<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 1, 1999
REGISTRATION NO. 333-82269
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
EOTT ENERGY PARTNERS, L.P.
EOTT ENERGY FINANCE CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 76-0424520
DELAWARE 76-0610042
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
1330 POST OAK BOULEVARD
SUITE 2700
HOUSTON, TEXAS 77056
TELEPHONE NO. (713) 993-5200
(Address, including zip code and telephone number, including area code, of
registrants' principal executive offices)
---------------------
REX R. ROGERS
1400 SMITH STREET
HOUSTON, TEXAS 77002
(713) 853-6161
(Name, address, including zip code and telephone number, including area code, of
agent for service)
---------------------
PLEASE SEND COPIES OF COMMUNICATIONS TO:
ROBERT S. BAIRD
VINSON & ELKINS L.L.P.
2700 ONE AMERICAN CENTER, 600 CONGRESS
AUSTIN, TEXAS 78701
(512) 495-8451
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (the "Securities Act"), other than securities offered only in connection
with dividend or interest reinvestment plans, please check the following
box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE
SECURITIES TO BE REGISTERED OFFERING PRICE(1)(2) AMOUNT OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------
Common Units
Debt Securities(3)................................. $500,000,000 $139,000(5)
- ---------------------------------------------------------------------------------------------------------------------
Guarantees of Debt Securities(4)................... -- --
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) We have estimated the proposed maximum aggregate offering price solely to
calculate the registration fee under Rule 457(o) of the Securities Act. In
no event will the aggregate initial offering price of all securities we
issue exceed $600,000,000. The registered securities may be sold separately
or as units of the registered securities.
(2) The proposed maximum offering price for each class of securities we are
registering is not specified pursuant to General Instruction II.D. of Form
S-3.
(3) If any debt securities are issued at an original issue discount, then the
offering price of those debt securities shall be in an amount that will
result in an aggregate initial offering price not to exceed $500,000,000,
less the dollar amount of any registered securities previously issued.
(4) The debt securities may be guaranteed by any or all of the subsidiaries of
EOTT Energy Partners, L.P. listed on the Table of Additional Registrant
Guarantors on the following page. Pursuant to Rule 457(n), no separate fee
is payable with respect to the guarantees of the debt securities being
registered.
(5) Previously paid
WE HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE
NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL WE FILE A FURTHER AMENDMENT
SPECIFICALLY STATING THAT THIS REGISTRATION STATEMENT IS EFFECTIVE IN ACCORDANCE
WITH SECTION 8(a) OF THE SECURITIES ACT. OTHERWISE, THIS REGISTRATION STATEMENT
BECOMES EFFECTIVE ON THE DATE THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), DETERMINES.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF ADDITIONAL REGISTRANT GUARANTORS
<TABLE>
<CAPTION>
ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT
EXACT NAME OF STATE OR OTHER JURISDICTION IRS EMPLOYER GUARANTOR'S
REGISTRANT GUARANTOR OF ORGANIZATION IDENTIFICATION NUMBER PRINCIPAL EXECUTIVE OFFICES
- -------------------- --------------------------- --------------------- --------------------------------
<S> <C> <C> <C>
EOTT ENERGY OPERATING Delaware 76-0424498 1330 Post Oak Boulevard
LIMITED PARTNERSHIP Suite 2700
Houston, Texas 77056
(713)993-5200
EOTT ENERGY PIPELINE Delaware 76-0424521 1330 Post Oak Boulevard
LIMITED PARTNERSHIP Suite 2700
Houston, Texas 77056
(713)993-5200
EOTT ENERGY CANADA Delaware 76-0427424 1330 Post Oak Boulevard
LIMITED PARTNERSHIP Suite 2700
Houston, Texas 77056
(713)993-5200
</TABLE>
<PAGE> 3
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED SEPTEMBER 1, 1999
PROSPECTUS
$500,000,000
---------------------
COMMON UNITS
DEBT SECURITIES
EOTT ENERGY PARTNERS, L.P.
EOTT ENERGY FINANCE CORP.
---------------------
We are EOTT Energy Partners, L.P., a publicly traded limited partnership
engaged in the purchasing, gathering, transporting, storage and resale of crude
oil, refined petroleum products and natural gas liquids and in related
activities. We are the issuer of the common units and debt securities offered by
means of this prospectus. EOTT Energy Finance Corp. may act as co-issuer of debt
securities.
We currently have 14,976,011 common units outstanding. Our common units are
traded on the New York Stock Exchange under the symbol "EOT."
---------------------
WE WILL PROVIDE SPECIFIC TERMS OF OFFERINGS OF OUR SECURITIES IN PROSPECTUS
SUPPLEMENTS. YOU SHOULD READ THIS PROSPECTUS AND ANY SUPPLEMENT TO THIS
PROSPECTUS CAREFULLY BEFORE YOU INVEST. YOU SHOULD ALSO READ THE DOCUMENTS WE
HAVE REFERRED YOU TO IN THE "WHERE YOU CAN FIND MORE INFORMATION" SECTION OF
THIS PROSPECTUS FOR INFORMATION ON US AND FOR OUR FINANCIAL STATEMENTS. TOGETHER
THESE DOCUMENTS WILL PROVIDE YOU WITH THE SPECIFIC TERMS OF THE OFFERINGS. THIS
PROSPECTUS MAY NOT BE USED TO SELL OUR SECURITIES UNLESS IT IS ACCOMPANIED BY A
PROSPECTUS SUPPLEMENT.
LIMITED PARTNER INTERESTS ARE INHERENTLY DIFFERENT FROM CAPITAL STOCK OF A
CORPORATION. PURCHASERS OF OUR SECURITIES SHOULD CONSIDER EACH OF THE FACTORS
DESCRIBED UNDER "RISK FACTORS," ON PAGE 2, IN EVALUATING AN INVESTMENT IN US.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF OUR SECURITIES. THIS MEANS THAT NEITHER THE SEC NOR ANY STATE
SECURITIES COMMISSION HAS PASSED UPON THE ACCURACY, ADEQUACY OR COMPLETENESS OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1999.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
ABOUT THIS PROSPECTUS....................................... ii
WHERE YOU CAN FIND MORE INFORMATION......................... ii
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS... iii
WHO WE ARE.................................................. 1
RISK FACTORS................................................ 2
CONFLICTS OF INTEREST AND FIDUCIARY RESPONSIBILITIES........ 7
USE OF PROCEEDS............................................. 8
DESCRIPTION OF THE DEBT SECURITIES.......................... 8
RATIO OF EARNINGS TO FIXED CHARGES.......................... 13
DESCRIPTION OF OUR COMMON UNITS............................. 13
CASH DISTRIBUTION POLICY.................................... 15
DESCRIPTION OF OUR PARTNERSHIP AGREEMENT.................... 16
TAX CONSIDERATIONS.......................................... 19
PLAN OF DISTRIBUTION........................................ 34
LEGAL MATTERS............................................... 35
EXPERTS..................................................... 35
</TABLE>
i
<PAGE> 5
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC using a "shelf" registration process. Under this shelf process, we may offer
from time to time up to $500,000,000 of our securities. Each time we offer our
securities, we will provide you with a prospectus supplement that will describe,
among other things, the specific amounts and prices of the securities being
offered and the terms of the offering including, in the case of debt securities,
the specific terms of the securities. The prospectus supplement may also add,
update or change information contained in this prospectus. Therefore, before you
invest in our securities, you should read this prospectus, any prospectus
supplements and all additional information referenced in the next section.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information with
the SEC. You may read and copy any document we file at the SEC's public
reference room at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the SEC's public reference rooms in New York, New
York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. In addition, the SEC maintains a web
site that contains reports, information statements and other information
regarding issuers that file electronically. Our SEC filings are also available
on this web site at http://www.sec.gov. You can also obtain information about us
at the offices of the New York Stock Exchange, 20 Broad Street, New York, New
York, 10005.
The SEC allows us to incorporate by reference information we file with it
into this prospectus. This procedure means that we can disclose important
information to you by referring you to documents on file or to be filed with the
SEC. The information we incorporate by reference is part of this prospectus and
later information that we file with the SEC will automatically update and
supersede this information. Therefore, before you decide to invest in a
particular offering under this shelf registration, you should always check for
SEC reports we may have filed after the date of this prospectus. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until all offerings under this shelf registration are completed:
- Annual Report on Form 10-K for the year ended December 31, 1998;
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999 and
June 30, 1999; and
- the description of our common units contained in our Form 8-A/A dated
March 14, 1994.
You may request a copy of these filings at no cost by making written or
telephone requests for copies to:
EOTT Energy Corp.
1400 Smith Street
Houston, Texas 77002
Attention: Shareholder Relations
Telephone: (713) 853-6161
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with any information. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front of each document.
ii
<PAGE> 6
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
This prospectus contains statements that constitute "forward looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934. In general, any statement other than
a statement of historical fact is a forward looking statement. We caution that
our actual results may differ materially from those anticipated or projected
forward looking statements. Any differences could result from a variety of
factors, including the following:
- our ability to maintain existing volumes of crude oil purchased at the
lease and to obtain additional volumes of crude oil;
- our success in hedging our positions;
- industry conditions;
- prices and demand for crude oil;
- economic, political and administrative developments that impact federal,
state and local departments and agencies that regulate the oil industry;
- the effect of competition;
- conditions of the capital markets;
- our ability to successfully acquire and efficiently integrate new assets;
and
- our ability to successfully implement our Year 2000 readiness program.
The information we set forth under the heading "Risk Factors" details these
and other facts that could affect our operating results. You should carefully
consider all this information before you invest.
iii
<PAGE> 7
WHO WE ARE
We are EOTT Energy Partners, L.P., and we purchase, gather, transport,
store and resell crude oil, refined petroleum products and natural gas liquids.
As an intermediary, we seek to earn profits primarily by buying crude oil at
competitive prices, efficiently transporting and handling the purchased crude
oil and marketing the crude oil to refinery customers or other trade partners
who can most benefit from the particular crude oil type. Through our crude oil
gathering and marketing operations, we purchase crude oil produced from
approximately 40,000 leases owned by many of the largest integrated and
independent crude oil producers in the United States and Canada. We purchase
approximately 87% of our lease crude oil from independent oil producers and
approximately 13% from major integrated oil companies. We market the crude oil
to major oil companies and independent refiners throughout the United States and
Canada. In addition to our gathering and marketing operations, we have pipeline
operations in which we transport crude oil on our intrastate and interstate
pipelines based on regulated published tariffs.
On December 1, 1998, we purchased crude oil gathering and transportation
assets in key oil producing regions in a transaction that almost tripled our
pipeline mileage and almost doubled our crude oil lease barrels under contract.
The acquisition included approximately 3,900 miles of crude oil pipelines, crude
oil transport trucks, meter stations, vehicles, storage tanks and contracts for
approximately 180,000 lease barrels of crude oil per day from production in 11
central and western states including Texas, Oklahoma, Kansas and California. On
May 3, 1999, we purchased crude oil transportation and storage assets that
included approximately 2,000 miles of common carrier crude oil pipelines in
Southeast New Mexico and West Texas, bringing our crude oil pipeline mileage to
a total of approximately 8,200 miles.
We are a Delaware limited partnership. EOTT Energy Corp., a Delaware
corporation and an indirect wholly-owned subsidiary of Enron Corp. ("Enron"),
serves as our sole general partner. Our operations are conducted through, and
the operating assets are owned by, EOTT Energy Operating Limited Partnership,
EOTT Energy Canada Limited Partnership and EOTT Energy Pipeline Limited
Partnership, each of which is a Delaware limited partnership. Our general
partner is also the general partner of our operating partnerships. EOTT Energy
Finance Corp., a Delaware corporation, is a wholly-owned subsidiary of EOTT
Energy Partners, L.P. and has been organized for the sole purpose of co-issuing
debt securities.
1
<PAGE> 8
RISK FACTORS
In addition to the other information in, or incorporated by reference in
this prospectus and any accompanying prospectus supplement, you should carefully
consider and evaluate all of the information relating to the risk factors set
forth below.
RISKS RELATED TO OUR BUSINESS
ECONOMIC AND INDUSTRY FACTORS BEYOND OUR CONTROL, INCLUDING PRODUCTION
LEVELS OF CRUDE OIL, CAN ADVERSELY AFFECT OUR GROSS MARGIN.
Our ability to pay cash distributions and service our debt obligations
depends primarily on our gross margin, which is the difference between the sales
price of crude oil and the cost of crude oil purchased, including costs paid to
third parties for transportation and handling charges. Historically, our
business has been very competitive with thin and volatile profit margins. Our
gross margin is affected by many factors beyond our control, including:
- the performance of the U.S. and world economies;
- volumes of crude oil produced in the areas we serve;
- demand for oil by refineries and other customers;
- prices for crude oil at various lease locations;
- prices for crude oil futures contracts on the New York Mercantile
Exchange;
- the competitive position of alternative energy sources; and
- the availability of pipeline and other transportation facilities that may
make crude oil production from other producing areas competitive with
crude oil production that we purchase at the lease.
The absolute price levels for crude oil do not necessarily bear a direct
relationship to our gross margins per barrel, and our gross margins per barrel
cannot be projected with any level of certainty. Due to the volatility of crude
oil prices and the decline in crude oil production, crude oil gathering margins
have suffered industry wide over the last few years. Although there has been
improvement in crude oil margins since 1997, margins have not returned to
historical levels.
IF WE CANNOT MAINTAIN OUR VOLUMES OF CRUDE OIL PURCHASED AT THE LEASE, OUR
ABILITY TO PAY CASH DISTRIBUTIONS AND SERVICE OUR DEBT OBLIGATIONS WILL BE
ADVERSELY AFFECTED.
Our profitability depends in part on our ability to offset volumes lost
because of natural declines in crude oil production from depleting wells or
volumes lost to competitors. This is particularly difficult in an environment of
reduced drilling activity and discontinued production operations. The amount of
drilling and production will depend in large part on crude oil prices. To the
extent that low crude oil prices result in lower volumes of lease crude oil
available for purchase, we may experience lower per barrel margins, as
competition for available lease crude oil on the basis of price intensifies. It
is possible that domestic crude oil producers may further reduce or discontinue
drilling and production operations. In addition, a sustained depression in crude
oil prices could result in the bankruptcy of some producers.
Because producers experience inconveniences in switching lease crude oil
purchasers, producers typically do not change purchasers on the basis of minor
variations in price. Thus, we may experience difficulty acquiring lease crude
oil in areas where there are existing relationships between producers and other
gatherers and purchasers of crude oil. Furthermore, we cannot assure you that we
will be successful in obtaining production made available by major oil companies
or that we will be successful in acquiring other gatherers or marketers.
2
<PAGE> 9
OUR PERFORMANCE DEPENDS ON OUR ABILITY TO MINIMIZE BAD DEBTS AND LEGAL
LIABILITY WHEN EXTENDING CREDIT TO OPERATORS AND CUSTOMERS.
When we purchase crude oil at the lease, we often make payment to an
operator who is responsible for the correct payment and distribution of the
proceeds to other parties. If the operator does not have sufficient resources to
indemnify and defend us in case of a protest, action or complaint by those other
parties, our costs could rise. In addition, because we may extend credit to some
customers in large amounts, it is important that our credit review, evaluation
and control mechanisms work properly. Even if our mechanisms work properly, we
cannot assure you that our customers will not experience losses in dealings with
other parties, in which case we could be adversely affected.
A REDUCTION IN OUR CREDIT STANDING OR ABILITY TO ACCESS CAPITAL WOULD
ADVERSELY AFFECT OUR BASIC PURCHASING AND MARKETING ACTIVITIES.
Our financial resources are a major consideration for parties that enter
into transactions with us, and because of the large dollar volume of the
marketing transactions in which we engage, we have a significant need for
working capital. While we believe that our revolving credit facility will be
sufficient to support our working capital needs, any significant decrease in our
financial strength, regardless of the reason for the decrease, may:
- increase the number of transactions requiring letters of credit or other
financial support;
- make it more difficult for us to obtain letters of credit upon expiration
of our revolving credit facility;
- make it more difficult to renew our revolving credit facility upon its
expiration; or
- increase the cost of obtaining letters of credit.
If we do experience a decrease in financial strength, or if our general partner
is unsuccessful in managing our working capital position, we may be unable to
maintain or increase the level of our purchasing and marketing activities. We
cannot assure you that our revolving credit facility will be adequate or that we
will not be required to reduce our market activities because of limitations on
our ability to obtain financing for our working capital needs.
OUR ABILITY TO MAINTAIN OR INCREASE OUR GROSS MARGINS IS DEPENDENT ON THE
SUCCESS OF OUR PRICE RISK MANAGEMENT STRATEGIES.
Sophisticated price risk management strategies, including those involving
price hedges using New York Mercantile Exchange futures contracts, are very
important in maintaining or increasing our gross margins. Hedging techniques
require significant resources dedicated to the management of futures positions
and physical inventories. We cannot assure you that our price risk management
strategies will be successful in protecting us from risks or in maintaining our
gross margins at desirable levels. Furthermore, we have certain basis risks (the
risk that price relationships between delivery points, grades of crude oil or
delivery periods will change) that cannot be completely hedged, and from time to
time we enter into transactions providing for purchases and sales in future
periods in which the volumes of crude oil are balanced but where either the
purchase or the sale prices are not fixed at the time the transactions are
entered into. In these cases we are subject to the risk that prices may change
or that price changes will not occur as anticipated.
Our ability to increase our profitability and cash flow will depend to a
large extent on our success in making wise decisions regarding sources of supply
and demand for crude oil, our skill in handling the transportation and storage
of crude oil and our ability to respond to changes in the markets. The marketing
of crude oil is complex and requires detailed current knowledge of crude oil
sources and outlets and a familiarity with a number of factors including:
- types of crude oil;
- individual refinery demand for specific grades of crude oil;
3
<PAGE> 10
- area market price structures for the different grades of crude oil;
- location of customers;
- availability of transportation facilities; and
- timing and costs (including storage) involved in delivering crude oil to
the appropriate customer.
TECHNICAL AND STRUCTURAL IMPROVEMENTS IN THE MARKETS FOR CRUDE OIL MAY HAVE
AN ADVERSE EFFECT ON OUR PERFORMANCE.
We realize margins because of our ability to take advantage of our
gathering, storage and transportation assets and our ability to effect
transactions at many different delivery points. Developments in the markets for
crude oil or petroleum products, such as the development of more accurate price
reporting mechanisms or the introduction of additional futures contracts
involving new delivery locations and products, may adversely affect our margins.
ENVIRONMENTAL AND OTHER REGULATORY COSTS AND LIABILITIES COULD AFFECT OUR
CASH FLOW.
Our business is heavily regulated by federal, state and local agencies with
respect to environmental, safety and other regulatory matters. This regulation
increases our cost of doing business. We may be subject to substantial penalties
if we fail to comply with any regulation. We cannot assure you that regulatory
changes enacted by regulatory agencies that have jurisdiction over us will not
increase our cost of conducting business or otherwise negatively impact our
profitability, cash flow and financial condition.
We are subject to numerous laws and regulations governing the discharge of
materials into the environment or otherwise relating to environmental
protection. If an accidental leak or spill occurs in one of our pipelines or at
a storage facility, we may have to pay a significant amount to clean up the leak
or spill. The resulting costs and liabilities could negatively affect the level
of cash available to pay amounts due on our debt and for distributions to
unitholders. Although we believe that we are in compliance in all material
respects with all applicable environmental laws and regulations, we could be
adversely affected by environmental costs and liabilities that may be incurred
or increased costs resulting from failure to obtain all required regulatory
consents and approvals. Proper maintenance of pipelines is important for the
avoidance of accidental leaks and spills. The average age of our pipelines is
approximately 40 years, and we have acquired approximately 80% of our pipelines
in the past four years. While we believe we have adequately maintained our
pipelines during our ownership, we cannot assure you that these pipelines have
received proper maintenance at all times prior to our ownership. As to all of
our properties, we cannot assure you that past operating practices, including
those that were state of the art at the time employed, will not result in
significant future environmental liabilities. In addition, we cannot assure you
that in the future regulatory agencies with jurisdiction over us will not enact
additional environmental regulations that will negatively affect our
profitability, cash flow and financial condition.
Our pipelines are subject to rate regulation as well as laws relating to
safety and the environment. Federal and state agencies could change the tariffs
we may charge for common carrier pipeline transportation or impose additional
safety or environmental requirements, any of which could affect our
profitability, cash flow and financial condition.
In connection with our recent asset acquisitions from Koch and Texas-New
Mexico PipeLine Co., the parties agreed to allocate responsibilities for
environmental liabilities associated with the pipelines and other assets
included in these transactions. In the Koch transactions, we agreed to be
responsible for certain environmental matters. For the cleanup of pre-closing
contamination which was unknown on the closing date, we agreed to pay up to
$250,000 for each incident, subject to an overall cap of $13 million on all such
incidents in the aggregate. In the Texas-New Mexico PipeLine transaction, we
generally agreed to assume responsibility for the seller's existing cleanup
obligations. In order to minimize our exposure for remediation costs in the
Texas-New Mexico PipeLine transaction, we obtained $20 million in special
insurance coverage for known and unknown cleanup liabilities. In connection with
that insurance coverage, we, as between ourself and our insurance carrier,
remain responsible for all claims in excess of the
4
<PAGE> 11
$20 million, subject to certain deductibles, including a $4 million EOTT
retained liability and a $5 million cap on insurance coverage for known
contamination. Although we believe that we have adequately identified the
anticipated environmental liabilities associated with the Koch and Texas-New
Mexico PipeLine acquisitions, we cannot assure you that there will not be any
material liabilities identified at some future time or that we would be
successful in making indemnity claims, if any. Any claims submitted by us under
any environmental insurance policy will be subject to standard claims review by
the applicable insurance carrier. Should an insurance carrier or an indemnifying
party refuse to honor any claim, or be unable to pay any claim, we would remain
liable for payment.
WE ARE SUBJECT TO RISKS IN PREPARING FOR THE YEAR 2000 PROBLEM.
We estimate that our critical systems will be Year 2000-ready substantially
before January 1, 2000. However, we cannot assure you that our plan to be ready
for the Year 2000 will succeed in accomplishing its purpose or that unforeseen
circumstances will not arise during the implementation of the plan that would
materially adversely affect us.
We are taking reasonable steps to identify, assess, and, where appropriate,
to replace devices that contain embedded chips. Despite these reasonable
efforts, we anticipate that we will not be able to find and remediate all
embedded chips in our systems. Further, we anticipate that third parties on whom
we depend also will not be able to find and remediate all embedded chips in
their systems. Some of the embedded chips that fail to operate or that produce
anomalous results may create system disruptions or failures. Some of these
disruptions or failures may spread from the systems in which they are located to
other systems in a cascade. These cascading failures may have adverse effects
upon our ability to maintain safe operations, and may also have adverse effects
upon our ability to serve our customers and otherwise to fulfill certain
contractual and other legal obligations. The embedded chip problem is widely
recognized as one of the more difficult aspects of the Year 2000 problem across
industries and throughout the world.
Our operations are regulated in part by governmental authorities. We expect
to satisfy these regulatory authorities' requirements for achieving Year 2000
readiness. If our reasonable expectations in this regard are in error, and if a
regulatory authority should order the temporary cessation of our operations in
one or more of these areas, the adverse effect could be material. Other
companies with whom we transact business could face similar problems that
materially adversely affect us.
We cannot assure you that suppliers upon which we depend for essential
goods and services will convert and test their mission-critical systems and
processes in a timely manner. Failure or delay by all or some of these entities,
including the U.S. and state or local governments and foreign governments, could
create substantial disruptions having a material adverse affect on our business.
OUR RAPID GROWTH MAY CAUSE DIFFICULTIES INTEGRATING NEW OPERATIONS.
Part of our business strategy includes acquiring additional assets that
will allow us to increase distributions to unitholders. In the last few years,
we have made several acquisitions that significantly increased our asset base.
Unexpected costs or challenges may arise whenever assets with different
operations are combined. Successful acquisitions require management and other
personnel to devote significant amounts of time to integrating the acquired
assets with existing operations. These efforts may temporarily distract their
attention from day-to-day business, the development or acquisition of new
properties and other business opportunities.
RISKS RELATED TO OUR PARTNERSHIP STRUCTURE
CASH DISTRIBUTIONS TO OUR UNITHOLDERS ARE NOT GUARANTEED AND MAY FLUCTUATE;
ENRON'S COMMITMENT TO SUPPORT CASH DISTRIBUTIONS ON COMMON UNITS WILL EXPIRE
AFTER 2001.
Our cash distributions are not guaranteed and may fluctuate with our
performance. Enron has a commitment to contribute to us up to $29 million ($26.5
million of which is available) if necessary to support our ability to pay the
minimum quarterly distribution of $0.475 per unit ($1.90 annualized). In
addition to the current commitment, Enron has previously contributed $21.9
million to help us pay the
5
<PAGE> 12
minimum quarterly distribution. However, Enron's commitment to support the
minimum quarterly distribution extends only to quarters through December 31,
2001.
OUR UNITHOLDERS WILL HAVE LIMITED VOTING RIGHTS AND WILL NOT CONTROL OUR
GENERAL PARTNER.
We are a limited partnership, operated under the direction of our general
partner. This structure affects our common unitholders in various ways
including:
- the voting rights of common unitholders are more limited than those of
holders of capital stock in a corporation;
- our common unitholders have no right to participate in our management and
have no right to elect our general partner or members of its board of
directors;
- our partnership agreement contains provisions making it difficult to
replace our general partner; and
- our general partner and its affiliates may have conflicts of interest
with our common unitholders and with us.
WE DO NOT HAVE THE SAME FLEXIBILITY AS CORPORATIONS TO ACCUMULATE CASH AND
EQUITY TO PROTECT AGAINST ILLIQUIDITY IN THE FUTURE.
Unlike a corporation, our partnership agreement requires us to make
quarterly distributions to our partners of all available cash, consisting of all
cash receipts less disbursements and any amounts reserved for commitments and
contingencies, including capital and operating costs and debt covenants. The
value of our common units is likely to decrease if the amount we distribute per
unit decreases. Accordingly, if we experience a liquidity problem in the future
and are required to reduce distributions on our common units, we may not be able
to issue equity on favorable terms.
OUR PARTNERSHIP AGREEMENT MODIFIES THE FIDUCIARY DUTIES OF OUR GENERAL
PARTNER UNDER DELAWARE LAW.
Our partnership agreement modifies fiduciary duties of our general partner
to the limited partners under Delaware law. These modifications of state law
standards of fiduciary duty may limit the ability of unitholders to challenge
successfully the actions of the general partner as being a breach of what would
otherwise have been a fiduciary duty.
UNITHOLDERS MAY HAVE NEGATIVE TAX CONSEQUENCES IF WE DEFAULT ON OUR DEBT OR
SELL ASSETS.
If we default on any of our debt, the lenders will have the right to sue us
for non-payment. Such an action could cause an investment loss and cause
negative tax consequences for unitholders through the realization of taxable
income by unitholders without a corresponding cash distribution. Likewise, if we
were to dispose of assets and realize a taxable gain while there is substantial
debt outstanding and proceeds of the sale were applied to the debt, unitholders
could have increased taxable income without a corresponding cash distribution.
OUR GENERAL PARTNER HAS A LIMITED CALL RIGHT.
If at any time our general partner and its affiliates own 80% or more of
the issued and outstanding limited partner interests of any class, our general
partner will have the right to purchase all, but not less than all, of the
outstanding limited partner interests of that class that are held by
non-affiliated persons.
RISKS RELATED TO OUR CAPITAL STRUCTURE
FURTHER ISSUANCES OF UNITS BY US COULD RESULT IN DILUTION FOR UNITHOLDERS
OR HINDER ANY OF OUR FUTURE FINANCINGS.
The market price of our common units could drop as a result of sales of a
large number of common units in the market or the perception that sales of
common units could occur. These factors could also make it more difficult for us
to raise funds through future offerings of common units. In this respect you
should consider several factors.
6
<PAGE> 13
First, on February 12, 1999, our unitholders approved a proposal that
authorized us to issue an additional 10 million common units for any business
purpose. These units may be issued on terms and conditions established by our
general partner in its sole discretion without further approval of any limited
partners. Our partnership agreement also authorizes us to issue other limited
partner interests and other equity under the conditions specified in our
partnership agreement.
Second, our general partner has the right, which it may from time to time
assign in whole or in part to any of its affiliates, to purchase common units,
subordinated units or other equity securities from us whenever, and on the same
terms that, we issue securities to persons other than our general partner and
its affiliates, to the extent necessary to maintain the percentage interest of
our general partner and its affiliates in us that existed immediately prior to
each issuance.
Third, if some or all of our outstanding subordinated units are converted
into common units, the amount of available cash necessary to pay the minimum
quarterly distribution with respect to all of our common units would be
increased proportionately, thereby resulting in a dilution of the interest of
existing common unitholders in our cash distributions.
Fourth, if we issue more units, Enron's commitment to support our minimum
quarterly distributions will not increase, thereby resulting in a dilution of
the support obligation per unit.
Finally, a holder of 1,700,000 outstanding common units is entitled to
certain registration rights that allow it to cause us to register its units for
future sale. This unitholder has agreed for our benefit that it will not
exercise its registration rights until the earlier of March 1, 2000 and 180 days
following an underwritten offering of common units pursuant to this prospectus.
OUR INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.
Of our total debt, we have approximately $217 million payable to Enron by
December 31, 1999. We must repay or refinance this debt to avoid a material
adverse effect on our financial condition.
CONFLICTS OF INTEREST AND FIDUCIARY RESPONSIBILITIES
We have extensive ongoing relationships with Enron and its affiliates.
Enron's wholly owned subsidiary, EOTT Energy Corp., serves as our general
partner. Our general partner's employees participate in some employee benefit
plans administered by Enron. Our general partner owns, in addition to its
approximately 2% general partner interest, subordinated units representing
approximately a 29% interest in us, and Enron owns common units representing
approximately a 14% interest in us. The members of the board of directors of our
general partner are elected by a wholly-owned subsidiary of Enron. Our interests
could conflict with the interests of Enron and its affiliates, including our
general partner, and in such case our general partner will generally have a
fiduciary duty to resolve the conflicts in a manner that is in our best
interest.
Unless otherwise provided for in a partnership agreement, the laws of
Delaware and Texas generally require a general partner of a partnership to
adhere to fiduciary duty standards, under which it owes its partners the highest
duties of good faith, fairness and loyalty. Because of the competing interests
identified above, our partnership agreement contains provisions that modify some
of these fiduciary duties. For example, our partnership agreement states that
our general partner, its affiliates and its officers and directors will not be
liable for monetary damages to us, our limited partners or their assignees for
errors of judgment or for any acts or omissions if our general partner and they
acted in good faith. Our partnership agreement allows our general partner and
its board of directors to take into account the interests of parties in addition
to ours in resolving conflicts of interest. Our partnership agreement provides
that our general partner will not be in breach of its obligations under our
partnership agreement or its duties to us or our unitholders if the resolution
of a conflict is fair and reasonable to us. The latitude given in our
partnership agreement in connection with resolving conflicts of interest may
significantly limit the ability of a unitholder to challenge what might
otherwise be a breach of fiduciary duty. Our partnership agreement provides that
a purchaser of common units is deemed to have consented to conflicts of interest
and actions
7
<PAGE> 14
of our general partner and its affiliates that might otherwise be prohibited and
to have agreed that the conflicts of interest and actions do not constitute a
breach by our general partner of any duty stated or implied by law or equity.
Our audit committee (which is composed of persons who are not officers or
employees of our general partner or any of its affiliates) will, at the request
of our general partner, review conflicts of interest that may arise between our
general partner and its affiliates, on the one hand, and our unitholders or us,
on the other. Any resolution of a conflict approved by our audit committee is
conclusively deemed fair and reasonable to us. We are required to indemnify our
general partner, its affiliates and their respective officers, directors,
employees, agents and trustees to the fullest extent permitted by law against
liabilities, costs and expenses incurred by any of them who acted in good faith
and in a manner reasonably believed to be in or (in the case of a person other
than our general partner) not opposed to, our best interests and, with respect
to any criminal proceedings, had no reasonable cause to believe the conduct was
unlawful.
Our extensive ongoing relationships with Enron include:
- an Ancillary Agreement pursuant to which Enron has committed to
contribute to us up to $29 million ($26.5 million of which remains
available) if necessary to support our ability to pay the minimum
quarterly distribution on our common units with respect to quarters
ending on or prior to December 31, 2001;
- a Corporate Services Agreement pursuant to which Enron has agreed to
provide corporate staff and support services to us;
- agreements with Enron affiliates regarding the gathering and purchase by
us of volumes of crude oil and condensate; and
- a $1 billion credit facility provided by Enron to us and approximately
$220 million in other indebtedness to Enron for borrowed money.
Under our partnership agreement, with some limited exceptions, affiliates
of our general partner are not restricted from engaging in any business
activities, including those in competition with us. As a result, other conflicts
of interest may arise between affiliates of our general partner and us. Our
partnership agreement provides that, subject to limited exceptions, it shall not
constitute a breach of our general partner's fiduciary duties to our unitholders
or to us for any affiliate of our general partner to engage in direct
competition with us including, without limitation, the gathering, transportation
and marketing of crude oil and refined petroleum products.
USE OF PROCEEDS
Unless otherwise indicated to the contrary in an accompanying prospectus
supplement, we will use the net proceeds from the sale of securities covered by
this shelf registration for general corporate purposes, which may include
repayment of indebtedness, the acquisition of businesses and other capital
expenditures and additions to working capital.
DESCRIPTION OF THE DEBT SECURITIES
DESCRIPTION OF DEBT SECURITIES
The following are the general terms and conditions that could apply to debt
securities we may issue under this shelf registration statement. If and when we
offer debt securities, a prospectus supplement will state the particular terms
and conditions that actually apply to the debt securities included under the
prospectus supplement. The debt securities will be our unsecured general
obligations and either senior debt securities or subordinated debt securities.
EOTT Energy Finance Corp. may be co-issuer of any series of debt
securities. The co-issuer was incorporated under the laws of the State of
Delaware on July 1, 1999 and is wholly-owned by us. The
8
<PAGE> 15
co-issuer has no material assets or any liabilities other than as co-issuer of
debt securities. The co-issuer's activities will be limited to co-issuing debt
securities and engaging in other activities incidental thereto.
If we offer senior debt securities or subordinated debt securities, we will
issue them under an indenture that we refer to in this prospectus as an
"indenture". We will enter into the indentures with a trustee that is qualified
to act under the Trust Indenture Act of 1939 (together with any other trustee(s)
chosen by us and appointed in a supplemental indenture with respect to a
particular series of debt securities, the "Trustee"). We will identify the
Trustee for each series of debt securities in the applicable prospectus
supplement. These filings will be available for inspection at the corporate
trust office of the Trustee, or as described above under "Where You Can Find
More Information." The indenture will be subject to, and governed by, the Trust
Indenture Act.
SPECIFIC TERMS OF EACH SERIES OF DEBT SECURITIES IN THE PROSPECTUS SUPPLEMENT
A prospectus supplement relating to any series of debt securities we offer
will describe the specific terms of those debt securities. These terms will
include some or all of the following:
- the designation, aggregate principal amount and authorized denominations;
- whether the debt securities are senior debt securities or subordinated
debt securities;
- the maturity date;
- the interest rate, if any, and the method for calculating the interest
rate;
- the interest payment dates and the record dates for the interest
payments;
- the portion of the principal amount that will be payable if the maturity
of the debt securities is accelerated;
- any guaranties of the debt securities by any of our affiliated limited
partnerships or others, or other forms of credit support for the debt
securities;
- any mandatory or optional redemption terms or prepayment, conversion,
sinking fund or exchangeability or convertibility provisions;
- the place where principal and interest will be payable;
- if other than denominations of $1,000 or multiples of $1,000, the
denominations the debt securities will be issued in;
- whether the debt securities will be issued in the form of global
securities or certificates;
- the currency or currencies, if other than the currency of the United
States, in which principal and interest will be payable;
- whether the debt securities will be issuable in registered form or bearer
form or both and, if bearer securities are issuable, any restrictions
applicable to the exchange of one form for another and the offer, sale
and delivery of bearer securities;
- the dates on which premium, if any, will be payable;
- our right, if any, to defer payment of interest and the maximum length of
the deferral period;
- any listing on a securities exchange;
- the initial public offering price; and
- other specific terms, including events of default and covenants provided
for with respect to the debt securities.
9
<PAGE> 16
Any particular series of debt securities may contain covenants limiting:
- the incurrence of additional debt (including guarantees) by us and our
affiliated limited partnerships;
- the making of certain payments by us and our affiliated limited
partnerships;
- our business activities and those of our affiliated limited partnerships;
- the issuance of other securities by our affiliated limited partnerships;
- asset dispositions;
- transactions with our affiliated limited partnerships and other
affiliates;
- a change of control;
- the incurrence of liens; and
- certain mergers and consolidations involving us and our affiliated
limited partnerships.
PROVISIONS RELATING ONLY TO THE SENIOR DEBT SECURITIES
The senior debt securities will rank equally in right of payment with all
of our other senior and unsubordinated debt and senior in right of payment to
any of our subordinated debt (including the subordinated debt securities). The
senior debt securities will be effectively subordinated to all of our secured
debt. We will disclose the amount of our secured debt in the prospectus
supplement
PROVISIONS RELATING ONLY TO THE SUBORDINATED DEBT SECURITIES
SUBORDINATION TO SENIOR DEBT
The subordinated debt securities will rank junior in right of payment to
all of our senior debt. "Senior debt" will be defined to include all notes or
other evidences of debt, including our guarantees for money we borrowed, not
expressed to be subordinate or junior in right of payment to any other of our
debt.
PAYMENT BLOCKAGES
The indenture may provide that no cash payment of principal, interest and
any premium on the subordinated debt securities may be made:
- if we fail to pay when due any amounts on any senior debt;
- if our property or we are involved in any voluntary or involuntary
liquidation or bankruptcy; and
- in other instances specified in the indenture.
MODIFICATION OF INDENTURE
Under the indenture, generally we and the Trustee will be able to modify
our rights and obligations and the rights of the holders with the consent of the
holders of a specified percentage of the outstanding holders of each series of
debt affected by the modification. No modification of the principal or interest
payment terms, and no modification reducing the percentage required for
modifications, will be effective against any holder without its consent. In
addition, we and the Trustee will be able to amend the indenture without the
consent of any holder of the debt securities to make technical changes.
NO PERSONAL LIABILITY OF OUR GENERAL PARTNER
Our general partner and its directors, officers, employees and shareholders
will not have any liability for our obligations under the indenture or the debt
securities. By accepting a debt security, you waive and release these parties
from this liability. Your waiver and release are part of the consideration for
the issuance of the debt securities.
10
<PAGE> 17
PAYMENT AND TRANSFER
Principal, interest and any premium on fully registered securities will be
paid at the office of the paying agent that we may designate. We will make
payment by check mailed to persons in whose names the debt securities are
registered on days specified in the indentures or any prospectus supplement.
Debt security payments in other forms will be paid at a place designated by us
and specified in a prospectus supplement.
Fully registered securities may be transferred or exchanged at the
corporate trust office of the trustee or at any other office or agency
maintained by us for these purposes, without payment of any service charge,
except for any tax or governmental charge.
DISCHARGING OUR OBLIGATIONS
Except as may otherwise be set forth in any prospectus supplement, we may
choose to either discharge our obligations on the debt securities of any series
in a legal defeasance or release ourselves from our covenant restrictions on the
debt securities of any series in a covenant defeasance. We may do so at any time
prior to the stated maturity or redemption of the debt securities of the series
if, among other conditions,
- we deposit with the trustee sufficient cash or U.S. government securities
to pay the principal, interest, any premium and any other sums due to the
stated maturity date or redemption date of the debt securities of the
series; and
- we provide an opinion of our counsel that holders of the debt securities
will not be affected for U.S. federal income tax purposes by the
defeasance.
If we choose the legal defeasance option, holders of the debt securities of
that series will not be entitled to the benefits of the indenture except for
registration of transfer and exchange of debt securities, replacement of lost,
stolen or mutilated debt securities, any required conversion or exchange of debt
securities, any required sinking fund payments and receipt of principal and
interest on the original stated due dates or specified redemption dates.
REGISTRATION OF DEBT SECURITIES; GLOBAL SECURITIES
We may issue debt securities of a series in whole or part in registered,
bearer, coupon or global form. A global security is a security, typically held
by a depository, that represents the beneficial interest of a number of
purchasers of the security.
BOOK ENTRY, DELIVERY AND FORM
Unless otherwise stated in any prospectus supplement, The Depository Trust
Company, New York, New York ("DTC") will act as depositary. Book-entry debt
securities of a series will be issued in the form of a global debt security that
will be deposited with DTC. This means that we will not issue certificates to
each holder. One global debt security will be issued to DTC who will keep a
computerized record of its participants (for example, your broker) whose clients
have purchased the debt securities. The participant will then keep a record of
its clients who purchased the debt securities. Unless it is exchanged in whole
or in part for a certificate debt security, a global debt security may not be
transferred; except that DTC, its nominees and their successors may transfer a
global debt security as a whole to one another.
Beneficial interests in global debt securities will be shown on, and
transfers of global debt securities will be made only through, records
maintained by DTC and its participants.
DTC has provided us the following information: DTC is a limited-purpose
trust company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the United States
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered under the
11
<PAGE> 18
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants ("Direct Participants") deposit with DTC. DTC
also records the settlement among Direct Participants of securities
transactions, such as transfers and pledges, in deposited securities through
computerized records for Direct Participant's accounts. This eliminates the need
to exchange certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and some other
organizations.
DTC's book-entry system is also used by other organizations such as
securities brokers and dealers, banks and trust companies that work through a
Direct Participant. The rules that apply to DTC and its participants are on file
with the SEC.
DTC is owned by a number of its Direct Participants and by the New York
Stock Exchange, Inc., The American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc.
We will wire principal and interest payments to DTC's nominee. We and the
Trustee will treat DTC's nominee as the owner of the global debt securities for
all purposes. Accordingly, we, the Trustee and any paying agent will have no
direct responsibility or liability to pay amounts due on the global debt
securities to owners of beneficial interests in the global debt securities.
It is DTC's current practice, upon receipt of any payment of principal or
interest, to credit Direct Participants' accounts on the payment date according
to their respective holdings of beneficial interests in the global debt
securities as shown on DTC's records. In addition, it is DTC's current practice
to assign any consenting or voting rights to Direct Participants whose accounts
are credited with debt securities on a record date, by using an omnibus proxy.
Payments by participants to owners of beneficial interests in the global debt
securities, and voting by participants, will be governed by the customary
practices between the participants and owners of beneficial interests, as is the
case with debt securities held for the account of customers registered in
"street name." However, payments will be the responsibility of the participants
and not of DTC, the Trustee or us.
Debt securities represented by a global debt security will be exchangeable
for certificated debt securities with the same terms in authorized denominations
only if:
- DTC notifies us that it is unwilling or unable to continue as depositary
or if DTC ceases to be a clearing agency registered under applicable law
and a successor depositary is not appointed by us within 90 days; or
- We determine not to require all of the debt securities of a series to be
represented by a global debt security and notify the Trustee of our
decision.
THE TRUSTEE
The indenture will govern the duties, responsibilities and rights of the
trustee, including the following:
RESIGNATION OR REMOVAL OF TRUSTEE
Under provisions of the indenture and the Trust Indenture Act governing
trustee conflicts of interest, any uncured event of default under any series of
senior debt securities will force the trustee to resign as trustee for either
the subordinated debt securities or the senior debt securities. Also, any
uncured event of default under any series of subordinated debt securities will
force the trustee to resign as trustee for either the senior debt securities or
the subordinated debt securities. Any resignation of the trustee will require
the appointment of a successor trustee for the applicable debt securities in
accordance with the terms and conditions of the indenture.
The trustee may resign or be removed by us for one or more series of debt
securities and a successor trustee be appointed to act for that series. The
holders of a majority in aggregate principal amount of a series of debt
securities may remove the trustee for that series.
12
<PAGE> 19
LIMITATIONS ON TRUSTEE IF IT IS OUR CREDITOR
If the trustee becomes our creditor, the indenture will limit the trustee's
right to obtain payment of claims in some circumstances, or to realize on
certain property received in respect of those claims as security or otherwise.
ANNUAL TRUSTEE REPORT TO HOLDERS OF DEBT SECURITIES
The indenture will require the trustee to submit an annual report to the
holders of the debt securities regarding, among other things, the trustee's
eligibility to serve, the priority of the trustee's claims regarding advances
made by it and any action taken by the trustee materially affecting those debt
securities.
CERTIFICATE AND OPINIONS TO BE FURNISHED TO TRUSTEE
The indenture will provide that every application by us for action by the
trustee requires an officers' certificate and an opinion of counsel stating
that, in the opinion of the signers, we have complied with all conditions
precedent to the action.
GOVERNING LAW
The indenture and the debt securities will be governed by and construed in
accordance with the laws of the State of New York.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------- ----------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges........................... 1.30 n/a(1) n/a(1) n/a(1) 5.06 1.88 3.52
</TABLE>
- ---------------
(1) Earnings are insufficient to cover fixed charges for the six months ended
June 30, 1998 by $2,997,000 and for the years ended December 31, 1998 and
1997 by $4,067,000 and $14,399,000, respectively.
These computations include us, EOTT Energy Operating Limited Partnership, EOTT
Energy Canada Limited Partnership and EOTT Energy Pipeline Limited Partnership,
on a consolidated basis. For these ratios, "earnings" is the amount resulting
from adding the following items:
- income from continuing operations; and
- fixed charges.
The term "fixed charges" means the sum of the following:
- interest expense; and
- an estimate of the interest within rental expenses.
DESCRIPTION OF OUR COMMON UNITS
Generally, our common units represent limited partner interests that
entitle the holders to participate in our cash distributions and to exercise the
rights or privileges available to limited partners under our partnership
agreement. For a description of the relative rights and preferences of holders
of common units, holders of subordinated units and our general partner in and to
cash distributions, together with a description of the circumstances under which
subordinated units convert into common units, see "Cash Distribution Policy."
Our limited partners are the holders of the 14,976,011 common units and the
holders of the 9,000,000 subordinated units.
13
<PAGE> 20
Our outstanding common units are listed on the NYSE under the symbol "EOT."
Any additional common units we issue will also be listed on the NYSE.
The transfer agent and registrar for our common units is the First Chicago
Trust Company of New York.
MEETINGS/VOTING
Each holder of common units is entitled to one vote for each common unit on
all matters submitted to a vote of the unitholders.
STATUS AS LIMITED PARTNER OR ASSIGNEE
Except as described below under "-- Limited Liability," the common units
will be fully paid, and unitholders will not be required to make additional
capital contributions to us.
Each purchaser of common units offered by this prospectus must execute a
Transfer Application (the form of which is attached as Appendix I to this
prospectus) whereby the purchaser requests admission as a substituted limited
partner and makes representations and agrees to provisions stated in the
Transfer Application. If this action is not taken, a purchaser will not be
registered as a record holder of common units on the books of our transfer agent
or issued a common unit certificate. Purchasers may hold common units in nominee
accounts.
An assignee, pending its admission as a substituted limited partner, is
entitled to an interest in us equivalent to that of a limited partner with
respect to the right to share in allocations and distributions, including
liquidating distributions. Our general partner will vote and exercise other
powers attributable to common units owned by an assignee who has not become a
substituted limited partner at the written direction of the assignee.
Transferees who do not execute and deliver transfer applications will be treated
neither as assignees nor as record holders of common units and will not receive
cash distributions, federal income tax allocations or reports furnished to
record holders of common units. The only right the transferees will have is the
right to admission as a substituted limited partner in respect of the
transferred common units upon execution of a transfer application in respect of
the common units. A nominee or broker who has executed a transfer application
with respect to common units held in street name or nominee accounts will
receive distributions and reports pertaining to its common units.
LIMITED LIABILITY
Assuming that a limited partner does not participate in the control of our
business within the meaning of the Delaware Revised Uniform Limited Partnership
Act (the "Delaware Act") and that he otherwise acts in conformity with the
provisions of our partnership agreement, his liability under the Delaware Act
will be limited, subject to some possible exceptions, generally to the amount of
capital he is obligated to contribute to us in respect of his units plus his
share of any undistributed profits and assets.
Under the Delaware Act, a limited partnership may not make a distribution
to a partner to the extent that at the time of the distribution, after giving
effect to the distribution, all liabilities of the partnership, other than
liabilities to partners on account of their partnership interests and
liabilities for which the recourse of creditors is limited to specific property
of the partnership, exceed the fair value of the assets of the limited
partnership. For the purposes of determining the fair value of the assets of a
limited partnership, the Delaware Act provides that the fair value of the
property subject to liability of which recourse of creditors is limited shall be
included in the assets of the limited partnership only to the extent that the
fair value of that property exceeds the nonrecourse liability. The Delaware Act
provides that a limited partner who receives a distribution and knew at the time
of the distribution that the distribution was in violation of the Delaware Act
is liable to the limited partnership for the amount of the distribution, for
three years from the date of the distribution.
14
<PAGE> 21
REPORTS AND RECORDS
As soon as practicable, but in no event later than 120 days after the close
of each fiscal year, our general partner will furnish each unitholder of record
(as of a record date selected by our general partner) an annual report
containing our audited financial statements for the past fiscal year. These
financial statements will be prepared in accordance with generally accepted
accounting principles. In addition, no later than 90 days after the close of
each quarter, (except the fourth quarter) our general partner will furnish each
unitholder of record (as of a record date selected by our general partner) a
report containing our unaudited financial statements and any other information
required by law.
Our general partner will use all reasonable efforts to furnish each
unitholder of record information reasonably required for tax reporting purposes
within 90 days after the close of each fiscal year. Our general partner's
ability to furnish this summary tax information will depend on the cooperation
of unitholders in supplying information to our general partner. Each unitholder
will receive information to assist him in determining his U.S. federal and state
and Canadian federal and provincial tax liability and filing his U.S. federal
and state and Canadian federal and provincial income tax returns.
A limited partner can, for a purpose reasonably related to the limited
partner's interest as a limited partner, upon reasonable demand and at his own
expense, have furnished to him:
- a current list of the name and last known address of each partner;
- a copy of our tax returns;
- information as to the amount of cash and a description and statement of
the agreed value of any other property or services, contributed or to be
contributed by each partner and the date on which each became a partner;
- copies of our partnership agreement, our certificate of limited
partnership, amendments to either of them and powers of attorney which
have been executed under our partnership agreement;
- information regarding the status of our business and financial condition;
and
- any other information regarding our affairs as is just and reasonable.
Our general partner may, and intends to, keep confidential from the limited
partners trade secrets or other information the disclosure of which our general
partner believes in good faith is not in our best interest or which we are
required by law or by agreements with third parties to keep confidential.
CASH DISTRIBUTION POLICY
One of our principal objectives is to generate cash from our operations and
to distribute cash to our partners each quarter. We are required to distribute
to our partners 100% of our available cash each quarter. Our available cash is
defined in our partnership agreement and is generally the sum of the cash we
receive in a quarter less cash disbursements, adjusted for net changes in
reserves.
During a subordination period the holders of our common units are entitled
to receive each quarter a minimum quarterly distribution of $0.475 per unit
($1.90 annualized) prior to any distribution of available cash to holders of our
subordinated units. The subordination period is defined generally as the period
that will end if we have distributed at least the minimum quarterly distribution
on all outstanding units each quarter for four consecutive quarters and our
adjusted available cash constituting cash from operations, as defined in our
partnership agreement, for such four quarter period in the aggregate and each of
the last two quarters of such four quarter period was at least 110% of the
amount that would have been sufficient to enable us to distribute the minimum
quarterly distribution on all outstanding units on a fully diluted basis.
During the subordination period, our cash is distributed first 98% to the
holders of common units and 2% to our general partner until there has been
distributed to the holders of common units an amount equal
15
<PAGE> 22
to the minimum quarterly distribution and any arrearages. Any additional cash is
distributed 98% to the holders of subordinated units and 2% to our general
partner until there has been distributed to the holders of subordinated units an
amount equal to the minimum quarterly distribution. If the subordination period
ends, the rights of the holders of subordinated units will no longer be
subordinated to the rights of the holders of common units and such units may be
converted into common units.
Our general partner is entitled to incentive distributions if the amount we
distribute with respect to any quarter exceeds levels specified in our
partnership agreement. Under the quarterly, incentive distribution provisions,
generally our general partner is entitled to 15% of amounts we distribute in
excess of $0.525 per common unit, 25% of amounts we distribute in excess of
$0.625 per common unit and 50% of amounts we distribute in excess of $0.725 per
common unit.
The minimum quarterly distribution and the amounts that trigger incentive
distributions at various levels are subject to adjustment, as described in our
partnership agreement. Our partnership agreement characterizes cash
distributions as either distributions of cash from operations or distributions
of cash from interim capital transactions. Generally, cash from operations
refers to cash generated by the operation of our business after deducting
related cash expenditures, reserves, debt service and other items specified in
our partnership agreement, and cash from interim capital transactions refers to
cash generated from borrowings, sales of debt and equity securities and sales or
other dispositions of assets for cash, with some exceptions. To avoid the
difficulty of trying to determine whether available cash distributed is cash
from operations or cash from interim capital transactions, our partnership
agreement provides that all cash distributed will be considered cash from
operations unless the amount distributed exceeds the cash generated from our
operations since June 30, 1995. Any excess will be considered cash from interim
capital transactions. We do not anticipate that we will distribute significant
amounts of cash from interim capital transactions, but if we do distribute cash
from interim capital transactions the distribution will be treated as a return
of capital, and the minimum quarterly distribution amount and the amounts that
trigger incentive distributions will be adjusted downward. In that case the
adjusted minimum quarterly distribution will be $0.475 multiplied by a fraction,
the numerator of which is $20 less the total per unit cash from interim capital
transactions distributed and the denominator of which is $20. The amounts that
trigger incentive distributions at various levels will also be adjusted to the
levels described above multiplied by the same fraction.
Enron has committed to contribute to us up to $29 million ($26.5 million of
which remains available) if necessary to support our ability to pay the minimum
quarterly distribution on our common units with respect to quarters ending on or
prior to December 31, 2001. In exchange for contributions under Enron's support
obligation, we will issue additional partnership interests that are not entitled
to cash distributions or voting rights. These additional partnership interests
must be redeemed by us, at Enron's option, with any available cash in excess of
the amount needed to pay the minimum quarterly distribution on all units plus
any arrearages in the minimum quarterly distribution on common units during the
subordination period. After Enron's obligation to provide distribution support
expires, actual quarterly distributions of available cash will depend solely on
our performance.
DESCRIPTION OF OUR PARTNERSHIP AGREEMENT
The following is a summary of the material provisions of our partnership
agreement. Our partnership agreement and all amendments thereto have been filed
as exhibits to our Form 10-K, which is incorporated by reference in this
prospectus. The following provisions of our partnership agreement are summarized
elsewhere in this prospectus:
- distributions of our available cash are described under "Cash
Distribution Policy;"
- allocations of taxable income and other tax matters are described under
"Tax Considerations;" and
- rights of holders of common units, are described under "Description of
Our Common Units."
16
<PAGE> 23
PURPOSE
Our purpose under our partnership agreement is limited to serving as the
limited partner of our operating partnerships and engaging in any business
activities that may be engaged in by our operating partnership or that is
approved by our general partner. The partnership agreements of our operating
partnerships provide that they may engage in any activity that was engaged in by
our predecessors at the time of our initial public offering or reasonably
related thereto and any other activity approved by our general partner.
POWER OF ATTORNEY
Each limited partner, and each person who acquires a unit from a unitholder
and executes and delivers a transfer application, grants to our general partner
and, if appointed, a liquidator, a power of attorney to, among other things,
execute and file documents required for our qualification, continuance or
dissolution. The power of attorney also grants the authority for the amendment
of, and to make consents and waivers under, our partnership agreement.
CAPITAL CONTRIBUTIONS
Unitholders are not obligated to make additional capital contributions,
except as described below under "Description of Our Common Units -- Limited
Liability."
REIMBURSEMENT OF OUR GENERAL PARTNER
Our general partner does not receive any compensation for its services as
our general partner. It is, however, entitled to be reimbursed for all of its
costs incurred in managing and operating our business. Our partnership agreement
provides that our general partner will determine the expenses that are allocable
to us in any reasonable manner determined by our general partner in its sole
discretion.
ISSUANCE OF ADDITIONAL SECURITIES
Our partnership agreement authorizes us to issue an unlimited number of
additional limited partner interests and other equity securities that are equal
in rank with or junior to our common units on terms and conditions established
by our general partner in its sole discretion without the approval of any
limited partners. During the subordination period, however, except as set forth
in the following paragraph, we may not issue an aggregate of more than
approximately 10 million additional common units or an equivalent number of
units that are equal in rank with our common units, in each case, without the
approval of the holders of at least two-thirds of our outstanding common units.
During the subordination period, we may issue an unlimited number of common
units to finance an acquisition or a capital improvement that would have
resulted, on a pro forma basis, in an increase in per unit adjusted available
cash constituting cash from operations, as provided in our partnership
agreement.
In no event may we issue partnership interests that are senior to our
common units without the approval of the holders of at least two-thirds of our
outstanding common units.
It is possible that we will fund acquisitions through the issuance of
additional common units or other equity securities. Holders of any additional
common units we issue will be entitled to share equally with the then-existing
holders of common units in our cash distributions. In addition, the issuance of
additional partnership interests may dilute the value of the interests of the
then-existing holders of common units in our net assets.
In accordance with Delaware law and the provisions of our partnership
agreement, we may also issue additional partnership interests that, in the sole
discretion of our general partner, may have special voting rights to which
common units are not entitled.
Our general partner has the right, which it may from time to time assign in
whole or in part to any of its affiliates, to purchase common units,
subordinated units or other equity securities whenever, and on the
17
<PAGE> 24
same terms that, we issue those securities to persons other than our general
partner and its affiliates, to the extent necessary to maintain their percentage
interests in us that existed immediately prior to the issuance. The holders of
common units will not have preemptive rights to acquire additional common units
or other partnership interests in us.
AMENDMENTS TO OUR PARTNERSHIP AGREEMENT
Amendments to our partnership agreement may be proposed only by our general
partner. In general, proposed amendments must be approved by holders of at least
two-thirds of our outstanding units. However, in some limited circumstances,
more particularly described in our partnership agreement, our general partner
may make amendments to our partnership agreement without the approval of our
limited partners or assignees.
Any amendment that materially and adversely affects the rights or
preferences of any type or class of limited partner interests in relation to
other types of classes of limited partner interest or our general partner
interest will require the approval of at least a majority of the type or class
of limited partner interest so affected (excluding any limited partner interests
held by our general partner or its affiliates).
WITHDRAWAL OR REMOVAL OF OUR GENERAL PARTNER
Except as described below, our general partner has agreed not to withdraw
voluntarily as our general partner prior to April 1, 2004 without obtaining the
approval of the holders of at least two-thirds of our outstanding units,
excluding those held by our general partner and its affiliates, and furnishing
an opinion of counsel regarding limited liability and tax matters. On or after
April 1, 2004, our general partner may withdraw as general partner without first
obtaining approval of any unitholder by giving 90 days' written notice, and that
withdrawal will not constitute a violation of our partnership agreement. In
addition, our general partner may withdraw without unitholder approval upon 90
days' notice to our limited partners if at least 50% of our outstanding common
units are held or controlled by one person and its affiliates other than our
general partner and its affiliates. In addition, our partnership agreement
permits our general partner in some limited instances to sell or otherwise
transfer all of its general partner interest without the approval of our
unitholders. There are no restrictions on Enron's ability to sell the capital
stock of our general partner.
Upon the withdrawal of our general partner under any circumstances, the
holders of a majority of our outstanding units (other than those owned by the
withdrawing general partner), may select a successor to that withdrawing general
partner. If a successor is not elected, or is elected but an opinion of counsel
regarding limited liability and tax matters cannot be obtained, we will be
dissolved, wound up and liquidated, unless within 180 days after that
withdrawal, the holders of a majority of our outstanding units agree in writing
to continue our business and to appoint a successor general partner.
Our general partner may not be removed unless that removal is approved by
the vote of the holders of not less than two-thirds of our outstanding units,
excluding units held by our general partner and its affiliates, and we receive
an opinion of counsel regarding limited liability and tax matters. Any removal
of this kind is also subject to the approval of a successor general partner by
the vote of the holders of a majority of our outstanding units, excluding those
held by our withdrawing general partner and its affiliates.
Our partnership agreement also provides that if our general partner is
removed under circumstances where cause does not exist, the subordination period
will end, any outstanding additional partnership interests will be redeemable at
Enron's option and Enron's obligation to support distributions on common units
will terminate.
LIQUIDATION AND DISTRIBUTION OF PROCEEDS
Upon our dissolution, unless we are reconstituted and continued as a new
limited partnership, the person authorized to wind up our affairs (the
liquidator) will, acting with all the powers of our general
18
<PAGE> 25
partner that the liquidator deems necessary or desirable in its good faith
judgment, liquidate our assets. The proceeds of the liquidation will be applied
as follows: (i) first, towards the payment of all of our creditors and the
creation of a reserve for contingent liabilities and (ii) then, to all partners
in accordance with the positive balance in the respective capital accounts.
Under some circumstances and subject to some limitations, the liquidator may
defer liquidation or distribution of our assets for a reasonable period of time.
If the liquidator determines that a sale would be impractical or would cause
loss to the partners, our general partner may distribute assets to partners in
kind.
CHANGE OF MANAGEMENT PROVISIONS
Our partnership agreement contains specific provisions that are intended to
discourage a person or group from attempting to remove our general partner or
otherwise change management.
LIMITED CALL RIGHT
If at any time our general partner and its affiliates own 80% or more of
the issued and outstanding limited partner interests of any class, our general
partner will have the right to purchase all, but not less than all, of the
outstanding limited partner interests of that class that are held by
non-affiliated persons. The record date for determining ownership of the limited
partner interests would be selected by our general partner on at least 10 but
not more than 60 days' notice. The purchase price in the event of a purchase
under these provisions would be the greater of (i) the current market price (as
defined in our partnership agreement) of the limited partner interests of the
class as of the date five days prior to the mailing of written notice of its
election to purchase the units and (ii) the highest cash price paid by our
general partner or any of its affiliates for any limited partner interest of the
class purchased within the 90 days preceding the date our general partner mails
notice of its election to purchase the units.
INDEMNIFICATION
Under our partnership agreement, in most circumstances, we will indemnify
our general partner, its affiliates and their officers and directors to the
fullest extent permitted by law, from and against all losses, claims or damages
any of them may suffer by reason of their status as general partner, officer or
director, as long as the person seeking indemnity acted in good faith and in a
manner believed to be in or not opposed to our best interest. Any
indemnification under these provisions will only be out of our assets. Our
general partner shall not be personally liable for, or have any obligation to
contribute or loan funds or assets to us to enable us to effectuate
indemnification. We are authorized to purchase insurance against liabilities
asserted against and expenses incurred by persons for our activities, regardless
of whether we would have the power to indemnify the person against liabilities
under our partnership agreement.
REGISTRATION RIGHTS
Under our partnership agreement, we have agreed to register for resale
under the Securities Act and applicable state securities laws any common units,
subordinated units or other partnership securities proposed to be sold by our
general partner or any of its affiliates or their assignees if an exemption from
the registration requirements is not otherwise available. We are obligated to
pay all expenses incidental to the registration, excluding underwriting
discounts and commissions.
TAX CONSIDERATIONS
This section is a summary of all of the material federal income tax
considerations that may be relevant to you and, to the extent set forth below
under "-- Legal Opinions and Advice," represents the opinion of our counsel
Vinson & Elkins L.L.P. ("Counsel"), insofar as it relates to matters of United
States federal income tax law and legal conclusions. This section is based upon
current provisions of the Internal Revenue Code of 1986 (the "Code"), existing
and proposed regulations thereunder and current administrative rulings and court
decisions, all of which are subject to change. Subsequent changes may cause the
tax consequences to vary substantially from the consequences described below.
19
<PAGE> 26
We have made no attempt in the following discussion to comment on all
federal income tax matters affecting our unitholders or us. Moreover, the
discussion focuses on our unitholders who are individual citizens or residents
of the United States and has only limited application to corporations, estates,
trusts or non-resident aliens. Accordingly, you should consult, and should
depend on, your own tax advisor in analyzing the federal, state, local and
foreign tax consequences to you of the ownership or disposition of common units.
LEGAL OPINIONS AND ADVICE
Counsel has expressed its opinion that, based on the accuracy of
representations and subject to the qualifications set forth in the detailed
discussion that follows, for federal income tax purposes: we and our operating
limited partnerships will each be treated as a partnership; and owners of common
units (with some exceptions, as described in "-- Limited Partner Status" below)
will be treated as our partners (but not partners of the operating limited
partnerships). In addition, all statements as to matters of law and legal
conclusions contained in this section, unless otherwise noted, reflect the
opinion of Counsel. Counsel has also advised us that, based on current law, the
following general description of the principal federal income tax consequences
that should arise from the ownership and disposition of common units, insofar as
it relates to matters of law and legal conclusions, addresses all material tax
consequences to our unitholders who are individual citizens or residents of the
United States.
We have not requested any ruling from the Internal Revenue Service (the
"IRS") with respect to the foregoing issues or any other matter affecting our
unitholders or us. An opinion of counsel represents only counsel's best legal
judgment and does not bind the IRS or the courts. Thus, we cannot assure you
that the opinions and statements set forth in this prospectus would be sustained
by a court if contested by the IRS. The costs of any contest with the IRS will
be borne directly or indirectly by our unitholders and our general partner.
Furthermore, we cannot assure you that our treatment or an investment in us will
not be significantly modified by future legislative or administrative changes or
court decisions. Any modification may or may not be retroactively applied.
PARTNERSHIP STATUS
A partnership is not a taxable entity and incurs no federal income tax
liability. Instead, each partner is required to take into account his allocable
share of items of our income, gain, loss, deduction and credit in computing his
federal income tax liability, regardless of whether cash distributions are made.
Distributions by us to a unitholder are generally not taxable unless the amount
of any cash distributed is in excess of his adjusted basis in his partnership
interest.
Pursuant to certain Treasury Regulations effective January 1, 1997 (the
"Check-the-Box Regulations"), an entity in existence on January 1, 1997, will
generally retain its current classification for federal income tax purposes. As
of January 1, 1997, each of our operating limited partnerships and we were
classified and taxed as a partnership. Pursuant to the Check-the-Box
Regulations, this prior classification will be respected for all periods prior
to January 1, 1997, if:
- the entity had a reasonable basis for the claimed classification;
- the entity recognized the federal tax consequences of any change in
classification within five years prior to January 1, 1997; and
- the entity was not notified prior to May 8, 1996 that the entity
classification was under examination.
Based on these regulations and the applicable federal income tax law, Counsel
has opined that we and each of our operating limited partnerships have been and
will be classified as a partnership for federal income tax purposes. In
rendering its opinion, Counsel has relied on factual representations and
covenants made by our general partner and us:
- neither we nor any of our operating limited partnerships have elected or
will elect to be treated as an association taxable as a corporation;
20
<PAGE> 27
- except as otherwise required by Section 704 of the Code and regulations
promulgated thereunder, our general partner has had and will have, in the
aggregate, an interest in each material item of our income, gain, loss,
deduction or credit equal to at least 1% at all times during our
existence;
- a representation and covenant of our general partner that our general
partner has and will maintain, in the aggregate, a minimum capital
account balance in us equal to 1% of our total positive capital account
balances;
- for each taxable year, less than 10% of our gross income has been and
will be derived from sources other than (i) the exploration, development,
mining or production, processing, refining, transportation or marketing
of any mineral or natural resource, including oil, gas or products
thereof and naturally occurring carbon dioxide or (ii) other items of
income as to which Counsel has opined or will opine will be "qualifying
income" within the meaning of Section 7704(d) of the Code; and
- we and each of our operating limited partnerships are organized and will
be operated in accordance with (i) all applicable partnership statutes,
(ii) its or our respective partnership agreement and (iii) its or our
description in this Registration Statement.
Counsel's opinion as to our partnership classification in the event of a change
in our general partner is based upon the assumption that the new general partner
will satisfy the foregoing representations and covenants.
Section 7704 of the Code provides that publicly-traded partnerships will,
as a general rule, be taxed as corporations. However, an exception (the "Natural
Resource Exception") exists with respect to publicly-traded partnerships 90% or
more of the gross income of which for every taxable year consists of "qualifying
income." Qualifying income includes income and gains derived from the
transportation and trading of oil and petroleum products and natural gas
processing as conducted by us. Other types of qualifying income include interest
(from other than a financial business), dividends, gains from the sale of real
property and gains from the sale or other disposition of capital assets held for
the production of income that otherwise constitutes qualifying income. We
estimate that less than 5% of our gross income is not qualifying income under
this test; however, this estimate could change from time to time. Based upon and
subject to that estimate, the factual representations made by us and the general
partner and a review of the applicable legal authorities, Counsel is of the
opinion that at least 95% of our gross income constitutes qualifying income.
If we fail to meet the Natural Resource Exception (other than a failure
determined by the IRS to be inadvertent that is cured within a reasonable time
after discovery), we will be treated as if we had transferred all of our assets
(subject to liabilities) to a newly-formed corporation (on the first day we fail
to meet the Natural Resource Exception) in return for stock in the corporation,
and then distributed the stock to our unitholders in liquidation of their
interests in us. This contribution and liquidation should be tax-free to our
unitholders and us, so long as we, at such time, do not have liabilities in
excess of the basis of our assets. Thereafter, we would be treated as a
corporation for federal income tax purposes.
If we were treated as an association or otherwise taxable as a corporation
in any taxable year, as a result of a failure to meet the Natural Resource
Exception or otherwise, our items of income, gain, loss, deduction and credit
would be reflected only on our tax return rather than being passed through to
our unitholders, and our net income would be taxed at the entity level at
corporate rates. In addition, any distribution made to our unitholders would be
treated as either taxable dividend income (to the extent of our current or
accumulated earnings and profits), in the absence of earnings and profits as a
nontaxable return of capital (to the extent of his basis in his common units) or
taxable capital gain (after his basis in the common units is reduced to zero).
Accordingly, our treatment as an association taxable as a corporation would
result in a material reduction in a unitholder's cash flow and after-tax return.
The discussion below is based on the assumption that we will be classified
as a partnership for federal income tax purposes.
21
<PAGE> 28
LIMITED PARTNER STATUS
Our unitholders who have become limited partners will be treated as
partners for federal income tax purposes. Moreover, the IRS has ruled that
assignees of partnership interests who have not been admitted to a partnership
as partners, but who have the capacity to exercise substantial dominion and
control over the assigned partnership interests, will be treated as partners for
federal income tax purposes. On the basis of this ruling, except as otherwise
described herein, Counsel is of the opinion that (a) assignees who have executed
and delivered Transfer Applications and are awaiting admission as limited
partners and (b) our unitholders whose common units are held in street name or
by a nominee and who have the right to direct the nominee in the exercise of all
substantive rights attendant to the ownership of their common units will be
treated as partners for federal income tax purposes. As this ruling does not
extend, on its facts, to assignees of common units who are entitled to execute
and deliver Transfer Applications and thereby become entitled to direct the
exercise of attendant rights, but who fail to execute and deliver Transfer
Applications, Counsel's opinion does not extend to these persons. Income, gain,
deductions, losses or credits would not appear to be reportable by these
unitholders, and any cash distributions received by these unitholders would
therefore be fully taxable as ordinary income. These holders should consult
their own tax advisors with respect to their status as partners for federal
income tax purposes. A purchaser or other transferee of common units who does
not execute and deliver a Transfer Application may not receive federal income
tax information or reports furnished to record holders of common units unless
the common units are held in a nominee or street name account and the nominee or
broker has executed and delivered a Transfer Application with respect to the
common units.
A beneficial owner of common units whose common units have been transferred
to a short seller to complete a short sale would appear to lose his status as a
partner for federal income tax purposes with respect to the common units sold
short. See "-- Tax Treatment of Our Operations -- Treatment of Short Sales."
TAX CONSEQUENCES OF COMMON UNIT OWNERSHIP
FLOW-THROUGH OF TAXABLE INCOME
We will pay no federal income tax. Instead, each of our unitholders will be
required to report on his income tax return his allocable share of our income,
gains, losses and deductions without regard to whether corresponding cash
distributions are received by him. Consequently, we may allocate income to our
unitholders although they have not received a cash distribution in respect of
that income.
TREATMENT OF PARTNERSHIP DISTRIBUTIONS
Our distributions to any of our unitholders will not be taxable for federal
income tax purposes to the extent of his basis in his common units immediately
before the distribution. Cash distributions in excess of a common unitholder's
basis generally will be considered to be gain from the sale or exchange of the
common units, taxable in accordance with the rules described under "-- Tax
Consequences of Common Unit Ownership -- Disposition of Common Units." Any
reduction in a common unitholder's share of our liabilities for which no
partner, including our general partner, bears the economic risk of loss
("nonrecourse liabilities") will be treated as a distribution of cash to that
unitholder.
BASIS OF COMMON UNITS
A unitholder's initial tax basis for his common units will be the amount
paid for the common unit plus his share of our nonrecourse liabilities. The
initial tax basis for a common unit will be increased by the unitholder's share
of our income and by any increase in the unitholder's share of our nonrecourse
liabilities. The basis for a common unit will be decreased (but not below zero)
by our distributions, including any decrease in the unitholder's share of our
nonrecourse liabilities, by the unitholder's share of our losses and by the
unitholder's share of our expenditures that are not deductible in computing his
taxable income and are not required to be capitalized. A unitholder's share of
our nonrecourse liabilities will be generally based on the unitholder's share of
our profits.
22
<PAGE> 29
LIMITATIONS ON DEDUCTIBILITY OF OUR LOSSES
To the extent we incur losses, a unitholder's share of deductions for the
losses will be limited to the tax basis of the unitholder's common units or, in
the case of an individual unitholder or a corporate unitholder if more than 50%
of the value of his stock is owned directly or indirectly by five or fewer
individuals or some tax-exempt organizations, to the amount that the unitholder
is considered to be "at risk" with respect to our activities, if that is less
than the unitholder's basis. A unitholder must recapture losses deducted in
previous years to the extent that our distributions cause the unitholder's at
risk amount to be less than zero at the end of any taxable year. Losses
disallowed to a unitholder or recaptured as a result of these limitations will
carry forward and will be allowable to the extent that the unitholder's basis or
at risk amount (whichever is the limiting factor) is increased.
In general, a unitholder will be at risk to the extent of the purchase
price of his common units, but this will be less than the unitholder's basis for
his common units by the amount of the unitholder's share of any of our
nonrecourse liabilities. A unitholder's at risk amount will increase or decrease
as the basis of the unitholder's common units increases or decreases except that
changes in our nonrecourse liabilities will not increase or decrease the at risk
amount.
The passive loss limitations generally provide that individuals, estates,
trusts and some closely held corporations and personal service corporations can
only deduct losses from passive activities (generally, activities in which the
taxpayer does not materially participate) that are not in excess of the
taxpayer's income from passive activities or investments. The passive loss
limitations are applied separately with respect to each publicly-traded
partnership. Consequently, any losses generated by us will only be available to
offset future income that we generate and will not be available to offset income
from other passive activities or investments (including other publicly-traded
partnerships) or salary or active business income. Passive losses that are not
deductible because they exceed the unitholder's income that we generate may be
deducted in full when the unitholder disposes of his entire investment in us in
a fully taxable transaction to an unrelated party. The passive activity loss
rules are applied after other applicable limitations on deductions such as the
at risk rules and the basis limitation.
A unitholder's share of our net income may be offset by any of our
suspended passive losses, but it may not be offset by any other current or
carryover losses from other passive activities, including those attributable to
other publicly-traded partnerships. The IRS has announced that Treasury
Regulations will be issued that characterize net passive income from a
publicly-traded partnership as investment income for purposes of the limitations
on the deductibility of investment interest.
LIMITATIONS ON INTEREST DEDUCTIONS
The deductibility of a non-corporate taxpayer's "investment interest
expense" is generally limited to the amount of the taxpayer's "net investment
income." As noted, a unitholder's share of our net passive income will be
treated as investment income for this purpose. In addition, the unitholder's
share of our portfolio income will be treated as investment income. Investment
interest expense includes:
- interest on indebtedness properly allocable to property held for
investment;
- our interest expense attributed to portfolio income; and
- the portion of interest expense incurred to purchase or carry an interest
in a passive activity to the extent attributable to portfolio income.
The computation of a unitholder's investment interest expense will take
into account interest on any margin account borrowing or other loan incurred to
purchase or carry a common unit to the extent attributable to his portfolio
income. Net investment income includes gross income from property held for
investment, gain attributable to the disposition of property held for investment
and amounts treated as portfolio income pursuant to the passive loss rules less
deductible expenses (other than interest) directly connected with the production
of investment income.
23
<PAGE> 30
ALLOCATION OF OUR INCOME, GAIN, LOSS AND DEDUCTION
Our partnership agreement provides that a capital account be maintained for
each partner, that the capital accounts generally be maintained in accordance
with the applicable tax accounting principles set forth in applicable Treasury
Regulations and that all allocations to a partner be reflected by an appropriate
increase or decrease in his capital account. Distributions upon our liquidation
are generally to be made in accordance with positive capital account balances.
In general, if we have a net profit, items of income, gain, loss and
deduction will be allocated among our general partner and our unitholders in
accordance with their respective percentage interests in us. A class of our
unitholders that receives more cash than another class, on a per unit basis,
with respect to a year, will be allocated additional income equal to that
excess. If we have a net loss, items of income, gain, loss and deduction will
generally be allocated for both book and tax purposes (1) first, to our general
partner and our unitholders in accordance with their respective percentage
interests to the extent of their positive capital accounts and (2) second, to
our general partner.
Notwithstanding the above, as required by Section 704(c) of the Code, some
items of our income, deduction, gain and loss will be specially allocated to
account for the difference between the tax basis and fair market value of
property contributed to us ("Contributed Property") or owned by us at the time
new units are sold by us ("Adjusted Property"). In addition, some items of
recapture income will be allocated to the extent possible to the partner
allocated the deduction giving rise to the treatment of the gain as recapture
income in order to minimize the recognition of ordinary income by some of our
unitholders. Although we believe that these allocations will be respected under
recently adopted Treasury Regulation, if they are not respected, the amount of
the income or gain allocated to a unitholder will not change, but instead a
change in the character of the income allocated to a unitholder would result.
Finally, although we do not expect that our operations will result in the
creation of negative capital accounts, if negative capital accounts nevertheless
result, items of our income and gain will be allocated in an amount and manner
sufficient to eliminate the negative balance as quickly as possible.
Regulations provide that an allocation of items of our income, gain, loss,
deduction or credit, other than an allocation required by Section 704(c) of the
Code to eliminate the disparity between a partner's "book" capital account
(credited with the fair market value of Contributed Property and credited or
debited with any gain or loss attributable to an Adjusted Property) and "tax"
capital account (credited with the tax basis of Contributed Property) (the
"Book-Tax Disparity"), will generally be given effect for federal income tax
purposes in determining a partner's distributive share of an item of income,
gain, loss or deduction only if the allocation has substantial economic effect.
In any other case, a partner's distributive share of an item will be determined
on the basis of the partner's interest in us, which will be determined by taking
into account all the facts and circumstances, including the partner's relative
contributions to us, the interests of the partners in economic profits and
losses, the interests of the partners in cash flow and other non-liquidating
distributions and rights of the partners to distributions of capital upon
liquidation.
Under the Code, the partners in a partnership cannot be allocated more
depreciation, gain or loss than the total amount of the item recognized by that
partnership in a particular taxable period. This rule, often referred to as the
"ceiling limitation," is not expected to have significant application to
allocations with respect to Contributed Properties or Adjusted Properties and
thus, is not expected to prevent our unitholders from receiving allocations of
depreciation, gain or loss from our properties equal to that which they would
have received had our properties actually had a basis equal to fair market value
at the outset or at the time new units are issued by us. However, to the extent
the ceiling limitation is or becomes applicable, our partnership agreement
requires that some items of income and deduction be allocated in a way designed
to effectively "cure" this problem and eliminate the impact of the ceiling
limitations. These allocations will not have substantial economic effect because
they will not be reflected in the capital accounts of our unitholders.
The legislative history of Section 704(c) states that Congress anticipated
that Treasury Regulations would permit partners to agree to a more rapid
elimination of Book-Tax Disparities than required provided there is no tax
avoidance potential. Further, under Treasury Regulations under Section 704(c),
allocations
24
<PAGE> 31
similar to the curative allocations would be allowed. However, since the final
Treasury Regulations are not applicable to us, Counsel is unable to opine on the
validity of the curative allocations.
Counsel is of the opinion that, with the exception of curative allocations
and the allocation of recapture income discussed above, allocations under our
partnership agreement will be given effect for federal income tax purposes in
determining a partner's distributive share of an item of income, gain, loss or
deduction. There are, however, uncertainties in the Treasury Regulations
relating to allocations of partnership income, and investors should be aware
that some of the allocations in our partnership agreement may be successfully
challenged by the IRS.
TAX TREATMENT OF OUR OPERATIONS
Accounting Method and Taxable Year
We use the calendar year as our taxable year and adopt the accrual method
of accounting for federal income tax purposes.
Initial Tax Basis, Depreciation and Amortization
The tax basis established for our various assets will be used for purposes
of computing depreciation and cost recovery deductions and, ultimately, gain or
loss on the disposition of those assets. Our assets initially had an aggregate
tax basis equal to the sum of each unitholder's tax basis in his common units or
subordinated units and the tax basis of our general partner in its general
partner interest.
The IRS may challenge the method adopted by us to allocate this aggregate
tax basis among our assets and our treatment of certain amortizable intangible
assets. The IRS may (i) challenge either the fair market values or the useful
lives assigned to our assets or (ii) seek to characterize intangible assets as
non-amortizable goodwill. If the challenge or characterization were successful,
the deductions allocated to a common unitholder in respect of our assets would
be reduced, and a unitholder's share of taxable income received from us would be
increased accordingly. Any increase could be material.
To the extent allowable, our general partner may elect to use the
depreciation and cost recovery methods that will result in the largest
depreciation deductions in our early years. Property that we subsequently
acquire or construct may be depreciated using accelerated methods permitted by
the Code.
If we dispose of depreciable property by sale, foreclosure or otherwise,
all or a portion of any gain (determined by reference to the amount of
depreciation previously deducted and the nature of the property) may be subject
to the recapture rules and taxed as ordinary income rather than capital gain.
Similarly, a partner who has taken cost recovery or depreciation deductions with
respect to property owned by us may be required to recapture deductions upon a
sale of his interest. See "-- Tax Consequences of Common Unit
Ownership -- Allocation of Our Income, Gain, Loss and Deduction" and "-- Tax
Consequences of Common Unit Ownership -- Disposition of Common
Units -- Recognition of Gain or Loss."
Costs we incurred in organizing may be amortized over any period we select
not shorter than 60 months. The costs incurred in promoting the issuance of
units must be capitalized and cannot be deducted currently, ratably or upon our
termination. There are uncertainties regarding the classification of costs as
organization expenses, that may be amortized, and as syndication expenses which
may not be amortized.
Section 754 Election
We previously made the election permitted by Section 754 of the Code. This
election is irrevocable without the consent of the IRS. The election generally
permits a purchaser of common units to adjust his share of the basis in our
properties ("inside basis") pursuant to Section 743(b) of the Code to fair
market value (as reflected by his common unit price). See "Tax
Considerations -- Allocation of Our Income, Gain, Loss and Deduction." The
Section 743(b) adjustment is attributed solely to a purchaser of units and
25
<PAGE> 32
is not added to the basis of our assets associated with all of our unitholders.
(For purposes of this discussion, a partner's inside basis in our assets will be
considered to have two components: (1) his share of our actual basis in our
assets (the "Common Basis"); and (2) his Section 743(b) adjustment allocated to
each of our assets.)
Proposed Treasury Regulation Section 1.197-2(g)(3) generally requires that
the 743(b) adjustment attributable to amortizable intangible assets under
Section 197 should be treated as a newly-acquired asset placed in service on the
date when the transfer occurs. Under Treasury Regulation Section 1.167(c)-
1(a)(6), a Section 743(b) adjustment attributable to property subject to
depreciation under Section 167 of the Code rather than cost recovery deductions
under Section 168 is generally required to be depreciated using either the
straight-line method or the 150% declining balance method. We intend to utilize
the 150% declining balance method on our property subject to depreciation under
Section 167. Although the proposed regulations under Section 743 will likely
eliminate many of the problems if finalized in their current form, the
depreciation method and useful lives associated with the Section 743(b)
adjustment, therefore, may differ from the method and useful lives generally
used to depreciate the Common Basis in our properties. Pursuant to our
partnership agreement, our general partner is authorized to adopt a convention
to preserve the uniformity of common units even if that convention is not
consistent with Treasury Regulation Section 1.167(c)-1(a)(6) or 1.197-2(g)(3).
See "-- Tax Consequences of Common Unit Ownership -- Uniformity of Common
Units."
Although Counsel is unable to opine as to the validity of this approach, we
intend to depreciate the portion of a Section 743(b) adjustment attributable to
unrealized appreciation in the value of Contributed Property or Adjusted
Property (to the extent of any unamortized Book-Tax Disparity) using a rate of
depreciation or amortization derived from the depreciation or amortization
method and useful life applied to the Common Basis of our property. This method
is consistent with the proposed regulations under Section 743 but is arguably
inconsistent with Treasury Regulation Section 1.167(c)-1(a)(6) or Proposed
Treasury Regulation Section 1.197-2(g)(3) neither of which is expected to
directly apply to a material portion of our assets. To the extent that the
Section 743(b) adjustment is attributable to appreciation in value in excess of
the unamortized Book-Tax Disparity, we will apply the rules described in the
Treasury Regulations and legislative history. If we determine that this position
cannot reasonably be taken, we may adopt a depreciation or amortization
convention under which all purchasers acquiring common units in the same month
would receive depreciation or amortization, whether attributable to the Common
Basis or the Section 743(b) basis, based upon the same applicable rate as if
they had purchased a direct interest in our property. This aggregate approach
may result in lower annual depreciation or amortization deductions than would
otherwise be allowable to some of our unitholders. See "-- Tax Consequences of
Common Unit Ownership -- Uniformity of Common Units."
The allocation of the Section 743(b) adjustment must be made in accordance
with the principles of Section 1060 of the Code. Based on these principles, the
IRS may seek to reallocate some or all of any Section 743(b) adjustment not so
allocated by us to goodwill. Alternatively, it is possible that the IRS may seek
to treat the portion of the Section 743(b) adjustment attributable to the
Underwriter's discount as if allocable to a non-deductible syndication cost.
A Section 754 election is advantageous if the transferee's basis in his
common units is higher than his common units' share of the aggregate basis of
our assets immediately prior to the transfer. In that case, pursuant to the
election, the transferee would take a new and higher basis in his share of our
assets for purposes of calculating, among other items, his depreciation
deductions and his share of any gain or loss on a sale of our assets.
Conversely, a Section 754 election is disadvantageous if the transferee's basis
in his common units is lower than his common units' share of the aggregate basis
of our assets immediately prior to the transfer. Thus, the amount that a
unitholder will be able to obtain upon the sale of his common units may be
affected either favorably or adversely by the election.
The calculations involved in the Section 754 election are complex and we
will make them on the basis of some assumptions as to the value of our assets
and other matters. There is no assurance that the determinations we make will
not be successfully challenged by the IRS and that the deductions
26
<PAGE> 33
attributable to them will not be disallowed or reduced. Should the IRS require a
different basis adjustment to be made, and should, in our general partner's
opinion, the expense of compliance exceed the benefit of the election, our
general partner may seek permission from the IRS to revoke our Section 754
election. If permission is granted, a purchaser of common units subsequent to
the revocation probably will incur increased tax liability.
Alternative Minimum Tax
Each unitholder will be required to take into account his distributive
share of any items of our income, gain or loss for purposes of the alternative
minimum tax. A portion of our depreciation deductions may be treated as an item
of tax preference for this purpose.
A unitholder's alternative minimum taxable income derived from us may be
higher than his share of our net income because we may use more accelerated
methods of depreciation for purposes of computing federal taxable income or
loss. The minimum tax rate for individuals is 26% on the first $175,000 of
alternative minimum taxable income in excess of the exemption amount and to 28%
on any additional alternative minimum taxable income. You should consult with
your tax advisors as to the impact of an investment in common units on your
liability under the alternative minimum tax.
Valuation of Our Property
The federal income tax consequences of the ownership and disposition of
common units will depend in part on our estimates of the relative fair market
values, and determinations of the initial tax basis, of our assets. Although we
may from time to time consult with professional appraisers with respect to
valuation matters, many of the relative fair market value estimates will be made
solely by us. These estimates are subject to challenge and will not be binding
on the IRS or the courts. In the event the determinations of fair market value
are subsequently found to be incorrect, the character and amount of items of
income, gain, loss, deductions or credits previously reported by our unitholders
might change, and our unitholders might be required to amend their previously
filed tax returns or to file claims for refunds.
Treatment of Short Sales
A unitholder who engages in a short sale (or a transaction having the same
effect) with respect to common units will be required to recognize the gain (but
not the loss) inherent in the common units that are sold short. See "-- Tax
Consequences of Common Unit Ownership -- Disposition of Common Units." In
addition, it would appear that a unitholder whose common units are loaned to a
"short seller" to cover a short sale of common units would be considered as
having transferred beneficial ownership of those common units and would, thus,
no longer be a partner with respect to those common units during the period of
the loan. As a result, during this period, any of our income, gain, deduction,
loss or credit with respect to those common units would appear not to be
reportable by the unitholder, any cash distributions received by the unitholder
with respect to those common units would be fully taxable and all of those
distributions would appear to be treated as ordinary income. The IRS may also
contend that a loan of common units to a "short seller" constitutes a taxable
exchange. If the IRS successfully made this contention, the lending unitholder
may be required to recognize gain or loss. Unitholders desiring to assure their
status as partners should modify any of their brokerage account agreements to
prohibit their brokers from borrowing their common units.
DISPOSITION OF COMMON UNITS
Recognition of Gain or Loss
Gain or loss will be recognized on a sale of common units equal to the
difference between the amount realized and the unitholder's tax basis for the
common units sold. A unitholder's amount realized will be measured by the sum of
the cash or the fair market value of other property received plus his share of
our nonrecourse liabilities. Since the amount realized includes a unitholder's
share of our nonrecourse
27
<PAGE> 34
liabilities, the gain recognized on the sale of common units may result in a tax
liability in excess of any cash received from the sale.
Gain or loss recognized by a unitholder (other than a "dealer" in common
units) on the sale or exchange of a common unit held for more than twelve months
will generally be taxable as long-term capital gain or loss. A substantial
portion of this gain or loss, however, will be separately computed and taxed as
ordinary income or loss under section 751 of the Code to the extent attributable
to assets giving rise to depreciation recapture or other "unrealized
receivables" or to inventory we own. The term "unrealized receivables" includes
potential recapture items, including depreciation recapture. Ordinary income
attributable to unrealized receivables, inventory and deprecation recapture may
exceed net taxable gain realized upon the sale of the common unit and may be
recognized even if there is a net taxable loss realized upon the sale of the
common unit. Any loss recognized on the sale of common units will generally be a
capital loss. Thus, a unitholder may recognize both ordinary income and a
capital loss upon a disposition of common units. Net capital loss may offset no
more than $3,000 of ordinary income in the case of individuals and may only be
used to offset capital gain in the case of a corporation.
The IRS has ruled that a partner acquiring interests in a partnership in
separate transactions at different prices must maintain an aggregate adjusted
tax basis in a single partnership interest and that, upon sale or other
disposition of some of the interests, a portion of the aggregate tax basis must
be allocated to the interests sold on the basis of some equitable apportionment
method. This ruling is unclear as to how the holding period is affected by this
aggregation concept. If this ruling is applicable to you, the aggregation of
your tax basis effectively prohibits you from choosing among common units with
varying amounts of unrealized gain or loss as would be possible in a stock
transaction. Thus, the ruling may result in an acceleration of gain or deferral
of loss on a sale of a portion of your common units. It is not clear whether the
ruling applies to publicly-traded partnerships, such as us, the interests in
which are evidenced by separate interests, and accordingly Counsel is unable to
opine as to the effect this ruling will have on you. If you are considering the
purchase of additional common units or a sale of common units purchased at
differing prices, you should consult your tax advisor as to the possible
consequences of this ruling.
Allocations Between Transferors and Transferees
In general, our taxable income and losses will be determined annually and
will be prorated on a monthly basis and subsequently apportioned among our
unitholders in proportion to the number of common units they owned as of the
close of business on the last day of the preceding month. However, gain or loss
realized on a sale or other disposition of our assets other than in the ordinary
course of business will be allocated among our unitholders of record as of the
opening of the New York Stock Exchange on the first business day of the month in
which the gain or loss is recognized. As a result of this allocation procedure,
a unitholder transferring common units in the open market may be allocated
income, gain, loss, deduction, and credit accrued after the transfer.
The use of the allocation procedure discussed above may not be permitted by
existing Treasury Regulations and, accordingly, Counsel is unable to opine on
the validity of the method of allocating income and deductions between the
transferors and the transferees of common units. If an allocation procedure is
not allowed by the Treasury Regulations (or only applies to transfers of less
than all of a unitholder's interest), our taxable income or losses might be
reallocated among our unitholders. We are authorized to revise our method of
allocation between transferors and transferees (as well as among partners whose
interests otherwise vary during a taxable period) to conform to a method
permitted by future Treasury Regulations.
A unitholder who owns common units at any time during a quarter and who
disposes of his common units prior to the record date set for a distribution
with respect to that quarter will be allocated items of our income and gain
attributable to the quarter during which his common units were owned but will
not be entitled to receive cash distributions with respect to that quarter.
28
<PAGE> 35
Notification Requirements
A unitholder who sells or exchanges common units is required to notify us
in writing of the sale or exchange within 30 days of the sale or exchange and,
in any event, no later than January 15 of the year following the calendar year
that the sale or exchange occurred. We are required to notify the IRS of the
transaction and to furnish specific information to the transferor and
transferee. However, these reporting requirements do not apply with respect to a
sale by an individual who is a citizen of the United States and who effects the
sale through a broker. Additionally, a transferor and a transferee of a common
unit will be required to furnish statements to the IRS, filed with their income
tax returns for the taxable year in which the sale or exchange occurred, that
set forth the amount of the consideration received for the common unit that is
allocated to our goodwill or going concern value. Failure to satisfy these
reporting obligations may lead to the imposition of substantial penalties.
Constructive Termination
We will be considered to be terminated if there is a sale or exchange of
50% or more of the total interests in partnership capital and profits within a
12-month period. A constructive termination results in the closing of a
partnership's taxable year for all partners. A termination could result in the
non-uniformity of common units for federal income tax purposes. Our constructive
termination will cause a termination of our operating limited partnerships. A
termination could also result in penalties or loss of basis adjustments under
the Code if we were unable to determine that the termination had occurred.
In the case of a unitholder reporting on a fiscal year other than a
calendar year, the closing of our tax year may result in more than 12 months of
our taxable income or loss being includable in our taxable income for the year
of termination. In addition, each unitholder will realize taxable gain to the
extent that any money constructively distributed to him (including any net
reduction in his share of partnership nonrecourse liabilities) exceeds the
adjusted basis on his common units. New tax elections we are required to make,
including a new election under Section 754 of the Code, must be made subsequent
to the constructive termination. A constructive termination would also result in
a deferral of our deductions for depreciation. In addition, a termination might
either accelerate the application of or subject us to any tax legislation
enacted with effective dates after the closing of the offering made hereby.
ENTITY LEVEL COLLECTIONS
If we are required under applicable law to pay any federal, state or local
income tax on behalf of any unitholder, our general partner or any former
unitholder, we are authorized to pay those taxes from our funds. The payments,
if made, will be deemed current distributions of cash to our unitholders and our
general partner. Our general partner is authorized to amend our partnership
agreement in the manner necessary to maintain uniformity of intrinsic tax
characteristics of common units and to adjust subsequent distributions so that
after giving effect to the deemed distributions, the priority and
characterization of distributions otherwise applicable under our partnership
agreement is maintained as nearly as is practicable. These payments could give
rise to an overpayment of tax on behalf of an individual partner in which event
the partner could file a claim for credit or refund.
UNIFORMITY OF COMMON UNITS
Since we cannot match transferors and transferees of common units,
uniformity of the economic and tax characteristics of the common units to a
purchaser of common units must be maintained. In the absence of uniformity,
compliance with a number of federal income tax requirements, both statutory and
regulatory, could be substantially diminished. A lack of uniformity can result
from a literal application of Treasury Regulation Section 1.167(c)-1(a)(6) or
Proposed Treasury Regulation Section 1.197-2(g)(3) and from the application of
the "ceiling limitation" on our ability to make allocations to eliminate Book-
Tax Disparities attributable to Contributed Properties and Adjusted Properties.
Any non-uniformity could have a negative impact on the value of a unitholder's
interest in us.
29
<PAGE> 36
We intend to depreciate the portion of a Section 743(b) adjustment
attributable to unrealized appreciation in the value of Contributed Property or
Adjusted Property (to the extent of any unamortized Book-Tax Disparity) using
the rate of depreciation derived from the depreciation method and useful life
applied to the Common Basis of our property, consistent with the proposed
regulations under Section 743, but despite its inconsistency with Treasury
Regulation Section 1.167(c)-1(a)(6) or Proposed Treasury Regulation Section
1.197-2(g)(3). See "-- Tax Consequences of Common Stock Ownership -- Tax
Treatment of Operations -- Section 754 Election." To the extent that the Section
743(b) adjustment is attributable to appreciation in value in excess of the
unamortized Book-Tax Disparity, we will apply the rules described in the
Treasury Regulation and legislative history. If we determine that this position
cannot reasonably be taken, we may adopt depreciation and amortization
conventions under which all purchasers acquiring common units in the same month
would receive depreciation and amortization deductions, whether attributable to
the Common Basis or the Section 743(b) basis, based upon the same applicable
rate as if they had purchased a direct interest in our property. If this
aggregate approach is adopted, it may result in lower annual depreciation and
amortization deductions than would otherwise be allowable to some of our
unitholders and risk the loss of depreciation and amortization deductions not
taken in the year that the deductions are otherwise allowable. We will not adopt
this convention if we determine that the loss of depreciation and amortization
deductions will have a material adverse effect on our unitholders. If we choose
not to utilize this aggregate method, we may use any other reasonable
depreciation and amortization convention to preserve the uniformity of the
intrinsic tax characteristics of any common units that would not have a material
adverse effect on our unitholders. The IRS may challenge any method of
depreciating or amortizing the Section 743(b) adjustment described in this
paragraph. If this challenge were sustained, the uniformity of common units
might be affected.
Items of income and deduction will be specially allocated in a manner that
is intended to preserve the uniformity of intrinsic tax characteristics among
all common units, despite the application of the "ceiling limitation" to
Contributed Properties and Adjusted Properties. These special allocations will
be made solely for federal income tax purposes. See "-- Tax Consequences of
Common Unit Ownership" and "-- Tax Consequences of Common Unit
Ownership -- Allocation of Our Income, Gain, Loss and Deduction."
TAX-EXEMPT ORGANIZATIONS AND SOME OTHER INVESTORS
Ownership of common units by employee benefit plans, other tax-exempt
organizations, non-resident aliens, foreign corporations, other foreign persons
and regulated investment companies raises issues unique to these persons and, as
described below, may have substantially adverse tax consequences.
Employee benefit plans and most other organizations exempt from federal
income tax (including individual retirement accounts and other retirement plans)
are subject to federal income tax on unrelated business taxable income.
Virtually all of the taxable income derived by these organizations from the
ownership of common units will be unrelated business taxable income, and thus
will be taxable to these unitholders.
Regulated investment companies are required to derive 90% or more of their
gross income from interest, dividends, gains from the sale of stocks or
securities or foreign currency or some related sources. It is not anticipated
that any significant amount of our gross income will qualify as income from
these sources.
Non-resident aliens and foreign corporations, trusts or estates that
acquire common units will be considered to be engaged in business in the United
States on account of their ownership of common units, and as a consequence they
will be required to file federal tax returns in respect of their distributive
shares of our income, gain, loss deduction or credit and pay federal income tax
at regular rates on our income. Generally, a partnership is required to pay a
withholding tax on the portion of the Partnership's income that is effectively
connected with the conduct of a United States trade or business and which is
allocable to the foreign partners, regardless of whether any actual
distributions have been made to our partners. However, under rules applicable to
publicly-traded partnerships, we will withhold at the rate of 39.6% on
30
<PAGE> 37
actual cash distributions made quarterly to foreign unitholders. Each foreign
unitholder must obtain a taxpayer identification number from the IRS and submit
that number to our Transfer Agent on a Form W-8 in order to obtain credit for
the taxes withheld. Subsequent adoption of Treasury Regulations or the issuance
of other administrative pronouncements may require us to change these
procedures.
Because a foreign corporation that owns common units will be treated as
engaged in a United States trade or business, it may be subject to United States
branch profits tax at a rate of 30%, in addition to regular federal income tax,
on its allocable share of our earnings and profits (as adjusted for changes in
the foreign corporation's "U.S. net equity") that are effectively connected with
the conduct of a United States trade or business. This tax may be reduced or
eliminated by an income tax treaty between the United States and the country
with respect to which the foreign corporate unitholder is a "qualified
resident."
Under a ruling of the IRS, a foreign unitholder who sells or otherwise
disposes of a common unit will be subject to federal income tax on any gain
realized on the disposition of his common unit to the extent that the gain is
effectively connected with a United States trade or business of the foreign
unitholder. Apart from the ruling, a foreign unitholder will not be taxed upon
the disposition of a common unit if that foreign unitholder has held less than
5% in value of the common units during the five-year period ending on the date
of the disposition and if the common units are regularly traded on an
established securities market at the time of the disposition.
ADMINISTRATIVE MATTERS
Our Information Returns and Audit Procedures
We intend to furnish to each of our unitholders, within 90 days after the
close of each taxable year, tax information, including a Schedule K-1, that sets
forth each of our unitholders' allocable shares of our income, gain, loss,
deduction and credit. In preparing this information that will generally not be
reviewed by Counsel, we will use various accounting and reporting conventions,
some of which have been mentioned in the previous discussion, to determine the
respective unitholders' allocable share of income, gain, loss, deduction and
credits. There is no assurance that any of these conventions will yield a result
that conforms to the requirements of the Code, regulations or administrative
interpretations of the IRS. We cannot assure prospective unitholders that the
IRS will not successfully contend in court that these accounting and reporting
conventions are impermissible.
The federal income tax information returns we filed may be audited by the
IRS. Adjustments resulting from any IRS audit may require some or all of our
unitholders to file amended tax returns, and possibly may result in an audit of
unitholders' own returns. Any audit of a unitholder's return could result in
adjustments of non-partnership as well as partnership items.
Partnerships generally are treated as separate entities for purposes of
federal tax audits, judicial review of administrative adjustments by the IRS and
tax settlement proceedings. The tax treatment of partnership items of income,
gain, loss, deduction and credit are determined at the partnership level in a
unified partnership proceeding rather than in separate proceedings with the
partners. The Code provides for one partner to be designated as the "Tax Matters
Partner" for these purposes. Our partnership agreement appoints our general
partner as the Tax Matters Partner.
The Tax Matters Partner will make elections on our behalf and our
unitholders' behalf and can extend the statute of limitations for assessment of
tax deficiencies against our unitholders with respect to our items. The Tax
Matters Partner may bind a unitholder with less than a 1% profits interest in us
to a settlement with the IRS unless the unitholder elects, by filing a statement
with the IRS, not to give that authority to the Tax Matters Partner. The Tax
Matters Partner may seek judicial review (to which all of our unitholders are
bound) of a final partnership administrative adjustment and, if the Tax Matters
Partner fails to seek judicial review, the review may be sought by any of our
unitholders having at least 1% interest in our profits and by our unitholders
having in the aggregate at least a 5% profits interest. However, only one action
for judicial review will go forward, and each unitholder with an interest in the
outcome may participate.
31
<PAGE> 38
A unitholder must file a statement with the IRS identifying the treatment
of any item on his federal income tax return that is not consistent with the
treatment of the item on our return to avoid the requirement that all items be
treated consistently on both returns. Intentional or negligent disregard of the
consistency requirement may subject a unitholder to substantial penalties.
Nominee Reporting
Persons who hold an interest in us as a nominee for another person are
required to furnish to us:
- the name, address and taxpayer identification number of the beneficial
owners and the nominee;
- whether the beneficial owner is (i) a person that is not a United States
person, (ii) a foreign government, an international organization or any
wholly-owned agency or instrumentality of either of the foregoing or
(iii) a tax-exempt entity;
- the amount and description of common units held, acquired or transferred
for the beneficial owner; and
- other information including the dates of acquisitions and transfers,
means of acquisitions and transfers and acquisition cost for purchases,
as well as the amount of net proceeds from sales.
Brokers and financial institutions are required to furnish additional
information, including whether they are United States persons and information on
common units they acquire, hold or transfer for their own account. A penalty of
$50 per failure (up to a maximum of $100,000 per calendar year) is imposed by
the Code for failure to report this information to us. The nominee is required
to supply the beneficial owner of the common units with the information
furnished to us.
Registration as a Tax Shelter
The Code requires that "tax shelters" be registered with the Secretary of
the Treasury. The temporary Treasury Regulations interpreting the tax shelter
registration provisions of the Code are extremely broad. It is arguable that we
are not subject to the registration requirement on the basis that (i) we do not
constitute a tax shelter or (ii) we constitute a projected income investment
exempt from registration. However, we have registered as a tax shelter with the
IRS because of the absence of assurance that we will not be subject to tax
shelter registration and in light of the substantial penalties that might be
imposed if registration is required and not undertaken. ISSUANCE OF THE
REGISTRATION NUMBER DOES NOT INDICATE THAT AN INVESTMENT IN US OR THE CLAIMED
TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED BY THE IRS. Our tax
shelter registration number is 94130000154. A unitholder who sells or otherwise
transfers a common unit in a subsequent transaction must furnish the
registration number to the transferee. The penalty for failure of the transferor
of a common unit to furnish the registration number to the transferee is $100
for each failure. The unitholders must disclose our tax shelter registration
number on Form 8271 to be attached to the tax return on which any deduction,
loss, credit or other benefit we generate is claimed or income received from us
is included. A unitholder who fails to disclose the tax shelter registration
number on his return, without reasonable cause for the failure, will be subject
to a $50 penalty for each failure. Any penalties discussed herein are not
deductible for federal income tax purposes.
ACCURACY-RELATED PENALTIES
An additional tax equal to 20% of the amount of any portion of an
underpayment of tax that is attributable to one or more of the listed causes,
including substantial understatements of income tax and substantial valuation
misstatements, is imposed by the Code. No penalty will be imposed, however, with
respect to any portion of an underpayment if it is shown that there was a
reasonable cause for that portion and that the taxpayer acted in good faith with
respect to that portion.
A substantial understatement of income tax in any taxable year exists if
the amount of the understatement exceeds the greater of 10% of the tax required
to be shown on the return for the taxable year or $5,000 ($10,000 for most
corporations). The amount of any understatement subject to penalty
32
<PAGE> 39
generally is reduced if any portion is attributable to a position adopted on the
return (i) with respect to which there is or was, "substantial authority" or
(ii) as to which there is a reasonable basis and the pertinent facts of the
position are disclosed on the return. More stringent rules apply to "tax
shelters," a term that does not appear to include us. If any item of our income,
gain, loss, deduction or credit included in the distributive shares of our
unitholders might result in an "understatement" of income for which no
substantial authority exists, we must disclose the pertinent facts on our
return. In addition, we will make a reasonable effort to furnish sufficient
information for our unitholders to make adequate disclosure on their returns to
avoid liability for this penalty.
A substantial valuation misstatement exists if the value of any property
(or the adjusted basis of any property) claimed on a tax return is 200% or more
of the amount determined to be the correct amount of the valuation or adjusted
basis. No penalty is imposed unless the portion of the underpayment attributable
to a substantial valuation misstatement exceeds $5,000 ($10,000 for most
corporations). If the valuation claimed on a return is 400% or more than the
correct valuation, the penalty imposed increases to 40%.
OTHER TAX CONSIDERATIONS
In addition to federal income taxes, you may be subject to other taxes,
such as state and local and Canadian federal and provincial taxes,
unincorporated business taxes, and estate, inheritance or intangible taxes that
may be imposed by the various jurisdictions in which the we do business or own
property. Although an analysis of those various taxes is not presented here,
each prospective unitholder should consider their potential impact on his
investment in us. We will own property or conduct business in Canada and in most
states of the United States. A unitholder may be required to file Canadian
federal income tax returns and to pay Canadian federal and provincial income
taxes and to file state income tax returns and to pay taxes in various states
and may be subject to penalties for failure to comply with such requirements. We
anticipate that most of our U.S. income will be generated in approximately
thirteen (13) states: Alabama, California, Illinois, Indiana, Kansas, Louisiana,
Mississippi, Montana, New Mexico, North Dakota, Oklahoma, Texas and Wyoming.
Based on EOTT's income apportionment for 1998 state income tax purposes, our
general partner estimates that no other state will account for more than 1% of
our income. Of the thirteen states in which our general partner anticipates that
most of our U.S. income will be generated, Texas and Wyoming do not currently
impose personal income tax. In certain states, tax losses may not produce a tax
benefit in the year incurred (if, for example, we have no income from sources
within that state) and also may not be available to offset income in subsequent
taxable years. Some of the states may require us to withhold a percentage of
income from amounts to be distributed to a unitholder who is not a resident of
the state. Withholding, the amount which may be greater or less than a
particular unitholder's income tax liability to the state, generally does not
relieve the non-resident unitholder from the obligation to file an income tax
return. Amounts withheld will be treated as if distributed to unitholders for
purposes of determining the amount distributed by us. Based on current law and
our estimate of future operations, the general partner anticipates that any
amounts required to be withheld will not be material. We may also own property
or do business in other states in the future.
It is the responsibility of each unitholder to investigate the legal and
tax consequences, under the laws of pertinent states, localities, Canadian
provinces and Canada, of his investment in us. Accordingly, each prospective
unitholder should consult, and must depend upon, his own tax counsel or other
advisor with regard to those matters. Further, it is the responsibility of each
unitholder to file all Canadian, Canadian province, state and local, as well as
federal, tax returns that may be required of him. Counsel has not rendered an
opinion on the Canadian federal, Canadian provincial, state or local tax
consequences of an investment in us.
TAX CONSEQUENCES OF OWNERSHIP OF DEBT SECURITIES
A description of the material federal income tax consequences of the
acquisition, ownership and disposition of debt securities will be set forth in
the prospectus supplement relating to the offering of debt securities.
33
<PAGE> 40
PLAN OF DISTRIBUTION
Under this prospectus, we intend to offer our securities to the public:
- through one or more broker-dealers;
- through underwriters; or
- directly to investors.
We will fix a price or prices, and we may change the price of the
securities offered from time to time:
- at market prices prevailing at the time of any sale under this
registration statement;
- prices related to market prices; or
- negotiated prices.
We will pay or allow distributors' or sellers' commissions that will not
exceed those customary in the types of transactions involved. Broker-dealers may
act as agent or may purchase securities as principal and thereafter resell the
securities from time to time:
- in or through one or more transactions (which may involve crosses and
block transactions) or distributions;
- on the New York Stock Exchange;
- in the over-the-counter market; or
- in private transactions.
Broker-dealers or underwriters may receive compensation in the form of
underwriting discounts or commissions and may receive commissions from
purchasers of the securities for whom they may act as agents. If any
broker-dealer purchases the securities as principal, it may effect resales of
the securities from time to time to or through other broker-dealers, and other
broker-dealers may receive compensation in the form of concessions or
commissions from the purchasers of securities for whom they may act as agents.
To the extent required, the names of the specific managing underwriter or
underwriters, if any, as well as other important information, will be set forth
in prospectus supplements. In that event, the discounts and commissions we will
allow or pay to the underwriters, if any, and the discounts and commissions the
underwriters may allow or pay to dealers or agents, if any, will be set forth
in, or may be calculated from, the prospectus supplements.
Any underwriters, brokers, dealers and agents who participate in any sale
of the securities may also engage in transactions with, or perform services for,
us or our affiliates in the ordinary course of their businesses.
In connection with offerings under this shelf registration and in
compliance with applicable law, underwriters, brokers or dealers may engage in
transactions which stabilize or maintain the market price of the securities at
levels above those which might otherwise prevail in the open market.
Specifically, underwriters, brokers or dealers may over-allot in connection with
offerings, creating a short position in the securities for their own accounts.
For the purposes of covering a syndicate short position or stabilizing the price
of the securities, the underwriters, brokers or dealers may place bids for the
securities or effect purchases of the securities in the open market. Finally,
the underwriters may impose a penalty bid whereby selling concessions allowed to
syndicate members or other brokers or dealers for distribution the securities in
offerings may be reclaimed by the syndicate if the syndicate repurchases
previously distributed securities in transactions to cover short positions, in
stabilization transactions or otherwise. These activities may stabilize,
maintain or otherwise affect the market price of the securities, which may be
higher than the price that might otherwise prevail in the open market, and, if
commenced, may be discontinued at any time.
34
<PAGE> 41
LEGAL MATTERS
Vinson & Elkins L.L.P., will pass upon the validity of the securities
offered in this prospectus. The underwriters' own legal counsel will advise them
about other issues relating to any offering.
EXPERTS
The audited consolidated financial statements and schedule of EOTT Energy
Partners, L.P. as of December 31, 1998 and 1997, and for the three years in the
period ended December 31, 1998 incorporated by reference in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report.
35
<PAGE> 42
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$500,000,000
COMMON UNITS
DEBT SECURITIES
EOTT ENERGY PARTNERS, L.P.
EOTT ENERGY FINANCE CORP.
-------------------------
PROSPECTUS
-------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 43
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
We will incur the following expenses in connection with the issuance and
distribution of the securities registered. Except for the SEC registration fee,
all amounts shown are estimates.
<TABLE>
<S> <C>
Filing Fee for Registration Statement....................... $139,000
Legal Fees and Expenses..................................... $250,000
Accounting Fees and Expenses................................ $250,000
Miscellaneous............................................... $300,000
--------
Total............................................. $939,000
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The partnership agreement provides that EOTT Energy Partners, L.P. (the
"Partnership") will indemnify our general partner, any Departing Partner and any
Person who is or was an officer or director of our general partner or any
Departing Partner, any person who is or was an affiliate of our general partner
or any Departing Partner, any Person who is or was an employee, partner, agent
or trustee of our general partner or any Departing Partner or any affiliate of
our general partner or any Departing Partner or any Person who is or was serving
at the request of our general partner or any affiliate of our general partner or
any Departing Partner as an officer, director, employee, partner, agent or
trustee of another person ("Indemnitees"), to the fullest extent permitted by
law, from and against any and all losses, claims, damages, liabilities (joint or
several) expenses (including, without limitation, legal fees and expenses),
judgments, fines, penalties, interest, settlements and other amounts arising
from any and all claims, demands, actions, suits or proceedings, whether civil,
criminal, administrative or investigative, in which any Indemnitee may be
involved or is threatened to be involved, as a party or otherwise, by reason of
its status as (i) our general partner, Departing Partner or affiliate of either,
(ii) an officer, director, employee, partner, agent or trustee of our general
partner, Departing Partner or affiliate of either 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 and in a manner which such
Indemnitee believed to be in or not opposed to the best interest of the
Partnership and, with respect to any criminal proceeding, had no reasonable
cause to believe its conduct was unlawful. Any indemnification under these
provisions will be only out of the assets of the Partnership and our general
partner shall not be personally liable for or have any obligation to contribute
or loan funds or assets to the Partnership to enable it to effectuate, such
indemnification. The Partnership is authorized to purchase (or to reimburse our
general partner or its affiliates for the cost of) insurance against liabilities
asserted against and expenses 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 described
above.
II-1
<PAGE> 44
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
*1.1 -- Form of Underwriting Agreement
3.1 -- Form of Partnership Agreement of EOTT Energy Partners,
L.P. (incorporated by reference to Exhibit 3.1 to
Registration Statement, File No. 33-73984)
3.2 -- Amendment No. 1 dated as of August 8, 1995, to the
Amended and Restated Agreement of Limited Partnership of
EOTT Energy Partners, L.P. (incorporated by reference to
Exhibit 3.2 to Annual Report on Form 10-K for the Year
Ended December 31, 1995)
3.3 -- Amendment No. 2 dated as of July 16, 1996, to the Amended
and Restated Agreement of Limited Partnership of EOTT
Energy Partners, L.P. (incorporated by reference to
Exhibit 3.3 to Quarterly Report on Form 10-Q for the
Quarter Ended June 30, 1996)
3.4 -- Amendment No. 3 dated as of February 13, 1997, to the
Amended and Restated Agreement of Limited Partnership of
EOTT Energy Partners, L.P. (incorporated by reference to
Exhibit 3.4 to Annual Report on Form 10-K for the Year
Ended December 31, 1998)
3.5 -- Amendment No. 4 dated as of November 30, 1998, to the
Amended and Restated Agreement of Limited Partnership of
EOTT Energy Partners, L.P. (incorporated by reference to
Exhibit 3.5 to Annual Report on Form 10-K for the Year
Ended December 31, 1998)
3.6 -- Amendment No. 5 dated as of December 7, 1998, to the
Amended and Restated Agreement of Limited Partnership of
EOTT Energy Partners, L.P. (incorporated by reference to
Exhibit 3.6 to Annual Report on Form 10-K for the Year
Ended December 31, 1998)
3.7 -- Form of Amended and Restated Agreement of Limited
Partnership of EOTT Energy Operating Limited Partnership
(incorporated by reference to Exhibit 10.11 to
Registration Statement, File No. 33-73984)
**3.8 -- Form of Amended and Restated Agreement of Limited
Partnership of EOTT Energy Pipeline Limited Partnership
**3.9 -- Form of Amended and Restated Agreement of Limited
Partnership of EOTT Energy Canada Limited Partnership
**3.10 -- Form of Certificate of Incorporation of EOTT Energy
Finance Corp.
**3.11 -- Form of Bylaws of EOTT Energy Finance Corp.
**4.1 -- Form of Indenture for Senior Debt Securities and
Subordinated Debt Securities
4.2 -- Form of Senior Debt Securities (included in Exhibit 4.1)
4.3 -- Form of Subordinated Debt Securities (included in Exhibit
4.1)
**5 -- Opinion of Vinson & Elkins L.L.P. as to legality of
securities
**8 -- Tax opinion of Vinson & Elkins L.L.P.
**12.1 -- Computation of Earnings to Fixed Charges
21.1 -- Subsidiaries of the Registrant (incorporated by reference
to Exhibit 21.1 to Annual Report on Form 10-K for the
Year Ended December 31, 1994)
**23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Vinson & Elkins L.L.P. (included in Exhibits 5
and 8)
***24 -- Power of Attorney (included on signature page)
****25 -- Statements of Eligibility of Trustee
</TABLE>
II-2
<PAGE> 45
- ---------------
* The Company will file any underwriting agreement relating to Debt
Securities or Common Units that it may enter into as an exhibit to a
Current Report on Form 8-K or in a post effective amendment to this
registration statement.
** Filed herewith.
*** Previously filed.
**** The Company will file any Statement of Eligibility of Trustee not
previously so filed as an exhibit to a Current Report on Form 8-K or in a
post-effective amendment to this registration statement.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required in Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the "Plan
of Distribution" not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by
EOTT Energy Partners, L.P. pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference
in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering; and
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of EOTT Energy Partners. L.P.'s annual
report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above or
otherwise, the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE> 46
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement or amendment to be signed
on its behalf by the undersigned, thereunto duly authorized, in Houston, Texas,
on the 30th day of August, 1999.
EOTT Energy Partners, L.P.
(A Delaware Limited Partnership)
By: EOTT Energy Corp.
Its: General Partner
By: /s/ MICHAEL D. BURKE
----------------------------------
Michael D. Burke
President, Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment has been signed by the following persons in
the capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MICHAEL D. BURKE Director, Chief Executive August 30, 1999
- ----------------------------------------------------- Officer and President
Michael D. Burke
/s/ LORI L. MADDOX Controller (Chief Financial August 30, 1999
- ----------------------------------------------------- and Accounting Officer)
Lori L. Maddox
EDWARD O. GAYLORD* Chairman of the Board, August 30, 1999
- ----------------------------------------------------- Director
Edward O. Gaylord
DEE S. OSBORNE* Director August 30, 1999
- -----------------------------------------------------
Dee S. Osborne
DANIEL P. WHITTY* Director August 30, 1999
- -----------------------------------------------------
Daniel P. Whitty
JOHN H. DUNCAN* Director August 30, 1999
- -----------------------------------------------------
John H. Duncan
STANLEY C. HORTON* Director August 30, 1999
- -----------------------------------------------------
Stanley C. Horton
KENNETH L. LAY* Director August 30, 1999
- -----------------------------------------------------
Kenneth L. Lay
* By: /s/ LORI L. MADDOX
-----------------------------------------------
Lori L. Maddox
(Attorney-in-Fact for persons indicated)
</TABLE>
II-4
<PAGE> 47
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement or amendment to be signed
on its behalf by the undersigned, thereunto duly authorized, in Houston, Texas,
on the 30th day of August, 1999.
EOTT ENERGY FINANCE CORP.
By: /s/ MICHAEL D. BURKE
----------------------------------
Name: Michael D. Burke
Title: President, Chief
Executive Officer
and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment has been signed by the following persons in
the capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ MICHAEL D. BURKE Director, Chief Executive August 30, 1999
- ----------------------------------------------------- Officer and President
Michael D. Burke
/s/ LORI L. MADDOX Controller (Chief Financial August 30, 1999
- ----------------------------------------------------- and Accounting Officer)
Lori L. Maddox
EDWARD O. GAYLORD* Director August 30, 1999
- -----------------------------------------------------
Edward O. Gaylord
DANIEL P. WHITTY* Director August 30, 1999
- -----------------------------------------------------
Daniel P. Whitty
* By: /s/ LORI L. MADDOX
-----------------------------------------------
Lori L. Maddox
(Attorney-in-fact for persons indicated)
</TABLE>
II-5
<PAGE> 48
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement or amendment to be signed
on its behalf by the undersigned, thereunto duly authorized, in Houston, Texas,
on the 30th day of August, 1999.
EOTT ENERGY OPERATING LIMITED
PARTNERSHIP
(A Delaware Limited Partnership)
By: EOTT ENERGY CORP.
Its: General Partner
By: /s/ MICHAEL D. BURKE
----------------------------------
Name: Michael D. Burke
Title: President, Chief
Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment has been signed by the following persons in
the capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MICHAEL D. BURKE Director, Chief Executive Officer August 30, 1999
- ----------------------------------------------------- and President
Michael D. Burke
/s/ LORI L. MADDOX Controller (Chief Financial and August 30, 1999
- ----------------------------------------------------- Accounting Officer)
Lori L. Maddox
EDWARD O. GAYLORD* Chairman of the Board, Director August 30, 1999
- -----------------------------------------------------
Edward O. Gaylord
DEE S. OSBORNE* Director August 30, 1999
- -----------------------------------------------------
Dee S. Osborne
DANIEL P. WHITTY* Director August 30, 1999
- -----------------------------------------------------
Daniel P. Whitty
JOHN H. DUNCAN* Director August 30, 1999
- -----------------------------------------------------
John H. Duncan
STANLEY C. HORTON* Director August 30, 1999
- -----------------------------------------------------
Stanley C. Horton
KENNETH L. LAY* Director August 30, 1999
- -----------------------------------------------------
Kenneth L. Lay
* By: /s/ LORI L. MADDOX August 30, 1999
- -----------------------------------------------------
Lori L. Maddox
(Attorney-in-fact for the persons
indicated)
</TABLE>
II-6
<PAGE> 49
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement or amendment to be signed
on its behalf by the undersigned, thereunto duly authorized, in Houston, Texas,
on the 30th day of August, 1999.
EOTT ENERGY PIPELINE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
By: EOTT ENERGY CORP.
Its: General Partner
By: /s/ MICHAEL D. BURKE
----------------------------------
Name: Michael D. Burke
Title: President, Chief
Executive Officer and
Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment has been signed by the following persons in
the capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MICHAEL D. BURKE Director, Chief Executive Officer August 30, 1999
- ----------------------------------------------------- and President
Michael D. Burke
/s/ LORI L. MADDOX Controller (Chief Financial and August 30, 1999
- ----------------------------------------------------- Accounting Officer)
Lori L. Maddox
EDWARD O. GAYLORD* Chairman of the Board, Director August 30, 1999
- -----------------------------------------------------
Edward O. Gaylord
DEE S. OSBORNE* Director August 30, 1999
- -----------------------------------------------------
Dee S. Osborne
DANIEL P. WHITTY* Director August 30, 1999
- -----------------------------------------------------
Daniel P. Whitty
JOHN H. DUNCAN* Director August 30, 1999
- -----------------------------------------------------
John H. Duncan
STANLEY C. HORTON* Director August 30, 1999
- -----------------------------------------------------
Stanley C. Horton
KENNETH L. LAY * Director August 30, 1999
- -----------------------------------------------------
Kenneth L. Lay
* By: /s/ LORI L. MADDOX August 30, 1999
-----------------------------------------------
Lori L. Maddox
(Attorney-in-fact for the persons indicated)
</TABLE>
II-7
<PAGE> 50
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement or amendment to be signed
on its behalf by the undersigned, thereunto duly authorized, in Houston, Texas,
on the 30th day of August, 1999.
EOTT ENERGY CANADA LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
By: EOTT ENERGY CORP.
Its: General Partner
By: /s/ MICHAEL D. BURKE
----------------------------------
Name: Michael D. Burke
Title: President, Chief
Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment has been signed by the following persons in
the capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MICHAEL D. BURKE Director, Chief Executive Officer August 30, 1999
- ----------------------------------------------------- and President
Michael D. Burke
/s/ LORI L. MADDOX Controller (Chief Financial and August 30, 1999
- ----------------------------------------------------- Accounting Officer)
Lori L. Maddox
EDWARD O. GAYLORD* Chairman of the Board, Director August 30, 1999
- -----------------------------------------------------
Edward O. Gaylord
DEE S. OSBORNE* Director August 30, 1999
- -----------------------------------------------------
Dee S. Osborne
DANIEL P. WHITTY* Director August 30, 1999
- -----------------------------------------------------
Daniel P. Whitty
JOHN H. DUNCAN* Director August 30, 1999
- -----------------------------------------------------
John H. Duncan
STANLEY C. HORTON* Director August 30, 1999
- -----------------------------------------------------
Stanley C. Horton
KENNETH L. LAY* Director August 30, 1999
- -----------------------------------------------------
Kenneth L. Lay
* By: /s/ LORI L. MADDOX August 30, 1999
- ----------------------------------------------------
Lori L. Maddox
(Attorney-in-fact for the persons
indicated)
</TABLE>
II-8
<PAGE> 51
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
*1.1 -- Form of Underwriting Agreement
3.1 -- Form of Partnership Agreement of EOTT Energy Partners,
L.P. (incorporated by reference to Exhibit 3.1 to
Registration Statement, File No. 33-73984)
3.2 -- Amendment No. 1 dated as of August 8, 1995, to the
Amended and Restated Agreement of Limited Partnership of
EOTT Energy Partners, L.P. (incorporated by reference to
Exhibit 3.2 to Annual Report on Form 10-K for the Year
Ended December 31, 1995)
3.3 -- Amendment No. 2 dated as of July 16, 1996, to the Amended
and Restated Agreement of Limited Partnership of EOTT
Energy Partners, L.P. (incorporated by reference to
Exhibit 3.3 to Quarterly Report on Form 10-Q for the
Quarter Ended June 30, 1996)
3.4 -- Amendment No. 3 dated as of February 13, 1997, to the
Amended and Restated Agreement of Limited Partnership of
EOTT Energy Partners, L.P. (incorporated by reference to
Exhibit 3.4 to Annual Report on Form 10-K for the Year
Ended December 31, 1998)
3.5 -- Amendment No. 4 dated as of November 30, 1998, to the
Amended and Restated Agreement of Limited Partnership of
EOTT Energy Partners, L.P. (incorporated by reference to
Exhibit 3.5 to Annual Report on Form 10-K for the Year
Ended December 31, 1998)
3.6 -- Amendment No. 5 dated as of December 7, 1998, to the
Amended and Restated Agreement of Limited Partnership of
EOTT Energy Partners, L.P. (incorporated by reference to
Exhibit 3.6 to Annual Report on Form 10-K for the Year
Ended December 31, 1998)
3.7 -- Form of Amended and Restated Agreement of Limited
Partnership of EOTT Energy Operating Limited Partnership
(incorporated by reference to Exhibit 10.11 to
Registration Statement, File No. 33-73984)
**3.8 -- Form of Amended and Restated Agreement of Limited
Partnership of EOTT Energy Pipeline Limited Partnership
**3.9 -- Form of Amended and Restated Agreement of Limited
Partnership of EOTT Energy Canada Limited Partnership
**3.10 -- Form of Certificate of Incorporation of EOTT Energy
Finance Corp.
**3.11 -- Form of Bylaws of EOTT Energy Finance Corp.
**4.1 -- Form of Indenture for Senior Debt Securities and
Subordinated Debt Securities
4.2 -- Form of Senior Debt Securities (included in Exhibit 4.1)
4.3 -- Form of Subordinated Debt Securities (included in Exhibit
4.2)
**5 -- Opinion of Vinson & Elkins L.L.P. as to legality of
securities
**8 -- Tax opinion of Vinson & Elkins L.L.P.
**12.1 -- Computation of Earnings to Fixed Charges
21.1 -- Subsidiaries of the Registrant (incorporated by reference
to Exhibit 21.1 to Annual Report on Form 10-K for the
Year Ended December 31, 1994)
**23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Vinson & Elkins L.L.P. (included in Exhibits 5
and 8)
</TABLE>
<PAGE> 52
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
***24 -- Power of Attorney (included on signature page)
****25 -- Statements of Eligibility of Trustee
</TABLE>
- ---------------
* The Company will file any underwriting agreement relating to Debt
Securities or Common Units that it may enter into as an exhibit to a
Current Report on Form 8-K or in a post effective amendment to this
registration statement.
** Filed herewith.
*** Previously filed.
**** The Company will file any Statement of Eligibility of Trustee not
previously so filed as an exhibit to a Current Report on Form 8-K or in a
post-effective amendment to this registration statement.
<PAGE> 1
EXHIBIT 3.8
================================================================================
AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
EOTT ENERGY PIPELINE LIMITED PARTNERSHIP
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I-ORGANIZATIONAL MATTERS.................................................................. 1
1.1 Formation and Continuation...................................................... 1
1.2 Name............................................................................ 1
1.3 Registered Office; Principal Office............................................. 2
1.4 Power of Attorney............................................................... 2
1.5 Term............................................................................ 3
1.6 Possible Restrictions on Transfer............................................... 3
ARTICLE II-DEFINITIONS............................................................................ 3
"Additional Limited Partner"............................................................ 4
"Adjusted Capital Account".............................................................. 4
"Adjusted Property"..................................................................... 4
"Affiliate"............................................................................. 4
"Agreed Allocation"..................................................................... 4
"Agreed Value".......................................................................... 4
"Agreement"............................................................................. 5
"API" ................................................................................ 5
"Audit Committee"....................................................................... 5
"Available Cash"........................................................................ 5
"Book-Tax Disparity".................................................................... 6
"Business Day".......................................................................... 6
"Canada OLP"............................................................................ 6
"Capital Account"....................................................................... 6
"Capital Contribution".................................................................. 6
"Carrying Value"........................................................................ 6
"Certificate of Limited Partnership".................................................... 6
"Closing Date".......................................................................... 6
"Code" ................................................................................ 7
"Common Unit"........................................................................... 7
"Contributed Property".................................................................. 7
"Contribution Agreement"................................................................ 7
"Curative Allocation"................................................................... 7
"Delaware Act".......................................................................... 7
"Departing Partner"..................................................................... 7
"Economic Risk of Loss"................................................................. 7
"Enron"................................................................................. 7
"EOTT" ................................................................................ 7
"Event of Withdrawal"................................................................... 7
"Exchange Act".......................................................................... 7
"General Partner"....................................................................... 7
"Indemnitee"............................................................................ 7
"Initial Limited Partner"............................................................... 8
"Initial Offering"...................................................................... 8
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
"Limited Partner"........................................................................ 8
"Liquidation Date"....................................................................... 8
"Liquidator"............................................................................. 8
"Merger Agreement"....................................................................... 8
"MLP" .................................................................................. 8
"MLP Agreement".......................................................................... 8
"National Securities Exchange"........................................................... 8
"Net Agreed Value"....................................................................... 8
"Net Income"............................................................................. 9
"Net Loss"............................................................................... 9
"Net Termination Gain"................................................................... 9
"Net Termination Loss"................................................................... 9
"Nonrecourse Built-in Gain".............................................................. 9
"Nonrecourse Deductions"................................................................. 10
"Nonrecourse Liability".................................................................. 10
"Operating OLP".......................................................................... 10
"Operating OLP Agreement"................................................................ 10
"Opinion of Counsel"..................................................................... 10
"Organizational Limited Partner"......................................................... 10
"Other Partnerships"..................................................................... 10
"Other Partnership Agreements"........................................................... 10
"Partners"............................................................................... 10
"Partner Nonrecourse Debt"............................................................... 10
"Partner Nonrecourse Debt Minimum Gain" ................................................. 10
"Partner Nonrecourse Deductions"......................................................... 10
"Partnership"............................................................................ 10
"Partnership Interest"................................................................... 11
"Partnership Minimum Gain"............................................................... 11
"Percentage Interest".................................................................... 11
"Person"................................................................................. 11
"Recapture Income"....................................................................... 11
"Registration Statement"................................................................. 11
"Required Allocations"................................................................... 11
"Residual Gain".......................................................................... 11
"Residual Loss".......................................................................... 11
"Restricted Opportunity"................................................................. 11
"Securities Act"......................................................................... 12
"Special Approval"....................................................................... 12
"Substituted Limited Partner"............................................................ 12
"Surviving Business Entity".............................................................. 12
"Termination Capital Transactions"....................................................... 12
"Underwriter"............................................................................ 12
"Underwriting Agreement"................................................................. 12
"Unrealized Gain"........................................................................ 12
"Unrealized Loss"........................................................................ 12
"Withdrawal Opinion of Counsel".......................................................... 13
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE III-PURPOSE............................................................................... 13
3.1 Purpose and Business............................................................ 13
3.2 Powers.......................................................................... 13
ARTICLE IV-CAPITAL CONTRIBUTIONS.................................................................. 13
4.1 Initial Contributions........................................................... 13
4.2 Return of Initial Contributions................................................. 13
4.3 Contribution by the General Partner and the Initial Limited Partner............. 14
4.4 Additional Capital Contributions................................................ 14
4.5 No Preemptive Rights............................................................ 14
4.6 Capital Accounts................................................................ 14
4.7 Interest........................................................................ 17
4.8 No Withdrawal................................................................... 17
4.9 Loans from Partners............................................................. 17
ARTICLE V-ALLOCATIONS AND DISTRIBUTIONS........................................................... 17
5.1 Allocations for Capital Account Purposes........................................ 17
(a) Net Income............................................................. 17
(b) Net Losses............................................................. 17
(c) Net Termination Gains and Losses....................................... 18
(d) Special Allocations.................................................... 19
(i) Partnership Minimum Gain Chargeback........................... 19
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain........... 19
(iii) Qualified Income Offset....................................... 19
(iv) Gross Income Allocations...................................... 19
(v) Nonrecourse Deductions........................................ 20
(vi) Partner Nonrecourse Deductions................................ 20
(vii) Nonrecourse Liabilities....................................... 20
(viii) Code Section 754 Adjustments.................................. 20
(ix) Curative Allocation........................................... 20
5.2 Allocations for Tax Purposes.................................................... 21
5.3 Requirement of Distributions.................................................... 23
ARTICLE VI-MANAGEMENT AND OPERATION OF BUSINESS................................................... 24
6.1 Management...................................................................... 24
6.2 Certificate of Limited Partnership.............................................. 25
6.3 Restrictions on General Partner's Authority..................................... 25
6.4 Reimbursement of the General Partner............................................ 26
6.5 Outside Activities.............................................................. 26
6.6 Loans to and from the General Partner; Contracts with Affiliates................ 27
6.7 Indemnification................................................................. 29
6.8 Liability of Indemnitees........................................................ 30
6.9 Resolution of Conflicts of Interest............................................. 31
6.10 Other Matters Concerning the General Partner.................................... 32
6.11 Title to Partnership Assets..................................................... 33
6.12 Reliance by Third Parties....................................................... 33
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE VII-RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER......................................... 34
7.1 Limitation of Liability......................................................... 34
7.2 Management of Business.......................................................... 34
7.3 Return of Capital............................................................... 34
7.4 Rights of the Limited Partner Relating to the Partnership....................... 34
ARTICLE VIII-BOOKS, RECORDS, ACCOUNTING AND REPORTS............................................... 35
8.1 Records and Accounting.......................................................... 35
8.2 Fiscal Year..................................................................... 35
ARTICLE IX-TAX MATTERS............................................................................ 35
9.1 Preparation of Tax Returns...................................................... 35
9.2 Tax Elections................................................................... 35
9.3 Tax Controversies............................................................... 36
9.4 Organizational Expenses......................................................... 36
9.5 Withholding..................................................................... 36
9.6 Opinions of Counsel............................................................. 36
ARTICLE X-TRANSFER OF INTERESTS................................................................... 36
10.1 Transfer........................................................................ 36
10.2 Transfer of the General Partner's Partnership Interest.......................... 37
10.3 Transfer of the Limited Partner's Partnership Interest.......................... 37
ARTICLE XI-ADMISSION OF PARTNERS.................................................................. 37
11.1 Admission of Initial Limited Partner. .......................................... 37
11.2 Admission of Substituted Limited Partners....................................... 37
11.3 Admission of Successor General Partner.......................................... 37
11.4 Amendment of Agreement and Certificate of Limited Partnership................... 38
11.5 Admission of Additional Limited Partners........................................ 38
ARTICLE XII-WITHDRAWAL OR REMOVAL OF PARTNERS..................................................... 38
12.1 Withdrawal of the General Partner............................................... 38
12.2 Removal of a General Partner.................................................... 40
12.3 Interest of Departing Partner and Successor General Partner..................... 40
12.4 Reimbursement of Departing Partner.............................................. 40
12.5 Withdrawal of the Limited Partner............................................... 40
ARTICLE XIII-DISSOLUTION AND LIQUIDATION.......................................................... 40
13.1 Dissolution..................................................................... 40
13.2 Continuation of the Business of the Partnership after Dissolution............... 41
13.3 Liquidation..................................................................... 42
13.4 Distributions in Kind........................................................... 42
13.5 Cancellation of Certificate of Limited Partnership.............................. 43
13.6 Reasonable Time for Winding Up.................................................. 43
13.7 Return of Capital............................................................... 43
13.8 No Capital Account Restoration.................................................. 43
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<S> <C>
13.9 Waiver of Partition............................................................. 43
ARTICLE XIV-AMENDMENT OF PARTNERSHIP AGREEMENT.................................................... 44
14.1 Amendment to be Adopted Solely by General Partner............................... 44
14.2 Amendment Procedures............................................................ 45
ARTICLE XV-MERGER................................................................................. 45
15.1 Authority....................................................................... 45
15.2 Procedure for Merger or Consolidation........................................... 45
15.3 Approval by Limited Partner of Merger or Consolidation.......................... 46
15.4 Certificate of Merger........................................................... 46
15.5 Effect of Merger................................................................ 46
ARTICLE XVI-GENERAL PROVISIONS.................................................................... 47
16.1 Addresses and Notices........................................................... 47
16.2 References...................................................................... 47
16.3 Pronouns and Plurals............................................................ 47
16.4 Further Action.................................................................. 47
16.5 Binding Effect.................................................................. 47
16.6 Integration..................................................................... 47
16.7 Creditors....................................................................... 47
16.8 Waiver.......................................................................... 47
16.9 Counterparts.................................................................... 48
16.10 Applicable Law.................................................................. 48
16.11 Invalidity of Provisions........................................................ 48
</TABLE>
-v-
<PAGE> 7
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
EOTT ENERGY PIPELINE LIMITED PARTNERSHIP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF EOTT
ENERGY PIPELINE LIMITED PARTNERSHIP, dated as of March 24, 1994, is entered into
by and among EOTT Energy Corp., a Delaware corporation, as the General Partner,
Organizational Partner, Inc., a Delaware corporation, in its capacity as the
Organizational Limited Partner, and EOTT Energy Operating Limited Partnership, a
Delaware limited partnership, as the Initial Limited Partner, together with any
other Persons who become Partners in the Partnership as provided herein. In
consideration of the covenants, conditions and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 FORMATION AND CONTINUATION. (a) The General Partner and the
Organizational Limited Partner have previously formed the Partnership as a
limited partnership pursuant to the provisions of the Delaware Act and, together
with the Initial Limited Partner, hereby amend and restate the original
Agreement of Limited Partnership of EOTT Energy Pipeline Limited Partnership in
its entirety. Subject to the provisions of this Agreement, the General Partner,
the Organizational Limited Partner and the Initial Limited Partner hereby
continue the Partnership as a limited partnership pursuant to the provisions of
the Delaware Act. Except as expressly provided to the contrary in this
Agreement, the rights and obligations of the Partners and the administration,
dissolution and termination of the Partnership shall be governed by the Delaware
Act. All Partnership Interests shall constitute personal property of the owner
thereof for all purposes.
(b) In connection with the formation of the Partnership, EOTT has been
admitted as a general partner of the Partnership, and the Organizational Limited
Partner has been admitted as a limited partner of the Partnership. As of the
Closing Date, after giving effect to the transactions contemplated by Section
4.3, the limited partner interest in the Partnership of the Organizational
Limited Partner shall be terminated and the Organizational Limited Partner shall
withdraw as a Limited Partner of the Partnership.
1.2 NAME. The name of the Partnership shall be, and the business of the
Partnership shall be conducted under the name of, "EOTT Energy Pipeline Limited
Partnership." 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 Partner of such change
in the next regular communication to the Limited Partner.
-1-
<PAGE> 8
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 1330 Post Oak
Blvd., Houston, Texas 77056, or such other place as the General Partner may from
time to time designate by notice to the Limited Partner. The Partnership may
maintain offices at such other place or places within or outside the State of
Delaware as the General Partner deems necessary or appropriate.
1.4 POWER OF ATTORNEY. (a) The Limited Partner hereby constitutes and
appoints each of the General Partner and, if a Liquidator shall have been
selected pursuant to Section 13.3, 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 its true and lawful agent and attorney-in-fact, with full power
and authority in its name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (A) all certificates, documents and
other instruments (including, without limitation, this Agreement and
the Certificate of Limited Partnership and all amendments or
restatements thereof) that the 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 X, XI, XII or XIII 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 Partnership
Interests; 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 XV; and
(ii) execute, swear to, acknowledge, deliver, file and record
all ballots, consents, approvals, waivers, certificates, documents and
other instruments necessary or appropriate, in the 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 the consent or
approval of the Limited Partner is required by any provision of this
Agreement, the General Partner or the Liquidator
-2-
<PAGE> 9
may exercise the power of attorney made in this Section 1.4(a)(ii) only
after the necessary consent or approval of the Limited Partner is
obtained.
Nothing contained in this Section 1.4(a) shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article XIV 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 the Limited Partner and the transfer
of all or any portion of the Limited Partner's Partnership Interest and shall
extend to the Limited Partner's heirs, successors, assigns and personal
representatives. The Limited Partner 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 the Limited Partner 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. The Limited Partner 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 March 31, 2084, or until
the earlier termination of the Partnership in accordance with the provisions of
Article XIII.
1.6 POSSIBLE RESTRICTIONS ON TRANSFER. Notwithstanding anything to the
contrary contained in this Agreement, in the event of (a) the enactment (or
imminent enactment) of any legislation, (b) the publication of any temporary or
final regulation by the Treasury Department, (c) any ruling by the Internal
Revenue Service or (d) any judicial decision, that, in any such case, in the
Opinion of Counsel, would result in the taxation of the Partnership as an
association taxable as a corporation or would otherwise result in the
Partnership being taxed as an entity for federal income tax purposes, then, the
General Partner may impose such restrictions on the transfer of Partnership
Interests as may be required, in the Opinion of Counsel, to prevent the
Partnership from being taxed as an association taxable as a corporation or
otherwise 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.
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.
-3-
<PAGE> 10
"ADDITIONAL LIMITED PARTNER" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 11.5 and who is
shown as such on the books and records of the Partnership.
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account
maintained for each Partner as of the end of each fiscal year of the
Partnership, (a) increased by any amounts that such Partner is
obligated to restore under the standards set by Treasury Regulation
Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to restore under
Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)), and (b)
decreased by (i) the amount of all losses and deductions that, as of
the end of such fiscal year, are reasonably expected to be allocated to
such Partner in subsequent years under Sections 704(e)(2) and 706(d) of
the Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii)
the amount of all distributions that, as of the end of such fiscal
year, are reasonably expected to be made to such Partner in subsequent
years in accordance with the terms of this Agreement or otherwise to
the extent they exceed offsetting increases to such Partner's Capital
Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made
(other than increases as a result of a minimum gain chargeback pursuant
to Section 5.1(d)(i) or 5.1(d)(ii)). The foregoing definition of
Adjusted Capital Account is intended to comply with the provisions of
Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"ADJUSTED PROPERTY" means any property the Carrying Value of
which has been adjusted pursuant to Section 4.6(d)(i) or 4.6(d)(ii).
Once an Adjusted Property is deemed distributed by, and recontributed
to, the Partnership for federal income tax purposes upon a termination
thereof pursuant to Section 708 of the Code, such property shall
thereafter constitute a Contributed Property until the Carrying Value
of such property is subsequently adjusted pursuant to Section 4.6(d)(i)
or 4.6(d)(ii).
"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, other than a
Required Allocation, of an item of income, gain, loss or deduction
pursuant to the provisions of Section 5.1, including, without
limitation, a Curative Allocation (if appropriate to the context in
which the term "Agreed Allocation" is used).
"AGREED VALUE" of any Contributed Property means the fair
market value of such property or other consideration at the time of
contribution as determined by the General Partner using such reasonable
method of valuation as it may adopt; provided, however, that the Agreed
Value of any property deemed contributed to the Partnership for federal
income tax purposes upon termination and reconstitution thereof
pursuant to Section 708 of the Code shall be determined in accordance
with Section 4.6(c). Subject to Section 4.6(c), the General Partner
shall, in its sole discretion, use such method as it deems reasonable
and appropriate to allocate
-4-
<PAGE> 11
the aggregate Agreed Value of Contributed Properties contributed to the
Partnership in a single or integrated transaction among each separate
property on a basis proportional to the fair market value of each
Contributed Property.
"AGREEMENT" means this Amended and Restated Agreement of
Limited Partnership of EOTT Energy Pipeline Limited Partnership, as it
may be amended, supplemented or restated from time to time.
"API" has the meaning assigned to such term in the MLP
Agreement.
"AUDIT COMMITTEE" means a committee of the Board of Directors
of the General Partner composed entirely of one or more directors who
are neither officers nor employees of Enron or any of its Affiliates.
"AVAILABLE CASH" means with respect to any calendar quarter
and without duplication:
(a) the sum of:
(i) all cash receipts of the Partnership
during such quarter from all sources plus, in the
case of the calendar quarter ending June 30, 1994,
the cash balance of the Partnership as of the close
of business on the Closing Date; and
(ii) any reduction in a reserve with respect
to such quarter from the level of such reserve at the
end of the prior quarter;
(b) less the sum of:
(i) all cash disbursements of the
Partnership during such quarter, including, without
limitation, disbursements for operating expenses,
taxes, if any, debt service (including, without
limitation, the payment of principal, premium and
interest) and capital expenditures (but excluding all
cash distributions to Partners and any cash
disbursements with respect to which, and to the
extent that, a reserve was established in a prior
quarter); and
(ii) any reserves established with respect
to such quarter, and any increase in reserves
established with respect to prior quarters, in such
amounts as the General Partner determines in its
reasonable discretion to be necessary or appropriate
(A) to provide for the proper conduct of the business
of the Partnership (including, without limitation,
reserves for future capital expenditures) or (B)
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.
Notwithstanding the foregoing, "Available Cash" with respect to any
calendar quarter (x) shall not include any cash receipts or reductions
in reserves or take into account any
-5-
<PAGE> 12
disbursements made or reserves established after the Liquidation Date
and (y) shall include cash proceeds from borrowings received by the
Partnership after the end of such quarter but on or before the date on
which the Partnership makes its distribution of Available Cash in
respect of such quarter pursuant to Section 5.3.
"BOOK-TAX DISPARITY" means with respect to any item of
Contributed Property or Adjusted Property, as of the date of any
determination, the difference between the Carrying Value of such
Contributed Property or Adjusted Property and the adjusted basis
thereof for federal income tax purposes as of such date. A Partner's
share of the Partnership's Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained
pursuant to Section 4.6 and the hypothetical balance of such Partner's
Capital Account computed as if it had been maintained strictly in
accordance with federal income tax accounting principles.
"BUSINESS DAY" means Monday through Friday of each week,
except that a legal holiday recognized as such by the government of the
United States or the states of New York or Texas shall not be regarded
as a Business Day.
"CANADA OLP" means EOTT Energy Canada Limited Partnership, a
Delaware limited partnership.
"CAPITAL ACCOUNT" means the capital account maintained for a
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 or 4.4.
"CARRYING VALUE" means (a) with respect to a Contributed
Property, the Agreed Value of such property reduced (but not below
zero) by all depreciation, amortization and cost recovery deductions
charged to the Partners' Capital Accounts in respect of such
Contributed Property, and (b) with respect to any other Partnership
property, the adjusted basis of such property for federal income tax
purposes, all as of the time of determination. The Carrying Value of
any property shall be adjusted from time to time in accordance with
Sections 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.
"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 of Limited
Partnership may be amended, supplemented or restated from time to time.
"CLOSING DATE" means the first date on which Common Units are
sold by the General Partner to the Underwriters pursuant to the
provisions of the Underwriting Agreement.
-6-
<PAGE> 13
"CODE" means the Internal Revenue Code of 1986, as amended and
in effect from time to time, as interpreted by the applicable
regulations thereunder. Any reference herein to a specific section or
sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
"COMMON UNIT" has the meaning assigned to such term in the MLP
Agreement.
"CONTRIBUTED PROPERTY" means each property or other asset, in
such form as may be permitted by the Delaware Act, but excluding cash,
contributed to the Partnership (or deemed contributed to the
Partnership on termination and reconstitution thereof pursuant to
Section 708 of the Code). Once the Carrying Value of a Contributed
Property is adjusted pursuant to Section 4.6(d)(i), such property shall
no longer constitute a Contributed Property, but shall be deemed an
Adjusted Property.
"CONTRIBUTION AGREEMENT" has the meaning assigned to such term
in the MLP Agreement.
"CURATIVE ALLOCATION" means any allocation of an item of
income, gain, deduction, loss or credit pursuant to the provisions of
Section 5.1(d)(ix).
"DELAWARE ACT" means the Delaware Revised Uniform Limited
Partnership Act, 6 Del C. Section 17-101, et seq., as amended,
supplemented or restated from time to time, and any successor to such
statute.
"DEPARTING PARTNER" means a General Partner with respect to
which an Event of Withdrawal of the type described in Section 12.1 has
occurred.
"ECONOMIC RISK OF LOSS" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"ENRON" means Enron Corp., a Delaware corporation.
"EOTT" means EOTT Energy Corp., a Delaware corporation.
"EVENT OF WITHDRAWAL" has the meaning assigned to such term in
Section 12.1(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.
"GENERAL PARTNER" means EOTT and its successors as general
partner of the Partnership, unless the context otherwise requires.
"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
-7-
<PAGE> 14
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 PARTNER" means Operating OLP, upon being
admitted to the Partnership as a limited partner in accordance with
Section 11.1.
"INITIAL OFFERING" means the initial offering of Common Units
to the public, as described in the Registration Statement.
"LIMITED PARTNER" means the Organizational Limited Partner,
the Initial Limited Partner, each Substituted Limited Partner, if any,
each Additional Limited Partner and any Departing Partner upon the
change of its status from General Partner to Limited Partner pursuant
to Section 12.3, but excluding any such Person from and after the time
it withdraws from the Partnership.
"LIQUIDATION DATE" means (a) in the case of an event giving
rise to the dissolution of the Partnership of the type described in
clauses (a) and (b) of the first sentence of Section 13.2, the date on
which the applicable time period during which the Partners have the
right to elect to reconstitute the Partnership and continue its
business has expired without such an election being made, and (b) in
the case of any other event giving rise to the dissolution of the
Partnership, the date on which such event occurs.
"LIQUIDATOR" means the General Partner or other Person
approved pursuant to Section 13.3 who performs the functions described
therein.
"MERGER AGREEMENT" has the meaning assigned to such term in
Section 15.1.
"MLP" means EOTT Energy Partners, L.P., a Delaware limited
partnership.
"MLP AGREEMENT" means the Amended and Restated Agreement of
Limited Partnership of EOTT Energy Partners, L.P., as it may be
amended, supplemented or restated from time to time.
"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 by the Partnership, the Partnership's
Carrying Value of such property (as adjusted pursuant to Section
4.6(d)(ii)) at the time such property is distributed, reduced by any
indebtedness either assumed by such Partner upon such distribution or
to which such property is subject at the time of distribution, in
either case, as determined under Section 752 of the Code.
-8-
<PAGE> 15
"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). 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 Curative
Allocation, Net Income or Net Loss, whichever the case may be, shall be
recomputed without regard to such item.
"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
specially allocated under Section 5.1(d). 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 Curative
Allocation, Net Income, or Net Loss, whichever the case may be, shall
be recomputed without regard to such item.
"NET TERMINATION GAIN" means, for any taxable period, the sum,
if positive, of all items of income, gain, loss or deduction recognized
by the Partnership from Termination Capital Transactions occurring in
such taxable period. The items included in the determination of Net
Termination Gain shall be determined in accordance with Section 4.6(b)
and shall not include any items of income, gain or loss specially
allocated under Section 5.1(d). Once an item of income, gain or loss
that has been included in the initial computation of Net Termination
Gain is subjected to a Required Allocation or a Curative Allocation,
Net Termination Gain or Net Termination Loss, whichever the case may
be, shall be recomputed without regard to such item;
"NET TERMINATION LOSS" means, for any taxable period, the sum,
if negative, of all items of income, gain, loss or deduction recognized
by the Partnership from Termination Capital Transactions occurring in
such taxable period. The items included in the determination of Net
Termination Loss shall be determined in accordance with Section 4.6(b)
and shall not include any items of income, gain or loss specially
allocated under Section 5.1(d). Once an item of gain or loss that has
been included in the initial computation of Net Termination Loss is
subjected to a Required Allocation or a Curative Allocation, Net
Termination Gain or Net Termination Loss, whichever the case may be,
shall be recomputed without regard to such item;
"NONRECOURSE BUILT-IN GAIN" means with respect to any
Contributed Properties or Adjusted Properties that are subject to a
mortgage or pledge securing a Nonrecourse Liability, the amount of any
taxable gain that would be allocated to the Partners pursuant to
-9-
<PAGE> 16
Sections 5.2(b)(i)(A), 5.2(b)(ii)(A) or 5.2(b)(iv) if such properties
were disposed of in a taxable transaction in full satisfaction of such
liabilities and for no other consideration.
"NONRECOURSE DEDUCTIONS" means any and all items of loss,
deduction or expenditures (described in Section 705(a)(2)(B) of the
Code) that, in accordance with the principles of Treasury Regulation
Section 1.704-(2)(b), are attributable to a Nonrecourse Liability.
"NONRECOURSE LIABILITY" has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
"OPERATING OLP" means EOTT Energy Operating Limited
Partnership, a Delaware limited partnership.
"OPERATING OLP AGREEMENT" means the Amended and Restated
Agreement of Limited Partnership for Operating OLP, as same may be
amended from time to time.
"OPINION OF COUNSEL" means a written opinion of counsel (who
may be regular counsel to Enron, any Affiliate of Enron, the
Partnership or the General Partner) acceptable to the General Partner.
"ORGANIZATIONAL LIMITED PARTNER" means Organizational Partner,
Inc., a Delaware corporation, in its capacity as the organizational
limited partner of the Partnership.
"OTHER PARTNERSHIPS" means Canada OLP and Operating OLP.
"OTHER PARTNERSHIP AGREEMENTS" means the Amended and Restated
Agreement of Limited Partnership for each of the Other Partnerships, as
same may be amended from time to time.
"PARTNERS" means the General Partner and the Limited Partner.
"PARTNER NONRECOURSE DEBT" has the meaning set forth in
Treasury Regulation Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning set
forth in Treasury Regulation Section 1.704-2(i)(2).
"PARTNER NONRECOURSE DEDUCTIONS" means any and all items of
loss, deduction or expenditure (including, without limitation, any
expenditure described in Section 705(a)(2)(B) of the Code) that, in
accordance with the principles of Treasury Regulation Section
1.704-2(i), are attributable to a Partner Nonrecourse Debt.
"PARTNERSHIP" means the limited partnership heretofore formed
pursuant to this Agreement.
-10-
<PAGE> 17
"PARTNERSHIP INTEREST" means the interest of a Partner in the
Partnership.
"PARTNERSHIP MINIMUM GAIN" means that amount determined in
accordance with the principles of Treasury Regulation Section
1.704-2(d).
"PERCENTAGE INTEREST" means (a) as to the General Partner, in
its capacity as such, 1% and (b) as to the Limited Partner, 99%.
"PERSON" means an individual or a corporation, partnership,
trust, unincorporated organization, association or other entity.
"RECAPTURE INCOME" means any gain recognized by the
Partnership (computed without regard to any adjustment required by
Sections 734 or 743 of the Code) upon the disposition of any property
or asset of the Partnership, which gain is characterized as ordinary
income because it represents the recapture of deductions previously
taken with respect to such property or asset.
"REGISTRATION STATEMENT" means the Registration Statement on
Form S-1 (Registration No. 33-73984), as it has been or 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 the 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) Section 5.1(b)(i) or (b) Sections 5.1(d)(i)-(vi)
and (viii), such allocations (or limitations thereon) being directly or
indirectly required by the Treasury regulations promulgated under
Section 704(b) of the Code.
"RESIDUAL GAIN" or "RESIDUAL LOSS" means any item of gain or
loss, as the case may be, of the Partnership recognized for federal
income tax purposes resulting from a sale, exchange or other
disposition of a Contributed Property or Adjusted Property, to the
extent such item of gain or loss is not allocated pursuant to Sections
5.2(b)(i)(A) or 5.2(b)(ii)(A), respectively, to eliminate Book-Tax
Disparities.
"RESTRICTED OPPORTUNITY" means a discrete business opportunity
that satisfies each of the following criteria:
(a) such business opportunity involves an activity of
the type engaged in by EOTT immediately prior to the Closing
Date;
(b) such business opportunity was identified by or
presented to the General Partner for the benefit of the
Partnership, and a business opportunity shall be deemed not to
have been "identified by or presented to the General Partner
for the benefit of the Partnership" if it was identified by or
presented to Enron or its Affiliates (other than the General
Partner or any Affiliate of the General Partner controlled by
it) (i) prior to its identification by or presentation to the
General Partner, (ii) without their prior knowledge of the
fact that it had been previously identified by or presented to
the
-11-
<PAGE> 18
General Partner or (iii) with their prior knowledge of the
fact that it had been previously identified by or presented to
the General Partner but not as a result of such knowledge; and
(c) from and after the date on which such business
opportunity was "identified by or presented to the General
Partner for the benefit of the Partnership" as provided in
clause (b) immediately above, such business opportunity was
pursued by the General Partner for the benefit of the
Partnership in good faith and with reasonable diligence under
the circumstances (it being agreed that the criteria set forth
in this clause (c) shall be deemed not to be satisfied from
and after the time at which such business opportunity ceases
to be pursued by the General Partner in accordance with such
standard).
"SECURITIES ACT" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such
statute.
"SPECIAL APPROVAL" means approval by the Audit Committee.
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 11.2 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 15.2(b).
"TERMINATION CAPITAL TRANSACTIONS" means any sale, transfer or
other disposition of property of the Partnership occurring upon or
incident to the liquidation and winding up of the Partnership pursuant
to Article XIII.
"UNDERWRITER" means each Person named as an underwriter in
Schedule I to the Underwriting Agreement who purchases Common Units
pursuant thereto.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement
dated March 18, 1994, among the Underwriters, the MLP, the General
Partner, the Partnership and Enron providing for the purchase of Common
Units by such Underwriters.
"UNREALIZED GAIN" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of
(a) the fair market value of such property as of such date (as
determined under Section 4.6(d)) 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).
"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 (as
determined under Section 4.6(d)).
-12-
<PAGE> 19
"WITHDRAWAL OPINION OF COUNSEL" has the meaning assigned to
such term in Section 12.1(b).
ARTICLE III
PURPOSE
3.1 PURPOSE AND BUSINESS. The purpose and nature of the business to be
conducted by the Partnership shall be (a) to acquire, manage, and operate the
assets described in the Contribution Agreement as being transferred to the
Partnership and the Other Partnerships on the day before the Closing Date and
any similar assets or properties and to engage directly in, or to enter into or
form any corporation, limited liability company, partnership, joint venture or
other arrangement to engage indirectly in, any type of business or activity
engaged in by EOTT immediately prior to the Closing Date and, in connection
therewith, to exercise all of the rights and powers conferred upon the
Partnership pursuant to the agreements relating to such assets, (b) to engage
directly in, or enter into or form any corporation, limited liability company,
partnership, joint venture or other arrangement to engage indirectly in, any
business activity that is approved by the General Partner and which may lawfully
be conducted by a limited partnership organized pursuant to the Delaware Act
and, in connection therewith, to exercise all of the rights and powers conferred
upon the Partnership pursuant to the agreements relating to such business
activity, and (c) to do anything necessary or appropriate to the foregoing,
including, without limitation, the making of loans to the MLP or the Other
Partnerships (including, without limitation, those loans that may be required in
connection with its involvement in the activities referred to in clause (a) of
this sentence). The General Partner has no obligation or duty to the Partnership
or the Limited Partner to propose or approve, and in its sole discretion may
decline to propose or approve, the conduct by the Partnership of any business.
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.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 INITIAL CONTRIBUTIONS. In connection with the formation of the
Partnership under the Delaware Act, the General Partner has made an initial
Capital Contribution to the Partnership in the amount of $10 for an interest in
the Partnership and has been admitted as the general partner of the Partnership,
and the Organizational Limited Partner has made a Capital Contribution to the
Partnership in the amount of $990 for an interest in the Partnership and has
been admitted as a limited partner of the Partnership.
4.2 RETURN OF INITIAL CONTRIBUTIONS. As of the Closing Date, after
giving effect to the transactions contemplated by Section 4.3, the $10 Capital
Contribution by the General Partner and the $990 Capital Contribution by the
Organizational Limited Partner as initial Capital Contributions shall be
refunded. Ninety-nine percent of any interest or other profit that may have
resulted from the
-13-
<PAGE> 20
investment or other use of such initial Capital Contributions shall be allocated
and distributed to the Organizational Limited Partner, and the balance thereof
shall be allocated and distributed to the General Partner.
4.3 CONTRIBUTION BY THE GENERAL PARTNER AND THE INITIAL LIMITED
PARTNER. On the day before the Closing Date, the General Partner shall, as a
Capital Contribution, cause the Pre-Closing Transactions (as such term is
defined in the Contribution Agreement) to occur and in connection therewith, (a)
the General Partner's general partner interest in the Partnership consisting of
a Partnership Interest representing a 1% Percentage Interest shall be continued
and (b) the Initial Limited Partner shall be deemed to have made a Capital
Contribution equal to 99% of the Capital Contributions of all Partners through
such date and shall receive a limited partner interest in the Partnership
representing a 99% Percentage Interest in the Partnership.
4.4 ADDITIONAL CAPITAL CONTRIBUTIONS. With the consent of the General
Partner, the Limited Partner may, but shall not be obligated to, make additional
Capital Contributions to the Partnership. Contemporaneously with the making of
any such additional Capital Contributions by the Limited Partner, the General
Partner shall be obligated to make an additional Capital Contribution to the
Partnership such that the General Partner shall at all times have at least a 1%
interest in each item of Partnership income, gain, loss, deduction and credit.
Except as set forth in the immediately preceding sentence and Section 5.3(b),
the General Partner shall not be obligated to make any additional Capital
Contributions to the Partnership.
4.5 NO PREEMPTIVE RIGHTS. Except as provided in Section 4.4, no Person
shall have any preemptive, preferential or other similar right with respect to
(a) additional Capital Contributions; (b) issuance or sale of any class or
series of Partnership Interests, whether unissued, held in the treasury or
hereafter created; (c) issuance of any obligations, evidences of indebtedness or
other securities of the Partnership convertible into or exchangeable for, or
carrying or accompanied by any rights to receive, purchase or subscribe to, any
such Partnership Interests; (d) issuance of any right of subscription to or
right to receive, or any warrant or option for the purchase of, any such
Partnership Interests; or (e) issuance or sale of any other securities that may
be issued or sold by the Partnership.
4.6 CAPITAL ACCOUNTS. (a) The Partnership shall maintain for each
Partner owning a Partnership Interest a separate Capital Account with respect to
such Partnership Interest in accordance with the rules of Treasury Regulation
Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the
amount of all Capital Contributions made to the Partnership with respect to such
Partnership Interest pursuant to this Agreement 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 with
respect to such Partnership Interest pursuant to Sections 4.2 and 5.1, and
decreased by (x) the amount of cash or the Net Agreed Value of all actual and
deemed distributions of cash or property made with respect to such Partnership
Interest pursuant to this Agreement and (y) all items of Partnership deduction
and loss computed in accordance with Section 4.6(b) and allocated with respect
to such Partnership Interest 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
-14-
<PAGE> 21
tax purposes (including, without limitation, any method of depreciation, cost
recovery or amortization used for that purpose), provided, that:
(i) All fees and other expenses incurred by the Partnership to
promote the sale of (or to sell) a Partnership Interest that can
neither be deducted nor amortized under Section 709 of the Code, if
any, shall, for purposes of Capital Account maintenance, be treated as
an item of deduction at the time such fees and other expenses are
incurred and shall be allocated among the Partners pursuant to Section
5.1.
(ii) Except as otherwise provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any election
under Section 754 of the Code which may be made by the Partnership and,
as to those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of
the Code, without regard to the fact that such items are not includable
in gross income or are neither currently deductible nor capitalized for
federal income tax purposes.
(iii) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition were
equal in amount to the Partnership's Carrying Value with respect to
such property as of such date.
(iv) In accordance with the requirements of Section 704(b) of
the Code, any deductions for depreciation, cost recovery or
amortization attributable to any Contributed Property shall be
determined as if the adjusted basis of such property 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.
(v) If the Partnership's adjusted basis in a depreciable or
cost recovery property is reduced for federal income tax purposes
pursuant to Section 48(q)(1) or 48(q)(3) of the Code, the amount of
such reduction shall, solely for purposes hereof, be deemed to be an
additional depreciation or cost recovery deduction in the year such
property is placed in service and shall be allocated among the Partners
pursuant to Section 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 same manner to the Partners to whom such deemed
deduction was allocated.
(c) A transferee of a Partnership Interest shall succeed to a pro rata
portion of the Capital Account of the transferor relating to the Partnership
Interest so transferred; provided, however, that,
-15-
<PAGE> 22
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 13.3 and 13.4 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 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 Partnership
Interests for cash or Contributed Property, the Capital Account of all
Partners and the Carrying Value of each Partnership property
immediately prior to such issuance shall be adjusted upward or downward
to reflect any Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as if such Unrealized Gain or Unrealized Loss had
been recognized on an actual sale of each such property immediately
prior to such issuance and had been allocated to the Partners at such
time pursuant to Section 5.1. In determining such Unrealized Gain or
Unrealized Loss, the aggregate cash amount and fair market value of all
Partnership assets (including, without limitation, cash or cash
equivalents) immediately prior to the issuance of additional
Partnership Interests shall be determined by the 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 fair market value of the Partnership Interests of all
Partners at such time. 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.
(ii) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed
distribution to a Partner of any Partnership property (other than a
distribution of cash that is not in redemption or retirement of a
Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of such 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. Any Unrealized Gain or Unrealized Loss attributable to such
property shall be allocated in the same manner as Net Termination Gain
or Net Termination Loss pursuant to Section 5.1(c); provided, however,
that, in making any such allocation, Net Termination Gain or Net
Termination Loss actually realized shall be allocated first. In
determining such Unrealized Gain or Unrealized Loss the aggregate cash
amount and fair market value of all Partnership assets (including,
without limitation, cash or cash equivalents) immediately prior to a
distribution shall (A) in the case of a deemed distribution occurring
as a result of a termination of the Partnership pursuant to Section 708
of the Code, be determined and allocated in the same manner as that
provided in Section 4.6(d)(i) or (B) in the case of a
-16-
<PAGE> 23
liquidating distribution pursuant to Section 14.3 or 14.4, be
determined and allocated by the Liquidator using such reasonable method
of valuation as it may adopt.
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 in Section 4.2 and in Articles V, VII,
XII and XIII.
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.
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 hereinbelow.
(a) Net Income. After giving effect to the allocations in
Section 4.2 and the special allocations set forth in Section 5.1(d),
Net Income for each taxable period and all items of income, gain, loss
and deduction taken into account in computing Net Income for such
taxable period shall be allocated as follows:
(i) First, 100% to the General Partner until the
aggregate Net Income allocated to the General Partner pursuant
to this Section 5.1(a)(i) for the current taxable year and all
previous taxable years is equal to the aggregate Net Losses
allocated to the General Partner pursuant to Section
5.1(b)(ii) for all previous taxable years; and
(ii) Second, the balance, if any, 100% to the General
Partner and the Limited Partner in accordance with their
respective Percentage Interests.
(b) Net Losses. After giving effect to the special allocations
set forth in Section 5.1(d), Net Losses for each taxable period and all
items of income, gain, loss and deduction taken into account in
computing Net Losses for such taxable period shall be allocated as
follows:
-17-
<PAGE> 24
(i) First, 100% to the General Partner and the
Limited Partner in accordance with their respective Percentage
Interests; provided, that Net Losses shall not be allocated
pursuant to this Section 5.1(b)(i) to the extent that such
allocation would cause any Partner to have a deficit balance
in its Adjusted Capital Account at the end of such taxable
year (or increase any existing deficit balance in its Adjusted
Capital Account); and
(ii) Second, the balance, if any, 100% to the General
Partner.
(c) Net Termination Gains and Losses. After giving effect to
the allocations in Section 4.2 and the special allocations set forth in
Section 5.1(d), all items of income, gain, loss and deduction taken
into account in computing Net Termination Gain or Net Termination Loss
for such taxable period shall be allocated in the same manner as such
Net Termination Gain or Net Termination Loss is allocated hereunder.
All allocations under this Section 5.1(c) shall be made after Capital
Account balances have been adjusted by all other allocations provided
under this Section 5.1 and after all distributions of Available Cash
provided under Section 5.3 have been made with respect to the taxable
period ending on the date of the Partnership's liquidation pursuant to
Section 13.3.
(i) If a Net Termination Gain is recognized (or
deemed recognized pursuant to Section 4.6(d)) from Termination
Capital Transactions, such Net Termination Gain shall be
allocated between the General Partner and the Limited Partner
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, and 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; and
(B) Second, 100% to the General Partner and
the Limited Partner in accordance with their
respective Percentage Interests.
(ii) If a Net Termination Loss is recognized (or
deemed recognized pursuant to Section 4.6(d)) from Termination
Capital Transactions, such Net Termination Loss shall be
allocated to the Partners in the following manner:
(A) First, 100% to the General Partner and
the Limited Partner in proportion to, and to the
extent of, the positive balances in their respective
Adjusted Capital Accounts; and
(B) Second, the balance, if any, 100% to the
General Partner.
-18-
<PAGE> 25
(d) Special 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 any other provision of this Section 5.1, if
there is a net decrease in Partnership Minimum Gain during any
Partnership taxable period, each Partner shall be allocated
items of Partnership income and gain for such period (and, if
necessary, subsequent periods) in the manner and amounts
provided in Treasury Regulation Sections 1.704-2(f)(6),
1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor
provision. For purposes of this Section 5.1(d), each Partner's
Adjusted Capital Account balance shall be determined, and the
allocation of income or gain required hereunder shall be
effected, prior to the application of any other allocations
pursuant to this Section 5.1(d) with respect to such taxable
period (other than an allocation pursuant to Sections
5.1(d)(v) and (vi)). This Section 5.1(d)(i) is intended to
comply with the Partnership Minimum Gain chargeback
requirement in Treasury Regulation Section 1.704-2(f) and
shall be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum
Gain. Notwithstanding the other provisions of this Section
5.1 (other than Section 5.1(d)(i)), except as provided in
Treasury Regulation Section 1.704-2(i)(4), if there is a net
decrease in Partner Nonrecourse Debt Minimum Gain during any
Partnership taxable period, any Partner with a share of
Partner Nonrecourse Debt Minimum Gain at the beginning of such
taxable period shall be allocated items of Partnership income
and gain for such period (and, if necessary, subsequent
periods) in the manner and amounts provided in Treasury
Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or
any successor provisions. For purposes of this Section 5.1(d),
each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any
other allocations pursuant to this Section 5.1(d), other than
Section 5.1(d)(i) and other than an allocation pursuant to
Sections 5.1(d)(v) and (vi), with respect to such taxable
period. This Section 5.1(d)(ii) is intended to comply with the
chargeback of items of income and gain requirement in Treasury
Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(iii) Qualified Income Offset. In the event any
Partner unexpectedly receives any adjustments, allocations or
distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6) items of Partnership income and gain
shall be 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(d)(i)
or (ii).
(iv) Gross Income Allocations. In the event any
Partner has a deficit balance in its Adjusted Capital Account
at the end of any Partnership taxable period
-19-
<PAGE> 26
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(d)(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(d)(iv) were not in this Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions
for any taxable period shall be allocated to the Partners in
accordance with their respective Percentage Interests. If the
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 Partner, to revise the prescribed ratio to the
numerically closest ratio that does satisfy such requirements.
(vi) Partner Nonrecourse Deductions. Partner
Nonrecourse Deductions for any taxable period shall be
allocated 100% to the Partner that bears the Economic Risk of
Loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in
accordance with Treasury Regulation Section 1.704-2(i). If
more than one Partner bears the Economic Risk of Loss with
respect to a Partner Nonrecourse Debt, such Partner
Nonrecourse Deductions attributable thereto shall be allocated
between or among such Partners in accordance with the ratios
in which they share such Economic Risk of Loss.
(vii) Nonrecourse Liabilities. For purposes of
Treasury Regulation Section 1.752-3(a)(3), the Partners agree
that Nonrecourse Liabilities of the Partnership in excess of
the sum of (A) the amount of Partnership Minimum Gain and (B)
the total amount of Nonrecourse Built-in Gain shall be
allocated among the Partners in accordance with their
respective Percentage Interests.
(viii) Code Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset
pursuant to Section 734(b) or 743(b) of the Code is required,
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the
amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such
basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the
manner in which their Capital Accounts are required to be
adjusted pursuant to such Section of the Treasury regulations.
(ix) Curative Allocation.
(A) Notwithstanding any other provision of
this Section 5.1, other than the Required
Allocations, the Required Allocations shall be taken
into account in making the Agreed Allocations so
that, to the extent possible, the net
-20-
<PAGE> 27
amount of items of income, gain, loss and deduction
allocated to each Partner pursuant to the Required
Allocations and the Agreed Allocations, together,
shall be equal to the net amount of such items that
would have been allocated to each such Partner under
the Agreed Allocations had the Required Allocations
and the related Curative Allocation not otherwise
been provided in this Section 5.1. Notwithstanding
the preceding sentence, Required Allocations relating
to (1) Nonrecourse Deductions shall not be taken into
account except to the extent that there has been a
decrease in Partnership Minimum Gain and (2) Partner
Nonrecourse Deductions shall not be taken into
account except to the extent that there has been a
decrease in Partner Nonrecourse Debt Minimum Gain.
Allocations pursuant to this Section 5.1(d)(ix)(A)
shall only be made with respect to Required
Allocations to the extent the General Partner
reasonably determines that such allocations will
otherwise be inconsistent with the economic agreement
among the Partners. Further, allocations pursuant to
this Section 5.1(d)(ix)(A) shall be deferred with
respect to allocations pursuant to clauses (1) and
(2) hereof to the extent the General Partner
reasonably determines that such allocations are
likely to be offset by subsequent Required
Allocations.
(B) The General Partner shall have
reasonable discretion, with respect to each taxable
period, to (1) apply the provisions of Section
5.1(d)(ix)(A) in whatever order is most likely to
minimize the economic distortions that might
otherwise result from the Required Allocations, and
(2) divide all allocations pursuant to Section
5.1(d)(ix)(A) among the Partners in a manner that is
likely to minimize such economic distortions.
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 shall be allocated among the Partners in the same manner as its
correlative item of "book" income, gain, loss or deduction is allocated pursuant
to Section 5.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the
manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property and its
adjusted basis at the time of contribution; and (B) except as otherwise
provided in Section 5.2(b)(iv), 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
-21-
<PAGE> 28
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)(iv), 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) Except as otherwise provided in Section 5.2(b)(iv), all
other items of income, gain, loss and deduction shall be allocated
among the Partners in the same manner as their correlative item of
"book" gain or loss is allocated pursuant to Section 5.1. Such
allocations are intended to comply with, and shall be effected by the
General Partner in accordance with the principles of Treasury
Regulation Section 1.704-3(c) and Temporary Treasury Regulation Section
1.704-3T(d).
(iv) Any items of income, gain, loss or deduction otherwise
allocable under Section 5.2(b)(i)(B), 5.2(b)(ii)(B) or 5.2(b)(iii)
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 and for the
preservation of uniformity of any class or classes of Partnership Interests),
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
any class or classes of Partnership Interests). 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 Partnership Interests or 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 or amortize the portion of an adjustment under Section 743(b) of the
Code attributable to unrealized appreciation in any Adjusted Property (to the
extent of the unamortized Book-Tax Disparity) using a predetermined rate derived
from the depreciation or amortization method and useful life applied to the
Partnership's common basis of such property, despite the inconsistency of such
approach with Proposed Treasury Regulation Section 1.168-2(n), Treasury
Regulation Section 1.167(c)-1(a)(6) or the legislative history of Section 197 of
the Code. If the General Partner determines that such reporting position cannot
reasonably be taken, the General Partner may adopt depreciation and amortization
conventions under which all purchasers acquiring Partnership Interests in the
same month would receive depreciation and amortization deductions, based upon
the same applicable rate as if they had purchased a direct interest in the
Partnership's property. If the General Partner chooses not to utilize such
aggregate method, the General Partner may use any other reasonable depreciation
and amortization conventions to preserve
-22-
<PAGE> 29
the uniformity of the intrinsic tax characteristics of any class or classes of
Partnership Interests that would not have a material adverse effect on the
Limited Partner or the holders of any class or classes of Partnership Interests.
(e) Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to this Section 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) The General Partner may adopt such methods of allocation of income,
gain, loss or deduction between a transferor and a transferee of a Partnership
Interest as it determines necessary, to the extent permitted or required by
Section 706 of the Code and the regulations or rulings promulgated thereunder.
5.3 REQUIREMENT OF DISTRIBUTIONS. (a) Within 45 days following the end
of each calendar quarter (or following the period from the Closing Date to June
30, 1994) 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 in accordance with their respective Percentage
Interests. 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 or require any
distribution of cash if and to the extent such distribution would be prohibited
by applicable law or by any loan agreement, security agreement, mortgage, debt
instrument or other agreement or obligation to which the Partnership is a party
or by which it is bound or its assets are subject.
(b) Notwithstanding the definition of Available Cash contained herein,
disbursements made or reserves established after the end of any quarter shall be
deemed to have been made or established, for purposes of determining Available
Cash, within such quarter if the General Partner so determines. Notwithstanding
the foregoing, in the event of the dissolution and liquidation of the
Partnership, all proceeds of such liquidation shall be applied and distributed
in accordance with, and subject to the terms and conditions of, Sections 13.3
and 13.4
-23-
<PAGE> 30
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
6.1 MANAGEMENT. (a) The General Partner shall conduct, direct and
manage all activities of the Partnership. Except as otherwise expressly provided
in this Agreement, all management powers over the business and affairs of the
Partnership shall be exclusively vested in the General Partner, and the Limited
Partner shall have no 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 appropriate 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, (i) the making of any expenditures,
the lending or borrowing of money, the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance of evidences
of indebtedness and the incurring of any other obligations; (ii) the making of
tax, regulatory and other filings, or rendering of periodic or other reports to
governmental or other agencies having jurisdiction over the business or assets
of the Partnership; (iii) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of the
Partnership or the merger or other combination of the Partnership with or into
another Person (the matters described in this clause (3) being subject, however,
to any prior approval that may be required by Section 6.3); (iv) the use of the
assets of the Partnership (including, without limitation, cash on hand) for any
purpose consistent with the terms of this Agreement, including, without
limitation, the financing of the conduct of the operations of the Partnership,
the lending of funds to other Persons (including, without limitation, the Other
Partnerships), the repayment of obligations of the Partnership; (v) the
negotiation, execution and performance of any contracts, conveyances or other
instruments (including, without limitation, instruments that limit the liability
of the Partnership under contractual arrangements to all or particular assets of
the Partnership, with the other party to the contract to have no recourse
against the General Partner or its assets other than its interest in the
Partnership, even if same results in the terms of the transaction being less
favorable to the Partnership than would otherwise be the case); (vi) the
distribution of Partnership cash; (vii) the selection and dismissal of employees
and agents (including, without limitation, employees having titles such as
"president," "vice president," "secretary" and "treasurer") and agents, outside
attorneys, accountants, consultants and contractors and the determination of
their compensation and other terms of employment or hiring; (viii) the
maintenance of such insurance for the benefit of the Partnership and the
Partners (including, without limitation, the assets of the Partnership) as it
deems necessary or appropriate; (ix) the formation of, or acquisition of an
interest in, and the contribution of property to, any further limited or general
partnerships, joint ventures, corporations, limited liability companies or other
relationships; (x) 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; and (xi) the indemnification of any Person against liabilities
and contingencies to the extent permitted by law.
(b) Notwithstanding any other provision of this Agreement, the MLP
Agreement, the Other Partnership Agreements, the Delaware Act or any applicable
law, rule or regulation, each of the Partners hereby (i) approves, ratifies and
confirms the execution, delivery and performance by the
-24-
<PAGE> 31
parties thereto of the MLP Agreement, the Underwriting Agreement, the Other
Partnership Agreements, the Contribution Agreement, the Ancillary Agreement, the
Corporate Services Agreement, the agreements filed as Exhibits 10.01-10.11 to
the Registration Statement, and the other agreements described in or filed as a
part of the Registration Statement, and the engaging by any Affiliate of the
General Partner (other than Affiliates controlled by the General Partner) in
business and activities (other than Restricted Opportunities) that are in direct
competition with the business and activities of the MLP, the Partnership and the
Other Partnerships; (ii) agrees that the General Partner (on its own or through
any officer of the Partnership) is authorized to execute, deliver and perform
the agreements referred to in clause (i) of this sentence and the other
agreements, acts, transactions and matters described in the Registration
Statement on behalf of the Partnership without any further act, approval or vote
of the Partners; and (iii) agrees that the execution, delivery or performance by
the General Partner, the MLP, the Partnership, the Other Partnerships or any
Affiliate of any of them of this Agreement or any agreement authorized or
permitted under this Agreement, or the engaging by any Affiliate of the General
Partner (other than Affiliates controlled by the General Partner) in any
business and activities (other than Restricted Opportunities) that are in direct
competition with the business and activities of the MLP, the Partnership and the
Other Partnerships, shall not 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 any other
agreements) or of any duty stated or implied by law or equity.
6.2 CERTIFICATE OF LIMITED PARTNERSHIP. The General Partner has caused
the Certificate of Limited Partnership to be filed with the Secretary of State
of the State of Delaware as required by the Delaware Act and shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be determined by the General Partner in its sole discretion to be reasonable
and necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the Limited
Partner has 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 Partner has 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 7.4(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 the Limited Partner.
6.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY. (a) The General
Partner may not, without written approval of the specific act by the Limited
Partner or by other written instrument executed and delivered by the Limited
Partner subsequent to the date of this Agreement, take any action in
contravention of this Agreement, including, 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 (v) transfer its interest as general
partner of the Partnership, except as otherwise provided in this Agreement.
-25-
<PAGE> 32
(b) Except as provided in Articles XIII and XV, 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
without the approval of the Limited Partner; 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 and shall not apply to any forced sale of any or all of
the Partnership's assets pursuant to the foreclosure of, or other realization
upon, any such encumbrance.
(c) Unless approved by the Limited Partner, 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 to
be treated as an association taxable as a corporation or otherwise to be taxed
as an entity for federal income tax purposes; provided that this Section 6.3(c)
shall not be construed to apply to amendments to this Agreement (which are
governed by Article XIV) or mergers or consolidations of the Partnership with
any Person (which are governed by Article XV).
(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, the General Partner shall not
be compensated for its services as general partner of the 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, salary, bonus, incentive
compensation and other amounts paid to any Person to perform services for the
Partnership or for the General Partner in the discharge of its duties to the
Partnership) and (ii) all other necessary or appropriate expenses allocable to
the Partnership or otherwise reasonably incurred by the General Partner in
connection with operating the Partnership's business (including, without
limitation, expenses allocated to the General Partner by its Affiliates). 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. Reimbursements pursuant to this Section 6.4 shall be in
addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 6.7.
6.5 OUTSIDE ACTIVITIES. (a) After the Closing Date, the General
Partner, for so long as it is the general partner of the Partnership, (i) agrees
that its sole business will be to act as the general partner of the Partnership,
the MLP and the Other Partnerships and to undertake activities that are
ancillary or related thereto (including being a limited partner in the MLP),
(ii) shall not enter into or conduct any business or incur any debts or
liabilities except in connection with or incidental to (A) its performance of
the activities required or authorized by this Agreement, the Other Partnership
Agreements or the MLP Agreement or described in or contemplated by the
Registration Statement and (B) the acquisition, ownership or disposition of
partnership interests in the Partnership, the Other Partnerships and the MLP,
except that, notwithstanding the foregoing, employees of the General
-26-
<PAGE> 33
Partner may perform services for Enron and its Affiliates and (iii) shall cause
its Affiliates not to engage in any Restricted Opportunities.
(b) Except as described or provided for in the MLP Agreement, the Other
Partnership Agreements, the Registration Statement or Section 6.5(a), no
Indemnitee shall be expressly or implicitly restricted or proscribed pursuant to
the MLP Agreement, this Agreement, the Other Partnership Agreements or the
partnership relationship established hereby or thereby from engaging in other
activities for profit, whether in the businesses engaged in by the Partnership,
the Other Partnerships or the MLP or anticipated to be engaged in by the
Partnership, the Other Partnerships, the MLP or otherwise, including, without
limitation, in the case of any Affiliates of the General Partner those
businesses and activities (other than Restricted Opportunities) in direct
competition with the business and activities of the Partnership, the MLP or the
Other Partnerships or otherwise described in or contemplated by the Registration
Statement. Without limitation of and subject to the foregoing each Indemnitee
(other than the General Partner) shall have the right to engage in businesses of
every type and description and to engage in and possess an interest in other
business ventures of any and every type or description, independently or with
others, including, without limitation, in the case of any Affiliates of the
General Partner business interests and activities (other than Restricted
Opportunities) in direct competition with the business and activities of the
Partnership, the MLP or the Other Partnerships, and none of the same shall
constitute a breach of this Agreement or any duty to the Partnership, the Other
Partnerships, the MLP or any Partners. Neither the Partnership, the Other
Partnerships, the MLP, any Limited Partner nor any other Person shall have any
rights by virtue of this Agreement, the Other Partnership Agreements, the MLP
Agreement or the partnership relationship established hereby or thereby in any
business ventures of any Indemnitee (subject, in the case of the General
Partner, to compliance with Section 6.5(c)) and such Indemnitees shall have no
obligation to offer any interest in any such business ventures to the
Partnership, the Other Partnerships, the MLP, any Limited Partner or any other
Person.
(c) Subject to the terms of Sections 6.5(a) and (b) but otherwise
notwithstanding anything to the contrary in this Agreement, (i) the competitive
activities of any Indemnitees (other than the General Partner) are hereby
approved by the Partnership and all Partners and (ii) it shall be deemed not to
be a breach of the General Partner's fiduciary duty or any other obligation of
any type whatsoever of the General Partner for the General Partner to permit an
Affiliate of the General Partner to engage, or for any such Affiliate to engage,
in a business opportunity in preference to or to the exclusion of the
Partnership (other than the Restricted Opportunities).
(d) The term "Affiliates" when used in this Section 6.5 with respect to
the General Partner shall not include the Partnership, the MLP, the Other
Partnerships or any other Persons controlled by the General Partner.
6.6 LOANS TO AND FROM THE GENERAL PARTNER; CONTRACTS WITH AFFILIATES.
(a) (i) The General Partner, the Limited Partner, the Other Partnerships or any
of their Affiliates may lend to the Partnership, and the Partnership may borrow,
funds needed or desired by the Partnership for such periods of time as the
General Partner may determine and (ii) the General Partner, the Limited Partner,
the Other Partnerships or any Affiliate thereof may borrow from the Partnership,
and the Partnership may lend to such Persons, excess funds of the Partnership
for such periods of time and in such amounts as the General Partner may
determine; provided, however, that in either such case the lending party
-27-
<PAGE> 34
may not charge the borrowing party interest at a rate greater than the rate that
would be charged the borrowing party (without reference to the lending party's
financial abilities or guarantees) by unrelated lenders on comparable loans. The
borrowing party shall reimburse the lending party for any costs (other than any
additional interest costs) incurred by the lending party in connection with the
borrowing of such funds. For purposes of this Section 6.6(a) and Section 6.6(b),
the term "Partnership" shall include any Affiliate of the Partnership that is
controlled by the Partnership.
(b) The General Partner may itself, or may enter into an agreement with
any of its Affiliates to, render services to the Partnership or to the General
Partner in the discharge of its duties as general partner of 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(b) shall be deemed
satisfied as to (i) any transaction approved by Special Approval, (ii) any
transaction the terms of which are no less favorable to the Partnership than
those generally being provided to or available from unrelated third parties or
(iii) any transaction that, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the Partnership), is equitable
to the Partnership. The provisions of Section 6.4 shall apply to the rendering
of services described in this Section 6.6(b).
(c) The Partnership may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(d) 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(d) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to Sections 4.2 and 4.3, the Contribution
Agreement and any other transactions described in or contemplated by the
Registration Statement, (ii) any transaction approved by Special Approval, (iii)
any transaction the terms of which are no less favorable to the Partnership than
those generally being provided to or available from unrelated third parties or
(iv) any transaction that, taking into account the totality of the relationships
between the parties involved (including other transactions that may be
particularly favorable or advantageous to the Partnership), is equitable to the
Partnership.
(e) The General Partner and its Affiliates will have no obligation to
permit the Partnership, the Other Partnerships or the MLP to use any facilities
or assets of the General Partner and its Affiliates, except as may be provided
in contracts entered into from time to time specifically dealing with such use,
nor shall there be any obligation on the part of the General Partner or its
Affiliates to enter into such contracts.
(f) Without limitation of Sections 6.6(a) through 6.6(e), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement are hereby
approved by all Partners.
-28-
<PAGE> 35
6.7 INDEMNIFICATION. (a) To the fullest extent permitted by law but
subject to the limitations expressly provided in this Agreement, the General
Partner, any Departing Partner, any Person who is or was an officer or director
of the Partnership, the General Partner or any Departing Partner and all other
Indemnitees shall be indemnified and held harmless by the Partnership from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including, without limitation, legal fees and expenses), judgments,
fines, penalties, interest, settlements and other amounts arising from any and
all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise, by reason of its status as
(i) the General Partner, a Departing Partner or any of their Affiliates, (ii) an
officer, director, employee, partner, agent or trustee of the Partnership, 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 and 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 with respect to its obligations incurred pursuant to the Underwriting
Agreement or the Contribution Agreement (other than obligations incurred by the
General Partner on behalf of the Partnership, the MLP or the Other
Partnerships). 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, it being agreed
that the General Partner shall not be personally liable for such indemnification
and shall have no obligation to contribute or loan any monies or property to the
Partnership to enable it to effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including,
without limitation, legal fees and expenses) incurred by an Indemnitee who is
indemnified pursuant to Section 6.7(a) in defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the Partnership
prior to the final disposition of such claim, demand, action, suit or proceeding
upon receipt by the Partnership of 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 Indemnitee's capacity as (i) the General
Partner, a Departing Partner or an Affiliate thereof, (ii) an officer, director,
employee, partner, agent or trustee of the Partnership, 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 as to
actions in any other capacity (including, without limitation, any capacity under
the Underwriting Agreement), and shall continue as to an Indemnitee who has
ceased to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the General
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, regardless of
whether the
-29-
<PAGE> 36
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
(e) For purposes of this Section 6.7, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by it of its duties to the Partnership also
imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of Section 6.7(a); and action taken
or omitted by it with respect to an employee benefit plan in the performance of
its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partner to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 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
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 Partner, or any other Persons who have
acquired interests in the Partnership, 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
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Partnership and the Limited Partner of the
General Partner, its directors, officers and employees under this Section 6.8
-30-
<PAGE> 37
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, the MLP Agreement or the Other Partnership
Agreements, 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 MLP, the Other Partnerships or the Limited Partner, on the
other hand, any resolution or course of action in respect of such conflict of
interest shall be permitted and deemed approved by the Limited Partner, and
shall not constitute a breach of this Agreement, of the MLP Agreement, of the
Other Partnership Agreements or of any agreement contemplated herein or therein,
or of any duty stated or implied by law or equity, if the resolution or course
of action is or, by operation of this Agreement is deemed to be, fair and
reasonable to the Partnership. The General Partner shall be authorized but not
required in connection with its resolution of such conflict of interest to seek
Special Approval of a resolution of such conflict or course of action. Any
conflict of interest and any resolution of such conflict of interest shall be
conclusively deemed fair and reasonable to the Partnership if such conflict of
interest or resolution is (i) approved by Special Approval, (ii) on terms no
less favorable to the Partnership than those generally being provided to or
available from unrelated third parties or (iii) fair to the Partnership, taking
into account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or advantageous
to the Partnership). The General Partner may also adopt a resolution or course
of action that has not received Special Approval. The General Partner (including
the Audit Committee in connection with Special Approval) shall be authorized in
connection with its determination of what is "fair and reasonable" to the
Partnership and in connection with its resolution of any conflict of interest to
consider (A) the relative interests of any party to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such interest;
(B) any customary or accepted industry practices and any customary or historical
dealings with a particular Person; (C) any applicable generally accepted
accounting or engineering practices or principles; and (D) such additional
factors as the General Partner (including such Audit Committee) determines in
its sole discretion to be relevant, reasonable or appropriate under the
circumstances. Nothing contained in this Agreement, however, is intended to nor
shall it be construed to require the General Partner (including such Audit
Committee) 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 MLP, the Other Partnerships, the Limited Partner or any
limited partner in the MLP, (ii) it may make such decision in its sole
discretion (regardless of whether there is a reference to "sole discretion" or
"discretion") unless another express standard is provided for, or (iii) in "good
faith" or under another express standard, the General Partner or
-31-
<PAGE> 38
such Affiliate shall act under such express standard and shall not be subject to
any other or different standards imposed by this Agreement, the MLP Agreement,
the Other Partnership Agreements 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 or such Affiliate consistent with the
standards of "reasonable discretion" set forth in the definition of Available
Cash shall not constitute a breach of any duty of the General Partner to the
Partnership or the Limited Partner. The General Partner shall have no duty,
express or implied, to sell or otherwise dispose of any asset of the Partnership
or of the Other Partnerships, other than in the ordinary course of business. No
borrowing by the 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 Partner by reason of the fact that the purpose or
effect of such borrowing is directly or indirectly to (A) enable the General
Partner of the MLP to receive or increase the amount of "Incentive
Distributions" under the MLP Agreement, (B) reduce or eliminate the obligation
of Enron or any of its Affiliates to purchase APIs under the Ancillary
Agreement, (C) permit redemption of APIs by the MLP, (D) shorten the
"Subordination Period" under the MLP Agreement or (E) reduce the "Cumulative
Common Unit Arrearage" under the MLP Agreement in order to hasten the conversion
of the "Subordinated Units" in the MLP into Common Units.
(c) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
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 to be taken in reliance
upon the opinion (including, without limitation, an Opinion of Counsel) of such
Persons as to matters that such General Partner reasonably believes to be within
such Person's professional or expert competence shall be conclusively presumed
to have been done or omitted in good faith and in accordance with such opinion.
(c) 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
-32-
<PAGE> 39
is not reasonably believed by the General Partner to be in, or not inconsistent
with, 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, 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, one or more of its
Affiliates 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 or one or more of
its Affiliates or one or more nominees shall be held by the General Partner or
such Affiliate or nominee for the use and benefit of the Partnership in
accordance with the provisions of this Agreement; provided, however, that 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; provided that, prior to the withdrawal or
removal of the General Partner or as soon thereafter as practicable, the General
Partner shall use reasonable efforts to effect the transfer of record title to
the Partnership and, prior to any such transfer, will provide for the use of
such assets in a manner satisfactory to the Partnership. All Partnership assets
shall be recorded as the property of the Partnership in its books and records,
irrespective of the name in which record title to such Partnership assets is
held.
6.12 RELIANCE BY THIRD PARTIES. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the 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. The 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.
-33-
<PAGE> 40
ARTICLE VII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER
7.1 LIMITATION OF LIABILITY. The Limited Partner shall have no
liability under this Agreement except as expressly provided in this Agreement or
the Delaware Act.
7.2 MANAGEMENT OF BUSINESS. The Limited Partner, in its capacity as
such, shall not participate in the operation, management or control (within the
meaning of the Delaware Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
Partnership, 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 RETURN OF CAPITAL. The Limited Partner shall not be entitled to the
withdrawal or return of its Capital Contribution, except to the extent, if any,
that distributions made pursuant to this Agreement or upon termination of the
Partnership may be considered as such by law and then only to the extent
provided for in this Agreement.
7.4 RIGHTS OF THE LIMITED PARTNER RELATING TO THE PARTNERSHIP. (a) In
addition to other rights provided by this Agreement or by applicable law, and
except as limited by Section 7.4(b), the Limited Partner shall have the right,
for a purpose reasonably related to the Limited Partner's interest as a limited
partner in the Partnership, upon reasonable demand and at the Limited Partner's
own expense:
(i) to obtain true and full information regarding the status
of the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of
the Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to it, upon notification to the
General Partner, a current list of the name and last known business,
residence or mailing address of each Partner;
(iv) to have furnished to it, upon notification to the General
Partner, a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with a copy of the
executed copies of all powers of attorney pursuant to which this
Agreement, the Certificate of Limited Partnership and all amendments
thereto have been executed;
(v) to obtain true and full information regarding the amount
of cash and 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.
-34-
<PAGE> 41
(b) Notwithstanding any other provision of this Agreement, the General
Partner may keep confidential from the Limited Partner 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 that the Partnership is required by law or by agreements with third parties
to keep confidential (other than agreements with Affiliates of the General
Partner the primary purpose of which is to circumvent the obligations set forth
in this Section 7.4).
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 RECORDS AND ACCOUNTING. The General Partner shall keep or cause to
be kept at the principal office of the Partnership appropriate books and records
with respect to the Partnership's business, including, without limitation, all
books and records necessary to provide to the Limited Partner any information,
lists and copies of documents required to be provided pursuant to Section
7.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including, without limitation, books of
account and records of Partnership proceedings, may be kept on, or be in the
form of, computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device, provided, that the books
and records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial reporting purposes, on an accrual basis in accordance
with generally accepted accounting principles.
8.2 FISCAL YEAR. The fiscal year of the Partnership shall be the
calendar year.
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 the Partners 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 Partner.
-35-
<PAGE> 42
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. The Limited Partner agrees
to cooperate with the General Partner and to do or refrain from doing any or all
things reasonably required by the General Partner to conduct such proceedings.
9.4 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
Other Partnerships 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
(including, without limitation, by reason of Section 1446 of the Code), the
amount withheld shall be treated as a distribution of cash pursuant to Section
5.3 in the amount of such withholding from such Partner.
9.6 OPINIONS OF COUNSEL. Notwithstanding any other provision of this
Agreement, if the Partnership is treated as an association taxable as a
corporation at any time or is otherwise taxable 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 or any of the Other Partnerships to become so treated
as an association taxable as a corporation or otherwise taxable as an entity for
federal income tax purposes, such requirement for an Opinion of Counsel shall be
deemed automatically waived.
ARTICLE X
TRANSFER OF INTERESTS
10.1 TRANSFER. (a) The term "transfer," when used in this Article X
with respect to a Partnership Interest, shall be deemed to refer to a
transaction by which a Partner disposes of its Partnership Interest to another
Person and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article X.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article X shall be null and void.
(c) Nothing contained in this Article X shall be construed to prevent a
disposition by the parent entity of the General Partner of all of the issued and
outstanding capital stock of the General Partner.
-36-
<PAGE> 43
10.2 TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST. If the
general partner of the MLP transfers its partnership interest as a general
partner therein to any Person in accordance with the provisions of the MLP
Agreement, the General Partner shall contemporaneously therewith transfer its
Partnership Interest as the general partner of the Partnership to such Person,
and the Limited Partner hereby expressly consents to such transfer. Except as
set forth in the immediately preceding sentence, the General Partner may not
transfer all or any part of its Partnership Interest as a General Partner in the
Partnership.
10.3 TRANSFER OF THE LIMITED PARTNER'S PARTNERSHIP INTEREST. If the
Limited Partner merges, consolidates or otherwise combines into any other Person
or transfers all or substantially all of its assets to another Person, such
Person may become a Substituted Limited Partner pursuant to Article XI. Except
as set forth in the immediately preceding sentence, the Limited Partner may not
transfer all or any part of its Partnership Interest or withdraw from the
Partnership.
ARTICLE XI
ADMISSION OF PARTNERS
11.1 ADMISSION OF INITIAL LIMITED PARTNER. Upon the making by the
Initial Limited Partner of the deemed Capital Contribution described in Section
4.3 and the issuance by the Partnership to the Initial Limited Partner of the
Partnership Interest described in Section 4.3 as being issued to such party, the
General Partner shall be deemed to have admitted Operating OLP to the
Partnership as the Initial Limited Partner in respect of such Partnership
Interest.
11.2 ADMISSION OF SUBSTITUTED LIMITED PARTNERS. Any person that is the
successor in interest to a Limited Partner as described in Section 10.3 shall be
admitted to the Partnership as a limited partner upon (a) furnishing to the
General Partner (i) acceptance in form satisfactory to the General Partner of
all of the terms and conditions of this Agreement and (ii) such other documents
or instruments as may be required to effect its admission as a limited partner
in the Partnership and (b) obtaining the consent of the General Partner, which
consent may be withheld or granted in the sole discretion of the General
Partner. Such Person shall be admitted to the Partnership as a limited partner
immediately prior to the transfer of the Partnership Interest, and the business
of the Partnership shall continue without dissolution.
11.3 ADMISSION OF SUCCESSOR GENERAL PARTNER. A successor General
Partner approved pursuant to Section 12.1 or 12.2 or the transferee of or
successor to all of the General Partner's Partnership Interest as a General
Partner in the Partnership pursuant to Section 10.2 who is proposed to be
admitted as a successor General Partner shall, subject to compliance with the
terms of Section 12.3, if applicable, be admitted to the Partnership as the
General Partner, effective immediately prior to the withdrawal or removal of the
General Partner pursuant to Section 12.1 or 12.2 or the transfer of the General
Partner's Partnership Interest as a General Partner in the Partnership pursuant
to Section 10.2. Any such successor shall, subject to the terms hereof, carry on
the business of the Partnership without dissolution. In each case, the admission
of such successor General Partner to the Partnership shall, subject to the terms
hereof, 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
such admission.
-37-
<PAGE> 44
11.4 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 to reflect such admission 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.
11.5 ADMISSION OF ADDITIONAL LIMITED PARTNERS. (a) A Person (other than
the General Partner or a Substituted Limited Partner) who makes a Capital
Contribution to the Partnership in accordance with this Agreement shall be
admitted to the Partnership as an Additional Limited Partner only upon
furnishing to the General Partner (i) evidence of acceptance in form
satisfactory to the General Partner of all of the terms and conditions of this
Agreement, including, without limitation, the power of attorney granted in
Section 1.4, and (ii) such other documents or instruments as may be required in
the discretion of the General Partner to effect such Person's admission as an
Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 11.5, 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 Person is
recorded as such in the books and records of the Partnership, following the
consent of the General Partner to such admission.
ARTICLE XII
WITHDRAWAL OR REMOVAL OF PARTNERS
12.1 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 Limited Partner;
(ii) the General Partner transfers all of its rights as
General Partner pursuant to Section 10.2;
(iii) the General Partner is removed pursuant to Section 12.2;
(iv) the general partner of the MLP withdraws from, or is
removed as the general partner of, the MLP;
(v) the General Partner (A) makes a general assignment for the
benefit of creditors; (B) files a voluntary bankruptcy petition; (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
-38-
<PAGE> 45
described in clauses (A)-(C) of this Section 12.1(a)(v); 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;
(vi) 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
(vii) a certificate of dissolution or its equivalent is filed
for the General Partner, or 90 days expire after the date of notice to
the General Partner of revocation of its charter without a
reinstatement of its charter, under the laws of its state of
incorporation.
If an Event of Withdrawal specified in Section 12.1(a)(v), (vi) or (vii) occurs,
the withdrawing General Partner shall give notice to the Limited Partner within
30 days after such occurrence. The Partners hereby agree that only the Events of
Withdrawal described in this Section 12.1 shall result in the withdrawal of the
General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following circumstances:
(i) at any time during the period beginning on the Closing
Date and ending at 12:00 Midnight, Central Standard Time, on March 31,
2004 the General Partner voluntarily withdraws by giving at least 90
days' advance notice of its intention to withdraw to the Limited
Partner, provided, that prior to the effective date of such withdrawal
the Limited Partner approves such withdrawal and the General Partner
delivers to the Partnership an Opinion of Counsel ("Withdrawal Opinion
of Counsel") that such withdrawal (following the selection of the
successor General Partner) would not result in the loss of the limited
liability of the Limited Partner or cause the Partnership to be treated
as an association taxable as a corporation or otherwise to be taxed as
an entity for federal income tax purposes;
(ii) at any time on or after 12:00 Midnight, Central Standard
Time, on March 31, 2004, the General Partner voluntarily withdraws by
giving at least 90 days' advance notice to the Limited Partner, such
withdrawal to take effect on the date specified in such notice; or
(iii) at any time that the General Partner ceases to be the
General Partner pursuant to Section 12.1(a)(ii), (iii) or (iv). If the
General Partner gives a notice of withdrawal pursuant to Section
12.1(a)(i), the Limited Partner may, prior to the effective date of
such withdrawal or removal, elect a successor General Partner,
provided, that such successor shall be the same Person, if any, that is
elected by the limited partners of the MLP pursuant to Section 13.1 of
the MLP Agreement as the successor to the General Partner in its
capacity as general partner of the MLP. If, prior to the effective date
of the General Partner's withdrawal, a successor is not selected by the
Limited Partner as provided herein or the Partnership does not receive
a Withdrawal Opinion of Counsel, the Partnership shall be dissolved in
accordance with
-39-
<PAGE> 46
Section 13.1. Any successor General Partner elected in accordance with
the terms of this Section 12.1 shall be subject to the provisions of
Section 11.3.
12.2 REMOVAL OF A GENERAL PARTNER. A General Partner shall be removed
if such General Partner is removed as a general partner of the MLP pursuant to
Section 13.2 of the MLP Agreement. Such removal shall be effective concurrently
with the effectiveness of the removal of such General Partner as a general
partner of the MLP pursuant to the terms of the MLP Agreement. If a successor
General Partner is elected in connection with the removal of such General
Partner as a general partner of the MLP, such successor General Partner shall,
upon admission pursuant to Article XI, automatically become a successor General
Partner of the Partnership. The admission of any such successor General Partner
to the Partnership shall be subject to the provisions of Section 11.3.
12.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR GENERAL PARTNER. The
Partnership Interest of a Departing Partner departing as a result of withdrawal
or removal pursuant to Section 12.1 or 12.2 shall (unless it is otherwise
required to be converted into Common Units pursuant to Section 13.3(b) of the
MLP Agreement) be purchased by the successor to the Departing Partner for cash
in the manner specified in the MLP Agreement. Such purchase (or conversion into
Common Units, as applicable) shall be a condition to the admission to the
Partnership of the successor as a General Partner.
12.4 REIMBURSEMENT OF DEPARTING PARTNER. 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 such departing Partner for the
benefit of the Partnership.
12.5 WITHDRAWAL OF THE LIMITED PARTNER. Without the prior consent of
the General Partner, which may be granted or withheld in its sole discretion,
the Limited Partner shall not have the right to withdraw from the Partnership.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
13.1 DISSOLUTION. The Partnership shall not be dissolved by the
admission of the Initial Limited Partner, 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, subject to Section 13.2,
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 12.1(a) (other than Section 12.1(a)(ii)), unless a successor
is elected and an Opinion of Counsel is
-40-
<PAGE> 47
received as provided in Section 12.1(b) or 12.2 and such successor is
admitted to the Partnership pursuant to Section 11.3;
(c) an election to dissolve the Partnership by the General
Partner that is approved by the Limited Partner;
(d) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Delaware Act;
(e) the sale of all or substantially all of the assets and
properties of the Partnership; or
(f) the dissolution of Operating OLP.
13.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER DISSOLUTION.
Upon (a) dissolution of the Partnership following an Event of Withdrawal caused
by the withdrawal or removal of the General Partner as provided in Section
12.1(a)(i) or (iii) and following a failure of the Limited Partner to appoint a
successor General Partner as provided in Section 12.1 or 12.2, then within 90
days thereafter or (b) dissolution of the Partnership upon an event constituting
an Event of Withdrawal as defined in Section 12.1(a)(v), (vi) or (vii), then
within 180 days thereafter, the Limited Partner 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 Limited Partner. In addition, upon dissolution of the
Partnership pursuant to Section 13.1(f), if Operating OLP is reconstituted
pursuant to Section 13.2 of the Operating OLP Agreement, the reconstituted
Operating OLP may, within 180 days after such event of dissolution, as the
Limited Partner, elect to reconstitute the Partnership in accordance with the
immediately preceding sentence. Upon any such election by the Limited Partner,
all Partners shall be bound thereby and shall be deemed to have approved same.
Unless such an election is made within the applicable time period as set forth
above, the Partnership shall conduct only activities necessary to wind up its
affairs. If such an election is so made, then:
(i) the reconstituted Partnership shall continue until the end
of the term set forth in Section 1.5 unless earlier dissolved in
accordance with this Article XIII;
(ii) if the successor General Partner is not the former
General Partner, then the interest of the former General Partner shall
be purchased by the successor General Partner or converted into Common
Units of the MLP as provided in the MLP Agreement; and
(iii) all necessary steps shall be taken to cancel this
Agreement and the Certificate of Limited Partnership and to enter into
and, as necessary, to file a new partnership agreement and certificate
of limited partnership, and the successor General Partner may for this
purpose exercise the powers of attorney granted the General Partner
pursuant to Section 1.4; provided, that the right to approve a
successor General Partner and to reconstitute and to continue the
business of the Partnership shall not exist and may not be exercised
unless the Partnership has received an Opinion of Counsel that (x) the
exercise of the right would not result in the loss of limited liability
of the Limited Partner and (y) neither the Partnership nor the
reconstituted
-41-
<PAGE> 48
limited partnership would be treated as an association taxable as a
corporation or otherwise be taxable as an entity for federal income tax
purposes upon the exercise of such right to continue.
13.3 LIQUIDATION. Upon dissolution of the Partnership, unless the
Partnership is continued under an election to reconstitute and continue the
Partnership pursuant to Section 13.2, the General Partner, or in the event the
General Partner has been dissolved or removed, become bankrupt as set forth in
Section 12.1 or withdrawn from the Partnership, a liquidator or liquidating
committee approved by the Limited Partner, shall be the Liquidator. The
Liquidator (if other than the General Partner) shall be entitled to receive such
compensation for its services as may be approved by the Limited Partner. The
Liquidator shall agree not to resign at any time without 15 days' prior notice
and (if other than the General Partner) may be removed at any time, with or
without cause, by notice of removal approved by the Limited Partner. Upon
dissolution, removal or resignation of the Liquidator, a successor and
substitute Liquidator (who shall have and succeed to all rights, powers and
duties of the original Liquidator) shall within 30 days thereafter be approved
by the Limited Partner. The right to approve a successor or substitute
Liquidator in the manner provided herein shall be deemed to refer also to any
such successor or substitute Liquidator approved in the manner herein provided.
Except as expressly provided in this Article XIII, 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; and
(b) to all Partners in accordance with the positive balances
in their respective Capital Accounts, as determined after taking into
account all Capital Account adjustments (other than those made by
reason of this clause) for the taxable year of the Partnership during
which the liquidation of the Partnership occurs (with the date of such
occurrence being determined pursuant to Treasury Regulation Section
1.704-1(b)(2)(ii)(g)); and such distribution shall be made by the end
of such taxable year (or, if later, within 90 days after said date of
such occurrence).
13.4 DISTRIBUTIONS IN KIND. (a) Notwithstanding the provisions of
Section 13.3, 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,
-42-
<PAGE> 49
those to Partners as creditors) and/or distribute to the Partners or to specific
classes of Partners, in lieu of cash, as tenants in common and in accordance
with the provisions of Section 13.3, 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
Partner, and shall be subject to such conditions relating to the disposition and
management of such properties as the Liquidator deems reasonable and equitable
and to any agreements governing the operation of such properties at such time.
The Liquidator shall determine the fair market value of any property distributed
in kind using such reasonable method of valuation as it may adopt.
(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 13.3, 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.
13.5 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP. Upon the
completion of the distribution of Partnership cash and property as provided in
Sections 13.3 and 13.4 in connection with the liquidation of the Partnership,
the Partnership shall be terminated and the Certificate of Limited Partnership
and all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be cancelled and such other
actions as may be necessary to terminate the Partnership shall be taken.
13.6 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 13.3 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.
13.7 RETURN OF CAPITAL. The General Partner shall not be personally
liable for, and shall have no obligation to contribute or loan any monies or
property to the Partnership to enable it to effectuate, the return of the
Capital Contributions of the Limited Partner, or any portion thereof, it being
expressly understood that any such return shall be made solely from Partnership
assets.
13.8 NO CAPITAL ACCOUNT RESTORATION. No Partner shall have any
obligation to restore any negative balance in its Capital Account upon
liquidation of the Partnership.
13.9 WAIVER OF PARTITION. Each Partner hereby waives any right to
partition of the Partnership property.
-43-
<PAGE> 50
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT
14.1 AMENDMENT TO BE ADOPTED SOLELY BY GENERAL PARTNER. The Limited
Partner agrees that the General Partner (pursuant to its powers of attorney from
the Limited Partner), without the approval of the Limited Partner, 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 treated as an association 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 Partner in any material
respect, (ii) that is necessary or desirable to satisfy any
requirements, conditions or guidelines contained in any opinion,
directive, order, ruling or regulation of any federal or state agency
or judicial authority or contained in any federal or state statute
(including, without limitation, the Delaware Act), 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 Partner or (iii)
that is required to effect the intent of the provisions of this
Agreement or is otherwise contemplated by this Agreement;
(e) an amendment that is necessary, in the Opinion of Counsel,
to prevent the Partnership or the General Partner or its directors or
officers from in any manner being subjected to the provisions of the
Investment Company Act of 1940, as amended, the Investment Advisers Act
of 1940, as amended, or "plan asset" regulations adopted under the
Employee Retirement Income Security Act of 1974, as amended, whether or
not substantially similar to plan asset regulations currently applied
or proposed by the United States Department of Labor;
(f) any amendment expressly permitted in this Agreement to be
made by the General Partner acting alone;
(g) an amendment effected, necessitated or contemplated by a
Merger Agreement approved in accordance with Section 15.3;
-44-
<PAGE> 51
(h) an amendment that, in the sole discretion of the General
Partner, is necessary or desirable to reflect, account for and deal
with appropriately the formation by the Partnership of, or investment
by the Partnership in, any corporation, partnership, joint venture,
limited liability company or other entity other than the Other
Partnerships, in connection with the conduct by the Partnership of
activities permitted by the terms of Section 3.1; or
(i) any other amendments substantially similar to the
foregoing.
14.2 AMENDMENT PROCEDURES. Except with respect to amendments of the
type described in Section 14.1, all amendments to this Agreement shall be made
in accordance with the following requirements. Amendments to this Agreement may
be proposed only by or with the consent of the General Partner. Each such
proposal shall contain the text of the proposed amendment. A proposed amendment
shall be effective upon its approval by the Limited Partner.
ARTICLE XV
MERGER
15.1 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.
15.2 PROCEDURE FOR MERGER OR CONSOLIDATION. Merger or consolidation of
the Partnership pursuant to this Article requires the prior approval of the
General Partner. If the General Partner shall determine, in the exercise of its
sole discretion, to consent to the merger or consolidation, the General Partner
shall approve the Merger Agreement, which shall set forth:
(a) The names and jurisdictions of formation or organization
of each of the business entities proposing to merge or consolidate;
(b) The name and jurisdictions of formation or organization of
the business entity that is to survive the proposed merger or
consolidation (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,
-45-
<PAGE> 52
or upon conversion of, their securities or rights, and (ii) in the case
of securities represented by certificates, upon the surrender of such
certificates, which cash, property or general or limited partnership
interests, rights, securities or obligations of the Surviving Business
Entity or any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are
to be delivered;
(e) A statement of any changes in the constituent documents or
the adoption of new constituent documents (the articles or certificate
of incorporation, articles of trust, declaration of trust, certificate
or agreement of limited partnership or other similar charter or
governing document) of the Surviving Business Entity to be effected by
such merger or consolidation;
(f) The effective time of the merger, which may be the date of
the filing of the certificate of merger pursuant to Section 15.4 or a
later date specified in or determinable in accordance with the Merger
Agreement (provided, that if the effective time of the merger is to be
later than the date of the filing of the certificate of merger, the
effective time shall be fixed no later than the time of the filing of
the certificate of merger and stated therein); and
(g) Such other provisions with respect to the proposed merger
or consolidation as are deemed necessary or appropriate by the General
Partner.
15.3 APPROVAL BY LIMITED PARTNER OF MERGER OR CONSOLIDATION. (a) The
General Partner of the Partnership, upon its approval of the Merger Agreement,
shall direct that a copy or a summary of the Merger Agreement be submitted to
the Limited Partner for its approval.
(b) The Merger Agreement shall be approved upon receiving the consent
of the Limited Partner. After such approval by the Limited Partner, and at any
time prior to the filing of the certificate of merger pursuant to Section 15.4,
the merger or consolidation may be abandoned pursuant to provisions therefor, if
any, set forth in the Merger Agreement.
15.4 CERTIFICATE OF MERGER. Upon the required approval by the General
Partner and the Limited Partner of a Merger Agreement, a certificate of merger
shall be executed and filed with the Secretary of State of the State of Delaware
in conformity with the requirements of the Delaware Act.
15.5 EFFECT OF MERGER. (a) At the effective time of the certificate of
merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all property,
real, personal and mixed, and all debts due to any of those business
entities and all other things and causes of action belonging to each of
those business entities shall be vested in the Surviving Business
Entity and after the merger or consolidation shall be the property of
the Surviving Business Entity to the extent they were of each
constituent business entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not
revert and is not in any way impaired because of the merger or
consolidation;
-46-
<PAGE> 53
(iii) all rights of creditors and all liens on or security
interest in property of any of those constituent business entities
shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity, and
may be enforced against it to the same extent as if the debts,
liabilities and duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article shall
not be deemed to result in a transfer or assignment of assets or liabilities
from one entity to another having occurred.
ARTICLE XVI
GENERAL PROVISIONS
16.1 ADDRESSES AND NOTICES. Any notice, demand, request or report
required or permitted to be given or made to a Partner under this Agreement
shall be in writing and shall be deemed given or made when received by it at the
principal office of the Partnership referred to in Section 1.3.
16.2 REFERENCES. Except as specifically provided otherwise, references
to "Articles" and "Sections" are to Articles and Sections of this Agreement.
16.3 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.
16.4 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.
16.5 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.
16.6 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.
16.7 CREDITORS. None of the provisions of this Agreement shall be for
the benefit of, or shall be enforceable by, any creditor of the Partnership.
16.8 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 waiver of any such breach or any other covenant, duty, agreement or
condition.
-47-
<PAGE> 54
16.9 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, independently of the
signature of any other party.
16.10 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.
16.11 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:
EOTT ENERGY CORP.
By: /s/ Stephen W. Duffy
------------------------------------------
Stephen W. Duffy
Vice President and General Counsel
ORGANIZATIONAL LIMITED PARTNER
ORGANIZATIONAL PARTNER, INC.
By: /s/ Louis E. Potempa
------------------------------------------
Louis E. Potempa
President
INITIAL LIMITED PARTNER:
EOTT ENERGY OPERATING LIMITED
PARTNERSHIP
BY: EOTT ENERGY CORP.,
GENERAL PARTNER
By: /s/ Stephen W. Duffy
--------------------------------------
Stephen W. Duffy
Vice President and General Counsel
-48-
<PAGE> 1
EXHIBIT 3.9
===============================================================================
AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
EOTT ENERGY CANADA LIMITED PARTNERSHIP
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I-ORGANIZATIONAL MATTERS................................................................................ 1
1.1 Formation and Continuation.................................................................... 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.......................................................................................... 3
"Additional Limited Partner".......................................................................... 3
"Adjusted Capital Account"............................................................................ 3
"Adjusted Property"................................................................................... 4
"Affiliate"........................................................................................... 4
"Agreed Allocation"................................................................................... 4
"Agreed Value"........................................................................................ 4
"Agreement"........................................................................................... 4
"API"................................................................................................. 5
"Audit Committee"..................................................................................... 5
"Available Cash"...................................................................................... 5
"Book-Tax Disparity".................................................................................. 5
"Business Day"........................................................................................ 6
"Capital Account"..................................................................................... 6
"Capital Contribution"................................................................................ 6
"Carrying Value"...................................................................................... 6
"Certificate of Limited Partnership".................................................................. 6
"Closing Date"........................................................................................ 6
"Code"................................................................................................ 6
"Common Unit"......................................................................................... 6
"Contributed Property"................................................................................ 6
"Contribution Agreement".............................................................................. 7
"Curative Allocation"................................................................................. 7
"Delaware Act"........................................................................................ 7
"Departing Partner"................................................................................... 7
"Economic Risk of Loss"............................................................................... 7
"Enron"............................................................................................... 7
"EOTT"................................................................................................ 7
"EOTT Canada"......................................................................................... 7
"EOTT Note"........................................................................................... 7
"Event of Withdrawal"................................................................................. 7
"Exchange Act"........................................................................................ 7
"General Partner"..................................................................................... 7
"Indemnitee".......................................................................................... 7
"Initial Limited Partner"............................................................................. 7
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
"Initial Offering"................................................................................... 8
"Limited Partner".................................................................................... 8
"Liquidation Date"................................................................................... 8
"Liquidator"......................................................................................... 8
"Management Services Agreement"...................................................................... 8
"Merger Agreement"................................................................................... 8
"MLP" .............................................................................................. 8
"MLP Agreement"...................................................................................... 8
"National Securities Exchange"....................................................................... 8
"Net Agreed Value"................................................................................... 8
"Net Income"......................................................................................... 8
"Net Loss"........................................................................................... 9
"Net Termination Gain"............................................................................... 9
"Net Termination Loss"............................................................................... 9
"Nonrecourse Built-in Gain".......................................................................... 9
"Nonrecourse Deductions"............................................................................. 9
"Nonrecourse Liability".............................................................................. 10
"Operating OLP"...................................................................................... 10
"Operating OLP Agreement"............................................................................ 10
"Opinion of Counsel"................................................................................. 10
"Other Partnerships"................................................................................. 10
"Other Partnership Agreements"....................................................................... 10
"Partners"........................................................................................... 10
"Partner Nonrecourse Debt"........................................................................... 10
"Partner Nonrecourse Debt Minimum Gain" ............................................................. 10
"Partner Nonrecourse Deductions"..................................................................... 10
"Partnership"........................................................................................ 10
"Partnership Interest"............................................................................... 10
"Partnership Minimum Gain"........................................................................... 10
"Percentage Interest"................................................................................ 10
"Person"............................................................................................. 11
"Pipeline OLP"....................................................................................... 11
"Recapture Income"................................................................................... 11
"Registration Statement"............................................................................. 11
"Required Allocations"............................................................................... 11
"Residual Gain"...................................................................................... 11
"Residual Loss"...................................................................................... 11
"Restricted Opportunity"............................................................................. 11
"Securities Act"..................................................................................... 12
"Special Approval"................................................................................... 12
"Substituted Limited Partner"........................................................................ 12
"Surviving Business Entity".......................................................................... 12
"Termination Capital Transactions"................................................................... 12
"Underwriter"........................................................................................ 12
"Underwriting Agreement"............................................................................. 12
"Unrealized Gain".................................................................................... 12
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
"Unrealized Loss"...................................................................................... 12
"Withdrawal Opinion of Counsel"........................................................................ 12
ARTICLE III-PURPOSE............................................................................................. 13
3.1 Purpose and Business.......................................................................... 13
3.2 Powers........................................................................................ 13
ARTICLE IV-CAPITAL CONTRIBUTIONS................................................................................ 13
4.1 Initial Contributions......................................................................... 13
4.2 Return of Initial Contributions............................................................... 13
4.3 Contribution by the General Partner and the Initial Limited Partner........................... 14
4.4 Additional Capital Contributions.............................................................. 14
4.5 No Preemptive Rights.......................................................................... 14
4.6 Capital Accounts.............................................................................. 14
4.7 Interest...................................................................................... 17
4.8 No Withdrawal................................................................................. 17
4.9 Loans from Partners........................................................................... 17
ARTICLE V-ALLOCATIONS AND DISTRIBUTIONS......................................................................... 17
5.1 Allocations for Capital Account Purposes...................................................... 17
(a) Net Income........................................................................... 17
(b) Net Losses........................................................................... 17
(c) Net Termination Gains and Losses..................................................... 18
(d) Special Allocations.................................................................. 18
(i) Partnership Minimum Gain Chargeback......................................... 19
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain......................... 19
(iii) Qualified Income Offset..................................................... 19
(iv) Gross Income Allocations.................................................... 19
(v) Nonrecourse Deductions...................................................... 20
(vi) Partner Nonrecourse Deductions.............................................. 20
(vii) Nonrecourse Liabilities..................................................... 20
(viii) Code Section 754 Adjustments................................................ 20
(ix) Curative Allocation......................................................... 20
5.2 Allocations for Tax Purposes.................................................................. 21
5.3 Requirement of Distributions.................................................................. 23
ARTICLE VI-MANAGEMENT AND OPERATION OF BUSINESS................................................................. 23
6.1 Management.................................................................................... 23
6.2 Certificate of Limited Partnership............................................................ 25
6.3 Restrictions on General Partner's Authority................................................... 25
6.4 Reimbursement of the General Partner.......................................................... 26
6.5 Outside Activities............................................................................ 26
6.6 Loans to and from the General Partner; Contracts with Affiliates.............................. 27
6.7 Indemnification............................................................................... 28
6.8 Liability of Indemnitees...................................................................... 30
6.9 Resolution of Conflicts of Interest........................................................... 30
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C>
6.10 Other Matters Concerning the General Partner.................................................. 32
6.11 Title to Partnership Assets................................................................... 32
6.12 Reliance by Third Parties..................................................................... 33
ARTICLE VII-RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER....................................................... 33
7.1 Limitation of Liability....................................................................... 33
7.2 Management of Business........................................................................ 33
7.3 Return of Capital............................................................................. 34
7.4 Rights of the Limited Partner Relating to the Partnership..................................... 34
ARTICLE VIII-BOOKS, RECORDS, ACCOUNTING AND REPORTS............................................................. 35
8.1 Records and Accounting........................................................................ 35
8.2 Fiscal Year................................................................................... 35
ARTICLE IX-TAX MATTERS.......................................................................................... 35
9.1 Preparation of Tax Returns.................................................................... 35
9.2 Tax Elections................................................................................. 35
9.3 Tax Controversies............................................................................. 35
9.4 Organizational Expenses....................................................................... 36
9.5 Withholding................................................................................... 36
9.6 Opinions of Counsel........................................................................... 36
ARTICLE X-TRANSFER OF INTERESTS................................................................................. 36
10.1 Transfer...................................................................................... 36
10.2 Transfer of the General Partner's Partnership Interest........................................ 36
10.3 Transfer of the Limited Partner's Partnership Interest........................................ 37
ARTICLE XI-ADMISSION OF PARTNERS................................................................................ 37
11.1 Admission of Substituted Limited Partners..................................................... 37
11.2 Admission of Successor General Partner........................................................ 37
11.3 Amendment of Agreement and Certificate of Limited Partnership................................. 37
11.4 Admission of Additional Limited Partners...................................................... 37
ARTICLE XII-WITHDRAWAL OR REMOVAL OF PARTNERS................................................................... 38
12.1 Withdrawal of the General Partner............................................................. 38
12.2 Removal of a General Partner.................................................................. 39
12.3 Interest of Departing Partner and Successor General Partner................................... 40
12.4 Reimbursement of Departing Partner............................................................ 40
12.5 Withdrawal of the Limited Partner............................................................. 40
ARTICLE XIII-DISSOLUTION AND LIQUIDATION........................................................................ 40
13.1 Dissolution................................................................................... 40
13.2 Continuation of the Business of the Partnership after Dissolution............................. 41
13.3 Liquidation................................................................................... 41
13.4 Distributions in Kind......................................................................... 42
13.5 Cancellation of Certificate of Limited Partnership............................................ 43
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<S> <C>
13.6 Reasonable Time for Winding Up................................................................ 43
13.7 Return of Capital............................................................................. 43
13.8 No Capital Account Restoration................................................................ 43
13.9 Waiver of Partition........................................................................... 43
ARTICLE XIV-AMENDMENT OF PARTNERSHIP AGREEMENT.................................................................. 43
14.1 Amendment to be Adopted Solely by General Partner............................................. 43
14.2 Amendment Procedures.......................................................................... 45
ARTICLE XV-MERGER............................................................................................... 45
15.1 Authority..................................................................................... 45
15.2 Procedure for Merger or Consolidation......................................................... 45
15.3 Approval by Limited Partner of Merger or Consolidation........................................ 46
15.4 Certificate of Merger......................................................................... 46
15.5 Effect of Merger.............................................................................. 46
ARTICLE XVI-GENERAL PROVISIONS.................................................................................. 47
16.1 Addresses and Notices......................................................................... 47
16.2 References.................................................................................... 47
16.3 Pronouns and Plurals.......................................................................... 47
16.4 Further Action................................................................................ 47
16.5 Binding Effect................................................................................ 47
16.6 Integration................................................................................... 47
16.7 Creditors..................................................................................... 47
16.8 Waiver........................................................................................ 47
16.9 Counterparts.................................................................................. 47
16.10 Applicable Law................................................................................ 47
16.11 Invalidity of Provisions...................................................................... 48
</TABLE>
-v-
<PAGE> 7
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
EOTT ENERGY CANADA LIMITED PARTNERSHIP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF EOTT
ENERGY CANADA LIMITED PARTNERSHIP, dated as of March 24, 1994, is entered into
by and among EOTT Energy Corp., a Delaware corporation, as the General Partner,
and EOTT Energy Operating Limited Partnership, a Delaware limited partnership,
as the Initial Limited Partner, together with any other Persons who become
Partners in the Partnership as provided herein. In consideration of the
covenants, conditions and agreements contained herein, the parties hereto
hereby agree as follows:
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 FORMATION AND CONTINUATION. (a) The General Partner and the
Initial Limited Partner have previously formed the Partnership as a limited
partnership pursuant to the provisions of the Delaware Act and hereby amend and
restate the original Agreement of Limited Partnership of EOTT Energy Canada
Limited Partnership in its entirety. Subject to the provisions of this
Agreement, the General Partner and the Initial Limited Partner hereby continue
the Partnership as a limited partnership pursuant to the provisions of the
Delaware Act. Except as expressly provided to the contrary in this Agreement,
the rights and obligations of the Partners and the administration, dissolution
and termination of the Partnership shall be governed by the Delaware Act. All
Partnership Interests shall constitute personal property of the owner thereof
for all purposes.
(b) In connection with the formation of the Partnership, EOTT has been
admitted as a general partner of the Partnership, and the Initial Limited
Partner has been admitted as a limited partner of the Partnership.
1.2 NAME. The name of the Partnership shall be, and the business of
the Partnership shall be conducted under the name of, "EOTT Energy Canada
Limited Partnership." 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 Partner of such
change in the next regular communication to the Limited Partner.
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 1330 Post
Oak Blvd., Houston, Texas 77056, or such other
-1-
<PAGE> 8
place as the General Partner may from time to time designate by notice to the
Limited Partner. The Partnership may maintain offices at such other place or
places within or outside the State of Delaware as the General Partner deems
necessary or appropriate.
1.4 POWER OF ATTORNEY. (a) The Limited Partner hereby constitutes and
appoints each of the General Partner and, if a Liquidator shall have been
selected pursuant to Section 13.3, 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 its true and lawful agent and attorney-in-fact, with full
power and authority in its name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (A) all certificates, documents and
other instruments (including, without limitation, this Agreement and
the Certificate of Limited Partnership and all amendments or
restatements thereof) that the 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 X, XI, XII
or XIII 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 Partnership Interests; 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 XV; and
(ii) execute, swear to, acknowledge, deliver, file and record
all ballots, consents, approvals, waivers, certificates, documents and
other instruments necessary or appropriate, in the 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 the consent or approval of the Limited Partner is
required by any provision of this Agreement, the General Partner or
the Liquidator may exercise the power of attorney made in this Section
1.4(a)(ii) only after the necessary consent or approval of the Limited
Partner is obtained.
Nothing contained in this Section 1.4(a) shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article XIV
or as may be otherwise expressly provided for in this Agreement.
-2-
<PAGE> 9
(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 the Limited Partner and the transfer
of all or any portion of the Limited Partner's Partnership Interest and shall
extend to the Limited Partner's heirs, successors, assigns and personal
representatives. The Limited Partner 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 the Limited Partner 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. The Limited Partner 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 March 31, 2084, or
until the earlier termination of the Partnership in accordance with the
provisions of Article XIII.
1.6 POSSIBLE RESTRICTIONS ON TRANSFER. Notwithstanding anything to the
contrary contained in this Agreement, in the event of (a) the enactment (or
imminent enactment) of any legislation, (b) the publication of any temporary or
final regulation by the Treasury Department, (c) any ruling by the Internal
Revenue Service or (d) any judicial decision, that, in any such case, in the
Opinion of Counsel, would result in the taxation of the Partnership as an
association taxable as a corporation or would otherwise result in the
Partnership being taxed as an entity for federal income tax purposes, then, the
General Partner may impose such restrictions on the transfer of Partnership
Interests as may be required, in the Opinion of Counsel, to prevent the
Partnership from being taxed as an association taxable as a corporation or
otherwise 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.
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 11.4 and who is
shown as such on the books and records of the Partnership.
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account
maintained for each Partner as of the end of each fiscal year of the
Partnership, (a) increased by any amounts that such Partner is
obligated to restore under the standards set by Treasury Regulation
Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to restore under
Treasury Regulation
-3-
<PAGE> 10
Sections 1.704-2(g) and 1.704-2(i)(5)), and (b) decreased by (i) the
amount of all losses and deductions that, as of the end of such fiscal
year, are reasonably expected to be allocated to such Partner in
subsequent years under Sections 704(e)(2) and 706(d) of the Code and
Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of
all distributions that, as of the end of such fiscal year, are
reasonably expected to be made to such Partner in subsequent years in
accordance with the terms of this Agreement or otherwise to the extent
they exceed offsetting increases to such Partner's Capital Account
that are reasonably expected to occur during (or prior to) the year in
which such distributions are reasonably expected to be made (other
than increases as a result of a minimum gain chargeback pursuant to
Section 5.1(d)(i) or 5.1(d)(ii)). The foregoing definition of Adjusted
Capital Account is intended to comply with the provisions of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
"ADJUSTED PROPERTY" means any property the Carrying Value of
which has been adjusted pursuant to Section 4.6(d)(i) or 4.6(d)(ii).
Once an Adjusted Property is deemed distributed by, and recontributed
to, the Partnership for federal income tax purposes upon a termination
thereof pursuant to Section 708 of the Code, such property shall
thereafter constitute a Contributed Property until the Carrying Value
of such property is subsequently adjusted pursuant to Section
4.6(d)(i) or 4.6(d)(ii).
"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, other than a
Required Allocation, of an item of income, gain, loss or deduction
pursuant to the provisions of Section 5.1, including, without
limitation, a Curative Allocation (if appropriate to the context in
which the term "Agreed Allocation" is used).
"AGREED VALUE" of any Contributed Property means the fair
market value of such property or other consideration at the time of
contribution as determined by the General Partner using such
reasonable method of valuation as it may adopt; provided, however,
that the Agreed Value of any property deemed contributed to the
Partnership for federal income tax purposes upon termination and
reconstitution thereof pursuant to Section 708 of the Code shall be
determined in accordance with Section 4.6(c). Subject to Section
4.6(c), 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 each separate
property on a basis proportional to the fair market value of each
Contributed Property.
"AGREEMENT" means this Amended and Restated Agreement of
Limited Partnership of EOTT Energy Canada Limited Partnership, as it
may be amended, supplemented or restated from time to time.
-4-
<PAGE> 11
"API" has the meaning assigned to such term in the MLP
Agreement.
"AUDIT COMMITTEE" means a committee of the Board of Directors
of the General Partner composed entirely of one or more directors who
are neither officers nor employees of Enron or any of its Affiliates.
"AVAILABLE CASH" means with respect to any calendar quarter
and without duplication:
(a) the sum of:
(i) all cash receipts of the Partnership
during such quarter from all sources plus, in the
case of the calendar quarter ending June 30, 1994,
the cash balance of the Partnership as of the close
of business on the Closing Date; and
(ii) any reduction in a reserve with
respect to such quarter from the level of such
reserve at the end of the prior quarter;
(b) less the sum of:
(i) all cash disbursements of the
Partnership during such quarter, including, without
limitation, disbursements for operating expenses,
taxes, if any, debt service (including, without
limitation, the payment of principal, premium and
interest) and capital expenditures (but excluding
all cash distributions to Partners and any cash
disbursements with respect to which, and to the
extent that, a reserve was established in a prior
quarter); and
(ii) any reserves established with respect
to such quarter, and any increase in reserves
established with respect to prior quarters, in such
amounts as the General Partner determines in its
reasonable discretion to be necessary or appropriate
(A) to provide for the proper conduct of the
business of the Partnership (including, without
limitation, reserves for future capital
expenditures) or (B) 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.
Notwithstanding the foregoing, "Available Cash" with respect to any
calendar quarter (x) shall not include any cash receipts or reductions
in reserves or take into account any disbursements made or reserves
established after the Liquidation Date and (y) shall include cash
proceeds from borrowings received by the Partnership after the end of
such quarter but on or before the date on which the Partnership makes
its distribution of Available Cash in respect of such quarter pursuant
to Section 5.3.
"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
-5-
<PAGE> 12
federal income tax purposes as of such date. A Partner's share of the
Partnership's Book-Tax Disparities in all of its Contributed Property
and Adjusted Property will be reflected by the difference between such
Partner's Capital Account balance as maintained pursuant to Section
4.6 and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with
federal income tax accounting principles.
"BUSINESS DAY" means Monday through Friday of each week,
except that a legal holiday recognized as such by the government of
the United States or the states of New York or Texas shall not be
regarded as a Business Day.
"CAPITAL ACCOUNT" means the capital account maintained for a
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 or 4.4.
"CARRYING VALUE" means (a) with respect to a Contributed
Property, the Agreed Value of such property reduced (but not below
zero) by all depreciation, amortization and cost recovery deductions
charged to the Partners' Capital Accounts in respect of such
Contributed Property, and (b) with respect to any other Partnership
property, the adjusted basis of such property for federal income tax
purposes, all as of the time of determination. The Carrying Value of
any property shall be adjusted from time to time in accordance with
Sections 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.
"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 of Limited
Partnership may be amended, supplemented or restated from time to
time.
"CLOSING DATE" means the first date on which Common Units are
sold by the General Partner to the Underwriters pursuant to the
provisions of the Underwriting Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended
and in effect from time to time, as interpreted by the applicable
regulations thereunder. Any reference herein to a specific section or
sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
"COMMON UNIT" has the meaning assigned to such term in the
MLP Agreement.
"CONTRIBUTED PROPERTY" means each property or other asset, in
such form as may be permitted by the Delaware Act, but excluding cash,
contributed to the Partnership (or deemed contributed to the
Partnership on termination and reconstitution thereof pursuant to
Section 708 of the Code). Once the Carrying Value of a Contributed
Property is adjusted pursuant to
-6-
<PAGE> 13
Section 4.6(d)(i), such property shall no longer constitute a
Contributed Property, but shall be deemed an Adjusted Property.
"CONTRIBUTION AGREEMENT" has the meaning assigned to such
term in the MLP Agreement.
"CURATIVE ALLOCATION" means any allocation of an item of
income, gain, deduction, loss or credit pursuant to the provisions of
Section 5.1(d)(ix).
"DELAWARE ACT" means the Delaware Revised Uniform Limited
Partnership Act, 6 Del C. Section 17-101, et seq., as amended,
supplemented or restated from time to time, and any successor to such
statute.
"DEPARTING PARTNER" means a General Partner with respect to
which an Event of Withdrawal of the type described in Section 12.1 has
occurred.
"ECONOMIC RISK OF LOSS" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"ENRON" means Enron Corp., a Delaware corporation.
"EOTT" means EOTT Energy Corp., a Delaware corporation.
"EOTT CANADA" means EOTT Canada Ltd., a corporation organized
under the laws of the Province of Alberta.
"EOTT NOTE" means that certain note payable dated the day
before the Closing Date and issued by EOTT in the original principal
amount of $8,800,000, which note was contributed by EOTT to the
Limited Partner.
"EVENT OF WITHDRAWAL" has the meaning assigned to such term
in Section 12.1(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.
"GENERAL PARTNER" means EOTT and its successors as general
partner of the Partnership, unless the context otherwise requires.
"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 PARTNER" means Operating OLP.
-7-
<PAGE> 14
"INITIAL OFFERING" means the initial offering of Common Units
to the public, as described in the Registration Statement.
"LIMITED PARTNER" means the Initial Limited Partner, each
Substituted Limited Partner, if any, each Additional Limited Partner
and any Departing Partner upon the change of its status from General
Partner to Limited Partner pursuant to Section 12.3, but excluding any
such Person from and after the time it withdraws from the Partnership.
"LIQUIDATION DATE" means (a) in the case of an event giving
rise to the dissolution of the Partnership of the type described in
clauses (a) and (b) of the first sentence of Section 13.2, the date on
which the applicable time period during which the Partners have the
right to elect to reconstitute the Partnership and continue its
business has expired without such an election being made, and (b) in
the case of any other event giving rise to the dissolution of the
Partnership, the date on which such event occurs.
"LIQUIDATOR" means the General Partner or other Person
approved pursuant to Section 13.3 who performs the functions described
therein.
"MANAGEMENT SERVICES AGREEMENT" means that certain Management
Services Agreement dated March 24, 1994 between EOTT Canada and the
Partnership, as same may be amended from time to time.
"MERGER AGREEMENT" has the meaning assigned to such term in
Section 15.1.
"MLP" means EOTT Energy Partners, L.P., a Delaware limited
partnership.
"MLP AGREEMENT" means the Amended and Restated Agreement of
Limited Partnership of EOTT Energy Partners, L.P., as it may be
amended, supplemented or restated from time to time.
"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 by the Partnership, the
Partnership's Carrying Value of such property (as adjusted pursuant to
Section 4.6(d)(ii)) at the time such property is distributed, reduced
by any indebtedness either assumed by such Partner upon such
distribution or to which such property is subject at the time of
distribution, in either case, as determined under Section 752 of the
Code.
"NET INCOME" means, for any taxable 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
-8-
<PAGE> 15
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). 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 Curative Allocation, Net
Income or Net Loss, whichever the case may be, shall be recomputed
without regard to such item.
"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 specially allocated under Section 5.1(d). 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
Curative Allocation, Net Income, or Net Loss, whichever the case may
be, shall be recomputed without regard to such item.
"NET TERMINATION GAIN" means, for any taxable period, the
sum, if positive, of all items of income, gain, loss or deduction
recognized by the Partnership from Termination Capital Transactions
occurring in such taxable period. The items included in the
determination of Net Termination Gain shall be determined in
accordance with Section 4.6(b) and shall not include any items of
income, gain or loss specially allocated under Section 5.1(d). Once an
item of income, gain or loss that has been included in the initial
computation of Net Termination Gain is subjected to a Required
Allocation or a Curative Allocation, Net Termination Gain or Net
Termination Loss, whichever the case may be, shall be recomputed
without regard to such item;
"NET TERMINATION LOSS" means, for any taxable period, the
sum, if negative, of all items of income, gain, loss or deduction
recognized by the Partnership from Termination Capital Transactions
occurring in such taxable period. The items included in the
determination of Net Termination Loss shall be determined in
accordance with Section 4.6(b) and shall not include any items of
income, gain or loss specially allocated under Section 5.1(d). Once an
item of gain or loss that has been included in the initial computation
of Net Termination Loss is subjected to a Required Allocation or a
Curative Allocation, Net Termination Gain or Net Termination Loss,
whichever the case may be, shall be recomputed without regard to such
item;
"NONRECOURSE BUILT-IN GAIN" means with respect to any
Contributed Properties or Adjusted Properties that are subject to a
mortgage or pledge securing a Nonrecourse Liability, the amount of any
taxable gain that would be allocated to the Partners pursuant to
Sections 5.2(b)(i)(A), 5.2(b)(ii)(A) or 5.2(b)(iv) if such properties
were disposed of in a taxable transaction in full satisfaction of such
liabilities and for no other consideration.
"NONRECOURSE DEDUCTIONS" means any and all items of loss,
deduction or expenditures (described in Section 705(a)(2)(B) of the
Code) that, in accordance with the
-9-
<PAGE> 16
principles of Treasury Regulation Section 1.704-(2)(b), are
attributable to a Nonrecourse Liability.
"NONRECOURSE LIABILITY" has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
"OPERATING OLP" means EOTT Energy Operating Limited
Partnership, a Delaware limited partnership.
"OPERATING OLP AGREEMENT" means the Amended and Restated
Agreement of Limited Partnership for Operating OLP, as same may be
amended from time to time.
"OPINION OF COUNSEL" means a written opinion of counsel (who
may be regular counsel to Enron, any Affiliate of Enron, the
Partnership or the General Partner) acceptable to the General Partner.
"OTHER PARTNERSHIPS" means Pipeline OLP and Operating OLP.
"OTHER PARTNERSHIP AGREEMENTS" means the Amended and Restated
Agreement of Limited Partnership for each of the Other Partnerships,
as same may be amended from time to time.
"PARTNERS" means the General Partner and the Limited Partner.
"PARTNER NONRECOURSE DEBT" has the meaning set forth in
Treasury Regulation Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning set
forth in Treasury Regulation Section 1.704-2(i)(2).
"PARTNER NONRECOURSE DEDUCTIONS" means any and all items of
loss, deduction or expenditure (including, without limitation, any
expenditure described in Section 705(a)(2)(B) of the Code) that, in
accordance with the principles of Treasury Regulation Section
1.704-2(i), are attributable to a Partner Nonrecourse Debt.
"PARTNERSHIP" means the limited partnership heretofore formed
pursuant to this Agreement.
"PARTNERSHIP INTEREST" means the interest of a Partner in the
Partnership.
"PARTNERSHIP MINIMUM GAIN" means that amount determined in
accordance with the principles of Treasury Regulation Section
1.704-2(d).
"PERCENTAGE INTEREST" means (a) as to the General Partner, in
its capacity as such, 1% and (b) as to the Limited Partner, 99%.
-10-
<PAGE> 17
"PERSON" means an individual or a corporation, partnership,
trust, unincorporated organization, association or other entity.
"PIPELINE OLP" means EOTT Energy Pipeline Limited
Partnership, a Delaware limited partnership.
"RECAPTURE INCOME" means any gain recognized by the
Partnership (computed without regard to any adjustment required by
Sections 734 or 743 of the Code) upon the disposition of any property
or asset of the Partnership, which gain is characterized as ordinary
income because it represents the recapture of deductions previously
taken with respect to such property or asset.
"REGISTRATION STATEMENT" means the Registration Statement on
Form S-1 (Registration No. 33-73984), as it has been or 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 the 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) Section 5.1(b)(i) or (b) Sections 5.1(d)(i)-(vi)
and (viii), such allocations (or limitations thereon) being directly
or indirectly required by the Treasury regulations promulgated under
Section 704(b) of the Code.
"RESIDUAL GAIN" or "RESIDUAL LOSS" means any item of gain or
loss, as the case may be, of the Partnership recognized for federal
income tax purposes resulting from a sale, exchange or other
disposition of a Contributed Property or Adjusted Property, to the
extent such item of gain or loss is not allocated pursuant to Sections
5.2(b)(i)(A) or 5.2(b)(ii)(A), respectively, to eliminate Book-Tax
Disparities.
"RESTRICTED OPPORTUNITY" means a discrete business
opportunity that satisfies each of the following criteria:
(a) such business opportunity involves an activity
of the type engaged in by EOTT immediately prior to the
Closing Date;
(b) such business opportunity was identified by or
presented to the General Partner for the benefit of the
Partnership, and a business opportunity shall be deemed not
to have been "identified by or presented to the General
Partner for the benefit of the Partnership" if it was
identified by or presented to Enron or its Affiliates (other
than the General Partner or any Affiliate of the General
Partner controlled by it) (i) prior to its identification by
or presentation to the General Partner, (ii) without their
prior knowledge of the fact that it had been previously
identified by or presented to the General Partner or (iii)
with their prior knowledge of the fact that it had been
previously identified by or presented to the General Partner
but not as a result of such knowledge; and
-11-
<PAGE> 18
(c) from and after the date on which such business
opportunity was "identified by or presented to the General
Partner for the benefit of the Partnership" as provided in
clause (b) immediately above, such business opportunity was
pursued by the General Partner for the benefit of the
Partnership in good faith and with reasonable diligence under
the circumstances (it being agreed that the criteria set
forth in this clause (c) shall be deemed not to be satisfied
from and after the time at which such business opportunity
ceases to be pursued by the General Partner in accordance
with such standard).
"SECURITIES ACT" means the Securities Act of 1933, as
amended, supplemented or restated from time to time and any successor
to such statute.
"SPECIAL APPROVAL" means approval by the Audit Committee.
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 11.1 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 15.2(b).
"TERMINATION CAPITAL TRANSACTIONS" means any sale, transfer
or other disposition of property of the Partnership occurring upon or
incident to the liquidation and winding up of the Partnership pursuant
to Article XIII.
"UNDERWRITER" means each Person named as an underwriter in
Schedule I to the Underwriting Agreement who purchases Common Units
pursuant thereto.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement
dated March 18, 1994, among the Underwriters, the MLP, the General
Partner, the Partnership and Enron providing for the purchase of
Common Units by such Underwriters.
"UNREALIZED GAIN" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any,
of (a) the fair market value of such property as of such date (as
determined under Section 4.6(d)) 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).
"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 (as
determined under Section 4.6(d)).
"WITHDRAWAL OPINION OF COUNSEL" has the meaning assigned to
such term in Section 12.1(b).
-12-
<PAGE> 19
ARTICLE III
PURPOSE
3.1 PURPOSE AND BUSINESS. The purpose and nature of the business to be
conducted by the Partnership shall be (a) to acquire, manage, and operate the
assets described in the Contribution Agreement as being transferred to the
Partnership and the Other Partnerships on the day before the Closing Date and
any similar assets or properties and to engage directly in, or to enter into or
form any corporation, limited liability company, partnership, joint venture or
other arrangement to engage indirectly in, any type of business or activity
engaged in by EOTT immediately prior to the Closing Date and, in connection
therewith, to exercise all of the rights and powers conferred upon the
Partnership pursuant to the agreements relating to such assets, (b) to engage
directly in, or enter into or form any corporation, limited liability company,
partnership, joint venture or other arrangement to engage indirectly in, any
business activity that is approved by the General Partner and which may
lawfully be conducted by a limited partnership organized pursuant to the
Delaware Act and, in connection therewith, to exercise all of the rights and
powers conferred upon the Partnership pursuant to the agreements relating to
such business activity, and (c) to do anything necessary or appropriate to the
foregoing, including, without limitation, the making of loans to the MLP or the
Other Partnerships (including, without limitation, those loans that may be
required in connection with its involvement in the activities referred to in
clause (a) of this sentence). The General Partner has no obligation or duty to
the Partnership or the Limited Partner to propose or approve, and in its sole
discretion may decline to propose or approve, the conduct by the Partnership of
any business.
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.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 INITIAL CONTRIBUTIONS. In connection with the formation of the
Partnership under the Delaware Act, the General Partner has made an initial
Capital Contribution to the Partnership in the amount of $10 for an interest in
the Partnership and has been admitted as the general partner of the
Partnership, and the Initial Limited Partner has made a Capital Contribution to
the Partnership in the amount of $990 for an interest in the Partnership and
has been admitted as a limited partner of the Partnership.
4.2 RETURN OF INITIAL CONTRIBUTIONS. As of the Closing Date, after
giving effect to the transactions contemplated by Section 4.3, the $10 Capital
Contribution by the General Partner and the $990 Capital Contribution by the
Initial Limited Partner as initial Capital Contributions shall be refunded.
Ninety-nine percent of any interest or other profit that may have resulted from
the investment or other use of such initial Capital Contributions shall be
allocated and distributed to the Initial Limited Partner, and the balance
thereof shall be allocated and distributed to the General Partner.
-13-
<PAGE> 20
4.3 CONTRIBUTION BY THE GENERAL PARTNER AND THE INITIAL LIMITED
PARTNER. On the day before the Closing Date, (a) the General Partner shall, as
a Capital Contribution and as described in the Contribution Agreement,
contribute and deliver to the Partnership an amount in cash equal to 1/99th of
the principal amount of the EOTT Note in exchange for the continuation of its
general partner interest in the Partnership consisting of a Partnership
Interest representing a 1% Percentage Interest and (b) the Initial Limited
Partner shall, as a Capital Contribution and as described in the Contribution
Agreement, contribute and deliver the EOTT Note the Partnership in exchange for
the continuation of its limited partner interest in the Partnership consisting
of a Partnership Interest representing a 99% Percentage Interest.
4.4 ADDITIONAL CAPITAL CONTRIBUTIONS. With the consent of the General
Partner, the Limited Partner may, but shall not be obligated to, make
additional Capital Contributions to the Partnership. Contemporaneously with the
making of any such additional Capital Contributions by the Limited Partner, the
General Partner shall be obligated to make an additional Capital Contribution
to the Partnership such that the General Partner shall at all times have at
least a 1% interest in each item of Partnership income, gain, loss, deduction
and credit. Except as set forth in the immediately preceding sentence and
Section 5.3(b), the General Partner shall not be obligated to make any
additional Capital Contributions to the Partnership.
4.5 NO PREEMPTIVE RIGHTS. Except as provided in Section 4.4, no Person
shall have any preemptive, preferential or other similar right with respect to
(a) additional Capital Contributions; (b) issuance or sale of any class or
series of Partnership Interests, whether unissued, held in the treasury or
hereafter created; (c) issuance of any obligations, evidences of indebtedness
or other securities of the Partnership convertible into or exchangeable for, or
carrying or accompanied by any rights to receive, purchase or subscribe to, any
such Partnership Interests; (d) issuance of any right of subscription to or
right to receive, or any warrant or option for the purchase of, any such
Partnership Interests; or (e) issuance or sale of any other securities that may
be issued or sold by the Partnership.
4.6 CAPITAL ACCOUNTS. (a) The Partnership shall maintain for each
Partner owning a Partnership Interest a separate Capital Account with respect
to such Partnership Interest in accordance with the rules of Treasury
Regulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased
by (i) the amount of all Capital Contributions made to the Partnership with
respect to such Partnership Interest pursuant to this Agreement 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
with respect to such Partnership Interest pursuant to Sections 4.2 and 5.1, and
decreased by (x) the amount of cash or the Net Agreed Value of all actual and
deemed distributions of cash or property made with respect to such Partnership
Interest pursuant to this Agreement and (y) all items of Partnership deduction
and loss computed in accordance with Section 4.6(b) and allocated with respect
to such Partnership Interest 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:
-14-
<PAGE> 21
(i) All fees and other expenses incurred by the Partnership
to promote the sale of (or to sell) a Partnership Interest that can
neither be deducted nor amortized under Section 709 of the Code, if
any, shall, for purposes of Capital Account maintenance, be treated as
an item of deduction at the time such fees and other expenses are
incurred and shall be allocated among the Partners pursuant to Section
5.1.
(ii) Except as otherwise provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any election
under Section 754 of the Code which may be made by the Partnership and,
as to those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of
the Code, without regard to the fact that such items are not includable
in gross income or are neither currently deductible nor capitalized for
federal income tax purposes.
(iii) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition were
equal in amount to the Partnership's Carrying Value with respect to
such property as of such date.
(iv) In accordance with the requirements of Section 704(b) of
the Code, any deductions for depreciation, cost recovery or
amortization attributable to any Contributed Property shall be
determined as if the adjusted basis of such property 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.
(v) If the Partnership's adjusted basis in a depreciable or
cost recovery property is reduced for federal income tax purposes
pursuant to Section 48(q)(1) or 48(q)(3) of the Code, the amount of
such reduction shall, solely for purposes hereof, be deemed to be an
additional depreciation or cost recovery deduction in the year such
property is placed in service and shall be allocated among the
Partners pursuant to Section 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 same manner to the Partners to whom such
deemed deduction was allocated.
(c) A transferee of a Partnership Interest shall succeed to a pro rata
portion of the Capital Account of the transferor relating to the Partnership
Interest so transferred; provided, however, that, if the transfer causes a
termination of the Partnership under Section 708(b)(1)(B) of the Code, the
Partnership's properties 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
-15-
<PAGE> 22
such termination) pursuant to Sections 13.3 and 13.4 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 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 Partnership
Interests for cash or Contributed Property, the Capital Account of all
Partners and the Carrying Value of each Partnership property
immediately prior to such issuance shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized Gain
or Unrealized Loss had been recognized on an actual sale of each such
property immediately prior to such issuance and had been allocated to
the Partners at such time pursuant to Section 5.1. In determining such
Unrealized Gain or Unrealized Loss, the aggregate cash amount and fair
market value of all Partnership assets (including, without limitation,
cash or cash equivalents) immediately prior to the issuance of
additional Partnership Interests shall be determined by the 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 fair market value of the Partnership
Interests of all Partners at such time. The General Partner shall
allocate such aggregate value among the assets of the Partner ship (in
such manner as it determines in its sole discretion to be reasonable)
to arrive at a fair market value for individual properties.
(ii) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed
distribution to a Partner of any Partnership property (other than a
distribution of cash that is not in redemption or retirement of a
Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of such 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. Any Unrealized Gain or Unrealized Loss
attributable to such property shall be allocated in the same manner as
Net Termination Gain or Net Termination Loss pursuant to Section
5.1(c); provided, however, that, in making any such allocation, Net
Termination Gain or Net Termination Loss actually realized shall be
allocated first. In determining such Unrealized Gain or Unrealized
Loss the aggregate cash amount and fair market value of all
Partnership assets (including, without limitation, cash or cash
equivalents) immediately prior to a distribution shall (A) in the case
of a deemed distribution occurring as a result of a termination of the
Partnership pursuant to Section 708 of the Code, be determined and
allocated in the same manner as that provided in Section 4.6(d)(i) or
(B) in the case of a liquidating distribution pursuant to Section 14.3
or 14.4, be determined and allocated by the Liquidator using such
reasonable method of valuation as it may adopt.
-16-
<PAGE> 23
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 in Section 4.2 and in
Articles V, VII, XII and XIII.
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.
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 hereinbelow.
(a) Net Income. After giving effect to the allocations in
Section 4.2 and the special allocations set forth in Section 5.1(d),
Net Income for each taxable period and all items of income, gain, loss
and deduction taken into account in computing Net Income for such
taxable period shall be allocated as follows:
(i) First, 100% to the General Partner until the
aggregate Net Income allocated to the General Partner
pursuant to this Section 5.1(a)(i) for the current taxable
year and all previous taxable years is equal to the aggregate
Net Losses allocated to the General Partner pursuant to
Section 5.1(b)(ii) for all previous taxable years; and
(ii) Second, the balance, if any, 100% to the
General Partner and the Limited Partner in accordance with
their respective Percentage Interests.
(b) Net Losses. After giving effect to the special
allocations set forth in Section 5.1(d), Net Losses for each taxable
period and all items of income, gain, loss and deduction taken into
account in computing Net Losses for such taxable period shall be
allocated as follows:
(i) First, 100% to the General Partner and the
Limited Partner in accordance with their respective
Percentage Interests; provided, that Net Losses shall not be
allocated pursuant to this Section 5.1(b)(i) to the extent
that such allocation would cause any Partner to have a
deficit balance in its Adjusted Capital Account at the
-17-
<PAGE> 24
end of such taxable year (or increase any existing deficit
balance in its Adjusted Capital Account); and
(ii) Second, the balance, if any, 100% to the
General Partner.
(c) Net Termination Gains and Losses. After giving effect to
the allocations in Section 4.2 and the special allocations set forth
in Section 5.1(d), all items of income, gain, loss and deduction taken
into account in computing Net Termination Gain or Net Termination Loss
for such taxable period shall be allocated in the same manner as such
Net Termination Gain or Net Termination Loss is allocated hereunder.
All allocations under this Section 5.1(c) shall be made after Capital
Account balances have been adjusted by all other allocations provided
under this Section 5.1 and after all distributions of Available Cash
provided under Section 5.3 have been made with respect to the taxable
period ending on the date of the Partnership's liquidation pursuant to
Section 13.3.
(i) If a Net Termination Gain is recognized (or
deemed recognized pursuant to Section 4.6(d)) from
Termination Capital Transactions, such Net Termination Gain
shall be allocated between the General Partner and the
Limited Partner 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, and
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; and
(B) Second, 100% to the General Partner and
the Limited Partner in accordance with their
respective Percentage Interests.
(ii) If a Net Termination Loss is recognized (or
deemed recognized pursuant to Section 4.6(d)) from
Termination Capital Transactions, such Net Termination Loss
shall be allocated to the Partners in the following manner:
(A) First, 100% to the General Partner and
the Limited Partner in proportion to, and to the
extent of, the positive balances in their respective
Adjusted Capital Accounts; and
(B) Second, the balance, if any, 100% to
the General Partner.
(d) Special Allocations. Notwithstanding any other provision
of this Section 5.1, the following special allocations shall be made
for such taxable period:
-18-
<PAGE> 25
(i) Partnership Minimum Gain Chargeback.
Notwithstanding any other provision of this Section 5.1, if
there is a net decrease in Partnership Minimum Gain during
any Partnership taxable period, each Partner shall be
allocated items of Partnership income and gain for such
period (and, if necessary, subsequent periods) in the manner
and amounts provided in Treasury Regulation Sections
1.704-2(f)(6), 1.704-2(g)(2) and 1.704-2(j)(2)(i), or any
successor provision. For purposes of this Section 5.1(d),
each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any
other allocations pursuant to this Section 5.1(d) with
respect to such taxable period (other than an allocation
pursuant to Sections 5.1(d)(v) and (vi)). This Section
5.1(d)(i) is intended to comply with the Partnership Minimum
Gain chargeback requirement in Treasury Regulation Section
1.704-2(f) and shall be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum
Gain. Notwithstanding the other provisions of this Section
5.1 (other than Section 5.1(d)(i)), except as provided in
Treasury Regulation Section 1.704-2(i)(4), if there is a net
decrease in Partner Nonrecourse Debt Minimum Gain during any
Partnership taxable period, any Partner with a share of
Partner Nonrecourse Debt Minimum Gain at the beginning of
such taxable period shall be allocated items of Partnership
income and gain for such period (and, if necessary,
subsequent periods) in the manner and amounts provided in
Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions. For purposes
of this Section 5.1(d), each Partner's Adjusted Capital
Account balance shall be determined, and the allocation of
income or gain required hereunder shall be effected, prior to
the application of any other allocations pursuant to this
Section 5.1(d), other than Section 5.1(d)(i) and other than
an allocation pursuant to Sections 5.1(d)(v) and (vi), with
respect to such taxable period. This Section 5.1(d)(ii) is
intended to comply with the chargeback of items of income and
gain requirement in Treasury Regulation Section 1.704-2(i)(4)
and shall be interpreted consistently therewith.
(iii) Qualified Income Offset. In the event any
Partner unexpectedly receives any adjustments, allocations or
distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6) items of Partnership income and gain
shall be 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(d)(i)
or (ii).
(iv) Gross Income Allocations. In the event any
Partner has a deficit balance in its Adjusted Capital Account
at the end of any Partnership taxable period 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(d)(iv) shall be made only if and to the extent
that such Partner would
-19-
<PAGE> 26
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(d)(iv) were not in
this Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions
for any taxable period shall be allocated to the Partners in
accordance with their respective Percentage Interests. If the
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 Partner, to revise the prescribed ratio to the
numerically closest ratio that does satisfy such
requirements.
(vi) Partner Nonrecourse Deductions. Partner
Nonrecourse Deductions for any taxable period shall be
allocated 100% to the Partner that bears the Economic Risk of
Loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in
accordance with Treasury Regulation Section 1.704-2(i). If
more than one Partner bears the Economic Risk of Loss with
respect to a Partner Nonrecourse Debt, such Partner
Nonrecourse Deductions attributable thereto shall be
allocated between or among such Partners in accordance with
the ratios in which they share such Economic Risk of Loss.
(vii) Nonrecourse Liabilities. For purposes of
Treasury Regulation Section 1.752-3(a)(3), the Partners agree
that Nonrecourse Liabilities of the Partnership in excess of
the sum of (A) the amount of Partnership Minimum Gain and (B)
the total amount of Nonrecourse Built-in Gain shall be
allocated among the Partners in accordance with their
respective Percentage Interests.
(viii) Code Section 754 Adjustments. To the extent
an adjustment to the adjusted tax basis of any Partnership
asset pursuant to Section 734(b) or 743(b) of the Code is
required, pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts, the amount of such adjustment to the
Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis), and such item of gain or
loss shall be specially allocated to the Partners in a manner
consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such Section of the
Treasury regulations.
(ix) Curative Allocation.
(A) Notwithstanding any other provision of
this Section 5.1, other than the Required
Allocations, the Required Allocations shall be taken
into account in making the Agreed Allocations so
that, to the extent possible, the net amount of
items of income, gain, loss and deduction allocated
to each Partner pursuant to the Required Allocations
and the Agreed Allocations, together, shall be equal
to the net amount of such items that would have been
allocated
-20-
<PAGE> 27
to each such Partner under the Agreed Allocations
had the Required Allocations and the related
Curative Allocation not otherwise been provided in
this Section 5.1. Notwithstanding the preceding
sentence, Required Allocations relating to (1)
Nonrecourse Deductions shall not be taken into
account except to the extent that there has been a
decrease in Partnership Minimum Gain and (2) Partner
Nonrecourse Deductions shall not be taken into
account except to the extent that there has been a
decrease in Partner Nonrecourse Debt Minimum Gain.
Allocations pursuant to this Section 5.1(d)(ix)(A)
shall only be made with respect to Required
Allocations to the extent the General Partner
reasonably determines that such allocations will
otherwise be inconsistent with the economic
agreement among the Partners. Further, allocations
pursuant to this Section 5.1(d)(ix)(A) shall be
deferred with respect to allocations pursuant to
clauses (1) and (2) hereof to the extent the General
Partner reasonably determines that such allocations
are likely to be offset by subsequent Required
Allocations.
(B) The General Partner shall have
reasonable discretion, with respect to each taxable
period, to (1) apply the provisions of Section
5.1(d)(ix)(A) in whatever order is most likely to
minimize the economic distortions that might
otherwise result from the Required Allocations, and
(2) divide all allocations pursuant to Section
5.1(d)(ix)(A) among the Partners in a manner that is
likely to minimize such economic distortions.
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 shall be allocated among the Partners in the same manner as its
correlative item of "book" income, gain, loss or deduction is allocated
pursuant to Section 5.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the
manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property and
its adjusted basis at the time of contribution; and (B) except as
otherwise provided in Section 5.2(b)(iv), 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)(iv),
-21-
<PAGE> 28
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) Except as otherwise provided in Section 5.2(b)(iv), all
other items of income, gain, loss and deduction shall be allocated
among the Partners in the same manner as their correlative item of
"book" gain or loss is allocated pursuant to Section 5.1. Such
allocations are intended to comply with, and shall be effected by the
General Partner in accordance with the principles of Treasury
Regulation Section 1.704-3(c) and Temporary Treasury Regulation
Section 1.704-3T(d).
(iv) Any items of income, gain, loss or deduction otherwise
allocable under Section 5.2(b)(i)(B), 5.2(b)(ii)(B) or 5.2(b)(iii)
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 and for the
preservation of uniformity of any class or classes of Partnership Interests),
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 any class or classes of Partnership Interests). 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 Partnership Interests
or 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 or amortize the portion of an adjustment under Section 743(b) of the
Code attributable to unrealized appreciation in any Adjusted Property (to the
extent of the unamortized Book-Tax Disparity) using a predetermined rate
derived from the depreciation or amortization method and useful life applied to
the Partnership's common basis of such property, despite the inconsistency of
such approach with Proposed Treasury Regulation Section 1.168-2(n), Treasury
Regulation Section 1.167(c)-1(a)(6) or the legislative history of Section 197
of the Code. If the General Partner determines that such reporting position
cannot reasonably be taken, the General Partner may adopt depreciation and
amortization conventions under which all purchasers acquiring Partnership
Interests in the same month would receive depreciation and amortization
deductions, based upon the same applicable rate as if they had purchased a
direct interest in the Partnership's property. If the General Partner chooses
not to utilize such aggregate method, the General Partner may use any other
reasonable depreciation and amortization conventions to preserve the uniformity
of the intrinsic tax characteristics of any class or classes of Partnership
Interests that would not have a material adverse effect on the Limited Partner
or the holders of any class or classes of Partnership Interests.
-22-
<PAGE> 29
(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) The General Partner may adopt such methods of allocation of
income, gain, loss or deduction between a transferor and a transferee of a
Partnership Interest as it determines necessary, to the extent permitted or
required by Section 706 of the Code and the regulations or rulings promulgated
thereunder.
5.3 REQUIREMENT OF DISTRIBUTIONS. (a) Within 45 days following the end
of each calendar quarter (or following the period from the Closing Date to June
30, 1994) 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 in accordance with their respective Percentage
Interests. 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 or require any
distribution of cash if and to the extent such distribution would be prohibited
by applicable law or by any loan agreement, security agreement, mortgage, debt
instrument or other agreement or obligation to which the Partnership is a party
or by which it is bound or its assets are subject.
(b) Notwithstanding the definition of Available Cash contained herein,
disbursements made or reserves established after the end of any quarter shall
be deemed to have been made or established, for purposes of determining
Available Cash, within such quarter if the General Partner so determines.
Notwithstanding the foregoing, in the event of the dissolution and liquidation
of the Partnership, all proceeds of such liquidation shall be applied and
distributed in accordance with, and subject to the terms and conditions of,
Sections 13.3 and 13.4
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
6.1 MANAGEMENT. (a) The General Partner shall conduct, direct and
manage all activities of the Partnership. Except as otherwise expressly
provided in this Agreement, all management powers over the business and affairs
of the Partnership shall be exclusively vested in the General Partner, and the
Limited Partner shall have no 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
-23-
<PAGE> 30
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 appropriate 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, (i) the
making of any expenditures, the lending or borrowing of money, the assumption
or guarantee of, or other contracting for, indebtedness and other liabilities,
the issuance of evidences of indebtedness and the incurring of any other
obligations; (ii) the making of tax, regulatory and other filings, or rendering
of periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership; (iii) the
acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or
exchange of any or all of the assets of the Partnership or the merger or other
combination of the Partnership with or into another Person (the matters
described in this clause (3) being subject, however, to any prior approval that
may be required by Section 6.3); (iv) the use of the assets of the Partnership
(including, without limitation, cash on hand) for any purpose consistent with
the terms of this Agreement, including, without limitation, the financing of
the conduct of the operations of the Partnership, the lending of funds to other
Persons (including, without limitation, the Other Partnerships), the repayment
of obligations of the Partnership; (v) the negotiation, execution and
performance of any contracts, conveyances or other instruments (including,
without limitation, instruments that limit the liability of the Partnership
under contractual arrangements to all or particular assets of the Partnership,
with the other party to the contract to have no recourse against the General
Partner or its assets other than its interest in the Partnership, even if same
results in the terms of the transaction being less favorable to the Partnership
than would otherwise be the case); (vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees and agents (including, without
limitation, employees having titles such as "president," "vice president,"
"secretary" and "treasurer") and agents, outside attorneys, accountants,
consultants and contractors and the determination of their compensation and
other terms of employment or hiring; (viii) the maintenance of such insurance
for the benefit of the Partnership and the Partners (including, without
limitation, the assets of the Partnership) as it deems necessary or
appropriate; (ix) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general partnerships, joint
ventures, corporations, limited liability companies or other relationships; (x)
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;
and (xi) the indemnification of any Person against liabilities and
contingencies to the extent permitted by law.
(b) Notwithstanding any other provision of this Agreement, the MLP
Agreement, the Other Partnership Agreements, the Delaware Act or any applicable
law, rule or regulation, each of the Partners hereby (i) approves, ratifies and
confirms the execution, delivery and performance by the parties thereto of the
MLP Agreement, the Underwriting Agreement, the Other Partnership Agreements,
the Contribution Agreement, the Ancillary Agreement, the Corporate Services
Agreement, the Management Services Agreement, the agreements filed as Exhibits
10.01-10.11 to the Registration Statement, and the other agreements described
in or filed as a part of the Registration Statement, and the engaging by any
Affiliate of the General Partner (other than Affiliates controlled by the
General Partner) in business and activities (other than Restricted
Opportunities) that are in direct competition with the business and activities
of the MLP, the Partnership and the Other Partnerships; (ii) agrees that the
General Partner (on its own or through any officer of the Partnership) is
authorized to execute, deliver and perform the agreements referred to in clause
(i) of this sentence and the other
-24-
<PAGE> 31
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; and (iii) agrees that the execution, delivery or
performance by the General Partner, the MLP, the Partnership, the Other
Partnerships or any Affiliate of any of them of this Agreement or any agreement
authorized or permitted under this Agreement, or the engaging by any Affiliate
of the General Partner (other than Affiliates controlled by the General
Partner) in any business and activities (other than Restricted Opportunities)
that are in direct competition with the business and activities of the MLP, the
Partnership and the Other Partnerships, shall not 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 any other agreements) or of any duty stated or implied by law or equity.
6.2 CERTIFICATE OF LIMITED PARTNERSHIP. The General Partner has caused
the Certificate of Limited Partnership to be filed with the Secretary of State
of the State of Delaware as required by the Delaware Act and shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be determined by the General Partner in its sole discretion to be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the Limited Partner has 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 Partner has 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 7.4(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 the Limited
Partner.
6.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY. (a) The General
Partner may not, without written approval of the specific act by the Limited
Partner or by other written instrument executed and delivered by the Limited
Partner subsequent to the date of this Agreement, take any action in
contravention of this Agreement, including, 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 (v) transfer its
interest as general partner of the Partnership, except as otherwise provided in
this Agreement.
(b) Except as provided in Articles XIII and XV, 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 without the approval of the Limited Partner; 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 and shall not apply to any forced
sale of any or all of the Partnership's assets pursuant to the foreclosure of,
or other realization upon, any such encumbrance.
-25-
<PAGE> 32
(c) Unless approved by the Limited Partner, 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 to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes; provided
that this Section 6.3(c) shall not be construed to apply to amendments to this
Agreement (which are governed by Article XIV) or mergers or consolidations of
the Partnership with any Person (which are governed by Article XV).
(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, the General Partner shall not
be compensated for its services as general partner of the 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, salary, bonus,
incentive compensation and other amounts paid to any Person to perform services
for the Partnership or for the General Partner in the discharge of its duties
to the Partnership) and (ii) all other necessary or appropriate expenses
allocable to the Partnership or otherwise reasonably incurred by the General
Partner in connection with operating the Partnership's business (including,
without limitation, expenses allocated to the General Partner by its
Affiliates); provided, however, that the General Partner shall not perform or
be reimbursed for the "Services" to be performed on behalf of the Partnership
by EOTT Canada pursuant to the Management Services Agreement. 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. Reimbursements pursuant to this Section 6.4 shall be in
addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 6.7.
6.5 OUTSIDE ACTIVITIES. (a) After the Closing Date, the General
Partner, for so long as it is the general partner of the Partnership, (i)
agrees that its sole business will be to act as the general partner of the
Partnership, the MLP and the Other Partnerships and to undertake activities
that are ancillary or related thereto (including being a limited partner in the
MLP), (ii) shall not enter into or conduct any business or incur any debts or
liabilities except in connection with or incidental to (A) its performance of
the activities required or authorized by this Agreement, the Other Partnership
Agreements or the MLP Agreement or described in or contemplated by the
Registration Statement and (B) the acquisition, ownership or disposition of
partnership interests in the Partnership, the Other Partnerships and the MLP,
except that, notwithstanding the foregoing, employees of the General Partner
may perform services for Enron and its Affiliates and (iii) shall cause its
Affiliates not to engage in any Restricted Opportunities.
(b) Except as described or provided for in the MLP Agreement, the
Other Partnership Agreements, the Registration Statement or Section 6.5(a), no
Indemnitee shall be expressly or implicitly restricted or proscribed pursuant
to the MLP Agreement, this Agreement, the Other
-26-
<PAGE> 33
Partnership Agreements or the partnership relationship established hereby or
thereby from engaging in other activities for profit, whether in the businesses
engaged in by the Partnership, the Other Partnerships or the MLP or anticipated
to be engaged in by the Partnership, the Other Partnerships, the MLP or
otherwise, including, without limitation, in the case of any Affiliates of the
General Partner those businesses and activities (other than Restricted
Opportunities) in direct competition with the business and activities of the
Partnership, the MLP or the Other Partnerships or otherwise described in or
contemplated by the Registration Statement. Without limitation of and subject
to the foregoing each Indemnitee (other than the General Partner) shall have
the right to engage in businesses of every type and description and to engage
in and possess an interest in other business ventures of any and every type or
description, independently or with others, including, without limitation, in
the case of any Affiliates of the General Partner business interests and
activities (other than Restricted Opportunities) in direct competition with the
business and activities of the Partnership, the MLP or the Other Partnerships,
and none of the same shall constitute a breach of this Agreement or any duty to
the Partnership, the Other Partnerships, the MLP or any Partners. Neither the
Partnership, the Other Partnerships, the MLP, any Limited Partner nor any other
Person shall have any rights by virtue of this Agreement, the Other Partnership
Agreements, the MLP Agreement or the partnership relationship established
hereby or thereby in any business ventures of any Indemnitee (subject, in the
case of the General Partner, to compliance with Section 6.5(c)) and such
Indemnitees shall have no obligation to offer any interest in any such business
ventures to the Partnership, the Other Partnerships, the MLP, any Limited
Partner or any other Person.
(c) Subject to the terms of Sections 6.5(a) and (b) but otherwise
notwithstanding anything to the contrary in this Agreement, (i) the competitive
activities of any Indemnitees (other than the General Partner) are hereby
approved by the Partnership and all Partners and (ii) it shall be deemed not to
be a breach of the General Partner's fiduciary duty or any other obligation of
any type whatsoever of the General Partner for the General Partner to permit an
Affiliate of the General Partner to engage, or for any such Affiliate to
engage, in a business opportunity in preference to or to the exclusion of the
Partnership (other than the Restricted Opportunities).
(d) The term "Affiliates" when used in this Section 6.5 with respect
to the General Partner shall not include the Partnership, the MLP, the Other
Partnerships or any other Persons controlled by the General Partner.
6.6 LOANS TO AND FROM THE GENERAL PARTNER; CONTRACTS WITH AFFILIATES.
(a) (i) The General Partner, the Limited Partner, the Other Partnerships or any
of their Affiliates may lend to the Partnership, and the Partnership may
borrow, funds needed or desired by the Partnership for such periods of time as
the General Partner may determine and (ii) the General Partner, the Limited
Partner, the Other Partnerships or any Affiliate thereof may borrow from the
Partnership, and the Partnership may lend to such Persons, excess funds of the
Partnership for such periods of time and in such amounts as the General Partner
may determine; provided, however, that in either such case the lending party
may not charge the borrowing party interest at a rate greater than the rate
that would be charged the borrowing party (without reference to the lending
party's financial abilities or guarantees) by unrelated lenders on comparable
loans. The borrowing party shall reimburse the lending party for any costs
(other than any additional interest costs) incurred by the lending party in
connection with the borrowing of such funds. For purposes of this Section
6.6(a) and Section 6.6(b), the term "Partnership" shall include any Affiliate
of the Partnership that is controlled by the Partnership.
-27-
<PAGE> 34
(b) The General Partner may itself, or may enter into an agreement
with any of its Affiliates to, render services to the Partnership or to the
General Partner in the discharge of its duties as general partner of 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(b)
shall be deemed satisfied as to (i) any transaction approved by Special
Approval, (ii) any transaction the terms of which are no less favorable to the
Partnership than those generally being provided to or available from unrelated
third parties or (iii) any transaction that, taking into account the totality
of the relationships between the parties involved (including other transactions
that may be particularly favorable or advantageous to the Partnership), is
equitable to the Partnership. The provisions of Section 6.4 shall apply to the
rendering of services described in this Section 6.6(b).
(c) The Partnership may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(d) 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(d) shall be deemed to be satisfied as to (i)
the transactions effected pursuant to Sections 4.2 and 4.3, the Contribution
Agreement and any other transactions described in or contemplated by the
Registration Statement, (ii) any transaction approved by Special Approval,
(iii) any transaction the terms of which are no less favorable to the
Partnership than those generally being provided to or available from unrelated
third parties or (iv) any transaction that, taking into account the totality of
the relationships between the parties involved (including other transactions
that may be particularly favorable or advantageous to the Partnership), is
equitable to the Partnership.
(e) The General Partner and its Affiliates will have no obligation to
permit the Partnership, the Other Partnerships or the MLP to use any facilities
or assets of the General Partner and its Affiliates, except as may be provided
in contracts entered into from time to time specifically dealing with such use,
nor shall there be any obligation on the part of the General Partner or its
Affiliates to enter into such contracts.
(f) Without limitation of Sections 6.6(a) through 6.6(e), and
notwithstanding anything to the contrary in this Agreement, the existence of
the conflicts of interest described in the Registration Statement are hereby
approved by all Partners.
6.7 INDEMNIFICATION. (a) To the fullest extent permitted by law but
subject to the limitations expressly provided in this Agreement, the General
Partner, any Departing Partner, any Person who is or was an officer or director
of the Partnership, the General Partner or any Departing Partner and all other
Indemnitees shall be indemnified and held harmless by the Partnership from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including, without limitation, legal fees and expenses), judgments,
fines, penalties, interest, settlements and other amounts arising from any and
all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnitee may be involved, or is
threatened to be
-28-
<PAGE> 35
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 Partnership, 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 and 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 with respect to its obligations incurred pursuant to the Underwriting
Agreement or the Contribution Agreement (other than obligations incurred by the
General Partner on behalf of the Partnership, the MLP or the Other
Partnerships). 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, it being
agreed that the General Partner shall not be personally liable for such
indemnification and shall have no obligation to contribute or loan any monies
or property to the Partnership to enable it to effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including,
without limitation, legal fees and expenses) incurred by an Indemnitee who is
indemnified pursuant to Section 6.7(a) in defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the Partnership
prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Partnership of 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 Indemnitee's capacity as (i) the General
Partner, a Departing Partner or an Affiliate thereof, (ii) an officer,
director, employee, partner, agent or trustee of the Partnership, 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 as to actions in any other capacity (including, without
limitation, any capacity under the Underwriting Agreement), and shall continue
as to an Indemnitee who has ceased to serve in such capacity and shall inure to
the benefit of the heirs, successors, assigns and administrators of the
Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the
General 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,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
(e) For purposes of this Section 6.7, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by it of its duties to the Partnership also
imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of
-29-
<PAGE> 36
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 Partner to
personal liability by reason of the indemnification provisions set forth in
this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 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
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 Partner, or any other Persons
who have acquired interests in the Partnership, 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
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Partnership and the Limited Partner of the
General Partner, its directors, officers and employees 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, the MLP Agreement or the Other
Partnership Agreements, 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 MLP, the Other Partnerships or the Limited Partner, on
the other hand, any
-30-
<PAGE> 37
resolution or course of action in respect of such conflict of interest shall be
permitted and deemed approved by the Limited Partner, and shall not constitute
a breach of this Agreement, of the MLP Agreement, of the Other Partnership
Agreements or of any agreement contemplated herein or therein, or of any duty
stated or implied by law or equity, if the resolution or course of action is
or, by operation of this Agreement is deemed to be, fair and reasonable to the
Partnership. The General Partner shall be authorized but not required in
connection with its resolution of such conflict of interest to seek Special
Approval of a resolution of such conflict or course of action. Any conflict of
interest and any resolution of such conflict of interest shall be conclusively
deemed fair and reasonable to the Partnership if such conflict of interest or
resolution is (i) approved by Special Approval, (ii) on terms no less favorable
to the Partnership than those generally being provided to or available from
unrelated third parties or (iii) fair to the Partnership, taking into account
the totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership). The General Partner may also adopt a resolution or course of
action that has not received Special Approval. The General Partner (including
the Audit Committee in connection with Special Approval) shall be authorized in
connection with its determination of what is "fair and reasonable" to the
Partnership and in connection with its resolution of any conflict of interest
to consider (A) the relative interests of any party to such conflict,
agreement, transaction or situation and the benefits and burdens relating to
such interest; (B) any customary or accepted industry practices and any
customary or historical dealings with a particular Person; (C) any applicable
generally accepted accounting or engineering practices or principles; and (D)
such additional factors as the General Partner (including such Audit Committee)
determines in its sole discretion to be relevant, reasonable or appropriate
under the circumstances. Nothing contained in this Agreement, however, is
intended to nor shall it be construed to require the General Partner (including
such Audit Committee) 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 MLP, the Other Partnerships, the Limited Partner or any
limited partner in the MLP, (ii) it may make such decision in its sole
discretion (regardless of whether there is a reference to "sole discretion" or
"discretion") unless another express standard is provided for, or (iii) in
"good faith" or under another express standard, the General Partner or such
Affiliate shall act under such express standard and shall not be subject to any
other or different standards imposed by this Agreement, the MLP Agreement, the
Other Partnership Agreements 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 or such Affiliate consistent with the standards of
"reasonable discretion" set forth in the definition of Available Cash shall not
constitute a breach of any duty of the General Partner to the Partnership or
the Limited Partner. The General Partner shall have no duty, express or
implied, to sell or otherwise dispose of any asset of the Partnership or of the
Other Partnerships, other than in the ordinary course of business. No borrowing
by the Partnership
-31-
<PAGE> 38
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
Partner by reason of the fact that the purpose or effect of such borrowing is
directly or indirectly to (A) enable the General Partner of the MLP to receive
or increase the amount of "Incentive Distributions" under the MLP Agreement,
(B) reduce or eliminate the obligation of Enron or any of its Affiliates to
purchase APIs under the Ancillary Agreement, (C) permit redemption of APIs by
the MLP, (D) shorten the "Subordination Period" under the MLP Agreement or (E)
reduce the "Cumulative Common Unit Arrearage" under the MLP Agreement in order
to hasten the conversion of the "Subordinated Units" in the MLP into Common
Units.
(c) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
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 to be taken in
reliance upon the opinion (including, without limitation, an Opinion of
Counsel) of such Persons as to matters that such General Partner reasonably
believes to be within such Person's professional or expert competence shall be
conclusively presumed to have been done or omitted in good faith and in
accordance with such opinion.
(c) 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 not reasonably believed by the General Partner to be in, or not
inconsistent with, 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, 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, one or more of its
Affiliates or one or more nominees, as the General
-32-
<PAGE> 39
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 or one or more of its Affiliates or one or more nominees shall
be held by the General Partner or such Affiliate or nominee for the use and
benefit of the Partnership in accordance with the provisions of this Agreement;
provided, however, that 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; provided that, prior to
the withdrawal or removal of the General Partner or as soon thereafter as
practicable, the General Partner shall use reasonable efforts to effect the
transfer of record title to the Partnership and, prior to any such transfer,
will provide for the use of such assets in a manner satisfactory to the
Partnership. All Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which record
title to such Partnership assets is held.
6.12 RELIANCE BY THIRD PARTIES. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the 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. The
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.
ARTICLE VII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER
7.1 LIMITATION OF LIABILITY. The Limited Partner shall have no
liability under this Agreement except as expressly provided in this Agreement
or the Delaware Act.
7.2 MANAGEMENT OF BUSINESS. The Limited Partner, in its capacity as
such, shall not participate in the operation, management or control (within the
meaning of the Delaware Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
Partnership, the General Partner, any of its Affiliates or any officer,
director, employee, partner, agent
-33-
<PAGE> 40
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 RETURN OF CAPITAL. The Limited Partner shall not be entitled to
the withdrawal or return of its Capital Contribution, except to the extent, if
any, that distributions made pursuant to this Agreement or upon termination of
the Partnership may be considered as such by law and then only to the extent
provided for in this Agreement.
7.4 RIGHTS OF THE LIMITED PARTNER RELATING TO THE PARTNERSHIP. (a) In
addition to other rights provided by this Agreement or by applicable law, and
except as limited by Section 7.4(b), the Limited Partner shall have the right,
for a purpose reasonably related to the Limited Partner's interest as a limited
partner in the Partnership, upon reasonable demand and at the Limited Partner's
own expense:
(i) to obtain true and full information regarding the status
of the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of
the Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to it, upon notification to the
General Partner, a current list of the name and last known business,
residence or mailing address of each Partner;
(iv) to have furnished to it, upon notification to the
General Partner, a copy of this Agreement and the Certificate of
Limited Partnership and all amendments thereto, together with a copy
of the executed copies of all powers of attorney pursuant to which
this Agreement, the Certificate of Limited Partnership and all
amendments thereto have been executed;
(v) to obtain true and full information regarding the amount
of cash and 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 Partner 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 that the Partnership is required by law or by agreements with third parties
to keep confidential (other than agreements with Affiliates of the General
Partner the primary purpose of which is to circumvent the obligations set forth
in this Section 7.4).
-34-
<PAGE> 41
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 RECORDS AND ACCOUNTING. The General Partner shall keep or cause to
be kept at the principal office of the Partnership appropriate books and
records with respect to the Partnership's business, including, without
limitation, all books and records necessary to provide to the Limited Partner
any information, lists and copies of documents required to be provided pursuant
to Section 7.4(a). Any books and records maintained by or on behalf of the
Partnership in the regular course of its business, including, without
limitation, books of account and records of Partnership proceedings, may be
kept on, or be in the form of, computer disks, hard drives, punch cards,
magnetic tape, photographs, micrographics or any other information storage
device, provided, that the books and records so maintained are convertible into
clearly legible written form within a reasonable period of time. The books of
the Partnership shall be maintained, for financial reporting purposes, on an
accrual basis in accordance with generally accepted accounting principles.
8.2 FISCAL YEAR. The fiscal year of the Partnership shall be the
calendar year.
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 the Partners 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
Partner.
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. The Limited Partner
agrees to cooperate with the General Partner and to do or refrain from doing
any or all things reasonably required by the General Partner to conduct such
proceedings.
-35-
<PAGE> 42
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 Other Partnerships 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 (including, without limitation, by
reason of Section 1446 of the Code), the amount withheld shall be treated as a
distribution of cash pursuant to Section 5.3 in the amount of such withholding
from such Partner.
9.6 OPINIONS OF COUNSEL. Notwithstanding any other provision of this
Agreement, if the Partnership is treated as an association taxable as a
corporation at any time or is otherwise taxable 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 or any of the Other Partnerships to become so
treated as an association taxable as a corporation or otherwise taxable as an
entity for federal income tax purposes, such requirement for an Opinion of
Counsel shall be deemed automatically waived.
ARTICLE X
TRANSFER OF INTERESTS
10.1 TRANSFER. (a) The term "transfer," when used in this Article X
with respect to a Partnership Interest, shall be deemed to refer to a
transaction by which a Partner disposes of its Partnership Interest to another
Person and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article X.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article X shall be null and void.
(c) Nothing contained in this Article X shall be construed to prevent
a disposition by the parent entity of the General Partner of all of the issued
and outstanding capital stock of the General Partner.
10.2 TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST. If the
general partner of the MLP transfers its partnership interest as a general
partner therein to any Person in accordance with the provisions of the MLP
Agreement, the General Partner shall contemporaneously therewith transfer its
Partnership Interest as the general partner of the Partnership to such Person,
and the Limited Partner hereby expressly consents to such transfer. Except as
set forth in the immediately preceding sentence, the General Partner may not
transfer all or any part of its Partnership Interest as a General Partner in
the Partnership.
-36-
<PAGE> 43
10.3 TRANSFER OF THE LIMITED PARTNER'S PARTNERSHIP INTEREST. If the
Limited Partner merges, consolidates or otherwise combines into any other
Person or transfers all or substantially all of its assets to another Person,
such Person may become a Substituted Limited Partner pursuant to Article XI.
Except as set forth in the immediately preceding sentence, the Limited Partner
may not transfer all or any part of its Partnership Interest or withdraw from
the Partnership.
ARTICLE XI
ADMISSION OF PARTNERS
11.1 ADMISSION OF SUBSTITUTED LIMITED PARTNERS. Any person that is the
successor in interest to a Limited Partner as described in Section 10.3 shall
be admitted to the Partnership as a limited partner upon (a) furnishing to the
General Partner (i) acceptance in form satisfactory to the General Partner of
all of the terms and conditions of this Agreement and (ii) such other documents
or instruments as may be required to effect its admission as a limited partner
in the Partnership and (b) obtaining the consent of the General Partner, which
consent may be withheld or granted in the sole discretion of the General
Partner. Such Person shall be admitted to the Partnership as a limited partner
immediately prior to the transfer of the Partnership Interest, and the business
of the Partnership shall continue without dissolution.
11.2 ADMISSION OF SUCCESSOR GENERAL PARTNER. A successor General
Partner approved pursuant to Section 12.1 or 12.2 or the transferee of or
successor to all of the General Partner's Partnership Interest as a General
Partner in the Partnership pursuant to Section 10.2 who is proposed to be
admitted as a successor General Partner shall, subject to compliance with the
terms of Section 12.3, if applicable, be admitted to the Partnership as the
General Partner, effective immediately prior to the withdrawal or removal of
the General Partner pursuant to Section 12.1 or 12.2 or the transfer of the
General Partner's Partnership Interest as a General Partner in the Partnership
pursuant to Section 10.2. Any such successor shall, subject to the terms
hereof, carry on the business of the Partnership without dissolution. In each
case, the admission of such successor General Partner to the Partnership shall,
subject to the terms hereof, 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 such admission.
11.3 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 to reflect such admission 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.
11.4 ADMISSION OF ADDITIONAL LIMITED PARTNERS. (a) A Person (other
than the General Partner or a Substituted Limited Partner) who makes a Capital
Contribution to the Partnership in accordance with this Agreement shall be
admitted to the Partnership as an Additional Limited Partner only upon
furnishing to the General Partner (i) evidence of acceptance in form
satisfactory to the General Partner of all of the terms and conditions of this
Agreement, including, without limitation, the power of
-37-
<PAGE> 44
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 11.4, 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 Person
is recorded as such in the books and records of the Partnership, following the
consent of the General Partner to such admission.
ARTICLE XII
WITHDRAWAL OR REMOVAL OF PARTNERS
12.1 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 Limited Partner;
(ii) the General Partner transfers all of its rights as
General Partner pursuant to Section 10.2;
(iii) the General Partner is removed pursuant to Section
12.2;
(iv) the general partner of the MLP withdraws from, or is
removed as the general partner of, the MLP;
(v) the General Partner (A) makes a general assignment for
the benefit of creditors; (B) files a voluntary bankruptcy petition;
(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 Section 12.1(a)(v); 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;
(vi) 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
-38-
<PAGE> 45
(vii) a certificate of dissolution or its equivalent is filed
for the General Partner, or 90 days expire after the date of notice to
the General Partner of revocation of its charter without a
reinstatement of its charter, under the laws of its state of
incorporation.
If an Event of Withdrawal specified in Section 12.1(a)(v), (vi) or (vii)
occurs, the withdrawing General Partner shall give notice to the Limited
Partner within 30 days after such occurrence. The Partners hereby agree that
only the Events of Withdrawal described in this Section 12.1 shall result in
the withdrawal of the General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following circumstances:
(i) at any time during the period beginning on the Closing
Date and ending at 12:00 Midnight, Central Standard Time, on March 31,
2004 the General Partner voluntarily withdraws by giving at least 90
days' advance notice of its intention to withdraw to the Limited
Partner, provided, that prior to the effective date of such withdrawal
the Limited Partner approves such withdrawal and the General Partner
delivers to the Partnership an Opinion of Counsel ("Withdrawal Opinion
of Counsel") that such withdrawal (following the selection of the
successor General Partner) would not result in the loss of the limited
liability of the Limited Partner or cause the Partnership to be
treated as an association taxable as a corporation or otherwise to be
taxed as an entity for federal income tax purposes;
(ii) at any time on or after 12:00 Midnight, Central Standard
Time, on March 31, 2004, the General Partner voluntarily withdraws by
giving at least 90 days' advance notice to the Limited Partner, such
withdrawal to take effect on the date specified in such notice; or
(iii) at any time that the General Partner ceases to be the
General Partner pursuant to Section 12.1(a)(ii), (iii) or (iv). If the
General Partner gives a notice of withdrawal pursuant to Section
12.1(a)(i), the Limited Partner may, prior to the effective date of
such withdrawal or removal, elect a successor General Partner,
provided, that such successor shall be the same Person, if any, that
is elected by the limited partners of the MLP pursuant to Section 13.1
of the MLP Agreement as the successor to the General Partner in its
capacity as general partner of the MLP. If, prior to the effective
date of the General Partner's withdrawal, a successor is not selected
by the Limited Partner as provided herein or the Partnership does not
receive a Withdrawal Opinion of Counsel, the Partnership shall be
dissolved in accordance with Section 13.1. Any successor General
Partner elected in accordance with the terms of this Section 12.1
shall be subject to the provisions of Section 11.2.
12.2 REMOVAL OF A GENERAL PARTNER. A General Partner shall be removed
if such General Partner is removed as a general partner of the MLP pursuant to
Section 13.2 of the MLP Agreement. Such removal shall be effective concurrently
with the effectiveness of the removal of such General Partner as a general
partner of the MLP pursuant to the terms of the MLP Agreement. If a successor
General Partner is elected in connection with the removal of such General
Partner as a general partner of the MLP, such successor General Partner shall,
upon admission pursuant to Article XI,
-39-
<PAGE> 46
automatically become a successor General Partner of the Partnership. The
admission of any such successor General Partner to the Partnership shall be
subject to the provisions of Section 11.2.
12.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR GENERAL PARTNER. The
Partnership Interest of a Departing Partner departing as a result of withdrawal
or removal pursuant to Section 12.1 or 12.2 shall (unless it is otherwise
required to be converted into Common Units pursuant to Section 13.3(b) of the
MLP Agreement) be purchased by the successor to the Departing Partner for cash
in the manner specified in the MLP Agreement. Such purchase (or conversion into
Common Units, as applicable) shall be a condition to the admission to the
Partnership of the successor as a General Partner.
12.4 REIMBURSEMENT OF DEPARTING PARTNER. 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 such departing Partner for
the benefit of the Partnership.
12.5 WITHDRAWAL OF THE LIMITED PARTNER. Without the prior consent of
the General Partner, which may be granted or withheld in its sole discretion,
the Limited Partner shall not have the right to withdraw from the Partnership.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
13.1 DISSOLUTION. The Partnership shall not be dissolved by the
admission of the Initial Limited Partner, 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, subject to
Section 13.2, 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 12.1(a) (other than Section 12.1(a)(ii)), unless a
successor is elected and an Opinion of Counsel is received as provided
in Section 12.1(b) or 12.2 and such successor is admitted to the
Partnership pursuant to Section 11.2;
(c) an election to dissolve the Partnership by the General
Partner that is approved by the Limited Partner;
(d) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Delaware Act;
-40-
<PAGE> 47
(e) the sale of all or substantially all of the assets and
properties of the Partnership; or
(f) the dissolution of Operating OLP.
13.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER
DISSOLUTION. Upon (a) dissolution of the Partnership following an Event of
Withdrawal caused by the withdrawal or removal of the General Partner as
provided in Section 12.1(a)(i) or (iii) and following a failure of the Limited
Partner to appoint a successor General Partner as provided in Section 12.1 or
12.2, then within 90 days thereafter or (b) dissolution of the Partnership upon
an event constituting an Event of Withdrawal as defined in Section 12.1(a)(v),
(vi) or (vii), then within 180 days thereafter, the Limited Partner 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 Limited Partner. In addition, upon dissolution
of the Partnership pursuant to Section 13.1(f), if Operating OLP is
reconstituted pursuant to Section 13.2 of the Operating OLP Agreement, the
reconstituted Operating OLP may, within 180 days after such event of
dissolution, as the Limited Partner, elect to reconstitute the Partnership in
accordance with the immediately preceding sentence. Upon any such election by
the Limited Partner, all Partners shall be bound thereby and shall be deemed to
have approved same. Unless such an election is made within the applicable time
period as set forth above, the Partnership shall conduct only activities
necessary to wind up its affairs. If such an election is so made, then:
(i) the reconstituted Partnership shall continue until the
end of the term set forth in Section 1.5 unless earlier dissolved in
accordance with this Article XIII;
(ii) if the successor General Partner is not the former
General Partner, then the interest of the former General Partner shall
be purchased by the successor General Partner or converted into Common
Units of the MLP as provided in the MLP Agreement; and
(iii) all necessary steps shall be taken to cancel this
Agreement and the Certificate of Limited Partnership and to enter into
and, as necessary, to file a new partnership agreement and certificate
of limited partnership, and the successor General Partner may for this
purpose exercise the powers of attorney granted the General Partner
pursuant to Section 1.4; provided, that the right to approve a
successor General Partner and to reconstitute and to continue the
business of the Partnership shall not exist and may not be exercised
unless the Partnership has received an Opinion of Counsel that (x) the
exercise of the right would not result in the loss of limited
liability of the Limited Partner and (y) neither the Partnership nor
the reconstituted limited partnership would be treated as an
association taxable as a corporation or otherwise be taxable as an
entity for federal income tax purposes upon the exercise of such right
to continue.
13.3 LIQUIDATION. Upon dissolution of the Partnership, unless the
Partnership is continued under an election to reconstitute and continue the
Partnership pursuant to Section 13.2, the General Partner, or in the event the
General Partner has been dissolved or removed, become bankrupt as set forth in
Section 12.1 or withdrawn from the Partnership, a liquidator or liquidating
committee approved by the Limited Partner, shall be the Liquidator. The
Liquidator (if other than the General Partner) shall be entitled to receive
such compensation for its services as may be approved by the
-41-
<PAGE> 48
Limited Partner. The Liquidator shall agree not to resign at any time without
15 days' prior notice and (if other than the General Partner) may be removed at
any time, with or without cause, by notice of removal approved by the Limited
Partner. Upon dissolution, removal or resignation of the Liquidator, a
successor and substitute Liquidator (who shall have and succeed to all rights,
powers and duties of the original Liquidator) shall within 30 days thereafter
be approved by the Limited Partner. The right to approve a successor or
substitute Liquidator in the manner provided herein shall be deemed to refer
also to any such successor or substitute Liquidator approved in the manner
herein provided. Except as expressly provided in this Article XIII, 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; and
(b) to all Partners in accordance with the positive balances
in their respective Capital Accounts, as determined after taking into
account all Capital Account adjustments (other than those made by
reason of this clause) for the taxable year of the Partnership during
which the liquidation of the Partnership occurs (with the date of such
occurrence being determined pursuant to Treasury Regulation Section
1.704-1(b)(2)(ii)(g)); and such distribution shall be made by the end
of such taxable year (or, if later, within 90 days after said date of
such occurrence).
13.4 DISTRIBUTIONS IN KIND. (a) Notwithstanding the provisions of
Section 13.3, 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) and/or distribute to the Partners
or to specific classes of Partners, in lieu of cash, as tenants in common and
in accordance with the provisions of Section 13.3, 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 Partner, and shall be subject to such conditions relating to the
disposition and management of such properties as the Liquidator deems
reasonable and equitable and to any agreements governing the operation of such
properties at such time. The Liquidator shall determine the fair market value
of any property distributed in kind using such reasonable method of valuation
as it may adopt.
-42-
<PAGE> 49
(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 13.3, 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.
13.5 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP. Upon the
completion of the distribution of Partnership cash and property as provided in
Sections 13.3 and 13.4 in connection with the liquidation of the Partnership,
the Partnership shall be terminated and the Certificate of Limited Partnership
and all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be cancelled and such
other actions as may be necessary to terminate the Partnership shall be taken.
13.6 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 13.3 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.
13.7 RETURN OF CAPITAL. The General Partner shall not be personally
liable for, and shall have no obligation to contribute or loan any monies or
property to the Partnership to enable it to effectuate, the return of the
Capital Contributions of the Limited Partner, or any portion thereof, it being
expressly understood that any such return shall be made solely from Partnership
assets.
13.8 NO CAPITAL ACCOUNT RESTORATION. No Partner shall have any
obligation to restore any negative balance in its Capital Account upon
liquidation of the Partnership.
13.9 WAIVER OF PARTITION. Each Partner hereby waives any right to
partition of the Partnership property.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT
14.1 AMENDMENT TO BE ADOPTED SOLELY BY GENERAL PARTNER. The Limited
Partner agrees that the General Partner (pursuant to its powers of attorney
from the Limited Partner), without the approval of the Limited Partner, 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:
-43-
<PAGE> 50
(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 treated as an association 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 Partner in any material
respect, (ii) that is necessary or desirable to satisfy any
requirements, conditions or guidelines contained in any opinion,
directive, order, ruling or regulation of any federal or state agency
or judicial authority or contained in any federal or state statute
(including, without limitation, the Delaware Act), 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 Partner or
(iii) that is required to effect the intent of the provisions of this
Agreement or is otherwise contemplated by this Agreement;
(e) an amendment that is necessary, in the Opinion of
Counsel, to prevent the Partnership or the General Partner or its
directors or officers from in any manner being subjected to the
provisions of the Investment Company Act of 1940, as amended, the
Investment Advisers Act of 1940, as amended, or "plan asset"
regulations adopted under the Employee Retirement Income Security Act
of 1974, as amended, whether or not substantially similar to plan
asset regulations currently applied or proposed by the United States
Department of Labor;
(f) any amendment expressly permitted in this Agreement to be
made by the General Partner acting alone;
(g) an amendment effected, necessitated or contemplated by a
Merger Agreement approved in accordance with Section 15.3;
(h) an amendment that, in the sole discretion of the General
Partner, is necessary or desirable to reflect, account for and deal
with appropriately the formation by the Partnership of, or investment
by the Partnership in, any corporation, partnership, joint venture,
limited liability company or other entity other than the Other
Partnerships, in connection with the conduct by the Partnership of
activities permitted by the terms of Section 3.1; or
(i) any other amendments substantially similar to the
foregoing.
-44-
<PAGE> 51
14.2 AMENDMENT PROCEDURES. Except with respect to amendments of the
type described in Section 14.1, all amendments to this Agreement shall be made
in accordance with the following requirements. Amendments to this Agreement may
be proposed only by or with the consent of the General Partner. Each such
proposal shall contain the text of the proposed amendment. A proposed amendment
shall be effective upon its approval by the Limited Partner.
ARTICLE XV
MERGER
15.1 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.
15.2 PROCEDURE FOR MERGER OR CONSOLIDATION. Merger or consolidation of
the Partnership pursuant to this Article requires the prior approval of the
General Partner. If the General Partner shall determine, in the exercise of its
sole discretion, to consent to the merger or consolidation, the General Partner
shall approve the Merger Agreement, which shall set forth:
(a) The names and jurisdictions of formation or organization
of each of the business entities proposing to merge or consolidate;
(b) The name and jurisdictions of formation or organization
of the business entity that is to survive the proposed merger or
consolidation (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 changes in the constituent documents
or the adoption of new constituent documents (the articles or
certificate of incorporation, articles of trust, declaration
-45-
<PAGE> 52
of trust, certificate or agreement of limited partnership or other
similar charter or governing document) of the Surviving Business
Entity to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date
of the filing of the certificate of merger pursuant to Section 15.4 or
a later date specified in or determinable in accordance with the
Merger Agreement (provided, that if the effective time of the merger
is to be later than the date of the filing of the certificate of
merger, the effective time shall be fixed no later than the time of
the filing of the certificate of merger and stated therein); and
(g) Such other provisions with respect to the proposed merger
or consolidation as are deemed necessary or appropriate by the General
Partner.
15.3 APPROVAL BY LIMITED PARTNER OF MERGER OR CONSOLIDATION. (a) The
General Partner of the Partnership, upon its approval of the Merger Agreement,
shall direct that a copy or a summary of the Merger Agreement be submitted to
the Limited Partner for its approval.
(b) The Merger Agreement shall be approved upon receiving the consent
of the Limited Partner. After such approval by the Limited Partner, and at any
time prior to the filing of the certificate of merger pursuant to Section 15.4,
the merger or consolidation may be abandoned pursuant to provisions therefor,
if any, set forth in the Merger Agreement.
15.4 CERTIFICATE OF MERGER. Upon the required approval by the General
Partner and the Limited Partner of a Merger Agreement, a certificate of merger
shall be executed and filed with the Secretary of State of the State of
Delaware in conformity with the requirements of the Delaware Act.
15.5 EFFECT OF MERGER. (a) At the effective time of the certificate of
merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all property,
real, personal and mixed, and all debts due to any of those business
entities and all other things and causes of action belonging to each
of those business entities shall be vested in the Surviving Business
Entity and after the merger or consolidation shall be the property of
the Surviving Business Entity to the extent they were of each
constituent business entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not
revert and is not in any way impaired because of the merger or
consolidation;
(iii) all rights of creditors and all liens on or security
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.
-46-
<PAGE> 53
(b) A merger or consolidation effected pursuant to this Article shall
not be deemed to result in a transfer or assignment of assets or liabilities
from one entity to another having occurred.
ARTICLE XVI
GENERAL PROVISIONS
16.1 ADDRESSES AND NOTICES. Any notice, demand, request or report
required or permitted to be given or made to a Partner under this Agreement
shall be in writing and shall be deemed given or made when received by it at
the principal office of the Partnership referred to in Section 1.3.
16.2 REFERENCES. Except as specifically provided otherwise, references
to "Articles" and "Sections" are to Articles and Sections of this Agreement.
16.3 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.
16.4 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.
16.5 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.
16.6 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.
16.7 CREDITORS. None of the provisions of this Agreement shall be for
the benefit of, or shall be enforceable by, any creditor of the Partnership.
16.8 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 waiver of any such breach or any other covenant, duty, agreement or
condition.
16.9 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, independently of the
signature of any other party.
16.10 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.
-47-
<PAGE> 54
16.11 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:
EOTT ENERGY CORP.
By: /s/ Stephen W. Duffy
------------------------------------
Stephen W. Duffy
Vice President and General Counsel
INITIAL LIMITED PARTNER:
EOTT ENERGY OPERATING LIMITED
PARTNERSHIP
BY: EOTT ENERGY CORP.,
GENERAL PARTNER
By: /s/ Stephen W. Duffy
------------------------------
Stephen W. Duffy
Vice President and General
Counsel
-48-
<PAGE> 1
EXHIBIT 3.10
CERTIFICATE OF INCORPORATION
OF
EOTT ENERGY FINANCE CORP.
* * * * *
ARTICLE I.
The name of the corporation is EOTT Energy Finance Corp.
ARTICLE II.
The registered office of this corporation in the State of Delaware is
located at 1209 Orange Street in the City of Wilmington, County of New Castle.
The name and address of its registered agent is The Corporation Trust Company,
1209 Orange Street, Wilmington, Delaware.
ARTICLE III.
The nature of the business or purpose of this corporation is to engage in
any lawful act or activity for which corporations may be organized under the
General Corporation Laws of Delaware.
ARTICLE IV.
1. The total number of shares of stock which this corporation shall have
authority to issue is ten thousand (10,000) shares, all of which are to be of
the par value of $1.00 each and all of one class and all to be designated as the
Common Stock of the corporation.
<PAGE> 2
2. The shares of Common Stock may be issued from time to time for such
consideration, no less than the par value thereof and upon such terms as from
time to time shall be determined by the Board of Directors.
ARTICLE V.
The minimum amount of capital with which this corporation shall commence
business is one thousand dollars ($1,000).
ARTICLE VI.
The name and mailing address of the incorporator is as follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
Matt A. Maxwell 1400 Smith Street, Suite 4804
Houston, Texas 77002
</TABLE>
ARTICLE VII.
The corporation shall have perpetual existence.
ARTICLE VIII.
The private property of the stockholders shall not be subject to the
payment of corporate debts to any extent whatever, but shall be exempt from
corporate liability.
ARTICLE IX.
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized:
(a) To make, alter, amend and rescind the Bylaws of this corporation.
(b) To set apart out of any of the available funds of this corporation
such reserves for proper purposes as the Board of Directors may deem expedient,
and to abolish any such reserves.
2
<PAGE> 3
(c) To determine the use and distribution of any surplus and net profits.
(d) To authorize and cause to be executed and delivered, without limit as
to amount, mortgages and instruments of pledge of, and other instruments
creating liens upon, the real and personal property of this corporation.
(e) From time to time, to determine whether and to what extent and at
what times and places and under what conditions and regulations the accounts and
books of this corporation (other than the stock ledger) or any of them, shall be
open to the inspection of the stockholders, and no stockholder shall have any
right to inspect any account or book or document of this corporation, except as
conferred by statute, or authorized by the directors or by a resolution of the
stockholders.
(f) By resolution or resolutions, passed by a majority of the whole
Board, to designate one or more committees, each committee to consist of two or
more of the directors of this corporation, which, to the extent provided in said
resolution or resolutions or in the Bylaws of this corporation, shall have and
may exercise the powers of the Board of Directors in the management of the
business and affairs of this corporation, and may have power to authorize the
seal of this corporation to be affixed to all papers which may require it. Such
committee or committees shall have such name or names as may be stated in the
Bylaws of this corporation or as may be determined from time to time by
resolution adopted by the Board of Directors.
(g) When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting powers given at a
stockholders' meeting duly called for that purpose, or when authorized by the
written consent of the holders of a majority of the voting stock issued and
outstanding, the Board of Directors shall have power and authority to sell,
lease or exchange all of the property and assets of the corporation, including
its goodwill, upon such terms and conditions and for such considerations, which
may be in whole or in part shares of stock in, and/or other securities of, any
other corporation or corporations as its Board of Directors shall deem expedient
and for the best interests of the corporation.
3
<PAGE> 4
This corporation may in its Bylaws confer powers and authority upon its
Board of Directors in addition to the foregoing and in addition to the powers
and authorities expressly conferred upon it by statute.
ARTICLE X.
No contract or other transaction between this corporation and any other
corporation and no act of this corporation shall in any way be affected or
invalidated by the fact that any of the directors of this corporation are
pecuniarily or otherwise interested in, or are directors of such other
corporation.
ARTICLE XI.
The stockholders and Board of Directors shall have power, if the Bylaws
so provide, to hold their meetings and to keep the books of this corporation
(except such as are required by the laws of Delaware to be kept in Delaware) and
documents and papers of this corporation outside the State of Delaware and have
one or more offices within or without the State of Delaware at such places as
may be designated from time to time by the Board of Directors.
ARTICLE XII.
1. The number of directors of this corporation shall be specified in the
Bylaws and such number may be increased or decreased from time to time in such
manner as may be prescribed in the Bylaws. The directors need not be
stockholders.
2. In case of an increase in the number of directors, the additional
directors may be elected by the Board of Directors to hold office until the next
annual meeting of the stockholders and until their successors are elected and
qualified. In case of vacancies in the Board of Directors, a majority of the
remaining directors may elect directors to fill such vacancies.
3. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability
4
<PAGE> 5
(i) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of laws, (iii) under Section 174
of the Delaware General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit.
4. Each person who was or is made a party or is threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than said law permitted
the corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
paragraph 5 hereof, the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the corporation. The right to indemnification conferred in
this Section shall be a contract right and shall include the right to be paid by
the corporation the expenses incurred in defending any such proceeding in
advance of its final disposition;
5
<PAGE> 6
provided, however, that, if the Delaware General Corporation Law requires, the
payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise. The corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
5. If a claim under paragraph 4 of the Article XII is not paid in full by
the corporation within thirty days after a written claim has been received by
the corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
corporation. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of
6
<PAGE> 7
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
6. The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Section shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, bylaw, agreement, vote of stockholders or disinterested directors
or otherwise.
7. The corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the corporation
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
ARTICLE XIII.
This corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the sole incorporator for the purpose of
forming a corporation in pursuance of an Act of the Legislature of the State of
Delaware entitled "An Act Providing A General Corporation Law" (approved March
10, 1899) and the acts amendatory thereof and supplemental thereto, do make and
file this Certificate of Incorporation, hereby declaring and certifying that the
facts herein stated are true, and accordingly hereunto have set my hand this 1st
day of July, 1999.
/s/ MATT A. MAXWELL
-------------------------------
Matt A. Maxwell
7
<PAGE> 1
EXHIBIT 3.11
BYLAWS
OF
EOTT ENERGY FINANCE CORP.
A Delaware Corporation
Date of Adoption
July 1, 1999
<PAGE> 2
BYLAWS
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Article I Offices ......................................................................................1
Section 1. Registered Office...................................................................1
Section 2. Other Offices.......................................................................1
Article II Stockholders ................................................................................1
Section 1. Place of Meetings...................................................................1
Section 2. Quorum; Adjournment of Meetings.....................................................1
Section 3. Annual Meetings.....................................................................2
Section 4. Special Meetings....................................................................2
Section 5. Record Date.........................................................................2
Section 6. Notice of Meetings..................................................................3
Section 7. Stockholder List....................................................................3
Section 8. Proxies.............................................................................4
Section 9. Voting; Elections; Inspectors.......................................................4
Section 10. Conduct of Meetings................................................................5
Section 11. Treasury Stock.....................................................................5
Section 12. Action Without Meeting.............................................................5
Section 13. Business to be Brought Before the Annual Meeting...................................6
Article III Board of Directors .........................................................................7
Section 1. Power; Number; Term of Office.......................................................7
Section 2. Quorum; Voting......................................................................7
Section 3. Place of Meetings; Order of Business................................................7
Section 4. First Meeting.......................................................................8
Section 5. Regular Meetings....................................................................8
Section 6. Special Meetings....................................................................8
Section 7. Nomination of Directors.............................................................8
Section 8. Removal.............................................................................9
Section 9. Vacancies; Increases in the Number of Directors.....................................9
Section 10. Compensation......................................................................10
Section 11. Action Without a Meeting; Telephone Conference Meetings...........................10
Section 12. Approval or Ratification of Acts or Contracts by Stockholders.....................10
Article IV Committees .................................................................................10
Section 1. Executive Committee................................................................10
Section 2. Audit Committee....................................................................11
Section 3. Other Committees...................................................................11
Section 4. Procedure; Meetings; Quorum........................................................11
Section 5. Substitution and Removal of Members; Vacancies.....................................11
Section 6. Limitation on Power and Authority of Committees....................................12
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Article V Officers ....................................................................................12
Section 1. Number, Titles and Term of Office..................................................12
Section 2. Powers and Duties of the Chairman of the Board.....................................12
Section 3. Powers and Duties of the Chief Executive Officer...................................13
Section 4. Powers and Duties of the President.................................................13
Section 5. Powers and Duties of the Vice Chairman of the Board................................13
Section 6. Powers and Duties of the Managing Directors........................................13
Section 7. Vice Presidents....................................................................14
Section 8. General Counsel....................................................................14
Section 9. Secretary.........................................................................14
Section 10. Deputy Corporate Secretary and Assistant Secretaries..............................14
Section 11. Treasurer.........................................................................14
Section 12. Assistant Treasurers..............................................................15
Section 13. Action with Respect to Securities of Other Corporations...........................15
Section 14. Delegation........................................................................15
Article VI Capital Stock ..............................................................................15
Section 1. Certificates of Stock..............................................................15
Section 2. Transfer of Shares.................................................................16
Section 3. Ownership of Shares................................................................16
Section 4. Regulations Regarding Certificates.................................................16
Section 5. Lost or Destroyed Certificates.....................................................16
Article VII Miscellaneous Provisions ..................................................................17
Section 1. Fiscal Year........................................................................17
Section 2. Corporate Seal.....................................................................17
Section 3. Notice and Waiver of Notice........................................................17
Section 4. Facsimile Signatures...............................................................17
Section 5. Reliance upon Books, Reports and Records...........................................18
Section 6. Application of Bylaws..............................................................18
Article VIII Amendments ...............................................................................18
</TABLE>
ii
<PAGE> 4
BYLAWS
OF
EOTT ENERGY FINANCE CORP.
Article I
Offices
Section 1. Registered Office. The registered office of the Corporation required
by the state of incorporation of the Corporation to be maintained in the state
of incorporation of the Corporation shall be the registered office named in the
original charter documents of the Corporation, or such other office as may be
designated from time to time by the Board of Directors in the manner provided by
law.
Section 2. Other Offices. The Corporation may also have offices at such other
places both within and without the state of incorporation of the Corporation as
the Board of Directors may from time to time determine or the business of the
Corporation may require.
Article II
Stockholders
Section 1. Place of Meetings. All meetings of the stockholders shall be held at
the principal office of the Corporation, or at such other place within or
without the state of incorporation of the Corporation as shall be specified or
fixed in the notices or waivers of notice thereof.
Section 2. Quorum; Adjournment of Meetings. Unless otherwise required by law or
provided in the charter documents of the Corporation or these Bylaws, (i) the
holders of a majority of the voting power attributable to the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at any meeting of stockholders for the
transaction of business, (ii) in all matters other than election of directors,
the affirmative vote of the holders of a majority of the voting power
attributable to such stock so present or represented at any meeting of
stockholders at which a quorum is present shall constitute the act of the
stockholders, and (iii) where a separate vote by a class or classes is required,
a majority of the voting power attributable to the outstanding shares of such
class or classes, present in person or represented by proxy shall constitute a
quorum entitled to take action with respect to that vote on that matter and the
affirmative vote of the majority of the voting power attributable to the shares
of such class or classes present in person or represented by proxy at the
meeting shall be the act of such class.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors.
1
<PAGE> 5
Notwithstanding the other provisions of the charter documents of the Corporation
or these Bylaws, the chairman of the meeting or the holders of a majority of the
voting power attributable to the issued and outstanding stock, present in person
or represented by proxy and entitled to vote thereat, at any meeting of
stockholders, whether or not a quorum is present, shall have the power to
adjourn such meeting from time to time, without any notice other than
announcement at the meeting of the time and place of the holding of the
adjourned meeting. If the adjournment is for more than thirty (30) days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at such meeting. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally called.
Section 3. Annual Meetings. An annual meeting of the stockholders, for the
election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place (within or without the state of incorporation of the
Corporation), on such date, and at such time as the Board of Directors shall fix
and set forth in the notice of the meeting, which date shall be within thirteen
(13) months subsequent to the last annual meeting of stockholders.
Section 4. Special Meetings. Unless otherwise provided in the charter documents
of the Corporation, special meetings of the stockholders for any purpose or
purposes may be called at any time by the Chairman of the Board, by the
President, by the Vice Chairman of the Board, by a majority of the Board of
Directors, or by a majority of the Executive Committee (if any), at such time
and at such place as may be stated in the notice of the meeting. Business
transacted at a special meeting shall be confined to the purpose(s) stated in
the notice of such meeting.
Section 5. Record Date. For the purpose of determining stockholders entitled to
notice of or to vote at any meeting of stockholders, or any adjournment thereof,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors of the Corporation may fix a date as the record
date for any such determination of stockholders, which record date shall not
precede the date on which the resolutions fixing the record date are adopted and
which record date, in the case of a meeting of stockholders, shall not be more
than sixty (60) days nor less than ten (10) days before the date of such meeting
of stockholders, nor, in the case of any other action, more than sixty (60) days
prior to any such action.
If the Board of Directors does not fix a record date for any meeting of the
stockholders, the record date for determining stockholders entitled to notice of
or to vote at such meeting shall be at the close of business on the third
business day next preceding the day on which notice is given. If the Board of
Directors does not fix the record date for determining stockholders for any
other purpose, the record date shall be at the close of business on the day on
which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
2
<PAGE> 6
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
For the purpose of determining the stockholders entitled to consent to corporate
action in writing without a meeting, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which date
shall not be more than ten (10) days after the date upon which the resolution
fixing the record date is adopted by the Board of Directors. If the Board of
Directors does not fix the record date, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is necessary, shall be
the first date on which a signed written consent setting forth the action taken
or proposed to be taken is delivered to the Corporation at its registered office
in the state of incorporation of the Corporation, at its principal place of
business, or an officer or agent of the Corporation having custody of the book
in which proceedings of meetings of stockholders are recorded. Delivery made to
a corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. If the Board of Directors does not fix the
record date, and prior action by the Board of Directors is necessary, the record
date for determining stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on the day on which
the Board of Directors adopts the resolution taking such prior action.
Section 6. Notice of Meetings. Written notice of the place, date and hour of all
meetings, and, in case of a special meeting, the purpose or purposes for which
the meeting is called, shall be given by or at the direction of the Chairman of
the Board, the President, the Vice Chairman of the Board, the Secretary or other
person(s) calling the meeting to each stockholder entitled to vote thereat not
less than ten (10) nor more than sixty (60) days before the date of the meeting.
Such notice is given when deposited in the United States mail, postage prepaid,
directed to the stockholder at such stockholder's address as it appears on the
records of the Corporation.
Section 7. Stockholder List. A complete list of stockholders entitled to vote at
any meeting of stockholders, arranged in alphabetical order for each class of
stock and showing the address of each such stockholder and the number of shares
registered in the name of such stockholder, shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or if not so specified, at the
place where the meeting is to be held. The stockholder list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 8. Proxies. Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for him by proxy.
Proxies for use at any meeting of stockholders shall be filed with the
Secretary, or such other officer as the Board of Directors may from time to time
determine by resolution, before or at the time of the meeting. All proxies shall
be received and taken charge of and all ballots shall be
3
<PAGE> 7
received and canvassed by the secretary of the meeting, who shall decide all
questions touching upon the qualification of voters, the validity of the
proxies, and the acceptance or rejection of votes, unless an inspector or
inspectors shall have been duly appointed as provided in Section 9 of Article II
hereof, in which event such inspector or inspectors shall decide all such
questions.
No proxy shall be valid after three (3) years from its date, unless the proxy
provides for a longer period. Each proxy shall be revocable unless expressly
provided therein to be irrevocable and coupled with an interest sufficient in
law to support an irrevocable power.
Should a proxy designate two or more persons to act as proxies, unless such
instrument shall provide the contrary, a majority of such persons present at any
meeting at which their powers thereunder are to be exercised shall have and may
exercise all the powers of voting or giving consents thereby conferred, or if
only one be present, then such powers may be exercised by that one; or, if an
even number attend and a majority do not agree on any particular issue, each
person designated to act as proxy and so attending shall be entitled to exercise
such powers in respect of such portion of the shares as is equal to the
reciprocal of the fraction equal to the number of persons designated to act as
proxies and in attendance divided by the total number of shares represented by
such proxies.
Section 9. Voting; Elections; Inspectors. Unless otherwise required by law or
provided in the charter documents of the Corporation, each stockholder shall on
each matter submitted to a vote at a meeting of stockholders have one vote for
each shares of stock entitled to vote which is registered in his name on the
record date for the meeting. For the purposes hereof, each election to fill a
directorship shall constitute a separate matter. Shares registered in the name
of another corporation, domestic or foreign, or other legal entity may be voted
by such officer, agent or proxy as the bylaws (or comparable instrument) of such
corporation or other legal entity may prescribe, or in the absence of such
provisions, as the Board of Directors (or comparable body) of such corporation
or other legal entity may determine. Shares registered in the name of a deceased
person may be voted by the executor or administrator of such person's estate,
either in person or by proxy.
All voting, except as required by the charter documents of the Corporation or
where otherwise required by law, may be by a voice vote; provided, however, upon
request of the chairman of the meeting or upon demand therefor by stockholders
holding a majority of the issued and outstanding stock present in person or by
proxy at any meeting a stock vote shall be taken. Every stock vote shall be
taken by written ballots, each of which shall state the name of the stockholder
or proxy voting and such other information as may be required under the
procedure established for the meeting. All elections of directors shall be by
written ballots, unless otherwise provided in the charter documents of the
Corporation.
In advance of any meeting of stockholders, the Chairman of the Board, the
President or the Board of Directors shall appoint one or more inspectors, each
of whom shall subscribe an oath or affirmation to execute faithfully the duties
of inspector at such meeting with strict impartiality and according to the best
of such inspector's ability. Such inspector(s) shall receive the written
ballots, count the votes, make and sign a certificate
4
<PAGE> 8
of the result thereof and take such further action as may be required of the
inspector(s) under the laws of the state of incorporation of the Corporation.
The Chairman of the Board, the President or the Board of Directors may appoint
any person to serve as inspector, except no candidate for the office of director
shall be appointed as an inspector.
Unless otherwise provided in the charter documents of the Corporation,
cumulative voting for the election of directors shall be prohibited.
Section 10. Conduct of Meetings. The meetings of the stockholders shall be
presided over by the Chairman of the Board, or if the Chairman of the Board is
not present, by the President, or if the President is not present, by the Vice
Chairman of the Board, or if none of the Chairman of the Board, the President
and the Vice Chairman of the Board is present, by a chairman elected at the
meeting. The Secretary of the Corporation, if present, shall act as secretary of
such meetings, or if the Secretary is not present, the Deputy Corporate
Secretary or an Assistant Secretary shall so act; if none of the Secretary, the
Deputy Corporate Secretary and an Assistant Secretary is present, then a
secretary shall be appointed by the chairman of the meeting. The chairman of any
meeting of stockholders shall determine the order of business and, subject to
the requirements of the laws of the state of incorporation of the Corporation,
the procedure at the meeting, including such regulation of the manner of voting
and the conduct of discussion as seem to the chairman in order.
Section 11. Treasury Stock. The Corporation shall not vote, directly or
indirectly, shares of its own stock owned by it, and such shares shall not be
counted for quorum purposes. No other corporation of which the Corporation owns
a majority of the shares entitled to vote in the election of directors of such
other corporation shall vote, directly or indirectly, shares of the
Corporation's stock owned by such other corporation, and such shares shall not
be counted for quorum purposes. Nothing in this Section 11 shall be construed as
limiting the right of the Corporation to vote stock, including but not limited
to its own stock, held by it in a fiduciary capacity.
Section 12. Action Without Meeting. Unless otherwise provided in the charter
documents of the Corporation, any action permitted or required by law, the
charter documents of the Corporation or these Bylaws to be taken at a meeting of
stockholders, may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered to the Corporation by delivery to its registered office
in the state of incorporation, its principal place of business, or an officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested.
Every written consent shall bear the date of signature of each stockholder who
signs the consent, and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered in the manner required by this Section to the
Corporation, written consents signed by a
5
<PAGE> 9
sufficient number of holders to take action are delivered to the Corporation by
delivery to its registered office in the state of incorporation, its principal
place of business, or an officer or agent of the Corporation having custody of
the book in which proceedings of meetings of stockholders are recorded. Delivery
made to the Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested.
Prompt notice of the taking of corporation action without a meeting by less than
a unanimous written consent shall be given by the Secretary to those
stockholders who have not consented in writing.
Section 13. Business to be Brought Before the Annual Meeting. To be properly
brought before the annual meeting of stockholders, business must be either (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (b) otherwise brought before the
meeting by or at the direction of the Board of Directors, or (c) otherwise
properly brought before the meeting by a stockholder of the Corporation who is a
stockholder of record at the time of giving of notice provided for in this
Section 13 of Article II, who shall be entitled to vote at such meeting and who
complies with the notice procedures set forth in this Section 13 of Article II.
In addition to any other applicable requirements, for business to be brought
before an annual meeting by a stockholder of the Corporation, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Corporation not less than
120 days prior to the anniversary date of the proxy statement for the preceding
annual meeting of stockholders of the Corporation. A stockholder's notice to the
Secretary shall set forth as to each matter (i) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and address, as
they appear on the Corporation's books, of the stockholder proposing such
business, (iii) the acquisition date, the class and the number of shares of
voting stock of the Corporation which are owned beneficially by the stockholder,
(iv) any material interest of the stockholder in such business, and (v) a
representation that the stockholder intends to appear in person or by proxy at
the meeting to bring the proposed business before the meeting.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at the annual meeting except in accordance with the procedures set
forth in this Section 13 of Article II.
The chairman of the annual meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section 13 of Article II, and if the
chairman should so determine, the chairman shall so declare to the meeting and
any such business not properly brought before the meeting shall not be
transacted.
Notwithstanding the foregoing provisions of this Section 13 of Article II, a
stockholder shall also comply with all applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder with
respect to the matters set forth in this Section 13.
6
<PAGE> 10
Article III
Board of Directors
Section 1. Power; Number; Term of Office. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors, and subject to the restrictions imposed by law or the charter
documents of the Corporation, the Board of Directors may exercise all the powers
of the Corporation.
The number of directors that shall constitute the whole Board of Directors shall
be determined from time to time by the Board of Directors (provided that no
decrease in the number of directors which would have the effect of shortening
the term of an incumbent director may be made by the Board of Directors). If the
Board of Directors makes no such determination, the number of directors shall be
not less than three and not more than five. Each director shall hold office
until such director's successor shall have been elected and qualified or until
such director's earlier death, resignation or removal.
Unless otherwise provided in the charter documents of the Corporation, directors
need not be stockholders nor residents of the state of incorporation of the
Corporation.
Section 2. Quorum; Voting. Unless otherwise provided in the charter documents of
the Corporation, a majority of the total number of directors shall constitute a
quorum for the transaction of business of the Board of Directors and the vote of
a majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 3. Place of Meetings; Order of Business. The directors may hold their
meetings and may have an office and keep the books of the Corporation, except as
otherwise provided by law, in such place or places, within or without the state
of incorporation of the Corporation, as the Board of Directors may from time to
time determine. At all meetings of the Board of Directors business shall be
transacted in such order as shall from time to time be determined by the
Chairman of the Board, or in the Chairman of the Board's absence by the
President (should the President be a director), or in the President's absence by
the Vice Chairman of the Board, or by the Board of Directors.
Section 4. First Meeting. Each newly elected Board of Directors may hold its
first meeting for the purpose of organization and the transaction of business,
if a quorum is present, immediately after and at the same place as the annual
meeting of the stockholders. Notice of such meeting shall not be required. At
the first meeting of the Board of Directors in each year at which a quorum shall
be present, held next after the annual meeting of stockholders, the Board of
Directors shall elect the officers of the Corporation.
Section 5. Regular Meetings. Regular meetings of the Board of Directors shall be
held at such times and places as shall be designated from time to time by the
Chairman of the Board or, in the absence of the Chairman of the Board, by the
President (should the
7
<PAGE> 11
President be a director), or in the President's absence, by the Vice Chairman of
the Board, or by the Board of Directors. Notice of such regular meetings shall
not be required.
Section 6. Special Meetings. Special meetings of the Board of Directors may be
called by the Chairman of the Board, the President (should the President be a
director) or the Vice Chairman of the Board or, on the written request of any
two directors, by the Secretary, in each case on at least twenty-four (24) hours
personal, written, telegraphic, cable or wireless notice to each director. Such
notice, or any waiver thereof pursuant to Article VII, Section 3 hereof, need
not state the purpose or purposes of such meeting, except as may otherwise be
required by law or provided for in the charter documents of the Corporation or
these Bylaws. Meetings may be held at any time without notice if all the
directors are present or if those not present waive notice of the meeting in
writing.
Section 7. Nomination of Directors. Only persons who are nominated in accordance
with the following procedures shall be eligible for election as directors,
except as otherwise provided in Section 9 of this Article III. Nominations of
persons for election to the Board of Directors of the Corporation may be made at
a meeting of stockholders (a) by or at the direction of the Board of Directors
or (b) by any stockholder of the Corporation who is a stockholder of record at
the time of giving of notice provided for in this Section 7 of Article III, who
shall be entitled to vote for the election of directors at the meeting and who
complies with the notice procedures set forth in this Section 7 of Article III.
Such nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice shall be delivered to
or mailed and received at the principal executive offices of the Corporation (i)
with respect to an election to be held at the annual meeting of the stockholders
of the Corporation, 120 days prior to the anniversary date of the proxy
statement for the immediately preceding annual meeting of stockholders of the
Corporation, and (ii) with respect to an election to be held at a special
meeting of stockholders of the Corporation for the election of directors, not
later than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or public disclosure of the date of
the meeting was made, whichever first occurs. Such stockholder's notice to the
Secretary shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a director, all information relating to
the person that is required to be disclosed in solicitations for proxies for
election of directors, or is otherwise required, pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including the written
consent of such person to be named in the proxy statement as a nominee and to
serve as a director if elected); and (b) as to the stockholder giving the notice
(i) the name and address, as they appear on the Corporation's books, of such
stockholder, and (ii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the stockholder. At the request of
any officer of the Corporation, any person nominated by the Board of Directors
for election as a director shall furnish to the Secretary of the Corporation
that information required to be set forth in a stockholder's notice of
nomination which pertains to the nominee.
In the event that a person is validly designated as nominee to the Board and
shall thereafter become unable or unwilling to stand for election to the Board
of Directors, the
8
<PAGE> 12
Board of Directors or the stockholder who proposed such nominee, as the case may
be, may designate a substitute nominee.
Except as otherwise provided in Section 9 of this Article III, no person shall
be eligible to serve as a director of the Corporation unless nominated in
accordance with the procedures set forth in this Section 7 of Article III. The
chairman of the meeting of stockholders shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by the Bylaws, and if the chairman should so determine,
the chairman shall so declare to the meeting and the defective nomination shall
be disregarded.
Notwithstanding the foregoing provisions of this Section 7 of Article III, a
stockholder shall also comply with all applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder with
respect to the matters set forth in this Section 7 of Article III.
Section 8. Removal. Any director or the entire Board of Directors may be
removed, with or without cause by the holders of a majority of the shares then
entitled to vote at an election of directors; provided that, with respect to the
removal without cause of a director or directors elected by the holders of any
class or series entitled to elect one or more directors, only the holders of
outstanding shares of that class or series shall be entitled to vote on such
removal.
Section 9. Vacancies; Increases in the Number of Directors. Unless otherwise
provided in the charter documents of the Corporation, vacancies existing on the
Board of Directors for any reason and newly created directorships resulting from
any increase in the authorized number of directors to be elected by all of the
stockholders having the right to vote as a single class may be filled by the
affirmative vote of a majority of the directors then in office, although less
than a quorum, or by a sole remaining director; and any director so chosen shall
hold office until the next annual election and until such Director's successor
shall have been elected and qualified, or until such Director's earlier death,
resignation or removal.
Section 10. Compensation. Directors and members of standing committees may
receive such compensation as the Board of Directors from time to time shall
determine to be appropriate, and shall be reimbursed for all reasonable expenses
incurred in attending and returning from meetings of the Board of Directors.
Section 11. Action Without a Meeting; Telephone Conference Meetings. Unless
otherwise restricted by the charter documents of the Corporation, any action
required or permitted to be taken at any meeting of the Board of Directors, or
any committee designated by the Board of Directors, may be taken without a
meeting if all members of the Board of Directors or committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or committee. Such consent
shall have the same force and effect as a unanimous vote at a meeting and may be
stated as such in any document or instrument filed with the Secretary of State
of the state of incorporation of the Corporation.
9
<PAGE> 13
Unless otherwise restricted by the charter documents of the Corporation, subject
to the requirement for notice of meetings, members of the Board of Directors or
members of any committee designated by the Board of Directors may participate in
a meeting of such Board of Directors or committee, as the case may be, by means
of a conference telephone connection or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
participation in such a meeting shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
Section 12. Approval or Ratification of Acts or Contracts by Stockholders. The
Board of Directors in its discretion may submit any act or contract for approval
or ratification at any annual meeting of the stockholders, or at any special
meeting of the stockholders called for the purpose of considering any such act
or contract, and any act or contract that shall be approved or be ratified by
the vote of the stockholders holding a majority of the voting power attributable
to the issued and outstanding shares of stock of the Corporation entitled to
vote and present in person or by proxy at such meeting (provided that a quorum
is present) shall be as valid and as binding upon the Corporation and upon all
the stockholders as if it has been approved or ratified by every stockholder of
the Corporation.
Article IV
Committees
Section 1. Executive Committee. The Board of Directors may, by resolution passed
by a majority of the whole Board of Directors, designate an Executive Committee
consisting of one or more of the directors of the Corporation, one of whom shall
be designated chairman of the Executive Committee. During the intervals between
the meetings of the Board of Directors, the Executive Committee shall possess
and may exercise all the powers of the Board of Directors, except as provided in
Section 6 of this Article IV. The Executive Committee shall also have, and may
exercise, all the powers of the Board of Directors, except as aforesaid,
whenever a quorum of the Board of Directors shall fail to be present at any
meeting of the Board.
Section 2. Audit Committee. The Board of Directors may, by resolution passed by
a majority of the whole Board of Directors, designate an Audit Committee
consisting of one or more of the directors of the Corporation, one of whom shall
be designated chairman of the Audit Committee. The Audit Committee shall have
and may exercise such powers and authority as provided in the resolution
creating it and as determined from time to time by the Board of Directors,
except as provided in Section 6 of this Article IV.
Section 3. Other Committees. The Board of Directors may, by resolution passed
from time to time by a majority of the whole Board of Directors, designate such
other committees as it shall see fit consisting of one or more of the directors
of the Corporation, one of whom shall be designated chairman of each such
committee. Any such committee shall have and may exercise such powers and
authority as provided in the resolution
10
<PAGE> 14
creating it and as determined from time to time by the Board of Directors,
except as provided in Section 6 of this Article IV.
Section 4. Procedure; Meetings; Quorum. Any committee designated pursuant to
this Article IV shall keep regular minutes of its actions and proceedings in a
book provided for that purpose and report the same to the Board of Directors at
its meeting next succeeding such action, shall fix its own rules or procedures,
and shall meet at such times and at such place or places as may be provided by
such rules, or by such committee or the Board of Directors. Should a committee
fail to fix its own rules, the provisions of these Bylaws, pertaining to the
calling of meetings and conduct of business by the Board of Directors, shall
apply as nearly as practicable. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a quorum,
except as provided in Section 5 of this Article IV, and the affirmative vote of
a majority of the members present shall be necessary for the adoption by it of
any resolution.
Section 5. Substitution and Removal of Members; Vacancies. The Board of
Directors may designate one or more directors as alternate members of any
committee who may replace any absent or disqualified member at any meeting of
such committee. In the absence or disqualification of a member of a committee,
the member or members present at any meeting and not disqualified from voting,
whether or not constituting a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of the absent or
disqualified member. The Board of Directors shall have the power at any time to
remove any member(s) of a committee and to appoint other directors in lieu of
the person(s) so removed and shall also have the power to fill vacancies in a
committee.
Section 6. Limitation on Power and Authority of Committees. No committee of the
Board of Directors shall have the power or authority of the Board of Directors
in reference to amending the charter documents of the Corporation (except that a
committee may, to the extent and in the manner authorized by the laws of the
state of incorporation of the Corporation, fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
Corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series) or adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution of the Corporation, amending, altering or repealing
these Bylaws or adopting new bylaws for the Corporation, and, unless a
resolution passed by a majority of the whole Board of Directors so provides, no
such committee shall have the power and authority to declare a dividend, to
authorize the issuance of stock or to adopt a certificate of ownership and
merger pursuant to the laws of the state of incorporation of the Corporation.
11
<PAGE> 15
Article V
Officers
Section 1. Number, Titles and Term of Office. The officers of the Corporation
shall be a Chairman of the Board, a President, one or more Managing Directors,
one or more Vice Presidents (any one or more of whom may be designated Executive
Vice President or Senior Vice President), a Treasurer, a Secretary, and such
other officers as the Board of Directors may from time to time elect or appoint
(including, but not limited to, a Vice Chairman of the Board, a General Counsel,
a Deputy Corporate Secretary, one or more Assistant Secretaries and one or more
Assistant Treasurers). Each officer shall hold office until such officer's
successor shall be duly elected and shall qualify or until such officer's death
or until such officer shall resign or shall have been removed. Any number of
offices may be held by the same person, unless the charter documents of the
Corporation provide otherwise. Except for the Chairman of the Board and the Vice
Chairman of the Board, no officer need be a director.
Section 2. Powers and Duties of the Chairman of the Board. The Chairman of the
Board shall preside at all meetings of the stockholders and of the Board of
Directors; and he shall have such other powers and duties as designated in these
bylaws and as from time to time may be assigned to him by the Board of
Directors.
Section 3. Powers and Duties of the Chief Executive Officer. The Chairman of the
Board shall be the chief executive officer of the Corporation unless the Board
of Directors designates the President as chief executive officer. Subject to the
control of the Board of Directors and the executive committee (if any), the
chief executive officer shall have general executive charge, management and
control of the properties, business and operations of the Corporation with all
such powers as may be reasonably incident to such responsibilities; may agree
upon and execute all leases, contracts, evidences of indebtedness and other
obligations in the name of the Corporation and may sign all certificates for
shares of capital stock of the Corporation; and shall have such other powers and
duties as designated in accordance with these Bylaws and as from time to time
may be assigned to the chief executive officer by the Board of Directors.
Section 4. Powers and Duties of the President. Unless the Board of Directors
otherwise determines, the President shall have the authority to agree upon and
execute all leases, contracts, evidences of indebtedness and other obligations
in the name of the Corporation; and, unless the Board of Directors, otherwise
determines, the President shall, in the absence of the Chairman of the Board or
if there be no Chairman of the Board, preside at all meetings of the
stockholders and (should the President be a director) of the Board of Directors;
and the President shall have such other powers and duties as designated in
accordance with these Bylaws and as from time to time may be assigned to the
President by the Board of Directors or the Chairman of the Board.
Section 5. Powers and Duties of the Vice Chairman of the Board. The Board of
Directors may assign areas of responsibility to the Vice Chairman of the Board,
and, in such event, and subject to the overall direction of the Chairman of the
Board and the Board of Directors, the Vice Chairman of the Board shall be
responsible for supervising
12
<PAGE> 16
the management of the affairs of the Corporation and its subsidiaries within the
area or areas assigned and shall monitor and review on behalf of the Board of
Directors all functions within the corresponding area or areas of the
Corporation and each such subsidiary of the Corporation. In the absence of the
President, or in the event of the President's inability or refusal to act, the
Vice Chairman of the Board shall perform the duties of the President, and when
so acting shall have all the powers of and be subject to all the restrictions
upon the President. Further, the Vice Chairman of the Board shall have such
other powers and duties as designated in accordance with these Bylaws and as
from time to time may be assigned to the Vice Chairman of the Board by the Board
of Directors or the Chairman of the Board.
Section 6. Powers and Duties of the Managing Directors. The Managing Directors
shall be the executive officers of the Corporation next in authority to the
Chairman of the Board and the President, both of whom the Managing Directors
shall assist in the management of the business of the Corporation and the
implementation of orders and resolutions of the Board of Directors. Unless the
Board of Directors otherwise determines, each Managing Director shall have the
authority to agree upon and execute all leases, contracts, evidences of
indebtedness and other obligations in the name of the Corporation. Each Managing
Director shall have such other powers and duties as designated in accordance
with these Bylaws and as from time to time may be assigned to such Managing
Director by the Board of Directors, the Chairman of the Board or the President.
Section 7. Vice Presidents. Subject to any restrictions that may be imposed by
the Board of Directors, each Vice President shall at all times possess power to
sign all certificates, contracts and other instruments of the Corporation,
except as otherwise limited in writing by the Chairman of the Board, the
President, the Vice Chairman of the Board or any Managing Director of the
Corporation. Each Vice President shall have such other powers and duties as from
time to time may be assigned to such Vice President by the Board of Directors,
the Chairman of the Board, the President, the Vice Chairman of the Board or any
Managing Director.
Section 8. General Counsel. The General Counsel shall act as chief legal advisor
to the Corporation. The General Counsel may have one or more staff attorneys and
assistants, and may retain other attorneys to conduct the legal affairs and
litigation of the Corporation under the General Counsel's supervision.
Section 9. Secretary. The Secretary shall keep the minutes of all meetings of
the Board of Directors, committees of the Board of Directors and the
stockholders, in books provided for that purpose; shall attend to the giving and
serving of all notices; may in the name of the Corporation affix the seal of the
Corporation to any contract of the Corporation and attest the affixation of the
seal of the Corporation thereto; may sign with the other appointed officers all
certificates for shares of capital stock of the Corporation; shall have charge
of the certificate books, transfer books and stock ledgers, and such other books
and papers as the Board of Directors may direct, all of which shall at all
reasonable times be open to inspection of any director upon application at the
office of the Corporation during business hours; shall have such other powers
and duties as designated in these Bylaws and as from time to time may be
assigned to the Secretary by
13
<PAGE> 17
the Board of Directors, the Chairman of the Board, the President, the Vice
Chairman of the Board or any Managing Director; and shall in general perform all
acts incident to the office of Secretary, subject to the control of the Board of
Directors, the Chairman of the Board, the President, the Vice Chairman of the
Board or any Managing Director.
Section 10. Deputy Corporate Secretary and Assistant Secretaries. The Deputy
Corporate Secretary and each Assistant Secretary shall have the usual powers and
duties pertaining to such offices, together with such other powers and duties as
designated in these Bylaws and as from time to time may be assigned to the
Deputy Corporate Secretary or an Assistant Secretary by the Board of Directors,
the Chairman of the Board, the President, the Vice Chairman of the Board, any
Managing Director or the Secretary. The Deputy Corporate Secretary shall
exercise the powers of the Secretary during that officer's absence or inability
or refusal to act.
Section 11. Treasurer. Subject to any restrictions that may be imposed by the
Board of Directors, the Treasurer shall have responsibility for the custody and
control of all the funds and securities of the Corporation, and shall have such
other powers and duties as designated in these Bylaws and as from time to time
may be assigned to the Treasurer by the Board of Directors, the Chairman of the
Board, the President, the Vice Chairman of the Board or any Managing Director.
The Treasurer shall perform all acts incident to the position of Treasurer,
subject to the control of the Board of Directors, the Chairman of the Board, the
President, the Vice Chairman of the Board and any Managing Director; and the
Treasurer shall, if required by the Board of Directors, give such bond for the
faithful discharge of the Treasurer's duties in such form as the Board of
Directors may require.
Section 12. Assistant Treasurers. Each Assistant Treasurer shall have the usual
powers and duties pertaining to such office, together with such other powers and
duties as designated in these Bylaws and as from time to time may be assigned to
each Assistant Treasurer by the Board of Directors, the Chairman of the Board,
the President, the Vice Chairman of the Board, any Managing Director or the
Treasurer. Any Assistant Treasurer may exercise the powers of the Treasurer
during that officer's absence or inability or refusal to act.
Section 13. Action with Respect to Securities of Other Corporations. Unless
otherwise directed by the Board of Directors, the Chairman of the Board, the
President or the Vice Chairman of the Board, together with the Secretary, the
Deputy Corporate Secretary or any Assistant Secretary shall have power to vote
and otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of security holders of or with respect to any action of security holders
of any other corporation in which this Corporation may hold securities and
otherwise to exercise any and all rights and powers which this Corporation may
possess by reason of its ownership of securities in such other corporation.
Section 14. Delegation. For any reason that the Board of Directors may deem
sufficient, the Board of Directors may, except where otherwise provided by
statute, delegate the powers or duties of any officer to any other person, and
may authorize any officer to delegate specified duties of such officer to any
other person. Any such delegation or
14
<PAGE> 18
authorization by the Board shall be effected from time to time by resolution of
the Board of Directors.
Article VI
Capital Stock
Section 1. Certificates of Stock. The certificates for shares of the capital
stock of the Corporation shall be in such form, not inconsistent with that
required by law and the charter documents of the Corporation, as shall be
approved by the Board of Directors. Every holder of stock represented by
certificates shall be entitled to have a certificate signed by or in the name of
the Corporation by the Chairman of the Board, President, Vice Chairman of the
Board or a Vice President and the Secretary, Deputy Corporate Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer of the
Corporation representing the number of shares (and, if the stock of the
Corporation shall be divided into classes or series, certifying the class and
series of such shares) owned by such stockholder which are registered in
certified form; provided, however, that any of or all the signatures on the
certificate may be facsimile. The stock record books and the blank stock
certificate books shall be kept by the Secretary, or at the office of such
transfer agent or transfer agents as the Board of Directors may from time to
time determine. In case any officer, transfer agent or registrar who shall have
signed or whose facsimile signature or signatures shall have been placed upon
any such certificate or certificates shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued by the
Corporation, such certificate may nevertheless be issued by the Corporation with
the same effect as if such person were such officer, transfer agent or registrar
at the date of issue. The stock certificates shall be consecutively numbered and
shall be entered in the books of the Corporation as they are issued and shall
exhibit the holder's name and number of shares.
Section 2. Transfer of Shares. The shares of stock of the Corporation shall be
transferable only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorneys or legal representatives upon
surrender and cancellation of certificates for a like number of shares. Upon
surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
Section 3. Ownership of Shares. The Corporation shall be entitled to treat the
holder of record of any share or shares of capital stock of the Corporation as
the holder in fact thereof and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of the state of incorporation of the
Corporation.
Section 4. Regulations Regarding Certificates. The Board of Directors shall have
the power and authority to make all such rules and regulations as they may deem
expedient
15
<PAGE> 19
concerning the issue, transfer and registration or the replacement of
certificates for shares of capital stock of the Corporation.
Section 5. Lost or Destroyed Certificates. The Board of Directors may determine
the conditions upon which the Corporation may issue a new certificate of stock
in place of a certificate theretofore issued by it which is alleged to have been
lost, stolen or destroyed and may require the owner of such certificate or such
owner's legal representative to give bond, with surety sufficient to indemnify
the Corporation and each transfer agent and registrar against any and all losses
or claims which may arise by reason of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate in the place of the
one so lost, stolen or destroyed.
Article VII
Miscellaneous Provisions
Section 1. Fiscal Year. The fiscal year of the Corporation shall end on the last
day of December of each year.
Section 2. Corporate Seal. The corporate seal shall be circular in form and
shall have inscribed thereon the name of the Corporation and the state of its
incorporation, which seal shall be in the charge of the Secretary and shall be
affixed to certificates of stock, debentures, bonds, and other documents, in
accordance with the direction of the Board of Directors, and as may be required
by law; however, the Secretary may, if the Secretary deems it expedient, have a
facsimile of the corporate seal inscribed on any such certificates of stock,
debentures, bonds, contracts or other documents. Duplicates of the seal may be
kept for use by the Deputy Corporate Secretary or any Assistant Secretary.
Section 3. Notice and Waiver of Notice. Whenever any notice is required to be
given by law, the charter documents of the Corporation or under the provisions
of these Bylaws, said notice shall be deemed to be sufficient if given (i) by
telegraphic, cable or wireless transmission (including by telecopy or facsimile
transmission) or (ii) by deposit of the same in a post office box or by delivery
to an overnight courier service company in a sealed prepaid wrapper addressed to
the person entitled thereto at such person's post office address, as it appears
on the records of the Corporation, and such notice shall be deemed to have been
given on the day of such transmission or mailing or delivery to courier, as the
case may be.
Whenever notice is required to be given by law, the charter documents of the
Corporation or under any of the provisions of these Bylaws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person, including without limitation a director, at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be
16
<PAGE> 20
specified in any written waiver of notice unless so required by the charter
documents of the Corporation or these Bylaws.
Section 4. Facsimile Signatures. In addition to the provisions for the use of
facsimile signatures elsewhere specifically authorized in these Bylaws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors.
Section 5. Reliance upon Books, Reports and Records. A member of the Board of
Directors, or a member of any committee designated by the Board of Directors,
shall, in the performance of such person's duties, be fully protected in relying
in good faith upon the records of the Corporation and upon such information,
opinion, reports or statements presented to the Corporation by any of the
Corporation's officers or employees, or committees of the Board of Directors, or
by any other person as to matters the member reasonably believes are within such
other person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation.
Section 6. Application of Bylaws. In the event that any provisions of these
Bylaws is or may be in conflict with any law of the United States, of the state
of incorporation of the Corporation or of any other governmental body or power
having jurisdiction over this Corporation, or over the subject matter to which
such provision of these Bylaws applies, or may apply, such provision of these
Bylaws shall be inoperative to the extent only that the operation thereof
unavoidably conflicts with such law and shall in all other respects be in full
force and effect.
Article VIII
Amendments
The Board of Directors shall have the power to adopt, amend and repeal from time
to time Bylaws of the Corporation, subject to the right of the stockholders
entitled to vote with respect thereto to amend or repeal such Bylaws as adopted
or amended by the Board of Directors.
17
<PAGE> 1
EXHIBIT 4.1
EOTT ENERGY PARTNERS, L.P.,
EOTT ENERGY CORP.
and
[ ]
as Trustee
---------------
Indenture
Dated as of _____ __, 1999
---------------
Debt Securities
<PAGE> 2
<TABLE>
ARTICLE I
Definitions
<S> <C> <C>
SECTION 1.01. Certain Terms Defined.....................................................................1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act........................................11
SECTION 1.03. Rules of Construction....................................................................11
ARTICLE II
Debt Securities
SECTION 2.01. Forms Generally..........................................................................12
SECTION 2.02. Form of Trustee's Certificate of Authentication..........................................13
SECTION 2.03. Principal Amount; Issuable in Series.....................................................13
SECTION 2.04. Execution of Debt Securities.............................................................17
SECTION 2.05. Authentication and Delivery of Debt Securities...........................................18
SECTION 2.06. Denomination of Debt Securities..........................................................20
SECTION 2.07. Registration of Transfer and Exchange....................................................20
SECTION 2.08. Temporary Debt Securities................................................................22
SECTION 2.09. Mutilated, Destroyed, Lost or Stolen Debt Securities.....................................23
SECTION 2.10. Cancelation of Surrendered Debt Securities...............................................24
SECTION 2.11. Provisions of the Indenture and Debt Securities for the Sole Benefit of
the Parties and the Holders..............................................................25
SECTION 2.12. Payment of Interest; Rights Preserved....................................................25
SECTION 2.13. Securities Denominated in Foreign Currencies.............................................25
SECTION 2.14. Wire Transfers...........................................................................26
SECTION 2.15. Securities Issuable in the Form of a Global Security.....................................26
SECTION 2.16. Medium Term Securities...................................................................30
SECTION 2.17. Defaulted Interest.......................................................................30
SECTION 2.18. Judgments................................................................................32
ARTICLE III
Redemption of Debt Securities
SECTION 3.01. Applicability of Article.................................................................33
SECTION 3.02. Notice of Redemption; Selection of Debt Securities.......................................33
SECTION 3.03. Payment of Debt Securities Called for Redemption.........................................35
SECTION 3.04. Mandatory and Optional Sinking Funds.....................................................36
SECTION 3.05. Redemption of Debt Securities for Sinking Fund...........................................37
</TABLE>
<PAGE> 3
2
<TABLE>
<S> <C> <C>
ARTICLE IV
Particular Covenants of the Issuers
SECTION 4.01. Payment of Principal of, and Premium, If Any, and Interest on, Debt Securities...........39
SECTION 4.02. Maintenance of Offices or Agencies for Registration of Transfer, Exchange
and Payment of Debt Securities...........................................................40
SECTION 4.03. Appointment to Fill a Vacancy in the Office of Trustee...................................40
SECTION 4.04. Duties of Paying Agents, etc.............................................................41
SECTION 4.05. Statement by Officers as to Default......................................................42
SECTION 4.06. Further Instruments and Acts.............................................................42
SECTION 4.07. Corporate Existence......................................................................43
SECTION 4.08. Maintenance of Properties................................................................43
SECTION 4.09. Payment of Taxes and Other Claims........................................................43
ARTICLE V
Holders' Lists and Reports
by the Issuers and the Trustee
SECTION 5.01. Issuers to Furnish Trustee Information as to Names and Addresses of Holders;
Preservation of Information..............................................................44
SECTION 5.02. Communications to Holders................................................................45
SECTION 5.03. Reports by Issuers.......................................................................45
SECTION 5.04. Reports by Trustee.......................................................................46
SECTION 5.05. Record Dates for Action by Holders.......................................................46
ARTICLE VI
Remedies of the Trustee and Holders in Event of Default
SECTION 6.01. Events of Default........................................................................47
SECTION 6.02. Collection of Indebtedness by Trustee, etc...............................................51
SECTION 6.03. Application of Moneys Collected by Trustee...............................................52
SECTION 6.04. Limitation on Suits by Holders...........................................................54
SECTION 6.05. Remedies Cumulative; Delay or Omission in Exercise of Rights Not a Waiver of Default.....55
</TABLE>
<PAGE> 4
3
<TABLE>
<S> <C> <C>
SECTION 6.06. Rights of Holders of Majority in Principal Amount of Debt Securities
to Direct Trustee and to Waive Default...................................................55
SECTION 6.07. Trustee to Give Notice of Defaults Known to It, but May Withhold Such
Notice in Certain Circumstances..........................................................56
SECTION 6.08. Requirement of an Undertaking To Pay Costs in Certain Suits under
the Indenture or Against the Trustee.....................................................57
ARTICLE VII
Concerning the Trustee
SECTION 7.01. Certain Duties and Responsibilities......................................................57
SECTION 7.02. Certain Rights of Trustee................................................................59
SECTION 7.03. Trustee Not Liable for Recitals in Indenture or in Debt Securities.......................61
SECTION 7.04. Trustee, Paying Agent or Registrar May Own Debt Securities...............................61
SECTION 7.05. Moneys Received by Trustee to Be Held in Trust...........................................61
SECTION 7.06. Compensation and Reimbursement...........................................................62
SECTION 7.07. Right of Trustee to Rely on an Officers' Certificate Where No
Other Evidence Specifically Prescribed...................................................63
SECTION 7.08. Separate Trustee; Replacement of Trustee.................................................63
SECTION 7.09. Successor Trustee by Merger..............................................................65
SECTION 7.10. Eligibility; Disqualification............................................................65
SECTION 7.11. Preferential Collection of Claims Against Issuers........................................66
SECTION 7.12. Compliance with Tax Laws.................................................................66
ARTICLE VIII
Concerning the Holders
SECTION 8.01. Evidence of Action by Holders............................................................66
SECTION 8.02. Proof of Execution of Instruments and of Holding of Debt Securities......................67
SECTION 8.03. Who May Be Deemed Owner of Debt Securities...............................................67
SECTION 8.04. Instruments Executed by Holders Bind Future Holders......................................68
</TABLE>
<PAGE> 5
4
<TABLE>
<S> <C> <C>
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Purposes for Which Supplemental Indenture May Be Entered into
Without Consent of Holders...............................................................69
SECTION 9.02. Modification of Indenture with Consent of Holders of Debt Securities.....................72
SECTION 9.03. Effect of Supplemental Indentures........................................................73
SECTION 9.04. Debt Securities May Bear Notation of Changes by Supplemental Indentures..................74
ARTICLE X
Consolidation, Merger, Sale or Conveyance
SECTION 10.01. Consolidations and Mergers of the Issuers...............................................74
SECTION 10.02. Rights and Duties of Successor Corporation..............................................75
ARTICLE XI
Satisfaction and Discharge of Indenture;
Defeasance; Unclaimed Moneys
SECTION 11.01. Applicability of Article................................................................76
SECTION 11.02. Satisfaction and Discharge of Indenture: Defeasance.....................................76
SECTION 11.03. Conditions of Defeasance................................................................78
SECTION 11.04. Application of Trust Money..............................................................79
SECTION 11.05. Repayment to Issuers....................................................................80
SECTION 11.06. Indemnity for U.S. Government Obligations...............................................80
SECTION 11.07. Reinstatement...........................................................................80
ARTICLE XII
Subordination of Debt Securities
SECTION 12.01. Applicability of Article; Agreement To Subordinate......................................80
SECTION 12.02. Liquidation, Dissolution, Bankruptcy....................................................81
SECTION 12.03. Default on Senior Indebtedness..........................................................81
</TABLE>
<PAGE> 6
5
<TABLE>
<S> <C> <C>
SECTION 12.04. Acceleration of Payment of Debt Securities..............................................83
SECTION 12.05. When Distribution Must Be Paid Over.....................................................83
SECTION 12.06. Subrogation.............................................................................83
SECTION 12.07. Relative Rights.........................................................................83
SECTION 12.08. Subordination May Not Be Impaired by Issuers............................................84
SECTION 12.09. Rights of Trustee and Paying Agent......................................................84
SECTION 12.10. Distribution or Notice to Representative................................................85
SECTION 12.11. Article XII Not to Prevent Defaults or Limit Right to Accelerate........................85
SECTION 12.12. Trust Moneys Not Subordinated...........................................................85
SECTION 12.13. Trustee Entitled to Rely................................................................85
SECTION 12.14. Trustee to Effectuate Subordination.....................................................86
SECTION 12.15. Trustee Not Fiduciary for Holders of Senior Indebtedness................................86
SECTION 12.16. Reliance by Holders of Senior Indebtedness on Subordination Provisions..................86
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.01. Successors and Assigns of Issuers Bound by Indenture....................................87
SECTION 13.02. Acts of Board, Committee or Officer of Successor Company Valid..........................87
SECTION 13.03. Required Notices or Demands.............................................................87
SECTION 13.04. Indenture and Debt Securities to Be Construed in Accordance with the
Laws of the State of New York...........................................................88
SECTION 13.05. Officers' Certificate and Opinion of Counsel to Be Furnished upon
Application or Demand by the Issuers....................................................88
SECTION 13.06. Payments Due on Legal Holidays..........................................................89
SECTION 13.07. Provisions Required by Trust Indenture Act to Control...................................89
SECTION 13.08. Computation of Interest on Debt Securities..............................................89
SECTION 13.09. Rules by Trustee, Paying Agent and Registrar............................................89
SECTION 13.10. No Recourse Against Others..............................................................89
SECTION 13.11. Severability............................................................................90
SECTION 13.12. Effect of Headings......................................................................90
</TABLE>
<PAGE> 7
6
<TABLE>
<S> <C> <C>
SECTION 13.13. Indenture May Be Executed in Counterparts...............................................90
</TABLE>
<PAGE> 8
INDENTURE dated as of , 1999, among EOTT
ENERGY PARTNERS, L.P., a Delaware limited (the
"Company"), EOTT ENERGY FINANCE CORP., a Delaware
corporation ("EOTT FINANCE and, together with the
Company, the "Issuers") and [ ], a [ ] banking
corporation (the "Trustee").
RECITALS OF THE ISSUERS
The Issuers have duly authorized the execution and delivery of
this Indenture to provide for the issuance from time to time of their
debentures, notes, bonds or other evidences of indebtedness to be issued in one
or more series unlimited as to principal amount (herein called the "Debt
Securities"), as in this Indenture provided.
All things necessary to make this Indenture a valid agreement
to the Issuer, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH
That in order to declare the terms and conditions upon which
the Debt Securities are authenticated, issued and delivered, and in
consideration of the premises, and of the purchase and acceptance of the Debt
Securities by the holders thereof, the Issuers and the Trustee covenant and
agree with each other, for the benefit of the respective Holders from time to
time of the Debt Securities or any series thereof, as follows:
ARTICLE I
Definitions
SECTION 1.01. Certain Terms Defined. The terms defined in this
Section 1.01 (except as herein otherwise expressly provided or unless the
context otherwise requires) for all purposes of this Indenture and of any
Indenture supplemental hereto shall have the respective meanings specified in
this Section 1.01. All other terms used in this Indenture which are defined in
the Trust Indenture Act or which are by reference therein defined in the
Securities
<PAGE> 9
2
Act (except as herein otherwise expressly provided or unless the context
otherwise requires), shall have the meanings assigned to such terms in the Trust
Indenture Act and in the Securities Act as in force as of the date of original
execution of this Indenture.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Bank Indebtedness" means any and all amounts payable under or
in respect of (i) any credit agreement, as supplemented, amended, modified,
refinanced or replaced at any time from time to time, and (ii) any lines of
credit and letters of credit of the Company, in each case, including principal,
premium (if any), interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the Company
whether or not a claim for post-filing interest is allowed in such proceedings),
fees, charges, expenses, reimbursement obligations, guarantees and all other
amounts payable thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of the
General Partner or any duly authorized committee or subcommittee of such Board
and the Board of Directors of EOTT Finance or any duly authorized committee or
subcommittee of such Board, except as the context may otherwise require.
"business day" means, when used with respect to any Place of
Payment specified pursuant to Section 2.03, any day that is not a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or trust
companies in such Place of Payment are authorized or obligated by law to close,
except as otherwise specified pursuant to Section 2.03.
"Capital Stock" of any Person means any and all shares, units,
interests, rights to purchase, warrants,
<PAGE> 10
3
options, participations or other equivalents of or interests (including
partnership interests) in (however designated) equity of such Person, including
any Preferred Stock, but excluding any debt securities convertible into such
equity.
"Common Units" means the common units, of the Company, which
units are currently listed on the New York Stock Exchange.
"Company" means EOTT Energy Partners, L.P., a Delaware limited
partnership, and, subject to the provisions of Article X, shall also include its
successors and assigns.
"corporate trust office of the Trustee" or other similar term
means the office of the Trustee at which the corporate trust business of the
Trustee shall, at any particular time, be principally administered in the United
States of America, except that with respect to the presentation of Debt
Securities for payment or for registration of transfer and exchange, such term
shall also mean the office of the Trustee or the Trustee's agent in the Borough
of Manhattan, the City and State of New York, at which at any particular time
its corporate agency business shall be conducted.
"Currency" means Dollars or Foreign Currency.
"Debt Security" or "Debt Securities" has the meaning stated in
the first recital of this Indenture and more particularly means any debt
security or debt securities, as the case may be, of any series authenticated and
delivered under this Indenture.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Depositary" means, unless otherwise specified by the Issuers
pursuant to either Section 2.03 or 2.15, with respect to registered Debt
Securities of any series issuable or issued in whole or in part in the form of
one or more Global Securities, The Depository Trust Company, New York, New York,
or any successor thereto registered as a clearing agency under the Exchange Act
or other applicable statute or regulations.
<PAGE> 11
4
"Designated Senior Indebtedness" means (i) the Bank
Indebtedness and (ii) any other Senior Indebtedness of the Company.
"Dollar" or "$" means such currency of the United States as at
the time of payment is legal tender for the payment of public and private debts.
"Dollar Equivalent" means, with respect to any monetary amount
in a Foreign Currency, at any time for the determination thereof, the amount of
Dollars obtained by converting such Foreign Currency involved in such
computation into Dollars at the spot rate for the purchase of Dollars with the
applicable Foreign Currency as quoted by Citibank, N.A. (unless another
comparable financial institution is designated by the Issuers) in New York, New
York at approximately 11:00 a.m. (New York time) on the date two business days
prior to such determination.
"EOTT Finance" means EOTT Energy Finance Corp., a Delaware
corporation, and, subject to the provisions of Article X, shall also include its
successors and assigns.
"Event of Default" has the meaning specified in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Floating Rate Security" means a Debt Security that provides
for the payment of interest at a variable rate determined periodically by
reference to an interest rate index specified pursuant to Section 2.03.
"Foreign Currency" means a currency issued or adopted by the
government of any country other than the United States or a composite currency
the value of which is determined by reference to the values of the currencies of
any group of countries.
"GAAP" means generally accepted accounting principles in the
United States as in effect as of the date on which the Debt Securities of the
applicable series are issued, including those set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting
<PAGE> 12
5
Standards Board or in such other statements by such other entity as approved by
a significant segment of the accounting profession. All ratios and computations
based on GAAP contained in this Indenture shall be computed in conformity with
GAAP consistently applied.
"General Partner" means EOTT Energy Corp., a Delaware
corporation and the general partner of the Company.
"Global Security" means with respect to any series of Debt
Securities issued hereunder, a Debt Security which is executed by the Issuers
and authenticated and delivered by the Trustee to the Depositary or pursuant to
the Depositary's instruction, all in accordance with this Indenture and any
Indentures supplemental hereto, or resolution of the Board of Directors and set
forth in an Officers' Certificate, which shall be registered in the name of the
Depositary or its nominee and which shall represent, and shall be denominated in
an amount equal to the aggregate principal amount of, all the Outstanding Debt
Securities of such series or any portion thereof, in either case having the same
terms, including, without limitation, the same original issue date, date or
dates on which principal is due and interest rate or method of determining
interest.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any indebtedness or other
obligation of any other Person and any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such indebtedness or other
obligation of such other Person or (ii) entered into for purposes of assuring in
any other manner the obligee of such indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided, however, that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Holder," "Holder of Debt Securities" or other similar terms
mean, with respect to a Registered Security, the Registered Holder.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any indebtedness or Capital Stock of
a Person existing at the
<PAGE> 13
6
time such Person becomes a Subsidiary (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be incurred by such Subsidiary at
the time it becomes a Subsidiary. The terms "Incurred", "Incurrence" and
"Incurring" shall each have a correlative meaning.
"Indenture" means this instrument as originally executed, or,
if amended or supplemented as herein provided, as so amended or supplemented and
shall include the form and terms of particular series of Debt Securities as
contemplated hereunder, whether or not a supplemental Indenture is entered into
with respect thereto.
"Issuers" means the Company and EOTT Finance, and, subject to
the provisions of Article X, shall also include their successors and assigns.
"Issuer Order" means a written order of the Issuers, signed by
the Chairman of the Board, President or any Vice President of each Issuer and by
the Treasurer, Secretary, any Assistant Treasurer or any Assistant Secretary of
each Issuer.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President or any Vice President and by the Treasurer,
chief accounting officer, the Secretary or any Assistant Treasurer or Assistant
Secretary of the General Partner and by the Chairman of the Board, the President
or any Vice President and by the Treasurer, chief accounting officer, the
Secretary or any Assistant Treasurer or Assistant Secretary of EOTT Finance.
Each such certificate shall include the statements provided for in Section
13.05, if applicable.
"Opinion of Counsel" means an opinion in writing signed by
legal counsel for the Company (which counsel may be an employee of the Company),
or outside counsel for the Company. Each such opinion shall include the
statements provided for in Section 13.05, if applicable.
"Original Issue Discount Debt Security" means any Debt
Security which provides for an amount less than the
<PAGE> 14
7
principal amount thereof to be due and payable upon a declaration or
acceleration of the maturity thereof pursuant to Section 6.01.
"Outstanding" when used with respect to any series of Debt
Securities, means, as of the date of determination, all Debt Securities of that
series theretofore authenticated and delivered under this Indenture, except:
(i) Debt Securities of that series theretofore canceled by the
Trustee or delivered to the Trustee for cancelation;
(ii) Debt Securities of that series for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any paying agent (other than the Company or EOTT
Finance) in trust or set aside and segregated in trust by the Issuers
(if either of the Issuers shall act as its own paying agent) for the
holders of such Debt Securities; provided, that, if such Debt
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to
the Trustee has been made; and
(iii) Debt Securities of that series which have been paid
pursuant to Section 2.09 or in exchange for or in lieu of which other
Debt Securities have been authenticated and delivered pursuant to this
Indenture, other than any such Debt Securities in respect of which
there shall have been presented to the Trustee proof satisfactory to it
that such Debt Securities are held by a bona fide purchaser in whose
hands such Debt Securities are valid obligations of the Issuers;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Debt Securities of any series have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Debt Securities owned by the Issuers or any other obligor upon the Debt
Securities or any Affiliate of the Issuers or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Debt Securities which
the Trustee knows to be so owned shall be so disregarded. Debt
<PAGE> 15
8
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Debt Securities and that the
pledgee is not one of the Issuers or any other obligor upon the Debt Securities
or an Affiliate of the Issuers or of such other obligor. In determining whether
the Holders of the requisite principal amount of outstanding Debt Securities
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, the principal amount of an original Issue Discount Debt
Security that shall be deemed to be Outstanding for such purposes shall be the
amount of the principal thereof that would be due and payable as of the date of
such determination upon a declaration of acceleration of the maturity thereof
pursuant to Section 6.01. In determining whether the Holders of the requisite
principal amount of the Outstanding Debt Securities of any series have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
the principal amount of a Debt Security denominated in one or more foreign
currencies or currency units that shall be deemed to be Outstanding for such
purposes shall be the Dollar Equivalent, determined in the manner provided as
contemplated by Section 2.03 on the date of original issuance of such Debt
Security, of the principal amount (or, in the case of any Original Issue
Discount Security, the Dollar Equivalent on the date of original issuance of
such Security of the amount determined as provided in the preceding sentence
above) of such Debt Security.
"pari passu", as applied to the ranking of any indebtedness of
a Person in relation to other indebtedness of such Person, means that each such
indebtedness either (i) is not subordinate in right of payment to any
indebtedness or (ii) is subordinate in right of payment to the same indebtedness
as is the other, and is so subordinate to the same extent, and is not
subordinate in right of payment to each other or to any indebtedness as to which
the other is not so subordinate.
"Person" means any individual, corporation, partnership, joint
venture, association, limited liability company, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
<PAGE> 16
9
"Place of Payment" means, when used with respect to the Debt
Securities of any series, the place or places where the principal of, and
premium, if any, and interest on, the Debt Securities of that series are payable
as specified pursuant to Section 2.03.
"Preferred Stock" as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Registered Holder" means the Person in whose name a
Registered Security is registered in the Debt Security Register (as defined in
Section 2.07(a)).
"Registered Security" means any Debt Security registered as to
principal and interest in the Debt Security Register (as defined in Section
2.07(a)).
"Registrar" has the meaning set forth in Section 2.07(a).
"Representative" means the trustee, agent or representative
(if any) for an issue of indebtedness.
"responsible officer" when used with respect to the Trustee,
means any officer within the Trustee, including any Vice President, any Second
Vice President, any trust officer or any other officer of the Trustee performing
functions similar to those performed by the persons who at the time shall be
such officers, and any other officer of the Trustee to whom corporate trust
matters are referred because of his knowledge of and familiarity with the
particular subject.
"Restricted Subsidiary" means a Subsidiary of the Company.
"Secured Indebtedness" means any indebtedness of the Company
secured by a Lien.
"Securities Act" means the Securities Act of 1933.
<PAGE> 17
10
"Senior Indebtedness" means, as to any series of Debt
Securities subordinated pursuant to the provisions of Article XII, the
indebtedness of the Company identified as Senior Indebtedness in the resolution
of the Board of Directors and accompanying Officers' Certificate or supplemental
Indenture setting forth the terms, including as to subordination, of such
series.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by (i) such
Person, (ii) such Person and one or more Subsidiaries of such Person or (iii)
one or more Subsidiaries of such Person.
"Trustee" initially means [ ] and any other Person or
Persons appointed as such from time to time pursuant to Section 7.08, and,
subject to the provisions of Article VII, includes its or their successors and
assigns. If at any time there is more than one such Person, "Trustee" as used
with respect to the Debt Securities of any series shall mean the Trustee with
respect to the Debt Securities of that series.
"Trust Indenture Act" (except as herein otherwise expressly
provided) means the Trust Indenture Act of 1939 as in force at the date of this
indenture as originally executed and, to the extent required by law, as amended.
"United States" means the United States of America (including
the States and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
<PAGE> 18
11
"U.S. Government Obligations" means securities that are (x)
direct obligations of the United States for the payment of which its full faith
and credit is pledged or (y) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States, which, in either case, are not callable or redeemable at the
option of the issuer thereof.
"Yield to Maturity" means the yield to maturity calculated at
the time of issuance of a series of Debt Securities, or, if applicable, at the
most recent redetermination of interest on such series and calculated in
accordance with accepted financial practice.
SECTION 1.02. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the Trust
Indenture Act which are incorporated by reference in and made a part of this
indenture. The following Trust Indenture Act terms have the following meanings:
"indenture securities" means the Debt Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Issuers and
any other obligor on the Debt Securities.
All other Trust Indenture Act terms used in this Indenture
that are defined by the Trust indenture Act,reference to another statute or
defined by rules of the Securities and Exchange Commission have the meanings
assigned to them by such definitions.
SECTION 1.03. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
<PAGE> 19
12
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) if the applicable series of Debt Securities are
subordinated pursuant to Article XII, unsecured indebtedness shall not
be deemed to be subordinate or junior to Secured Indebtedness merely by
virtue of its nature as unsecured indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be the
greater of (i) the maximum liquidation value of such Preferred Stock or
(ii) the maximum mandatory redemption or mandatory repurchase price
with respect to such Preferred Stock.
ARTICLE II
Debt Securities
SECTION 2.01. Forms Generally. The Debt Securities of each
series shall be in substantially the form established without the approval of
any Holder by or pursuant to a resolution of the Board of Directors or in one or
more Indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as the Issuers
may deem appropriate (and, if not contained in a supplemental Indenture entered
into in accordance with Article IX, as are not prohibited by the provisions of
this Indenture) or as may be required or
<PAGE> 20
13
appropriate to comply with any law or with any rules made pursuant thereto or
with any rules of any securities exchange on which such series of Debt
Securities may be listed, or to conform to general usage, or as may,
consistently herewith, be determined by the officers executing such Debt
Securities as evidenced by their execution of the Debt Securities.
The definitive Debt Securities of each series shall be
printed, lithographed or engraved on steel engraved borders or may be produced
in any other manner, all as determined by the officers executing such Debt
Securities, as evidenced by their execution of such Debt Securities.
SECTION 2.02. Form of Trustee's Certificate of
Authentication. The Trustee's Certificate of Authentication
on all Debt Securities authenticated by the Trustee shall be
in substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities of the series designated
therein referred to in the within-mentioned Indenture.
---------------------------
As Trustee
By
---------------------------
Authorized Signature
SECTION 2.03. Principal Amount; Issuable in Series. The
aggregate principal amount of Debt Securities which may be issued, executed,
authenticated, delivered and outstanding under this Indenture is unlimited.
The Debt Securities may be issued in one or more series. There
shall be established, without the approval of any Holders, in or pursuant to a
resolution of the Board of Directors and set forth in an Officers' Certificate,
or established in one or more Indentures supplemental hereto,
<PAGE> 21
14
prior to the issuance of Debt Securities of any series any or all of the
following:
(1) the title of the Debt Securities of the series (which
shall distinguish the Debt Securities of the series from all other Debt
Securities);
(2) any limit upon the aggregate principal amount of the Debt
Securities of the series which may be authenticated and delivered under
this Indenture (except for Debt Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu of,
other Debt Securities of the series pursuant to this Article II);
(3) the date or dates on which the principal and premium, if
any, of the Debt Securities of the series are payable;
(4) the rate or rates (which may be fixed or variable) at
which the Debt Securities of the series shall bear interest, if any, or
the method of determining such rate or rates, the date or dates from
which such interest shall accrue, the interest payment dates on which
such interest shall be payable, or the method by which such date will
be determined, in the case of Registered Securities, the record dates
for the determination of Holders thereof to whom such interest is
payable; and the basis upon which interest will be calculated if other
than that of a 360-day year of twelve thirty-day months;
(5) the Place or Places of Payment, if any, in addition to or
instead of the corporate trust office of the Trustee where the
principal of, and interest on, Debt Securities of the series shall be
payable;
(6) the price or prices at which, the period or periods within
which and the terms and conditions upon which Debt Securities of the
series may be redeemed, in whole or in part, at the option of the
Issuers or otherwise;
(7) the obligation, if any, of the Issuers to redeem, purchase
or repay Debt Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof, and the
price or
<PAGE> 22
15
prices to which and the period or periods within which and the terms and
conditions upon which Debt Securities of the series shall be redeemed, purchased
or repaid, in whole or in part, pursuant to such obligations;
(8) the terms, if any, upon which the Debt Securities of the
series may be convertible into or exchanged for Common Units, Preferred
Stock (which may be represented by depositary shares), other Debt
Securities or warrants for Common Units, Preferred Stock or
indebtedness or other securities of any kind of the Company, EOTT
Finance or any other obligor or issuer and the terms and conditions
upon which such conversion or exchange shall be effected, including the
initial conversion or exchange price or rate, the conversion or
exchange period and any other provision in addition to or in lieu of
those described herein;
(9) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which Debt Securities of the
series shall be issuable;
(10) if the amount of principal of or any premium or interest
on Debt Securities of the series may be determined with reference to an
index or pursuant to a formula, the manner in which such amounts will
be determined;
(11) if the principal amount payable at the Stated Maturity of
Debt Securities of the series will not be determinable as of any one or
more dates prior to such Stated Maturity, the amount which will be
deemed to be such principal amount as of any such date for any purpose,
including the principal amount thereof which will be due and payable
upon any maturity other than the Stated Maturity or which will be
deemed to be Outstanding as of any such date (or, in any such case, the
manner in which such deemed principal amount is to be determined); and
the manner of determining the equivalent thereof in the currency of the
United States of America for purposes of the definition of Dollar
Equivalent;
(12) any changes or additions to Article XI, including the
addition of additional covenants that may be subject to the covenant
defeasance option pursuant to Section 11.02(b)(ii);
<PAGE> 23
16
(13) if other than such coin or Currency of the United States
as at the time of payment is legal tender for payment of public and
private debts, the coin or Currency or Currencies or units of two or
more Currencies in which payment of the principal of and premium, if
any, and interest on, Debt Securities of the series shall be payable;
(14) if other than the principal amount thereof, the portion
of the principal amount of Debt Securities of the series which shall be
payable upon declaration of acceleration of the maturity thereof
pursuant to Section 6.01 or provable in bankruptcy pursuant to Section
6.02;
(15) the terms, if any, of the transfer, mortgage, pledge or
assignment as security for the Debt Securities of the series of any
properties, assets, moneys, proceeds, securities or other collateral,
including whether certain provisions of the Trust Indenture Act are
applicable and any corresponding changes to provisions of this
Indenture as currently in effect;
(16) any addition to or change in the Events of Default with
respect to the Debt Securities of the series and any change in the
right of the Trustee or the Holders to declare the principal of and
interest on, such Debt Securities due and payable;
(17) if the Debt Securities of the series shall be issued in
whole or in part in the form of a Global Security or Securities, the
terms and conditions, if any, upon which such Global Security or
Securities may be exchanged in whole or in part for other individual
Debt Securities in definitive registered form; and the Depositary for
such Global Security or Securities and the form of any legend or
legends to be borne by any such Global Security or Securities in
addition to or in lieu of the legend referred to in Section 2.15;
(18) any trustees, authenticating or paying agents, transfer
agents or registrars;
(19) the applicability of, and any addition to or change in
the covenants and definitions currently set forth in this Indenture or
in the terms currently set
<PAGE> 24
17
forth in Article X, including conditioning any merger, conveyance,
transfer or lease permitted by Article X upon the satisfaction of an
indebtedness coverage standard by the Issuers and any Successor Company
(as defined in Article X);
(20) the terms, if any, of any Guarantee of the payment of
principal of, and premium, if any, and interest on, Debt Securities of
the series and any corresponding changes to the provisions of this
Indenture as currently in effect;
(21) the subordination, if any, of the Debt Securities of the
series pursuant to Article XII and any changes or additions to Article
XII;
(22) with regard to Debt Securities of the series that do not
bear interest, the dates for certain required reports to the Trustee;
and
(23) any other terms of the Debt Securities of the series
(which terms shall not be prohibited by the provisions of this
Indenture).
All Debt Securities of any one series appertaining thereto
shall be substantially identical except as to denomination and except as may
otherwise be provided in or pursuant to such resolution of the Board of
Directors and as set forth in such Officers' Certificate or in any such
Indenture supplemental hereto.
SECTION 2.04. Execution of Debt Securities. The Debt
Securities shall be signed on behalf of each of the Issuers by its Chairman of
the Board, its Vice Chairman, its President or a Vice President and by its
Secretary, an Assistant Secretary, a Treasurer or an Assistant Treasurer. Such
signatures upon the Debt Securities may be the manual or facsimile signatures of
the present or any future such authorized officers and may be imprinted or
otherwise reproduced on the Debt Securities. The seal of the Issuers, if any,
may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Debt Securities.
Only such Debt Securities as shall bear thereon a certificate
of authentication substantially in the form hereinbefore recited, signed
manually by the Trustee, shall
<PAGE> 25
18
be entitled to the benefits of this Indenture or be valid or obligatory for any
purpose. Such certificate by the Trustee upon any Debt Security executed by the
Issuers shall be conclusive evidence that the Debt Security so authenticated has
been duly authenticated and delivered hereunder.
In case any officer of either of the Issuers who shall have
signed any of the Debt Securities shall cease to be such officer before the Debt
Securities so signed shall have been authenticated and delivered by the Trustee,
or disposed of by the Issuers, such Debt Securities nevertheless may be
authenticated and delivered or disposed of as though the Person who signed such
Debt Securities had not ceased to be such officer of the Company or EOTT
Finance; and any Debt Security may be signed on behalf of the Issuers by such
Persons as, at the actual date of the execution of such Debt Security, shall be
the proper officers of the Issuers, although at the date of such Debt Security
or of the execution of this Indenture any such Person was not such officer.
SECTION 2.05. Authentication and Delivery of Debt Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Issuers may deliver Debt Securities of any series executed by the
Issuers to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Debt Securities to or upon an Issuer Order. In
authenticating such Debt Securities and accepting the additional
responsibilities under this Indenture in relation to such Debt Securities, the
Trustee shall be entitled to receive, and (subject to Section 7.01.) shall be
fully protected in relying upon:
(1) a copy of any resolution or resolutions of the Board of
Directors, certified by the Secretary or Assistant Secretary of each of
the Issuers, authorizing the terms of issuance of any series of Debt
Securities;
(2) an executed supplemental Indenture, if any;
(3) an Officers' Certificate; and
<PAGE> 26
19
(4) an Opinion of Counsel prepared in accordance with Section
13.05 substantially to the effect that:
(a) the form of such Debt Securities has been
established by or pursuant to a resolution of the Board of
Directors or by a supplemental Indenture as permitted by
Section 2.01 in conformity with the provisions of this
Indenture;
(b) the terms of such Debt Securities have been
established by or pursuant to a resolution of the Board of
Directors or by a supplemental Indenture as permitted by
Section 2.03 in conformity with the provisions of this
Indenture;
(c) such Debt Securities, when authenticated and
delivered by the Trustee and issued by the Issuers in the
manner and subject to any conditions specified in such Opinion
of Counsel, will constitute valid and legally binding
obligations of the Issuers, enforceable in accordance with
their terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may
be limited by equitable principles of general applicability;
Such Opinion of Counsel need express no opinion as to whether
a court in the United States would render a money judgment in a currency other
than that of the United States.
The Trustee shall have the right to decline to authenticate
and deliver any Debt Securities under this Section 2.05 if the Trustee, being
advised by counsel, determines that such action may not lawfully be taken or if
the Trustee in good faith by its board of directors or trustees, executive
committee or a trust committee of directors, trustees or vice presidents shall
determine that such action would expose the Trustee to personal liability to
existing Holders.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Issuers to authenticate Debt Securities of any series. Unless
limited by the terms of such appointment, an authenticating agent may
authenticate
<PAGE> 27
20
Debt Securities whenever the Trustee may do so. Each reference in this Indenture
to authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, paying agent or agent
for service of notices and demands.
Unless otherwise provided in the form of Debt Security for any
series, each Debt Security shall be dated the date of its authentication.
SECTION 2.06. Denomination of Debt Securities. Unless
otherwise provided in the form of Debt Security for any series, the Debt
Securities of each series shall be issuable only as Registered Securities in
such denominations as shall be specified or contemplated by Section 2.03. In the
absence of any such specification with respect to the Debt Securities of any
series, the Debt Securities of such series shall be issuable in denominations of
$1,000 and any integral multiple thereof.
SECTION 2.07. Registration of Transfer and Exchange. (a) The
Issuers shall keep or cause to be kept a register for each series of Registered
Securities issued hereunder (hereinafter collectively referred to as the "Debt
Security Register"), in which, subject to such reasonable regulations as it may
prescribe, the Issuers shall provide for the registration of Registered
Securities and the transfer of Registered Securities as in this Article II
provided. At all reasonable times the Debt Security Register shall be open for
inspection by the Trustee. Subject to Section 2.15, upon due presentment for
registration of transfer of any Registered Security at any office or agency to
be maintained by the Issuers in accordance with the provisions of Section 4.02,
the Issuers shall execute and the Trustee shall authenticate and deliver in the
name of the transferee or transferees a new Registered Security or Registered
Securities of authorized denominations for a like aggregate principal amount.
Unless and until otherwise determined by the Issuers by
resolution of the Board of Directors, the register of the Issuers for the
purpose of registration, exchange or registration of transfer of the Registered
Securities shall be kept at the corporate trust office of the Trustee and, for
this purpose, the Trustee shall be designated "Registrar".
<PAGE> 28
21
Registered Securities of any series (other than a Global
Security) may be exchanged for a like aggregate principal amount of Registered
Securities of the same series of other authorized denominations. Subject to
Section 2.15, Registered Securities to be exchanged shall be surrendered at the
office or agency to be maintained by the Issuers as provided in Section 4.02,
and the Issuers shall execute and the Trustee shall authenticate and deliver in
exchange therefor the Registered Security or Registered Securities which the
Holder making the exchange shall be entitled to receive.
(b) All Registered Securities presented or surrendered for
registration of transfer, exchange or payment shall (if so required by the
Issuers, the Trustee or the Registrar) be duly endorsed or be accompanied by a
written instrument or instruments of transfer, in form satisfactory to the
Issuers, the Trustee and the Registrar, duly executed by the Registered Holder
or his attorney duly authorized in writing.
All Debt Securities issued in exchange for or upon transfer of
Debt Securities shall be the valid obligations of the Issuers, evidencing the
same debt, and entitled to the same benefits under this Indenture as the Debt
Securities surrendered for such exchange or transfer.
No service charge shall be made for any exchange or
registration of transfer of Debt Securities (except as provided by Section
2.09), but the Issuers may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto, other than
those expressly provided in this Indenture to be made at the Issuers' own
expense or without expense or without charge to the Holders.
The Issuers shall not be required (a) to issue, register the
transfer of or exchange any Debt Securities for a period of 15 days next
preceding any mailing of notice of redemption of Debt Securities of such series
or (b) to register the transfer of or exchange any Debt Securities selected,
called or being called for redemption.
Prior to the due presentation for registration of transfer of
any Debt Security, the Issuers, the Trustee, any paying agent or any Registrar
may deem and treat the Person in whose name a Debt Security is registered as the
absolute
<PAGE> 29
22
owner of such Debt Security for the purpose of receiving payment of principal
of, and premium, if any, and interest on, such Debt Security and for all other
purposes whatsoever, whether or not such Debt Security is overdue, and none of
the Issuers, the Trustee, any paying agent or Registrar shall be affected by
notice to the contrary.
None of the Issuers, the Trustee, any agent of the Trustee,
any paying agent or any Registrar will have any responsibility or liability for
any aspect of the records relating to, or payments made on account of,
beneficial ownership interests of a Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
SECTION 2.08. Temporary Debt Securities. Pending the
preparation of definitive Debt Securities of any series, the Issuers may execute
and the Trustee shall authenticate and deliver temporary Debt Securities
(printed, lithographed, photocopied, typewritten or otherwise produced) of any
authorized denomination, and substantially in the form of the definitive Debt
Securities in lieu of which they are issued, in registered form and with such
omissions, insertions and variations as may be appropriate for temporary Debt
Securities, all as may be determined by the Issuers with the concurrence of the
Trustee. Temporary Debt Securities may contain such reference to any provisions
of this Indenture as may be appropriate. Every temporary Debt Security shall be
executed by the Issuers and be authenticated by the Trustee upon the same
conditions and in substantially the same manner, and with like effect, as the
definitive Debt Securities.
If temporary Debt Securities of any series are issued, the
Issuers will cause definitive Debt Securities of such series to be prepared
without unreasonable delay. After the preparation of definitive Debt Securities
of such series, the temporary Debt Securities of such series shall be
exchangeable for definitive Debt Securities of such series upon surrender of the
temporary Debt Securities of such series at the office or agency of the Issuers
at a Place of Payment for such series, without charge to the Holder thereof,
except as provided in Section 2.07 in connection with a transfer, and upon
surrender for cancelation of any one or more temporary Debt Securities of any
series, the Issuers shall execute and the Trustee shall authenticate and deliver
in exchange therefor a like
<PAGE> 30
23
principal amount of definitive Debt Securities of the same series of authorized
denominations and of like tenor. Until so exchanged, temporary Debt Securities
of any series shall in all respects be entitled to the same benefits under this
Indenture as definitive Debt Securities of such series, except as otherwise
specified as contemplated by Section 2.03(17) with respect to the payment of
interest on Global Securities in temporary form.
Upon any exchange of a portion of a temporary Global Security
for a definitive Global Security or for the individual Debt Securities
represented thereby pursuant to Section 2.07 or this Section 2.08, the temporary
Global Security shall be endorsed by the Trustee to reflect the reduction of the
principal amount evidenced thereby, whereupon the principal amount of such
temporary Global Security shall be reduced for all purposes by the amount so
exchanged and endorsed.
SECTION 2.09. Mutilated, Destroyed, Lost or Stolen Debt
Securities. If (i) any mutilated Debt Security is surrendered to the Trustee at
its corporate trust office (in the case of Registered Securities) or (ii) the
Issuers and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Debt Security, and there is delivered to the
Issuers and the Trustee such security or indemnity as may be required by them to
save each of them and any paying agent harmless, and neither the Issuers nor the
Trustee receives notice that such Debt Security has been acquired by a bona fide
purchaser, then the Issuers shall execute and, upon an Issuer Order, the Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Debt Security, a new Debt Security of the
same series of like tenor, form, terms and principal amount, bearing a number
not contemporaneously Outstanding. Upon the issuance of any substituted Debt
Security, the Issuers 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 connected therewith. In case any Debt Security which has matured
or is about to mature or which has been called for redemption shall become
mutilated or be destroyed, lost or stolen, the Issuers may, instead of issuing a
substituted Debt Security, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated Debt Security) if the
applicant for such payment shall furnish the Issuers and the Trustee with such
<PAGE> 31
24
security or indemnity as either may require to save it harmless from all risk,
however remote, and, in case of destruction, loss or theft, evidence to the
satisfaction of the Issuers and the Trustee of the destruction, loss or theft of
such Debt Security and of the ownership thereof.
Every substituted Debt Security of any series issued pursuant
to the provisions of this Section 2.09 by virtue of the fact that any Debt
Security is destroyed, lost or stolen shall constitute an original additional
contractual obligation of the Issuers, whether or not the destroyed, lost or
stolen Debt Security shall be found at any time, and shall be entitled to all
the benefits of this Indenture equally and proportionately with any and all
other Debt Securities of that series duly issued hereunder. All Debt Securities
shall be held and owned upon the express condition that the foregoing provisions
are exclusive with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Debt Securities, and shall preclude any and all other
rights or remedies, notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
SECTION 2.10. Cancelation of Surrendered Debt Securities. All
Debt Securities surrendered for payment, redemption, registration of transfer or
exchange shall, if surrendered to the Issuers or any paying agent or a
Registrar, be delivered to the Trustee for cancelation by it, or if surrendered
to the Trustee, shall be canceled by it, and no Debt Securities shall be issued
in lieu thereof except as expressly permitted by any of the provisions of this
Indenture. All canceled Debt Securities held by the Trustee shall be destroyed
(subject to the record retention requirements of the Exchange Act) and
certification of their destruction delivered to the Issuers, unless otherwise
directed. On request of the Issuers, the Trustee shall deliver to the Issuers
canceled Debt Securities held by the Trustee. If the Issuers shall acquire any
of the Debt Securities, however, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented thereby unless and
until the same are delivered or surrendered to the Trustee for cancelation. The
Issuers may not issue new Debt Securities to replace Debt Securities it has
redeemed, paid or delivered to the Trustee for cancelation.
<PAGE> 32
25
SECTION 2.11. Provisions of the Indenture and Debt Securities
for the Sole Benefit of the Parties and the Holders. Nothing in this Indenture
or in the Debt Securities, expressed or implied, shall give or be construed to
give to any Person, other than the parties hereto, the Holders or any Registrar
or paying agent, any legal or equitable right, remedy or claim under or in
respect of this Indenture, or under any covenant, condition or provision herein
contained; all its covenants, conditions and provisions being for the sole
benefit of the parties hereto, the Holders and any Registrar and paying agents.
SECTION 2.12. Payment of Interest; Rights Preserved. (a)
Interest on any Registered Security that is payable and is punctually paid or
duly provided for on any interest payment date shall be paid to the Person in
whose name such Registered Security is registered at the close of business on
the regular record date for such interest notwithstanding the cancellation of
such Registered Security upon any transfer or exchange subsequent to the regular
record date. Payment of interest on Registered Securities shall be made at the
corporate trust office of the Trustee (except as otherwise specified pursuant to
Section 2.03), or at the option of the Issuers, by check mailed to the address
of the Person entitled thereto as such address shall appear in the Debt Security
Register or, if provided pursuant to Section 2.03 and in accordance with
arrangements satisfactory to the Trustee, at the option of the Registered Holder
by wire transfer to an account designated by the Registered Holder.
(b) Subject to the foregoing provisions of this Section 2.12
and Section 2.17, each Debt Security of a particular series delivered under this
Indenture upon registration of transfer of or in exchange for or in lieu of any
other Debt Security of the same series shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Debt
Security.
SECTION 2.13. Securities Denominated in Foreign Currencies.
(a) Except as otherwise specified pursuant to Section 2.03 for Registered
Securities of any series, payment of the principal of, and premium, if any, and
interest on, Registered Securities of such series will be made in Dollars.
<PAGE> 33
26
(b) For the purposes of calculating the principal amount of
Debt Securities of any series denominated in a Foreign Currency or in units of
two or more Foreign Currencies for any purpose under this Indenture, the
principal amount of such Debt Securities at any time Outstanding shall be deemed
to be the Dollar Equivalent of such principal amount as of the date of any such
calculation.
In the event any Foreign Currency or currencies or units of
two or more Currencies in which any payment with respect to any series of Debt
Securities may be made ceases to be a freely convertible Currency on United
States Currency markets, for any date thereafter on which payment of principal
of, or premium, if any, or interest on, the Debt Securities of a series is due,
the Issuers shall select the Currency of payment for use on such date, all as
provided in the Debt Securities of such series. In such event, the Issuers
shall, as provided in the Debt Securities of such series, notify the Trustee of
the Currency which they have selected to constitute the funds necessary to meet
the Issuers' obligations or such payment date and of the amount of such Currency
to be paid. Such amount shall be determined as provided in the Debt Securities
of such series. The payment to the Trustee with respect to such payment date
shall be made by the Issuers solely in the Currency so selected.
SECTION 2.14. Wire Transfers. Notwithstanding any other
provision to the contrary in this Indenture, the Issuers may make any payment of
monies required to be deposited with the Trustee on account of principal of, or
premium, if any, or interest on, the Debt Securities (whether pursuant to
optional or mandatory redemption payments, interest payments or otherwise) by
wire transfer of immediately available funds to an account designated by the
Trustee on or before the date such moneys are to be paid to the Holders of the
Debt Securities in accordance with the terms hereof.
SECTION 2.15. Securities Issuable in the Form of a Global
Security. (a) If the Issuers shall establish pursuant to Sections 2.01 and 2.03
that the Debt Securities of a particular series are to be issued in whole or in
part in the form of one or more Global Securities, then the Issuers shall
execute and the Trustee or its agent shall, in accordance with Section 2.05,
authenticate and deliver, such
<PAGE> 34
27
Global Security or Securities, which (i) shall represent, and shall be
denominated in an amount equal to the aggregate principal amount of, the
Outstanding Debt Securities of such series to be represented by such Global
Security or Securities, or such portion thereof as the Issuers shall specify in
an Officers' Certificate, (ii) shall be registered in the name of the Depositary
for such Global Security or securities or its nominee, (iii) shall be delivered
by the Trustee or its agent to the Depositary or pursuant to the Depositary's
instruction and (iv) shall bear a legend substantially to the following effect:
"Unless and until it is exchanged in whole or in part for the individual Debt
Securities represented hereby, this Global Security may not be transferred
except as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor Depositary or a nominee
of such successor Depositary", or such other legend as may then be required by
the Depositary for such Global Security or Securities.
(b) Notwithstanding any other provision of this Section 2.15
or of Section 2.07 to the contrary, and subject to the provisions of paragraph
(c) below, unless the terms of a Global Security expressly permit such Global
Security to be exchanged in whole or in part for definitive Debt Securities in
registered form, a Global Security may be transferred, in whole but not in part
and in the manner provided in Section 2.07, only by the Depositary to a nominee
of the Depositary for such Global Security, or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary, or by the Depositary or a
nominee of the Depositary to a successor Depositary for such Global Security
selected or approved by the Issuers, or to a nominee of such successor
Depositary.
(c) (i) If at any time the Depositary for a Global Security or
Securities notifies the Issuers that it is unwilling or unable to continue as
Depositary for such Global Security or Securities or if at any time the
Depositary for the Debt Securities for such series shall no longer be eligible
or in good standing under the Exchange Act or other applicable statute, rule or
regulation, the Issuers shall appoint a successor Depositary with respect to
such Global Security or Securities. If a successor Depositary for such Global
Security or Securities is not appointed by the Issuers within 90 days after the
Issuers
<PAGE> 35
28
receive such notice or becomes aware of such ineligibility, the Issuers shall
execute, and the Trustee or its agent, upon receipt of an Issuer Order for the
authentication and delivery of such individual Debt Securities of such series in
exchange for such Global Security, will authenticate and deliver, individual
Debt Securities of such series of like tenor and terms in definitive form in an
aggregate principal amount equal to the principal amount of the Global Security
in exchange for such Global Security or securities.
(ii) The Issuers may at any time and in their sole discretion
determine that the Debt Securities of any series or portion thereof issued or
issuable in the form of one or more Global Securities shall no longer be
represented by such Global security or securities. In such event the Issuers
will execute, and the Trustee, upon receipt of an Issuer Order for the
authentication and delivery of individual Debt Securities of such series in
exchange in whole or in part for such Global Security, will authenticate and
deliver individual Debt Securities of such series of like tenor and terms in
definitive form in an aggregate principal amount equal to the principal amount
of such series or portion thereof in exchange for such Global Security or
Securities.
(iii) If specified by the Issuers pursuant to Sections 2.01
and 2.03 with respect to Debt Securities issued or issuable in the form of a
Global Security, the Depositary for such Global Security may surrender such
Global Security in exchange in whole or in part for individual Debt Securities
of such series of like tenor and terms in definitive form on such terms as are
acceptable to the Issuers, the Trustee and such Depositary. Thereupon the
Issuers shall execute, and the Trustee or its agent upon receipt of an Issuer
Order for the authentication and delivery of definitive Debt Securities of such
series shall authenticate and deliver, without service charge, (1) to each
Person specified by such Depositary a new Debt Security or Securities of the
same series of like tenor and terms and of any authorized denomination as
requested by such Person in aggregate principal amount equal to and in exchange
for such Persons beneficial interest in the Global Security; and (2) to such
Depositary a new Global Security of like tenor and terms and in an authorized
denomination equal to the difference, if any, between the principal amount of
the surrendered Global Security and the aggregate principal amount of Debt
Securities delivered to Holders thereof.
<PAGE> 36
29
(iv) In any exchange provided for in any of the preceding
three paragraphs, the Issuers will execute and the Trustee or its agent will
authenticate and deliver individual Debt Securities. Upon the exchange of the
entire principal amount of a Global Security for individual Debt Securities,
such Global Security shall be canceled by the Trustee or its agent. Except as
provided in the preceding paragraph, Registered Securities issued in exchange
for a Global Security pursuant to this Section 2.15 shall be registered in such
names and in such authorized denominations as the Depositary for such Global
Security, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee or the Registrar. The Trustee or the
Registrar shall deliver such Registered Securities to the Persons in whose names
such Registered Securities are so registered.
(v) Payments in respect of the principal of and interest on
any Debt Securities registered in the name of the Depositary or its nominee will
be payable to the Depositary or such nominee in its capacity as the registered
owner of such Global Security. The Issuers and the Trustee may treat the Person
in whose name the Debt Securities, including the Global Security, are registered
as the owner thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. None of the Issuers, the Trustee, any Registrar,
the paying agent or any agent of the Issuers or the Trustee will have any
responsibility or liability for (a) any aspect of the records relating to or
payments made on account of the beneficial ownership interests of the Global
Security by the Depositary or its nominee or any of the Depositary's direct or
indirect participants, or for maintaining, supervising or reviewing any records
of the Depositary, its nominee or any of its direct or indirect participants
relating to the beneficial ownership interests of the Global Security, (b) the
payments to the beneficial owners of the Global Security of amounts paid to the
Depositary or its nominee, or (c) any other matter relating to the actions and
practices of the Depositary, its nominee or any of its direct or indirect
participants. None of the Issuers, the Trustee or any such agent will be liable
for any delay by the Depositary, its nominee, or any of its direct or indirect
participants in identifying the beneficial owners of the Debt Securities, and
the Issuers and the Trustee may conclusively rely on, and will be protected in
relying on, instructions from the Depositary or its nominee for all purposes
(including with
<PAGE> 37
30
respect to the registration and delivery, and the respective principal amounts,
of the Debt Securities to be issued).
SECTION 2.16. Medium Term Securities. Notwithstanding any
contrary provision herein, if all Debt Securities of a series are not to be
originally issued at one time, it shall not be necessary for the Issuers to
deliver to the Trustee an Officers' Certificate, resolutions of the Board of
Directors, supplemental Indenture, Opinion of Counsel or written order or any
other document otherwise required pursuant to Section 2.01, 2.03, 2.05 or 13.05
at or prior to the time of authentication of each Debt Security of such series
if such documents are delivered to the Trustee or its agent at or prior to the
authentication upon original issuance of the first such Debt Security of such
series to be issued; provided, that any subsequent request by the Issuers to the
Trustee to authenticate Debt Securities of such series upon original issuance
shall constitute a representation and warranty by the Issuers that, as of the
date of such request, the statements made in the Officers' Certificate delivered
pursuant to Section 2.05 or 13.05 shall be true and correct as if made on such
date and that the Opinion of Counsel delivered at or prior to such time of
authentication of an original issuance of Debt Securities shall specifically
state that it shall relate to all subsequent issuances of Debt Securities of
such series that are identical to the Debt Securities issued in the first
issuance of Debt Securities of such series.
An Issuer Order delivered by the Issuers to the Trustee in the
circumstances set forth in the preceding paragraph, may provide that Debt
Securities which are the subject thereof will be authenticated and delivered by
the Trustee or its agent on original issue from time to time upon the telephonic
or written order of Persons designated in such written order (any such
telephonic instructions to be promptly confirmed in writing by such Person) and
that such Persons are authorized to determine, consistent with the Officers'
Certificate, supplemental Indenture or resolution of the Board of Directors
relating to such written order, such terms and conditions of such Debt
Securities as are specified in such Officers' Certificate, supplemental
Indenture or such resolution.
SECTION 2.17. Defaulted Interest. Any interest on any Debt
Security of a particular series which is payable, but is not punctually paid or
duly provided for, on
<PAGE> 38
31
the dates and in the manner provided in the Debt Securities of such series and
in this Indenture (herein called "Defaulted Interest") shall forthwith cease to
be payable to the Registered Holder thereof on the relevant record date by
virtue of having been such Registered Holder, and such Defaulted Interest may be
paid by the Issuers, at their election in each case, as provided in clause (i)
or (ii) below:
(i) The Issuers may elect to make payment of any Defaulted
Interest to the Persons in whose names the Registered Securities of
such series are registered at the close of business on a special record
date for the payment of such Defaulted Interest, which shall be fixed
in the following manner: The Issuers shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
such Registered Security of such series and the date of the proposed
payment, and at the same time the Issuers shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a special record date
for the payment of such Defaulted Interest which shall be not more than
15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify
the Issuers of such special record date and, in the name and at the
expense of the Issuers, shall cause notice of the proposed payment of
such Defaulted Interest and the special record date therefor to be
mailed, first class postage prepaid, to each Holder thereof at its
address as it appears in the Security Register, not less than 10 days
prior to such special record date. Notice of the proposed payment of
such Defaulted Interest and the special record date therefor having
been so mailed, such Defaulted interest shall be paid to the Persons in
whose names the Registered Securities of such series are registered at
the close of business on such special record date.
<PAGE> 39
32
(ii) The Issuers may make payment of any Defaulted Interest on
the Registered Securities of such series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
the Registered Securities of such series may be listed, and upon such
notice as may be required by such exchange, if, after notice given by
the Issuers to the Trustee of the proposed payment pursuant to this
clause, such manner of payment shall be deemed practicable by the
Trustee.
SECTION 2.18. Judgments. The Issuers may provide pursuant to
Section 2.03 for Debt Securities of any series that (a) the obligation, if any,
of the Issuers to pay the principal of, and premium, if any, and interest on,
the Debt Securities of any series in a Foreign Currency or Dollars (the
"Designated Currency") as may be specified pursuant to Section 2.03 is of the
essence and agrees that, to the fullest extent possible under applicable law,
judgments in respect of Debt Securities of such series shall be given in the
Designated Currency; (b) the obligation of the Issuers to make payments in the
Designated Currency of the principal of, and premium, if any, and interest on,
such Debt Securities shall, notwithstanding any payment in any other Currency
(whether pursuant to a judgment or otherwise), be discharged only to the extent
of the amount in the Designated Currency that the Holder receiving such payment
may, in accordance with normal banking procedures, purchase with the sum paid in
such other Currency (after any premium and cost exchange) on the business day in
the country of issue of the Designated Currency or in the international banking
community (in the case of a composite currency) immediately following the day on
which such Holder receives such payment; (c) if the amount in the Designated
Currency that may be so purchased for any reason falls short of the amount
originally due, the Issuers shall pay such additional amounts as may be
necessary to compensate for such shortfall; and (d) any obligation of the
Issuers not discharged by such payment shall be due as a separate and
independent obligation and, until discharged as provided herein, shall continue
in full force and effect.
<PAGE> 40
33
ARTICLE III
Redemption of Debt Securities
SECTION 3.01. Applicability of Article. The provisions of this
Article shall be applicable to the Debt Securities of any series which are
redeemable before their Stated Maturity except as otherwise specified as
contemplated by Section 2.03 for Debt Securities of such series.
SECTION 3.02. Notice of Redemption; Selection of Debt
Securities. In case the Issuers shall desire to exercise the right to redeem all
or, as the case may be, any part of the Debt Securities of any series in
accordance with their terms, a resolution of the Board of Directors or a
supplemental Indenture, the Issuers shall fix a date for redemption and shall
give notice of such redemption at least 30 and not more than 60 days prior to
the date fixed for redemption to the Holders of Debt Securities of such series
so to be redeemed as a whole or in part, in the manner provided in Section
13.03. The notice if given in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder receives such
notice. In any case, failure to give such notice or any defect in the notice to
the Holder of any Debt Security of a series designated for redemption as a whole
or in part shall not affect the validity of the proceedings for the redemption
of any other Debt Security of such series.
Each such notice of redemption shall specify the date fixed
for redemption, the redemption price at which Debt Securities of such series are
to be redeemed, the Place or Places of Payment that payment will be made upon
presentation and surrender of such Debt Securities, that any interest accrued to
the date fixed for redemption will be paid as specified in said notice, that the
redemption is for a sinking fund payment (if applicable), that, if the Issuers
default on making such redemption payment or if the Debt Securities of that
series are subordinated pursuant to the terms of Article XII the paying agent is
prohibited from making such payment pursuant to the terms of this Indenture,
that on and after said date any interest thereon or on the portions thereof to
be redeemed will cease to accrue, that in the case of Original Issue Discount
Securities original issue discount accrued after the date fixed for redemption
will cease to accrue, the terms of the Debt Securities of
<PAGE> 41
34
that series pursuant to which the Debt Securities of that series are being
redeemed and that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Debt
Securities of that series. If less than all the Debt Securities of a series are
to be redeemed the notice of redemption shall specify the CUSIP numbers of the
Debt Securities of that series to be redeemed. In case any Debt Security of a
series is to be redeemed in part only, the notice of redemption shall state the
portion of the principal amount thereof to be redeemed and shall state that on
and after the date fixed for redemption, upon surrender of such Debt Security, a
new Debt Security or Debt Securities of that series will be issued in principal
amount equal to the unredeemed portion thereof.
At least 60 days before the redemption date unless the Trustee
consents to a shorter period, the Issuers shall give notice to the Trustee of
the redemption date, the principal amount of Debt Securities to be redeemed and
the series and terms of the Debt Securities pursuant to which such redemption
will occur. Such notice shall be accompanied by an Officers' Certificate and an
Opinion of Counsel to the effect that such redemption will comply with the
conditions herein. If fewer than all the Debt Securities of a series are to be
redeemed, the record date relating to such redemption shall be selected by the
Issuers and given to the Trustee, which record date shall be not less than 15
days after the date of notice to the Trustee.
On or prior to the redemption date for any Registered
Securities, the Issuers shall deposit with the Trustee or with a paying agent
(or, if the Company or EOTT Finance is acting as its own paying agent, segregate
and hold in trust) an amount of money in the Currency in which such Debt
Securities are denominated (except as provided pursuant to Section 2.03)
sufficient to pay the redemption price of such Registered Securities or any
portions thereof that are to be redeemed on that date.
If less than all the Debt Securities of like tenor and terms
of a series are to be redeemed (other than pursuant to mandatory sinking fund
redemptions) the Trustee shall select, in such manner as in its sole discretion
it shall deem appropriate and fair, the Debt Securities of that series or
portions thereof (in multiples of $1,000) to be redeemed. In any case where more
than one Registered
<PAGE> 42
35
Security of such series is registered in the same name, the Trustee in its
discretion may treat the aggregate principal amount so registered as if it were
represented by one Registered Security of such series. The Trustee shall
promptly notify the Issuers in writing of the Debt Securities selected for
redemption and, in the case of any Debt Securities selected for partial
redemption, the principal amount thereof to be redeemed. If any Debt Security
called for redemption shall not be so paid upon surrender thereof on such
redemption date, the principal, premium, if any, and interest shall bear
interest until paid from the redemption date at the rate borne by the Debt
Securities of that series. If less than all the Debt Securities of unlike tenor
and terms of a series are to be redeemed, the particular Debt Securities to be
redeemed shall be selected by the Issuers. Provisions of this Indenture that
apply to Debt Securities called for redemption also apply to portions of Debt
Securities called for redemption.
SECTION 3.03. Payment of Debt Securities Called for
Redemption. If notice of redemption has been given as provided in Section 3.02,
the Debt Securities or portions of Debt Securities of the series with respect to
which such notice has been given shall become due and payable on the date and at
the Place or Places of Payment stated in such notice at the applicable
redemption price, together with any interest accrued to the date fixed for
redemption, and on and after said date (unless the Issuers shall default in the
payment of such Debt Securities at the applicable redemption price, together
with any interest accrued to said date) any interest on the Debt Securities or
portions of Debt Securities of any series so called for redemption shall cease
to accrue and any original issue discount in the case of Original Issue Discount
Securities shall cease to accrue. On presentation and surrender of such Debt
Securities at the Place or Places of Payment in said notice specified, the said
Debt Securities or the specified portions thereof shall be paid and redeemed by
the Issuers at the applicable redemption price, together with any interest
accrued thereon to the date fixed for redemption.
Any Debt Security that is to be redeemed only in part shall be
surrendered at the corporate trust office or such other office or agency of the
Issuers as is specified pursuant to Section 2.03, if the Issuers, the Registrar
or the Trustee so requires, due endorsement by, or a written
<PAGE> 43
36
instrument of transfer in form satisfactory to the Issuers, the Registrar and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing, and the Issuers shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Debt Security without service charge, a new
Debt Security or Debt Securities of the same series, of like tenor and form, of
any authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Debt Security so surrendered; except that if a Global Security is so
surrendered, the Issuers shall execute, and the Trustee shall authenticate and
deliver to the Depositary for such Global Security, without service charge, a
new Global Security in a denomination equal to and in exchange for the
unredeemed portion of the principal of the Global Security so surrendered. In
the case of a Debt Security providing appropriate space for such notation, at
the option of the Holder thereof, the Trustee, in lieu of delivering a new Debt
Security or Debt Securities as aforesaid, may make a notation on such Debt
Security of the payment of the redeemed portion thereof.
SECTION 3.04. Mandatory and Optional Sinking Funds. The
minimum amount of any sinking fund payment provided for by the terms of Debt
Securities of any series, resolution of the Board of Directors or a supplemental
Indenture is herein referred to as a "mandatory sinking fund payment", and any
payment in excess of such minimum amount provided for by the terms of Debt
Securities of any series, resolution of the Board of Directors or a supplemental
Indenture is herein referred to as an "optional sinking fund payment".
In lieu of making all or any part of any mandatory sinking
fund payment with respect to any Debt Securities of a series in cash, the
Issuers may at their option (a) deliver to the Trustee Debt Securities of that
series theretofore purchased or otherwise acquired by the Issuers or (b) receive
credit for the principal amount of Debt Securities of that series which have
been redeemed either at the election of the Issuers pursuant to the terms of
such Debt Securities or through the application of permitted optional sinking
fund payments pursuant to the terms of such Debt Securities, resolution or
supplemental Indenture; provided, that such Debt Securities have not been
previously so credited. Such Debt Securities shall be received
<PAGE> 44
37
and credited for such purpose by the Trustee at the redemption price specified
in such Debt Securities, resolution or supplemental Indenture for redemption
through operation of the sinking fund and the amount of such mandatory sinking
fund payment shall be reduced accordingly.
SECTION 3.05. Redemption of Debt Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any series of
Debt Securities, the Issuers will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, any resolution or supplemental
Indenture, the portion thereof, if any, which is to be satisfied by payment of
cash in the Currency in which the Debt Securities of such series are denominated
(except as provided pursuant to Section 2.03) and the portion thereof, if any,
which is to be satisfied by delivering and crediting Debt Securities of that
series pursuant to this Section 3.05 (which Debt Securities, if not previously
redeemed, will accompany such certificate) and whether the Issuers intend to
exercise their right to make any permitted optional sinking fund payment with
respect to such series. Such certificate shall also state that no Event of
Default has occurred and is continuing with respect to such series. Such
certificate shall be irrevocable and upon its delivery the Issuers shall be
obligated to make the cash payment or payments therein referred to, if any, on
or before the next succeeding sinking fund payment date. Failure of the Issuers
to deliver such certificate (or to deliver the Debt Securities specified in this
paragraph) shall not constitute a Default, but such failure shall require that
the sinking fund payment due on the next succeeding sinking fund payment date
for that series shall be paid entirely in cash and shall be sufficient to redeem
the principal amount of such Debt Securities subject to a mandatory sinking fund
payment without the option to deliver or credit Debt Securities as provided in
this Section 3.05 and without the right to make any optional sinking fund
payment, if any, with respect to such series.
Any sinking fund payment or payments (mandatory or optional)
made in cash plus any unused balance of any preceding sinking fund payments made
in cash which shall equal or exceed $100,000 (or a lesser sum if the Issuers
shall so request) with respect to the Debt Securities of any particular series
shall be applied by the Trustee on the
<PAGE> 45
38
sinking fund payment date on which such payment is made (or, if such payment is
made before a sinking fund payment date, on the sinking fund payment date
following the date of such payment) to the redemption of such Debt Securities at
the Redemption Price specified in such Debt Securities, resolution or
supplemental Indenture for operation of the sinking fund together with any
accrued interest to the date fixed for redemption. Any sinking fund moneys not
so applied or allocated by the Trustee to the redemption of Debt Securities
shall be added to the next cash sinking fund payment received by the Trustee for
such series and, together with such payment, shall be applied in accordance with
the provisions of this Section 3.05. Any and all sinking fund moneys with
respect to the Debt Securities of any particular series held by the Trustee on
the last sinking fund payment date with respect to Debt Securities of such
series and not held for the payment or redemption of particular Debt Securities
shall be applied by the Trustee, together with other moneys, if necessary, to be
deposited sufficient for the purpose, to the payment of the principal of the
Debt Securities of that series at its Stated Maturity.
The Trustee shall select the Debt Securities to be redeemed
upon such sinking fund payment date in the manner specified in the last
paragraph of Section 3.02 and the Issuers shall cause notice of the redemption
thereof to be given in the manner provided in Section 3.02 except that the
notice of redemption shall also state that the Debt Securities are being
redeemed by operation of the sinking fund. Such notice having been duly given,
the redemption of such Debt Securities shall be made upon the terms and in the
manner stated in Section 3.03.
At least one business day before each sinking fund payment
date, the Issuers shall pay to the Trustee (or, if the Company or EOTT Finance
is acting as its own paying agent, the Company or EOTT Finance shall segregate
and hold in trust) in cash a sum in the Currency in which the Debt Securities of
such series are denominated (except as provided pursuant to Section 2.03) equal
to any interest accrued to the date fixed for redemption of Debt Securities or
portions thereof to be redeemed on such sinking fund payment date pursuant to
this Section 3.05.
The Trustee shall not redeem any Debt Securities of a series
with sinking fund moneys or mail any notice of
<PAGE> 46
39
redemption of such Debt Securities by operation of the sinking fund for such
series during the continuance of a Default in payment of interest on such Debt
Securities or of any Event of Default (other than an Event of Default occurring
as a consequence of this paragraph) with respect to such Debt Securities, except
that if the notice of redemption of any such Debt Securities shall theretofore
have been mailed in accordance with the provisions hereof, the Trustee shall
redeem such Debt Securities if cash sufficient for that purpose shall be
deposited with the Trustee for that purpose in accordance with the terms of this
Article III. Except as aforesaid, any moneys in the sinking fund for such series
at the time when any such Default or Event of Default shall occur and any moneys
thereafter paid into such sinking fund shall, during the continuance of such
Default or Event of Default, be held as security for the payment of such Debt
Securities; provided, however, that in case such Event of Default or Default
shall have been cured or waived as provided herein, such moneys shall thereafter
be applied on the next sinking fund payment date for such Debt Securities on
which such moneys may be applied pursuant to the provisions of this Section
3.05.
ARTICLE IV
Particular Covenants of the Issuers
SECTION 4.01. Payment of Principal of, and Premium, If Any,
and Interest on, Debt Securities. The Issuers, for the benefit of each series of
Debt Securities, will duly and punctually pay or cause to be paid the principal
of, and premium, if any, and interest on, each of the Debt Securities at the
place, at the respective times and in the manner provided herein and in the Debt
Securities. Each installment of interest on the Debt Securities may at the
Issuers' option be paid by mailing checks for such interest payable to the
Person entitled thereto to the address of such Person as it appears on the Debt
Security Register maintained pursuant to Section 2.07(a).
Principal, premium and interest of Debt Securities of any
series shall be considered paid on the date due if on such date the Trustee or
any paying agent holds in accordance with this Indenture money sufficient to pay
in the Currency in which the Debt Securities of such series are
<PAGE> 47
40
denominated (except as provided pursuant to Section 2.03) all principal, premium
and interest then due and, in the case of Debt Securities subordinated pursuant
to the terms of Article XII, the Trustee or such paying agent, as the case may
be, is not prohibited from paying such money to the Holders on that date
pursuant to the terms of the Indenture.
The Issuers shall pay interest on overdue principal at the
rate specified therefor in the Debt Securities and they shall pay interest on
overdue installments of interest at the same rate to the extent lawful.
SECTION 4.02. Maintenance of Offices or Agencies for
Registration of Transfer, Exchange and Payment of Debt Securities. The Issuers
will maintain in each Place of Payment for any series of Debt Securities, an
office or agency where Debt Securities of such series may be presented or
surrendered for payment, where Debt Securities of such series may be surrendered
for transfer or exchange and where notices and demands to or upon the Issuers in
respect of the Debt Securities of such series and this Indenture may be served.
The Issuers will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the Issuers
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the corporate trust office of the
Trustee, and the Issuers hereby appoint the Trustee as its agent to receive all
presentations, surrenders, notices and demands.
The Issuers may also from time to time designate different or
additional offices or agencies to be maintained for such purposes (in or outside
of such Place of Payment), and may from time to time rescind any such
designation; provided, however, that no such designation or rescission shall in
any manner relieve the Issuers of their obligations described in the preceding
paragraph. The Issuers will give prompt written notice to the Trustee of any
such additional designation or rescission of designation and any change in the
location of any such different or additional office or agency.
SECTION 4.03. Appointment to Fill a Vacancy in the Office of
Trustee. The Issuers, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will
<PAGE> 48
41
appoint, in the manner provided in Section 7.08, a Trustee, so that there shall
at all times be a Trustee hereunder with respect to each series of Debt
Securities.
SECTION 4.04. Duties of Paying Agents, etc. (a) The Issuers
shall cause each paying agent, if any, other than the Trustee, to execute and
deliver to the Trustee an instrument in which such agent shall agree with the
Trustee, subject to the provisions of this Section 4.04,
(i) that it will hold all sums held by it as such agent for
the payment of the principal of, and premium, if any, or interest on,
the Debt Securities of any series (whether such sums have been paid to
it by the Issuers or by any other obligor on the Debt Securities of
such series) in trust for the benefit of the Holders of the Debt
Securities of such series;
(ii) that it will give the Trustee notice of any failure by
the Issuers (or by any other obligor on the Debt Securities of such
series) to make any payment of the principal of and premium, if any, or
interest on, the Debt Securities of such series when the same shall be
due and payable; and
(iii) that it will at any time during the continuance of an
Event of Default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held by it as such agent.
(b) If either of the Issuers shall act as its own paying
agent, it will, on or before each due date of the principal of, and premium, if
any, or interest on, the Debt Securities if any, of any series, set aside,
segregate and hold in trust for the benefit of the Holders of the Debt
Securities of such series a sum sufficient to pay such principal, premium, if
any, or interest so becoming due. The Issuers will promptly notify the Trustee
of any failure by the Issuers to take such action or the failure by any other
obligor on such Debt Securities to make any payment of the principal of, and
premium, if any, or interest on, such Debt Securities when the same shall be due
and payable.
(c) Anything in this Section 4.04 to the contrary
notwithstanding, either of the Issuers may, at any time, for the purpose of
obtaining a satisfaction and discharge of this Indenture, or for any other
reason, pay or cause to be
<PAGE> 49
42
paid to the Trustee all sums held in trust by it or any paying agent, as
required by this Section 4.04, such sums to be held by the Trustee upon the same
terms as those upon which such sums were held by the Issuers or such paying
agent.
(d) Whenever the Issuers shall have one or more paying agents
with respect to any series of Debt Securities, they will, prior to each due date
f the principal of, and premium, if any, or interest on, any Debt Securities of
such series, deposit with any such paying agent a sum sufficient to pay the
principal, premium or interest so becoming due, such sum to be held in trust for
the benefit of the Persons entitled thereto, and (unless any such paying agent
is the Trustee) the Issuers will promptly notify the Trustee of their action or
failure so to act.
(e) Anything in this Section 4.04 to the contrary
notwithstanding, the agreement to hold sums in trust as provided in this Section
4.04 is subject to the provisions of Section 11.05.
SECTION 4.05. Statement by Officers as to Default. The Issuers
will deliver to the Trustee, on or before a date not more than four months after
the end of each fiscal year of the Issuers (currently ending on December 31 of
each year) ending after the date hereof, an Officers' Certificate stating, as to
each officer signing such certificate, that (i) in the course of his performance
of his duties as an officer of the General Partner or EOTT Finance, as
applicable, he would normally have knowledge of any Default, (ii) whether or not
to the best of his knowledge any Default occurred during such year and (iii) if
to the best of his knowledge the Company or EOTT Finance, as applicable, is in
Default, specifying all such Defaults and what action the Company or EOTT
Finance, as applicable, is taking or proposes to take with respect thereto. The
Issuers also shall comply with Section 314(a)(4) of the Trust Indenture Act.
SECTION 4.06. Further Instruments and Acts. The Issuers will,
upon request of the Trustee, execute and deliver such further instruments and do
such further acts as may reasonably be necessary or proper to carry out more
effectually the purposes of this Indenture.
<PAGE> 50
43
SECTION 4.07. Corporate Existence. Subject to Article X, the
Issuers shall do or cause to be done all things necessary to preserve and keep
in full force and effect the corporate existence and related rights and
franchises (charges and statutory) of the Company and each of its Subsidiaries;
provided, however, that the Company shall not be required to preserve any such
right or franchise for the corporate existence of any such Subsidiary if the
Board of Directors of the General Partner shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
its Subsidiaries as a whole and that the loss thereof would not reasonably be
expected to have a material adverse effect on the ability of the Issuers to
perform their obligations hereunder; and provided, further, however, that the
foregoing shall not prohibit a sale, transfer or conveyance of a Subsidiary of
the Company or any of its assets in compliance with the terms of this Indenture.
SECTION 4.08. Maintenance of Properties. The Company shall
cause all material properties owned by the Company or any of its Subsidiaries or
used or held for use in the conduct of its business or the business of any of
its Subsidiaries to be maintained and kept in good condition, repair and working
order (ordinary wear and tear excepted) and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the reasonable
judgment of the Company may be consistent with sound business practice and
necessary so that the business carried on in connection therewith may be
properly conducted at all times; provided, however, that nothing in this Section
shall prevent the Company from discontinuing the maintenance of any of such
properties if such discontinuance is, in the reasonable judgment of the Company,
desirable in the conduct of its business or the business of any of its
Subsidiaries and not reasonably expected to have a material adverse effect on
the ability of the Issuers to perform their obligations hereunder.
SECTION 4.09. Payment of Taxes and Other Claims. The Company
shall pay or discharge or cause to be paid or discharged, on or before the date
the same shall become due and payable, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company or any of its
Subsidiaries or otherwise assessed or upon the income, profits or property of
the Company or any of its
<PAGE> 51
44
Subsidiaries if failure to pay or discharge the same could reasonably be
expected to have a material adverse effect on the ability of the Issuers to
perform their obligations hereunder and (b) all lawful claims for labor,
materials and supplies, which, if unpaid, would by law become a Lien upon the
property of the Company or any of its Subsidiaries, except for any Lien
permitted to be incurred under the terms of this Indenture, if failure to pay or
discharge the same could reasonably be expected to have a material adverse
effect on the ability of the Issuers to perform their obligations hereunder;
provided, however, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings properly instituted and diligently conducted and in
respect of which appropriate reserves (in the good faith judgment of management
of the Company) are being maintained in accordance with GAAP.
ARTICLE V
Holders' Lists and Reports
by the Issuers and the Trustee
SECTION 5.01. Issuers to Furnish Trustee Information as to
Names and Addresses of Holders; Preservation of Information. The Issuers
covenant and agree that they will furnish or cause to be furnished to the
Trustee with respect to the Registered Securities of each series:
(a) not more than 15 days after each record date with respect
to the payment of interest, if any, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Registered
Holders as of such record date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Issuers of any such request, a
list as of a date not more than 15 days prior to the time such list is
furnished;
provided, however, that so long as the Trustee shall be the Registrar, such
lists shall not be required to be furnished.
<PAGE> 52
45
The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
Holders (1) contained in the most recent list furnished to it as provided in
this Section 5.01 or (2) received by it in the capacity of paying agent or
Registrar (if so acting) hereunder.
The Trustee may destroy any List furnished to it as provided
in this Section 5.01 upon receipt of a new List so furnished.
SECTION 5.02. Communications to Holders. Holders may
communicate pursuant to Section 312(b) of the Trust Indenture Act with other
Holders with respect to their rights under this Indenture or the Debt
Securities. The Issuers, the Trustee, the Registrar and anyone else shall have
the protection of Section 312(c) of the Trust Indenture Act.
SECTION 5.03. Reports by Issuers. (a) The Issuers covenant and
agree, and any obligor hereunder shall covenant and agree, to file with the
Trustee, within 15 days after the Issuers or such obligor, as the case may be,
is required to file the same with the Securities and Exchange Commission, copies
of the annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as said Commission may from time
to time by rules and regulations prescribe) which the Issuers or such obligor,
as the case may be, may be required to file with said Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act; or, if either of the Issuers or
such obligor, as the case may be, is not required to file information, documents
or reports pursuant to either of such Sections, then to file with the Trustee
and said Commission, in accordance with rules and regulations prescribed from
time to time by said Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to Section 13
of the Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations.
(b) The Issuers covenant and agree, and any obligor hereunder
shall covenant and agree, to file with the Trustee and the Securities and
Exchange Commission, in accordance with the rules and regulations prescribed
from time to time by said Commission, such additional
<PAGE> 53
46
information, documents, and reports with respect to compliance by the Issuers or
such obligor, as the case may be, with the conditions and covenants provided for
in this Indenture as may be required from time to time by such rules and
regulations.
SECTION 5.04. Reports by Trustee. The Trustee shall transmit
to Holders such reports concerning the Trustee and its actions under this
Indenture as may be required pursuant to the Trust Indenture Act at the time and
in the manner provided pursuant thereto.
Reports pursuant to this Section 5.04 shall be transmitted by
mail:
(1) to all Registered Holders, as the names and addresses of
such Holders appear in the Debt Security Register;
(2) except in the cases of reports under Section 313(b)(2) of
the Trust Indenture Act, to each holder of a Debt Security of any
series whose name and address appear in the information preserved at
the time by the Trustee in accordance with Section 5.02.
A copy of each report at the time of its mailing to Holders
shall be filed with the Securities and Exchange Commission and each stock
exchange (if any) on which the Debt Securities of any series are listed. The
Issuers agree to notify promptly the Trustee whenever the Debt Securities of any
series become listed on any stock exchange and of any delisting thereof.
SECTION 5.05. Record Dates for Action by Holders. If the
Issuers shall solicit from the Holders of Debt Securities of any series any
action (including the making of any demand or request, the giving of any
direction, notice, consent or waiver or the taking of any other action), the
Issuers may, at their option, by resolution of the Board of Directors, fix in
advance a record date for the determination of Holders of Debt Securities
entitled to take such action, but the Issuers shall have no obligation to do so.
Any such record date shall be fixed at the Issuers' discretion. If such a record
date is fixed, such action may be sought or given before or after the record
date, but only the Holders of Debt Securities of record at the close of business
on such record date shall be deemed to be Holders
<PAGE> 54
47
of Debt Securities for the purpose of determining whether Holders of the
requisite proportion of Debt Securities of such series Outstanding have
authorized or agreed or consented to such action, and for that purpose the Debt
Securities of such series Outstanding shall be computed as of such record date.
ARTICLE VI
Remedies of the Trustee and Holders in Event of Default
SECTION 6.01. Events of Default. If any one or more of the
following shall have occurred and be continuing with respect to Debt Securities
of any series (each of the following, an "Event of Default"):
(a) Default in the payment of any installment of interest upon
any Debt Securities of that series as and when the same shall become
due and payable, whether or not such payment shall be prohibited by
Article XII, if applicable, and continuance of such default for a
period of 30 days; or
(b) default in the payment of the principal of or premium, if
any, on any Debt Securities of that series as and when the same shall
become due and payable, whether at maturity, upon redemption, by
declaration, upon required repurchase or otherwise, whether or not such
payment shall be prohibited by Article XII, if applicable; or
(c) default in the payment of any sinking fund payment with
respect to any Debt Securities of that series as and when the same
shall become due and payable; or
(d) failure on the part of the Issuers to comply with Article
X; or
(e) failure on the part of the Issuers duly to observe or
perform any other of the covenants or agreements on the part of the
Issuers in the Debt Securities of that series, in any resolution of the
Board of Directors authorizing the issuance of that series of Debt
Securities, in this Indenture with respect to such series or in any
supplemental Indenture
<PAGE> 55
48
with respect to such series (other than a covenant a default in the
performance of which is elsewhere in this Section specifically dealt
with), continuing for a period of 60 days after the date on which
written notice specifying such failure and requiring the Issuers to
remedy the same shall have been given, by registered or certified mail,
to the Issuers by the Trustee or to the Issuers and the Trustee by the
Holders of at least 25% in aggregate principal amount of the Debt
Securities of that series at the time Outstanding; or
(f) indebtedness of the Company or any Subsidiary of the
Company is not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default,
the total amount of such indebtedness unpaid or accelerated exceeds
$10,000,000 or its Dollar Equivalent at the time and such default
remains uncured or such acceleration is not rescinded for 10 days after
the date on which written notice specifying such failure and requiring
the Company to remedy the same shall have been given, by registered or
certified mail, to the Issuers by the Trustee or to the Issuers and the
Trustee by the Holders of at least 25% in aggregate principal amount of
the Debt Securities of that series at the time Outstanding; or
(g) either of the Issuers or any of its Restricted
Subsidiaries shall (i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code or any
other Federal or State bankruptcy, insolvency or similar law, (ii)
consent to the institution of, or fail to controvert within the time
and in the manner prescribed by law, any such proceeding or the filing
of any such petition, (iii) apply for or consent to the appointment of
a receiver, trustee, custodian, sequestrator or similar official for
either of the Issuers or any such Restricted Subsidiary or for a
substantial part of its property, (iv) file an answer admitting the
material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors,
(vi) admit in writing its inability or fail generally to pay its debts
as they become due, (vii) take corporate action for the purpose of
effecting any of the foregoing, or (viii) take any
<PAGE> 56
49
comparable action under any foreign laws relating to insolvency; or
(h) the entry of an order or decree by a court having
competent jurisdiction in the premises for (i) relief in respect of
either of the Issuers or any of its Restricted Subsidiaries or a
substantial part of any of their property under Title 11 or the United
States Code or any other Federal or State bankruptcy, insolvency or
similar law, (ii) the appointment of a receiver, trustee, custodian,
sequestrator or similar official for either of the Issuers or any such
Restricted Subsidiary or for a substantial part of any of their
property (except any decree or order appointing such official of any
Restricted Subsidiary pursuant to a plan under which the assets and
operations of such Restricted Subsidiary are transferred to or combined
with another Subsidiary or Subsidiaries of the Company or to the
Company) or (iii) the winding-up or liquidation of either of the
Issuers or any such Restricted Subsidiary (except any decree or order
approving or ordering the winding up or liquidation of the affairs of a
Restricted Subsidiary pursuant to a plan under which the assets and
operations of such Restricted Subsidiary are transferred to or combined
with another Subsidiary or Subsidiaries of the Company or to the
Company); and such order or decree shall continue unstayed and in
effect for 60 consecutive days; or any similar relief is granted under
any foreign laws and the order or decree stays in effect for 60
consecutive days; or
(i) any other Event of Default provided under the terms of the
Debt Securities of that series;
then and in each and every case that an Event of Default with respect to Debt
Securities of that series at the time outstanding occurs and is continuing,
unless the principal of and interest on all the Debt Securities of that series
shall have already become due and payable, either the rustee or the Holders of
not less than 25% in aggregate principal amount of the Debt Securities of that
series then Outstanding hereunder, by notice in writing to the Issuers (and to
the Trustee if given by Holders), may declare the principal of (or, if the Debt
Securities of that series are Original Issue Discount Debt Securities, such
portion of the principal amount as may be specified in the terms of that
<PAGE> 57
50
series) and interest on all the Debt Securities of that series to be due and
payable immediately, and upon any such declaration the same shall become and
shall be immediately due and payable, anything in this Indenture or in the Debt
Securities of that series contained to the contrary notwithstanding.
The Holders of a majority in principal amount of the Debt
Securities of a particular series by notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree already rendered and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration. Upon any such rescission, the parties hereto
shall be restored respectively to their several positions and rights hereunder,
and all rights, remedies and powers of the parties hereto shall continue as
though no proceeding had been taken.
In case the Trustee or any Holder shall have proceeded to
enforce any right under this Indenture and such proceedings shall have been
discontinued or abandoned because of such rescission or annulment or for any
other reason or shall have been determined adversely to the Trustee or such
Holder, then and in every such case the parties hereto shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the parties hereto shall continue as though no such
proceeding had been taken.
The foregoing Events of Default shall constitute Events of
Default whatever the reason for any such Event of Default and whether it is
voluntary or involuntary or is effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body.
The Issuers shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any event which with the giving of notice and the lapse of time would become
an Event of Default under clause (c), (d), (e), (f), (g), (h) or (i), its status
and what action the Issuers are taking or propose to take with respect thereto.
<PAGE> 58
51
SECTION 6.02. Collection of Indebtedness by Trustee, etc. If
an Event of Default occurs and is continuing, the Trustee, in its own name and
as trustee of an express trust, shall be entitled and empowered to institute any
action or proceedings at law or in equity for the collection of the sums so due
and unpaid or enforce the performance of any provision of the Debt Securities of
the affected series or this Indenture, and may prosecute any such action or
proceedings to judgment or final decree, and may enforce any such judgment or
final decree against the Issuers or any other obligor upon the Debt Securities
of such series (and collect in the manner provided by law out of the property of
the Issuers or any other obligor upon the Debt Securities of such series
wherever situated the moneys adjudged or decreed to be payable).
In case there shall be pending proceedings for the bankruptcy
or for the reorganization of either of the Issuers or any other obligor upon the
Debt Securities of any series under Title 11 of the United States Code or any
other Federal or State bankruptcy, insolvency or similar law, or in case a
receiver, trustee or other similar official shall have been appointed for its
property, or in case of any other similar judicial proceedings relative to
either of the Issuers or any other obligor upon the Debt Securities of any
series, its creditors or its property, the Trustee, irrespective of whether the
principal of Debt Securities of any series shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand pursuant to the provisions of this Section
6.02, shall be entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole amount of
principal, premium, if any, and interest (or, if the Debt Securities of such
series are Original Issue Discount Debt Securities, such portion of the
principal amount as may be specified in the terms of such series) owing and
unpaid in respect of the Debt Securities of such series, and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for reasonable compensation to the Trustee,
its agents, attorneys and counsel, and for reimbursement of all expenses and
liabilities Incurred, and all advances made, by the Trustee except as a result
of its negligence or bad faith) and of the Holders thereof allowed in any such
judicial proceedings relative to either of the Issuers, or any other obligor
upon the Debt Securities of
<PAGE> 59
52
such series, its creditors or its property, and to collect and receive any
moneys or other property payable or deliverable on any such claims, and to
distribute all amounts received with respect to the claims of such Holders and
of the Trustee on their behalf, and any receiver, assignee or trustee in
bankruptcy or reorganization is hereby authorized by each of such Holders to
make payments to the Trustee, and, in the event that the Trustee shall consent
to the making of payments directly to such Holders, to pay to the Trustee such
amount as shall be sufficient to cover reasonable compensation to the Trustee,
its agents, attorneys and counsel, and all other reasonable expenses and
liabilities Incurred, and all advances made, by the Trustee except as a result
of its negligence or bad faith.
All rights of action and of asserting claims under this
Indenture, or under any of the Debt Securities, of any series, may be enforced
by the Trustee without the possession of any such Debt Securities or the
production thereof in any trial or other proceedings relative thereto, and any
such action or proceedings instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment (except for
any amounts payable to the Trustee pursuant to Section 7.06) shall be for the
ratable benefit of the Holders of all the Debt Securities in respect of which
such action was taken.
In case of an Event of Default hereunder the Trustee may in
its discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture, or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.
SECTION 6.03. Application of Moneys Collected by Trustee. Any
moneys or other property collected by the Trustee pursuant to Section 6.02 with
respect to Debt Securities of any series shall be applied, after giving effect
to the provisions of Article XII, if applicable, in the order following, at the
date or dates fixed by the Trustee for the distribution of such moneys or other
property, upon presentation of the several Debt Securities
<PAGE> 60
53
of such series in respect of which moneys or other property have been collected,
and the notation thereon of the payment, if only partially paid, and upon
surrender thereof if fully paid:
First: To the payment of all money due the Trustee pursuant
to Section 7.06;
Second: In case the principal of the Outstanding Debt
Securities in respect of which such moneys have been collected shall
not have become due, to the payment of interest on the Debt Securities
of such series in the order of the maturity of the installments of such
interest, with interest (to the extent that such interest has been
collected by the Trustee) upon the overdue installments of interest at
the rate or Yield to Maturity (in the case of Original Issue Discount
Debt Securities) borne by the Debt Securities of such series, such
payments to be made ratably to the Persons entitled thereto, without
discrimination or preference;
Third: In case the principal of the Outstanding Debt
Securities in respect of which such moneys have been collected shall
have become due, by declaration or otherwise, to the payment of the
whole amount then owing and unpaid upon the Debt Securities of such
series for principal and premium, if any, and interest, with interest
on the overdue principal and premium, if any, and (to the extent that
such interest has been collected by the Trustee) upon overdue
installments of interest at the rate or Yield to Maturity (in the case
of Original Issue Discount Debt Securities) borne by the Debt
Securities of such series; and, in case such moneys shall be
insufficient to pay in full the whole amount so due and unpaid upon the
Debt Securities of such series, then to the payment of such principal
and premium, if any, and interest, without preference or priority of
principal and premium, if any, over interest, or of interest over
principal and premium, if any, or of any installment of interest over
any other installment of interest, or of any Debt Security of such
series over any Debt Security of such series, ratably to the aggregate
of such principal and premium, if any, and interest; and
<PAGE> 61
54
Fourth: The remainder, if any, shall be paid to the Issuers,
their successors or assigns, or to whomsoever may be lawfully entitled
to receive the same, or as a court of competent jurisdiction may
direct.
The Trustee may fix a record date and payment date for any
payment to Holders pursuant to this Section 6.03. At least 15 days before such
record date, the Issuers shall mail to each Holder and the Trustee a notice that
states the record date, the payment date and amount to be paid.
SECTION 6.04. Limitation on Suits by Holders. No Holder of any
Debt Security of any series shall have any right by virtue or by availing of any
provision of this Indenture to institute any action or proceeding at law or in
equity or in bankruptcy or otherwise, upon or under or with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless such Holder previously shall have given to the Trustee
written notice of an Event of Default with respect to Debt Securities of that
same series and of the continuance thereof and unless the Holders of not less
than 25% in aggregate principal amount of the Outstanding Debt Securities of
that series shall have made written request upon the Trustee to institute such
action or proceedings in respect of such Event of Default in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
Incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity shall have failed to institute any
such action or proceedings and no direction inconsistent with such written
request shall have been given to the Trustee pursuant to Section 6.06; it being
understood and intended, and being expressly covenanted by the Holder of every
Debt Security with every other Holder and the Trustee, that no one or more
Holders shall have any right in any manner whatever by virtue or by availing of
any provision of this Indenture to affect, disturb or prejudice the rights of
any Holders, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all such
Holders. For the protection and enforcement of the provisions of this Section
6.04, each
<PAGE> 62
55
and every Holder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Notwithstanding any other provision in this Indenture,
however, the right of any Holder of any Debt Security to receive payment of the
principal of, and premium, if any, and (subject to Section 2.12) interest on,
such Debt Security on or after the respective due dates expressed in such Debt
Security, and to institute suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or effected without the
consent of such Holder.
SECTION 6.05. Remedies Cumulative; Delay or Omission in
Exercise of Rights Not a Waiver of Default. All powers and remedies given by
this Article VI to the Trustee or to the Holders shall, to the extent permitted
by law, be deemed cumulative and not exclusive of any thereof or of any other
powers and remedies available to the Trustee or the Holders, by judicial
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture, and no delay or omission
of the Trustee or of any Holder to exercise any right or power accruing upon any
Default occurring and continuing as aforesaid, shall impair any such right or
power, or shall be construed to be a waiver of any such Default or an
acquiescence therein; and, subject to the provisions of Section 6.04, every
power and remedy given by this Article VI or by law to the Trustee or to the
Holders may be exercised from time to time, and as often as shall be deemed
expedient, by the Trustee or by the Holders.
SECTION 6.06. Rights of Holders of Majority in Principal
Amount of Debt Securities to Direct Trustee and to Waive Default. The Holders of
a majority in aggregate principal amount of the Debt Securities of any series at
the time Outstanding shall have the right to direct the time, method, and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the Debt
Securities of such series; provided, however, that such direction shall not be
otherwise than in accordance with law and the provisions of this Indenture, and
that subject to the provisions of Section 7.01, the Trustee shall have the right
to decline to follow any such direction if the Trustee being advised by counsel
shall determine that the action so directed may not lawfully be taken, or if the
Trustee shall
<PAGE> 63
56
by a responsible officer or officers determine that the action so directed would
involve it in personal liability or would be unjustly prejudicial to Holders of
Debt Securities of such series not taking part in such direction; and provided
further, however, that nothing in this Indenture contained shall impair the
right of the Trustee to take any action deemed proper by the Trustee and which
is not inconsistent with such direction by such Holders. Prior to the
acceleration of the maturity of the Debt Securities of any series, as provided
in Section 6.01, the Holders of a majority in aggregate principal amount of the
Debt Securities of that series at the time Outstanding may on behalf of the
Holders of all the Debt Securities of that series waive any past Default or
Event of Default and its consequences for that series specified in the terms
thereof as contemplated by Section 2.03, except (i) a Default in the payment of
the principal of, and premium, if any, or interest on, any of the Debt
Securities and (ii) a Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Holder affected thereby. In case
of any such waiver, such Default shall cease to exist, any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture, and the Issuers, the Trustee and the Holders of the Debt Securities
of that series shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereon.
SECTION 6.07. Trustee to Give Notice of Defaults Known to It,
but May Withhold Such Notice in Certain Circumstances. The Trustee shall, within
90 days after the occurrence of a Default known to it with respect to a series
of Debt Securities give to the Holders thereof, in the manner provided in
Section 13.03, notice of all Defaults with respect to such series known to the
Trustee, unless such Defaults shall have been cured or waived before the giving
of such notice; provided that, except in the case of Default in the payment of
the principal of, or premium, if any, or interest on, any of the Debt Securities
of such series or in the making of any sinking fund payment with respect to the
Debt Securities of such series, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee or
a committee of directors or responsible officers of the Trustee in good faith
determine that the withholding of such notice is in the interests of the Holders
thereof.
<PAGE> 64
57
SECTION 6.08. Requirement of an Undertaking To Pay Costs in
Certain Suits under the Indenture or Against the Trustee. All parties to this
Indenture agree, and each Holder of any Debt Security by his acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Trustee for any action taken or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit in the manner and to the extent provided in the Trust Indenture
Act, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section 6.08 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any Holder, or
group of Holders, holding in the aggregate more than ten percent in principal
amount of the Outstanding Debt Securities of that series or to any suit
instituted by any Holder for the enforcement of the payment of the principal of,
or premium, if any, or interest on, any Debt Security on or after the due date
for such payment expressed in such Debt Security.
ARTICLE VII
Concerning the Trustee
SECTION 7.01. Certain Duties and Responsibilities. The
Trustee, prior to the occurrence of an Event of Default and after the curing or
waiving of all Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Indenture. In case an Event of Default has occurred (which has not been cured or
waived), the Trustee shall exercise such of the rights and powers vested in it
by this Indenture, and use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
<PAGE> 65
58
No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own wilful misconduct, except that:
(a) this subsection shall not be construed to limit the effect
of the first paragraph of this Section 7.01;
(b) prior to the occurrence of an Event of Default with
respect to the Debt Securities of a series and after the curing or
waiving of all Events of Default with respect to such series which may
have occurred:
(1) the duties and obligations of the Trustee with
respect to Debt Securities of any series shall be determined
solely by the express provisions of this Indenture, and the
Trustee shall not be liable except for the performance of such
duties and obligations with respect to such series as are
specifically set forth in this Indenture, and no implied
covenants or obligations with respect to such series shall be
read into this Indenture against the Trustee; and
(2) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture;
but in the case of any such certificates or opinions which by
any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Indenture; but the Trustee shall examine
the evidence furnished to it pursuant to Section 5.03 to
determine whether or not such evidence conforms to the
requirement of this Indenture;
(c) the Trustee shall not be liable for an error of judgment
made in good faith by a responsible officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts; and
<PAGE> 66
59
(d) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it with respect to Debt Securities of
any series in good faith in accordance with the direction of the
Holders of not less than a majority in aggregate principal amount of
the Outstanding Debt Securities of that series relating to the time,
method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture with respect to Debt Securities of such
series.
None of the provisions of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any personal
financial liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if there shall be reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 7.02. Certain Rights of Trustee. Except
as otherwise provided in Section 7.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note 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) any request, direction, order or demand of the Issuers
mentioned herein shall be sufficiently evidenced by an Issuer Order
(unless other evidence in respect thereof be herein specifically
prescribed); and any resolution of the Board of Directors may be
evidenced to the Trustee by a copy thereof certified by the Secretary
or an Assistant Secretary of each of the Issuers;
<PAGE> 67
60
(c) the Trustee may consult with counsel, and the advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered
or omitted by it hereunder in good faith and in accordance with such
advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Holders of Debt Securities of any
series pursuant to the provisions of this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be
Incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Indenture;
(f) prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, approval
or other paper or document, unless requested in writing to do so by the
Holders of a majority in aggregate principal amount of the then
outstanding Debt Securities of a series affected by such matter;
provided, however, that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be Incurred by
it in the making of such investigation is not, in the opinion of the
Trustee, reasonably assured to the Trustee by the security afforded to
it by the terms of this Indenture, the Trustee may require reasonable
indemnity against such costs, expenses or liabilities as a condition to
so proceeding. The reasonable expense of every such investigation shall
be paid by the Issuers or, if paid by the Trustee, shall be repaid by
the Issuers upon demand;
<PAGE> 68
61
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed by it with due care hereunder; and
(h) if any property other then cash shall at any time be
subject to a Lien in favor of the Holders, the Trustee, if and to the
extent authorized by a receivership or bankruptcy court of competent
jurisdiction or by the supplemental instrument subjecting such property
to such lien, shall be entitled to make advances for the purpose of
preserving such property or of discharging tax Liens or other prior
Liens or encumbrances thereon.
SECTION 7.03. Trustee Not Liable for Recitals in Indenture or
in Debt Securities. The recitals contained herein and in the Debt Securities
(except the Trustee's certificate of authentication) shall be taken as the
statements of the Issuers, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Debt Securities of any series, except
that the Trustee represents that it is duly authorized to execute and deliver
this Indenture, authenticate the Debt Securities and perform its obligations
hereunder, and that the statements made by it or to be made by it in a Statement
of Eligibility and Qualification on Form T-1 supplied to the Issuers are true
and accurate. The Trustee shall not be accountable for the use or application by
the Issuers of any of the Debt Securities or of the proceeds thereof.
SECTION 7.04. Trustee, Paying Agent or Registrar May Own Debt
Securities. The Trustee or any paying agent or Registrar, in its individual or
any other capacity, may become the owner or pledgee of Debt Securities and
subject to the provisions of the Trust Indenture Act relating to conflicts of
interest and preferential claims may otherwise deal with the Issuers with the
same rights it would have if it were not Trustee, paying agent or Registrar.
SECTION 7.05. Moneys Received by Trustee to Be Held in Trust.
Subject to the provisions of Section 11.05, all moneys received by the Trustee
shall, until used or
<PAGE> 69
62
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
moneys received by it hereunder. So long as no Event of Default shall have
occurred and be continuing, all interest allowed on any such moneys shall be
paid from time to time to the Issuers upon an Issuer Order.
SECTION 7.06. Compensation and Reimbursement. The Issuers
covenant and agree to pay in Dollars to the Trustee from time to time, and the
Trustee shall be entitled to, reasonable compensation for all services rendered
by it hereunder (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust), and, except as otherwise
expressly provided herein, the Issuers will pay or reimburse in Dollars the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents, attorneys and counsel and of all Persons not
regularly in its employ) except any such expense, disbursement or advances as
may arise from its negligence or bad faith. The Issuers also covenant to
indemnify in Dollars the Trustee for, and to hold it harmless against, any loss,
liability or expense Incurred without negligence, wilful misconduct or bad faith
on the part of the Trustee, arising out of or in connection with the acceptance
or administration of this trust or trusts hereunder, including the reasonable
costs and expenses of defending itself against any claim of liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The obligations of the Issuers under this Section 7.06 to compensate
and indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder
and shall survive the satisfaction and discharge of this Indenture. The Issuers
and the Holders agree that such additional indebtedness shall be secured by a
Lien prior to that of the Debt Securities upon all property and funds held or
collected by the Trustee, as such, except funds held in trust for the payment of
principal of, and premium, if any, or interest on, particular Debt Securities.
When the Trustee incurs expenses or renders services after an
Event of Default specified in
<PAGE> 70
63
Section 6.01(g) or (h) occurs, the expenses and the compensation for the
services are intended to constitute expenses of administration under any
bankruptcy, insolvency, reorganization or other similar law.
SECTION 7.07. Right of Trustee to Rely on an Officers'
Certificate Where No Other Evidence Specifically Prescribed. Except as otherwise
provided in Section 7.01, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee and such certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.
SECTION 7.08. Separate Trustee; Replacement of Trustee. The
Issuers may, but need not, appoint a separate Trustee for any one or more series
of Debt Securities. The Trustee may resign with respect to one or more or all
series of Debt Securities at any time by giving notice to the Issuers. The
Holders of a majority in principal amount of the Debt Securities of a particular
series may remove the Trustee for such series and only such series by so
notifying the Trustee and may appoint a successor Trustee. The Issuers shall
remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Issuers or by the
Holders of a majority in principal amount of the Debt Securities of a particular
series and such Holders do not reasonably promptly appoint a successor Trustee,
or if a
<PAGE> 71
64
vacancy exists in the office of Trustee for any reason (the Trustee in such
event being referred to herein as the retiring Trustee), the Issuers shall
promptly appoint a successor Trustee. No resignation or removal of the Trustee
and no appointment of a successor Trustee shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of this Section 7.08.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of Debt Securities of each applicable series. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the Lien provided for in Section 7.06.
If a successor Trustee does not take office within 60 days
after the retiring Trustee gives notice of resignation or is removed, the
retiring Trustee or the Holders of 25% in principal amount of the Debt
Securities of any applicable series may petition any court of competent
jurisdiction for the appointment of a successor Trustee for the Debt Securities
of such series.
If the Trustee fails to comply with Section 7.10, any Holder
of Debt Securities of any applicable series may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee for the Debt Securities of such series.
Notwithstanding the replacement of the Trustee pursuant to
this Section 7.08, the Issuers' obligations under Section 7.06 shall continue
for the benefit of the retiring Trustee.
In the case of the appointment hereunder of a separate or
successor trustee with respect to the Debt Securities of one or more series, the
Issuers, any retiring Trustee and each successor or separate Trustee with
respect to the Debt Securities of any applicable series shall execute and
deliver an Indenture supplemental hereto (1) which shall contain such provisions
as shall be deemed
<PAGE> 72
65
necessary or desirable to confirm that all the rights, powers, trusts and duties
of any retiring Trustee with respect to the Debt Securities of any series as to
which any such retiring Trustee is not retiring shall continue to be vested in
such retiring Trustee and (2) that shall add to or change any of the provisions
of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one trustee, it being
understood that nothing herein or in such supplemental Indenture shall
constitute such Trustees co-trustees of the same trust and that each such
separate, retiring or successor Trustee shall be Trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Debt Securities shall have been authenticated but
not delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Debt Securities so
authenticated; and in case at that time any of the Debt Securities shall not
have been authenticated, any successor to the Trustee may authenticate such Debt
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Debt Securities or in this Indenture
provided that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of Section 310(a) of the Trust Indenture
Act. The Trustee shall have a combined capital and surplus of at least
$50,000,000, as set forth in its most recent published annual report of
condition. No obligor upon the Debt Securities of a particular series or Person
directly or indirectly controlling, controlled by or under common
<PAGE> 73
66
control with such obligor shall serve as Trustee upon the Debt Securities of
such series. The Trustee shall comply with Section 310(b) of the Trust Indenture
Act; provided, however, that there shall be excluded from the operation of
Section 310(b)(1) of the Trust Indenture Act this Indenture or any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Issuers are outstanding if the
requirements for such exclusion set forth in Section 310(b)(1) of the Trust
Indenture Act are met.
SECTION 7.11. Preferential Collection of Claims Against
Issuers. The Trustee shall comply with Section 311(a) of the Trust Indenture
Act, excluding any creditor relationship listed in Section 311(b) of the Trust
Indenture Act. A Trustee who had resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent indicated therein.
SECTION 7.12. Compliance with Tax Laws. The Trustee hereby
agrees to comply with all U.S. Federal income tax information reporting and
withholding requirements applicable to it with respect to payments of premium
(if any) and interest on the Debt Securities, whether acting as Trustee,
Security Registrar, paying agent or otherwise with respect to the Debt
Securities.
ARTICLE VIII
Concerning the Holders
SECTION 8.01. Evidence of Action by Holders. Whenever in this
Indenture it is provided that the Holders of a specified percentage in aggregate
principal amount of the Debt Securities of any or all series may take action
(including the making of any demand or request, the giving of any direction,
notice, consent or waiver or the taking of any other action) the fact that at
the time of taking any such action the Holders of such specified percentage have
joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by Holders in person or by agent or proxy
appointed in writing, (b) by the record of the Holders voting in favor thereof
at any meeting of Holders duly called and held in accordance with the provisions
of Section 5.02 or (c) by a combination of
<PAGE> 74
67
such instrument or instruments and any such record of such a meeting of Holders.
SECTION 8.02. Proof of Execution of Instruments and of Holding
of Debt Securities. Subject to the provisions of Sections 7.01, 7.02 and 13.09,
proof of the execution of any instrument by a Holder or his agent or proxy shall
be sufficient if made in accordance with such reasonable rules and regulations
as may be prescribed by the Trustee or in such manner as shall be satisfactory
to the Trustee.
The ownership of Registered Securities of any series shall be
proved by the Debt Security Register or by a certificate of the Registrar for
such series.
The Trustee may require such additional proof of any matter
referred to in this Section 8.02 as it shall deem necessary.
SECTION 8.03. Who May Be Deemed Owner of Debt Securities.
Prior to due presentment for registration of transfer of any Registered
Security, the Issuers, the Trustee, any paying agent and any Registrar may deem
and treat the Person in whose name any Registered Security shall be registered
upon the books of the Issuers as the absolute owner of such Registered Security
(whether or not such Registered Security shall be overdue and notwithstanding
any notation of ownership or other writing thereon) for the purpose of receiving
payment of or on account of the principal of and premium, if any, and (subject
to Section 2.03) interest on such Registered Security and for all other
purposes, and neither the Issuers nor the Trustee nor any paying agent nor any
Registrar shall be affected by any notice to the contrary; and all such payments
so made to any such Holder for the time being, or upon his order, shall be valid
and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Registered Security.
None of the Issuers, the Trustee, any paying agent or the
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in a Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
<PAGE> 75
68
SECTION 8.04. Instruments Executed by Holders Bind Future
Holders. At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 8.01, of the taking of any action by the Holders of the
percentage in aggregate principal amount of the Debt Securities of any series
specified in this Indenture in connection with such action and subject to the
following paragraph, any Holder of a Debt Security which is shown by the
evidence to be included in the Debt Securities the Holders of which have
consented to such action may, by filing written notice with the Trustee at its
corporate trust office and upon proof of holding as provided in Section 8.02,
revoke such action so far as concerns such Debt Security. Except as aforesaid
any such action taken by the Holder of any Debt Security shall be conclusive and
binding upon such Holder and upon all future Holders and owners of such Debt
Security and of any Debt Security issued upon transfer thereof or in exchange or
substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon such Debt Security or such other Debt Securities. Any
action taken by the Holders of the percentage in aggregate principal amount of
the Debt Securities of any series specified in this Indenture in connection with
such action shall be conclusively binding upon the Issuers, the Trustee and the
Holders of all the Debt Securities of such series.
The Issuers may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders of Registered Securities
entitled to give their consent or take any other action required or permitted to
be taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Holders of Registered Securities at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to give such consent or to
revoke any consent previously given or to take any such action, whether or not
such Persons continue to be Holders of Registered Securities after such record
date. No such consent shall be valid or effective for more than 120 days after
such record date unless the consent of the Holders of the percentage in
aggregate principal amount of the Debt Securities of such series specified in
this Indenture shall have been received within such 120-day period.
<PAGE> 76
69
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Purposes for Which Supplemental Indenture May Be
Entered into Without Consent of Holders. The Issuers, when authorized by a
resolution of the Board of Directors, and the Trustee may from time to time and
at any time, without the consent of Holders, enter into an Indenture or
Indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof) for one or
more of the following purposes:
(a) to evidence the succession pursuant to Article X of
another Person to either of the Issuers, or successive successions, and
the assumption by the Successor Company (as defined in Section 10.01)
of the covenants, agreements and obligations of the Company or EOTT
Finance, as the case may be, in this Indenture and in the Debt
Securities;
(b) to surrender any right or power herein conferred upon the
Issuers, to add to the covenants of the Issuers such further covenants,
restrictions, conditions or provisions for the protection of the
Holders of all or any series of Debt Securities (and if such covenants
are to be for the benefit of less than all series of Debt Securities,
stating that such covenants are expressly being included solely for the
benefit of such series) as the Board of Directors shall consider to be
for the protection of the Holders of such Debt Securities, and to make
the occurrence, or the occurrence and continuance, of a Default in any
of such additional covenants, restrictions, conditions or provisions a
Default or an Event of Default permitting the enforcement of all or any
of the several remedies provided in this Indenture; provided, that in
respect of any such additional covenant, restriction, condition or
provision such supplemental Indenture may provide for a particular
period of grace after Default (which period may be shorter or longer
than that allowed in the case of other Defaults) or may provide for an
immediate enforcement upon such Default or may limit the remedies
available to the Trustee upon such Default or may limit the right of
the Holders of a majority in
<PAGE> 77
70
aggregate principal amount of any or all series of Debt Securities to
waive such default;
(c) to cure any ambiguity or to correct or supplement any
provision contained herein, in any supplemental Indenture or in any
Debt Securities of any series that may be defective or inconsistent
with any other provision contained herein, in any supplemental
Indenture or in the Debt Securities of such series; to convey,
transfer, assign, mortgage or pledge any property to or with the
Trustee, or to make such other provisions in regard to matters or
questions arising under this Indenture as shall not adversely affect
the interests of any Holders of Debt Securities of any series;
(d) to modify or amend this Indenture in such a manner as to
permit the qualification of this Indenture or any Indenture
supplemental hereto under the Trust Indenture Act as then in effect,
except that nothing herein contained shall permit or authorize the
inclusion in any Indenture supplemental hereto of the provisions
referred to in Section 316(a)(2) of the Trust Indenture Act;
(e) to add to or change any of the provisions of this
Indenture to change or eliminate any restrictions on the payment of
principal of, or premium, if any, or interest on, Registered
Securities; provided, that any such action shall not adversely affect
the interests of the Holders of Debt Securities of any series in any
material respect or permit or facilitate the issuance of Debt
Securities of any series in uncertificated form;
(f) to comply with Article X;
(g) in the case of any Debt Securities, if any, subordinated
pursuant to Article XII, to make any change in Article XII that would
limit or terminate the benefits applicable to any holder of Senior
Indebtedness (or Representatives therefor) under Article XII;
(h) to add Guarantees with respect to the Debt Securities or
to secure the Debt Securities;
<PAGE> 78
71
(i) to add to, change or eliminate any of the provisions of
this Indenture in respect of one or more series of Debt Securities;
provided, however, that any such addition, change or elimination not
otherwise permitted under this Section 9.01 shall (i) neither (A) apply
to any Debt Security of any series created prior to the execution of
such supplemental Indenture and entitled to the benefit of such
provision nor (B) modify the rights of the Holder of any such Debt
Security with respect to such provision or (ii) shall become effective
only when there is no such Debt Security outstanding;
(j) to evidence and provide for the acceptance of appointment
hereunder by a successor or separate Trustee with respect to the Debt
Securities of one or more series and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee; and
(k) to establish the form or terms of Debt Securities of any
series as permitted by Sections 2.01 and 2.03.
The Trustee is hereby authorized to join with the Issuers in
the execution of any such supplemental Indenture, to make any further
appropriate agreements and stipulations which may be therein contained and to
accept the conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Trustee shall not be obligated to enter into any such
supplemental Indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental Indenture authorized by the provisions of
this Section 9.01 may be executed by the Issuers and the Trustee without the
consent of the Holders of any of the Debt Securities at the time outstanding,
notwithstanding any of the provisions of Section 9.02.
In the case of any Debt Securities subordinated pursuant to
Article XII, an amendment under this Section 9.01 may not make any change that
adversely affects the rights under Article XII of any holder of such Senior
Indebtedness then Outstanding unless the holders of such
<PAGE> 79
72
Senior Indebtedness (or any group or Representative thereof authorized to give a
consent) consent to such change.
After an amendment under this Section 9.01 becomes effective,
the Issuers shall mail to Holders of Debt Securities of each series affected
thereby a notice briefly describing such amendment. The failure to give such
notice to all such Holders, or any defect therein, shall not impair or affect
the validity of an amendment under this Section 9.01.
SECTION 9.02. Modification of Indenture with Consent of
Holders of Debt Securities. Without notice to any Holder but with the consent
(evidenced as provided in Section 8.01) of the Holders of not less than a
majority in aggregate principal amount of the outstanding Debt Securities of
each series affected by such supplemental Indenture, the Issuers, when
authorized by a resolution of the Board of Directors, and the Trustee may from
time to time and at any time enter into an Indenture or Indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act as in
force at the date of execution thereof) for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Indenture or of any supplemental Indenture or of modifying in any manner the
rights of the Holders of the Debt Securities of such series; provided, that no
such supplemental Indenture, without the consent of the Holders of each Debt
Security so affected, shall (i) reduce the percentage in principal amount of
Debt Securities of any series whose Holders must consent to an amendment; (ii)
reduce the rate of or extend the time for payment of interest on any Debt
Security; (iii) reduce the principal of or extend the Stated Maturity of any
Debt Security; (iv) reduce the premium payable upon the redemption of any Debt
Security or change the time at which any Debt Security may or shall be redeemed
in accordance with Article III; (v) make any Debt Security payable in Currency
other than that stated in the Debt Security; (vi) in the case of any Debt
Security subordinated pursuant to Article XII, make any change in Article XII
that adversely affects the rights of any Holder under Article XII; (vii) release
any security that may have been granted in respect of the Debt Securities; or
(viii) make any change in Section 6.06 or this Section 9.02.
<PAGE> 80
73
A supplemental Indenture which changes or eliminates any
covenant or other provision of this Indenture which has been expressly included
solely for the benefit of one or more particular series of Debt Securities or
which modifies the rights of the Holders of Debt Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect the
rights under this Indenture of the Holders of Debt Securities of any other
series.
Upon the request of the Issuers, accompanied by a copy of a
resolution of the Board of Directors authorizing the execution of any such
supplemental Indenture, and upon the filing with the Trustee of evidence of the
consent of Holders as aforesaid, the Trustee shall join with the Issuers in the
execution of such supplemental Indenture unless such supplemental Indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion but shall not be
obligated to enter into such supplemental Indenture.
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed supplemental
Indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
In the case of any Debt Securities subordinated pursuant to
Article XII, an amendment under this Section 9.02 may not make any change that
adversely affects the rights under Article XII of any holder of such Senior
Indebtedness then Outstanding unless the holders of such Senior Indebtedness (or
any group or Representative thereof authorized to give a consent) consent to
such change.
After an amendment under this Section 9.02 becomes effective,
the Issuers shall mail to Holders of Debt Securities of each series affected
thereby a notice briefly describing such amendment. The failure to give such
notice to all such Holders, or any defect therein, shall not impair or affect
the validity of an amendment under this Section 9.02.
SECTION 9.03. Effect of Supplemental Indentures. Upon the
execution of any supplemental Indenture pursuant to the provisions of this
Article IX, this Indenture shall be
<PAGE> 81
74
and be deemed to be modified and amended in accordance therewith and the
respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Issuers and the Holders shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental Indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
The Trustee, subject to the provisions of Sections 7.01 and
7.02, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any such supplemental Indenture complies with the
provisions of this Article IX.
SECTION 9.04. Debt Securities May Bear Notation of Changes by
Supplemental Indentures. Debt Securities of any series authenticated and
delivered after the execution of any supplemental Indenture pursuant to the
provisions of this Article IX may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental Indenture. New Debt Securities of any series so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any
modification of this Indenture contained in any such supplemental Indenture may
be prepared and executed by the Issuers, authenticated by the Trustee and
delivered in exchange for the Debt Securities of such series then outstanding.
Failure to make the appropriate notation or to issue a new Debt Security of such
series shall not affect the validity of such amendment.
ARTICLE X
Consolidation, Merger, Sale or Conveyance
SECTION 10.01. Consolidations and Mergers of the Issuers.
Neither of the Issuers shall consolidate with or merge with or into any Person,
or convey, transfer or lease all or substantially all its assets, unless: (i)
either (a) such Issuer shall be the continuing Person in the case of a merger or
(b) the resulting, surviving or transferee Person if other than such Issuer (the
"Successor Company") shall be a corporation organized and existing under the
laws of the United States, any State thereof or the District of Columbia
<PAGE> 82
75
and the Successor Company shall expressly assume, by an Indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of such Issuer under the Debt Securities according
to their tenor, and this Indenture; (ii) immediately after giving effect to such
transaction (and treating any indebtedness which becomes an obligation of the
Successor Company or any Subsidiary of the Company as a result of such
transaction as having been Incurred by the Successor Company or such Subsidiary
at the time of such transaction), no Default or Event of Default would occur or
be continuing; and (iii) such Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental Indenture (if any)
comply with this Indenture.
SECTION 10.02. Rights and Duties of Successor Corporation. In
case of any consolidation or merger, or conveyance or transfer of the assets of
an Issuer as an entirety or virtually as an entirety in accordance with Section
10.01, the Successor Company shall succeed to and be substituted for such
Issuer, with the same effect as if it had been named herein as the party of the
first part, and the predecessor corporation shall be relieved of any further
obligation under the Indenture and the Debt Securities. The Successor Company
thereupon may cause to be signed, and may issue either in its own name or in the
name of such Issuer, any or all the Debt Securities issuable hereunder which
theretofore shall not have been signed by such Issuer and delivered to the
Trustee; and, upon the order of the Successor Company, instead of such Issuer,
and subject to all the terms, conditions and limitations in this Indenture
prescribed, the Trustee shall authenticate and shall deliver any Debt Securities
which previously shall have been signed and delivered by the officers of such
Issuer to the Trustee for authentication, and any Debt Securities which the
Successor Company thereafter shall cause to be signed and delivered to the
Trustee for that purpose. All the Debt Securities so issued shall in all
respects have the same legal rank and benefit under this Indenture as the Debt
Securities theretofore or thereafter issued in accordance with the terms of this
Indenture as though all such Debt Securities had been issued at the date of the
execution hereof.
<PAGE> 83
76
In case of any such consolidation, merger, sale or conveyance
such changes in phraseology and form (but not in substance) may be made in the
Debt Securities appertaining thereto thereafter to be issued as may be
appropriate.
ARTICLE XI
Satisfaction and Discharge of Indenture;
Defeasance; Unclaimed Moneys
SECTION 11.01. Applicability of Article. If, pursuant to
Section 2.03, provision is made for the defeasance of Debt Securities of a
series, then the provisions of this Article XI relating to defeasance of Debt
Securities shall be applicable except as otherwise specified pursuant to Section
2.03 for Debt Securities of such series.
SECTION 11.02. Satisfaction and Discharge of Indenture:
Defeasance. (a) If at any time (i) the Issuers shall have delivered to the
Trustee for cancelation all Debt Securities of any series theretofore
authenticated and delivered (other than (1) any Debt Securities of such series
which shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.09 and (2) Debt Securities for whose
payment money has theretofore been deposited in trust and thereafter repaid to
the Issuers as provided in Section 11.05) or (ii) all Debt Securities of such
series not theretofore delivered to the Trustee for cancelation shall have
become due and payable, or are by their terms to become due and payable within
one year or are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption, and the
Issuers shall deposit with the Trustee as trust funds the entire amount in the
Currency in which such Debt Securities are denominated (except as otherwise
provided pursuant to Section 2.03) sufficient to pay at maturity or upon
redemption all Debt Securities of such series not theretofore delivered to the
Trustee for cancelation, including principal and premium, if any, and interest
due or to become due on such date of maturity or redemption date, as the case
may be, and if in either case the Issuers shall also pay or cause to be paid all
other sums payable hereunder by the Issuers, then this Indenture shall cease to
be of further effect (except as to any surviving rights of registration of
transfer or exchange of such Debt Securities herein expressly provided for and
<PAGE> 84
77
rights to receive payments of principal of, and premium, if any, and interest
on, such Debt Securities) with respect to the Debt Securities of such series,
and the Trustee, on demand of the Issuers accompanied by an Officers'
Certificate and an Opinion of Counsel and at the cost and expense of the
Issuers, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture.
(b) Subject to Sections 11.02(c), 11.03 and 11.07, the Issuers
at any time may terminate, with respect to Debt Securities of a particular
series, (i) all their obligations under the Debt Securities of such series and
this Indenture with respect to the Debt Securities of such series ("legal
defeasance option") or (ii) their obligations with respect to the Debt
Securities of such series under clause (ii) of Section 10.01 and the related
operation of Section 6.01(d) and the operation of Sections 6.01(e), (f) and (i)
("covenant defeasance option"). The Issuers may exercise their legal defeasance
option notwithstanding their prior exercise of their covenant defeasance option.
If the Issuers exercise their legal defeasance option, payment
of the Debt Securities of the defeased series may not be accelerated because of
an Event of Default. If the Issuers exercise their covenant defeasance option,
payment of the Debt Securities of the defeased series may not be accelerated
because of an Event of Default specified in Sections 6.01(d), (e), (f) and (i)
(except to the extent covenants or agreements referenced in such Sections remain
applicable).
Upon satisfaction of the conditions set forth herein and upon
request of the Issuers, the Trustee shall acknowledge in writing the discharge
of those obligations that the Issuers terminate.
(c) Notwithstanding clauses (a) and (b) above, the Issuers'
obligations in Sections 2.07, 2.09, 4.02, 4.04, 5.01, 7.06, 7.10, 11.05, 11.06
and 11.07 shall survive until the Debt Securities of the defeased series have
been paid in full. Thereafter, the Issuers' obligations in Sections 7.06, 11.05
and 11.06 shall survive.
<PAGE> 85
78
SECTION 11.03. Conditions of Defeasance. The Issuers may
exercise their legal defeasance option or their covenant defeasance option with
respect to Debt Securities of a particular series only if:
(1) the Issuers irrevocably deposit in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of,
and premium, if any, and interest on, the Debt Securities of such
series to maturity or redemption, as the case may be;
(2) the Issuers deliver to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay the principal, premium
and interest when due on all the Debt Securities of such series to
maturity or redemption, as the case may be;
(3) 91 days pass after the deposit is made and during the
91-day period no Default specified in Section 6.01(g) or (h) with
respect to either of the Issuers occurs which is continuing at the end
of the period;
(4) no Default has occurred and is continuing on the date of
such deposit and after giving effect thereto;
(5) the deposit does not constitute a default under any other
agreement binding on either of the Issuers and, if the Debt Securities
of such series are subordinated pursuant to Article XII, is not
prohibited by Article XII;
(6) the Issuers deliver to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(7) in the event of the legal defeasance option, the Issuers
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Issuers have
<PAGE> 86
79
received from the Internal Revenue Service a ruling, or (ii) since the
date of this Indenture there has been a change in the applicable
Federal income tax law, in either case of the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of Debt
Securities of such series will not recognize income, gain or loss for
Federal income tax purposes as a result of such defeasance and will be
subject to Federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such defeasance
had not occurred;
(8) in the event of the covenant defeasance option, the
Issuers shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders of Debt Securities of such series will not
recognize income, gain or loss for Federal income tax purposes as a
result of such covenant defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred; and
(9) the Issuers deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Debt Securities of
such series as contemplated by this Article XI have been complied with.
Before or after a deposit, the Issuers may make arrangements
satisfactory to the Trustee for the redemption of Debt Securities of such series
at a future date in accordance with Article III.
SECTION 11.04. Application of Trust Money. The
Trustee shall hold in trust money or U.S. Government Obligations deposited with
it pursuant to this Article XI. It shall apply the deposited money and the money
from U.S. Government Obligations through any paying agent and in accordance with
this Indenture to the payment of principal of, and premium, if any, and interest
on, the Debt Securities of the defeased series. In the event the Debt Securities
of the defeased series are subordinated pursuant to Article XII, money and
securities so held in trust are not subject to Article XII.
<PAGE> 87
80
SECTION 11.05. Repayment to Issuers. The Trustee and any
paying agent shall promptly turn over to the Issuers upon request any excess
money or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and any paying agent shall pay to the Issuers upon request any money held by
them for the payment of principal, premium or interest that remains unclaimed
for two years, and, thereafter, Holders entitled to such money must look to the
Issuers for payment as general creditors.
SECTION 11.06. Indemnity for U.S. Government Obligations.
The Issuers shall pay and shall indemnify the Trustee and the Holders against
any tax, fee or other charge imposed on or assessed against deposited U.S.
Government Obligations or the principal and interest received on such U.S.
Government Obligations.
SECTION 11.07. Reinstatement. If the Trustee or any paying
agent is unable to apply any money or U.S. Government Obligations in accordance
with this Article XI by reason of any legal proceeding or by reason of any order
or judgment of any court or government authority enjoining, restraining or
otherwise prohibiting such application, the Issuers' obligations under this
Indenture and the Debt Securities of the defeased series shall be revived and
reinstated as though no deposit had occurred pursuant to this Article XI until
such time as the Trustee or any paying agent is permitted to apply all such
money or U.S. Government Obligations in accordance with this Article XI.
ARTICLE XII
Subordination of Debt Securities
SECTION 12.01. Applicability of Article; Agreement To
Subordinate. The provisions of this Article XII shall be applicable to the Debt
Securities of any series (Debt Securities of such series referred to in this
Article XII as "Subordinated Debt Securities") designated, pursuant to Section
2.03, as subordinated to Senior Indebtedness. Each Holder by accepting a
Subordinated Debt Security agrees that the indebtedness evidenced by such
Subordinated Debt Security is subordinated in right of payment, to the extent
and in the manner
<PAGE> 88
81
provided in this Article XII, to the prior payment of all Senior Indebtedness
and that the subordination is for the benefit of and enforceable by the holders
of Senior Indebtedness. All provisions of this Article XII shall be subject to
Section 12.12.
SECTION 12.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Issuers to creditors upon a total
or partial liquidation or a total or partial dissolution of the Issuers or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Issuers or their property:
(1) holders of Senior Indebtedness shall be entitled to
receive payment in full in cash of the Senior Indebtedness (including
interest (if any), accruing on or after the commencement of a
proceeding in bankruptcy, whether or not allowed as a claim against the
Issuers in such bankruptcy proceeding) before Holders of Subordinated
Debt Securities shall be entitled to receive any payment of principal
of, or premium, if any, or interest on, the Subordinated Debt
Securities; and
(2) until the Senior Indebtedness is paid in full, any
distribution to which Holders of Subordinated Debt Securities would be
entitled but for this Article XII shall be made to holders of Senior
Indebtedness as their interests may appear, except that such Holders
may receive shares of stock and any debt securities that are
subordinated to Senior Indebtedness to at least the same extent as the
Subordinated Debt Securities.
SECTION 12.03. Default on Senior Indebtedness. The Issuers may
not pay the principal of, or premium, if any, or interest on, the Subordinated
Debt Securities or make any deposit pursuant to Article XI and may not
repurchase, redeem or otherwise retire (except, in the case of Subordinated Debt
Securities that provide for a mandatory sinking fund pursuant to Section 3.04,
by the delivery of Subordinated Debt Securities by the Issuers to the Trustee
pursuant to the first paragraph of Section 3.05) any Debt Securities
(collectively, "pay the Subordinated Debt Securities") if (i) any principal,
premium or interest in respect of Senior Indebtedness is not paid within any
<PAGE> 89
82
applicable grace period (including at maturity) or (ii) any other default on
Senior Indebtedness occurs and the maturity of such Senior Indebtedness is
accelerated in accordance with its terms unless, in either case, (x) the default
has been cured or waived and any such acceleration has been rescinded or (y)
such Senior Indebtedness has been paid in full in cash; provided, however, that
the Issuers may pay the Subordinated Debt Securities without regard to the
foregoing if the Issuers and the Trustee receive written notice approving such
payment from the Representative of each issue of Designated Senior Indebtedness.
During the continuance of any default (other than a default described in clause
(i) or (ii) of the preceding sentence) with respect to any Senior Indebtedness
pursuant to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, the Issuers may
not pay the Subordinated Debt Securities for a period (a "Payment Blockage
Period") commencing upon the receipt by the Issuers and the Trustee of written
notice of such default from the Representative of any Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period (a
"Blockage Notice") and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Issuers from the Person or Persons who gave such Blockage Notice, (ii) by
repayment in full in cash of such Designated Senior Indebtedness or (iii)
because the default giving rise to such Blockage Notice is no longer
continuing). Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the provisions contained in the first
sentence of this Section 12.03), unless the holders of such Designated Senior
Indebtedness or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, the Issuers may resume payments
on the Subordinated Debt Securities after such Payment Blockage Period. Not more
than one Blockage Notice may be given in any consecutive 360-day period,
irrespective of the number of defaults with respect to any number of issues of
Senior Indebtedness during such period; provided, however, that if any Blockage
Notice within such 360-day period is given by or on behalf of any holders of
Designated Senior Indebtedness (other than the Bank Indebtedness), the
Representative of the Bank Indebtedness may give another Blockage Notice within
such period; provided further, however, that in no event may the
<PAGE> 90
83
total number of days during which any Payment Blockage Period or Periods is in
effect exceed 179 days in the aggregate during any 360 consecutive day period.
For purposes of this Section 12.03, no default or event of default which existed
or was continuing on the date of the commencement of any Payment Blockage Period
with respect to the Senior Indebtedness initiating such Payment Blockage Period
shall be, or be made, the basis of the commencement of a subsequent Payment
Blockage Period by the Representative of such Senior Indebtedness, whether or
not within a period of 360 consecutive days, unless such default or event of
default shall have been cured or waived for a period of not less than 90
consecutive days.
SECTION 12.04. Acceleration of Payment of Debt Securities. If
payment of the Subordinated Debt Securities is accelerated because of an Event
of Default, the Issuers or the Trustee shall promptly notify the holders of the
Designated Senior Indebtedness (or their Representatives) of the acceleration.
SECTION 12.05. When Distribution Must Be Paid Over. If a
distribution is made to Holders of Subordinated Debt Securities that because of
this Article XII should not have been made to them, the Holders who receive such
distribution shall hold it in trust for holders of Senior Indebtedness and pay
it over to them as their interests may appear.
SECTION 12.06. Subrogation. After all Senior Indebtedness is
paid in full and until the Subordinated Debt Securities are paid in full,
Holders thereof shall be subrogated to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness. A
distribution made under this Article XII to holders of Senior Indebtedness which
otherwise would have been made to Holders of Subordinated Debt Securities is
not, as between the Issuers and such Holders, a payment by the Issuers on Senior
Indebtedness.
SECTION 12.07. Relative Rights. This Article XII defines the
relative rights of Holders of Subordinated Debt Securities and holders of Senior
Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Issuers and Holders of either
Subordinated Debt Securities or Debt Securities,
<PAGE> 91
84
the obligation of the Issuers, which is absolute and unconditional, to
pay principal of, and premium, if any, and interest on, the
Subordinated Debt Securities and the Debt Securities in accordance with
their terms; or
(2) prevent the Trustee or any Holder of either Subordinated
Debt Securities or Debt Securities from exercising its available
remedies upon a Default, subject to the rights of holders of Senior
Indebtedness to receive distributions otherwise payable to Holders of
Subordinated Debt Securities.
SECTION 12.08. Subordination May Not Be Impaired by Issuers.
No right of any holder of Senior Indebtedness to enforce the subordination of
the indebtedness evidenced by the Subordinated Debt Securities shall be impaired
by any act or failure to act by the Issuers or by their failure to comply with
this Indenture.
SECTION 12.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 12.03, the Trustee or any paying agent may continue to
make payments on Subordinated Debt Securities and shall not be charged with
knowledge of the existence of facts that would prohibit the making of any such
payments unless, not less than two business days prior to the date of such
payment, a responsible officer of the Trustee receives notice satisfactory to it
that payments may not be made under this Article XII. The Issuers, the
Registrar, any paying agent, a Representative or a holder of Senior Indebtedness
may give the notice; provided, however, that, if an issue of Senior Indebtedness
has a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
The Registrar and any paying agent may do the same with like rights. The Trustee
shall be entitled to all the rights set forth in this Article XII with respect
to any Senior Indebtedness which may at any time be held by it, to the same
extent as any other holder of Senior Indebtedness; and nothing in Article VII
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article XII shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.06.
<PAGE> 92
85
SECTION 12.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness, the distribution may be made and the notice given to their
Representative (if any).
SECTION 12.11. Article XII Not to Prevent Defaults or Limit
Right to Accelerate. The failure to make a payment pursuant to the Debt
Securities by reason of any provision in this Article XII shall not be construed
as preventing the occurrence of a Default. Nothing in this Article XII shall
have any effect on the right of the Holders or the Trustee to accelerate the
maturity of either the Subordinated Debt Securities or the Debt Securities, as
the case may be.
SECTION 12.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article XI by the Trustee for
the payment of principal of, and premium, if any, and interest on, the
Subordinated Debt Securities or the Debt Securities shall not be subordinated to
the prior payment of any Senior Indebtedness or subject to the restrictions set
forth in this Article XII, and none of the Holders thereof shall be obligated to
pay over any such amount to the Issuers or any holder of Senior Indebtedness of
the Issuers or any other creditor of the Issuers.
SECTION 12.13. Trustee Entitled to Rely. Upon any payment or
distribution pursuant to this Article XII, the Trustee and the Holders shall be
entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to such
Holders or (iii) upon the Representatives for the holders of Senior Indebtedness
for the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of the Senior Indebtedness and other
indebtedness of the Issuers, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article XII. In the event that the Trustee determines, in good faith,
that evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any
<PAGE> 93
86
payment or distribution pursuant to this Article XII, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article XII, and, if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article XII.
SECTION 12.14. Trustee to Effectuate Subordination. Each
Holder by accepting a Subordinated Debt Security authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Holders of Subordinated
Debt Securities and the holders of Senior Indebtedness as provided in this
Article XII and appoints the Trustee as attorney-in-fact for any and all such
purposes.
SECTION 12.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Holders of Subordinated Debt
Securities or the Issuers or any other Person, money or assets to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article XII
or otherwise.
SECTION 12.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Holder by accepting a Subordinated Debt Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Subordinated Debt Securities, to acquire and continue
to hold, or to continue to hold, such Senior Indebtedness and such holder of
Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.
<PAGE> 94
87
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.01. Successors and Assigns of Issuers Bound by
Indenture. All the covenants, stipulations, promises and agreements in this
Indenture contained by or in behalf of the Company, EOTT Finance or the Trustee
shall bind its successors and assigns, whether so expressed or not.
SECTION 13.02. Acts of Board, Committee or Officer of
Successor Company Valid. Any act or proceeding by any provision of this
Indenture authorized or required to be done or performed by any board, committee
or officer of the Issuers shall and may be done and performed with like force
and effect by the like board, committee or officer of any Successor Company.
SECTION 13.03. Required Notices or Demands. Except as
otherwise expressly provided in this Indenture, any notice or demand which by
any provision of this Indenture is required or permitted to be given or served
by the Trustee or by the Holders to or on the Issuers may be given or served by
being deposited postage prepaid in a post office letter box in the United States
addressed (until another address is filed by the Issuers with the Trustee) as
follows: EOTT Energy Corp., 1330 Post Oak Blvd., Suite 2700, Houston, TX 77056,
Attention: Chief Financial Officer. Except as otherwise expressly provided in
this Indenture, any notice, direction, request or demand by the Issuers or by
any Holder to or upon the Trustee may be given or made, for all purposes, by
being deposited, postage prepaid, in a post office letter box in the United
States addressed to the corporate trust office of the Trustee initially at [ ],
[ ]. The Issuers or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Any notice required or permitted to a Registered Holder by the
Issuers or the Trustee pursuant to the provisions of this Indenture shall be
deemed to be properly mailed by being deposited postage prepaid in a post office
letter box in the United States addressed to such Holder at the address of such
Holder as shown on the Debt Security Register. Any report pursuant to Section
313 of the Trust
<PAGE> 95
88
Indenture Act shall be transmitted in compliance with subsection (c) therein.
In the event of suspension of regular mail service or by
reason of any other cause it shall be impracticable to give notice by mail, then
such notification as shall be given with the approval of the Trustee shall
constitute sufficient notice for every purpose thereunder.
Failure to mail a notice or communication to a Holder or any
defect in it or any defect in any notice by publication as to a Holder shall not
affect the sufficiency of such notice with respect to other Holders. If a notice
or communication is mailed or published in the manner provided above, it is
conclusively presumed duly given.
SECTION 13.04. Indenture and Debt Securities to Be Construed
in Accordance with the Laws of the State of New York. This Indenture and each
Debt Security shall be deemed to be New York contracts, and for all purposes
shall be construed in accordance with the laws of said State (without reference
to principles of conflicts of law).
SECTION 13.05. Officers' Certificate and Opinion of Counsel to
Be Furnished upon Application or Demand by the Issuers. Upon any application or
demand by the Issuers to the Trustee to take any action under any of the
provisions of this Indenture, the Issuers shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with, except that in the case of any such
application or demand as to which the furnishing of such document is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (1) a statement that the Person
making such certificate or opinion has read such covenant or condition, (2) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or
<PAGE> 96
89
opinion are based, (3) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with and (4) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
SECTION 13.06. Payments Due on Legal Holidays. In any case
where the date of maturity of interest on or principal of and premium, if any,
on the Debt Securities of a series or the date fixed for redemption or repayment
of any Debt Security or the making of any sinking fund payment shall not be a
business day at any Place of Payment for the Debt Securities of such series,
then payment of interest or principal and premium, if any, or the making of such
sinking fund payment need not be made on such date at such Place of Payment, but
may be made on the next succeeding business day at such Place of Payment with
the same force and effect as if made on the date of maturity or the date fixed
for redemption, and no interest shall accrue for the period after such date. If
a record date is not a business day, the record date shall not be affected.
SECTION 13.07. Provisions Required by Trust Indenture Act to
Control. If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with another provision included in this Indenture which
is required to be included in this Indenture by any of Sections 310 to 318,
inclusive, of the Trust Indenture Act, such required provision shall control.
SECTION 13.08. Computation of Interest on Debt Securities.
Interest, if any, on the Debt Securities shall be computed on the basis of a
360-day year of twelve 30-day months, except as may otherwise be provided
pursuant to Section 2.03.
SECTION 13.09. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of Holders. The
Registrar and any paying agent may make reasonable rules for their functions.
SECTION 13.10. No Recourse Against Others. An
incorporator or any past, present or future director, officer, partner,
employee, stockholder or member, as such, of the Issuers, the General Partner or
any Subsidiary
<PAGE> 97
90
guarantor shall not have any liability for any obligations of the Issuers under
the Debt Securities, this Indenture or any Guarantees or for any claim based on,
in respect of, or by reason of, such obligations or their creation. By accepting
a Debt Security, each Holder shall waive and release all such liability. The
waiver and release shall be part of the consideration for the issue of the Debt
Securities.
SECTION 13.11. Severability. In case any provision in this
Indenture, the Debt Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 13.12. Effect of Headings. The article
and section headings herein and in the Table of Contents are
for convenience only and shall not affect the construction
hereof.
SECTION 13.13. Indenture May Be Executed in Counterparts. This
Indenture may be executed in any number of counterparts, each of which shall be
an original; but such counterparts shall together constitute but one and the
same instrument.
The Trustee hereby accepts the trusts in this Indenture upon
the terms and conditions herein set forth.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly signed as of the date first written above.
EOTT ENERGY PARTNERS, L.P.,
by EOTT ENERGY CORP.,
its general partner
by
----------------------------------------
Name:
Title:
EOTT ENERGY FINANCE CORP.,
<PAGE> 98
by
----------------------------
Name:
Title:
[ ],
by
----------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 5
[VINSON & ELKINS L.L.P. LETTERHEAD]
August 30, 1999
EOTT Energy Partners, L.P.
1330 Post Oak Boulevard
Houston, Texas 77056
Ladies and Gentlemen:
We have acted as counsel for EOTT Energy Partners, L.P., a Delaware limited
partnership (the "Partnership"), with respect to certain legal matters in
connection with the registration by the Partnership under the Securities Act of
1933, as amended (the "Securities Act"), (i) of the offer and sale by the
Partnership and EOTT Energy Finance Corp., a Delaware corporation (the
"Co-issuer") from time to time, pursuant to Rule 415 under the Securities Act,
of unsecured debt securities, in one or more series, consisting of notes,
debentures or other evidences of indebtedness (the "Debt Securities") and (ii)
of the offer and sale by the Partnership of units representing common limited
partner interests in the Partnership (the "Common Units"). The aggregate initial
offering prices of the Debt Securities and the Common Units offered by the
Partnership thereby (the "Securities") will not exceed $500,000,000 or, if
applicable, the equivalent thereof in any other currency or currency unit. The
Securities will be offered in amounts, at prices and on terms to be determined
in light of market conditions at the time of sale and to be set forth in
supplements to the Prospectus contained in the Partnership's Registration
Statement on Form S-3 to which this opinion is an exhibit.
Before rendering our opinions hereinafter set forth, we examined such
certificates, instruments and documents, including the Amended and Restated
Agreement of Limited Partnership of the Partnership, a form of which has been
filed as an exhibit to the Registration Statement (the "Partnership Agreement"),
the Certificate of Limited Partnership of EOTT Energy Partners, L.P. (the
"Certificate") filed with the Secretary of State of Delaware pursuant to the
Delaware Revised Uniform Limited Partnership Act in connection with the
formation of the Partnership, the form of the Indenture filed as an exhibit to
the Registration Statement, and we reviewed such questions of law, as we
considered appropriate.
Based upon the foregoing examination and review, we are of the opinion
that:
1. The Partnership has been duly formed and is validly existing as a
limited partnership under the Delaware Revised Uniform Limited Partnership
Act; and
2. All of the Common Units offered by means of the Registration
Statement have been duly authorized by the Partnership Agreement and when
(a) the Registration Statement has become effective under the Securities
Act, and (b) the Common Units have been issued and sold as contemplated in
the Registration Statement, the Common Units will be legally issued and
fully paid and non-assessable, except as such non-assessability may be
affected by 17-607 of the Delaware Revised Uniform Limited Partnership Act.
3. When (a) the Registration Statement has become effective under the
Securities Act, (b) the terms of any Debt Securities and of their issuance
and sale have been duly established in conformity with the Indenture so as
not to violate any applicable law or result in a default under or breach of
any agreement or instrument binding upon the Partnership and so as to
comply with any requirements or restriction imposed by any court or
governmental body having jurisdiction over the Partnership, and (c) the
Debt Securities have been duly executed and authenticated in accordance
with the Indenture and issued and sold as contemplated in the Registration
Statement, the Debt Securities will constitute valid and legally binding
obligations of the Partnership and the Co-issuer, subject to bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization,
<PAGE> 2
moratorium and similar laws relating to or affecting creditors' rights
generally and to general equitable principles.
The opinions expressed herein are qualified in the following respects:
(A) We have assumed, without independent verification, that the
certificates for the Common Units will conform to the specimens thereof
examined by us and will have been duly countersigned by a transfer agent
and duly registered by a registrar of the Common Units.
(B) We have assumed that (i) each document submitted to us for review
is accurate and complete, each such document that is an original is
authentic, each such document that is a copy conforms to an authentic
original and all signatures on each such document are genuine, and (ii)
each certificate from governmental officials reviewed by us is accurate,
complete and authentic, and all official public records are accurate and
complete.
(C) This opinion is limited in all respects to federal laws and the
Delaware Revised Uniform Limited Partnership Act.
We are rendering this opinion as of the time the Registration Statement
becomes effective. We hereby consent to the use of our name in the Registration
Statement and to the filing of this opinion as an exhibit to the Registration
Statement. This consent does not constitute an admission that we are "experts"
within the meaning of such term as used in the Securities Act of 1933.
/s/ VINSON & ELKINS L.L.P.
2
<PAGE> 1
EXHIBIT 8
[VINSON & ELKINS LETTERHEAD]
August 30, 1999
EOTT Energy Partners, L.P.
1330 Post Oak Boulevard
Houston, Texas 77056
Gentlemen:
We have acted as counsel to EOTT Energy Partners, L.P., a Delaware limited
partnership (the "Partnership"), in connection with the offer and sale of units
representing limited partner interests in the Partnership (the "Common Units")
pursuant to a Registration Statement, as amended, on Form S-3 (the "Registration
Statement") originally filed with the Securities and Exchange Commission under
the Securities Act of 1933 on July 2, 1999. Capitalized terms not defined herein
shall have the meanings ascribed to them in the Amended and Restated Agreement
of Limited Partnership of EOTT Energy Partners, L.P. (the "Partnership
Agreement") filed as an exhibit to the Registration Statement.
The Partnership owns a 99% limited partner interest in EOTT Energy
Operating Limited Partnership ("EEOLP"), a Delaware limited partnership, which
in turn owns 99% limited partnership interests in each of EOTT Energy Pipeline
Limited Partnership ("EEPLP"), a Delaware limited partnership, and EOTT Energy
Canada Limited Partnership ("EECLP" and, together with EEOLP and EEPLP, the
"Operating Limited Partnerships"), a Delaware limited partnership. EOTT Energy
Corp., (the "General Partner") a Delaware corporation, owns a 1% general partner
interest in the Partnership and a 1% general partner interest in each of the
Operating Limited Partnerships. Unless the context otherwise requires,
references to Partnership are references to both the Partnership and the
Operating Limited Partnerships.
You have requested our opinion that (i) each of the Partnership and the
Operating Limited Partnerships will be classified as a partnership for federal
income tax purposes and (ii) each beneficial owner of Common Units will be
treated as a partner of the Partnership for federal income tax purposes. In
addition, you have asked us to review the description of the principal federal
income tax consequences that should arise from the purchase, ownership and
disposition of Common Units found in the "Tax Considerations" section of the
Registration Statement.
In connection with the foregoing request, the Partnership and the General
Partner have the following representations with respect to the Partnership and
the Operating Limited Partnerships:
(a) Neither the Partnership nor any of the Operating Limited
Partnerships has elected or will elect to be treated as an association
taxable as a corporation;
(b) The Partnership and each of the Operating Limited Partnerships has
been and will continue to be operated in accordance with (i) all applicable
partnership statutes, (ii) its respective partnership agreement, and (iii)
its description in the Registration Statement;
(c) Except as otherwise required by section 704 of the Code and
regulations promulgated thereunder, the General Partner has had and will
have, in the aggregate, an interest in each material item of income, gain,
loss, deduction or credit of the Partnership equal to at least 1% at all
times during the existence of the Partnership;
(d) The General Partner has and will maintain, in the aggregate, a
minimum capital account balance in the Partnership equal to 1% of the total
positive capital account balances of the Partnership;
(e) For each taxable year, less than 10% of the gross income of the
Partnership will be derived from sources other than (i) the exploration,
development, mining or production, processing, refining, transportation or
marketing of any mineral or natural resource including oil, gas or products
thereof,
<PAGE> 2
and naturally occurring carbon dioxide or (ii) other items of income as to
which we have opined or will opine will be "qualifying income" within the
meaning of section 7704(d) of the Code.
Based upon the foregoing representations and covenants, the General
Partner's continued participation (or the participation of another party
satisfying the foregoing representations and covenants) as general partner of
the Partnership and the Code, existing regulations thereunder, published rulings
and judicial decisions currently outstanding, it is our opinion that (i) each of
the Partnership and the Operating Limited Partnerships will be classified as a
partnership for federal income tax purposes, and (ii) each beneficial owner of
Common Units will be treated as a partner of the Partnership for federal income
tax purposes. As used in this opinion, the term "beneficial owner of Common
Units" refers to (a) the assignees of Common Units who have executed and
delivered Transfer Applications and are awaiting admission as limited partners,
and (b) unitholders whose Common Units are held in street name or by nominee and
who have the right to direct the nominee in the exercise of all substantive
rights attendant to the ownership of their Common Units.
In addition, we have reviewed the description of the principal federal
income tax consequences of the purchase, ownership and disposition of Common
Units contained in the "Tax Considerations" section of the Registration
Statement and, except as otherwise noted therein, all statements contained in
such description relating to matters of law and legal conclusions reflect our
opinion.
Finally, based on our review of the Registration Statement, we have
concluded that the "Tax Considerations" section of the Registration Statement
addresses all material tax consequences to unitholders who are individual
citizens or residents of the United States.
We are rendering this opinion as of the time the Registration Statement
becomes effective. We hereby consent to the use of our name in the Registration
Statement and to the filing of this opinion as an exhibit to the Registration
Statement. This consent does not constitute an admission that we are "experts"
within the meaning of such term as used in the Securities Act of 1933.
/s/ VINSON & ELKINS L.L.P.
2
<PAGE> 1
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------- -----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------- ------- ------- -------- ------- -------- -----------
(PRO FORMA)
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS:
Net Income (Loss)............ $ 6,463 $(2,997) $(4,067) $(14,399) $28,809 $(61,433) $19,688
Add:
(Income) Loss from
discontinued
operations............ -- -- -- -- -- 65,838 (4,809)
Extraordinary loss...... -- -- -- -- -- 1,315 --
Cumulative effect of
accounting change..... (1,747) -- -- -- -- -- --
Fixed Charges........... 15,622 5,323 13,803 10,094 7,092 6,530 5,909
Less:
Capitalized interest.... -- -- -- -- -- -- --
------- ------- ------- -------- ------- -------- -------
Total earnings............. $20,338 $ 2,326 $ 9,736 $ (4,305) $35,901 $ 12,250 $20,788
======= ======= ======= ======== ======= ======== =======
FIXED CHARGES
Interest expenses............ $13,820 $ 3,823 $10,165 $ 6,661 $ 3,659 $ 3,930 $ 4,176
Portion of rental expense
representing interest...... 1,802 1,500 3,638 3,433 3,433 2,600 1,733
------- ------- ------- -------- ------- -------- -------
Total fixed charges........ $15,622 $ 5,323 $13,803 $ 10,094 $ 7,092 $ 6,530 $ 5,909
======= ======= ======= ======== ======= ======== =======
RATIO OF EARNINGS TO FIXED
CHARGES(1)................. $ 1.30 N/A N/A N/A $ 5.06 $ 1.88 $ 3.52
======= ======= ======= ======== ======= ======== =======
</TABLE>
- ---------------
(1) Earnings were insufficient to cover fixed charges for the six months ended
June 30, 1998 by $2,997,000 and for the years ended December 31, 1998 and
1997 by $4,067,000 and $14,399,000, respectively.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference into this registration statement on Form S-3 of our report dated
February 15, 1999 included in EOTT Energy Partners, L.P.'s Form 10-K for the
year ended December 31, 1998 and to all references to our Firm included in this
registration statement.
Arthur Andersen LLP
Houston, Texas
August 30, 1999
