
Partner; and
(vi) to obtain such other information regarding the affairs of
the Partnership as is just and reasonable.
(b) Notwithstanding any other provision of this Agreement, the
General Partner may keep confidential from the Limited Partners and Assignees
for such period of time as the General Partner deems reasonable, any
information that the General Partner reasonably believes to be in the nature of
trade secrets or other information the disclosure of which the General Partner
in good faith believes is not in the best interests of the Partnership or could
damage the Partnership or the Operating Partnership or that the Partnership or
the Operating Partnership is required by law or by agreements with third
parties to keep confidential (other than agreements with Affiliates the primary
purpose of which is to circumvent the obligations set forth in Section 7.5).
VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 Records and Accounting. The General Partner shall keep or cause
to be kept at the principal office of the Partnership appropriate books and
records with respect to the Partnership's business including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Section 7.5(a). Any books and records maintained by or on behalf of the
Partnership in the regular course of its business, including, without
limitation, the record of the Record Holders and Assignees of Units or other
Partnership Securities, books of account and records of Partnership
proceedings, may be kept on, or be in the form of, computer disks, hard disks,
punch cards, magnetic tape, photographs, micrographics or any other information
storage device, provided, that the books and records so maintained are
convertible into clearly legible written form within a reasonable period
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of time. The books of the Partnership shall be maintained, for financial
reporting purposes, on an accrual basis in accordance with generally accepted
accounting principles.
8.2 Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
8.3 Reports. (a) As soon as practicable, but in no event later than
120 days after the close of each Partnership Year, the General Partner shall
cause to be mailed to each Record Holder of a Unit as of a date selected by the
General Partner in its sole discretion, an annual report containing financial
statements of the Partnership for such Partnership Year, presented in
accordance with generally accepted accounting principles, including a balance
sheet and statements of operations, Partners' equity and cash flows, such
statements to be audited by a firm of independent public accountants selected
by the General Partner.
(b) As soon as practicable, but in no event later than 90 days after
the close of each calendar quarter except the last calendar quarter of each
year, the General Partner shall cause to be mailed to each Record Holder of a
Unit, as of a date selected by the General Partner in its sole discretion, a
report containing unaudited financial statements of the Partnership and such
other information as may be required by applicable law, regulation or rule of
any National Securities Exchange on which the Units are listed for trading, or
as the General Partner determines to be necessary or appropriate.
ARTICLE IX
TAX MATTERS
9.1 Preparation of Tax Returns. The General Partner shall arrange
for the preparation and timely filing of all returns of Partnership income,
gains, deductions, losses and other items required of the Partnership for
federal and state income tax purposes and shall use all reasonable efforts to
furnish, within 90 days of the close of each taxable year of the Partnership,
the tax information reasonably required by Unitholders for federal and state
income tax reporting purposes. The classification, realization and recognition
of income, gain, losses and deductions and other items shall be on the accrual
method of accounting for federal income tax purposes. The taxable year of the
Partnership shall be the calendar year.
9.2 Tax Elections. Except as otherwise provided herein, the General
Partner shall in its sole discretion, determine whether to make any available
election pursuant to the Code; provided, however, that the General Partner
shall make the election under Section 754 of the Code in accordance with
applicable regulations thereunder. The General Partner shall have the right to
seek to revoke any such election (including, without limitation, the election
under Section 754 of the Code) upon the General Partner's determination in its
sole discretion that such revocation is in the best interests of the Limited
Partners and Assignees.
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9.3 Tax Controversies. Subject to the provisions hereof, the General
Partner is designated the Tax Matters Partner (as defined in Section 6231 of
the Code), and is authorized and required to represent the Partnership (at the
Partnership's expense) in connection with all examinations of the Partnership's
affairs by tax authorities, including, without limitation, resulting
administrative and judicial proceedings, and to expend Partnership funds for
professional services and costs associated therewith. Each Partner and
Assignee agrees to cooperate with the General Partner and to do or refrain from
doing any or all things reasonably required by the General Partner to conduct
such proceedings.
9.4 Organizational Expenses. The Partnership shall elect to deduct
expenses, if any, incurred by it in organizing the Partnership ratably over a
60-month period as provided in Section 709 of the Code.
9.5 Withholding. Notwithstanding any other provision of this
Agreement, the General Partner is authorized to take any action that it
determines in its sole discretion to be necessary or appropriate to cause the
Partnership and the Operating Partnership to comply with any withholding
requirements established under the Code or any other federal, state or local
law, including, without limitation, pursuant to Sections 1441, 1442, 1445 and
1446 of the Code. To the extent that the Partnership is required to withhold
and pay over to any taxing authority any amount resulting from the allocation
or distribution of income to any Partner or Assignee (including, without
limitation, by reason of Section 1446 of the Code), the amount withheld shall
be treated as a distribution of cash for purposes of Section 4.6(a) in the
amount of such withholding from such Partner.
9.6 Entity-Level Taxation. If legislation is enacted which causes
the Partnership to become treated as an association taxable as a corporation
for federal income tax purposes, then with respect to any calendar quarter
thereafter the Minimum Quarterly Distribution, First Target Distribution or
Second Target Distribution, as the case may be, shall be equal to the product
of (i) each such distribution amount multiplied by (ii) 1 minus the sum of (x)
the effective federal income tax rate applicable to the Partnership (expressed
as a percentage) plus (y) the effective overall state and local income tax rate
applicable to the Partnership (expressed as a percentage), in each case, for
the taxable year in which such quarter occurs (after taking into account the
benefit of any deduction allowable for federal income tax purposes with respect
to the payment of state and local income taxes).
9.7 Entity-Level Deficiency Collections. If the Partnership is
required by applicable law to pay any federal, state or local income tax on
behalf of, or withhold such amount with respect to, any Partner or Assignee or
any former Partner or Assignee (a) the General Partner shall cause the
Partnership to pay such tax on behalf of such Partner or Assignee or former
Partner or Assignee from the funds of the Partnership; (b) any amount so paid
on behalf of, or withheld with respect to, any Partner or Assignee shall be
treated as a distribution of cash to such Partner or Assignee for purposes of
Section 4.6(a); and (c) to the extent any such Partner or Assignee (but not a
former Partner or Assignee) is not then entitled to such distribution under
this Agreement, the General Partner shall be authorized, without the approval
of any Partner or Assignee, to amend this Agreement insofar as
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is necessary to maintain the uniformity of intrinsic tax characteristics as to
all Units and to make subsequent adjustments to distributions in a manner
which, in the reasonable judgment of the General Partner, will make as little
alteration as practicable in the priority and amount of distributions otherwise
applicable under this Agreement, and will not otherwise alter the distributions
to which Partners and Assignees are entitled under this Agreement. If the
Partnership is permitted (but not required) by applicable law to pay any such
tax on behalf of any Partner or Assignee or former Partner or Assignee, the
General Partner shall be authorized (but not required) to cause the Partnership
to pay such tax from the funds of the Partnership and to take any action
consistent with this Section 9.7. The General Partner shall be authorized (but
not required) to take all necessary or appropriate actions to collect all or
any portion of a deficiency in the payment of any such tax that relates to
prior periods and that is attributable to Persons who were Limited Partners or
Assignees when such deficiencies arose, from such Persons.
9.8 Opinions of Counsel. Notwithstanding any other provision of this
Agreement, if the Partnership is taxable for federal income tax purposes as a
corporation or otherwise taxed for federal income tax purposes as an entity at
any time and, pursuant to the provisions of this Agreement, an Opinion of
Counsel would otherwise be required to the effect that an action will not cause
the Partnership to become so taxable as a corporation or other entity or to be
treated as an association taxable as a corporation, such requirement for an
Opinion of Counsel shall be deemed automatically waived.
ARTICLE X
UNIT CERTIFICATES
10.1 Unit Certificates. Upon the Partnership's issuance of Class B
Common Units and Class A Common Units to any Person, the Partnership shall
issue one or more Certificates in the name of such Person evidencing the number
of such Units being so issued. Certificates shall be executed on behalf of the
Partnership by the General Partner. No Class A Common Unit Certificate shall
be valid for any purpose until it has been countersigned by the Transfer Agent
10.2 Registration, Registration of Transfer and Exchange. (a) The
General Partner shall cause to be kept on behalf of the Partnership a register
(the "Unit Register") in which, subject to such reasonable regulations as it
may prescribe and subject to the provisions of Section 10.2(b), the General
Partner will provide for the registration and the transfer of Class A Common
Units. The Transfer Agent is hereby appointed registrar and transfer agent for
the purpose of registering and transferring Class A Common Units as herein
provided. The Partnership shall not recognize transfers of Certificates
representing Class A Common Units unless same are effected in the manner
described in this Section 10.2. Upon surrender for registration of transfer of
any Units evidenced by a Certificate and subject to the provisions of Section
10.2(b), the General Partner on behalf of the Partnership will execute, and the
Transfer Agent will countersign and deliver, in the name of the holder or the
designated transferee or transferees, as required pursuant to the holder's
instructions,
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one or more new Certificates evidencing the same aggregate number of Class A
Common Units as was evidenced by the Certificate so surrendered.
(b) Except as otherwise provided in Section 11.5, the Partnership
shall not recognize any transfer of Class A Common Units until the Certificates
evidencing such Units are surrendered for registration of transfer and such
Certificates are accompanied by a Transfer Application duly executed by the
transferee (or the transferee's attorney-in-fact duly authorized in writing).
No charge shall be imposed by the Partnership for such transfer, provided,
that, as a condition to the issuance of any new Certificate under this Section
10.2, the General Partner may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed with respect thereto.
10.3 Mutilated, Destroyed, Lost or Stolen Certificates. (a) If any
mutilated Certificate is surrendered to the Transfer Agent, the General Partner
on behalf of the Partnership shall execute, and, upon its request, the Transfer
Agent shall countersign and deliver in exchange therefor, a new Certificate
evidencing the same number of Units as the Certificate so surrendered.
(b) The General Partner on behalf of the Partnership shall execute,
and, upon its request, the Transfer Agent shall countersign and deliver a new
Certificate in place of any Certificate previously issued if the Record Holder
of the Certificate:
(i) makes proof by affidavit, in form and substance
satisfactory to the General Partner, that a previously issued
Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate before the
Partnership has received notice that the Certificate has been acquired
by a purchaser for value in good faith and without notice of an adverse
claim;
(iii) if requested by the General Partner, delivers to the
Partnership such security or indemnity as may be required by the General
Partner, in form and substance satisfactory to the General Partner, with
surety or sureties and with fixed or open penalty as the General Partner
may direct, in its sole discretion, to indemnify the Partnership, the
General Partner and the Transfer Agent against any claim that may be
made on account of the alleged loss, destruction or theft of the
Certificate; and
(iv) satisfies any other reasonable requirements imposed by
the General Partner.
If a Limited Partner or Assignee fails to notify the Partnership within a
reasonable time after he has notice of the loss, destruction or theft of a
Certificate, and a transfer of the Units represented by the Certificate is
registered before the Partnership, the General Partner or the Transfer Agent
receives such notification, the Limited Partner or Assignee shall be precluded
from making any claim against the Partnership, the General Partner or the
Transfer Agent for such transfer or for a new Certificate.
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(c) As a condition to the issuance of any Certificate under this
Section 10.3, the General Partner may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including, without limitation, the fees and
expenses of the Transfer Agent) connected therewith.
10.4 Record Holder. In accordance with Section 10.2(b), the
Partnership shall be entitled to recognize the Record Holder as the Limited
Partner or Assignee with respect to any Class B Common Units or Class A Common
Units and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such Class B Common Units or Class A Common 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 Class B Common Units or Class A Common 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 Class B Common Units or Class A
Common Units, as between the Partnership on the one hand and such other Persons
on the other hand, such representative Person (a) shall be the Limited Partner
or Assignee (as the case may be) of record and beneficially, (b) must execute
and deliver a Transfer Application and (c) shall be bound by this Agreement and
shall have the rights and obligations of a Limited Partner or Assignee (as the
case may be) hereunder and as provided for herein.
ARTICLE XI
TRANSFER OF INTERESTS
11.1 Transfer. (a) The term "transfer," when used in this Article XI
with respect to a Partnership Interest, shall be deemed to refer to an
appropriate transaction by which the General Partner assigns its Partnership
Interest as General Partner to another Person or by which the holder of a Unit
assigns such Unit to another Person who is or becomes an Assignee and includes
a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage,
exchange or any other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article XI. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article XI shall be null and void.
11.2 Transfer of General Partner's Partnership Interest. (a) The
General Partner may transfer all, but not less than all, of its Partnership
Interest as the General Partner to a single transferee if, but only if, (i) at
least 66 2/3 of the Outstanding Units (excluding for this purpose Units held by
the General Partner and its Affiliates) approve of such transfer and of the
admission of such transferee as General Partner, (ii) the transferee agrees to
assume the rights and duties of the General Partner and be bound by the
provisions of this Agreement and the Operating Partnership Agreement and (iii)
the Partnership receives an Opinion of Counsel that such transfer would not
result in the loss
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of limited liability of any Limited Partner or of any limited partner of any
Operating Partnership or cause the Partnership or the Operating Partnership to
be taxable as a corporation or otherwise taxed as an entity for federal income
tax purposes.
(b) Neither Section 11.2(a) nor any other provision of this Agreement
shall be construed to prevent (and all Partners do hereby consent to) (i) the
transfer by the General Partner of all of its Partnership Interest as a General
Partner to an Affiliate or (ii) the transfer by the General Partner of all its
Partnership Interest as a General Partner upon its merger or consolidation with
or other combination into any other Person or the transfer by it of all or
substantially all of its assets to another Person if, in the case of a transfer
described in either clause (i) or (ii) of this sentence, the rights and duties
of the General Partner with respect to the Partnership Interest so transferred
are assumed by the transferee and the transferee agrees to be bound by the
provisions of this Agreement and the Operating Partnership Agreement; provided,
that, in either such case, such transferee furnishes to the Partnership an
Opinion of Counsel that such merger, consolidation, combination, transfer or
assumption will not result in a loss of limited liability of any Limited
Partner or of any limited partner of the Operating Partnership or cause the
Partnership or the Operating Partnership to be taxable as a corporation or
otherwise taxed as an entity for federal income tax purposes. In the case of a
transfer pursuant to this Section 11.2(b), the transferee or successor (as the
case may be) shall be admitted to the Partnership as the General Partner
immediately prior to the transfer of the Partnership Interest, and the business
of the Partnership shall continue without dissolution.
11.3 Transfer of Units. (a) Units may be transferred only in the
manner described in Section 10.2. The transfer of any Units and the admission
of any new Partner shall not constitute an amendment to this Agreement.
(b) Until admitted as a Substituted Limited Partner pursuant to
Article XII, the Record Holder of a Unit shall be an Assignee in respect of
such Unit. Limited Partners may include custodians, nominees or any other
individual or entity in its own or any representative capacity.
(c) Each distribution in respect of Units shall be paid by the
Partnership, directly or through the Transfer Agent or through any other Person
or agent, only to the Record Holders thereof as of the Record Date set for the
distribution. Such payment shall constitute full payment and satisfaction of
the Partnership's liability in respect of such payment, regardless of any claim
of any Person who may have an interest in such payment by reason of an
assignment or otherwise.
(d) A transferee who has completed and delivered a Transfer
Application shall be deemed to have (i) requested admission as a Substituted
Limited Partner, (ii) agreed to comply with and be bound by and to have
executed this Agreement, (iii) represented and warranted that such transferee
has the capacity and authority to enter into this Agreement, (iv) made the
powers of attorney set forth in this Agreement and (v) given the consents and
made the waivers contained in this Agreement.
11.4 Restrictions on Transfers. Notwithstanding the other provisions
of this Article XI, no transfer of any Class B Common Unit or Class A Common
Unit or interest therein of any Limited
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Partner or Assignee shall be made if such transfer would (a) violate the then
applicable federal or state securities laws or rules and regulations of the
Securities and Exchange Commission, any state securities commission or any
other governmental authorities with jurisdiction over such transfer, (b) cause
the Partnership to be taxable as a corporation or otherwise taxed as an entity
for federal income tax purposes or (c) affect the Partnership's existence or
qualification as a limited partnership under the Delaware Act.
11.5 Citizenship Certificates; Non-citizen Assignees. (a) If the
Partnership or the Operating Partnership is or becomes subject to any federal,
state or local law or regulation which, in the reasonable determination of the
General Partner, provides for the cancellation or forfeiture of any property in
which the Partnership or the Operating Partnership has an interest based on the
nationality, citizenship or other status of a Limited Partner or Assignee, the
General Partner may request any Limited Partner or Assignee to furnish to the
General Partner, within 30 days after receipt of such request, an executed
Citizenship Certification or such other information concerning his nationality,
citizenship or other status (or, if the Limited Partner or Assignee is a
nominee holding for the account of another Person, the nationality, citizenship
or other status of such Person) as the General Partner may request. If a
Limited Partner or Assignee fails to furnish to the General Partner within the
aforementioned 30-day period such Citizenship Certification or other requested
information or if upon receipt of such Citizenship Certification or other
requested information the General Partner determines, with the advice of
counsel, that a Limited Partner or Assignee is not an Eligible Citizen, the
Units owned by such Limited Partner or Assignee shall be subject to redemption
in accordance with the provisions of Section 11.6. In addition, the General
Partner may require that the status of any such Limited Partner or Assignee be
changed to that of a Non-citizen Assignee, and, thereupon, the General Partner
shall be substituted for such Non-citizen Assignee as the Limited Partner in
respect of his Units.
(b) The General Partner shall, in exercising voting rights in respect
of Units held by it on behalf of Non-citizen Assignees, distribute the votes in
the same ratios as the votes of Limited Partners in respect of Units of the
same class other than those of Non-citizen Assignees are cast, either for,
against or abstaining as to the matter.
(c) Upon dissolution of the Partnership, a Non-citizen Assignee shall
have no right to receive a distribution in kind pursuant to Section 14.4 but
shall be entitled to the cash equivalent thereof, and the General Partner shall
provide cash in exchange for an assignment of the Non-citizen Assignee's share
of the distribution in kind. Such payment and assignment shall be treated for
Partnership purposes as a purchase by the General Partner from the Non-citizen
Assignee of his Partnership Interest (representing his right to receive his
share of such distribution in kind).
(d) At any time after he can and does certify that he has become an
Eligible Citizen, a Non-citizen Assignee may, upon application to the General
Partner, request admission as a Substituted Limited Partner with respect to any
Units of such Non-citizen Assignee not redeemed pursuant to Section 11.6, and
upon the Non-citizen Assignee's admission pursuant to Section 12.2
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the General Partner shall cease to be deemed to be the Limited Partner in
respect of the Non-citizen Assignee's Units.
11.6 Redemption of Interests. (a) If at any time a Limited Partner or
Assignee fails to furnish a Citizenship Certification or other information
requested within the 30-day period specified in Section 11.5(a), or if upon
receipt of such Citizenship Certification or other information the General
Partner determines, with the advice of counsel, that a Limited Partner or
Assignee is not an Eligible Citizen, the Partnership may, unless the Limited
Partner or Assignee establishes to the satisfaction of the General Partner that
such Limited Partner or Assignee is an Eligible Citizen or has transferred his
Units to a Person who furnishes a Citizenship Certification to the General
Partner prior to the date fixed for redemption as provided below, redeem the
Partnership Interest of such Limited Partner or Assignee as follows:
(i) The General Partner shall, not later than the 30th day
before the date fixed for redemption, give notice of redemption to the
Limited Partner or Assignee, at his last address designated on the
records of the Partnership or the Transfer Agent, by registered or
certified mail, postage prepaid. The notice shall be deemed to have
been given when so mailed. The notice shall specify the Redeemable
Units, the date fixed for redemption, the place of payment, that payment
of the redemption price will be made upon surrender of the Certificate
evidencing the Redeemable Units and that on and after the date fixed for
redemption no further allocations or distributions to which the Limited
Partner or Assignee would otherwise be entitled in respect of the
Redeemable Units will accrue or be made.
(ii) The aggregate redemption price for Redeemable Units shall
be an amount equal to the Current Market Price (the date of
determination of which shall be the date fixed for redemption) of Units
of the class to be so redeemed multiplied by the number of Units of each
such class included among the Redeemable Units. The redemption price
shall be paid, in the sole discretion of the General Partner, in cash or
by delivery of a promissory note of the Partnership in the principal
amount of the redemption price, bearing interest at the rate of 10%
annually and payable in three equal annual installments of principal
together with accrued interest, commencing one year after the redemption
date.
(iii) Upon surrender by or on behalf of the Limited Partner or
Assignee, at the place specified in the notice of redemption, of the
Certificate evidencing the Redeemable Units, duly endorsed in blank or
accompanied by an assignment duly executed in blank, the Limited Partner
or Assignee or his duly authorized representative shall be entitled to
receive the payment therefor.
(iv) After the redemption date, Redeemable Units shall no
longer constitute issued and Outstanding Units.
(b) The provisions of this Section 11.6 shall also be applicable to
Units held by a Limited Partner or Assignee as nominee of a Person determined
to be other than an Eligible Citizen.
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(c) Nothing in this Section 11.6 shall prevent the recipient of a
notice of redemption from transferring his Units before the redemption date if
such transfer is otherwise permitted under this Agreement. Upon receipt of
notice of such a transfer, the General Partner shall withdraw the notice of
redemption, provided, the transferee of such Units certifies in the Transfer
Application that he is an Eligible Citizen. If the transferee fails to make
such certification, such redemption shall be effected from the transferee on
the original redemption date.
(d) If the Partnership is or becomes subject to any federal, state or
local law or regulation which, in the reasonable determination of the General
Partner, provides for the cancellation or forfeiture of any property in which
the Partnership or the Operating Partnership has an interest, based on the
nationality (or other status) of the General Partner, whether or not in its
capacity as such, the Partnership may, unless the General Partner has furnished
a Citizenship Certification or transferred its Partnership Interest or Units to
a Person who furnishes a Citizenship Certification prior to the date fixed for
redemption, redeem the Partnership Interest or Interests of the General Partner
in the Partnership, which redemption shall also constitute redemption of the
general partner interest of the general partner of the Operating Partnership.
If such redemption includes a redemption of the Combined Interest, the
redemption price thereof shall be equal to the aggregate sum of the Current
Market Price (the date of determination for which shall be the date fixed for
redemption) of each class of Units then Outstanding, in each such case
multiplied by the number of Units of such class into which the Combined
Interest would then be convertible under the terms of Section 13.3(b) if the
General Partner were to withdraw or be removed as the General Partner (the date
of determination for which shall be the date fixed for redemption). The
redemption price shall be paid in cash or by delivery of a promissory note of
the Partnership in the principal amount of the redemption price, bearing
interest at the rate of 10% annually and payable in three equal annual
installments of principal, together with accrued interest, commencing one year
after the redemption date.
XII
ADMISSION OF PARTNERS
12.1 Admission of Initial Limited Partners. Upon the issuance by the
Partnership of Class B Common Units or Class A Common Units to the Initial
Limited Partners as described in Section 4.3 and the execution by each such
party of a Transfer Application, the General Partner admitted to the
Partnership the Initial Limited Partners as Limited Partners in respect of the
Units.
12.2 Admission of Substituted Limited Partners. By transfer of a Unit
in accordance with Article XI, the transferor shall be deemed to have given the
transferee the right to seek admission as a Substituted Limited Partner subject
to the conditions of, and in the manner permitted under, this Agreement. A
transferor of a Certificate shall, however, only have the authority to convey
to a purchaser or other transferee who does not execute and deliver a Transfer
Application (i) the right to negotiate such Certificate to a purchaser or other
transferee and (ii) the right to transfer the right
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to request admission as a Substituted Limited Partner to such purchaser or
other transferee in respect of the transferred Units. Each transferee of a
Unit (including, without limitation, any nominee holder or an agent acquiring
such Unit for the account of another Person) who executes and delivers a
Transfer Application shall, by virtue of such execution and delivery, be an
Assignee and be deemed to have applied to become a Substituted Limited Partner
with respect to the Units so transferred to such Person. Such Assignee shall
become a Substituted Limited Partner (i) at such time as the General Partner
consents thereto, which consent may be given or withheld in the General
Partner's sole discretion, and (ii) when any such admission is shown on the
books and records of the Partnership. If such consent is withheld, such
transferee shall be an Assignee. An Assignee shall have an interest in the
Partnership equivalent to that of a Limited Partner with respect to allocations
and distributions, including, without limitation, liquidating distributions, of
the Partnership. With respect to voting rights attributable to Units that are
held by Assignees, the General Partner shall be deemed to be the Limited
Partner with respect thereto and shall, in exercising the voting rights in
respect of such Units on any matter, vote such Units at the written direction
of the Assignee who is the Record Holder of such Units. If no such written
direction is received, such Units will not be voted. An Assignee shall have no
other rights of a Limited Partner.
12.3 Admission of Successor General Partner. A successor General
Partner approved pursuant to Section 13.1 or the transferee of or successor to
all of the General Partner's Partnership Interest pursuant to Section 11.2 who
is proposed to be admitted as a successor General Partner shall be admitted to
the Partnership as the General Partner, effective immediately prior to the
withdrawal or removal of the General Partner pursuant to Section 13.1 or the
transfer of the General Partner's Partnership Interest pursuant to Section
11.2; provided, however, that no such successor shall be admitted to the
Partnership until such successor has complied with the terms of Section 11.2.
Any such successor shall carry on the business of the Partnership without
dissolution. In each case, the admission shall be subject to the successor
General Partner executing and delivering to the Partnership an acceptance of
all of the terms and conditions of this Agreement and such other documents or
instruments as may be required to effect the admission.
12.4 Admission of Additional Limited Partners. (a) A Person (other
than the General Partner, an Initial Limited Partner or a Substituted Limited
Partner) who makes a Capital Contribution to the Partnership in accordance with
this Agreement (other than by virtue of the purchase of APIs) shall be admitted
to the Partnership as an Additional Limited Partner only upon furnishing to the
General Partner (i) evidence of acceptance in form satisfactory to the General
Partner of all of the terms and conditions of this Agreement, including,
without limitation, the power of attorney granted in Section 1.4, and (ii) such
other documents or instruments as may be required in the discretion of the
General Partner to effect such Person's admission as an Additional Limited
Partner.
(b) Notwithstanding anything to the contrary in this Section 12.4, no
Person shall be admitted as an Additional Limited Partner without the consent
of the General Partner, which consent may be given or withheld in the General
Partner's sole discretion. The admission of any Person as an Additional
Limited Partner shall become effective on the date upon which the name of such
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Person is recorded on the books and records of the Partnership, following the
consent of the General Partner to such admission.
12.5 Amendment of Agreement and Certificate of Limited Partnership.
To effect the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Delaware Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement and, if required by law, to prepare
and file an amendment to the Certificate of Limited Partnership and may for
this purpose, among others, exercise the power of attorney granted pursuant to
Section 1.4.
ARTICLE XIII
WITHDRAWAL OR REMOVAL OF PARTNERS
13.1 Withdrawal of the General Partner. (a) The General Partner shall
be deemed to have withdrawn from the Partnership upon the occurrence of any one
of the following events (each such event herein referred to as an "Event of
Withdrawal"):
(i) the General Partner voluntarily withdraws from the
Partnership by giving written notice to the other Partners;
(ii) the General Partner transfers all of its rights as General
Partner pursuant to Section 11.2;
(iii) the General Partner is removed pursuant to Section 13.2;
(iv) the General Partner (A) makes a general assignment for the
benefit of creditors; (B) files a voluntary bankruptcy petition; (C)
files a petition or answer seeking for itself a reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any law; (D) files an answer or other pleading
admitting or failing to contest the material allegations of a petition
filed against the General Partner in a proceeding of the type described
in clauses (A)-(C) of this sentence; or (E) seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator of
the General Partner or of all or any substantial part of its properties;
(v) a final and non-appealable judgment is entered by a court
with appropriate jurisdiction ruling that the General Partner is
bankrupt or insolvent, or a final and non-appealable order for relief is
entered by a court with appropriate jurisdiction against the General
Partner, in each case under any federal or state bankruptcy or
insolvency laws as now or hereafter in effect; or
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(vi) a certificate of dissolution or its equivalent is filed
for the General Partner, or 90 days expire after the date of notice to
the General Partner of revocation of its charter without a reinstatement
of its charter, under the laws of its state of incorporation.
If an Event of Withdrawal specified in this Section 13.1(a)(iv), (v) or (vi)
occurs, the withdrawing General Partner shall give written notice to the
Limited Partners within 30 days after such occurrence. The Partners hereby
agree that only the Events of Withdrawal described in this Section 13.1 shall
result in the withdrawal of the General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal will not constitute a breach of this
Agreement under the following circumstances: (i) at any time during the period
prior to January 1, 2000 the General Partner voluntarily withdraws by giving at
least 90 days' advance notice of its intention to withdraw to the Limited
Partners; provided, that prior to the effective date of such withdrawal, the
withdrawal is approved by at least 66 2/3% of the Outstanding Units (excluding
for this purpose Units held by the General Partner and its Affiliates) and the
General Partner provides to the Partnership an Opinion of Counsel ("Withdrawal
Opinion of Counsel") that following the election of a successor General
Partner, the General Partner's withdrawal would not result in the loss of
limited liability of any Limited Partner or of the limited partner of the
Operating Partnership or cause the Partnership or Operating Partnership to be
taxable as a corporation or otherwise taxed as an entity for federal tax
purposes; (ii) at any time after December 31, 1999, the General Partner
voluntarily withdraws by giving at least 90 days' advance notice to the Limited
Partners, such withdrawal to take effect on the date specified in such notice;
(iii) at any time that the General Partner ceases to be a General Partner
pursuant to Section 13.1(a)(ii) or is removed pursuant to Section 13.2; or (iv)
notwithstanding clause (i) of this sentence, at any time that the General
Partner voluntarily withdraws by giving at least 90 days' advance notice of its
intention to withdraw to the Limited Partners, such withdrawal to take effect
on the date specified in the notice, if at the time such notice is given more
than 50% of the Outstanding Class A Common Units that are held by Persons other
than by the General Partner and its Affiliates are owned beneficially or of
record or controlled at any time by one Person or its Affiliates. The
withdrawal of the General Partner from the Partnership upon the occurrence of
an Event of Withdrawal shall also constitute the withdrawal of the general
partner from the Operating Partnership. If the General Partner gives a notice
of withdrawal pursuant to Section 13.1(a)(i), holders of at least a majority of
the Outstanding Units (excluding for purposes of such determination Units owned
by the General Partner and its Affiliates) may, prior to the effective date of
such withdrawal, elect a successor General Partner. The Person so elected
shall automatically become the successor general partner of the Operating
Partnership, as provided in the Operating Partnership Agreement. If, prior to
the effective date of the General Partner's withdrawal, a successor is not
selected by the Limited Partners as provided herein or the Partnership does not
receive a Withdrawal Opinion of Counsel, the Partnership shall be dissolved in
accordance with Section 14.1. If a successor General Partner is elected and a
Withdrawal Opinion of Counsel is rendered, such successor shall be admitted
(subject to Section 12.3) immediately prior to the effective time of the
withdrawal or removal of the Departing Partner and shall continue the business
of the Partnership and the Operating Partnership without dissolution.
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13.2 Removal of the General Partner. The General Partner may be
removed with or without Cause if such removal is approved by at least 66 2/3%
of the Outstanding Units (excluding for this purpose Units held by the General
Partner and its Affiliates). Any such action by the Limited Partners for
removal of the General Partner must also provide for the election and
succession of a new General Partner. Such removal shall be effective
immediately following the admission of the successor General Partner pursuant
to Article XII. The removal of the General Partner shall also automatically
constitute the removal of the general partner of the Operating Partnership, as
provided in the Operating Partnership Agreement. The Person elected as
successor General Partner shall automatically become the successor general
partner of the Operating Partnership. The right of the Limited Partners to
remove the General Partner shall not exist or be exercised unless the
Partnership has received an Opinion of Counsel that the removal of the General
Partner and the selection of a successor General Partner will not result in the
loss of limited liability of any Limited Partner or of the limited partner of
the Operating Partnership or cause the Partnership or the Operating Partnership
to be taxable as a corporation or otherwise taxed as an entity for federal
income tax purposes.
13.3 Interest of Departing Partner and Successor General Partner. (a)
In the event of (i) withdrawal of the General Partner under circumstances where
such withdrawal does not violate this Agreement or (ii) removal of the General
Partner by the Limited Partners under circumstances where Cause does not exist,
the Departing Partner shall, at its option exercisable prior to the effective
date of the departure of such Departing Partner, promptly receive from its
successor in exchange for its Partnership Interest as General Partner an amount
in cash equal to the fair market value of the Departing Partner's Partnership
Interest as General Partner, such amount to be determined and payable as of the
effective date of its departure. If the General Partner withdraws under
circumstances where such withdrawal violates this Agreement or the Operating
Partnership Agreement or if the General Partner is removed by the Limited
Partners under circumstances where Cause exists, the General Partner's
successor shall have the option described in the immediately preceding
sentence, and the Departing Partner shall not have such option. In either
case, if the successor acquires the Departing Partner's Partnership Interest as
the general partner, such successor General Partner must also acquire at such
time each general partner interest of such Departing Partner or its Affiliate
as general partner of the Operating Partnership, for an amount in cash equal to
the fair market value of such interest, determined as of the effective date of
its departure. In either event, the Departing Partner shall be entitled to
receive all reimbursements due such Departing Partner pursuant to Section 6.4,
including, without limitation, any employee-related liabilities (including,
without limitation, severance liabilities), incurred in connection with the
termination of any employees employed by the General Partner for the benefit of
the Partnership or the Operating Partnership. Subject to Section 13.3(b), the
Departing Partner shall, as of the effective date of its departure, cease to
share in any allocations or distributions with respect to its Partnership
Interest as the General Partner and Partnership income, gain, loss, deduction
and credit will be prorated and allocated as set forth in Section 5.2(g).
For purposes of this Section 13.3(a), the fair market value of the
Departing Partner's Partnership Interest as the general partner of the
Partnership herein and the partnership interest of
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such Departing Partner or its Affiliate, as the case may be, as the general
partner of the Operating Partnership (collectively, the "Combined Interest")
shall be determined by agreement between the Departing Partner and its
successor or, failing agreement within 30 days after the effective date of such
Departing Partner's departure, by an independent investment banking firm or
other independent expert selected by the Departing Partner and its successor,
which, in turn, may rely on other experts and the determination of which shall
be conclusive as to such matter. If such parties cannot agree upon one
independent investment banking firm or other independent expert within 45 days
after the effective date of such departure, then the Departing Partner shall
designate an independent investment banking firm or other independent expert,
the Departing Partner's successor shall designate an independent investment
banking firm or other independent expert, and such firms or experts shall
mutually select a third independent investment banking firm or independent
expert, which shall determine the fair market value of the Combined Interest.
In making its determination, such independent investment banking firm or other
independent expert shall consider the then current trading price of Units on
any National Securities Exchange on which Units are then listed, the value of
the Partnership's assets, the rights and obligations of the General Partner and
other factors it may deem relevant.
(b) If the Combined Interest is not acquired in the manner set forth
in Section 13.3(a), the Departing Partner and its Affiliate, to the extent
applicable, shall become a Limited Partner and their Combined Interest shall be
converted into Units pursuant to a valuation made by an investment banking firm
or other independent expert selected pursuant to Section 13.3(a), without
reduction in such Partnership Interest (but subject to proportionate dilution
by reason of the admission of its successor). Any successor General Partner
shall indemnify the Departing Partner as to all debts and liabilities of the
Partnership arising on or after the date on which the Departing Partner becomes
a Limited Partner. For purposes of this Agreement, conversion of the General
Partner's Partnership Interest to Units will be characterized as if the General
Partner contributed its Partnership Interest to the Partnership in exchange for
the newly-issued Units.
(c) If the option described in Section 13.3(a) is not exercised by
the party entitled to do so, the successor General Partner shall, at the
effective date of its admission to the Partnership, contribute to the capital
of the Partnership cash in an amount such that its Capital Account, after
giving effect to such contribution and any adjustments made to the Capital
Accounts of all Partners pursuant to Section 4.6(d)(i), shall be equal to that
percentage of the Capital Accounts of all Partners that is equal to its
Percentage Interest as the General Partner. In such event, each successor
General Partner shall, subject to the following sentence, be entitled to such
Percentage Interest of all Partnership allocations and distributions and any
other allocations and distributions to which the Departing Partner was
entitled. In addition, such successor General Partner shall cause this
Agreement to be amended to reflect that, from and after the date of such
successor General Partner's admission, the successor General Partner's interest
in all Partnership distributions and allocations shall be 1%, and that of the
Unitholders shall be 99%.
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13.4 Redemption of APIs. (a) At such time as the Unrecovered Capital
in respect of any Outstanding API is reduced to zero, such API shall be deemed
to be redeemed and shall thereupon cease to be Outstanding.
(b) Notwithstanding any provision of this Agreement, if the Company
(or any Affiliate of IPL that is a successor to the Company as General Partner
of the Partnership) is removed as general partner of the Partnership by the
Limited Partners under circumstances where Cause does not exist, and Units held
by the General Partner and its Affiliates are not voted in favor of such
removal, the Special Limited Partners shall have the right to require the
Partnership to redeem, out of Available Cash constituting Cash from Operations,
prior to any distribution thereof to the Limited Partners, any APIs that are
then outstanding at a price equal to the Unrecovered Capital attributable
thereto.
13.5 Withdrawal of Limited Partners. No Limited Partner shall have
any right to withdraw from the Partnership; provided, however, that when a
transferee of a Limited Partner's Units becomes a Record Holder, such
transferring Limited Partner shall cease to be a Limited Partner with respect
to the Units so transferred.
ARTICLE XIV
DISSOLUTION AND LIQUIDATION
14.1 Dissolution. The Partnership shall not be dissolved by the
admission of Substituted Limited Partners or Additional Limited Partners or by
the admission of a successor General Partner in accordance with the terms of
this Agreement. Upon the removal or withdrawal of the General Partner, any
successor General Partner shall continue the business of the Partnership. The
Partnership shall dissolve, and its affairs should be wound up, upon:
(a) the expiration of its term as provided in Section 1.5;
(b) an Event of Withdrawal of the General Partner as provided
in Section 13.1 (a), unless a successor is named as provided in Section
13.1(b) or Section 13.2, as the case may be;
(c) an election to dissolve the Partnership by the General
Partner that is approved by at least 66 2/3% of the Outstanding Units
(and all Limited Partners hereby expressly consent that such approval
may be effected upon written consent of at least 66 2/3% of the
Outstanding Units);
(d) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Delaware Act; or
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(e) the sale of all or substantially all of the assets and
properties of the Partnership or the Operating Partnership.
14.2 Continuation of the Business of the Partnership after
Dissolution. Upon (i) dissolution of the Partnership following an Event of
Withdrawal caused by the withdrawal or removal of the General Partner and a
failure of the requisite number of Partners to appoint a successor General
Partner as provided in Section 13.1 or 13.2, as the case may be, then within an
additional 90 days or (ii) dissolution of the Partnership upon an event
constituting an Event of Withdrawal described in Section 13.1(a)(iv), then
within 180 days thereafter, at least a majority of the Outstanding Units may
elect to reconstitute the Partnership and continue its business on the same
terms and conditions set forth in this Agreement by forming a new limited
partnership on terms identical to those set forth in this Agreement and having
as a general partner a Person approved by the holders of at least a majority of
the Outstanding Units. Upon any such election by the holders of at least a
majority of the outstanding Units, all Partners shall be bound thereby and
shall be deemed to have approved thereof. Unless such an election is made with
the applicable time period as set forth above, the Partnership shall conduct
only activities necessary to wind up its affairs. If such an election is so
made, then:
(a) the reconstituted Partnership shall continue until the end
of the term set forth in Section 1.5 unless earlier dissolved in
accordance with this Article XIV;
(b) if the successor General Partner is not the former General
Partner, then the interest of the former General Partner shall be
treated thenceforth as the interest of a Limited Partner and converted
into Units in the manner provided in Section 13.3(b); and
(c) all necessary steps shall be taken to cancel this
Agreement and the Certificate of Limited Partnership and to enter into
and, as necessary, to file a new partnership agreement and certificate
of limited partnership, and the successor general partner may for this
purpose exercise the powers of attorney granted the General Partner
pursuant to Section 1.4; provided that the right of at least a majority
of Outstanding Units to approve a successor general partner and to
reconstitute and to continue the business of the Partnership shall not
exist and may not be exercised unless the Partnership has received an
Opinion of Counsel that (x) the exercise of the right would not result
in the loss of limited liability of any Limited Partner and (y) neither
the Partnership, the reconstituted limited partnership nor the Operating
Partnership would become taxable as a corporation or otherwise be taxed
as an entity for federal income tax purposes upon the exercise of such
right to continue.
14.3 Liquidation. Upon dissolution of the Partnership, unless the
Partnership is continued under an election to reconstitute and continue the
Partnership pursuant to Section 14.2, the General Partner, or in the event the
General Partner has been dissolved or removed, become bankrupt as set forth in
Section 13.1 or withdrawn from the Partnership, a liquidator or liquidating
committee approved by at least 66 2/3% of the Outstanding Units, shall be the
Liquidator. The Liquidator (if other than the General Partner) shall be
entitled to receive such compensation for its services as may
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be approved by at least 66 2/3% of the Outstanding Units. The Liquidator shall
agree not to resign at any time without 15 days' prior written notice and (if
other than the General Partner) may be removed at any time, with or without
Cause by notice of removal approved by at least 66 2/3% of the Outstanding
Units. Upon dissolution, removal or resignation of the Liquidator, a successor
and substitute Liquidator (who shall have and succeed to all rights, powers and
duties of the original Liquidator) shall within 30 days thereafter be approved
by at least 66 2/3% of the Outstanding Units. The right to approve a successor
or substitute Liquidator in the manner provided herein shall be deemed to refer
also to any such successor or substitute Liquidator approved in the manner
herein provided. Except as expressly provided in this Article XIV, the
Liquidator approved in the manner provided herein shall have and may exercise,
without further authorization or consent of any of the parties hereto, all of
the powers conferred upon the General Partner under the terms of this Agreement
(but subject to all of the applicable limitations, contractual and otherwise,
upon the exercise of such powers, other than the limitation on sale set forth
in Section 6.3(b)) to the extent necessary or desirable in the good faith
judgment of the Liquidator to carry out the duties and functions of the
Liquidator hereunder for and during such period of time as shall be reasonably
required in the good faith judgment of the Liquidator to complete the winding
up and liquidation of the Partnership as provided for herein. The Liquidator
shall liquidate the assets of the Partnership, and apply and distribute the
proceeds of such liquidation in the following order of priority, unless
otherwise required by mandatory provisions of applicable law:
(a) the payment to creditors of the Partnership, including,
without limitation, Partners who are creditors, in the order of priority
provided by law; and the creation of a reserve of cash or other assets
of the Partnership for contingent liabilities in an amount, if any,
determined by the Liquidator to be appropriate for such purposes;
(b) to all Partners in accordance with the positive balances
in their respective Capital Accounts after taking into account
adjustments to such Capital Accounts pursuant to Section 5.1(c);
(c) to all Partners in accordance with their respective
Percentage Interests.
14.4 Distributions in Kind. (a) Notwithstanding the provisions of
Section 14.3, which require the liquidation of the assets of the Partnership,
but subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its absolute discretion,
defer for a reasonable time the liquidation of any assets except those
necessary to satisfy liabilities of the Partnership (including, without
limitation, those to Partners as creditors) or distribute to the Partners, in
lieu of cash, as tenants in common and in accordance with the provisions of
Section 14.3, undivided interests in such Partnership assets as the Liquidator
deems not suitable for liquidation. Any such distributions in kind shall be
made only if, in the good faith judgment of the Liquidator, such distributions
in kind are in the best interest of the Limited Partners, and shall be subject
to such conditions relating to the disposition and management of such
properties as the Liquidator deems reasonable and equitable
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and to any agreement governing the operation of such properties at such time.
The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
(b) In accordance with Section 704(c)(1)(B) of the Code, in the case
of any deemed distribution occurring as a result of a termination of the
Partnership pursuant to Section 708(b)(1)(B) of the Code, to the maximum extent
possible consistent with the priorities of Section 14.3, the General Partner
shall have sole discretion to treat the deemed distribution of Partnership
assets to Partners as occurring in a manner that will not cause a shift of the
Book-Tax Disparity attributable to a Partnership asset existing immediately
prior to the deemed distribution to another asset upon the deemed contribution
of assets to the reconstituted Partnership, including, without limitation,
deeming the distribution of any Partnership assets to be made either to the
Partner who contributed such assets or to the transferee of such Partner.
14.5 Cancellation of Certificate of Limited Partnership. Upon the
completion of the distribution of Partnership cash and property as provided in
Sections 14.3 and 14.4, the Partnership shall be terminated and the Certificate
of Limited Partnership and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Delaware shall be
canceled and such other actions as may be necessary to terminate the
Partnership shall be taken.
14.6 Reasonable Time for Winding Up. A reasonable time shall be
allowed for the orderly winding up of business and affairs of the Partnership
and the liquidation of its assets pursuant to Section 14.3 in order to minimize
any losses otherwise attendant upon such winding up, and the provisions of this
Agreement shall remain in effect between the Partners during the period of
liquidation.
14.7 Return of Capital. The General Partner shall not be personally
liable for the return of the Capital Contributions of the Limited Partners, or
any portion thereof, it being expressly understood that any such return shall
be made solely from Partnership assets.
14.8 Capital Account Restoration. No Limited Partner shall have any
obligation to restore any negative balance in its Capital Account upon
liquidation of the Partnership. The General Partner shall be obligated to
restore any negative balance in its Capital Account upon liquidation of its
interest in the Partnership by the end of the taxable year of the Partnership
during which such liquidation occurs, or, if later, within 90 days after the
date of such liquidation.
14.9 Waiver of Partition. Each Partner hereby waives any right to
partition of the Partnership property.
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ARTICLE XV
AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS; RECORD DATE
15.1 Amendment to be Adopted Solely by General Partner. Each Limited
Partner agrees that the General Partner (pursuant to its powers of attorney
from the Limited Partners and Assignees), without the approval of any Limited
Partner or Assignee, may amend any provision of this Agreement, and execute,
swear to, acknowledge, deliver, file and record whatever documents may be
required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of
the principal place of business of the Partnership, the registered agent
of the Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners
in accordance with this Agreement;
(c) a change that, in the sole discretion of the General
Partner, is reasonable and necessary or appropriate to qualify or
continue the qualification of the Partnership as a limited partnership
or a partnership in which the limited partners have limited liability
under the laws of any state or that is necessary or advisable in the
opinion of the General Partner to ensure that the Partnership will not
be taxable as a corporation or otherwise taxed as an entity for federal
income tax purposes;
(d) a change (i) that, in the sole discretion of the General
Partner, does not adversely affect the Limited Partners in any material
respect, (ii) that is necessary or appropriate to satisfy any
requirements, conditions, guidelines or interpretations contained in any
opinion, interpretative release, directive, order, ruling or regulation
of any federal or state agency or judicial authority or contained in any
federal or state agency or judicial authority or contained in any
federal or state statute (including, without limitation, the Delaware
Act) or that is necessary or appropriate to facilitate the trading of
the Units (including, without limitation, the division of Outstanding
Units into different classes to facilitate uniformity of tax
consequences within such classes of Units) or comply with any rule,
regulation, interpretative release, guideline or requirement of any
National Securities Exchange on which the Units are or will be listed
for trading, compliance with any of which the General Partner determines
in its sole discretion to be in the best interests of the Partnership
and the Limited Partners or (iii) that is required to effect the intent
of the provisions of this Agreement or is otherwise contemplated by this
Agreement;
(e) an amendment that is necessary, in the Opinion of Counsel,
to prevent the Partnership or the General Partner or its directors or
officers from in any manner being subjected to the provisions of the
Investment Company Act of 1940, as amended, the
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Investment Advisers Act of 1940, as amended, or "plan asset" regulations
adopted under the Employee Retirement Income Security Act of 1974, as
amended, whether or not substantially similar to plan asset regulations
currently applied or proposed by the United States Department of Labor;
(f) subject to the terms of Section 4.4, an amendment that the
General Partner determines in its sole discretion to be necessary or
appropriate in connection with the authorization for issuance of any
class or series of Units pursuant to Section 4.4;
(g) an amendment made after the Preference Period, the effect
of which is to separate into a security (which may be evidenced by a
certificate(s) if determined by the General Partner to be appropriate),
separate and apart from the Class A Common Units, the right of the
holders of Class A Common Units then Outstanding to receive any then
remaining Cumulative Class A Common Unit Deficiency;
(h) an amendment made after the Preference Period, the effect
of which is to separate into a security (which may be evidenced by a
certificate(s) if determined by the General Partner to be appropriate),
separate and apart from the Class B Common Units, the right of the
holders of Class B Common Units then Outstanding to receive any then
remaining Cumulative Class B Common Unit Deficiency;
(i) any amendment expressly permitted in this Agreement to be
made by the General Partner acting alone;
(j) an amendment effected, necessitated or contemplated by a
Merger Agreement approved in accordance with Section 16.3; or
(k) any other amendments substantially similar to the
foregoing.
15.2 Amendment Procedures. Except as provided in Sections 15.1 and
15.3, all amendments to this Agreement shall be made in accordance with the
following requirements. Amendments to this Agreement may be proposed solely by
the General Partner. Each such proposal shall contain the text of the proposed
amendment. If an amendment is proposed, the General Partner shall seek the
written approval of the requisite percentage of Outstanding Units or call a
meeting of the Limited Partners to consider and vote on such proposed
amendment. A proposed amendment shall be effective upon its approval by the
holders of at least 66 2/3% of the Outstanding Units unless a greater or
different percentage is required under this Agreement. The General Partner
shall notify all Record Holders upon final adoption of any proposed amendment.
15.3 Amendment Requirements. (a) Notwithstanding the provisions of
Sections 15.1 and 15.2, no provision of this Agreement that establishes a
percentage of Outstanding Units required to take any action shall be amended,
altered, changed, repealed or rescinded in any respect that would have the
effect of reducing such voting requirement unless such amendment is approved by
the
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written consent or the affirmative vote of Unitholders whose aggregate
percentage of Outstanding Units constitutes not less than the required
percentage of Outstanding Units sought to be reduced.
(b) Notwithstanding the provisions of Sections 15.1 and 15.2, no
amendment to this Agreement may (i) enlarge the obligations of any Limited
Partner without such Limited Partner's consent, which may be given or withheld
in its sole discretion, (ii) modify the amounts distributable to the General
Partner in respect of its general partner interest in the Partnership or the
Operating Partnership or modify the amounts reimbursable or otherwise payable
to the General Partner or any of its Affiliates by the Partnership, (iii)
change Section 14.1(a) or (c), (iv) restrict in any way any action by or rights
of the General Partner as set forth in this Agreement without the General
Partner's consent (which may be given or withheld in the sole discretion of the
General Partner) or (v) change the term of the Partnership or, except as set
forth in Section 14.1(c), give any Person the right to dissolve the
Partnership.
(c) Except as otherwise provided, and without limitation of the
General Partner's authority to adopt amendments to this Agreement as
contemplated in Section 15.1, the General Partner may amend the Partnership
Agreement without the approval of Unitholders, except that any amendment that
would have a material adverse effect on the holders of any type or class of
Outstanding Units must be approved by the holders of not less than 66 2/3% of
the Outstanding Units of such type or class.
(d) Notwithstanding any other provision of this Agreement, except for
amendments pursuant to Section 6.3 or 15.1, no amendments shall become
effective without the approval of the Record Holders of at least 95% of the
Units unless the Partnership obtains an Opinion of Counsel to the effect that
(a) such amendment will not cause the Partnership or the Operating Partnership
to be taxable as a corporation or otherwise taxed as an entity for federal
income tax purposes and (b) such amendment will not affect the limited
liability of any Limited Partner or any limited partner of the Operating
Partnership under applicable law.
(e) This Section 15.3 shall only be amended with the approval of the
Record Holders of not less than 95% of the Outstanding Units.
15.4 Meetings. All acts of Limited Partners to be taken hereunder
shall be taken in the manner provided in this Article XV. Meetings of the
Limited Partners may be called by the General Partner or by Limited Partners
owning 20% or more of the Outstanding Units of the class for which a meeting is
proposed. Limited Partners shall call a meeting by delivering to the General
Partner one or more requests in writing stating that the signing Limited
Partners wish to call a meeting and indicating the general or specific purposes
for which the meeting is to be called. Within 60 days after receipt of such a
call from Limited Partners or within such greater time as may be reasonably
necessary for the Partnership to comply with any statutes, rules, regulations,
listing agreements or similar requirements governing the holding of a meeting
or the solicitation of proxies for use at such a meeting, the General Partner
shall send a notice of the meeting to the Limited Partners either directly or
indirectly through the Transfer Agent. A meeting shall be held at a time and
place
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determined by the General Partner on a date not more than 60 days after the
mailing of notice of the meeting. Limited Partners shall not vote on matters
that would cause the Limited Partners to be deemed to be taking part in the
management and control of the business and affairs of the Partnership so as to
jeopardize the Limited Partners' limited liability under the Delaware Act or
the law of any other state in which the Partnership is qualified to do
business.
15.5 Notice of a Meeting. Notice of a meeting called pursuant to
Section 15.4 shall be given to the Record Holders in writing by mail or other
means of written communication in accordance with Section 18.1. The notice
shall be deemed to have been given at the time when deposited in the mail or
sent by other means of written communication.
15.6 Record Date. For purposes of determining the Limited Partners
entitled to notice of or to vote at a meeting of the Limited Partners or to
give approvals without a meeting as provided in Section 15.11, the General
Partner may set a Record Date, which shall not be less than 10 nor more than 60
days before (a) the date of the meeting (unless such requirement conflicts with
any rule, regulation, guideline or requirement of any National Securities
Exchange on which the Units are listed for trading, in which case the rule,
regulation, guideline or requirement of such exchange shall govern) or (b) in
the event that approvals are sought without a meeting, the date by which
Limited Partners are requested in writing by the General Partner to give such
approvals.
15.7 Adjournment. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting and a new Record Date
need not be fixed, if the time and place thereof are announced at the meeting
at which the adjournment is taken, unless such adjournment shall be for more
than 45 days. At the adjourned meeting, the Partnership may transact any
business which might have been transacted at the original meeting. If the
adjournment is for more than 45 days or if a new Record Date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given in
accordance with this Article XV.
15.8 Waiver of Notice; Approval of Meeting; Approval of Minutes. The
transactions of any meeting of Limited Partners, however called and noticed,
and whenever held, shall be as valid as if had at a meeting duly held after
regular call and notice, if a quorum is present either in person or by proxy,
and if, either before or after the meeting, each of the Limited Partners
entitled to vote, present in person or by proxy, signs a written waiver of
notice or an approval of the holding of the meeting or an approval of the
minutes thereof. All waivers and approvals shall be filed with the Partnership
records or made a part of the minutes of the meeting. Attendance of a Limited
Partner at a meeting shall constitute a waiver of notice of the meeting, except
when the Limited Partner disapproves, at the beginning of the meeting, the
transaction of any business because the meeting is not lawfully called or
convened, and except that attendance at a meeting is not a waiver of any right
to disapprove the consideration of matters required to be included in the
notice of the meeting, but not so included, in either case if the disapproval
is expressly made at the meeting.
15.9 Quorum. The holders of 66 2/3% of the Outstanding Units of the
class for which a meeting has been called represented in person or by proxy
shall constitute a quorum at a meeting of
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Limited Partners of such class unless any such action by the Limited Partners
requires approval by holders of a majority in interest of such Units, in which
case the quorum shall be a majority. At any meeting of the Limited Partners
duly called and held in accordance with this Agreement at which a quorum is
present, the act of Limited Partners holding Outstanding Units that in the
aggregate represent at least 66 2/3% of the Outstanding Units entitled to vote
and be present in person or by proxy at such meeting shall be deemed to
constitute the act of all Limited Partners, unless a greater or different
percentage is required with respect to such action under the provisions of this
Agreement, in which case the act of the Limited Partners holding Outstanding
Units that in the aggregate represent at least such greater or different
percentage shall be required. The Limited Partners present at a duly called or
held meeting at which a quorum is present may continue to transact business
until adjournment, notwithstanding the withdrawal of enough Limited Partners to
leave less than a quorum, if any action taken (other than adjournment) is
approved by the required percentage of Outstanding Units specified in this
Agreement. In the absence of a quorum, any meeting of Limited Partners may be
adjourned from time to time by the affirmative vote of a majority of the
Outstanding Units represented either in person or by proxy, but no other
business may be transacted, except as provided in Section 15.7.
15.10 Conduct of Meeting. The General Partner shall have full power
and authority concerning the manner of conducting any meeting of the Limited
Partners or solicitation of approvals in writing, including, without
limitation, the determination of Persons entitled to vote, the existence of a
quorum, the satisfaction of the requirements of Section 15.4, the conduct of
voting, the validity and effect of any proxies and the determination of any
controversies, votes or challenges arising in connection with or during the
meeting or voting. The General Partner shall designate a Person to serve as
chairman of any meeting and shall further designate a Person to take the
minutes of any meeting, in either case including, without limitation, a Partner
or a director or officer of the General Partner. All minutes shall be kept
with the records of the Partnership maintained by the General Partner. The
General Partner may make such other regulations consistent with applicable law
and this Agreement as it may deem advisable concerning the conduct of any
meeting of the Limited Partners or solicitation of approvals in writing,
including, without limitation, regulations in regard to the appointment of
proxies, the appointment and duties of inspectors of votes and approvals, the
submission and examination of proxies and other evidence of the right to vote,
and the revocation of approvals in writing.
15.11 Action Without a Meeting. Any action that may be taken at a
meeting of the Limited Partners may be taken without a meeting if an approval
in writing setting forth the action so taken is signed by Limited Partners
holding not less than the minimum percentage of the Outstanding Units that
would be necessary to authorize to take such action at a meeting at which all
the Limited Partners were present and voted. Prompt notice of the taking of
action without a meeting shall be given to the Limited Partners who have not
approved in writing. The General Partner may specify that any written ballot
submitted to Limited Partners for the purpose of taking any action without a
meeting shall be returned to the Partnership within the time period, which
shall be not less than 20 days, specified by the General Partner. If a ballot
returned to the Partnership does not vote all of the Units held by the Limited
Partner, the Partnership shall be deemed to have failed to receive
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a ballot for the Units that were not voted. If approval of the taking of any
action by the Limited Partners is solicited by any Person other than by or on
behalf of the General Partner, the written approvals shall have no force and
effect unless and until (a) they are deposited with the Partnership in care of
the General Partner, (b) approvals sufficient to take the action proposed are
dated as of a date not more than 90 days prior to the date sufficient approvals
are deposited with the Partnership and (c) an Opinion of Counsel is delivered
to the General Partner to the effect that the exercise of such right and the
action proposed to be taken with respect to any particular matter (i) will not
cause the Limited Partners to be deemed to be taking part in the management and
control of the business and affairs of the Partnership so as to jeopardize the
Limited Partners' limited liability, (ii) will not jeopardize the status of the
Partnership as a partnership, or cause the Partnership to be taxable as a
corporation or otherwise taxed as an entity, under applicable tax laws and
regulations and (iii) is otherwise permissible under the state statutes then
governing the rights, duties and liabilities of the Partnership and the
Partners.
15.12 Voting and Other Rights. (a) Only those Record Holders of Units
on the Record Date set pursuant to Section 15.6 shall be entitled to notice of,
and to vote at, a meeting of Limited Partners or to act with respect to matters
as to which holders of the Outstanding Units have the right to vote or to act.
All references in this Agreement to votes of, or other acts that may be taken
by, the holders of Outstanding Units shall be deemed to be references to the
votes or acts of the Record Holders of such Outstanding Units.
(b) With respect to Units that are held for a Person's account by
another Person (such as a broker, dealer, bank, trust company or clearing
corporation, or an agent of any of the foregoing), in whose name such Units are
registered, such broker, dealer or other agent shall, in exercising the voting
rights in respect of such Units on any matter, and unless the arrangement
between such Persons provides otherwise, vote such Units in favor of, and at
the direction of, the Person who is the beneficial owner, and the Partnership
shall be entitled to assume it is so acting without further inquiry. The
provisions of this Section 15.12(b) (as well as all other provisions of this
Agreement) are subject to the provisions of Section 10.4.
ARTICLE XVI
MERGER
16.1 Authority. 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.
16.2 Procedure for Merger or Consolidation. Merger or consolidation
of the Partnership pursuant to this Article XVI requires the prior approval of
the General Partner. If the General
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Partner shall determine, in the exercise of its sole discretion, to consent to
the merger or consolidation, the General Partner shall approve the Merger
Agreement, which shall set forth:
(a) The names and jurisdictions of formation or organization
of each of the business entities proposing to merge or consolidate;
(b) The name and jurisdictions of formation or organization of
the business entity that is to survive the proposed merger or
consolidation (hereafter designated as the "Surviving Business Entity");
(c) The terms and conditions of the proposed merger or
consolidation;
(d) The manner and basis of exchanging or converting the
equity securities of each constituent business entity for, or into,
cash, property or general or limited partnership interests, rights,
securities or obligations of the Surviving Business Entity and (i) if
any general or limited partnership interests, securities or rights of
any constituent business entity are not to be exchanged or converted
solely for, or into, cash, property or general or limited partnership
interests, rights, securities or obligations of the Surviving Business
Entity, the cash, property or general or limited partnership interests,
rights, securities or obligations of any limited partnership,
corporation, trust or other entity (other than the Surviving Business
Entity) which the holders of such general or limited partnership
interest are to receive in exchange for, or upon conversion of their
securities or rights, and (ii) in the case of securities represented by
certificates, upon the surrender of such certificates, which cash,
property or general or limited partnership interests, rights, securities
or obligations of the Surviving Business Entity or any limited
partnership, corporation, trust or other entity (other than the
Surviving Business Entity), or evidences thereof, are to be delivered;
(e) A statement of any amendments or other changes in the
constituent documents (the articles or certificate of incorporation,
articles of trust, declaration of trust, certificate or agreement of
limited partnership or other similar charter or governing document), or
the adoption of new constituent documents, in either case as
contemplated in Section 17-211(g) of the Delaware Act, of the Surviving
Business Entity to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date of
the filing of the certificate of merger pursuant to Section 16.4 or a
later date specified in or determinable in accordance with the Merger
Agreement; provided that if the effective time of the merger is to be
later than the date of the filing of the certificate of merger, it shall
be fixed no later than the time of the filing of the certificate of
merger and stated therein; and
(g) Such other provisions with respect to the proposed merger
or consolidation as are deemed necessary or appropriate by the General
Partner.
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16.3 Approval by Limited Partners of Merger or Consolidation. (a) The
General Partner of the Partnership, upon its approval of the Merger Agreement,
shall direct that the Merger Agreement be submitted to a vote of Limited
Partners whether at a meeting or by written consent, in either case in
accordance with the requirements of Article XV. A copy or a summary of the
Merger Agreement shall be included in or enclosed with the notice of a meeting
or the written consent.
(b) The Merger Agreement shall be approved upon receiving the
affirmative vote or consent of the holders of at least 66 2/3% of the
Outstanding Units, unless the Merger Agreement contains any provision which, if
contained in an amendment to this Agreement, the provisions of this Agreement
or the Delaware Act would require the vote or consent of a greater percentage
of the Outstanding Units of the Limited Partners or of any class of Limited
Partners, in which case such greater percentage vote or consent shall be
required for approval of the Merger Agreement.
(c) After such approval by vote or consent of the Limited Partners,
and at any time prior to the filing of the certificate of merger pursuant to
Section 16.4, the merger or consolidation may be abandoned pursuant to
provisions therefor, if any, set forth in the Merger Agreement.
16.4 Certificate of Merger. Upon the required approval by the General
Partner and Limited Partners of a Merger Agreement, a certificate of merger
shall be executed and filed with the Secretary of State of the State of
Delaware in conformity with the requirements of the Delaware Act.
16.5 Effect of Merger. (a) Upon the effective date of the certificate
of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all property,
real, personal and mixed, and all debts due to any of those business
entities and all other things and causes of action belonging to each of
those business entities shall be vested in the Surviving Business Entity
and, after the merger or consolidation, shall be the property of the
Surviving Business Entity to the extent they were part of each
constituent business entity;
(ii) the title to any real property vested by deed or otherwise
in any of those constituent business entities shall not revert and shall
not be in any way impaired because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security
interest in property of any of those constituent business entities shall
be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity, and may
be enforced against it to the same extent as if the debts, liabilities
and duties had been incurred or contracted by it.
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(b) A merger or consolidation effected pursuant to this Article XVI
shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another having occurred.
ARTICLE XVII
RIGHT TO ACQUIRE UNITS
17.1 Right to Acquire Units. (a) Notwithstanding any provision of this
Agreement, if at any time less than 15% of the total Units then issued and
Outstanding are held by Persons other than the General Partner and its
Affiliates, the General Partner shall then have the right (which right it may
assign and transfer to the Partnership or any Affiliate of the General Partner)
exercisable in its sole discretion, to purchase all, but not less than all, of
the Units then Outstanding held by Persons other than the General Partner and
its Affiliates, at the higher of (a) the highest cash price paid by the General
Partner or any of its Affiliates for any Unit purchased during the 90-day
period preceding the date that the notice described in Section 17.1(b) is
mailed or (b) the Current Market Price as of the date the General Partner (or
any of its assignees) mails the Notice of Election to Purchase with respect to
its election to purchase such Units. As used in this Agreement, (i) "Current
Market Price" of a Unit 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 20 consecutive Trading Days immediately prior to, but not
including, such date; (ii) "Closing Price" for any day means the last sale
price on such day, regular way, or in case no such sale takes place on such
day, the average of the closing bid and asked prices on such day, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted 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 price
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 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 General Partner; and (iii) "Trading
Day" means a day on which the principal National Securities Exchange on which
the Units of any class are listed or admitted to trading is open for the
transaction of business or, if Units of a class are not listed or admitted to
trading on any National Securities Exchange, a day on which banking
institutions in New York City generally are open.
(b) If the General Partner, any Affiliate of the General Partner or
the Partnership elects to exercise the right to purchase Units granted pursuant
to Section 17.1(a), the General Partner shall
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deliver to the Transfer Agent written notice of such election to purchase (the
"Notice of Election to Purchase") and shall cause the Transfer Agent to mail a
copy of such Notice of Election to Purchase to the Record Holders of Units (as
of a Record Date selected by the General Partner) at least 10, but not more
than 60 days prior to the Purchase Date. Such Notice of Election to Purchase
shall also be published in daily newspapers of general circulation printed in
the English language and published in the Borough of Manhattan, New York. The
Notice of Election to Purchase shall specify the Purchase Date and the price
(determined in accordance with Section 17.1(a)) at which Units will be
purchased and state that the General Partner, its Affiliate or the Partnership,
as the case may be, elects to purchase such Units, upon surrender of Unit
Certificates representing such 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 Units are listed or
admitted to trading. Any such Notice of Election to Purchase mailed to a
Record Holder of Units at his address as reflected in the records of the
Transfer Agent shall be conclusively presumed to have been given whether or not
the owner receives such notice. On or prior to the Purchase Date, the General
Partner, its Affiliate or the Partnership, as the case may be, shall deposit
with the Transfer Agent cash in an amount sufficient to pay the aggregate
purchase price of all of the 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 Units subject to purchase as provided herein,
then from and after the Purchase Date, notwithstanding that any Unit
Certificate shall not have been surrendered for purchase, all rights of the
holders of such Units (including, without limitation, any rights pursuant to
Articles IV, V and XIV) shall thereupon cease, except the right to receive the
purchase price (determined in accordance with Section 17.1(a)) for the Units
therefor, without interest, upon surrender to the Transfer Agent of the Unit
Certificates representing such Units, and such Units shall thereupon be deemed
to be transferred to the General Partner, its Affiliate or the Partnership, as
the case may be, on the record books of the Transfer Agent and the Partnership,
and the General Partner or any Affiliate of the General Partner, or the
Partnership, as the case may be, shall be deemed to be the owner of all such
Units from and after the Purchase Date and shall have all rights as the owner
of such Units (including, without limitation, all rights as owner pursuant to
Articles IV, V and XIV).
(c) At any time from and after the Purchase Date, a holder of an
Outstanding Unit subject to purchase as provided in this Section 17.1 may
surrender his 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
GENERAL PROVISIONS
18.1 Addresses and Notices. Any notice, demand, request or report
required or permitted to be given or made to a Partner or Assignee under this
Agreement shall be in writing and shall be deemed given or made when delivered
in person or when sent by first-class United States mail or
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by other means of written communication to the Partner or Assignee at the
address described below. Any notice, payment or report to be given or made to
a Partner or Assignee hereunder shall be deemed conclusively to have been given
or made, and the obligation to give such notice or report or to make such
payment shall be deemed conclusively to have been fully satisfied, upon sending
of such notice, payment or report to the Record Holder of such Unit at his
address as shown on the records of the Transfer Agent or as otherwise shown on
the records of the Partnership, regardless of any claim of any Person who may
have an interest in such Unit or the Partnership Interest of a General Partner
by reason of any assignment or otherwise. An affidavit or certificate of
making of any notice, payment or report in accordance with the provisions of
this Section 18.1 executed by the General Partner, the Transfer Agent or the
mailing organization shall be prima facie evidence of the giving or making of
such notice, payment or report. If any notice, payment or report addressed to
a Record Holder at the address of such Record Holder appearing on the books and
records of the Transfer Agent or the Partnership is returned by the United
States Post Office marked to indicate that the United States Postal Service is
unable to deliver it, such notice, payment or report and any subsequent
notices, payments and reports shall be deemed to have been duly given or made
without further mailing (until such time as such Record Holder or another
Person notifies the Transfer Agent or the Partnership of a change in his
address) if they are available for the Partner or Assignee at the principal
office of the Partnership for a period of one year from the date of the giving
or making of such notice, payment or report to the other Partners and
Assignees. Any notice to the Partnership shall be deemed given if received by
the General Partner at the principal office of the Partnership designated
pursuant to Section 1.3. The General Partner may rely and shall be protected
in relying on any notice or other document from a Partner, Assignee or other
Person if believed by it to be genuine.
18.2 Titles and Captions. All article or section titles or captions
in this Agreement are for convenience only. They shall not be deemed part of
this Agreement and in no way define, limit, extend or describe the scope or
intent of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
18.3 Pronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice-versa.
18.4 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as
may be necessary or appropriate to achieve the purposes of this Agreement.
18.5 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
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18.6 Integration. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter hereof and supersedes
all prior agreements and understandings pertaining thereto.
18.7 Creditors. None of the provisions of this Agreement shall be for
the benefit of, or shall be enforceable by, any creditor of the Partnership.
18.8 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, agreement
or condition.
18.9 Counterparts. This Agreement may be executed in counterparts,
all of which together shall constitute an agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or, in the case of a
Person acquiring a Unit, upon executing and delivering a Transfer Application
as herein described, independently of the signature of any other party.
18.10 Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
18.11 Invalidity of Provisions. If any provision of this Agreement is
or becomes invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
LAKEHEAD PIPE LINE COMPANY, INC.
By: /s/ P. D. DANIEL
--------------------------------
P. D. Daniel
President
LIMITED PARTNERS:
All Limited Partners now and
hereafter admitted as limited
partners of the Partnership,
pursuant to Powers of Attorney
now and hereafter executed in
favor of, and granted and
delivered to, the General
Partner.
By: Lakehead Pipe Line Company,
Inc., General Partner, as
attorney-in-fact for all
Limited Partners pursuant to
the Powers of Attorney granted
pursuant to Section 1.4.
By: /s/ P. D. DANIEL
--------------------------------
P. D. Daniel
President
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