THIRD AMENDED AND RESTATED
AGREEMENT
OF
LIMITED PARTNERSHIP
OF
FERRELLGAS PARTNERS, L.P.
TABLE OF CONTENTS
ARTICLE I
ORGANIZATIONAL MATTERS
Section 1.1 Formation and Continuation......................................2
Section 1.2 Name............................................................2
Section 1.3 Registered Office; Principal Office.............................3
Section 1.4 Power of Attorney...............................................3
Section 1.5 Term............................................................4
Section 1.6 Possible Restrictions on Transfer...............................4
ARTICLE II
DEFINITIONS.................................5
ARTICLE III
PURPOSE
Section 3.1 Purpose and Business...........................................26
Section 3.2 Powers.........................................................27
ARTICLE IV
CAPITAL CONTRIBUTIONS
Section 4.1 Initial Contributions.............................................27
Section 4.2 Contributions by the General Partner and the Initial Limited
Partners; Contributions on the WNGL Closing Date and issuance
of General Partner Units..........................................27
Section 4.3 Issuances of Additional Units and Other Securities................28
Section 4.4 Limited Preemptive Rights.........................................30
Section 4.5 Capital Accounts..................................................30
Section 4.6 Interest..........................................................33
Section 4.7 No Withdrawal.....................................................33
Section 4.8 Loans from Partners...............................................33
Section 4.9 No Fractional Units...............................................33
Section 4.10 Splits and Combinations..........................................33
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
Section 5.1 Allocations for Capital Account Purposes..........................34
Section 5.2 Allocations for Tax Purposes......................................42
Section 5.3 Requirement and Characterization of Distributions.................44
Section 5.4 Distributions of Cash from Operations and Additional Senior Units.44
Section 5.5 Distributions of Cash from Interim Capital Transactions...........48
Section 5.6 Adjustment of Senior Unit Liquidation Preference, Senior Unit
Distribution, Minimum Quarterly Distribution and Target Distribution
Levels............................................................49
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Section 5.7 Special Provisions Relating to the Senior Units...................50
Section 5.8 Special Provisions Relating to the Special Limited Partners.......52
Section 5.9 Special Provision Relating to FCI Common Units....................53
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
Section 6.1 Management........................................................53
Section 6.2 Certificate of Limited Partnership................................55
Section 6.3 Restrictions on General Partner's Authority.......................55
Section 6.4 Reimbursement of the General Partner..............................56
Section 6.5 Outside Activities................................................57
Section 6.6 Loans to and from the General Partner; Contracts with Affiliates..58
Section 6.7 Indemnification...................................................59
Section 6.8 Liability of Indemnitees..........................................61
Section 6.9 Resolution of Conflicts of Interest...............................61
Section 6.10 Other Matters Concerning the General Partner.....................63
Section 6.11 Title to Partnership Assets......................................63
Section 6.12 Purchase or Sale of Units........................................64
Section 6.13 Registration Rights of Ferrellgas and its Affiliates.............64
Section 6.14 Reliance by Third Parties........................................66
ARTICLE VII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 7.1 Limitation of Liability...........................................67
Section 7.2 Management of Business............................................67
Section 7.3 Outside Activities................................................67
Section 7.4 Return of Capital.................................................67
Section 7.5 Rights of Limited Partners Relating to the Partnership............67
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 8.1 Records and Accounting............................................68
Section 8.2 Fiscal Year.......................................................69
Section 8.3 Reports...........................................................69
ARTICLE IX
TAX MATTERS
Section 9.1 Preparation of Tax Returns........................................69
Section 9.2 Tax Elections.....................................................69
Section 9.3 Tax Controversies.................................................70
Section 9.4 Organizational Expenses...........................................70
Section 9.5 Withholding.......................................................70
Section 9.6 Entity-Level Taxation.............................................70
Section 9.7 Entity-Level Arrearage Collections................................70
Section 9.8 Opinions of Counsel...............................................71
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ARTICLE X
CERTIFICATES
Section 10.1 Certificates.....................................................71
Section 10.2 Registration, Registration of Transfer and Exchange..............72
Section 10.3 Mutilated, Destroyed, Lost or Stolen Certificates................72
Section 10.4 Record Holder....................................................73
ARTICLE XI
TRANSFER OF INTERESTS
Section 11.1 Transfer.........................................................74
Section 11.2 Transfer of the General Partner Interest.........................74
Section 11.3 Transfer of Units (other than General Partner Units).............75
Section 11.4 Restrictions on Transfers........................................75
Section 11.5 Citizenship Certificates; Non-citizen Assignees..................75
Section 11.6 Redemption of Interests..........................................76
Section 11.7 Transfer of IDRs.................................................77
ARTICLE XII
ADMISSION OF PARTNERS
Section 12.1 Admission of Initial Limited Partners............................78
Section 12.2 Admission of Substituted Limited Partners........................78
Section 12.3 Admission of Successor General Partner...........................78
Section 12.4 Admission of Additional Limited Partners.........................79
Section 12.5 Amendment of Agreement and Certificate of Limited Partnership....79
ARTICLE XIII
WITHDRAWAL OR REMOVAL OF PARTNERS
Section 13.1 Withdrawal of the General Partner................................79
Section 13.2 Removal of the General Partner...................................81
Section 13.3 Interest of Departing Partner and Successor General Partner......81
Section 13.4 Withdrawal of Limited Partners...................................83
ARTICLE XIV
DISSOLUTION AND LIQUIDATION
Section 14.1 Dissolution......................................................83
Section 14.2 Continuation of the Business of the Partnership after Dissolution83
Section 14.3 Liquidation......................................................84
Section 14.4 Distributions in Kind............................................85
Section 14.5 Cancellation of Certificate of Limited Partnership...............85
Section 14.6 Reasonable Time for Winding Up...................................86
Section 14.7 Return of Capital Contributions..................................86
Section 14.8 Capital Account Restoration......................................86
Section 14.9 Waiver of Partition..............................................86
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ARTICLE XV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
Section 15.1 Amendment to be Adopted Solely by General Partner................86
Section 15.2 Amendment Procedures.............................................88
Section 15.3 Amendment Requirements...........................................88
Section 15.4 Meetings.........................................................89
Section 15.5 Notice of a Meeting..............................................89
Section 15.6 Record Date......................................................89
Section 15.7 Adjournment......................................................89
Section 15.8 Waiver of Notice; Approval of Meeting; Approval of Minutes.......89
Section 15.9 Quorum...........................................................90
Section 15.10 Conduct of Meeting..............................................90
Section 15.11 Action Without a Meeting........................................91
Section 15.12 Voting and Other Rights.........................................91
Section 15.13 Voting Rights of Senior Units...................................92
Section 15.14 Amendment of Arrearage Requirements.............................92
ARTICLE XVI
MERGER
Section 16.1 Authority........................................................92
Section 16.2 Procedure for Merger or Consolidation............................93
Section 16.3 Approval by Holders of Common Units of Merger or Consolidation...94
Section 16.4 Certificate of Merger............................................94
Section 16.5 Effect of Merger.................................................95
ARTICLE XVII
RIGHT TO ACQUIRE UNITS
Section 17.1 Right to Acquire Units...........................................95
Section 17.2 Right to Acquire Senior Units....................................96
ARTICLE XVIII
GENERAL PROVISIONS
Section 18.1 Addresses and Notices............................................97
Section 18.2 References.......................................................98
Section 18.3 Pronouns and Plurals.............................................98
Section 18.4 Further Action...................................................98
Section 18.5 Binding Effect...................................................98
Section 18.6 Integration......................................................98
Section 18.7 Creditors........................................................98
Section 18.8 Waiver...........................................................98
Section 18.9 Counterparts.....................................................98
Section 18.10 Applicable Law..................................................99
Section 18.11 Invalidity of Provisions .......................................99
EXHIBIT A - Certificate Evidencing Common Units
EXHIBIT B - Certificate Evidencing Senior Unitss
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THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
FERRELLGAS PARTNERS, L.P.
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
FERRELLGAS PARTNERS, L.P., dated as of April 6, 2001, is entered into by and
among Ferrellgas, Inc., a Delaware corporation, as the General Partner, the
Persons who are Limited Partners in the Partnership as of the date hereof and
those Persons who become Partners in the Partnership or parties hereto as
provided herein. In consideration of the covenants, conditions and agreements
contained herein, the parties hereto hereby agree as follows:
RECITALS:
WHEREAS, the General Partner and the organizational Limited Partner
organized the Partnership as a Delaware limited partnership pursuant to an
Agreement of Limited Partnership dated as of July 5, 1994 (the "Original
Agreement");
WHEREAS, the Partnership, the Operating Partnership and Williams Natural
Gas Liquids, Inc., a Delaware corporation, entered into a Purchase Agreement
dated November 7, 1999, relating to the sale of Thermogas, L.L.C. to the
Partnership in consideration, in part, for the issuance of Senior Units, as
defined below;
WHEREAS, to effect the transactions contemplated by the WNGL Purchase
Agreement and other matters, the Original Agreement was amended and restated
(the "Amended and Restated Agreement");
WHEREAS, on May 14, 2000, the General Partner made certain amendments to
the Amended and Restated Agreement with the consent of the holder of all of the
Senior Units, as allowed by the Amended and Restated Agreement;
WHEREAS, on June 5, 2000, the holders of Common Units approved a proposal
at a special meeting of such holders to amend the definition of "Outstanding"
under the Amended and Restated Agreement; and
WHEREAS, on June 5, 2000, the General Partner amended and restated the
Amended and Restated Agreement (the "Second Amended and Restated Agreement") to
convert the General Partner's percentage interest in the partnership into
General Partner Units (as defined below) and make related amendments, which
amendment and restatement was made pursuant to Section 15.1 of the Amended and
Restated Agreement that provides that the General Partner may amend the Amended
and Restated Agreement without the consent of any Limited Partner to reflect a
change that, in the sole discretion of the General Partner, does not adversely
affect the Limited Partners in any material respect;
NOW, THEREFORE, the Second Amended and Restated Agreement is hereby amended
to reflect (a) certain amendments to the Second Amended and Restated Agreement
made with the consent in writing of the holder of all of the Senior Units, as
allowed by the Second Amended and
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Restated Agreement, (b) certain amendments made pursuant to Section 15.1 of
the Second Amended and Restated Agreement that provides that the General Partner
may amend the Second Amended and Restated Agreement without the consent of any
Limited Partner to reflect a change that, in the sole discretion of the General
Partner, does not adversely affect the Limited Partners in any material respect,
and (c) the addition of Sections 5.4 (a), (b) and (c) proposed by the General
Partner to allow the Common Units held by FCI, as defined below, to defer
specified payments of Available Cash, as defined below, which amendments were
consented to in writing by the Limited Partners owning not less than the minimum
percentage of the Outstanding Units that would be necessary to authorize or take
such action at a meeting at which all the Limited Partners entitled to vote
thereon were present and voted in accordance with Section 15.11 of the Second
Amended and Restated Agreement, and, which addition of Sections 5.4(a), (b) and
(c) shall be effective as of the end of the Information Statement Period, as
defined below, and, as so amended, is restated in its entirety as follows:
ARTICLE I
ORGANIZATIONAL MATTERS
Section 1.1 Formation and Continuation.
--------------------------
(a) The General Partner and the organizational Limited Partner previously
formed the Partnership as a limited partnership pursuant to the provisions of
the Delaware Act. The General Partner hereby amends and restates the Second
Amended and Restated Agreement in its entirety to continue the Partnership as a
limited partnership pursuant to the provisions of the Delaware Act and to set
forth the rights and obligations of the Partners and certain matters related
thereto. This amendment and restatement shall become effective on the date of
this Agreement. Except as expressly provided to the contrary in this Agreement,
the rights and obligations of the Partners and the administration, dissolution
and termination of the Partnership shall be governed by the Delaware Act. All
Partnership Interests shall constitute personal property of the owner thereof
for all purposes.
(b) In connection with the formation of the Partnership, Ferrellgas was
admitted as a general partner of the Partnership, and the organizational Limited
Partner was admitted as a limited partner of the Partnership. As of the Initial
Closing Date, the interest in the Partnership of the organizational Limited
Partner was terminated and the organizational Limited Partner withdrew as a
limited partner of the Partnership.
Section 1.2 Name. The name of the Partnership is "Ferrellgas Partners,
L.P." The Partnership's business may be conducted under any other name or names
deemed necessary or appropriate by the General Partner, including, without
limitation, the name of the General Partner. The words "Limited Partnership,"
"L.P.," "Ltd." or similar words or letters shall be included in the
Partnership's name where necessary for the purposes of complying with the laws
of any jurisdiction that so requires. The General Partner in its sole discretion
may change the name of the Partnership at any time and from time to time and
shall notify the Limited Partners of such change in the next regular
communication to the Limited Partners. 24403075.11 31501 1113C 00649490
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Section 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 shall be located at, and the address of the General Partner
shall be, One Liberty Plaza, Liberty, Missouri 64068, or such other place as the
General Partner may from time to time designate by notice to the Limited
Partners. The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the General Partner deems necessary
or appropriate.
Section 1.4 Power of Attorney.
-----------------
(a) Each Limited Partner and each Assignee hereby constitutes and
appoints each of the General Partner and, if a Liquidator shall have been
selected pursuant to Section 14.3, the Liquidator severally (and any successor
to either thereof by merger, transfer, assignment, election or otherwise) and
each of their authorized officers and attorneys-in-fact, with full power of
substitution, as his true and lawful agent and attorney-in-fact, with full power
and authority in his name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (A) all certificates, documents and other
instruments (including, without limitation, this Agreement and the
Certificate of Limited Partnership and all amendments or restatements
thereof) that the General Partner or the Liquidator deems necessary or
appropriate to form, qualify or continue the existence or qualification of
the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) in the State of Delaware and in
all other jurisdictions in which the Partnership may conduct business or
own property; (B) all certificates, documents and other instruments that
the General Partner or the Liquidator deems necessary or appropriate to
reflect, in accordance with its terms, any amendment, change, modification
or restatement of this Agreement; (C) all certificates, documents and other
instruments (including, without limitation, conveyances and a certificate
of cancellation) that the General Partner or the Liquidator deems necessary
or appropriate to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement; (D) all certificates,
documents and other instruments relating to the admission, withdrawal,
removal or substitution of any Partner pursuant to, or other events
described in, Article XI, XII, XIII or XIV or the Capital Contribution of
any Partner; (E) all certificates, documents and other instruments relating
to the determination of the rights, preferences and privileges of any class
or series of Units or other Partnership Securities issued pursuant to
Section 4.2; and (F) all certificates, documents and other instruments
(including, without limitation, agreements and a certificate of merger)
relating to a merger or consolidation of the Partnership pursuant to
Article XVI; and
(ii) execute, swear to, acknowledge, deliver, file and record all
ballots, consents, approvals, waivers, certificates, 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
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the terms or intent of this Agreement; provided, that when required by
Section 15.3 or any other provision of this Agreement that establishes a
percentage of the Limited Partners or of the Limited Partners of any class
or series required to take any action, the General Partner or the
Liquidator may exercise the power of attorney made in this Section
1.4(a)(ii) only after the necessary vote, consent or approval of the
Limited Partners or of the Limited Partners of such class or series, as
applicable.
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 XV or
as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and not
be affected by the subsequent death, incompetency, disability, incapacity,
dissolution, bankruptcy or termination of any Limited Partner or Assignee and
the transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Interest and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or the Liquidator acting in good faith pursuant to such power of
attorney; and each such Limited Partner or Assignee hereby waives any and all
defenses that may be available to contest, negate or disaffirm the action of the
General Partner or the Liquidator taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within 15 days after receipt of the General
Partner's or the Liquidator's request therefor, such further designation, powers
of attorney and other instruments as the General Partner or the Liquidator deems
necessary to effectuate this Agreement and the purposes of the Partnership.
Section 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 July 31, 2084,
or until the earlier dissolution of the Partnership in accordance with the
provisions of Article XIV.
Section 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's being taxed as an entity for federal income tax purposes, then,
the General Partner may impose such restrictions on the transfer of Units or
Partnership Interests as may be required, in the Opinion of Counsel, to prevent
the Partnership from being taxed as an association taxable as a corporation or
otherwise as an entity for federal income tax purposes, including, without
limitation, making such amendments to this Agreement as the General Partner in
its sole discretion may determine to be necessary or appropriate to impose such
restrictions, provided, that any such amendment to this Agreement that would
result in the delisting or suspension of trading of any class of Units on any
National Securities Exchange on which such class of Units is then traded must be
approved by the holders of at least two-thirds of the Outstanding Units of such
class (excluding the vote in respect of Units held by the General Partner and
its Affiliates).
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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.
"Acquisition" means any transaction in which the Partnership
or the Operating Partnership acquires (through an asset acquisition,
merger, stock acquisition or other form of investment) control over all
or a portion of the assets, properties or business of another Person
for the purpose of increasing the operating capacity of the Partnership
and the Operating Partnership, taken as a whole, from the operating
capacity of the Partnership and the Operating Partnership, taken as a
whole, existing immediately prior to such transaction.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.4 and who is
shown as such on the books and records of the Partnership.
"Additional Senior Units" has the meaning assigned to such term
in Section 5.4.
"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. The "Adjusted Capital Account" in
respect of a Common Unit, a General Partner Unit, a Senior Unit, an IDR
or any other specified interest in the Partnership shall be the amount
which such Adjusted Capital Account would be if such Common Unit,
General Partner Unit, Senior Unit or IDR or other interest in the
Partnership were the only interest in the Partnership held by a
Partner.
"Adjusted Property" means any property the Carrying Value of
which has been adjusted pursuant to Section 4.5(d)(i) or 4.5(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
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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. 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.
"Amended and Restated Agreement" has the meaning assigned to
such term in the recitals hereto.
"Agreement" means this Third Amended and Restated Agreement of
Limited Partnership of Ferrellgas Partners, L.P., as it may be amended,
supplemented or restated from time to time.
"Amended and Restated Agreement" has the meaning assigned to
such term in the recitals hereto.
"Arrearage" means as to each Quarter within the Arrearage
Period, the excess, if any, of (a) the sum of all Available Cash
distributed pursuant to Sections 5.4(a)(ii) through 5.4(a)(vi) or
5.4(b)(ii), as applicable, over (b) the sum of all Available Cash
distributed pursuant to Section 5.4(a)(vii) or Section 5.4(b)(iii), as
applicable, and categorized by Unit or Special Limited Partner for each
Quarter according to the amount of the excess accrued for that Unit or
Special Limited Partner pursuant to each clause of Section 5.4(a) or
Section 5.4(b), as applicable. Upon payment of any amount of the
Arrearage pursuant to Section 5.4(b)(iv) or Section 5.4(c)(iii), that
amount shall no longer be considered an Arrearage.
"Arrearage Period" means the period commencing at the end of
the Information Statement Period, and ending on the earlier of (a)
December 31, 2005, (b) a Change of Control, (c) the occurrence of an
event that causes the dissolution of the Partnership in accordance with
Section 14.1, or (d) the date on which FCI no longer beneficially owns
any FCI Common Units.
"Assignee" means a Non-citizen Assignee or a Person to whom
one or more Units have been transferred in a manner permitted under
this Agreement and who has executed and delivered a Transfer
Application as required by this Agreement, but who has not become a
Substituted Limited Partner.
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"Associate" means, when used to indicate a relationship with
any Person, (i) any corporation or organization of which such Person is
a director, officer or partner or is, directly or indirectly, the owner
of 20% or more of any class of voting stock or other voting interest of
such corporation or organization; (ii) any trust or other estate in
which such Person has at least a 20% beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity; and
(iii) any relative or spouse of such Person, or any relative of such
spouse, who has the same residence as such Person.
"Audit Committee" means a committee of the Board of Directors
of the General Partner composed entirely of two or more directors who
are neither officers nor employees of the General Partner or any of its
Affiliates.
"Available Cash" means, with respect to any Quarter and
without duplication:
(a) the sum of:
(i) all cash receipts of the Partnership during such
Quarter from all sources (including, without limitation,
distributions of cash received from the Operating Partnership
and cash proceeds from Interim Capital Transactions, but
excluding cash proceeds from Termination Capital
Transactions), plus, in the case of the Quarter ending October
31, 1994, the cash balance of the Partnership as of the close
of business on the Initial Closing Date; and
(ii) any reduction with respect to such Quarter in a
cash reserve previously established pursuant to clause (b)(ii)
below (either by reversal or utilization) 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), redemption of Partnership Interests, capital
expenditures, contributions, if any, to the Operating
Partnership and cash distributions to Partners (but only to
the extent that such cash distributions to Partners exceed
Available Cash for the immediately preceding Quarter); and
(ii) any cash reserves established with respect to
such Quarter, and any increase with respect to such Quarter in
a cash reserve previously established pursuant to this clause
(b)(ii) from the level of such reserve at the end of the prior
Quarter, 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 or the Operating Partnership (including, without
limitation, reserves for future capital expenditures), (B) to
provide funds for distributions with respect to Units in
respect of any one or more of the next four Quarters provided,
however, that for so long as any Senior Units are Outstanding,
the General Partner may not establish cash reserves for
distributions pursuant to
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Sections 5.4(a)(ii) through (a)(vii), 5.4(b)(ii) through
(b)(iv), 5.4(c)(ii), 5.4(c)(iii) or 5.4(d)(ii) through (d)(vi)
unless the General Partner has determined that in its judgment
the establishment of such reserves will not prevent the
Partnership from making distributions pursuant to Sections
5.4(a)(i), 5.4(b)(i), 5.4(c)(i) or 5.4(d)(i), as applicable,
with respect to the four Quarters next following the date on
which such cash reserves are to be so established or (C)
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 or the Operating
Partnership is a party or by which any of them is bound or its
assets are subject; provided, however, that for purposes of
determining Available Cash for the Quarter ending October 31,
1994, such Quarter shall be deemed to have commenced on the
Initial Closing Date.
Notwithstanding the foregoing, "Available Cash" with respect to any
Quarter shall not include any cash receipts or reductions in reserves
or take into account any disbursements made or reserves established in
each case after the Liquidation Date. Taxes paid by the Partnership on
behalf of, or amounts withheld with respect to, all or less than all of
the Partners shall not be considered cash disbursements of the
Partnership that reduce Available Cash, but the payment or withholding
thereof shall be deemed to be a distribution of Available Cash to the
Partners other than the Limited Partners holding Senior Units.
Alternatively, in the discretion of the General Partner, such taxes (if
pertaining to all Partners) may be considered to be cash disbursements
of the Partnership which reduce Available Cash, but the payment or
withholding thereof shall not be deemed to be a distribution of
Available Cash to such Partners. Notwithstanding the foregoing, the
payment of taxes by the Partnership on behalf of Limited Partners
holding Senior Units will not satisfy the obligation of the Partnership
to pay the Senior Unit Distribution.
"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 4.5 and the hypothetical balance of such Partner's
Capital Account computed as if it had been maintained strictly in
accordance with federal income tax accounting principles.
"Business Day" means Monday through Friday of each week,
except that a legal holiday recognized as such by the government of the
United States or the states of New York or Missouri shall not be
regarded as a Business Day.
"Capital Account" means the capital account maintained for a
Partner pursuant to Section 4.5.
"Capital Additions and Improvements" means (a) additions or
improvements to the capital assets owned by the Partnership or the
Operating Partnership or (b) the acquisition of existing or the
construction of new capital assets (including, without limitation,
retail distribution outlets, propane tanks, pipeline systems, storage
facilities and related assets),
8
made to increase the operating capacity of the Partnership and the
Operating Partnership, taken as a whole, from the operating capacity of
the Partnership and the Operating Partnership, taken as a whole,
existing immediately prior to such addition, improvement, acquisition
or construction.
"Capital Contribution" means any cash, cash equivalents or the
Net Agreed Value of Contributed Property that a Partner contributes to
the Partnership pursuant to the Contribution Agreement or Sections 4.1,
4.2, 4.3, 13.3(c) or 14.8.
"Capital Interests" means, with respect to any corporation,
any and all shares, participations, rights or other equivalent
interests in the capital of the corporation, and with respect to any
partnership, any and all partnership interests (whether general or
limited) and any other interests or participations that confer on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership.
"Carrying Value" means (a) with respect to a Contributed
Property, the Agreed Value of such property reduced (but not below
zero) by all depreciation, amortization and cost recovery deductions
charged to the Partners' and Assignees' Capital Accounts in respect of
such Contributed Property, and (b) with respect to any other
Partnership property, the adjusted basis of such property for federal
income tax purposes, all as of the time of determination. The Carrying
Value of any property shall be adjusted from time to time in accordance
with Sections 4.5(d)(i) and 4.5(d)(ii) and to reflect changes,
additions or other adjustments to the Carrying Value for dispositions
and acquisitions of Partnership properties, as deemed appropriate by
the General Partner.
"Cash from Interim Capital Transactions" means, at any date,
such amounts of Available Cash as are deemed to be Cash from Interim
Capital Transactions pursuant to Section 5.3.
"Cash from Operations" means, at the close of any Quarter but
prior to the Liquidation Date, on a cumulative basis and without
duplication,
(a) the sum of all cash receipts of the Partnership
and the Operating Partnership during the period since the
Initial Closing Date through such date (including, without
limitation, the cash balance of the Partnership as of the
close of business on the Initial Closing Date, plus an initial
balance of $25 million, excluding any cash proceeds from any
Interim Capital Transactions (except to the extent specified
in Section 5.3) and Termination Capital Transactions),
(b) less the sum of:
(i) all cash operating expenditures of the
Partnership and the Operating Partnership during such
period, including, without limitation, taxes, if any,
and amounts owed to the General Partner as
reimbursement pursuant to Section 6.4,
9
(ii) all cash debt service payments of the
Partnership and the Operating Partnership during such
period (other than payments or prepayments of
principal and premium (A) required by reason of loan
agreements (including, without limitation, covenants
and default provisions therein) or by lenders, in
each case in connection with sales or other
dispositions of assets or (B) made in connection with
refinancings or refundings of indebtedness with the
proceeds from new indebtedness or from the sale of
equity interests, provided, that any payment or
prepayment of principal and premium, whether or not
then due, shall be deemed, at the election and in the
discretion of the General Partner, to be refunded or
refinanced by any indebtedness incurred or to be
incurred by the Partnership or the Operating
Partnership simultaneously with or within 180 days
prior to or after such payment or prepayment to the
extent of the principal amount of such indebtedness
so incurred),
(iii) all cash capital expenditures of the
Partnership and the Operating Partnership during such
period, including, without limitation, cash capital
expenditures made in respect of Maintenance Capital
Expenditures, but excluding (A) cash capital
expenditures made in respect of Acquisitions and
Capital Additions and Improvements and (B) cash
expenditures made in payment of transaction expenses
relating to Interim Capital Transactions,
(iv) any cash reserves of the Partnership or
the Operating Partnership outstanding as of such date
that the General Partner deems in its reasonable
discretion to be necessary or appropriate to provide
for the future cash payment of items of the type
referred to in clauses (i) through (iii) of this
sentence, and
(v) any cash reserves of the Partnership or
the Operating Partnership outstanding as of such date
that the General Partner deems in its reasonable
discretion to be necessary or appropriate to provide
funds for distributions with respect to Units in
respect of any one or more of the next four Quarters,
all as determined on a consolidated basis and after taking into account
the General Partner's interest therein attributable to its general
partner interest in the Operating Partnership. Where cash capital
expenditures are made in part in respect of Acquisitions or Capital
Additions and Improvements and in part for other purposes, the General
Partner's good faith allocation thereof between the portion made for
Acquisitions or Capital Additions and Improvements and the portion made
for other purposes shall be conclusive. Taxes paid by the Partnership
on behalf of, or amounts withheld with respect to, all or less than all
of the Partners shall not be considered cash operating expenditures of
the Partnership that reduce Cash from Operations, but the payment or
withholding thereof shall be deemed to be a distribution of Available
Cash to such Partners. Alternatively, in the discretion of the General
Partner, such taxes (if pertaining to all Partners) may be considered
to be cash operating expenditures of the Partnership which reduce Cash
from Operations, but the payment or withholding thereof shall not be
deemed to be a distribution of Available Cash to such Partners.
10
"Cause" means a court of competent jurisdiction has entered a
final, non-appealable judgment finding the General Partner liable for
actual fraud, gross negligence or willful or wanton misconduct in its
capacity as general partner of the Partnership.
"Ceiling Quarterly Distribution" means the highest
distribution per Quarter made for any of the immediately preceding four
Quarters per Common Unit (other than an FCI Common Unit) pursuant to
Section 5.4, or if the Cumulative FCI Common Unit Arrearage is equal to
zero (determined after giving effect to the application of Section 5.4
for the current Quarter), then the distribution to be made for the
current Quarter per Common Unit as declared by the General Partner;
provided, however that in no case may the Ceiling Quarterly
Distribution be less than the Minimum Quarterly Distribution.
"Certificate" means a certificate (a) substantially in the
form of Exhibit A to this Agreement with respect to the Common Units,
(b) substantially in the form of Exhibit B to this Agreement with
respect to the Senior Units, (c) issued in global or book-entry form in
accordance with the rules and regulations of the Depository, or (d) in
such other form as may be adopted by the General Partner in its sole
discretion, issued by the Partnership evidencing ownership of one or
more Common Units or Senior Units, as the case may be, or a
certificate, in such form as may be adopted by the General Partner in
its sole discretion, issued by the Partnership evidencing ownership of
one or more other Units.
"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.
"Change of Control" means (a) the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the
Partnership or the Operating Partnership to any Person or group (as
such term is used in Section 13(d)(3) of the Exchange Act) other than
James E. Ferrell, the Related Parties and any Person of which James E.
Ferrell and the Related Parties beneficially own in the aggregate 51%
or more of the outstanding voting stock (or if such Person is a
partnership, 51% or more of the general partner interests), (b) the
liquidation or dissolution of the Partnership, the Operating
Partnership or the General Partner, (c) the occurrence of any
transaction, the result of which is that James E. Ferrell and the
Related Parties beneficially own in the aggregate, directly or
indirectly, less than 51% of the outstanding voting stock entitled to
vote for the election of directors of the General Partner and (d) the
occurrence of any transaction, the result of which is that the General
Partner is no longer the sole general partner of the Partnership or the
Operating Partnership.
"Citizenship Certification" means a properly completed
certificate in such form as may be specified by the General Partner by
which an Assignee or a Limited Partner certifies that he (and if he is
a nominee holding for the account of another Person, that to the best
of his knowledge such other Person) is an Eligible Citizen.
"Closing Price" for any day means the last sale price on such
day, regular way, or in case no such sale takes place on such day, the
average of the closing bid and asked prices on such day, regular way,
in either case as reported in the principal consolidated transaction
11
reporting system with respect to securities listed on the principal
National Securities Exchange on which the Units of such class are
listed or admitted to trading or, if the Units of such class are not
listed or admitted to trading on any National Securities Exchange, the
last quoted price on such day or, if not so quoted, the average of the
high bid and low asked prices on such day in the over the counter
market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotation System or such other system then in use, or if
on any such day the Units of such class are not quoted by any such
organization, the average of the closing bid and asked prices on such
day as furnished by a professional market maker making a market in the
Units of such class selected by the Board of Directors of the General
Partner, or if on any such day no market maker is making a market in
the Units of such class, the fair value of such Units on such day as
determined reasonably and in good faith by the Board of Directors of
the General Partner.
"Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time, as interpreted by the applicable
regulations thereunder. Any reference herein to a specific section or
sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
"Combined Interest" has the meaning assigned to such term in
Section 13.3(a).
"Commission" means the Securities and Exchange Commission.
"Common Unit" means a Unit representing a fractional part of
the Partnership Interests of all Limited Partners and Assignees and
having the rights and obligations specified with respect to Common
Units in this Agreement. The term "Common Unit" shall specifically
include all FCI Common Units and, except with respect to certain
allocations and distributions to the extent specified in Article V or
pursuant to Section 15.14(a), the FCI Common Units shall not be treated
as a separate class or series of Units or Partnership Securities from
other Common Units under any provision of this Agreement, specifically
including, but not limited to, any voting purpose, right or privilege.
"Contributed Property" means each property or other asset, in
such form as may be permitted by the Delaware Act, but excluding cash,
contributed to the Partnership. Once the Carrying Value of a
Contributed Property is adjusted pursuant to Section 4.5(d), such
property shall no longer constitute a Contributed Property, but shall
be deemed an Adjusted Property.
"Contribution Agreement" means that certain Contribution,
Conveyance and Assumption Agreement, dated as of the Initial Closing
Date, between Ferrellgas, the Partnership and the Operating
Partnership, together with the additional conveyance documents and
instruments contemplated or referenced thereunder.
"Cumulative FCI Common Unit Arrearage" means, with respect to
all FCI Common Units, whenever issued, and as of the end of any
Quarter, the excess, if any, of (a) the sum resulting from adding
together the FCI Common Unit Arrearage as to all FCI Common Units for
each of the Quarters within the Arrearage Period including the current
Quarter over (b) the sum of any distributions theretofore made pursuant
to Sections 5.4(b)(iv) and 5.4(c)(iii)
12
with respect to such FCI Common Units (determined after giving effect
to any distributions to be made in the current Quarter).
"Curative Allocation" means any allocation of an item of
income, gain, deduction, loss or credit pursuant to the provisions of
Section 5.1(d)(xi).
"Current Market Price" as of any date of any class of Units
listed or admitted to trading on any National Securities Exchange means
the average of the daily Closing Prices per Unit of such class for the
20 consecutive Trading Days immediately prior to such date.
"Delaware Act" means the Delaware Revised Uniform Limited
Partnership Act, 6 Del C.ss. 17-101, et seq., as amended, supplemented
or restated from time to time, and any successor to such statute.
"Departing Partner" means a former General Partner from and
after the effective date of any withdrawal or removal of such former
General Partner pursuant to Section 13.1 or 13.2.
"Depositary" means with respect to any Units issued in global
or book-entry form, The Depository Trust Company and its successors and
permitted assigns.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"Eligible Citizen" means a Person qualified to own interests
in real property in jurisdictions in which the Partnership or the
Operating Partnership does business or proposes to do business from
time to time, and whose status as a Limited Partner or Assignee does
not or would not subject the Partnership or the Operating Partnership
to a substantial risk of cancellation or forfeiture of any of its
properties or any interest therein.
"Event of Withdrawal" has the meaning assigned to such term in
Section 13.1(a).
"FCI" means Ferrell Companies, Inc., a Kansas corporation.
"FCI Common Unit" means any Common Units beneficially owned by
FCI or the last FCI Common Unit owned by another holder specified in
Section 4.5(c). Any FCI Common Unit Outstanding and no longer
beneficially owned by FCI (other than the last FCI Common Unit
specified in Section 4.5(c)) shall have, as a substantive manner in the
hands of a subsequent holder like intrinsic economic and federal income
tax characteristics in all material respects, to the intrinsic economic
and federal income tax characteristics of a Common Unit then
Outstanding.
"FCI Common Unit Arrearage" means, with respect to any FCI
Common Unit and as to each Quarter within the Arrearage Period, the
excess, if any, of (a) the sum of all Available Cash distributed for
that Quarter with respect to a Common Unit (other than an
13
FCI Common Unit) then Outstanding pursuant to Sections 5.4(a)(ii)
through 5.4(a)(vi) or Section 5.4(b)(ii), as applicable, over (b) the
sum of all Available Cash distributed for that Quarter with respect to
an FCI Common Unit pursuant to Section 5.4(a)(vii) or Section
5.4(b)(iii), as applicable.
"FCI ESOT" means the employee stock ownership trust related to
the employee stock ownership plan of FCI organized under Section
4975(e)(7) of the Code.
"Ferrellgas" means Ferrellgas, Inc., a Delaware corporation
and a wholly owned subsidiary of FCI.
"First Liquidation Target Amount" has the meaning assigned to
such term in Section 5.1(c)(i)(D).
"First Target Distribution" means $0.55 per Unit (or, with
respect to the period commencing on the Initial Closing Date and ending
on October 31, 1994, the product of $0.55 multiplied by a fraction of
which the numerator is the number of days in such period and of which
the denominator is 92), subject to adjustment in accordance with
Sections 5.6(b) and (c) and Section 9.6.
"General Partner" means Ferrellgas, and its successors as
general partner of the Partnership.
"General Partner Interest" means the ownership interest of the
General Partner in the Partnership (in its capacity as a general
partner without reference to any other Partnership Interests in the
Partnership held by it) which is evidenced by General Partner Units and
includes any and all benefits to which the General Partner is entitled
as provided in this Agreement, together with all obligations of the
General Partner to comply with the terms and provisions of this
Agreement.
"General Partner Unit" means a Unit representing a fractional
part of the General Partner Interest and having the rights and
obligations specified with respect to the General Partner Units in this
Agreement.
"Group" means a Person that with or through any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting (except
voting pursuant to a revocable proxy or consent given to such Person in
response to a proxy or consent solicitation made to 10 or more Persons)
or disposing of any Partnership Securities with any other Person that
beneficially owns, or whose Affiliates or Associates beneficially own,
directly or indirectly, Partnership Interests.
"Holder" has the meaning assigned to such term in Section
6.13(a).
14
"IDR" means a Partnership Interest issued to Ferrellgas in
connection with the transfer of its assets to the Partnership pursuant
to Section 4.2, which Partnership Interest shall confer upon the holder
thereof only the rights and obligations specifically provided in this
Agreement with respect to IDRs (and no other rights otherwise available
to holders of a Partnership Interest).
"Incentive Distribution" means any amount of cash distributed
to the Special Limited Partners, pursuant to Section 5.4.
"Indemnified Persons" has the meaning assigned to such term in
Section 6.13(c).
"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.
"Information Statement Period" means the period that commences
on the mailing of an Information Statement to the holders of the Common
Units (other than the FCI Common Units) that informs those holders of
FCI's consent to the addition of Sections 5.4(a), (b) and (c), which
period ends twenty (20) days after the commencement of the mailing.
"Initial Closing Date" means July 5, 1994.
"Initial Limited Partners" means Ferrellgas (with respect to
the Common Units it owned) and the Underwriters.
"Initial Offering" means the initial offering and sale of
Common Units to the public, as described in the Registration Statement.
"Initial Unit Price" means (a) with respect to the Common
Units, $21.00 or (b) with respect to any other class or series of
Units, the price per Unit at which such class or series of Units is
initially sold by the Partnership, as determined by the General
Partner, in each case adjusted as the General Partner determines to be
appropriate to give effect to any distribution, subdivision or
combination of Units.
"Interim Capital Transactions" means (a) borrowings,
refinancings or refundings of indebtedness and sales of debt securities
(other than for working capital purposes and other than for items
purchased on open account in the ordinary course of business) by the
Partnership or the Operating Partnership, (b) sales of equity interests
(including Common Units sold to the Underwriters pursuant to the
exercise of the Overallotment Option) by the Partnership or the
Operating Partnership and (c) sales or other voluntary or involuntary
dispositions of any assets of the Partnership or the Operating
Partnership (other than (x) sales or other dispositions of inventory in
the ordinary course of business, (y) sales or other dispositions of
other current assets including, without limitation, receivables and
accounts
15
and (z) sales or other dispositions of assets as a part of normal
retirements or replacements), in each case prior to the commencement of
the dissolution and liquidation of the Partnership.
"Issue Price" means the price at which a Unit is purchased
from the Partnership, less any sales commission or underwriting
discount charged to the Partnership.
"Limited Partner" means, unless the context otherwise
requires, (a) each Initial Limited Partner, each Substituted Limited
Partner, each Additional Limited Partner and any Departing Partner upon
the change of its status from General Partner to Limited Partner
pursuant to Section 13.3, subject to the provisions of Section 5.7, (b)
solely for the purposes of Section 1.4 and Articles VI and VII, each
Special Limited Partner and (c) solely for purposes of Articles IV, V
and VI and Sections 14.3 and 14.4, each Assignee.
"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 14.2, the date on
which the applicable time period during which the holders of
Outstanding Units have the right to elect to reconstitute the
Partnership and continue its business has expired without such an
election being made, and (b) in the case of any other event giving rise
to the dissolution of the Partnership, the date on which such event
occurs.
"Liquidator" means the General Partner or other Person
approved pursuant to Section 14.3 who performs the functions described
therein.
"Maintenance Capital Expenditures" means cash capital
expenditures made to maintain, up to the level thereof that existed at
the time of such expenditure, the operating capacity of the capital
assets of the Partnership and the Operating Partnership, taken as a
whole, as such assets existed at the time of such expenditure and
shall, therefore, not include cash capital expenditures made in respect
of Acquisitions and Capital Additions and Improvements. Where cash
capital expenditures are made in part to maintain the operating
capacity level referred to in the immediately preceding sentence and in
part for other purposes, the General Partner's good faith allocation
thereof between the portion used to maintain such operating capacity
level and the portion used for other purposes shall be conclusive.
"Material Event" means the occurrence of any of the following
events while any Senior Units are owned by The Williams Companies, Inc.
or owned directly or indirectly by James E. Ferrell or any Related
Party: (a) a Change of Control; (b) the Partnership or the Operating
Partnership is treated as an association taxable as a corporation for
federal income tax purposes or is otherwise subject to taxation as an
entity for federal income tax purposes; (c) the Partnership issues any
Partnership Interests for cash prior to December 31, 2005 (other than
issuances pursuant to the Ferrellgas, Inc. Unit Option Plan) and the
first $40 million of the aggregate proceeds of such issuances are not
used to redeem the Senior Units; (d) the Partnership issues any
Partnership Interests for cash prior to December 31, 2005, and the
aggregate proceeds of such issuances above the amount specified in
clause (c) are not used to redeem the Senior Units (other than (i)
issuances pursuant to the Ferrellgas, Inc. Unit
16
Option Plan and (ii) up to $20 million of the aggregate proceeds of
such issuances used to reduce indebtedness or other off-balance sheet
credit facilities of the Partnership or the Operating Partnership); or
(e) the Partnership fails to pay the Senior Unit Distribution in full
for any Quarter.
"Merger Agreement" has the meaning assigned to such term in
Section 16.1.
"Minimum Quarterly Distribution" means $0.50 per Common Unit
per Quarter (or, with respect to the period commencing on the Initial
Closing Date and ending on October 31, 1994, the product of $0.55
multiplied by a fraction of which the numerator is the number of days
in such period and of which the denominator is 92), subject to
adjustment in accordance with Sections 5.6(b) and (c) and Section 9.6.
"National Securities Exchange" means an exchange registered
with the Securities and Exchange Commission under Section 6(a) of the
Securities Exchange Act of 1934, as amended, supplemented or restated
from time to time, and any successor to such statute.
"Net Agreed Value" means, (a) in the case of any Contributed
Property, the Agreed Value of such property reduced by any liabilities
either assumed by the Partnership upon such contribution or to which
such property is subject when contributed, and (b) in the case of any
property distributed to a Partner or Assignee by the Partnership, the
Partnership's Carrying Value of such property (as adjusted pursuant to
Section 4.5(d)(ii)) at the time such property is distributed, reduced
by any indebtedness either assumed by such Partner or Assignee upon
such distribution or to which such property is subject at the time of
distribution, in either case, as determined under Section 752 of the
Code.
"Net Income" means, for any taxable 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 4.5(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 4.5(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.
17
"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 (including, without limitation, such amounts
recognized through the Operating 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 4.5(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 (including, without limitation, such amounts
recognized through the Operating 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 4.5(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.
"Non-citizen Assignee" means a Person who the General Partner
has determined in its sole discretion does not constitute an Eligible
Citizen and as to whose Partnership Interest the General Partner has
become the Substituted Limited Partner, pursuant to Section 11.5.
"Nonrecourse Built-in Gain" means with respect to any
Contributed Properties or Adjusted Properties that are subject to a
mortgage or pledge securing a Nonrecourse Liability, the amount of any
taxable gain that would be allocated to the Partners pursuant to
Sections 5.2(b)(i)(A), 5.2(b)(ii)(A) or 5.2(b)(iii) 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).
"Notice of Election to Purchase" has the meaning assigned to
such term in Section 17.1(b).
"Operating Partnership" means Ferrellgas, L.P., a Delaware
limited partnership.
18
"Operating Partnership Agreement" means the Agreement of
Limited Partnership of the Operating Partnership, as it may be amended,
supplemented or restated from time to time.
"Opinion of Counsel" means a written opinion of counsel (who
may be regular counsel to Ferrellgas, any Affiliate of Ferrellgas, the
Partnership or the General Partner) acceptable to the General Partner.
"Original Agreement" has the meaning assigned to such term in
the recitals hereto.
"Outstanding" means, with respect to the Units or other
Partnership Securities, all Units or other Partnership Securities that
are issued by the Partnership and reflected as outstanding on the
Partnership's books and records as of the date of determination;
provided that, if at any time any Person or Group (other than
Ferrellgas, its Affiliates and except as provided below) owns
beneficially 20% or more of all Common Units, such Common Units so
owned shall not be voted on any matter and shall not be considered to
be Outstanding when sending notices of a meeting of Limited Partners
(unless otherwise required by law), calculating required votes,
determining the presence of a quorum or for other similar purposes
under this Agreement, except that such Common Units shall be considered
to be Outstanding for purposes of Section 13.1(b)(iv) (such Common
Units shall not, however, be treated as a separate class or series of
Partnership Securities for purposes of this Agreement). Notwithstanding
the above, the Common Units issued upon conversion of the Senior Units,
so long as such Common Units are held by WNGL, its successors, directly
or indirectly by The Williams Companies, Inc. or directly or indirectly
by James E. Ferrell or any Related Party (1) shall at all times be
considered Outstanding for purposes of this Agreement and have all
rights specified with respect to Common Units in this Agreement and (2)
shall be included with any other Common Units in determining whether
WNGL, its successors, The Williams Companies, Inc., James E. Ferrell or
any Related Party own beneficially 20% or more of all Common Units with
respect to those other Common Units that were not converted from Senior
Units.
"Overallotment Option" means the overallotment option granted
to the Underwriters by the Partnership pursuant to the Underwriting
Agreement.
"Partners" means the General Partner, the Limited Partners and
the Special Limited Partners.
"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.
19
"Partnership" means Ferrellgas Partners, L.P., a Delaware
limited partnership established by the Certificate of Limited
Partnership, and any successors thereto.
"Partnership Interest" means an interest in the Partnership,
which shall include General Partner Units, Senior Units, Common Units,
IDRs or other Partnership Securities, or a combination thereof or
interest therein, as the case may be.
"Partnership Minimum Gain" means that amount determined in
accordance with the principles of Treasury Regulation Section
1.704-2(d).
"Partnership Securities" has the meaning assigned to such term
in Section 4.3(a).
"Per Unit Capital Amount" means, as of any date of
determination, the Capital Account, stated on a per Unit basis,
underlying any Unit held by a Person.
"Percentage Interest" means as of the date of such
determination (a) as to any Partner or Assignee holding Units, the
product of (i) 100% less the percentage applicable to clause (b)
multiplied by (ii) the quotient of the number of Units held by such
Partner or Assignee divided by the total number of all Outstanding
Units (other than Senior Units), and (b) as to the holders of
additional Partnership Securities issued by the Partnership in
accordance with Section 4.3, the percentage established as a part of
such issuance. The Senior Units have not been allocated a Percentage
Interest.
"Person" means an individual or a corporation, partnership,
trust, unincorporated organization, association or other entity.
"Pro Rata" means (a) when modifying Units or any class
thereof, apportioned equally among all designated Units or class
thereof in accordance with their relative Percentage Interests, (b)
when modifying Partners and Assignees, apportioned among all Partners
and Assignees in accordance with their relative Percentage Interests,
and (c) when modifying holders of IDRs, apportioned equally among all
holders of IDRs in accordance with the relative number of IDRs held by
such holder.
"Purchase Date" means the date determined by the General
Partner as the date for purchase of all Outstanding Units (other than
Units owned by the General Partner and its Affiliates) pursuant to
Article XVII.
"Quarter" means, unless the context requires otherwise, a
three month period of time ending on October 31, January 31, April 30,
or July 31; provided, however, that the General Partner, in its sole
discretion, may amend such period as it deems necessary or appropriate
in connection with a change in the fiscal year of the Partnership.
"Recapture Income" means any gain recognized by the
Partnership (computed without regard to any adjustment required by
Sections 734 or 743 of the Code) upon the disposition of any property
or asset of the Partnership, which gain is characterized as ordinary
income because it represents the recapture of deductions previously
taken with respect to such property or asset.
20
"Record Date" means the date established by the General
Partner for determining (a) the identity of the Record Holder entitled
to notice of, or to vote at, any meeting of Limited Partners or
entitled to vote by ballot or give approval of Partnership action in
writing without a meeting or entitled to exercise rights in respect of
any lawful action of Limited Partners or (b) the identity of Record
Holders entitled to receive any report or distribution.
"Record Holder" means the Person in whose name a Unit is
registered on the books of the Transfer Agent as of the opening of
business on a particular Business Day, or with respect to a holder of a
General Partner Unit or an IDR, the Person in whose name such General
Partner Unit or IDR is registered on the books which the General
Partner has caused to be kept as of the opening of business on such
Business Day.
"Redeemable Units" means any Units for which a redemption
notice has been given, and has not been withdrawn, under Section 11.6.
"Registration Statement" means the Registration Statement on
Form S-1 (Registration No. 33-53383), as it has been or as it may be
amended or supplemented from time to time, filed by the Partnership
with the Commission under the Securities Act to register the offering
and sale of the Common Units in the Initial Offering.
"Related Party" means (a) the spouse or any lineal descendant
of James E. Ferrell, (b) any trust for his benefit or for the benefit
of his spouse or any such lineal descendants, (c) any corporation,
partnership or other entity in which James E. Ferrell and/or such other
Persons referred to in the foregoing clauses (a) and (b) are the direct
record and beneficial owners of all of the voting and nonvoting
securities, (d) the FCI ESOT and (e) any participant in the FCI ESOT
whose ESOT account has been allocated shares of FCI.
"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)(ii) or (b) Sections 5.1(d)(i),
5.1(d)(ii), 5.1(d)(iv), 5.1(d)(v), 5.1(d)(vi), 5.1(d)(vii) and
5.1(d)(ix), 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 Activities" means the retail sale of propane to
end users within the continental United States in the manner engaged in
by Ferrellgas immediately prior to the Closing Date.
"Second Amended and Restated Agreement" has the meaning
assigned to such term in the recitals hereto.
21
"Second Liquidation Target Amount" has the meaning assigned to
such term in Section 5.1(c)(i)(E).
"Second Target Distribution" means $0.63 per Unit (or, with
respect to the period commencing on the Initial Closing Date and ending
on October 31, 1994, the product of $0.55 multiplied by a fraction of
which the numerator is the number of days in such period and of which
the denominator is 92), subject to adjustment in accordance with
Sections 5.6(b) and (c) and Section 9.6.
"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such
statute.
"Senior Unit" means a Unit representing a fractional part of
the Partnership Interests of all Limited Partners and Assignees having
the rights and obligations specified with respect to Senior Units in
this Agreement. The term "Senior Unit" includes all Additional Senior
Units.
"Senior Unit Distribution" means distributions that are
required to be paid on the Senior Units (including Additional Senior
Units) at a quarterly rate equal to the sum of (a) $1.00 per Senior
Unit per Quarter (or part thereof or, with respect to the period
commencing with the WNGL Closing Date and ending on January 31, 2000,
the product of $1.00 multiplied by a fraction of which the numerator is
the number of days in such period and of which the denominator is 92),
plus (b) an additional $0.50 per Senior Unit per Quarter (or part
thereof) if the Partnership fails to pay in full the Senior Unit
Redemption Price on or prior to the Senior Unit Redemption Date, in
each case accumulating from and including the date of such failure or
default in clause (b) until the date such failure or default has been
cured by the Partnership. Each of the amounts set forth in clauses (a)
and (b) are subject to adjustment in accordance with Section 5.6(a).
All Senior Unit Distributions shall be cumulative, whether or
not declared and whether or not there is sufficient Available Cash for
the payment thereof, on a daily basis from the WNGL Closing Date and
shall be payable quarterly in arrears on each distribution payment date
pursuant to Section 5.3(a), commencing on the first distribution
payment date after the WNGL Closing Date. Any unpaid or undistributed
Senior Unit Distributions will compound on a quarterly basis at a rate
equal to the then applicable distribution rate, calculated in
accordance with the first sentence of this definition. If any Senior
Unit Distributions are payable through the issuance of Additional
Senior Units pursuant to Section 5.4 and are so paid by such issuance,
such Senior Unit Distributions shall be deemed paid in full. Any
Additional Senior Units that are required to be issued and distributed,
but which are not issued and distributed as required, will be entitled
to the Senior Unit Distribution as if they were issued and distributed
as required.
"Senior Unit Liquidation Preference" means $40.00 per Senior
Unit, subject to adjustment in accordance with Section 5.6(a).
"Senior Unit Redemption Date" means the date the Partnership
shall pay the Senior Unit Redemption Price to the holders of Senior
Units pursuant to Section 17.2(b).
22
"Senior Unit Redemption Notice" means a written notice from
the Partnership to the holder or holders of Senior Units setting forth:
(a) the Senior Unit Redemption Price;
(b) whether all or less than all of the Outstanding
Senior Units are to be redeemed and the total number
of Senior Units being redeemed;
(c) the Senior Unit Redemption Date;
(d) that the holder is to surrender to the Partnership,
in the manner, at the place or places and at the
price designated, his certificate or certificates
representing the Senior Units to be redeemed; and
(e) that distributions on the Senior Units to be redeemed
shall cease to accumulate on such Senior Unit
Redemption Date unless the Partnership defaults in
the payment of the redemption price.
"Senior Unit Redemption Price" means, with respect to each
Senior Unit called for redemption in accordance with the Senior Unit
Redemption Notice pursuant to Section 17.2(b), an amount in cash equal
to the Senior Unit Liquidation Preference, plus an amount equal to any
accumulated and unpaid Senior Unit Distributions on such Senior Units
to the Senior Unit Redemption Date.
"Special Approval" means approval by the Audit Committee.
"Special Limited Partner" means each holder of an IDR.
"Special Limited Partners Book Capital" means, as of any date
of determination, the amount equal to the sum of the balances of the
Capital Accounts of all the Special Limited Partners, determined
pursuant to Section 4.5 (prior to any adjustment pursuant to Section
4.5(d) arising upon the present event requiring a valuation of the
Partnership's assets).
"Special Pro Rata" means when modifying Unitholders, in
accordance with the applicable Units' relative Percentage Interest
calculated with the inclusion of all Common Units regardless of whether
the holders of some Common Units are excluded from the Unitholders
modified by this term. By way of example, if there is one General
Partner Unit, 40 Common Units (other than FCI Common Units) and 59 FCI
Common Units, and the phrase "Special Pro Rata" is used as "to the
Unitholders (other than the holders of the FCI Common Units), Special
Pro Rata," then the Percentage Interest of the Common Units (other than
the FCI Common Units) will be (40+59)/(1+40+59) or 99% and the
Percentage Interest of the General Partner Unit will be 1/(1+40+59) or
1%. If Available Cash is to be distributed Special Pro Rata in that
circumstance, it would be distributed 99% to the Common Units (other
than the FCI Common Units) and 1% to the General Partner Unit.
23
"Subordinated Unit" means a Unit representing a fractional
part of the Partnership Interests of all Limited Partners and Assignees
and having the rights and obligations specified with respect to
Subordinated Units in the Original Agreement. Each Outstanding
Subordinated Unit converted into a Common Unit on a one-for-one basis
as of August 1, 1999.
"Subordination Period" means the period which commenced on the
Initial Closing Date and ended on August 1, 1999.
"Subsidiary" means, with respect to any Person, (i) a
corporation of which more than 50% of the voting power of shares of
Capital Interests entitled (without regard to the occurrence of any
contingency) to vote in the election of directors or other governing
body of such corporation is owned, directly or indirectly, by such
Person, by one or more Subsidiaries of such Person, or a combination
thereof, (ii) a partnership (whether general or limited) in which such
Person or a Subsidiary of such Person is, at the date of determination,
a general or limited partner of such partnership, but only if more than
50% of the Capital Interests of such partnership (considering all of
the Capital Interests of the partnership as a single class) is owned or
controlled, directly or indirectly, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (iii) any
other Person (other than a corporation or a partnership) in which such
Person, directly or indirectly, at the date of determination, has (x)
at least a majority ownership interest or (y) the power to elect or
direct the election of a majority of the directors or other governing
body of such Person.
"Substituted Limited Partner" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 12.2 in
place of and with all the rights of a Limited Partner and who is shown
as a Limited Partner on the books and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such
term in Section 16.2(b).
"Termination Capital Transactions" means any sale, transfer or
other disposition of property of the Partnership or the Operating
Partnership occurring upon or incident to the liquidation and winding
up of the Partnership and the Operating Partnership pursuant to Article
XIV.
"Third Target Distribution" means $0.82 per Unit (or, with
respect to the period commencing on the Initial Closing Date and ending
on October 31, 1994, the product of $0.55 multiplied by a fraction of
which the numerator is the number of days in such period and of which
the denominator is 92), subject to adjustment in accordance with
Sections 5.6(b) and (c) and Section 9.6.
"Trading Day" means a day on which the principal National
Securities Exchange on which the Units of any class are listed or
admitted to trading is open for the transaction of business or, if
Units of a class are not listed or admitted to trading on any National
Securities Exchange, a day on which banking institutions in New York
City generally are open.
"Transaction" has the meaning assigned to such term in Section
5.7(g).
24
"Transfer" has the meaning assigned to such term in Section
11.1(a).
"Transfer Agent" means such bank, trust company or other
Person (including, without limitation, the General Partner or one of
its Affiliates) as shall be appointed from time to time by the
Partnership to act as registrar and transfer agent for the Units.
"Transfer Application" means an application and agreement for
transfer of Units in the form set forth on the back of a Certificate or
in a form substantially to the same effect in a separate instrument.
"Underwriter" means each Person named as an underwriter in
Schedule I to the Underwriting Agreement who purchased Common Units
pursuant thereto.
"Underwriting Agreement" means the Underwriting Agreement
dated June 27, 1994, among the Underwriters, the Partnership, the
General Partner and FCI providing for the purchase of Common Units by
such Underwriters.
"Unit" means a Partnership Interest of a Partner or Assignee
in the Partnership representing a fractional part of the Partnership
Interests of all Partners and Assignees and shall include, without
limitation, General Partner Units, Senior Units and Common Units;
provided, that each General Partner Unit at any time Outstanding shall
represent the same fractional part of the Partnership Interests of all
Partners and Assignees holding General Partner Units as each other
General Partner Unit, each Senior Unit at any time Outstanding shall
represent the same fractional part of the Partnership Interests of all
Partners and Assignees holding Senior Units as each other Senior Unit,
and each Common Unit at any time Outstanding shall represent the same
fractional part of the Partnership Interests of all Partners and
Assignees holding Common Units as each other Common Unit.
"Unitholders" means the holders of Common Units and General
Partner Units but shall not include holders of Senior Units.
"Unpaid MQD" has the meaning assigned to such term in Section
5.1(c)(i)(C).
"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 4.5(d)) over (b) the Carrying Value of such
property as of such date (prior to any adjustment to be made pursuant
to Section 4.5(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of
(a) the Carrying Value of such property as of such date (prior to any
adjustment to be made pursuant to Section 4.5(d) as of such date) over
(b) the fair market value of such property as of such date (as
determined under Section 4.5(d)).
25
"Unrecovered Initial Unit Price" means, at any time, with
respect to a class or series of Units (other than Senior Units and
General Partner Units), the price per Unit at which such class or
series of Units was initially offered to the public for sale by the
underwriters in respect of such offering, as determined by the General
Partner, less the sum of all distributions theretofore made in respect
of a Unit of such class or series that was sold in the initial offering
of Units of said class or series constituting Cash from Interim Capital
Transactions and any distributions of cash (or the Net Agreed Value of
any distributions in kind) in connection with the dissolution and
liquidation of the Partnership theretofore made in respect of a Unit of
such class or series that was sold in the initial offering of Units of
such class or series, adjusted as the General Partner determines to be
appropriate to give effect to any distribution, subdivision or
combination of Units.
"Withdrawal Opinion of Counsel" has the meaning assigned to
such term in Section 13.1(b).
"WNGL" means Williams Natural Gas Liquids, Inc., a Delaware
corporation
"WNGL Closing Date" means the closing date of the transactions
contemplated by the WNGL Purchase Agreement.
"WNGL Purchase Agreement" means that certain Purchase
Agreement, dated as of November 7, 1999, as amended, by and among the
Partnership, the Operating Partnership and WNGL.
"WNGL Registration Rights Agreement" means that certain
Registration Rights Agreement, dated the WNGL Closing Date, as amended,
between the Partnership and WNGL.
ARTICLE III
PURPOSE
Section 3.1 Purpose and Business. The purpose and nature of the
business to be conducted by the Partnership shall be (a) to serve as a limited
partner in the Operating Partnership and, in connection therewith, to exercise
all of the rights and powers conferred upon the Partnership as a limited partner
in the Operating Partnership pursuant to the Operating Partnership Agreement or
otherwise, (b) to engage directly in, or to enter into or form any corporation,
partnership, joint venture, limited liability company or other arrangement to
engage in, any business activity that the Operating Partnership is permitted to
engage in by the Operating Partnership Agreement and, in connection therewith,
to exercise all of the rights and powers conferred upon the Partnership pursuant
to the agreements relating to such business activity, (c) to engage directly in,
or to enter into or form any corporation, partnership, joint venture, limited
liability company or other arrangement to engage in, any business activity that
is approved by the General Partner and which lawfully may be conducted by a
limited partnership organized pursuant to the Delaware Act and, in connection
therewith, to exercise all of the rights and powers conferred upon the
Partnership pursuant to the agreements relating to such business activity, and
(d) to do anything necessary or appropriate to the foregoing, including, without
limitation, the making of capital contributions or
26
loans to the Operating Partnership. The General Partner has no obligation or
duty to the Partnership, the Limited Partners, the Special Limited Partners or
the Assignees to propose or approve, and in its sole discretion may decline to
propose or approve, the conduct by the Partnership of any business.
Section 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
Section 4.1 Initial Contributions. In connection with the formation of
the Partnership under the Delaware Act, the General Partner made an initial
Capital Contribution to the Partnership and was admitted as the general partner
of the Partnership, and the organizational Limited Partner made a Capital
Contribution to the Partnership and was admitted as a limited partner of the
Partnership.
Section 4.2 Contributions by the General Partner and the Initial
Limited Partners; Contributions on the WNGL Closing Date and issuance of General
Partner Units.
(a) On the Initial Closing Date, the General Partner
contributed and delivered to the Partnership, as a Capital Contribution, a
limited partner interest in the Operating Partnership which, together with the
Partnership Interest (as defined in the Operating Partnership Agreement)
previously held by the Partnership, represented a 98.9899% Percentage Interest
(as defined in the Operating Partnership Agreement) in the Operating
Partnership, in exchange for (i) the continuation of its Partnership Interest as
general partner in the Partnership, subject to all of the rights, privileges and
duties of the General Partner under this Agreement, (ii) 1,000,000 Common Units
and 16,593,721 Subordinated Units and (iii) the IDRs.
(b) On the Initial Closing Date, each Underwriter contributed
and delivered to the Partnership cash in an amount equal to the Issue Price per
Common Unit, multiplied by the number of Common Units specified in the
Underwriting Agreement to be purchased by such Underwriter. In exchange for such
Capital Contribution by the Underwriters, the Partnership issued Common Units to
each Underwriter on whose behalf such Capital Contribution was made in an amount
equal to the quotient obtained by dividing (x) the cash contribution to the
Partnership by or on behalf of such Underwriter by (y) the Issue Price per
Common Unit. Immediately after these contributions, the Initial Capital
Contribution of the General Partner and the organizational Limited Partner were
refunded, the interest of the organizational Limited Partner was terminated and
the organizational Limited Partner ceased to be a Limited Partner.
(c) To the extent that the Underwriters' Overallotment Option
was exercised, each Underwriter contributed and delivered to the Partnership
cash in an amount equal to the Issue Price per Common Unit multiplied by the
number of Common Units purchased by such Underwriter pursuant to the
Overallotment Option. In exchange for such Capital Contribution, the Partnership
issued Common Units to each Underwriter on whose behalf such Capital
Contribution was made in an amount equal to the quotient obtained by dividing
(x) the cash contribution to the Partnership by or on behalf of such Underwriter
by (y) the Issue Price per Common Unit.
27
(d) On the WNGL Closing Date, pursuant to the WNGL Purchase
Agreement, WNGL contributed all of its interests in Thermogas L.L.C., a Delaware
limited liability company (previously Thermogas Company, a Delaware
corporation), to the Partnership in exchange for 4,375,000 Senior Units.
(e) On June 5, 2000, the Partnership issued 316,233 General
Partner Units to represent the General Partner Interest as of that date, which
number is equal to one percent of the quotient of the number of Common Units
then Outstanding divided by ninety-nine percent rounded down to the nearest
whole number of General Partner Units.
(f) Immediately upon the conversion of Senior Units into
Common Units as provided in Section 5.7(b), the Partnership will issue to the
General Partner (for no consideration) that number of General Partner Units
which will cause the Percentage Interest of its General Partner Interest
immediately after such conversion to be equal to the Percentage Interest of its
General Partner Interest immediately prior to such conversion.
(g) If the Partnership issues additional Common Units and uses
the proceeds from that issuance to redeem any of the Senior Units pursuant to
the terms of this Agreement, the Partnership will issue to the General Partner
(for no consideration) that number of General Partner Units equal to the
$1,767,677 Capital Contribution made by the General Partner to the Partnership
at the time of the issuance of the Senior Units divided by the issuance price of
such Common Units. This clause (g) shall not obviate the provisions of Section
4.3 to the extent those provisions otherwise apply to that issuance of Common
Units.
Section 4.3 Issuances of Additional Units and Other Securities.
--------------------------------------------------
(a) Subject to Section 4.3(c), the General Partner is hereby
authorized to cause the Partnership to issue, in addition to the Partnership
Interests and Units issued pursuant to Sections 4.1 and 4.2, such additional
Units (other than General Partner Units), or classes or series thereof, or
options, rights, warrants or appreciation rights relating thereto, or any other
type of equity security that the Partnership may lawfully issue, any unsecured
or secured debt obligations of the Partnership convertible into any class or
series of equity securities of the Partnership (collectively, "Partnership
Securities"), for any Partnership purpose, at any time or from time to time, to
the Partners or to other Persons for such consideration and on such terms and
conditions as shall be established by the General Partner in its sole
discretion, all without the approval of any Limited Partners. The General
Partner shall have sole discretion, subject to the guidelines set forth in this
Section 4.3 and the requirements of the Delaware Act, in determining the
consideration and terms and conditions with respect to any future issuance of
Partnership Securities.
(b) Additional Partnership Securities to be issued by the
Partnership pursuant to this Section 4.3 shall be issuable from time to time in
one or more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties, including, without limitation, rights, powers and
duties senior to existing classes and series of Partnership Securities (except
as provided in Section 4.3(c)), all as shall be fixed by the General Partner in
the exercise of its sole discretion, subject to Delaware law and Section 4.3(c),
including, without limitation, (i) the allocations of items of Partnership
income, gain, loss, deduction and credit to each such class or series of
Partnership Securities; (ii) the right
28
of each such class or series of Partnership Securities to share in Partnership
distributions; (iii) the rights of each such class or series of Partnership
Securities upon dissolution and liquidation of the Partnership; (iv) whether
such class or series of additional Partnership Securities is redeemable by the
Partnership and, if so, the price at which, and the terms and conditions upon
which, such class or series of additional Partnership Securities may be redeemed
by the Partnership; (v) whether such class or series of additional Partnership
Securities is issued with the privilege of conversion and, if so, the rate at
which, and the terms and conditions upon which, such class or series of
Partnership Securities may be converted into any other class or series of
Partnership Securities or other property; (vi) the terms and conditions upon
which each such class or series of Partnership Securities will be issued,
evidenced by certificates and assigned or transferred; and (vii) the right, if
any, of each such class or series of Partnership Securities to vote on
Partnership matters, including, without limitation, matters relating to the
relative rights, preferences and privileges of each such class or series.
(c) Notwithstanding the terms of Sections 4.3(a) and 4.3(b),
the issuance by the Partnership of any Partnership Securities pursuant to this
Section 4.3 shall be subject to the following restrictions and limitations:
(i) Except for the issuance of Additional Senior Units
pursuant to Section 5.4, for so long as any Senior Units are
Outstanding, the Partnership shall not create, authorize or issue
additional Partnership Securities (or securities convertible into
Partnership Securities) having distribution rights or liquidation
rights ranking prior or senior to, or on a parity with, the Senior
Units, without the prior approval of the holders of at least a majority
of the Outstanding Senior Units; and
(ii) The General Partner may, at any time, make a Capital
Contribution to the Partnership so that the General Partner will have a
Capital Account equal to at least 1.0% of the sum of the Capital
Accounts of all Partners. Upon the issuance of any Common Units by the
Partnership to any Person, the General Partner, in its sole discretion,
may simultaneously purchase (or may purchase at any time thereafter as
specified below) a number of General Partner Units only to the extent
necessary such that after taking into account the additional Common
Units issued to such Person and the General Partner Units to be issued
to the General Partner pursuant to this Section 4.3(c)(ii), the General
Partner will have a Percentage Interest of no more than 1.0%. The
consideration for the General Partner Units to be issued to the General
Partner shall be the higher of the price at which the Common Units were
issued or, only if the purchase is not made simultaneously with the
issuance of the Common Units, the Closing Price of the Common Units on
the day prior to the proposed issuance of such General Partner Units;
(d) The General Partner is hereby authorized and directed to
take all actions that it deems necessary or appropriate in connection with each
issuance of Units, IDRs or other Partnership Securities pursuant to Section
4.3(a) and to amend this Agreement in any manner that it deems necessary or
appropriate to provide for each such issuance, to admit Additional Limited
Partners in connection therewith and to specify the relative rights, powers and
duties of the holders of the Units, IDRs or other Partnership Securities being
so issued.
29
(e) The General Partner shall do all things necessary to
comply with the Delaware Act and is authorized and directed to do all things it
deems to be necessary or advisable in connection with any future issuance of
Partnership Securities, including, without limitation, compliance with any
statute, rule, regulation or guideline of any federal, state or other
governmental agency or any National Securities Exchange on which the Units or
other Partnership Securities are listed for trading.
Section 4.4 Limited Preemptive Rights. Except as provided in this
Section 4.4 and Section 4.3, no Person shall have any preemptive, preferential
or other similar right with respect to (a) additional Capital Contributions; (b)
issuance or sale of any class or series of Units, IDRs or other Partnership
Securities, whether unissued, held in the treasury or hereafter created; (c)
issuance of any obligations, evidences of indebtedness or other securities of
the Partnership convertible into or exchangeable for, or carrying or accompanied
by any rights to receive, purchase or subscribe to, any such Units, IDRs or
other Partnership Securities; (d) issuance of any right of subscription to or
right to receive, or any warrant or option for the purchase of, any such Units,
IDRs or other Partnership Securities; or (e) issuance or sale of any other
securities that may be issued or sold by the Partnership. The General Partner
shall have the right, which it may from time to time assign in whole or in part
to any of its Affiliates, to purchase Units, IDRs or other Partnership
Securities from the Partnership whenever, and on the same terms that, the
Partnership issues Units, IDRs or other Partnership Securities to Persons other
than the General Partner and its Affiliates, to the extent necessary to maintain
the Percentage Interests of the General Partner and its Affiliates equal to that
which existed immediately prior to the issuance of such Units, IDRs or other
Partnership Securities. Notwithstanding the type of Partnership Securities
issued by the Partnership to Persons other than the General Partner and its
Affiliates, the right of the General Partner and its Affiliates to purchase
Units, IDRs or other Partnership Securities pursuant to the immediately
preceding sentence may be exercised through the purchase of General Partner
Units (based on a value which is proportionate to the price for which the
Partnership Securities are issued to such Persons) in an amount necessary to
maintain the Percentage Interest of the General Partner and its Affiliates with
respect to the General Partner Interest equal to that which existed immediately
prior to the issuance of Units, IDRs or other Partnership Securities.
Section 4.5 Capital Accounts.
----------------
(a) The Partnership shall maintain for each Partner (or a
beneficial owner of a Partnership Interest held by a nominee in any case in
which the nominee has furnished the identity of such owner to the Partnership in
accordance with Section 6031(c) of the Code or any other method acceptable to
the General Partner in its sole discretion) 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
4.5(b) and allocated with respect to such Partnership Interest pursuant to
Section 5.1, and decreased by (x) the amount of cash or Net Agreed Value of all
actual and deemed distributions of cash or property made with respect to such
Partnership Interest pursuant to this Agreement and (y) all items of Partnership
deduction and loss computed in accordance with Section 4.5(b) and allocated with
respect to such Partnership Interest pursuant to Section 5.1.
30
(b) For purposes of computing the amount of any item of
income, gain, loss or deduction to be reflected in the Partners' Capital
Accounts, the determination, recognition and classification of any such item
shall be the same as its determination, recognition and classification for
federal income tax purposes (including, without limitation, any method of
depreciation, cost recovery or amortization used for that purpose), provided,
that:
(i) Solely for purposes of this Section 4.5, the Partnership
shall be treated as owning directly its proportionate share (as
determined by the General Partner based upon the provisions of the
Operating Partnership Agreements) of all property owned by the
Operating Partnership.
(ii) All fees and other expenses incurred by the Partnership
to promote the sale of (or to sell) a Partnership Interest that can
neither be deducted nor amortized under Section 709 of the Code, if
any, shall, for purposes of Capital Account maintenance, be treated as
an item of deduction at the time such fees and other expenses are
incurred and shall be allocated among the Partners pursuant to Section
5.1.
(iii) Except as otherwise provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any election
under Section 754 of the Code which may be made by the Partnership and,
as to those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of
the Code, without regard to the fact that such items are not includable
in gross income or are neither currently deductible nor capitalized for
federal income tax purposes.
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition were
equal in amount to the Partnership's Carrying Value with respect to
such property as of such date.
(v) In accordance with the requirements of Section 704(b) of
the Code, any deductions for depreciation, cost recovery or
amortization attributable to any Contributed Property shall be
determined as if the adjusted basis of such property on the date it was
acquired by the Partnership were equal to the Agreed Value of such
property. Upon an adjustment pursuant to Section 4.5(d) to the Carrying
Value of any Partnership property subject to depreciation, cost
recovery or amortization, any further deductions for such depreciation,
cost recovery or amortization attributable to such property shall be
determined (A) as if the adjusted basis of such property were equal to
the Carrying Value of such property immediately following such
adjustment and (B) using a rate of depreciation, cost recovery or
amortization derived from the same method and useful life (or, if
applicable, the remaining useful life) as is applied for federal income
tax purposes; provided, however, that, if the asset has a zero adjusted
basis for federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable method
that the General Partner may adopt.
(vi) If the Partnership's adjusted basis in a depreciable or
cost recovery property is reduced for federal income tax purposes
pursuant to Section 48(q)(1) or 48(q)(3) of the Code, the amount of
such reduction shall, solely for purposes hereof, be deemed to be an
31
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) Subject to the next sentence, 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. Upon the
sale, exchange or other disposition of an FCI Common Unit (other than the last
FCI Common Unit sold, exchanged or otherwise disposed of by FCI) such that the
FCI Common Unit is not beneficially owned by FCI, the Capital Account maintained
for FCI shall (i) first, be allocated to the FCI Common Units to be transferred,
as the case may be, in an amount equal to the product of (x) the number of such
FCI Common Units to be transferred, as the case may be, and (y) the Per Unit
Capital Amount for a Common Unit, and (ii) second, any remaining balance in such
Capital Account will be retained by FCI in its retained Units. With respect to
the last FCI Common Unit to be sold, exchanged or otherwise disposed of by FCI,
that FCI Common Unit shall remain an FCI Common Unit and shall retain the
balance of the applicable Capital Account regardless of the holder thereof.
(d) (i) Consistent with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), on an issuance of additional Units for cash or
Contributed Property, the conversion of Senior Units into Common Units pursuant
to Section 5.7, or the conversion of the General Partner's Combined Interest to
Common Units pursuant to Section 13.3(b), the Capital Account of all Partners
and the Carrying Value of each Partnership property immediately prior to such
issuance shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as if such Unrealized
Gain or Unrealized Loss had been recognized on an actual sale of each such
property immediately prior to such issuance and had been allocated to the
Partners at such time pursuant to Sections 5.1(a) and 5.1(b). In determining
such Unrealized Gain or Unrealized Loss, the aggregate cash amount and fair
market value of all Partnership assets (including, without limitation, cash or
cash equivalents) immediately prior to the issuance of additional Units shall be
determined by the 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 all Partnership property shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable
to such Partnership property, as if such Unrealized Gain or Unrealized
Loss had been recognized in a sale of such property immediately prior
to such distribution for an amount equal to its fair market value, and
had been allocated to the Partners, at such time, pursuant to Section
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
32
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 be determined
and allocated by the Liquidator using such reasonable method of
valuation as it may adopt.
Section 4.6 Interest. No interest shall be paid by the Partnership on
Capital Contributions or on balances in Partners' Capital Accounts.
Section 4.7 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 4.1, and
Articles V, VII, XIII and XIV.
Section 4.8 Loans from Partners. Loans by a Partner to the Partnership
shall not constitute Capital Contributions. If any Partner shall advance funds
to the Partnership in excess of the amounts required hereunder to be contributed
by it to the capital of the Partnership, the making of such excess advances
shall not result in any increase in the amount of the Capital Account of such
Partner. The amount of any such excess advances shall be a debt obligation of
the Partnership to such Partner and shall be payable or collectible only out of
the Partnership assets in accordance with the terms and conditions upon which
such advances are made.
Section 4.9 No Fractional Units. Except for fractional Senior Units
issued pursuant to Section 5.4 and Section 4.10(d), no fractional Units shall be
issued by the Partnership.
Section 4.10 Splits and Combinations.
-----------------------
(a) Subject to Section 4.3(c) and 4.10(d), the General Partner
may make a Pro Rata distribution of Units or other Partnership Securities to all
Record Holders or may effect a subdivision or combination of Units or other
Partnership Securities; provided, however, that, after any such distribution,
subdivision or combination, each Partner shall have the same Percentage Interest
in the Partnership as before such distribution, subdivision or combination.
(b) Whenever such a distribution, subdivision or combination
of Units or other Partnership Securities is declared, the General Partner shall
select a Record Date as of which the distribution, subdivision or combination
shall be effective and shall send notice of the distribution, subdivision or
combination at least 20 days prior to such Record Date to each Record Holder as
of the date not less than 10 days prior to the date of such notice. The General
Partner also may cause a firm of independent public accountants selected by it
to calculate the number of Units to be held by each Record Holder after giving
effect to such distribution, subdivision or combination. The General Partner
shall be entitled to rely on any certificate provided by such firm as conclusive
evidence of the accuracy of such calculation.
(c) Promptly following any such distribution, subdivision or
combination, the General Partner may cause Certificates to be issued to the
Record Holders of Units as of the applicable Record Date representing the new
number of Units held by such Record Holders, or the General Partner may adopt
such other procedures as it may deem appropriate to reflect such distribution,
subdivision or combination; provided, however, if any such distribution,
subdivision
33
or combination results in a smaller total number of Units Outstanding, the
General Partner shall require, as a condition to the delivery to a Record Holder
of such new Certificate, the surrender of any Certificate held by such Record
Holder immediately prior to such Record Date.
(d) Except with respect to Senior Units, the Partnership shall
not issue fractional Units upon any distribution, subdivision or combination of
Units. If a distribution, subdivision or combination of Common Units would
result in the issuance of fractional Common Units but for the provisions of
Section 4.9 and this Section 4.10(d), each fractional Common Unit shall be
rounded to the nearest whole Common Unit (and a 0.5 Common Unit shall be rounded
to the next higher Common Unit).
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
Section 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 4.5(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 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, to the General Partner in an amount equal to the
Percentage Interest of its General Partner Interest and to the Limited
Partners holding Senior Units, Pro Rata, in an amount equal to 100%
less the Percentage Interest of the General Partner Interest, until the
aggregate Net Income allocated to such Partners pursuant to this
Section 5.1(a)(i) for the current and all previous taxable years is
equal to the aggregate Net Losses allocated to such Partners pursuant
to Section 5.1(b)(iii) for all previous taxable years;
(ii) Second, 100% to the General Partner until the aggregate
Net Income allocated to the General Partner pursuant to this Section
5.1(a)(ii) for the current taxable year and all previous taxable years
is equal to the aggregate Net Losses allocated to the General Partner
pursuant to Section 5.1(b)(iv) for all previous taxable years;
(iii) Third, to the Unitholders, Pro Rata, until the aggregate
Net Income allocated to such Partners pursuant to this Section
5.1(a)(iii) for the current taxable year and all previous taxable years
is equal to the aggregate Net Losses allocated to such Partners
pursuant to Section 5.1(b)(ii) for all previous taxable years; and
(iv) Fourth, the balance, if any, to the Unitholders, Pro
Rata.
(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:
34
(i) First, to the Unitholders, Pro Rata, until the aggregate
Net Losses allocated to such Partners pursuant to this Section
5.1(b)(i) for the current taxable year and all previous taxable years
is equal to the aggregate Net Income allocated to such Partners
pursuant to Section 5.1(a)(iv) for all previous taxable years;
(ii) Second, to the Unitholders, Pro Rata; provided, that Net
Losses shall not be allocated to such Partners pursuant to this Section
5.1(b)(ii) to the extent that such allocation would cause any Limited
Partner holding Common Units to have a deficit balance in its Adjusted
Capital Account at the end of such taxable year (or increase any
existing deficit balance in its Adjusted Capital Account);
(iii) Third, to the General Partner in an amount equal to the
Percentage Interest of its General Partner Interest and to the Limited
Partners holding Senior Units, Pro Rata, in an amount equal to 100%
less the Percentage Interest of the General Partner Interest; provided,
that Net Losses shall not be allocated to such Partners pursuant to
this Section 5.1(b)(iii) to the extent such allocation would cause any
Limited Partner holding Senior Units to have a deficit balance in its
Adjusted Capital Account at the end of such taxable year (or increase
any existing deficit balance in its Adjusted Capital Account); and
(iv) Fourth, the balance, if any, 100% to the General Partner.
(c) Net Termination Gains and Losses. After giving effect to
the 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 5.4
have been made with respect to the taxable period ending on the date of the
Partnership's liquidation pursuant to Section 14.3.
(i) If a Net Termination Gain is recognized (or deemed
recognized pursuant to Section 4.5(d)) from Termination Capital
Transactions, such Net Termination Gain shall be allocated among the
Partners in the following manner (and the Adjusted Capital Accounts of
the Partners shall be increased by the amount so allocated in each of
the following subclauses, in the order listed, before an allocation is
made pursuant to the next succeeding subclause):
(A) First, to each Partner having a deficit balance
in its Adjusted Capital Account, in the proportion that such
deficit balance bears to the total deficit balances in the
Adjusted Capital Accounts of all Partners, until each such
Partner has been allocated Net Termination Gain equal to any
such deficit balance in its Adjusted Capital Account;
(B) Second, to the Limited Partners holding Senior
Units, Pro Rata, in an amount equal to 100% less the
Percentage Interest of the General Partner Interest, and to
the General Partner in an amount equal to the Percentage
Interest of its General Partner Interest, until the Adjusted
Capital Account in respect of each Senior
35
Unit then Outstanding is equal to the sum of (i) the Senior
Unit Liquidation Preference (or fraction thereof) plus (ii)
any accumulated and unpaid Senior Unit Distributions.
(C) Third, to the Unitholders, Pro Rata, until the
Adjusted Capital Account in respect of each Common Unit then
Outstanding (without taking into account any Arrearage that
makes up a part of the applicable Adjusted Capital Account) is
equal to the sum of (1) its Unrecovered Initial Unit Price
plus (2) the Minimum Quarterly Distribution for the Quarter
during which such Net Termination Gain is recognized, reduced
by any distribution made pursuant to Section 5.4 or Arrearage
accrued with respect to a Common Unit in an amount equal to
the Minimum Quarterly Distribution paid during such Quarter
(the amount determined pursuant to this clause (2) is
hereinafter defined as the "Unpaid MQD");
(D) Fourth, to the Unitholders, Pro Rata, until the
Adjusted Capital Account in respect of each Common Unit then
Outstanding (without taking into account any Arrearage that
makes up a part of the applicable Adjusted Capital Account) is
equal to the sum of (1) its Unrecovered Initial Unit Price,
plus (2) the Unpaid MQD, if any, for such Common Unit with
respect to the Quarter during which such Net Termination Gain
is recognized, plus (3) the excess of (aa) the First Target
Distribution less the Minimum Quarterly Distribution for each
Quarter of the Partnership's existence over (bb) the amount of
any distributions of Cash from Operations that was distributed
or Arrearage that was accrued pursuant to:
(v) Section 5.4(a)(iii) hereof,
(w) Section 5.4(d)(iii) hereof,
(x) solely with respect to the distribution
referenced in Section 5.4(a)(iii) pursuant to
Sections 5.4(a)(vii), 5.4(b)(ii), 5.4(b)(iii),
5.4(c)(ii) and 5.4(c)(iii) hereof,
(y) Section 5.4(c) of the Amended and
Restated Agreement and the Second Amended and
Restated Agreement, and
(z) Sections 5.4(a)(iv) or 5.4 (b)(ii) of
the Original Agreement,
(the sum of (1) plus (2) plus (3) is hereinafter defined as the
"First Liquidation Target Amount");
(E) Fifth, 86.8673% to the Unitholders, Pro Rata, and
13.1327% to the Special Limited Partners, Pro Rata, until the
Adjusted Capital Account in respect of each Common Unit then
Outstanding (without taking into account any Arrearage that
makes up a part of the applicable Adjusted Capital Account) is
equal to the sum of
36
(1) the First Liquidation Target Amount, plus (2) the excess
of (aa) the Second Target Distribution less the First Target
Distribution for each Quarter of the Partnership's existence
over (bb) the amount of any distributions of Cash from
Operations that was distributed or Arrearage that was accrued
pursuant to:
(v) Section 5.4(a)(iv) hereof,
(w) Section 5.4(d)(iv) hereof,
(x) solely with respect to the distribution
referenced in Section 5.4(a)(iv)pursuant to
Sections 5.4(a)(vii), 5.4(b)(ii), 5.4(b)(iii),
5.4(c)(ii) and 5.4(c)(iii) hereof,
(y) Section 5.4(d) of the Amended and
Restated Agreement and the Second Amended and
Restated Agreement, and
(z) Sections 5.4(a)(v) or 5.4 (b)(iii) of
the Original Agreement,
(the sum of (1) plus (2) is hereinafter defined as the "Second
Liquidation Target Amount");
(F) Sixth, 76.7653% to the Unitholders, Pro Rata, and
23.2347% to the Special Limited Partners, Pro Rata, until the
Adjusted Capital Account in respect of each Common Unit then
Outstanding (without taking into account any Arrearage that
makes up a part of the applicable Adjusted Capital Account) is
equal to the sum of (1) the Second Liquidation Target Amount,
plus (2) the excess of (aa) the Third Target Distribution less
the Second Target Distribution for each Quarter of the
Partnership's existence over (bb) the amount of any
distributions of Cash from Operations that was distributed or
Arrearage that was accrued pursuant to:
(v) Section 5.4(a)(v) hereof,
(w) Section 5.4(d)(v) hereof,
(x) solely with respect to the distribution
referenced in Section 5.4(a)(v) pursuant to
Sections 5.4(a)(vii), 5.4(b)(ii), 5.4(b)(iii),
5.4(c)(ii) and 5.4(c)(iii) hereof,
(y) Section 5.4(e) of the Amended and
Restated Agreement and the Second Amended and
Restated Agreement, and
(z) Sections 5.4(a)(vi) or 5.4(b)(iv) of the
Original Agreement; and
(G) Thereafter, any remaining amount 51.5102% to the
Unitholders, Pro Rata, and 48.4898% to the Special Limited
Partners, Pro Rata.
37
(ii) If a Net Termination Loss is recognized (or deemed
recognized pursuant to Section 4.5(d)) from Termination Capital
Transactions, such Net Termination Loss shall be allocated to the
Partners in the following manner:
(A) First, to the Unitholders, Pro Rata, until the
Adjusted Capital Account in respect of each Common Unit then
Outstanding (without taking into account any Arrearage that
makes up a part of the applicable Adjusted Capital Account)
has been reduced to zero;
(B) Second, to the holders of the FCI Common Units
until the Adjusted Capital Account in respect of each FCI
Common Unit then Outstanding has been reduced to zero;
(C) Third, to the Limited Partners holding Senior
Units, Pro Rata, in an amount equal to 100% less the
Percentage Interest of the General Partner Interest, and to
the General Partner in an amount equal to the Percentage
Interest of its General Partner Interest, until the Adjusted
Capital Account in respect of each Senior Unit then
Outstanding has been reduced to zero; and
(D) Thereafter, 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:
(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)(vi) and 5.1(d)(vii)). 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
38
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)(vi)
and 5.1(d)(vii), 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) Priority Allocations. First, if the amount of cash or
the Net Agreed Value of any property distributed (except cash or
property distributed pursuant to Section 14.3 or 14.4) to any Limited
Partner holding Common Units with respect to a taxable year is greater
(on a per Unit basis) than the amount of cash or the Net Agreed Value
of property distributed to the other Limited Partners holding Common
Units (on a per Unit basis), then (1) each Limited Partner holding
Common Units receiving such greater cash or property distribution shall
be allocated gross income in an amount equal to the product of (aa) the
amount by which the distribution (on a per Unit basis) to such Limited
Partners holding Common Units exceeds the distribution (on a per Unit
basis) to the Limited Partner holding Common Units receiving the
smallest distribution and (bb) the number of Units owned by the Limited
Partners holding Common Units receiving the greater distribution; and
(2) the General Partner shall be allocated gross income in an aggregate
amount equal to the sum of the amounts allocated in clause (1) above
multiplied by the Percentage Interest of its General Partner Interest,
divided by 100% less the Percentage Interest of the General Partner
Interest. Second, gross income for the taxable period shall be
allocated 100% to the Limited Partners holding Senior Units, Pro Rata,
until the aggregate amount of such items allocated to the Limited
Partners holding Senior Units, Pro Rata, under this paragraph (iii) for
the current taxable period and all previous taxable periods is equal to
the cumulative amount of cash distributed to the Limited Partners
holding Senior Units, Pro Rata, pursuant to Sections 5.4 and 5.5(a) for
the current and all previous taxable periods. All or a portion of the
remaining items of Partnership gross income or gain for the taxable
period, if any, shall be allocated 100% to the Special Limited
Partners, Pro Rata, until the aggregate amount of such items allocated
to the Special Limited Partners, Pro Rata, under this paragraph (iii)
for the current taxable period and all previous taxable periods is
equal to the cumulative amount of cash distributed to the Special
Limited Partners, Pro Rata, from the Closing Date through the end of
such taxable period.
(iv) Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of
Partnership income and gain shall be 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).
(v) 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)(v)
39
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 for in this Section 5.1 have been tentatively made
as if this Section 5.1(d)(v) were not in this Agreement.
(vi) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with
their respective Percentage Interests. If the General Partner
determines in its good faith discretion that the Partnership's
Nonrecourse Deductions must be allocated in a different ratio to
satisfy the safe harbor requirements of the Treasury Regulations
promulgated under Section 704(b) of the Code, the General Partner is
authorized, upon notice to the Limited Partners, to revise the
prescribed ratio to the numerically closest ratio that does satisfy
such requirements.
(vii) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the
Partner that bears the Economic Risk of Loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable in accordance with Treasury Regulation Section
1.704-2(i). If more than one Partner bears the Economic Risk of Loss
with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse
Deductions attributable thereto shall be allocated between or among
such Partners in accordance with the ratios in which they share such
Economic Risk of Loss.
(viii) Nonrecourse Liabilities. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (A) the amount
of Partnership Minimum Gain and (B) the total amount of Nonrecourse
Built-in Gain shall be allocated among the Partners in accordance with
their respective Percentage Interests.
(ix) Code Section 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.
(x) Economic Uniformity.
(A) Immediately prior to a sale, exchange or other
disposition of all or any portion of the Senior Units, the
holders disposing of Senior Units may elect that the
Partnership allocate items of Partnership gross income or gain
100% to the Limited Partners disposing of Senior Units until
the Limited Partners disposing of Senior Units have been
allocated an amount of gross income or gain which causes the
Capital Accounts maintained with respect to each of the Senior
Units to be equal. Immediately prior to the conversion of all
or any portion of the Senior Units into Common Units, the
Limited Partners converting such Senior Units may elect that
the Partnership allocate items of Partnership gross income or
gain until the Limited
40
Partners converting such Senior Units have been allocated an
amount of gross income or gain which causes the Capital
Account maintained with respect to each of the Senior Units to
be converted to be equal to the product of (x) the number of
Common Units into which the Senior Units will be converted and
(y) the Per Unit Capital Account for a Common Unit.
(B) If at the time of the sale, exchange or other
disposition of Senior Units, the Senior Units are publicly
traded or will become publicly traded as a result of the sale,
exchange or disposition, the General Partner may cause the
Partnership to allocate items of gross income or gain 100% to
the Limited Partners disposing of Senior Units until the
Limited Partners disposing of Senior Units have been allocated
an amount of gross income or gain which causes the Capital
Accounts maintained with respect to each of the Senior Units
that will be publicly traded after the disposition to be
equal. Immediately prior to the sale, exchange or other
disposition in the public marketplace of Common Units into
which Senior Units have been converted, the General Partner
may cause the Partnership to allocate items of gross income or
gain 100% to the Limited Partners disposing of such Common
Units until the Limited Partners disposing of such Common
Units have been allocated an amount of gross income or gain
which causes the Capital Account maintained with respect to
all Common Units that are publicly traded after the
disposition to be equal.
(xi) 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 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)(xi)(A) shall only be made with respect to
Required Allocations to the extent the General Partner
reasonably determines that such allocations will otherwise be
inconsistent with the economic agreement among the Partners.
Further, allocations pursuant to this Section 5.1(d)(xi)(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)(xi)(A) in whatever order is
most likely to minimize the economic distortions that might
otherwise result
41
from the Required Allocations, and (2) divide all allocations
pursuant to Section 5.1(d)(xi)(A) among the Partners in a
manner that is likely to minimize such economic distortions.
(xii) Retirement of Assumed Indebtedness. All losses or
deductions attributable to premiums, consent fees, or other
expenditures incurred by the Partnership to retire indebtedness assumed
from the General Partner pursuant to the Contribution Agreement shall
be allocated to the General Partner.
Section 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)(iii), any item of Residual Gain or Residual
Loss attributable to a Contributed Property shall be allocated among
the Partners in the same manner as its correlative item of "book" gain
or loss is allocated pursuant to Section 5.1.
(ii) (A) In the case of an Adjusted Property, such items shall
(1) first, be allocated among the Partners in a manner consistent with
the principles of Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and
the allocations thereof pursuant to Section 4.5(d)(i) or (ii), and (2)
second, in the event such property was originally a Contributed
Property, be allocated among the Partners in a manner consistent with
Section 5.2(b)(i)(A); and (B) except as otherwise provided in Section
5.2(b)(iii), any item of Residual Gain or Residual Loss attributable to
an Adjusted Property shall be allocated among the Partners in the same
manner as its correlative item of "book" gain or loss is allocated
pursuant to Section 5.1.
(iii) The General Partner shall apply (a) the principles of
Temporary Regulation Section 1.704-3T to eliminate Book-Tax Disparities
with respect to the Book-Tax Disparities existing on the date of
adoption of Treasury Regulation Section 1.704-3(d) (the "Remedial
Regulations") and (b) the Remedial Regulations with respect to any
Book-Tax Disparity created thereafter.
(c) For the proper administration of the Partnership and for
the preservation of uniformity of the Units (or any class or classes thereof),
the General Partner shall have sole discretion to (i) adopt such conventions as
it deems appropriate in determining the amount of
42
depreciation, amortization and cost recovery deductions; (ii) make special
allocations for federal income tax purposes of income (including, without
limitation, gross income) or deductions; and (iii) amend the provisions of this
Agreement as appropriate (x) to reflect the proposal or promulgation of Treasury
Regulations under Section 704(b) or Section 704(c) of the Code or (y) otherwise
to preserve or achieve uniformity of the Units (or any class or classes
thereof). The General Partner may adopt such conventions, make such allocations
and make such amendments to this Agreement as provided in this Section 5.2(c)
only if such conventions, allocations or amendments would not have a material
adverse effect on the Partners, the holders of any class or classes of Units
issued and Outstanding 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 Treasury Regulation Section 1.167(c)-1(a)(6) and Proposed
Treasury Regulation 1.197-2(g)(3) or any successor regulations thereto. 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 Units in the same month would receive
depreciation and amortization deductions, based upon the same applicable rate as
if they had purchased a direct interest in the Partnership's property. If the
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 Units
that would not have a material adverse effect on the Limited Partners or the
Record Holders of any class or classes of Units.
(e) Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall, to the extent possible,
after taking into account other required allocations of gain pursuant to this
Section 5.2, be characterized as Recapture Income in the same proportions and to
the same extent as such Partners (or their predecessors in interest) have been
allocated any deductions directly or indirectly giving rise to the treatment of
such gains as Recapture Income.
(f) All items of income, gain, loss, deduction and credit
recognized by the Partnership for federal income tax purposes and allocated to
the Partners in accordance with the provisions hereof shall be determined
without regard to any election under Section 754 of the Code which may be made
by the Partnership; provided, however, that such allocations, once made, shall
be adjusted as necessary or appropriate to take into account those adjustments
permitted or required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction
attributable to transferred Units shall, for federal income tax purposes, be
determined on an annual basis and prorated on a monthly basis and shall be
allocated to the Partners as of the opening of the New York Stock Exchange on
the first Business Day of each month; provided, however, that gain or loss on a
sale or other disposition of any assets of the Partnership other than in the
ordinary course of business shall be allocated to the Partners as of the opening
of the New York Stock Exchange on the
43
first Business Day of the month in which such gain or loss is recognized for
federal income tax purposes. The General Partner may revise, alter or otherwise
modify such methods of allocation as it determines necessary, to the extent
permitted or required by Section 706 of the Code and the regulations or rulings
promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited
Partner under the provisions of this Article V shall instead be made to the
beneficial owner of Units held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the General
Partner in its sole discretion.
Section 5.3 Requirement and Characterization of Distributions.
-------------------------------------------------
(a) Within 45 days following the end of (i) the period
beginning on the Initial Closing Date and ending on October 31, 1994 and (ii)
each Quarter commencing with the Quarter beginning on November 1, 1994, an
amount equal to 100% of Available Cash with respect to such Quarter shall be
distributed in accordance with this Article V by the Partnership to the
Partners, as of the Record Date selected by the General Partner in its
reasonable discretion. All amounts of Available Cash distributed by the
Partnership on any date from any source shall be deemed to be Cash from
Operations until the sum of all amounts of Available Cash theretofore
distributed by the Partnership to the Partners pursuant to Section 5.4 equals
the aggregate amount of all Cash from Operations generated by the Partnership
since the Initial Closing Date through the close of the immediately preceding
Quarter. Any remaining amounts of Available Cash distributed by the Partnership
on such date shall, except as otherwise provided in Section 5.5, be deemed to be
Cash from Interim Capital Transactions.
(b) Notwithstanding the definitions of Available Cash and Cash
from Operations contained herein, disbursements (including, without limitation,
contributions to the Operating Partnership or disbursements on behalf of the
Operating Partnership) made or cash reserves established, increased or reduced
after the end of any Quarter but on or before the date on which the Partnership
makes its distribution of Available Cash in respect of such Quarter as required
by Section 5.3(a) shall be deemed to have been made, established, increased or
reduced for purposes of determining Available Cash and Cash from Operations,
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 14.3 and 14.4.
Section 5.4 Distributions of Cash from Operations and Additional Senior
Units. Subject to Section 17-607 of the Delaware Act, Available Cash with
respect to any Quarter that is deemed to be Cash from Operations pursuant to the
provisions of Section 5.3 or 5.5 shall be distributed as follows, except as
otherwise required by Section 4.3(b) in respect of additional Partnership
Securities issued pursuant thereto and except that clauses (a), (b) and (c) of
this Section 5.4 shall not be effective until the end of the Information
Statement Period:
(a) if during the Arrearage Period and if the Cumulative FCI
Common Unit Arrearage is equal to zero immediately prior to making such
distribution:
44
(i) First, to the Limited Partners holding Senior Units, Pro
Rata, in an amount equal to 100% less the Percentage Interest of the
General Partner Interest, and to the General Partner in an amount equal
to the Percentage Interest of its General Partner Interest, until there
has been distributed in respect of each Senior Unit then Outstanding an
amount equal to the Senior Unit Distribution and any accumulated and
unpaid Senior Unit Distributions through the last day of the preceding
Quarter;
(ii) Second, to the Unitholders (other than the holders of the
FCI Common Units), Special Pro Rata, until there has been distributed
in respect of each Common Unit (other than any FCI Common Unit) then
Outstanding an amount equal to the Minimum Quarterly Distribution;
(iii) Third, to the Unitholders (other than the holders of the
FCI Common Units), Special Pro Rata, until there has been distributed
in respect of each Common Unit (other than any FCI Common Unit) then
Outstanding an amount equal to the excess of the Ceiling Quarterly
Distribution or the First Target Distribution (whichever is less) over
the Minimum Quarterly Distribution; provided, that if the Ceiling
Quarterly Distribution is used in this calculation, clauses (iv), (v)
and (vi) of this Section 5.4(a) shall not be operative and the
distribution shall proceed to Section 5.4(a)(vii);
(iv) Fourth, 86.8673% to the Unitholders (other than the
holders of the FCI Common Units), Special Pro Rata, and 13.1327% to the
Special Limited Partners, Pro Rata, until there has been distributed in
respect of each Common Unit (other than any FCI Common Unit) then
Outstanding an amount equal to the excess of the Ceiling Quarterly
Distribution or the Second Target Distribution (whichever is less) over
the First Target Distribution; provided, that if the Ceiling Quarterly
Distribution is used in this calculation, clauses (v) and (vi) of this
Section 5.4(a) shall not be operative and the distribution shall
proceed to Section 5.4(a)(vii);
(v) Fifth, 76.7653% to the Unitholders (other than the holders
of the FCI Common Units), Special Pro Rata, and 23.2347% to the Special
Limited Partners, Pro Rata, until there has been distributed in respect
of each Common Unit (other than any FCI Common Unit) then Outstanding
an amount equal to the excess of the Ceiling Quarterly Distribution or
the Third Target Distribution (whichever is less) over the Second
Target Distribution; provided, that if the Ceiling Quarterly
Distribution is used in this calculation, clause (vi) of this Section
5.4(a) shall not be operative and the distribution shall proceed to
Section 5.4(a)(vii);
(vi) Sixth, 51.5102% to the Unitholders (other than the
holders of the FCI Common Units), Special Pro Rata, and 48.4898% to the
Special Limited Partners, Pro Rata, until there has been distributed in
respect of each Common Unit (other than any FCI Common Unit) then
Outstanding an amount equal to the excess of the Ceiling Quarterly
Distribution over the Third Target Distribution; and
(vii) Thereafter, to the holders of the FCI Common Units, the
holder of the General Partner Units and the Special Limited Partners in
the same order and until the aggregate distributions on a per FCI
Common Unit basis are the same amounts as the
45
distributions made on a per Common Unit basis pursuant to Section
5.4(a)(ii) through 5.4(a)(vi) but with any distribution made to the
Common Units made to the FCI Common Units;
provided, however, that for this clause (a) at the point (the "Section 5.4(a)
Threshold Point") in the application of clauses (ii) through (vii) above that
the Cumulative FCI Common Unit Arrearage equals $36 million, the distribution
shall continue pursuant to Section 5.4(c)(ii) (and beginning with the specific
clause of Section 5.4(a)(ii) through (vi) applicable to the Section 5.4(a)
Threshold Point) and Section 5.4(c)(iii) with respect to all Unitholders and the
Special Limited Partners, as applicable, so that the FCI Common Units thereafter
receive the distribution they otherwise would have received under that Section
5.4(c)(ii) (and the applicable clauses of Section 5.4(a)(ii) through (vi)) with
any remainder distributed pursuant to Section 5.4(c)(iii);
(b) if during the Arrearage Period and if the Cumulative FCI
Common Unit Arrearage immediately prior to making such distribution is greater
than zero but less than $36 million:
(i) First, to the Limited Partners holding Senior Units, Pro
Rata, in an amount equal to 100% less the Percentage Interest of the
General Partner Interest, and to the General Partner in an amount equal
to the Percentage Interest of its General Partner Interest, until there
has been distributed in respect of each Senior Unit then Outstanding an
amount equal to the Senior Unit Distribution and any accumulated and
unpaid Senior Unit Distributions through the last day of the preceding
Quarter;
(ii) Second, to the Unitholders (other than the holders of the
FCI Common Units), Special Pro Rata, and to the Special Limited
Partners, Pro Rata, until there has been distributed in respect of each
Common Unit (other than any FCI Common Unit) then Outstanding an amount
equal to the Ceiling Quarterly Distribution in the order specified in
Section 5.4(a)(ii) through 5.4(a)(vi);
(iii) Third, to the holders of the FCI Common Units, the
holder of the General Partner Units and the Special Limited Partners in
the same order and until the aggregate distributions on a per FCI
Common Unit basis are the same amounts as the distributions made on a
per Common Unit basis pursuant to Section 5.4(b)(ii) but with any
distribution made to the Common Units made to the FCI Common Units; and
(iv) Thereafter, to the holders of the FCI Common Units, the
holder of the General Partner Units and the Special Limited Partners
until there has been distributed an amount equal to each Arrearage
beginning with the Arrearage applicable to the oldest Quarter applied
in the same manner and to the same holders of Units and Special Limited
Partners as each such Arrearage was accrued pursuant to Sections 5.4(a)
or 5.4(b);
provided, however, that for this clause (b) at the point (the "Section 5.4(b)
Threshold Point") in the application of clauses (ii) and (iii) above that the
Cumulative FCI Common Unit Arrearage equals $36 million, the distribution shall
continue pursuant to Section 5.4(c)(ii) (and beginning with the specific clause
of Section 5.4(a)(ii) through (vi) applicable to the Section 5.4(b) Threshold
Point) and Section 5.4(c)(ii) with respect to all Unitholders and the Special
Limited Partners, as applicable,
46
so that the FCI Common Units thereafter receive the distribution they otherwise
would have received under that Section 5.4(c)(iii) (and the applicable clauses
of Section 5.4(a)(ii) through (vi)) with any remainder distributed pursuant to
Section 5.4(c)(iii);
(c) if during the Arrearage Period and the Cumulative FCI
Common Unit Arrearage equals $36 million or if after the Arrearage Period and if
the Cumulative FCI Common Unit Arrearage is greater than zero:
(i) First, to the Limited Partners holding Senior Units, Pro
Rata, in an amount equal to 100% less the Percentage Interest of the
General Partner Interest, and to the General Partner in an amount equal
to the Percentage Interest of its General Partner Interest, until there
has been distributed in respect of each Senior Unit then Outstanding an
amount equal to the Senior Unit Distribution and any accumulated and
unpaid Senior Unit Distributions through the last day of the preceding
Quarter;
(ii) Second, to the Unitholders (including the holders of the
FCI Common Units), Pro Rata, and to the Special Limited Partners, Pro
Rata, until there has been distributed in respect of each Common Unit
(including any FCI Common Unit) then Outstanding an amount equal to the
Ceiling Quarterly Distribution as if such distribution was made
pursuant to Section 5.4(a)(ii) through 5.4(a)(vi) without the use of
the phrases "(other than the holders of the FCI Common Units)" and
"(other than any FCI Common Unit)"; and
(iii) Thereafter, to the holders of the FCI Common Units, the
holder of the General Partner Units and the Special Limited Partners
until there has been distributed an amount equal to each Arrearage
beginning with the Arrearage applicable to the oldest Quarter applied
in the same manner and to the same holders of Units and Special Limited
Partners as each such Arrearage was accrued pursuant to Sections 5.4(a)
or 5.4(b);
or
(d) if after the Arrearage Period and if the Cumulative
FCI Common Unit Arrearage is zero:
(i) First, to the Limited Partners holding Senior Units, Pro
Rata, in an amount equal to 100% less the Percentage Interest of the
General Partner Interest, and to the General Partner in an amount equal
to the Percentage Interest of its General Partner Interest, until there
has been distributed in respect of each Senior Unit then Outstanding an
amount equal to the Senior Unit Distribution and any accumulated and
unpaid Senior Unit Distributions through the last day of the preceding
Quarter;
(ii) Second, to the Unitholders, Pro Rata, until there has
been distributed in respect of each Common Unit then Outstanding an
amount equal to the Minimum Quarterly Distribution,
(iii) Third, to the Unitholders, Pro Rata, until there has
been distributed in respect of each Common Unit then Outstanding an
amount equal to the excess of the First Target Distribution over the
Minimum Quarterly Distribution;
47
(iv) Fourth, 86.8673% to the Unitholders, Pro Rata, and
13.1327% to the Special Limited Partners, Pro Rata, until there has
been distributed in respect of each Common Unit then Outstanding an
amount equal to the excess of the Second Target Distribution over the
First Target Distribution;
(v) Fifth, 76.7653% to the Unitholders, Pro Rata, and 23.2347%
to the Special Limited Partners, Pro Rata, until there has been
distributed in respect of each Common Unit then Outstanding an amount
equal to the excess of the Third Target Distribution over the Second
Target Distribution; and
(vi) Thereafter, 51.5102% to the Unitholders, Pro Rata, and
48.4898% to the Special Limited Partners, Pro Rata;
provided, however, that for Sections 5.4(a), (b), (c) and (d):
(1) notwithstanding the amount of Available Cash that is deemed to be
Cash from Operations with respect to such Quarter, Senior Unit Distributions
accruing prior to February 1, 2001, shall be paid by the issuance of additional
Senior Units having an aggregate Senior Unit Liquidation Preference equal to the
amount of such Senior Unit Distributions ("Additional Senior Units"), which may
include fractional Senior Units or the cash equivalent thereof based on the
Senior Unit Liquidation Preference;
(2) if (A) the Senior Unit Distribution has been reduced to zero
pursuant to the second sentence of Section 5.6(a), (B) all of the Senior Units
have been converted pursuant to Section 5.7(b) or (C) all of the Senior Units
have been redeemed pursuant to Section 17.2, then clause (i) of each of
subsections (a), (b), (c) and (d) of this Section 5.4 shall terminate and have
no further force or effect; and,
(3) if the Minimum Quarterly Distribution, the First Target
Distribution, the Second Target Distribution and the Third Target Distribution
have been reduced to zero pursuant to the second sentence of Section 5.6(b),
then subsections (a)(ii) through (a)(v), b(ii) and b(iii) as they relate to
(a)(ii) through a(v), c(ii) as it relates to (a)(ii) through (a)(v) and d(ii)
through (d)(v) of this Section 5.4 shall terminate and have no further force or
effect.
Section 5.5 Distributions of Cash from Interim Capital Transactions.
Subject to Section 17-607 of the Delaware Act, Available Cash that constitutes
Cash from Interim Capital Transactions shall be distributed, unless the
provisions of Section 5.3 require otherwise, as follows:
(a) First, to the Limited Partners holding Senior Units, Pro
Rata, in an amount equal to 100% less the Percentage Interest of the General
Partner Interest, and to the General Partner in an amount equal to the
Percentage Interest of its General Partner Interest, until there has been
distributed in respect of each Senior Unit then Outstanding an amount equal to
any accumulated and unpaid Senior Unit Distribution through such date;
(b) Second, to the Limited Partners holding Senior Units, Pro
Rata, in an amount equal to 100% less the Percentage Interest of the General
Partner Interest, and to the General Partner in an amount equal to the
Percentage Interest of its General Partner Interest, until a hypothetical
48
holder of a Senior Unit acquired on the WNGL Closing Date has received with
respect to such Senior Unit, during the period since the WNGL Closing Date
through such date, distributions of Available Cash that are deemed to be Cash
from Interim Capital Transactions in an aggregate amount equal to the Senior
Unit Liquidation Preference;
(c) Third, to the Unitholders, Pro Rata, until a hypothetical
holder of a Common Unit acquired on the Initial Closing Date has received with
respect to such Common Unit, during the period since the Initial Closing Date
through such date, distributions of Available Cash that are deemed to be Cash
from Interim Capital Transactions in an aggregate amount equal to the Initial
Unit Price; and
(d) Thereafter, all Available Cash shall be distributed as if
it were Cash from Operations and shall be distributed in accordance with Section
5.4.
Section 5.6 Adjustment of Senior Unit Liquidation Preference, Senior
Unit Distribution, Minimum Quarterly Distribution and Target Distribution
Levels.
(a) The Senior Unit Liquidation Preference and the Senior Unit
Distribution shall be proportionately adjusted in the event of any distribution,
combination or subdivision (whether effected by a distribution payable in Senior
Units or otherwise) of Senior Units in accordance with Section 4.10. In the
event of a distribution of Available Cash to the Limited Partners holding Senior
Units pursuant to Section 5.5(b), the Senior Unit Liquidation Preference shall
be reduced by the amount of that distribution to the Limited Partners holding
Senior Units, Pro Rata. In the event of a distribution of Available Cash to the
Limited Partners holding Senior Units pursuant to Section 5.5(b), the Senior
Unit Distribution shall be adjusted proportionately downward to equal the
product obtained by multiplying the otherwise applicable Senior Unit
Distribution by a fraction of which the numerator is the Senior Unit Liquidation
Preference immediately after giving effect to such distribution and of which the
denominator is the Senior Unit Liquidation Preference immediately prior to
giving effect to such distribution.
(b) The Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution shall be
proportionately adjusted in the event of any distribution, combination or
subdivision (whether effected by a distribution payable in Units or otherwise)
of Units or other Partnership Securities in accordance with Section 4.10. If a
distribution of Available Cash is made that is deemed to be Cash from Interim
Capital Transactions, the Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution shall be
adjusted proportionately downward to equal the product obtained by multiplying
the otherwise applicable Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution, as the
case may be, by a fraction of which the numerator is the Unrecovered Initial
Unit Price of the Common Units immediately after giving effect to such
distribution and of which the denominator is the Unrecovered Initial Unit Price
of the Common Units immediately prior to giving effect to such distribution.
(c) The Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution shall
also be subject to adjustment pursuant to Section 9.6.
49
Section 5.7 Special Provisions Relating to the Senior Units.
-----------------------------------------------
(a) Immediately upon the conversion of Senior Units into
Common Units as provided in Section 5.7(b), the holder of a Senior Unit so
converted shall possess all of the rights and obligations of a Limited Partner
holding Common Units hereunder, including, without limitation, the right to vote
as a Limited Partner holding Common Units, the right to participate in
allocations of income, gain, loss and deduction and distributions of cash made
with respect to Common Units pursuant to this Article V.
(b) Each holder of Senior Units shall have the right, at its
option, subject to the terms of this Section 5.7, to convert any or all of such
holders' Senior Units into Common Units at any time during the time period
commencing upon the earlier to occur of:
(i) December 31, 2005, upon not less than 90 days prior
written notice to the Partnership (which notice may be given prior to
December 31, 2005) in accordance with Section 5.7(d), or
(ii) a Material Event, upon not less than 10 days prior
written notice to the Partnership in accordance with Section 5.7(d);
provided, however, that prior to the expiration of such 10-day period,
the holders of the Senior Units may revoke their election to convert
Senior Units into Common Units at any time during the pendency of a
Material Event by written notice to the Partnership;
and ending on the date upon which the holders of the Senior Units give
the Partnership notice of their election to exercise their registration
rights with respect to the Senior Units pursuant to the WNGL
Registration Rights Agreement.
(c) If the holders of the Senior Units elect to convert any or
all of their Senior Units into Common Units, such number of Senior Units shall
be converted into a number of fully paid and nonassessable (subject to Section
17-607 of the Delaware Act) Common Units as is equal, subject to Section 5.7(g),
to the number of Senior Units being so converted, multiplied by the sum of (A)
the Senior Unit Liquidation Preference plus (B) any accumulated and unpaid
Senior Unit Distributions to and including the date of conversion, with the
product then divided by the Current Market Price of the Common Units as of the
date of conversion.
(d) The holders of the Senior Units shall exercise the right
to convert by the delivery of written notice, at the Partnership's principal
place of business, during the applicable time period specified in (b) above,
that the holder elects to convert all or a portion of the Senior Units
represented by such Certificates and, subject to Section 5.7(i), specifying the
name or names (with address) in which Certificates representing Common Units are
to be issued. Upon the expiration of the applicable time period specified in (b)
above, each converting holder of Senior Units shall be deemed to be the holder
of record of the number of Common Units issuable upon conversion in accordance
with (c) above, notwithstanding that the Certificates representing such Common
Units shall not then actually be delivered to such Person. Upon notice from the
Partnership, each holder of Senior Units so converted shall promptly surrender
to the Partnership or the Transfer Agent, Certificates representing the Senior
Units so converted, in proper transfer form. On the date of conversion, all
rights with respect to the Senior Units so converted will terminate except for
the right
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of holders to receive Certificates for the number of Common Units into which
such Senior Units have been converted. If the date for the conversion of Senior
Units into Common Units shall not be a Business Day, then such conversion shall
occur on the next Business Day. Each Senior Unit shall be canceled by the
General Partner upon its conversion.
(e) During the period beginning on the first of the twenty
(20) Trading Days immediately prior to the date of conversion through and
including the date of conversion, the Partnership shall not take any action that
will affect the Common Units, including, without limitation, the following:
(i) (A) make a redemption payment or make a distribution
payable in Common Units on any class of Partnership Interest (which,
for purposes of this Section 5.7(e) shall include, without limitation,
any distributions in the form of options, warrants or other rights to
acquire Partnership Interests) of the Partnership (other than the
issuance of Common Units in connection with the payment in redemption
for, of distributions on or the conversion of Senior Units); (B)
subdivide the outstanding Common Units into a larger number of Common
Units; (C) combine the outstanding Common Units into a smaller number
of Common Units; (D) issue any of its Partnership Securities in a
reclassification of the Common Units; or (E) set a Record Date with
respect to any of the events described in (A) through (D);
(ii) issue to all holders of its Common Units rights, options
or warrants entitling the holders thereof to subscribe for or purchase
Common Units (or securities convertible into or exchangeable for Common
Units) other than issuances of such rights, options or warrants if the
holder of Senior Units would be entitled to receive such rights,
options or warrants upon conversion at any time of Senior Units;
(iii) (A) other than distributions consistent with past
practice, make a Pro Rata distribution to all holders of Common Units
consisting exclusively of cash (excluding any cash distributed upon a
merger or consolidation to which paragraph (g) below applies), or (B)
make a distribution to all holders of its Common Units consisting of
evidences of indebtedness, its Partnership Interests other than Common
Units or assets (including securities, but excluding those rights,
options, warrants and distributions referred to in paragraphs (e)(i) or
(e)(ii) above); or
(iv) issue or sell Common Units or securities convertible into
or exchangeable for Common Units, or any options, warrants or other
rights to acquire Common Units.
(f) No fractional Common Units shall be issued upon the
conversion of any Senior Units. If more than one Senior Unit shall be
surrendered for conversion at one time by the same holder, the number of full
Common Units issuable upon conversion thereof shall be computed on the basis of
the aggregate Senior Unit Liquidation Preference of the Senior Units so
surrendered. If the conversion of any Senior Units results in a fraction, an
amount equal to such fraction multiplied by the Current Market Price of the
Common Units as of the date of conversion shall be paid to such holder in cash
by the Partnership.
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(g) In the event of any (i) capital reorganization or
reclassification or other change of outstanding Common Units, (ii) consolidation
or merger of the Partnership with or into another Person in accordance with
Section 16.1(b) (other than a consolidation or merger in which the Partnership
is the Surviving Business Entity and which does not result in any
reclassification or change of outstanding Common Units) or (iii) sale or other
disposition to another Person of all or substantially all of the assets of the
Partnership, computed on a consolidated basis in accordance with Section 16.1(b)
(any of the foregoing, a "Transaction"), lawful provision shall be made such
that the Senior Units will be convertible only into the kind and amount of stock
or other securities (of the Partnership or another issuer) or property or cash
receivable upon such Transaction by a holder of the number of Common Units into
which such Senior Units could have been converted immediately prior to such
Transaction. The provisions of this Section 5.7(g) and any equivalent thereof in
any governing document of the Surviving Business Entity similarly shall apply to
successive Transactions.
(h) The Partnership shall not enter into any agreement that
would prohibit the issuance of the number of Common Units as will from time to
time be sufficient to permit the conversion of all outstanding Senior Units.
(i) The issuance or delivery of certificates for Common Units
upon the conversion of Senior Units shall be made without charge to the
converting holder of Senior Units for such certificates or for any tax in
respect of the issuance or delivery of such certificates or the securities
represented thereby, and such certificates shall be issued or delivered in the
respective names of, or in such names as may be directed by, the holders of the
Senior Units converted; provided, however, that the Partnership shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate in a name other than that
of the holder of the Senior Units converted, and the Partnership shall not be
required to issue or deliver such certificate unless or until the Person or
Persons requesting the issuance or delivery thereof shall have paid to the
Partnership the amount of such tax or shall have established to the reasonable
satisfaction of the Partnership that such tax has been paid.
(j) The Partnership covenants that all Common Units which may
be delivered upon conversion of Senior Units will be newly issued Common Units,
will have been duly authorized and validly issued and will be fully paid and
non-assessable (except as such non- assessability may be affected by Section
17-607 of the Delaware Act).
(k) The Common Units issued by the Partnership upon conversion
of the Senior Units shall have, as a substantive manner in the hands of a
subsequent holder, like intrinsic economic and federal income tax
characteristics in all material respects, to the intrinsic economic and federal
income tax characteristics of a Common Unit then Outstanding.
Section 5.8 Special Provisions Relating to the Special Limited
Partners. Notwithstanding anything to the contrary set forth in this Agreement,
the Special Limited Partners (a) shall (i) possess the rights and obligations
provided in this Agreement with respect to a Limited Partner pursuant to
Articles VI and VII and (ii) have a Capital Account as a Partner pursuant to
Section 4.5 and all other provisions related thereto and (b) shall not (i) be
entitled to vote on any matters requiring the
52
approval or vote of the holders of Outstanding Units, (ii) be entitled to any
distributions other than to Partners as specified pursuant to Sections 5.4,
14.3 and 14.4 or (iii) be allocated items of income, gain, loss or deduction
other than as specified in this Article V.
Section 5.9 Special Provision Relating to FCI Common Units. Without the
prior written consent of FCI and notwithstanding any other provision of this
Agreement, neither the General Partner nor the Partnership shall declare a
distribution on a Common Unit for any Quarter in an amount in excess of the
Ceiling Quarterly Distribution if the Cumulative FCI Common Unit Arrearage is or
will be, based on that Quarter's distribution, greater than zero.
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
Section 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 no Limited
Partner or Assignee shall have any management power over the business and
affairs of the Partnership. In addition to the powers now or hereafter granted a
general partner of a limited partnership under applicable law or which are
granted to the 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 (iii) 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 or the Operating Partnership, the lending of funds to other Persons
(including, without limitation, the Operating Partnership, the General Partner
and Affiliates of the General Partner) and the repayment of obligations of the
Partnership and the Operating Partnership and the making of capital
contributions to the Operating 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,"
53
"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, the Operating Partnership and the Partners
(including, without limitation, the assets of the Operating Partnership and the
Partnership) as it deems necessary or appropriate; (ix) the formation of, or
acquisition of an interest in, and the contribution of property and the making
of loans to, any further limited or general partnerships, joint ventures,
corporations or other relationships (including, without limitation, the
acquisition of interests in, and the contributions of property to, the Operating
Partnership from time to time); (x) the control of any matters affecting the
rights and obligations of the Partnership, including, 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; (xi) the indemnification of any Person against
liabilities and contingencies to the extent permitted by law; (xii) the entering
into of listing agreements with The New York Stock Exchange, Inc. and any other
securities exchange and the delisting of some or all of the Units from, or
requesting that trading be suspended on, any such exchange (subject to any prior
approval that may be required under Section 1.6); (xiii) the purchase, sale or
other acquisition or disposition of Units; and (xiv) the undertaking of any
action in connection with the Partnership's participation in the Operating
Partnership as the limited partner (including, without limitation, contributions
or loans of funds by the Partnership to the Operating Partnership).
(b) Notwithstanding any other provision of this Agreement, the
Operating Partnership Agreement, the Delaware Act or any applicable law, rule or
regulation, each of the Partners and Assignees and each other Person who may
acquire an interest in Units hereby (i) approves, ratifies and confirms the
execution, delivery and performance by the parties thereto of the Operating
Partnership Agreement, the Underwriting Agreement, the Contribution Agreement,
the agreements and other documents filed as exhibits to the Registration
Statement, and the other agreements described in or filed as a part of the
Registration Statement, and the engaging by any Affiliate of the General Partner
in business and activities (other than Restricted Activities) that are in direct
competition with the business and activities of the Partnership and the
Operating Partnership; (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 or contemplated by the
Registration Statement on behalf of the Partnership without any further act,
approval or vote of the Partners or the Assignees or the other Persons who may
acquire an interest in Units; and (iii) agrees that the execution, delivery or
performance by the General Partner, the Partnership, the Operating Partnership
or any Affiliate of any of them, of this Agreement or any agreement authorized
or permitted under this Agreement (including, without limitation, the exercise
by the General Partner or any Affiliate of the General Partner of the rights
accorded pursuant to Article XVII), or the engaging by any Affiliate of the
General Partner in any business and activities (other than Restricted
Activities) that are in direct competition with the business and activities of
the Partnership and the Operating Partnership, 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. The term "Affiliate" when used in this Section 6.1(b) with respect to
the General Partner shall not include the Partnership or any Subsidiary of the
Partnership.
54
Section 6.2 Certificate of Limited Partnership. The General Partner has
caused the Certificate of Limited Partnership to be filed with the Secretary of
State of the State of Delaware as required by the Delaware Act and shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be determined by the General Partner in its sole discretion to be reasonable
and necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the extent
that such action is determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws
of the State of Delaware or of any other state in which the Partnership may
elect to do business or own property. Subject to the terms of Section 7.5(a),
the General Partner shall not be required, before or after filing, to deliver or
mail a copy of the Certificate of Limited Partnership, any qualification
document or any amendment thereto to any Limited Partner or Assignee.
Section 6.3 Restrictions on General Partner's Authority.
-------------------------------------------
(a) The General Partner may not, without written approval of
the specific act by all of the Outstanding Common Units or by other written
instrument executed and delivered by all of the Outstanding Common Units
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 XIV and XVI, 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 or approve on behalf of the Partnership the sale, exchange or other
disposition of all or substantially all of the assets of the Operating
Partnership, without the approval of the holders of at least a majority of the
Outstanding Common Units; provided, however, that this provision shall not
preclude or limit the 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. Without the approval of the holders of at least two-thirds of the
Outstanding Common Units, the General Partner shall not, on behalf of the
Partnership, (i) consent to any amendment to the Operating Partnership Agreement
or, except as expressly permitted by Section 6.9(d), take any action permitted
to be taken by a partner of the Operating Partnership, in either case, that
would have a material adverse effect on the Partnership as a partner of the
Operating Partnership or (ii) except as permitted under Sections 11.2, 13.1 and
13.2 elect or cause the Partnership to elect a successor general partner of the
Operating Partnership.
55
(c) Unless approved by the affirmative vote of the holders of
at least two-thirds of the Outstanding Common Units (excluding for purposes of
such determination Common Units owned by the General Partner and its
Affiliates), the General Partner shall not take any action or refuse to take any
reasonable action the effect of which, if taken or not taken, as the case may
be, would be to cause the Partnership or the Operating Partnership to be 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 XV) or mergers or consolidations of the Partnership with any Person
(which are governed by Article XVI).
Section 6.4 Reimbursement of the General Partner.
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(a) Except as provided in this Section 6.4 and elsewhere in
this Agreement or in the Operating Partnership Agreement, the General Partner
shall not be compensated for its services as general partner of the Partnership
or the Operating Partnership.
(b) The General Partner shall be reimbursed on a monthly
basis, or such other basis as the General Partner may determine in its sole
discretion, for (i) all direct and indirect expenses it incurs or payments it
makes on behalf of the Partnership (including, without limitation, 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.
(c) Subject to Section 4.3(c), the General Partner in its sole
discretion and without the approval of the Limited Partners (who shall have no
right to vote in respect thereof) may propose and adopt on behalf of the
Partnership, employee benefit and incentive plans (including, without
limitation, plans involving the issuance of Units), or issue Partnership
Securities pursuant to any employee benefit or incentive plan maintained or
sponsored by the General Partner or one of its Affiliates, in each case for the
benefit of employees of the General Partner, the Partnership, the Operating
Partnership or any Affiliate of any of them in respect of services performed,
directly or indirectly, for the benefit of the Partnership or the Operating
Partnership. The Partnership agrees to issue and sell to the General Partner any
Units or other Partnership Securities that the General Partner is obligated to
provide to any employees pursuant to any such benefit or incentive plans.
Expenses incurred by the General Partner in connection with any such plans
(including the net cost to the General Partner of Units purchased by the General
Partner from the Partnership to fulfill options or awards under such plans)
shall be reimbursed in accordance with Section 6.4(b). Any and all obligations
of the General Partner under any employee benefit or incentive plans adopted by
the General Partner as permitted by this Section 6.4(c) shall constitute
obligations of the General Partner hereunder and shall be assumed by any
successor General Partner approved pursuant to Section 13.1 or 13.2 or the
transferee of or successor to all of the General Partner Interest pursuant to
Section 11.2.
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Section 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 a general partner of the Partnership, the Operating
Partnership and any other partnership of which the Partnership or the Operating
Partnership is, directly or indirectly, a partner and to undertake activities
that are ancillary or related thereto (including being a limited partner in the
Partnership), (ii) shall not enter into or conduct any business or incur any
debts or liabilities except in connection with or incidental to (A) its
performance of the activities required or authorized by this Agreement or the
Operating Partnership Agreement or described in or contemplated by the
Registration Statement and (B) the acquisition, ownership or disposition of
Partnership Interests in the Partnership or partnership interests in the
Operating Partnership or any other partnership of which the Partnership or the
Operating Partnership is, directly or indirectly, a partner, except that,
notwithstanding the foregoing, employees of the General Partner may perform
services for FCI and its Affiliates, and (iii) shall not and shall cause its
Affiliates not to engage in any Restricted Activity.
(b) Except as described in Section 6.5(a), no Indemnitee shall
be expressly or implicitly restricted or proscribed pursuant to this Agreement,
the Operating Partnership Agreement or the partnership relationship established
hereby or thereby from engaging in other activities for profit, whether in the
businesses engaged in by the Partnership or the Operating Partnership or
anticipated to be engaged in by the Partnership, the Operating Partnership or
otherwise, including, without limitation, in the case of any Affiliates of the
General Partner those businesses and activities (other than Restricted
Activities) in direct competition with the business and activities of the
Partnership or the Operating Partnership 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 Activities) in direct competition with the business and
activities of the Partnership or the Operating Partnership, and none of the same
shall constitute a breach of this Agreement or any duty to the Partnership, the
Operating Partnership or any Partner or Assignee. Neither the Partnership, the
Operating Partnership, any Limited Partner nor any other Person shall have any
rights by virtue of this Agreement, the Operating Partnership Agreement or the
partnership relationship established hereby or thereby in any business ventures
of any Indemnitee (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 Operating
Partnership, any Limited Partner or any other Person. The General Partner and
any other Persons affiliated with the General Partner may acquire Units or other
Partnership Securities in addition to those acquired by any of such Persons on
the Closing Date, and, except as otherwise provided in this Agreement, shall be
entitled to exercise all rights of an Assignee or Limited Partner, as
applicable, relating to such Units or Partnership Securities, as the case may
be.
(c) 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
57
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
business interests and activities (other than Restricted Activities) in
preference to or to the exclusion of the Partnership.
(d) The term "Affiliates" when used in this Section 6.5 with
respect to the General Partner shall not include the Partnership or any
Subsidiary of the Partnership.
Section 6.6 Loans to and from the General Partner; Contracts with
Affiliates.
(a) The General Partner or any Affiliate thereof may lend to
the Partnership or the Operating Partnership, and the Partnership and the
Operating Partnership may borrow, funds needed or desired by the Partnership and
the Operating Partnership for such periods of time as the General Partner may
determine and (ii) the General Partner or any Affiliate thereof may borrow from
the Partnership or the Operating Partnership, and the Partnership and the
Operating Partnership may lend to the General Partner or such Affiliate, excess
funds of the Partnership and the Operating 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 and the term "Operating Partnership" shall include any
Affiliate of the Operating Partnership that is controlled by the Operating
Partnership.
(b) The Partnership may lend or contribute to the Operating
Partnership, and the Operating Partnership may borrow, funds on terms and
conditions established in the sole discretion of the General Partner; provided,
however, that the Partnership may not charge the Operating Partnership interest
at a rate greater than the rate that would be charged to the Operating
Partnership (without reference to the General Partner's financial abilities or
guarantees), by unrelated lenders on comparable loans. The foregoing authority
shall be exercised by the General Partner in its sole discretion and shall not
create any right or benefit in favor of the Operating Partnership or any other
Person.
(c) The General Partner may itself, or may enter into an
agreement with any of its Affiliates to, render services to the Partnership or
to the General Partner in the discharge of its duties as general partner of the
Partnership. Any services rendered to the Partnership by the General Partner or
any of its Affiliates shall be on terms that are fair and reasonable to the
Partnership; provided, however, that the requirements of this Section 6.6(c)
shall be deemed satisfied as to (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(c).
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(d) The Partnership may transfer assets to joint ventures,
other partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(e) Neither the General Partner nor any of its Affiliates
shall sell, transfer or convey any property to, or purchase any property from,
the Partnership, directly or indirectly, except pursuant to transactions that
are fair and reasonable to the Partnership; provided, however, that the
requirements of this Section 6.6(e) shall be deemed to be satisfied as to (i)
the transactions effected pursuant to Sections 4.1, 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.
(f) The General Partner and its Affiliates will have no
obligation to permit the Partnership or the Operating Partnership to use any
facilities or assets of the General Partner and its Affiliates, except as may be
provided in contracts entered into from time to time specifically dealing with
such use, nor shall there be any obligation on the part of the General Partner
or its Affiliates to enter into such contracts.
(g) Without limitation of Sections 6.6(a) through 6.6(f), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement are hereby
approved by all Partners.
Section 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 and any Person who is or was an officer or director of 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 reasonably believed to be in, or not opposed to,
the best interests of the Partnership and, with respect to any criminal
proceeding, had no reasonable cause to believe its conduct was unlawful;
provided, further, 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 or the
Operating Partnership). The
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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 holders of Outstanding Units, 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 Section 6.7(a); and action taken
or omitted by it with respect to an employee benefit plan in the performance of
its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners
to personal liability by reason of the indemnification provisions set forth in
this Agreement.
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(g) An Indemnitee shall not be denied indemnification in whole
or in part under this Section 6.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.7 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 6.7
or any 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.
Section 6.8 Liability of Indemnitees.
------------------------
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partners, the Assignees or any other Persons who have
acquired interests in the Units, for losses sustained or liabilities incurred as
a result of any act or omission if such Indemnitee acted in good faith.
(b) Subject to its obligations and duties as General Partner
set forth in Section 6.1(a), the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents, and the General Partner
shall not be responsible for any misconduct or negligence on the part of any
such agent appointed by the General Partner in good faith.
(c) Any amendment, modification or repeal of this Section 6.8
or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the liability to the Partnership and the Limited
Partners of the General Partner, its directors, officers and employees under
this Section 6.8 as in effect immediately prior to such amendment, modification
or repeal with respect to claims arising from or relating to matters occurring,
in whole or in part, prior to such amendment, modification or repeal, regardless
of when such claims may arise or be asserted.
Section 6.9 Resolution of Conflicts of Interest.
-----------------------------------
(a) Unless otherwise expressly provided in this Agreement or
the Operating Partnership Agreement, whenever a potential conflict of interest
exists or arises between the General Partner or any of its Affiliates, on the
one hand, and the Partnership, the Operating Partnership, any Partner or any
Assignee, on the other, any resolution or course of action in respect of such
conflict of interest shall be permitted and deemed approved by all Partners, and
shall not constitute a breach of this Agreement, of the Operating Partnership
Agreement, of any agreement contemplated herein or therein, or of any duty
stated or implied by law or equity, if the resolution or course of action is, or
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
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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 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 Operating Partnership, any Limited
Partner or any Assignee, (ii) it may make such decision in its sole discretion
(regardless of whether there is a reference to "sole discretion" or
"discretion") unless another express standard is provided for, or (iii) in "good
faith" or under another express standard, the General Partner or such Affiliate
shall act under such express standard and shall not be subject to any other or
different standards imposed by this Agreement, the Operating Partnership
Agreement, any other agreement contemplated hereby or under the Delaware Act or
any other law, rule or regulation. In addition, any actions taken by the General
Partner or such Affiliate consistent with the standards of "reasonable
discretion" set forth in the definitions of Available Cash or Cash from
Operations shall not constitute a breach of any duty of the General Partner to
the Partnership or the Limited Partners. The General Partner shall have no duty,
express or implied, to sell or otherwise dispose of any asset of the Operating
Partnership or of the Partnership, other than in the ordinary course of
business. No borrowing by the Partnership or the Operating Partnership or the
approval thereof by the General Partner shall be deemed to constitute a breach
of any duty of the General Partner to the Partnership or the Limited Partners by
reason of the fact that the purpose or effect of such borrowing is directly or
indirectly to enable Incentive Distributions or to hasten the expiration of the
Arrearage Period.
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(c) Whenever a particular transaction, arrangement or
resolution of a conflict of interest is required under this Agreement to be
"fair and reasonable" to any Person, the fair and reasonable nature of such
transaction, arrangement or resolution shall be considered in the context of all
similar or related transactions.
(d) The Limited Partners hereby authorize the General Partner,
on behalf of the Partnership as a partner of the Operating Partnership, to
approve of actions by the general partner of the Operating Partnership similar
to those actions permitted to be taken by the General Partner pursuant to this
Section 6.9.
Section 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, a duly appointed attorney or attorneys-in-fact or the duly
authorized officers of the Partnership. Each such attorney shall, to the extent
provided by the General Partner in the power of attorney, have full power and
authority to do and perform each and every act and duty that is permitted or
required to be done by the General Partner hereunder.
(d) Any standard of care and duty imposed by this Agreement or
under the Delaware Act or any applicable law, rule or regulation shall be
modified, waived or limited as required to permit the General Partner to act
under this Agreement or any other agreement contemplated by this Agreement and
to make any decision pursuant to the authority prescribed in this Agreement so
long as such action is reasonably believed by the General Partner to be in, or
not inconsistent with, the best interests of the Partnership.
Section 6.11 Title to Partnership Assets. Title to Partnership assets,
whether real, personal or mixed and whether tangible or intangible, shall be
deemed to be owned by the Partnership as an entity, and no Partner or Assignee,
individually or collectively, shall have any ownership interest in such
Partnership assets or any portion thereof. Title to any or all of the
Partnership assets may be held in the name of the Partnership, the General
Partner, 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
24403075.11 31501 1113C 00649490
63
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.
Section 6.12 Purchase or Sale of Units. The General Partner may cause
the Partnership to purchase or otherwise acquire Units; provided that, except
(a) as permitted pursuant to Section 11.6 and (b) in exchange for other Units or
Partnership Securities that are junior in right of distribution and liquidation
to the Senior Units, the General Partner may not cause the Partnership or any
Subsidiary to directly or indirectly purchase or otherwise acquire Common Units
or any other Units or Partnership Securities that are junior in right of
distribution or liquidation to the Senior Units at any time during which any of
the Senior Units are Outstanding. As long as Units are held by the Partnership
or the Operating Partnership, such Units shall not be considered Outstanding for
any purpose, except as otherwise provided herein. The General Partner or any
Affiliate of the General Partner may also purchase or otherwise acquire and sell
or otherwise dispose of Units for its own account, subject to the provisions of
Articles XI and XII.
Section 6.13 Registration Rights of Ferrellgas and its Affiliates.
(a) If (i) Ferrellgas or any Affiliate of Ferrellgas
(including, without limitation, for purposes of this Section 6.13, any Person
that is an Affiliate of Ferrellgas at the date hereof notwithstanding that it
may later cease to be an Affiliate of Ferrellgas) holds Units or other
Partnership Securities that it desires to sell and (ii) Rule 144 of the
Securities Act (or any successor rule or regulation to Rule 144) or another
exemption from registration is not available to enable such holder of Units (the
"Holder") to dispose of the number of Units or other securities it desires to
sell at the time it desires to do so without registration under the Securities
Act, then upon the request of Ferrellgas or any of its Affiliates, the
Partnership shall file with the Commission as promptly as practicable after
receiving such request, and use all reasonable efforts to cause to become
effective and remain effective for a period of not more than six months
following its effective date, a registration statement under the Securities Act
registering the offering and sale of the number of Units or other securities
specified by the Holder; provided, however, that the Partnership shall not be
required to effect more than three registrations pursuant to this Section
6.13(a); and provided further, that if the General Partner or, if at the time a
request pursuant to this Section 6.13 is submitted to the Partnership,
Ferrellgas or its Affiliate requesting registration is an Affiliate of the
General Partner, the Audit Committee in connection with Special Approval
determines in its good faith judgment that a postponement of the requested
registration for up to six months would be in the best interests of the
Partnership and its Partners due to a pending transaction, investigation or
other event, the filing of such registration statement or the effectiveness
thereof may be deferred for up to six months, but not thereafter. In connection
with any registration pursuant to the immediately preceding sentence, the
Partnership shall promptly prepare and file (x) such documents as may be
necessary to register or qualify the securities subject to such registration
under the securities laws of such states as the Holder shall reasonably request;
provided, however, that no such qualification
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shall be required in any jurisdiction where, as a result thereof, the
Partnership would become subject to general service of process or to taxation or
qualification to do business as a foreign corporation or partnership doing
business in such jurisdiction, and (y) such documents as may be necessary to
apply for listing or to list the securities subject to such registration on such
National Securities Exchange as the Holder shall reasonably request, and do any
and all other acts and things that may reasonably be necessary or advisable to
enable the Holder to consummate a public sale of such Units in such states.
Except as set forth in Section 6.13(c), all costs and expenses of any such
registration and offering (other than the underwriting discounts and
commissions) shall be paid by the Partnership, without reimbursement by the
Holder.
(b) If the Partnership shall at any time propose to file a
registration statement under the Securities Act for an offering of equity
securities of the Partnership for cash (other than an offering relating solely
to an employee benefit plan), the Partnership shall use all reasonable efforts
to include such number or amount of securities held by the Holder in such
registration statement as the Holder shall request. If the proposed offering
pursuant to this Section 6.13(b) shall be an underwritten offering, then, in the
event that the managing underwriter of such offering advises the Partnership and
the Holder in writing that in its opinion the inclusion of all or some of the
Holder's securities would adversely and materially affect the success of the
offering, the Partnership shall include in such offering only that number or
amount, if any, of securities held by the Holder which, in the opinion of the
managing underwriter, will not so adversely and materially affect the offering.
Except as set forth in Section 6.13(c), all costs and expenses of any such
registration and offering (other than the underwriting discounts and
commissions) shall be paid by the Partnership, without reimbursement by the
Holder.
(c) If underwriters are engaged in connection with any
registration referred to in this Section 6.13, the Partnership shall provide
indemnification, representations, covenants, opinions and other assurance to the
underwriters in form and substance reasonably satisfactory to such underwriters.
Further, in addition to and not in limitation of the Partnership's obligation
under Section 6.7, the Partnership shall, to the fullest extent permitted by
law, indemnify and hold harmless the Holder, its officers, directors and each
Person who controls the Holder (within the meaning of the Securities Act) and
any agent thereof (collectively, "Indemnified Persons") against any losses,
claims, demands, actions, causes of action, assessments, damages, liabilities
(joint or several), costs and expenses (including, without limitation, interest,
penalties and reasonable attorneys' fees and disbursements), resulting to,
imposed upon, or incurred by the Indemnified Persons, directly or indirectly,
under the Securities Act or otherwise (hereinafter referred to in this Section
6.13(c) as a "claim" and in the plural as "claims"), based upon, arising out of,
or resulting from any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which any Units were
registered under the Securities Act or any state securities or Blue Sky laws, in
any preliminary prospectus (if used prior to the effective date of such
registration statement), or in any summary or final prospectus or in any
amendment or supplement thereto (if used during the period the Partnership is
required to keep the registration statement current), or arising out of, based
upon or resulting from the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
made therein not misleading; provided, however, that the Partnership shall not
be liable to any Indemnified Person to the extent that any such claim arises out
of, is based upon or results from an untrue statement or
65
alleged untrue statement or omission or alleged omission made in such
registration statement, such preliminary, summary or final prospectus or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Partnership by or on behalf of such Indemnified
Person specifically for use in the preparation thereof.
(d) The provisions of Sections 6.13(a) and 6.13(b) shall
continue to be applicable with respect to Ferrellgas (and any of Ferrellgas'
Affiliates) after it ceases to be a Partner of the Partnership, during a period
of two years subsequent to the effective date of such cessation and for so long
thereafter as is required for the Holder to sell all of the Units or other
securities of the Partnership with respect to which it has requested during such
two year period that a registration statement be filed; provided, however, that
the Partnership shall not be required to file successive registration statements
covering the same securities for which registration was demanded during such
two-year period. The provisions of Section 6.13(c) shall continue in effect
thereafter.
(e) Any request to register Partnership Securities pursuant to
this Section 6.13 shall (i) specify the Partnership Securities intended to be
offered and sold by the Person making the request, (ii) express such Person's
present intent to offer such shares for distribution, (iii) describe the nature
or method of the proposed offer and sale of Partnership Securities, and (iv)
contain the undertaking of such Person to provide all such information and
materials and take all action as may be required in order to permit the
Partnership to comply with all applicable requirements in connection with the
registration of such Partnership Securities.
Section 6.14 Reliance by Third Parties. Notwithstanding anything to the
contrary in this Agreement any Person dealing with the Partnership shall be
entitled to assume that the General Partner and any officer of the Partnership
authorized by the General Partner to act on behalf and in the name of the
Partnership has full power and authority to encumber, sell or otherwise use in
any manner any and all assets of the Partnership and to enter into any contracts
on behalf of the Partnership, and such Person shall be entitled to deal with the
General Partner or any such officer as if it were the Partnership's sole party
in interest, both legally and beneficially. Each Limited Partner hereby waives
any and all defenses or other remedies that may be available against such Person
to contest, negate or disaffirm any action of the General Partner or any such
officer in connection with any such dealing. In no event shall any Person
dealing with the General Partner or any such officer 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 any such officer. Each and every certificate, document or
other instrument executed on behalf of the Partnership by the General Partner or
any such officer 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.
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ARTICLE VII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 7.1 Limitation of Liability. The Limited Partners and the
Assignees shall have no liability under this Agreement except as expressly
provided in this Agreement or the Delaware Act.
Section 7.2 Management of Business. No Limited Partner or Assignee
(other than the General Partner, any of its Affiliates or any officer, director,
employee, partner, agent or trustee of the General Partner or any of its
Affiliates, in its capacity as such, if such Person shall also be a Limited
Partner or Assignee) shall 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
General Partner, any of its Affiliates or any member, 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.
Section 7.3 Outside Activities. Subject to the provisions of Section
6.5, which shall continue to be applicable to the Persons referred to therein,
regardless of whether such Persons shall also be Limited Partners or Assignees,
any Limited Partner or Assignee shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including, without limitation, business interests and activities in
direct competition with the Partnership or the Operating Partnership. Neither
the Partnership nor any of the other Partners or Assignees shall have any rights
by virtue of this Agreement in any business ventures of any Limited Partner or
Assignee.
Section 7.4 Return of Capital. No Limited Partner or Assignee shall be
entitled to the withdrawal or return of its Capital Contribution, except to the
extent, if any, that distributions made pursuant to this Agreement or upon
termination of the Partnership may be considered as such by law and then only to
the extent provided for in this Agreement. Except to the extent provided by
Article V or as otherwise expressly provided in this Agreement, no Limited
Partner or Assignee shall have priority over any other Limited Partner or
Assignee either as to the return of Capital Contributions or as to profits,
losses or distributions. Any such return shall be a compromise to which all
Partners and Assignees agree within the meaning of ss. 17-502(b) of the Delaware
Act.
Section 7.5 Rights of Limited Partners Relating to the Partnership.
(a) In addition to other rights provided by this Agreement or
by applicable law, and except as limited by Section 7.5(b), each Limited Partner
shall have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon reasonable demand and at
such Limited Partner's own expense:
(i) to obtain true and full information regarding the status
of the business and financial condition of the Partnership;
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(ii) promptly after becoming available, to obtain a copy of
the Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to him, upon notification to the
General Partner, a current list of the name and last known business,
residence or mailing address of each Partner;
(iv) to have furnished to him, upon notification to the
General Partner, a copy of this Agreement and the Certificate of
Limited Partnership and all amendments thereto, together with a copy of
the executed copies of all powers of attorney pursuant to which this
Agreement, the Certificate of Limited Partnership and all amendments
thereto have been executed;
(v) to obtain true and full information regarding the amount
of cash and a description and statement of the Agreed Value of any
other Capital Contribution by each Partner and which each Partner has
agreed to contribute in the future, and the date on which each became a
Partner; and
(vi) to obtain such other information regarding the affairs of
the Partnership as is just and reasonable.
(b) Notwithstanding any other provision of this Agreement, the
General Partner may keep confidential from the Limited Partners and Assignees,
for such period of time as the General Partner deems reasonable, any information
that the General Partner reasonably believes to be in the nature of trade
secrets or other information the disclosure of which the General Partner in good
faith believes is not in the best interests of the Partnership or the Operating
Partnership or could damage the Partnership or the Operating Partnership or that
the Partnership or the Operating Partnership are required by law or by
agreements with third parties to keep confidential (other than agreements with
Affiliates the primary purpose of which is to circumvent the obligations set
forth in this Section 7.5).
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 8.1 Records and Accounting. The General Partner shall keep or
cause to be kept at the principal office of the Partnership appropriate books
and records with respect to the Partnership's business, including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Section 7.5(a). Any books and records maintained by or on behalf of the
Partnership in the regular course of its business, including, without
limitation, the record of the Record Holders and Assignees of Units or other
Partnership Securities, books of account and records of Partnership proceedings,
may be kept on, or be in the form of, computer disks, hard 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 both tax and financial reporting
purposes, on an accrual basis in accordance with generally accepted accounting
principles.
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Section 8.2 Fiscal Year. The fiscal year of the Partnership shall be August
1 to July 31. -----------
Section 8.3 Reports.
(a) As soon as practicable, but in no event later than 120
days after the close of each fiscal year of the Partnership, the General Partner
shall cause to be mailed to each Record Holder of a Unit as of a date selected
by the General Partner in its sole discretion, an annual report containing
financial statements of the Partnership for such fiscal year of the Partnership,
presented in accordance with generally accepted accounting principles, including
a balance sheet and statements of operations, Partners' equity and cash flows,
such statements to be audited by a firm of independent public accountants
selected by the General Partner.
(b) As soon as practicable, but in no event later than 90 days
after the close of each Quarter except the last Quarter of each year, the
General Partner shall cause to be mailed to each Record Holder of a Unit, as of
a date selected by the General Partner in its sole discretion, a report
containing unaudited financial statements of the Partnership and such other
information as may be required by applicable law, regulation or rule of any
National Securities Exchange on which the Units are listed for trading, or as
the General Partner determines to be necessary or appropriate.
ARTICLE IX
TAX MATTERS
Section 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 calendar year, the tax
information reasonably required by holders of Outstanding Units 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 August 1 to July 31.
Section 9.2 Tax Elections. Except as otherwise provided herein, the
General Partner shall, in its sole discretion, determine whether to make any
available election pursuant to the Code; provided, however, that the General
Partner shall make the election under Section 754 of the Code in accordance with
applicable regulations thereunder. The General Partner shall have the right to
seek to revoke any such election (including, without limitation, the election
under Section 754 of the Code) upon the General Partner's determination in its
sole discretion that such revocation is in the best interests of the Limited
Partners and Assignees. For purposes of computing the adjustments under Section
743(b) of the Code, the General Partner shall be authorized (but not required)
to adopt a convention whereby the price paid by a transferee of Units will be
deemed to be the lowest quoted closing price of the Units on any National
Securities Exchange on which such Units are traded during the calendar month in
which such transfer is deemed to occur pursuant to Section 5.2(g) without regard
to the actual price paid by such transferee.
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Section 9.3 Tax Controversies. Subject to the provisions hereof, the
General Partner is designated the Tax Matters Partner (as defined in Section
6231 of the Code), and is authorized and required to represent the Partnership
(at the Partnership's expense) in connection with all examinations of the
Partnership's affairs by tax authorities, including, without limitation,
resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. Each Partner and
Assignee agrees to cooperate with the General Partner and to do or refrain from
doing any or all things reasonably required by the General Partner to conduct
such proceedings.
Section 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.
Section 9.5 Withholding. Notwithstanding any other provision of this
Agreement, the General Partner is authorized to take any action that it
determines in its sole discretion to be necessary or appropriate to cause the
Partnership and the Operating Partnership to comply with any withholding
requirements established under the Code or any other federal, state or local law
including, without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of
the Code. To the extent that the Partnership is required to withhold and pay
over to any taxing authority any amount resulting from the allocation or
distribution of income to any Partner or Assignee (including, without
limitation, by reason of Section 1446 of the Code), the amount withheld shall be
treated as a distribution of cash pursuant to Section 5.3 in the amount of such
withholding from such Partner.
Section 9.6 Entity-Level Taxation. If legislation is enacted or the
interpretation of existing language is modified which causes the Partnership or
the Operating Partnership to be treated as an association taxable as a
corporation or otherwise subjects the Partnership or the Operating Partnership
to entity-level taxation for federal income tax purposes, the Minimum Quarterly
Distribution, First Target Distribution, Second Target Distribution or Third
Target Distribution, as the case may be, shall be equal to the product obtained
by multiplying (a) the amount thereof by (b) 1 minus the sum of (i) the highest
marginal federal corporate (or other entity, as applicable) income tax rate of
the Partnership for the taxable year of the Partnership in which such Quarter
occurs (expressed as a percentage) plus (ii) the effective overall state and
local income tax rate (expressed as a percentage) applicable to the Partnership
for the calendar year next preceding the calendar year in which such Quarter
occurs (after taking into account the benefit of any deduction allowable for
federal income tax purposes with respect to the payment of state and local
income taxes), but only to the extent of the increase in such rates resulting
from such legislation or interpretation. Such effective overall state and local
income tax rate shall be determined for the taxable year next preceding the
first taxable year during which the Partnership or the Operating Partnership is
taxable for federal income tax purposes as an association taxable as a
corporation or is otherwise subject to entity-level taxation by determining such
rate as if the Partnership or the Operating Partnership had been subject to such
state and local taxes during such preceding taxable year.
Section 9.7 Entity-Level Arrearage Collections. If the Partnership is
required by applicable law to pay any federal, state or local income tax on
behalf of, or withhold such amount with respect to, any Partner or Assignee or
any former Partner or Assignee in respect of Common Units held by such Person
(a) the General Partner shall cause the Partnership to pay such tax on behalf of
such Partner or Assignee or former Partner or Assignee from the funds of the
Partnership; (b) any amount
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so paid on behalf of, or withheld with respect to, any such Partner or Assignee
shall constitute a distribution out of Available Cash to such Partner or
Assignee pursuant to Section 5.3; provided, however, in the discretion of the
General Partner, such taxes (if pertaining to all such Partners) may be
considered to be cash disbursements of the Partnership which reduce Available
Cash, but the payment or withholding thereof shall not be deemed to be a
distribution of Available Cash to such Partners; and (c) to the extent any such
Partner or Assignee (but not a former Partner or Assignee) is not then entitled
to such distribution under this Agreement, the General Partner shall be
authorized, without the approval of any Partner or Assignee, to amend this
Agreement insofar as is necessary to maintain the uniformity of intrinsic tax
characteristics as to all Common Units and to make subsequent adjustments to
distributions in a manner which, in the reasonable judgment of the General
Partner, will make as little alteration as practicable in the priority and
amount of distributions otherwise applicable under this Agreement, and will not
otherwise alter the distributions to which Partners and Assignees are entitled
under this Agreement. If the Partnership is permitted (but not required) by
applicable law to pay any such tax on behalf of, or withhold such amount with
respect to, any Partner or Assignee or former Partner or Assignee with respect
to Common Units held by such Person, the General Partner shall be authorized
(but not required) upon the affirmative vote of the holders of at least a
majority of the Outstanding Senior Units, if any, to cause the Partnership to
pay such tax from the funds of the Partnership and to take any action consistent
with this Section 9.7. The General Partner shall be authorized (but not
required) to take all necessary or appropriate actions to collect all or any
portion of a deficiency in the payment of any such tax that relates to prior
periods and that is attributable to Persons who were Limited Partners or
Assignees with respect to Common Units held by such Person when such
deficiencies arose, from such Persons. The payment of taxes by the Partnership
on behalf of Limited Partners holding Senior Units will not satisfy the
obligation of the Partnership to pay the Senior Unit Distribution.
Section 9.8 Opinions of Counsel. Notwithstanding any other provision of
this Agreement, if the Partnership or the Operating 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 the Operating
Partnership 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
CERTIFICATES
Section 10.1 Certificates. Upon the Partnership's issuance of Common
Units or Senior Units to any Person, the Partnership shall issue one or more
Certificates in the name of such Person evidencing the number of such Units
being so issued. Certificates shall be executed on behalf of the Partnership by
the General Partner. No Common Unit Certificate shall be valid for any purpose
until it has been countersigned by the Transfer Agent; provided, however, that
if the General Partner elects to issue Units in global or book-entry form, the
Certificates shall be valid upon receipt of a certificate from the Transfer
Agent certifying that such Units have been duly registered in accordance with
the directions of the Partnership. The Partners holding Certificates evidencing
Senior Units may exchange such Certificates for Certificates evidencing Common
Units on or after
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the date on which such Senior Units are converted into Common Units pursuant to
the terms of Section 5.7(d). The General Partner Units need not be certificated,
but upon request of the General Partner, may be represented by Certificates in
the same manner as the Common Units or Senior Units.
Section 10.2 Registration, Registration of Transfer and Exchange.
(a) The General Partner shall cause to be kept on behalf of
the Partnership a register in which, subject to such reasonable regulations as
it may prescribe and subject to the provisions of Section 10.2(b), the General
Partner will provide for the registration and transfer of Units. The Transfer
Agent is hereby appointed registrar and transfer agent for the purpose of
registering Common Units and transfers of such Common Units as herein provided.
The Partnership shall not recognize transfers of Certificates representing Units
unless same are effected in the manner described in this Section 10.2. Upon
surrender for registration of transfer of any Units evidenced by a Certificate,
and subject to the provisions of Section 10.2(b), the General Partner on behalf
of the Partnership shall execute, and in the case of Common Units, the Transfer
Agent shall countersign, and deliver (or, in the case of Units issued in global
or book-entry form, register in accordance with the rules and regulations of the
Depositary), in the name of the holder or the designated transferee or
transferees, as required pursuant to the holder's instructions, one or more new
Certificates evidencing the same aggregate number of Units as was evidenced by
the Certificate so surrendered.
(b) Except as otherwise provided in Section 11.5, the
Partnership shall not recognize any transfer of Units until the Certificates
evidencing such Units are surrendered for registration of transfer and such
Certificates are accompanied by a Transfer Application duly executed by the
transferee (or the transferee's attorney-in-fact duly authorized in writing). No
charge shall be imposed by the Partnership for such transfer, provided, that as
a condition to the issuance of any new Certificate under this Section 10.2, the
General Partner may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed with respect thereto.
Section 10.3 Mutilated, Destroyed, Lost or Stolen Certificates.
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(a) If any mutilated Certificate is surrendered to the
Transfer Agent, the General Partner on behalf of the Partnership shall execute,
and upon its request the Transfer Agent shall countersign and deliver in
exchange therefor, a new Certificate evidencing the same number of Units as the
Certificate so surrendered.
(b) The General Partner on behalf of the Partnership shall
execute, and upon its request, in the case of Common Units, the Transfer Agent
shall countersign and deliver (or, in the case of Units issued in global or
book-entry form, register in accordance with the rules and regulations of the
Depositary) a new Certificate in place of any Certificate previously issued if
the Record Holder of the Certificate:
(i) makes proof by affidavit, in form and substance
satisfactory to the General Partner, that a previously issued
Certificate has been lost, destroyed or stolen;
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(ii) requests the issuance of a new Certificate before the
Partnership has notice that the Certificate has been acquired by a
purchaser for value in good faith and without notice of an adverse
claim;
(iii) if requested by the General Partner, delivers to the
Partnership a bond, in form and substance satisfactory to the General
Partner, with surety or sureties and with fixed or open penalty as the
General Partner may reasonably direct, in its sole discretion, to
indemnify the Partnership, the General Partner and the Transfer Agent
against any claim that may be made on account of the alleged loss,
destruction or theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by
the General Partner.
If a Limited Partner or Assignee fails to notify the Partnership within a
reasonable time after he has notice of the loss, destruction or theft of a
Certificate, and a transfer of the Units represented by the Certificate is
registered before the Partnership, the General Partner or the Transfer Agent
receives such notification, the Limited Partner or Assignee shall be precluded
from making any claim against the Partnership, the General Partner or the
Transfer Agent for such transfer or for a new Certificate.
(c) As a condition to the issuance of any new Certificate
under this Section 10.3, the General Partner may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including, without limitation, the fees
and expenses of the Transfer Agent) reasonably connected therewith.
Section 10.4 Record Holder. In accordance with Section 10.2(b), the
Partnership shall be entitled to recognize the Record Holder as the Limited
Partner or Assignee with respect to any Units and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such Units on
the part of any other Person, whether or not the Partnership shall have actual
or other notice thereof, except as otherwise provided by law or any applicable
rule, regulation, guideline or requirement of any National Securities Exchange
on which the Units are listed for trading. Without limiting the foregoing, when
a Person (such as a broker, dealer, bank, trust company or clearing corporation
or an agent of any of the foregoing) is acting as nominee, agent or in some
other representative capacity for another Person in acquiring and/or holding
Units, as between the Partnership on the one hand, and such other Persons, on
the other, such representative Person (a) shall be the Limited Partner or
Assignee (as the case may be) of record and beneficially, (b) must execute and
deliver a Transfer Application and (c) shall be bound by this Agreement and
shall have the rights and obligations of a Limited Partner or Assignee (as the
case may be) hereunder and as provided for herein.
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ARTICLE XI
TRANSFER OF INTERESTS
Section 11.1 Transfer.
(a) The term "transfer," when used in this Article XI with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which the General Partner assigns its General Partner Interest to another
Person, by which the holder of a Unit assigns such Unit to another Person who is
or becomes an Assignee or by which a Special Limited Partner holding an IDR
assigns such IDR 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 XI. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article XI shall be null and void.
(c) Nothing contained in this Article XI shall be construed to
prevent a disposition by the parent entity of the General Partner of any or all
of the issued and outstanding capital stock of the General Partner.
(d) Nothing contained in this Article XI, or elsewhere in this
Partnership Agreement, shall preclude the settlement of any transactions
involving Common Units entered into through the facilities of the New York Stock
Exchange.
Section 11.2 Transfer of the General Partner Interest. Except for a
transfer by the General Partner of all, but not less than all, of its General
Partner Interest to (a) an Affiliate of the General Partner or (b) another
Person in connection with the merger or consolidation of the General Partner
with or into another Person or the transfer by the General Partner of all or
substantially all of its assets to another Person, the transfer by the General
Partner of all or any part of its General Partner Interest to a Person prior to
July 31, 2004 shall be subject to the prior approval of at least a majority of
the Outstanding Common Units (excluding for purposes of such determination Units
owned by the General Partner and its Affiliates). Notwithstanding anything
herein to the contrary, no transfer by the General Partner of all or any part of
its General Partner Interest to another Person shall be permitted unless (i) the
transferee agrees to assume the rights and duties of the General Partner under
this Agreement and the Operating Partnership Agreement and to be bound by the
provisions of this Agreement and the Operating Partnership Agreement, (ii) the
Partnership receives an Opinion of Counsel that such transfer would not result
in the loss of limited liability of any Limited Partner or of any limited
partner of the Operating Partnership or cause the Partnership or any of the
Operating Partnership to be treated as an association taxable as a corporation
or otherwise to be taxed as an entity for federal income tax purposes and (iii)
such transferee also agrees to purchase all (or the appropriate portion thereof,
if applicable) of the partnership interest of the General Partner as the general
partner of the Operating Partnership. In the case of a transfer pursuant to and
in compliance with this Section 11.2, the transferee or successor (as the case
may be) shall, subject to compliance with the terms of Section 12.3, be admitted
to the Partnership as a General Partner immediately prior to the transfer of the
General Partner Interest, and the business of the Partnership shall continue
without dissolution.
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Section 11.3 Transfer of Units (other than General Partner Units).
(a) Units (other than General Partner Units) may be
transferred only in the manner described in Section 10.2. The transfer of any
Units (other than General Partner Units) and the admission of any new Partner
shall not constitute an amendment to this Agreement.
(b) Until admitted as a Substituted Limited Partner pursuant
to Article XII, the Record Holder of a Unit shall be an Assignee in respect of
such Unit. Limited Partners may include custodians, nominees, or any other
individual or entity in its own or any representative capacity.
(c) Each distribution in respect of Units shall be paid by the
Partnership, directly or through the Transfer Agent or through any other Person
or agent, only to the Record Holders thereof as of the Record Date set for the
distribution. Such payment shall constitute full payment and satisfaction of the
Partnership's liability in respect of such payment, regardless of any claim of
any Person who may have an interest in such payment by reason of an assignment
or otherwise.
(d) A transferee who has completed and delivered a Transfer
Application shall be deemed to have (i) requested admission as a Substituted
Limited Partner, (ii) agreed to comply with and be bound by and to have executed
this Agreement, (iii) represented and warranted that such transferee has the
right, power and authority and, if an individual, the capacity to enter into
this Agreement, (iv) granted the powers of attorney set forth in this Agreement
and (v) given the consents and approvals and made the waivers contained in this
Agreement.
Section 11.4 Restrictions on Transfers. Notwithstanding the other
provisions of this Article XI, no transfer of any Unit or interest therein of
any Limited Partner, Special Limited Partner or Assignee shall be made if such
transfer would (a) violate the then applicable federal or state securities laws
or rules and regulations of the Securities and Exchange Commission, any state
securities commission or any other governmental authorities with jurisdiction
over such transfer, (b) result in the taxation of the Partnership or the
Operating Partnership as an association taxable as a corporation or otherwise
subject the Partnership or the Operating Partnership to entity-level taxation
for federal income tax purposes or (c) affect the Partnership's or the Operating
Partnership's existence or qualification as a limited partnership under the
Delaware Act.
Section 11.5 Citizenship Certificates; Non-citizen Assignees.
-----------------------------------------------
(a) If the Partnership or the Operating Partnership is or
becomes subject to any federal, state or local law or regulation that, in the
reasonable determination of the General Partner, creates a substantial risk of
cancellation or forfeiture of any property in which the Partnership or the
Operating Partnership has an interest based on the nationality, citizenship or
other related status of a Limited Partner or Assignee, the General Partner may
request any Limited Partner or Assignee to furnish to the General Partner,
within 30 days after receipt of such request, an executed Citizenship
Certification or such other information concerning his nationality, citizenship
or other related status (or, if the Limited Partner or Assignee is a nominee
holding for the account of another Person, the nationality, citizenship or other
related status of such Person) as the General Partner may request. If a Limited
Partner or Assignee fails to furnish to the General Partner within the
aforementioned 30-day period such Citizenship Certification or other requested
information or if upon receipt of such Citizenship Certification or other
requested information the General Partner determines, with
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the advice of counsel, that a Limited Partner or Assignee is not an Eligible
Citizen, the Units owned by such Limited Partner or Assignee shall be subject to
redemption in accordance with the provisions of Section 11.6. In addition, the
General Partner may require that the status of any such Limited Partner or
Assignee be changed to that of a Non-citizen Assignee, and, thereupon, the
General Partner shall be substituted for such Non-citizen Assignee as the
Limited Partner in respect of his Units.
(b) The General Partner shall, in exercising voting rights in
respect of Units held by it on behalf of Non-citizen Assignees, distribute the
votes in the same ratios as the votes of Limited Partners in respect of Units
other than those of Non-citizen Assignees are cast, either for, against or
abstaining as to the matter.
(c) Upon dissolution of the Partnership, a Non-citizen
Assignee shall have no right to receive a distribution in kind pursuant to
Section 14.4 but shall be entitled to the cash equivalent thereof, and the
General Partner shall provide cash in exchange for an assignment of the
Non-citizen Assignee's share of the distribution in kind. Such payment and
assignment shall be treated for Partnership purposes as a purchase by the
General Partner from the Non-citizen Assignee of his Partnership Interest
(representing his right to receive his share of such distribution in kind).
(d) At any time after he can and does certify that he has
become an Eligible Citizen, a Non-citizen Assignee may, upon application to the
General Partner, request admission as a Substituted Limited Partner with respect
to any Units of such Non-citizen Assignee not redeemed pursuant to Section 11.6,
and upon his admission pursuant to Section 12.2 the General Partner shall cease
to be deemed to be the Limited Partner in respect of the Non-citizen Assignee's
Units.
Section 11.6 Redemption of Interests.
-----------------------
(a) If at any time a Limited Partner or Assignee fails to
furnish a Citizenship Certification or other information requested within the
30-day period specified in Section 11.5(a), or if upon receipt of such
Citizenship Certification or other information the General Partner determines,
with the advice of counsel, that a Limited Partner or Assignee is not an
Eligible Citizen, the Partnership may, unless the Limited Partner or Assignee
establishes to the satisfaction of the General Partner that such Limited Partner
or Assignee is an Eligible Citizen or has transferred his Units to a Person who
furnishes a Citizenship Certification to the General Partner prior to the date
fixed for redemption as provided below, redeem the Partnership Interest of such
Limited Partner or Assignee as follows:
(i) The General Partner shall, not later than the 30th day
before the date fixed for redemption, give notice of redemption to the
Limited Partner or Assignee, at his last address designated on the
records of the Partnership or the Transfer Agent, by registered or
certified mail, postage prepaid. The notice shall be deemed to have
been given when so mailed. The notice shall specify the Redeemable
Units, the date fixed for redemption, the place of payment, that
payment of the redemption price will be made upon surrender of the
Certificate evidencing the Redeemable Units and that on and after the
date fixed for redemption no further allocations or distributions to
which the Limited Partner or Assignee would otherwise be entitled in
respect of the Redeemable Units will accrue or be made.
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(ii) The aggregate redemption price for Redeemable Units shall
be an amount equal to the Current Market Price (the date of
determination of which shall be the date fixed for redemption) of Units
of the class to be so redeemed multiplied by the number of Units of
each such class included among the Redeemable Units. The redemption
price shall be paid, in the sole discretion of the General Partner, in
cash or by delivery of a promissory note of the Partnership in the
principal amount of the redemption price, bearing interest at the rate
of 10% annually and payable in three equal annual installments of
principal together with accrued interest, commencing one year after the
redemption date.
(iii) Upon surrender by or on behalf of the Limited Partner or
Assignee, at the place specified in the notice of redemption, of the
Certificate evidencing the Redeemable Units, duly endorsed in blank or
accompanied by an assignment duly executed in blank, the Limited
Partner or Assignee or his duly authorized representative shall be
entitled to receive the payment therefor.
(iv) After the redemption date, Redeemable Units shall no
longer constitute issued and Outstanding Units.
(b) The provisions of this Section 11.6 shall also be
applicable to Units held by a Limited Partner or Assignee as nominee of a Person
determined to be other than an Eligible Citizen.
(c) Nothing in this Section 11.6 shall prevent the recipient
of a notice of redemption from transferring his Units before the redemption date
if such transfer is otherwise permitted under this Agreement. Upon receipt of
notice of such a transfer, the General Partner shall withdraw the notice of
redemption, provided, the transferee of such Units certifies in the Transfer
Application that he is an Eligible Citizen. If the transferee fails to make such
certification, such redemption shall be effected from the transferee on the
original redemption date.
Section 11.7 Transfer of IDRs. A Special Limited Partner holding IDRs
may transfer any or all of the IDRs held by such Special Limited Partner. The
General Partner shall have the authority (but shall not be required) to adopt
such reasonable restrictions on the transfer of IDRs, consistent with the
restrictions on transfer of Units provided for in this Agreement, and
requirements for registering the transfer of IDRs as the General Partner, in its
sole discretion, shall determine are necessary or appropriate including, without
limitation, if the General Partner shall so determine, in its sole discretion,
the right of the Partnership to redeem IDRs upon terms and conditions similar to
those applicable to Units.
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ARTICLE XII
ADMISSION OF PARTNERS
Section 12.1 Admission of Initial Limited Partners. On the Initial
Closing Date, the General Partner was admitted to the Partnership as a Limited
Partner in respect of the Common Units and Subordinated Units issued to it and
as a Special Limited Partner in respect of the IDRs issued to it, and the
Underwriters were admitted to the Partnership as Initial Limited Partners.
Section 12.2 Admission of Substituted Limited Partners. By transfer of
a Unit (other than a General Partner Unit) in accordance with Article XI, the
transferor shall be deemed to have given the transferee the right to seek
admission as a Substituted Limited Partner subject to the conditions of, and in
the manner permitted under, this Agreement. A transferor of a Certificate (other
than a Certificate representing a General Partner Unit) shall, however, only
have the authority to convey to a purchaser or other transferee who does not
execute and deliver a Transfer Application (a) the right to negotiate such
Certificate to a purchaser or other transferee and (b) the right to transfer the
right to request admission as a Substituted Limited Partner to such purchaser or
other transferee in respect of the transferred Units. Each transferee of a Unit
(other than a General Partner Unit) (including, without limitation, any nominee
holder or an agent acquiring such Unit for the account of another Person) who
executes and delivers a Transfer Application shall, by virtue of such execution
and delivery, be an Assignee and be deemed to have applied to become a
Substituted Limited Partner with respect to the Units so transferred to such
Person. Such Assignee shall become a Substituted Limited Partner (x) at such
time as the General Partner consents thereto, which consent may be given or
withheld in the General Partner's sole discretion, and (y) when any such
admission is shown on the books and records of the Partnership. If such consent
is withheld, such transferee shall be an Assignee. An Assignee shall have an
interest in the Partnership equivalent to that of a Limited Partner with respect
to allocations and distributions, including, without limitation, liquidating
distributions, of the Partnership. With respect to voting rights attributable to
Units that are held by Assignees, the General Partner shall be deemed to be the
Limited Partner with respect thereto and shall, in exercising the voting rights
in respect of such Units on any matter, vote such Units at the written direction
of the Assignee who is the Record Holder of such Units. If no such written
direction is received, such Units will not be voted. An Assignee shall have no
other rights of a Limited Partner.
Section 12.3 Admission of Successor General Partner. A successor
General Partner approved pursuant to Section 13.1 or 13.2 or the transferee of
or successor to all of the General Partner Interest pursuant to Section 11.2 who
is proposed to be admitted as a successor General Partner shall be admitted to
the Partnership as the General Partner, effective immediately prior to the
withdrawal or removal of the General Partner pursuant to Section 13.1 or 13.2 or
the transfer of the General Partner Interest pursuant to Section 11.2; provided,
however, that no such successor shall be admitted to the Partnership until
compliance with the terms of Section 11.2 has occurred and such successor has
executed and delivered such other documents or instruments as may be required to
effect such admission. Any such successor shall, subject to the terms hereof,
carry on the business of the Partnership and Operating Partnership without
dissolution.
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Section 12.4 Admission of Additional Limited Partners.
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(a) A Person (other than the General Partner, an Initial
Limited Partner or a Substituted Limited Partner) who makes a Capital
Contribution to the Partnership in accordance with this Agreement shall be
admitted to the Partnership as an Additional Limited Partner only upon
furnishing to the General Partner (i) evidence of acceptance in form
satisfactory to the General Partner of all of the terms and conditions of this
Agreement, including, without limitation, the power of attorney granted in
Section 1.4, and (ii) such other documents or instruments as may be required in
the discretion of the General Partner to effect such Person's admission as an
Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section
12.4, no Person shall be admitted as an Additional Limited Partner without the
consent of the General Partner, which consent may be given or withheld in the
General Partner's sole discretion. The admission of any Person as an Additional
Limited Partner shall become effective on the date upon which the name of such
Person is recorded as such in the books and records of the Partnership,
following the consent of the General Partner to such admission.
(c) Upon the issuance by the Partnership of Senior Units to
WNGL pursuant to the WNGL Purchase Agreement and the execution and delivery in
writing evidencing WNGL's acceptance of all of the terms and conditions of this
Agreement, including, without limitation, the power of attorney granted in
Section 1.4, the General Partner shall admit WNGL to the Partnership as an
Additional Limited Partner on the WNGL Closing Date.
Section 12.5 Amendment of Agreement and Certificate of Limited
Partnership. To effect the admission to the Partnership of any Partner, the
General Partner shall take all steps necessary and appropriate under the
Delaware Act to amend the records of the Partnership 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.
ARTICLE XIII
WITHDRAWAL OR REMOVAL OF PARTNERS
Section 13.1 Withdrawal of the General Partner.
---------------------------------
(a) The General Partner shall be deemed to have withdrawn from
the Partnership upon the occurrence of any one of the following events (each
such event herein referred to as an "Event of Withdrawal");
(i) the General Partner voluntarily withdraws from the
Partnership by giving written notice to the other Partners (and it
shall be deemed that the General Partner has withdrawn pursuant to this
Section 13.1(a)(i) if the General Partner voluntarily withdraws as
general partner of the Operating Partnership);
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(ii) the General Partner transfers all of its General Partner
Interest pursuant to Section 11.2;
(iii) the General Partner is removed pursuant to Section 13.2;
(iv) the General Partner (A) makes a general assignment for
the benefit of creditors; (B) files a voluntary bankruptcy petition;
(C) files a petition or answer seeking for itself a reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any law; (D) files an answer or other pleading
admitting or failing to contest the material allegations of a petition
filed against the General Partner in a proceeding of the type described
in clauses (A)-(C) of this Section 13.1(a)(iv); or (E) seeks, consents
to or acquiesces in the appointment of a trustee, receiver or
liquidator of the General Partner or of all or any substantial part of
its properties;
(v) a final and non-appealable judgment is entered by a court
with appropriate jurisdiction ruling that the General Partner is
bankrupt or insolvent, or a final and non-appealable order for relief
is entered by a court with appropriate jurisdiction against the General
Partner, in each case under any federal or state bankruptcy or
insolvency laws as now or hereafter in effect; or
(vi) a certificate of dissolution or its equivalent is filed
for the General Partner, or 90 days expire after the date of notice to
the General Partner of revocation of its charter without a
reinstatement of its charter, under the laws of its state of
incorporation.
If an Event of Withdrawal specified in Section 13.1(a)(iv), (v) or (vi) occurs,
the withdrawing General Partner shall give notice to the Limited Partners within
30 days after such occurrence. The Partners hereby agree that only the Events of
Withdrawal described in this Section 13.1 shall result in the withdrawal of the
General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership
upon the occurrence of an Event of Withdrawal 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 July 31, 2004, the General Partner voluntarily withdraws by
giving at least 90 days' advance notice of its intention to withdraw to the
Limited Partners, provided, that prior to the effective date of such withdrawal
the withdrawal is approved by the holders of at least two-thirds of the
Outstanding Common Units (excluding for purposes of such determination Common
Units owned by the General Partner and its Affiliates) and the General Partner
delivers to the Partnership an Opinion of Counsel ("Withdrawal Opinion of
Counsel") that such withdrawal (following the selection of the successor General
Partner) would not result in the loss of the limited liability of any Limited
Partner or of the limited partner of the Operating Partnership or cause the
Partnership or the Operating Partnership to be treated as an association taxable
as a corporation or otherwise to be taxed as an entity for federal income tax
purposes; (ii) at any time after 12:00 midnight, Central Standard Time, on July
31, 2004, the General Partner voluntarily withdraws by giving at least 90 days'
advance notice to the Limited Partners, such withdrawal to take effect on the
date specified in such notice; (iii) at any time that the General Partner ceases
to be a General Partner pursuant to Section 13.1(a)(ii) or is removed pursuant
to Section 13.2; or (iv) notwithstanding clause (i) of this sentence, at any
time that the General Partner voluntarily withdraws by giving at least 90
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days' advance notice of its intention to withdraw to the Limited Partners, such
withdrawal to take effect on the date specified in the notice, if at the time
such notice is given one Person and its Affiliates (other than the General
Partner and its Affiliates) own beneficially or of record or control at least
50% of the Outstanding Common Units. The withdrawal of the General Partner from
the Partnership upon the occurrence of an Event of Withdrawal shall also
constitute the withdrawal of the General Partner as general partner of the
Operating Partnership. If the General Partner gives a notice of withdrawal
pursuant to Section 13.1(a)(i), holders of at least a majority of the
Outstanding Common Units (excluding for purposes of such determination Common
Units owned by the General Partner and its Affiliates) may, prior to the
effective date of such withdrawal, elect a successor General Partner. If, prior
to the effective date of the General Partner's withdrawal, a successor is
selected by the Limited Partners as provided herein, the Partnership, as the
limited partner of the Operating Partnership, shall cause such Person to become
the successor general partner of the Operating Partnership, as provided in the
Operating Partnership Agreement. If, prior to the effective date of the General
Partner's withdrawal, a successor is not selected by the Limited Partners as
provided herein or the Partnership does not receive a Withdrawal Opinion of
Counsel, the Partnership shall be dissolved in accordance with Section 14.1. Any
successor General Partner elected in accordance with the terms of this Section
13.1 shall be subject to the provisions of Section 12.3.
Section 13.2 Removal of the General Partner. The General Partner may be
removed if such removal is approved by Limited Partners holding at least
two-thirds of the Outstanding Common Units. Any such action by such Limited
Partners for removal of the General Partner must also provide for the election
of a successor General Partner by Limited Partners holding at least a majority
of the Outstanding Common Units. Such removal shall be effective immediately
following the admission of a successor General Partner pursuant to Article XII.
The removal of the General Partner shall also automatically constitute the
removal of the General Partner as general partner of the Operating Partnership,
as provided in the Operating Partnership Agreement. If a Person is elected as a
successor General Partner in accordance with the terms of this Section 13.2, the
Partnership, as the limited partner of the Operating Partnership, shall cause
such Person to become the successor general partner of the Operating
Partnership, as provided in the Operating Partnership Agreement. The right of
the Limited Partners holding Outstanding Common Units to remove the General
Partner shall not exist or be exercised unless the Partnership has received an
opinion opining as to the matters covered by a Withdrawal Opinion of Counsel.
Any successor General Partner elected in accordance with the terms of this
Section 13.2 shall be subject to the provisions of Section 12.3.
ection 13.3 Interest of Departing Partner and Successor General Partner.
(a) In the event of (i) withdrawal of the General Partner
under circumstances where such withdrawal does not violate this Agreement or
(ii) removal of the General Partner by the holders of Common Units under
circumstances where Cause does not exist, if a successor General Partner is
elected in accordance with the terms of Section 13.1 or 13.2, the Departing
Partner shall have the option exercisable prior to the effective date of the
departure of such Departing Partner to require its successor to purchase its
General Partner Interest and its partnership interest as the general partner in
the Operating Partnership (collectively, the "Combined Interest") in exchange
for an amount in cash equal to the fair market value of such Combined Interest,
such amount to be determined and payable as of the effective date of its
departure. If the General Partner
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is removed by the Limited Partners under circumstances where Cause exists or if
the General Partner withdraws under circumstances where such withdrawal violates
this Agreement or the Operating Partnership Agreement, and if a successor
General Partner is elected in accordance with the terms of Section 13.1 or 13.2,
such successor shall have the option, exercisable prior to the effective date of
the departure of such Departing Partner, to purchase the Combined Interest of
the Departing Partner for such fair market value of such Combined Interest. In
either event, the Departing Partner shall be entitled to receive all
reimbursements due such Departing Partner pursuant to Section 6.4, including,
without limitation, any employee-related liabilities (including, without
limitation, severance liabilities), incurred in connection with the termination
of any employees employed by the General Partner for the benefit of the
Partnership or the Operating Partnership. Subject to Section 13.3(b), the
Departing Partner shall, as of the effective date of its departure, cease to
share in any allocations or distributions with respect to its General Partner
Interest and Partnership income, gain, loss, deduction and credit will be
prorated and allocated as set forth in Section 5.2(g).
For purposes of this Section 13.3(a), the fair market value of the
Departing Partner's Combined Interest shall be determined by agreement between
the Departing Partner and its successor or, failing agreement within 30 days
after the effective date of such Departing Partner's departure, by an
independent investment banking firm or other independent expert selected by the
Departing Partner and its successor, which, in turn, may rely on other experts
and the determination of which shall be conclusive as to such matter. If such
parties cannot agree upon one independent investment banking firm or other
independent expert within 45 days after the effective date of such departure,
then the Departing Partner shall designate an independent investment banking
firm or other independent expert, the Departing Partner's successor shall
designate an independent investment banking firm or other independent expert,
and such firms or experts shall mutually select a third independent investment
banking firm or independent expert, which shall determine the fair market value
of the Combined Interest. In making its determination, such independent
investment banking firm or other independent expert shall consider the then
current trading price of Units on any National Securities Exchange on which
Units are then listed, the value of the Partnership's assets, the rights and
obligations of the General Partner and other factors it may deem relevant.
(b) If the Combined Interest is not purchased in the manner
set forth in Section 13.3(a), the Departing Partner shall become a Limited
Partner and the Combined Interest shall be converted into Common Units pursuant
to a valuation made by an investment banking firm or other independent expert
selected pursuant to Section 13.3(a), without reduction in such Partnership
Interest (but subject to proportionate dilution by reason of the admission of
its successor). Any successor General Partner shall indemnify the Departing
Partner as to all debts and liabilities of the Partnership arising on or after
the date on which the Departing Partner becomes a Limited Partner. For purposes
of this Agreement, conversion of the General Partner's Combined Interest to
Common Units will be characterized as if the General Partner contributed its
Combined Interest to the Partnership in exchange for the newly issued Common
Units.
(c) If a successor General Partner is elected in accordance
with the terms of Section 13.1 or 13.2 and the option described in Section
13.3(a) is not exercised by the party entitled to do so, the successor General
Partner shall, at the effective date of its admission to the Partnership,
contribute to the capital of the Partnership cash in an amount such that its
Capital Account, after giving effect to such contribution and any adjustments
made to the Capital Accounts of all Partners pursuant to Section 4.5(d)(i),
shall be equal to that percentage of the Capital Accounts of all Partners
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that is equal to its Percentage Interest as the General Partner. In such event,
such successor General Partner shall, subject to the following sentence, be
entitled to such Percentage Interest of all Partnership allocations and
distributions and any other allocations and distributions to which the Departing
Partner was entitled.
Section 13.4 Withdrawal of Limited Partners. No Limited Partner shall
have any right to withdraw from the Partnership; provided, however, that when a
transferee of a Limited Partner's Units becomes a Record Holder, such
transferring Limited Partner shall cease to be a Limited Partner with respect to
the Units so transferred.
ARTICLE XIV
DISSOLUTION AND LIQUIDATION
Section 14.1 Dissolution. The Partnership shall not be dissolved by the
admission of Substituted Limited Partners or Additional Limited Partners or by
the admission of a successor General Partner in accordance with the terms of
this Agreement. Upon the removal or withdrawal of the General Partner, if a
successor General Partner is elected pursuant to Section 13.1 or 13.2, the
Partnership shall not be dissolved and such successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
(subject to Section 14.2) 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 13.1(a) (other than Section 13.1(a)(ii)), unless a successor is
elected and an Opinion of Counsel is received as provided in Section 13.1(b) or
13.2 and such successor is admitted to the Partnership pursuant to Section 12.3;
(c) an election to dissolve the Partnership by the General
Partner that is approved by (i) the holders of at least a majority of the
Outstanding Units other than the Senior Units and (ii) the holders of at least a
majority of the Outstanding Senior Units (and all holders of Units hereby
expressly consent that such approval may be effected upon written consent of
said applicable percentage of the Outstanding Units);
(d) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Delaware Act; or
(e) the sale of all or substantially all of the assets and
properties of the Partnership and the Operating Partnership taken as a whole.
Section 14.2 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 13.1(a)(i) or (iii) and the failure of the Partners to
select a successor to such Departing Partner pursuant to Section 13.1 or 13.2,
then within 90 days thereafter or (b) dissolution of the Partnership upon an
event constituting an Event of Withdrawal as defined in Section 13.1(a)(iv), (v)
or (vi), then within 180 days thereafter, a majority
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of the Outstanding Common Units may elect to reconstitute the Partnership and
continue its business on the same terms and conditions set forth in this
Agreement by forming a new limited partnership on terms identical to those set
forth in this Agreement and having as the successor general partner a Person
approved by a majority of the Outstanding Common Units. Upon any such election
by a majority of the Outstanding Common Units, all Partners shall be bound
thereby and shall be deemed to have approved thereof. Unless such an election is
made within the applicable time period as set forth above, the Partnership shall
conduct only activities necessary to wind up its affairs. If such an election is
so made, then:
(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 XIV;
(ii) if the successor General Partner is not the former
General Partner, then the interest of the former General Partner shall
be treated thenceforth as the interest of a Limited Partner and
converted into Common Units in the manner provided in Section 13.3(b);
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 of a majority of
Outstanding Common Units to approve a successor General Partner and to
reconstitute and to continue the business of the Partnership shall not
exist and may not be exercised unless the Partnership has received an
Opinion of Counsel that (x) the exercise of the right would not result
in the loss of limited liability of any Limited Partner and (y) neither
the Partnership, the reconstituted limited partnership nor the
Operating Partnership would be treated as an association taxable as a
corporation or otherwise be taxable as an entity for federal income tax
purposes upon the exercise of such right to continue.
Section 14.3 Liquidation. Upon dissolution of the Partnership, unless
the Partnership is continued under an election to reconstitute and continue the
Partnership pursuant to Section 14.2, the General Partner, or in the event the
General Partner has been dissolved or removed, become bankrupt as set forth in
Section 13.1 or withdrawn from the Partnership, a liquidator or liquidating
committee approved by the holders of at least a majority of the Outstanding
Common Units, shall be the Liquidator. The Liquidator (if other than the General
Partner) shall be entitled to receive such compensation for its services as may
be approved by the holders of at least a majority of the Outstanding Common
Units. The Liquidator shall agree not to resign at any time without 15 days'
prior notice and (if other than the General Partner) may be removed at any time,
with or without cause, by notice of removal approved by a majority of the
Outstanding Units. Upon dissolution, removal or resignation of the Liquidator, a
successor and substitute Liquidator (who shall have and succeed to all rights,
powers and duties of the original Liquidator) shall within 30 days thereafter be
approved by the holders of at least a majority of the Outstanding Common Units.
The right to approve a successor or substitute Liquidator in the manner provided
herein shall be deemed to refer also to any such successor or substitute
Liquidator approved in the manner herein provided. Except as expressly provided
in this Article XIV, the Liquidator approved in the manner provided herein shall
have and may exercise, without further authorization or consent of any of the
parties hereto, all of the powers conferred upon the General Partner under the
terms of this Agreement (but subject
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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, and to the extent of,
the positive balances in their respective Capital Accounts, as determined after
taking into account all Capital Account adjustments (other than those made by
reason of 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).
Section 14.4 Distributions in Kind. Notwithstanding the provisions of
Section 14.3, which require the liquidation of the assets of the Partnership,
but subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its absolute discretion,
defer for a reasonable time the liquidation of any assets except those necessary
to satisfy liabilities of the Partnership (including, without limitation, those
to Partners as creditors) and or distribute to the Partners or to specific
classes of Partners, in lieu of cash, as tenants in common and in accordance
with the provisions of Section 14.3, undivided interests in such Partnership
assets as the Liquidator deems not suitable for liquidation. Any such
distributions in kind shall be made only if, in the good faith judgment of the
Liquidator, such distributions in kind are in the best interest of the Limited
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
Section 14.5 Cancellation of Certificate of Limited Partnership. Upon
the completion of the distribution of Partnership cash and property as provided
in Sections 14.3 and 14.4 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.
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Section 14.6 Reasonable Time for Winding Up. A reasonable time shall be
allowed for the orderly winding up of business and affairs of the Partnership
and the liquidation of its assets pursuant to Section 14.3 in order to minimize
any losses otherwise attendant upon such winding up, and the provisions of this
Agreement shall remain in effect between the Partners during the period of
liquidation.
Section 14.7 Return of Capital Contributions. The General Partner shall
not be personally liable for, and shall have no obligation to contribute or loan
any monies or property to the Partnership to enable it to effectuate, the return
of the Capital Contributions of the Limited Partners, or any portion thereof, it
being expressly understood that any such return shall be made solely from
Partnership assets.
Section 14.8 Capital Account Restoration. No Limited Partner shall have
any obligation to restore any negative balance in its Capital Account upon
liquidation of the Partnership. The General Partner shall be obligated to
restore any negative balance in its Capital Account upon liquidation of its
interest in the Partnership by the end of the taxable year of the Partnership
during which such liquidation occurs, or, if later, within 90 days after the
date of such liquidation.
Section 14.9 Waiver of Partition. To the maximum extent permitted by
law, each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE XV
AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS; RECORD DATE
Section 15.1 Amendment to be Adopted Solely by General Partner. Each
Limited Partner agrees that the General Partner (pursuant to its powers of
attorney from the Limited Partners, Special Limited Partners and Assignees),
without the approval of any Limited Partner or Assignee, may amend any provision
of this Agreement, and execute, swear to, acknowledge, deliver, file and record
whatever documents may be required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of
the principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners
in accordance with this Agreement;
(c) a change that, in the sole discretion of the General
Partner, is 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 neither the
Partnership nor the Operating Partnership will be treated as an association
taxable as a corporation or otherwise taxed as an entity for federal income tax
purposes;
86
(d) a change (i) that, in the sole discretion of the General
Partner, does not adversely affect the Limited Partners in any material respect,
(ii) that is necessary or desirable to satisfy any requirements, conditions or
guidelines contained in any opinion, directive, order, ruling or regulation of
any federal or state agency or judicial authority or contained in any federal or
state statute (including, without limitation, the Delaware Act) or that is
necessary or desirable to facilitate the trading of the Units (including,
without limitation, the division of Outstanding Units into different classes to
facilitate uniformity of tax consequences within such classes of Units) or
comply with any rule, regulation, guideline or requirement of any National
Securities Exchange on which the Units are or will be listed for trading,
compliance with any of which the General Partner determines in its sole
discretion to be in the best interests of the Partnership and the Limited
Partners, (iii) that is necessary or desirable to implement certain tax-related
provisions of the Partnership Agreement, or (iv) that is required to effect the
intent of the provisions of this Agreement or is otherwise contemplated by this
Agreement;
(e) a change in the fiscal year or taxable year of the
Partnership and any changes that, in the sole discretion of the General Partner,
are necessary or appropriate as a result of a change in the fiscal year or
taxable year of the Partnership including, without limitation, if the General
Partner shall so determine, a change in the definition of "Quarter" and the
dates on which distributions are to be made by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel,
to prevent the Partnership or the General 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;
(g) subject to the terms of Section 4.3, an amendment that, in
the sole discretion of the General Partner, is necessary or desirable in
connection with the authorization for issuance of any class or series of
Partnership Securities pursuant to Section 4.3;
(h) any amendment expressly permitted in this Agreement to be
made by the General Partner acting alone;
(i) an amendment effected, necessitated or contemplated by a
Merger Agreement approved in accordance with Section 16.3;
(j) 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 Operating Partnership, in connection with
the conduct by the Partnership of activities permitted by the terms of Section
3.1;
(k) any amendment to clause (a) of the definition of
"Arrearage Period" that results in the extension of the Arrearage Period; or
(l) any other amendments substantially similar to the
foregoing.
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Section 15.2 Amendment Procedures. Except as provided in Sections 15.1,
15.3 and 15.13, 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. A proposed amendment shall
be effective upon its approval by the holders of at least a majority of the
Outstanding Common Units, unless a greater or different percentage is required
under this Agreement. Each proposed amendment that requires the approval of the
holders of a specified percentage of Outstanding Common Units shall be set forth
in a writing that contains the text of the proposed amendment. If such an
amendment is proposed, the General Partner shall seek the written approval of
the requisite percentage of Outstanding Common Units or call a meeting of the
holders of Common Units to consider and vote on such proposed amendment. The
General Partner shall notify all Record Holders upon final adoption of any such
proposed amendments.
Section 15.3 Amendment Requirements.
----------------------
(a) Notwithstanding the provisions of Sections 15.1 and 15.2,
no provision of this Agreement that establishes a percentage of Outstanding
Units required to take any action shall be amended, altered, changed, repealed
or rescinded in any respect that would have the effect of reducing such voting
requirement unless such amendment is approved by the written consent or the
affirmative vote of holders of Outstanding Units whose aggregate Outstanding
Units constitute not less than the voting requirement sought to be reduced.
(b) Notwithstanding the provisions of Sections 15.1 and 15.2,
no amendment to this Agreement may (i) enlarge the obligations of any Limited
Partner without its consent, (ii) enlarge the obligations of the General Partner
without its consent, which may be given or withheld in its sole discretion,
(iii) modify the amounts distributable, reimbursable or otherwise payable to the
General Partner by the Partnership or the Operating Partnership, (iv) change
Section 14.1(a) or (c), (v) restrict in any way any action by or rights of the
General Partner as set forth in this Agreement or (vi) change the term of the
Partnership or, except as set forth in Section 14.1(c), give any Person the
right to dissolve the Partnership.
(c) Except as otherwise provided, and without limitation of
the General Partner's authority to adopt amendments to this Agreement as
contemplated in Section 15.1, any amendment that would have a material adverse
effect on the rights or preferences of any class of Outstanding Units in
relation to other classes of Units must be approved by the holders of not less
than a majority of the Outstanding Units of the class affected (excluding for
purposes of such determination Units owned by the General Partner and its
Affiliates).
(d) Notwithstanding any other provision of this Agreement,
except for amendments pursuant to Section 6.3 or 15.1 and except as otherwise
provided by Section 16.3(b), no amendments shall become effective without the
approval of the holders of at least 95% of the Outstanding Common Units unless
the Partnership obtains an Opinion of Counsel to the effect that (a) such
amendment will not cause the Partnership or the Operating Partnership to be
treated as an association taxable as a corporation or otherwise taxable as an
entity for federal income tax purposes and (b) such amendment will not affect
the limited liability of any Limited Partner or any limited partner of the
Operating Partnership under applicable law.
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(e) This Section 15.3 shall only be amended with the approval
of the holders of not less than 95% of the Outstanding Common Units.
Section 15.4 Meetings. All acts of Limited Partners to be taken
pursuant to this Agreement shall be taken in the manner provided in this Article
XV. Meetings of the Limited Partners may be called by the General Partner or by
Limited Partners owning 20% or more of the Outstanding Units of the class or
classes for which a meeting is proposed. Limited Partners shall call a meeting
by delivering to the General Partner one or more requests in writing stating
that the signing Limited Partners wish to call a meeting and indicating the
general or specific purposes for which the meeting is to be called. Within 60
days after receipt of such a call from Limited Partners or within such greater
time as may be reasonably necessary for the Partnership to comply with any
statutes, rules, regulations, listing agreements or similar requirements
governing the holding of a meeting or the solicitation of proxies for use at
such a meeting, the General Partner shall send a notice of the meeting to the
Limited Partners either directly or indirectly through the Transfer Agent. A
meeting shall be held at a time and place determined by the General Partner on a
date not more than 60 days after the mailing of notice of the meeting. Limited
Partners shall not vote on matters that would cause the Limited Partners to be
deemed to be taking part in the management and control of the business and
affairs of the Partnership so as to jeopardize the Limited Partners' limited
liability under the Delaware Act or the law of any other state in which the
Partnership is qualified to do business.
Section 15.5 Notice of a Meeting. Notice of a meeting called pursuant
to Section 15.4 shall be given to the Record Holders in writing by mail or other
means of written communication in accordance with Section 18.1. The notice shall
be deemed to have been given at the time when deposited in the mail or sent by
other means of written communication.
Section 15.6 Record Date. For purposes of determining the Limited
Partners entitled to notice of or to vote at a meeting of the Limited Partners
or to give approvals without a meeting as provided in Section 15.11, the General
Partner may set a Record Date, which shall not be less than 10 nor more than 60
days before (a) the date of the meeting (unless such requirement conflicts with
any rule, regulation, guideline or requirement of any National Securities
Exchange on which the Units are listed for trading, in which case the rule,
regulation, guideline or requirement of such exchange shall govern) or (b) in
the event that approvals are sought without a meeting, the date by which Limited
Partners are requested in writing by the General Partner to give such approvals.
Section 15.7 Adjournment. When a meeting is adjourned to another time
or place, notice need not be given of the adjourned meeting and a new Record
Date need not be fixed, if the time and place thereof are announced at the
meeting at which the adjournment is taken, unless such adjournment shall be for
more than 45 days. At the adjourned meeting, the Partnership may transact any
business which might have been transacted at the original meeting. If the
adjournment is for more than 45 days or if a new Record Date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given in
accordance with this Article XV.
Section 15.8 Waiver of Notice; Approval of Meeting; Approval of
Minutes. The transactions of any meeting of Limited Partners, however called and
noticed, and whenever held, shall be as valid as if had at a meeting duly held
after regular call and notice, if a quorum is present either in person or by
proxy, and if, either before or after the meeting, Limited Partners representing
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such quorum who were present in person or by proxy and entitled to vote, sign a
written waiver of notice or an approval of the holding of the meeting or an
approval of the minutes thereof. All waivers and approvals shall be filed with
the Partnership records or made a part of the minutes of the meeting. Attendance
of a Limited Partner at a meeting shall constitute a waiver of notice of the
meeting, except when the Limited Partner does not approve, at the beginning of
the meeting, of the transaction of any business because the meeting is not
lawfully called or convened; and except that attendance at a meeting is not a
waiver of any right to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, if the disapproval
is expressly made at the meeting.
Section 15.9 Quorum. The holders of two-thirds of the Outstanding Units
of the class or classes for which a meeting has been called represented in
person or by proxy shall constitute a quorum at a meeting of Limited Partners of
such class or classes unless any such action by the Limited Partners requires
approval by holders of a majority in interest of such Units, in which case the
quorum shall be a majority (excluding, in either case, if such are to be
excluded from the vote, Outstanding Units owned by the General Partner and its
Affiliates). At any meeting of the Limited Partners duly called and held in
accordance with this Agreement at which a quorum is present, the act of Limited
Partners holding Outstanding Units that in the aggregate represent a majority of
the Outstanding Units entitled to vote and be present in person or by proxy at
such meeting shall be deemed to constitute the act of all Limited Partners,
unless a greater or different percentage is required with respect to such action
under the provisions of this Agreement, in which case the act of the Limited
Partners holding Outstanding Units that in the aggregate represent at least such
greater or different percentage shall be required. The Limited Partners present
at a duly called or held meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Limited Partners to leave less than a quorum, if any action taken (other than
adjournment) is approved by the required percentage of Outstanding Units
specified in this Agreement. In the absence of a quorum, any meeting of Limited
Partners may be adjourned from time to time by the affirmative vote of a
majority of the Outstanding Units of the class or classes for which the meeting
was called represented either in person or by proxy, but no other business may
be transacted, except as provided in Section 15.7.
Section 15.10 Conduct of Meeting. The General Partner shall have full
power and authority concerning the manner of conducting any meeting of the
Limited Partners or solicitation of approvals in writing, including, without
limitation, the determination of Persons entitled to vote, the existence of a
quorum, the satisfaction of the requirements of Section 15.4, the conduct of
voting, the validity and effect of any proxies and the determination of any
controversies, votes or challenges arising in connection with or during the
meeting or voting. The General Partner shall designate a Person to serve as
chairman of any meeting and shall further designate a Person to take the minutes
of any meeting. All minutes shall be kept with the records of the Partnership
maintained by the General Partner. The General Partner may make such other
regulations consistent with applicable law and this Agreement as it may deem
advisable concerning the conduct of any meeting of the Limited Partners or
solicitation of approvals in writing, including, without limitation, regulations
in regard to the appointment of proxies, the appointment and duties of
inspectors of votes and approvals, the submission and examination of proxies and
other evidence of the right to vote, and the revocation of approvals in writing.
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Section 15.11 Action Without a Meeting. Any action that may be taken at
a meeting of the Limited Partners may be taken without a meeting if an approval
in writing setting forth the action so taken is signed by Limited Partners
owning not less than the minimum percentage of the Outstanding Units that would
be necessary to authorize or take such action at a meeting at which all the
Limited Partners entitled to vote thereon were present and voted. Prompt notice
of the taking of action without a meeting shall be given to the Limited Partners
who have not approved in writing. The General Partner may specify that any
written ballot submitted to Limited Partners for the purpose of taking any
action without a meeting shall be returned to the Partnership within the time
period, which shall be not less than 20 days, specified by the General Partner.
If a ballot returned to the Partnership does not vote all of the Units held by
the Limited Partner, the Partnership shall be deemed to have failed to receive a
ballot for the Units that were not voted. If approval of the taking of any
action by the Limited Partners is solicited by any Person other than by or on
behalf of the General Partner, the written approvals shall have no force and
effect unless and until (a) they are deposited with the Partnership in care of
the General Partner, (b) approvals sufficient to take the action proposed are
dated as of a date not more than 90 days prior to the date sufficient approvals
are deposited with the Partnership and (c) an Opinion of Counsel is delivered to
the General Partner to the effect that the exercise of such right and the action
proposed to be taken with respect to any particular matter (i) will not cause
the Limited Partners to be deemed to be taking part in the management and
control of the business and affairs of the Partnership so as to jeopardize the
Limited Partners' limited liability, (ii) will not jeopardize the status of the
Partnership as a partnership under applicable tax laws and regulations and (iii)
is otherwise permissible under the state statutes then governing the rights,
duties and liabilities of the Partnership and the Partners.
Section 15.12 Voting and Other Rights.
-----------------------
(a) Only those Record Holders of Units on the Record Date set
pursuant to Section 15.6 (and also subject to the limitations contained in the
definition of "Outstanding") shall be entitled to notice of, and to vote at, a
meeting of Limited Partners or to act with respect to matters as to which the
holders of the Outstanding Units have the right to vote or to act. All
references in this Agreement to votes of, or other acts that may be taken by,
the Outstanding Units shall be deemed to be references to the votes or acts of
the Record Holders of such Outstanding Units.
(b) With respect to Units that are held for a Person's account
by another Person (such as a broker, dealer, bank, trust company or clearing
corporation, or an agent of any of the foregoing), in whose name such Units are
registered, such broker, dealer or other agent shall, in exercising the voting
rights in respect of such Units on any matter, and unless the arrangement
between such Persons provides otherwise, vote such Units in favor of, and at the
direction of, the Person who is the beneficial owner, and the Partnership shall
be entitled to assume it is so acting without further inquiry. The provisions of
this Section 15.12(b) (as well as all other provisions of this Agreement) are
subject to the provisions of Section 10.4.
(c) With respect to any vote or act that may be taken by the
Record Holders of the Outstanding Common Units as specified in this Agreement,
each Outstanding Common Unit shall be entitled to one (1) vote per that
Outstanding Common Unit. The Record Holders of the Outstanding Common Units
shall always vote together as a class upon any matter which they have the right
to vote or act pursuant to this Agreement.
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Section 15.13 Voting Rights of Senior Units. Except as provided in
Sections 4.3(c)(i), 9.7, 14.1, 15.3(c), 16.1(b), 17.1, this Section 15.13 or
otherwise as required by law, the Senior Units shall have no voting rights. So
long as any Senior Units remain outstanding, unless a greater percentage shall
then be required by law, the Partnership shall not, without the approval of the
holders of at least a majority of the Outstanding Senior Units voting separately
as a class, (i) amend the Partnership Agreement so as to affect adversely the
specified rights, preferences or privileges of the Senior Units, including any
amendment made in order to issue additional Senior Units other than as provided
for in this Agreement as in effect on the WNGL Closing Date, (ii) except as
permitted pursuant to Section 6.12 and Section 11.6, purchase, redeem or
otherwise acquire for value any Common Units or (iii) permit any of its
Subsidiaries to issue equity interests to any Person (other than the Partnership
and its Subsidiaries and an interest not to exceed a percentage equal to one
percent divided by ninety-nine percent to the General Partner). The holders of
at least a majority of the Outstanding Senior Units, voting separately as one
class, may waive compliance with any provision of this Agreement. In exercising
any voting rights provided for in this Agreement, each Outstanding Senior Unit
shall be entitled to one vote.
Section 15.14 Amendment of Arrearage Requirements. Without limitation
of the General Partner's authority to adopt amendments to this Agreement as
contemplated in Section 15.1 with respect to the interests of the Common Units:
(a) any amendment to the provisions of this Agreement related
to the Arrearage Period or the Arrearage that would reasonably be expected to
have a material adverse effect on the rights or preferences of the Outstanding
Common Units (other than the FCI Common Units) must be approved by the holders
of not less than a majority of the Outstanding Common Units (excluding for
purposes of such determination the FCI Common Units); and
(b) any amendment to the provisions of this Agreement related
to the Arrearage Period or the Arrearage that would reasonably be expected to
have a material adverse effect on the rights or preferences of the Outstanding
FCI Common Units must be approved by FCI or the holder of the last FCI Common
Unit as specified in Section 4.5(c).
ARTICLE XVI
MERGER
Section 16.1 Authority. (a) Subject to (b) below, the Partnership may
merge or consolidate with one or more corporations, business trusts or
associations, real estate investment trusts, common law trusts or unincorporated
businesses, including, without limitation, a general partnership or limited
partnership, formed under the laws of the State of Delaware or any other state
of the United States of America, pursuant to a written agreement of merger or
consolidation ("Merger Agreement") in accordance with this Article XVI;
(b) Without the approval of the holders of at least the
majority of the Outstanding Senior Units, the Partnership shall not, in a single
transaction or series of related transactions, consolidate with or merge with or
into, or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its or the Operating Partnership's (which includes the sale
by the
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Partnership of its limited partnership interests in the Operating Partnership)
assets to, another Person unless: (A) either (1) the Partnership is the
Surviving Business Entity or (2) the Person (if other than the Partnership)
formed by such consolidation or into which the Partnership is merged or to which
the properties and assets of the Partnership or Operating Partnership are sold,
assigned, transferred, leased, conveyed or otherwise disposed of shall be an
entity organized under the laws of the United States or any State thereof or the
District of Columbia and shall expressly assume all of the obligations of the
Partnership under this Agreement, the WNGL Purchase Agreement and the WNGL
Registration Rights Agreement with respect to the Senior Units; and (B) if the
Partnership is not the Surviving Business Entity, the Senior Units shall be
converted into or exchanged for and shall become equity interests of such
Surviving Business entity, having in respect of such Surviving Business Entity
the same powers, preferences and relative, participating, optional or other
special rights and the qualifications, limitations or restrictions thereon, that
the Senior Units had immediately prior to such transactions.
Section 16.2 Procedure for Merger or Consolidation. Merger or
consolidation of the Partnership pursuant to this Article XVI requires the prior
approval of the General Partner. If the General 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
interests, securities or rights are to receive in exchange for, or upon
conversion of, their general or limited partnership interests, securities or
rights, and (ii) in the case of securities represented by certificates, upon the
surrender of such certificates, which cash, property or general or limited
partnership interests, rights, securities or obligations of the Surviving
Business Entity or any general or limited partnership, corporation, trust or
other entity (other than the Surviving Business Entity), or evidences thereof,
are to be delivered;
(e) A statement of any changes in the constituent documents or
the adoption of new constituent documents (the articles or certificate of
incorporation, articles of trust, declaration of trust, certificate or agreement
of limited partnership or other similar charter or governing document) of the
Surviving Business Entity to be effected by such merger or consolidation;
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(f) The effective time of the merger, which may be the date of
the filing of the certificate of merger pursuant to Section 16.4 or a later date
specified in or determinable in accordance with the Merger Agreement (provided,
that if the effective time of the merger is to be later than the date of the
filing of the certificate of merger, 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.
Section 16.3 Approval by Holders of Common Units of Merger or
Consolidation.
(a) The General Partner of the Partnership, upon its approval
of the Merger Agreement, shall direct that the Merger Agreement be submitted to
a vote of the Limited Partners holding Common Units whether at a meeting or by
written consent, in either case in accordance with the requirements of Article
XV. A copy or a summary of the Merger Agreement shall be included in or enclosed
with the notice of a meeting or the written consent.
(b) The Merger Agreement shall be approved upon receiving the
affirmative vote or consent of the holders of at least a majority of the
Outstanding Common Units unless the Merger Agreement contains any provision
which, if contained in an amendment to this Agreement, the provisions of this
Agreement or the Delaware Act would require the vote or consent of a greater
percentage of the Outstanding Common Units or of any class of Limited Partners,
in which case such greater percentage vote or consent shall be required for
approval of the Merger Agreement; provided that, in the case of a merger or
consolidation in which the surviving entity is a corporation or other entity
intended to be treated as an association taxable as a corporation or otherwise
taxable as an entity for federal income tax purposes, if in the opinion of the
General Partner it is necessary to effect, in contemplation of such merger or
consolidation, an amendment that would otherwise require a vote pursuant to
Section 15.3(d), no such vote pursuant to Section 15.3(d) shall be required
unless such amendment by its terms will be applicable to the Partnership in the
event the merger or consolidation is abandoned or unless such amendment will be
applicable to the Partnership during a period in excess of ten days prior to the
merger or consolidation.
(c) After such approval by vote or consent of the holders of
the Common Units, and at any time prior to the filing of the certificate of
merger pursuant to Section 16.4, the merger or consolidation may be abandoned
pursuant to provisions therefor, if any, set forth in the Merger Agreement.
Section 16.4 Certificate of Merger. Upon the required approval by the
General Partner and the Limited Partners of a Merger Agreement, a certificate of
merger shall be executed and filed with the Secretary of State of the State of
Delaware in conformity with the requirements of the Delaware Act.
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Section 16.5 Effect of Merger.
----------------
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all property,
real, personal and mixed, and all debts due to any of those business
entities and all other things and causes of action belonging to each of
those business entities shall be vested in the Surviving Business
Entity and after the merger or consolidation shall be the property of
the Surviving Business Entity to the extent they were of each
constituent business entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not
revert and is not in any way impaired because of the merger or
consolidation;
(iii) all rights of creditors and all liens on or security
interests in property of any of those constituent business entities
shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity, and
may be enforced against it to the same extent as if the debts,
liabilities and duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this
Article shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another having occurred.
ARTICLE XVII
RIGHT TO ACQUIRE UNITS
Section 17.1 Right to Acquire Units.
----------------------
(a) Notwithstanding any other provision of this Agreement, if
at any time not more than 20% of the total Units of any class then Outstanding
are held by Persons other than the General Partner and its Affiliates, the
General Partner shall, upon the approval of the holders of at least a majority
of the Outstanding Senior Units, have the right, which right it may assign and
transfer to the Partnership or any Affiliate of the General Partner, exercisable
in its sole discretion, to purchase all, but not less than all, of the Units of
such class then Outstanding held by Persons other than the General Partner and
its Affiliates, at the greater of (x) the Current Market Price as of the date
three days prior to the date that the notice described in Section 17.1(b) is
mailed, and (y) the highest cash price paid by the General Partner or any of its
Affiliates for any such Unit purchased during the 90-day period preceding the
date that the notice described in Section 17.1(b) is mailed.
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(b) If the General Partner, any Affiliate of the General
Partner or the Partnership elects to exercise the right to purchase Units
granted pursuant to Section 17.1(a), the General Partner shall deliver to the
Transfer Agent notice of such election to purchase (the "Notice of Election to
Purchase") and shall cause the Transfer Agent to mail a copy of such Notice of
Election to Purchase to the Record Holders of Units (as of a Record Date
selected by the General Partner) at least 10, but not more than 60, days prior
to the Purchase Date. Such Notice of Election to Purchase shall also be
published for a period of at least three consecutive days in at least two daily
newspapers of general circulation printed in the English language and published
in the Borough of Manhattan, New York. The Notice of Election to Purchase shall
specify the Purchase Date and the price (determined in accordance with Section
17.1(a)) at which Units will be purchased and state that the General Partner,
its Affiliate or the Partnership, as the case may be, elects to purchase such
Units, upon surrender of Certificates representing such Units in exchange for
payment, at such office or offices of the Transfer Agent as the Transfer Agent
may specify, or as may be required by any National Securities Exchange on which
the Units are listed or admitted to trading. Any such Notice of Election to
Purchase mailed to a Record Holder of Units at his address as reflected in the
records of the Transfer Agent shall be conclusively presumed to have been given
whether or not the owner receives such notice. On or prior to the Purchase Date,
the General Partner, its Affiliate or the Partnership, as the case may be, shall
deposit with the Transfer Agent cash in an amount sufficient to pay the
aggregate purchase price of all of the Units to be purchased in accordance with
this Section 17.1. If the Notice of Election to Purchase shall have been duly
given as aforesaid at least 10 days prior to the Purchase Date, and if on or
prior to the Purchase Date the deposit described in the preceding sentence has
been made for the benefit of the holders of Units subject to purchase as
provided herein, then from and after the Purchase Date, notwithstanding that any
Certificate shall not have been surrendered for purchase, all rights of the
holders of such Units (including, without limitation, any rights pursuant to
Articles IV, V and XIV) shall thereupon cease, except the right to receive the
purchase price (determined in accordance with Section 17.1(a)) for Units
therefor, without interest, upon surrender to the Transfer Agent of the
Certificates representing such Units, and such Units shall thereupon be deemed
to be transferred to the General Partner, its Affiliate or the Partnership, as
the case may be, on the record books of the Transfer Agent and the Partnership,
and the General Partner or any Affiliate of the General Partner, or the
Partnership, as the case may be, shall be deemed to be the owner of all such
Units from and after the Purchase Date and shall have all rights as the owner of
such Units (including, without limitation, all rights as owner of such Units
pursuant to Articles IV, V and XIV).
(c) At any time from and after the Purchase Date, a holder of
an Outstanding Unit subject to purchase as provided in this Section 17.1 may
surrender his Certificate, as the case may be, evidencing such Unit to the
Transfer Agent in exchange for payment of the amount described in Section
17.1(a), therefor, without interest thereon.
Section 17.2 Right to Acquire Senior Units.
-----------------------------
(a) Notwithstanding any other provision of this Agreement, the
Partnership shall have the right, which it may assign to any of its Affiliates,
exercisable in its sole discretion, to purchase for cash, in whole or in part,
at any time or from time to time, Senior Units at the Senior Unit Redemption
Price. The right of the Partnership and its permitted assigns to purchase
96
Outstanding Senior Units at the Senior Unit Redemption Price shall not apply to
Common Units issued upon conversion of the Senior Units in accordance with
Section 5.7; provided, however, that the Partnership and its permitted assigns
shall have the right to exercise such right at any time prior to the date of
conversion.
(b) If the Partnership or its permitted assigns exercises the
right to purchase Senior Units granted pursuant to Section 17.2(a), the
Partnership shall deliver or cause to be delivered to the holder or holders of
Senior Units, a Senior Unit Redemption Notice at least three, but not more than
thirty (30) Business Days prior to the Senior Unit Redemption Date.
(c) On or prior to the Senior Unit Redemption Date, the
General Partner, its Affiliate or the Partnership, as the case may be, shall
deposit with the Transfer Agent (or if all of the Outstanding Senior Units are
held by one Holder (including Affiliates of such Holder), pay to such Holder and
its Affiliates) cash in an amount sufficient to pay the aggregate Senior Unit
Redemption Price of all of the Senior Units acquired pursuant to this Section
17.2. On the Senior Unit Redemption Date, each holder of Senior Units shall
surrender the Certificates representing the number of Senior Units set forth in
the Senior Unit Redemption Notice, in proper transfer form, in the manner and
place designated in such notice. On the Senior Unit Redemption Date, the Senior
Unit Redemption Price shall be payable in cash to the person whose name appears
on such Certificates as the owner thereof, and, if purchased by the Partnership
and not any of its Affiliates, each surrendered Certificate shall be canceled
and retired. In the event that less than all of the Senior Units represented by
any such Certificates are being acquired by the Partnership or any of its
Affiliates, new Certificates shall be issued representing the number of Senior
Units to remain Outstanding.
(d) On and after the Senior Unit Redemption Date, unless the
Partnership or any of its Affiliates defaults in the payment in full of the
Senior Unit Redemption Price, all distributions on the Senior Units to be
purchased shall cease, and all rights associated with the Senior Units to be
purchased shall terminate other than the right to receive the Senior Unit
Redemption Price.
ARTICLE XVIII
GENERAL PROVISIONS
Section 18.1 Addresses and Notices. Any notice, demand, request, report
or proxy materials required or permitted to be given or made to a Partner or
Assignee under this Agreement shall be in writing and shall be deemed given or
made when delivered in person or when sent by first class United States mail or
by other means of written communication to the Partner or Assignee at the
address described below. Any notice, payment or report to be given or made to a
Partner or Assignee hereunder shall be deemed conclusively to have been given or
made, and the obligation to give such notice or report or to make such payment
shall be deemed conclusively to have been fully satisfied, upon sending of such
notice, payment or report to the Record Holder of such Unit at his address as
shown on the records of the Transfer Agent or as otherwise shown on the records
of the Partnership, regardless of any claim of any Person who may have an
interest in such Unit or the Partnership Interest of a General Partner by reason
of any assignment or otherwise. An affidavit or certificate of making of any
notice, payment or report in accordance with the provisions of this Section 18.1
executed by the General Partner, the Transfer Agent or the mailing organization
shall
97
be prima facie evidence of the giving or making of such notice, payment or
report. If any notice, payment or report addressed to a Record Holder at the
address of such Record Holder appearing on the books and records of the Transfer
Agent or the Partnership is returned by the United States Post Office marked to
indicate that the United States Postal Service is unable to deliver it, such
notice, payment or report and any subsequent notices, payments and reports shall
be deemed to have been duly given or made without further mailing (until such
time as such Record Holder or another Person notifies the Transfer Agent or the
Partnership of a change in his address) if they are available for the Partner or
Assignee at the principal office of the Partnership for a period of one year
from the date of the giving or making of such notice, payment or report to the
other Partners and Assignees. Any notice to the Partnership shall be deemed
given if received by the General Partner at the principal office of the
Partnership designated pursuant to Section 1.3. The General Partner may rely and
shall be protected in relying on any notice or other document from a Partner,
Assignee or other Person if believed by it to be genuine.
Section 18.2 References. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
Section 18.3 Pronouns and Plurals. Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
Section 18.4 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
Section 18.5 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
Section 18.6 Integration. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
Section 18.7 Creditors. None of the provisions of this Agreement shall
be for the benefit of, or shall be enforceable by, any creditor of the
Partnership.
Section 18.8 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
Section 18.9 Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute an agreement binding on all
the parties hereto, notwithstanding that all such parties are not signatories to
the original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or, in the case of a
Person acquiring a Unit, upon accepting the certificate evidencing such Unit or
executing and delivering a Transfer Application as herein described,
independently of the signature of any other party.
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Section 18.10 Applicable Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware, without
regard to the principles of conflicts of law.
Section 18.11 Invalidity of Provisions . If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
24403075.11 31501 1113C 00649490
99
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
FERRELLGAS, INC.
By: /s/ Kevin T. Kelly
-------------------------------
Name: Kevin T. Kelly
Title: Senior Vice President and CFO
LIMITED PARTNERS:
All Limited Partners admitted as
limited partners of the Partnership,
pursuant to Powers of Attorney
now and hereafter executed in
favor of, and granted and delivered
to, the General Partner.
By: FERRELLGAS, INC.
General Partner, as
attorney-in-fact for all
Limited Partners pursuant to
the Powers of Attorney
granted pursuant to
Section 1.4.
By: /s/ Kevin T. Kelly
------------------------
Name: Kevin T. Kelly
Title: Senior Vice President
and CFO
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EXHIBIT A
to the Third Amended and Restated Agreement of
Limited Partnership of
FERRELLGAS PARTNERS, L.P.
Certificate Evidencing Common Units
Representing Limited Partner Interests
FERRELLGAS PARTNERS, L.P.
No. Common Units
FERRELLGAS, INC., a Delaware corporation, as the General Partner of
FERRELLGAS PARTNERS, L.P., a Delaware limited partnership (the "Partnership"),
hereby certifies that
(the "Holder") is the registered owner of Common Units representing
limited partner interests in the Partnership (the "Common Units") transferable
on the books of the Partnership, in person or by duly authorized attorney, upon
surrender of this Certificate properly endorsed and accompanied by a properly
executed application for transfer of the Common Units represented by this
Certificate. The rights, preferences and limitations of the Common Units are set
forth in, and this Certificate and the Common Units represented hereby are
issued and shall in all respects be subject to the terms and provisions of, the
Third Amended and Restated Agreement of Limited Partnership of FERRELLGAS
PARTNERS, L.P., as amended, supplemented or restated from time to time (the
"Partnership Agreement"). Copies of the Partnership Agreement are on file at,
and will be furnished without charge on delivery of written request to the
Partnership at, the principal office of the Partnership located at One Liberty
Plaza, Liberty, Missouri 64068. Capitalized terms used herein but not defined
shall have the meaning given them in the Partnership Agreement.
The Holder, by accepting this Certificate, is deemed to have (i) requested
admission as, and agreed to become, a Limited Partner and to have agreed to
comply with and be bound by and to have executed the Partnership Agreement, (ii)
represented and warranted that the Holder has all right, power and authority
and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (iii) granted the powers of attorney provided for in the Partnership
Agreement and (iv) made the waivers and given the consents and approvals
contained in the Partnership Agreement.
This Certificate shall not be valid for any purpose unless it has been
countersigned and registered by the Transfer Agent and Registrar.
Dated:
------------------------------
Countersigned and Registered by: FERRELLGAS, INC.,
as General Partner
By:
- ------------------------------ ------------------------------
Transfer Agent and Registrar President
By:
- ------------------------------ ------------------------------
Authorized Signature Secretary
Page 1 of Exhibit A
[Reverse of Certificate]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as follows according to applicable laws or
regulations:
TEN COM- as tenants in common UNIF GIFT MIN ACT-
TEN ENT- as tenants by the entireties ..........Custodian..............
JT TEN- as joint tenants with right of (Cust) (Minor)
survivorship and not as under Uniform Gifts to Minors
tenants in common Act............................
State
Additional abbreviations, though not in the above list, may also be used.
ASSIGNMENT OF COMMON UNITS
in
FERRELLGAS PARTNERS, L.P.
IMPORTANT NOTICE REGARDING INVESTOR RESPONSIBILITIES
DUE TO TAX SHELTER STATUS OF FERRELLGAS PARTNERS, L.P.
You have acquired an interest in Ferrellgas Partners, L.P., One Liberty
Plaza, Liberty, Missouri 64068, whose taxpayer identification number is
43-1698480. The Internal Revenue Service has issued Ferrellgas Partners, L.P.
the following tax shelter registration number 94201000010:
YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL REVENUE
SERVICE IF YOU CLAIM ANY DEDUCTION, LOSS, CREDIT, OR OTHER TAX BENEFIT OR REPORT
ANY INCOME BY REASON OF YOUR INVESTMENT IN FERRELLGAS PARTNERS, L.P.
You must report the registration number as well as the name and taxpayer
identification number of Ferrellgas Partners, L.P. on Form 8271. FORM 8271 MUST
BE ATTACHED TO THE RETURN ON WHICH YOU CLAIM THE DEDUCTION, LOSS, CREDIT, OR
OTHER TAX BENEFIT OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT IN
FERRELLGAS PARTNERS, L.P.
If you transfer your interest in Ferrellgas Partners, L.P. to another
person, you are required by the Internal Revenue Service to keep a list
containing (a) that person's name, address and taxpayer identification number,
(b) the date on which you transferred the interest and (c) the name, address and
tax shelter registration number of Ferrellgas Partners, L.P. If you do not want
to keep such a list, you must (1) send the information specified above to the
Partnership, which will keep the list for this tax shelter, and (2) give a copy
of this notice to the person to whom you transfer your interest. Your failure to
comply with any of the above-described responsibilities could result in the
Page 2 of Exhibit A
imposition of a penalty under Section 6707(b) or 6708(a) of the Internal Revenue
Code of 1986, as amended, unless such failure is shown to be due to reasonable
cause.
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS
INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED, OR APPROVED
BY THE INTERNAL REVENUE SERVICE.
24403075.11 31501 1113C 00649490
Page 3 of Exhibit A
FOR VALUE RECEIVED, hereby assigns, conveys, sells and
------------------
transfers unto
-----------------------------------------------------------------
- --------------------------------------- --------------------------------------
(Please print or typewrite name and Please insert Social Security or other
address of Assignee) identifying number of Assignee)
Common Units representing limited partner interests
- ------------------------------
evidenced by this Certificate, subject to the Partnership Agreement, and does
hereby irrevocably constitute and appoint as its
------------------------------
attorney-in-fact with full power of substitution to transfer the same on the
books of Ferrellgas Partners, L.P.
Date: NOTE: The signature to any endorsement
------------------- hereon must correspond with the name as
written upon the face of this Certificate
in every particular, without alteration,
enlargement or change.
SIGNATURE(S) MUST BE GUARANTEED
BY A MEMBER FIRM OF THE
---------------------------------------
NATIONAL ASSOCIATION OF (Signature)
SECURITIES DEALERS, INC. OR BY A
COMMERCIAL BANK OR TRUST
---------------------------------------
COMPANY (Signature)
SIGNATURE(S) GUARANTEED
No transfer of the Common Units evidenced hereby will be registered on
the books of the Partnership, unless the Certificate evidencing the Common Units
to be transferred is surrendered for registration or transfer and an Application
for Transfer of Common Units has been executed by a transferee either (a) on the
form set forth below or (b) on a separate application that the Partnership will
furnish on request without charge. A transferor of the Common Units shall have
no duty to the transferee with respect to execution of the transfer application
in order for such transferee to obtain registration of the transfer of the
Common Units.
--------------------------------------------------
Page 4 of Exhibit A
APPLICATION FOR TRANSFER OF COMMON UNITS
The undersigned ("Assignee") hereby applies for transfer to the name of
the Assignee of the Common Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited Partner
and agrees to comply with and be bound by, and hereby executes, the Third
Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners,
L.P. (the "Partnership"), as amended, supplemented or restated to the date
hereof (the "Partnership Agreement"), (b) represents and warrants that the
Assignee has all right, power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement, (c) grants the powers of
attorney provided for in the Partnership Agreement and (d) makes the waivers and
gives the consents and approvals contained in the Partnership Agreement.
Capitalized terms not defined herein have the meanings assigned to such
terms in the Partnership Agreement.
Date:
-------------------- ---------------------------------------
Signature of Assignee
- ------------------------------------- ---------------------------------------
Social Security or other identifying Name and Address of Assignee
number of Assignee
- --------------------------------------
Purchase Price
including commissions, if any
Type of Entity (check one)
Individual Partnership Corporation
- -------------- ----------- ----------------------
Trust Other (specify)
- -------------------- ----------- --------------------
Nationality (Check One):
U.S. Citizen, Resident or Domestic Entity
- ---------
Foreign Corporation, or Non-resident alien
- --------- ---------
If the U.S. Citizen, Resident or Domestic Entity box is checked, the
following certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the
"Code"), the Partnership must withhold tax with respect to certain transfers of
property if a holder of an interest in the Partnership is a foreign person. To
inform the Partnership that no withholding is required with respect to the
undersigned interest holder's interest in it, the undersigned hereby certifies
the following (or, if applicable, certifies the following on behalf of the
interest holder).
Page 5 of Exhibit A
Complete Either A or B:
A. Individual Interest Holder
1. I am not a non-resident alien for purposes of U.S. income taxation.
2. My U.S. taxpayer identifying number (Social Security Number) is.
---------------------------
3. My home address is
---------------------------------------------------------------.
B. Partnership, Corporate or Other Interest-Holder
1. is not a
-------------------------------------
(Name of Interest-Holder)
foreign corporation, foreign partnership, foreign trust or foreign
estate (as those terms are defined in the Code and Treasury
Regulations).
2. The interest-holder's U.S. employer identification number is
---------------------------
3. The interest-holder's office address and place of incorporation (if
applicable) is .
---------------------------------------------------------------------
The interest-holder agrees to notify the Partnership within 60 days of the
date the interest-holder becomes a foreign person.
The interest-holder understands that this certificate may be disclosed to
the Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete and, if applicable, I further declare that I have authority to sign
this document on behalf of
- --------------------------------------------------------------------------------
(Name of Interest-Holder)
- --------------------------------------------------------------------------------
Signature and Date
- --------------------------------------------------------------------------------
Title (if applicable)
Page 6 of Exhibit A
Note: If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee holder or an agent of any of the foregoing, and is
holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or, in the case of any other nominee holder, a person performing a similar
function. If the Assignee is a broker, dealer, bank trust company, clearing
corporation, other nominee owner or an agent of any of the foregoing, the above
certification as to any person for whom the Assignee will hold the Common Units
shall be made to the best of the Assignee's knowledge.
Page 7 of Exhibit A
EXHIBIT B
to the Agreement of
Limited Partnership of
FERRELLGAS PARTNERS, L.P.
Certificate Evidencing Senior Units
Representing Limited Partner Interests
FERRELLGAS PARTNERS, L.P.
No.________ Senior Units
FERRELLGAS, INC., a Delaware corporation, as the General Partner of
FERRELLGAS PARTNERS, L.P., a Delaware limited partnership (the "Partnership"),
hereby certifies that ____________________ (the "Holder") is the registered
owner of _____ Senior Units representing limited partner interests in the
Partnership (the "Senior Units") transferable on the books of the Partnership,
in person or by duly authorized attorney, upon surrender of this Certificate
properly endorsed and accompanied by a properly executed application for
transfer of the Senior Units represented by this Certificate. The rights,
preferences and limitations of the Senior Units are set forth in, and this
Certificate and the Senior Units represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Third Amended and
Restated Agreement of Limited Partnership of FERRELLGAS PARTNERS, L.P., as
amended, supplemented or restated from time to time (the "Partnership
Agreement"). Copies of the Partnership Agreement are on file at, and will be
furnished without charge on delivery of written request to the Partnership at,
the principal office of the Partnership located at One Liberty Plaza, Liberty,
Missouri 64068. Capitalized terms used herein but not defined shall have the
meaning given them in the Partnership Agreement.
The Holder, by accepting this Certificate, is deemed to have (i) requested
admission as, and agreed to become, a Limited Partner and to have agreed to
comply with and be bound by and to have executed the Partnership Agreement, (ii)
represented and warranted that the Holder has all right, power and authority
and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (iii) granted the powers of attorney provided for in the Partnership
Agreement and (iv) made the waivers and given the consents and approvals
contained in the Partnership Agreement.
Dated:
-----------------
FERRELLGAS, INC.,
as General Partner
By:
--------------------------------------
President
By:
--------------------------------------
Secretary
1076119.3
Page 1 of Exhibit B
[Reverse of Certificate]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as follows according to applicable laws
or regulations:
TEN COM- as tenants in common UNIF GIFT MIN ACT-
TEN ENT- as tenants by the entireties .........Custodian.......
JT TEN- as joint tenants with right of (Cust) (Minor)
survivorship and not as under Uniform Gifts to Minors
tenants in common Act......................
State
Additional abbreviations, though not in the above list, may also be used.
ASSIGNMENT OF SENIOR UNITS
in
FERRELLGAS PARTNERS, L.P.
IMPORTANT NOTICE REGARDING INVESTOR RESPONSIBILITIES
DUE TO TAX SHELTER STATUS OF FERRELLGAS PARTNERS, L.P.
You have acquired an interest in Ferrellgas Partners, L.P.,
One Liberty Plaza, Liberty, Missouri 64068, whose taxpayer identification number
is 43-1698480. The Internal Revenue Service has issued Ferrellgas Partners, L.P.
the following tax shelter registration number 94201000010:
YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL
REVENUE SERVICE IF YOU CLAIM ANY DEDUCTION, LOSS, CREDIT, OR OTHER TAX BENEFIT
OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT IN FERRELLGAS PARTNERS, L.P.
You must report the registration number as well as the name
and taxpayer identification number of Ferrellgas Partners, L.P. on Form 8271.
FORM 8271 MUST BE ATTACHED TO THE RETURN ON WHICH YOU CLAIM THE DEDUCTION, LOSS,
CREDIT, OR OTHER TAX BENEFIT OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT
IN FERRELLGAS PARTNERS, L.P.
If you transfer your interest in Ferrellgas Partners, L.P. to
another person, you are required by the Internal Revenue Service to keep a list
containing (a) that person's name, address and taxpayer identification number,
(b) the date on which you transferred the interest and (c) the name, address and
tax shelter registration number of Ferrellgas Partners, L.P. If you do not want
to keep such a list, you must (1) send the information specified above to the
Partnership, which will keep the list for this tax shelter, and (2) give a copy
of this notice to the person to whom you transfer your interest. Your failure to
comply with any of the above-described responsibilities could result
Page 2 of Exhibit B
in the imposition of a penalty under Section 6707(b) or 6708(a) of the Internal
Revenue Code of 1986, as amended, unless such failure is shown to be due to
reasonable cause.
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS
INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED, OR APPROVED
BY THE INTERNAL REVENUE SERVICE.
Page 3 of Exhibit B
FOR VALUE RECEIVED, hereby assigns, conveys, sells and
--------------------
transfers unto
------------------------------------------------------------------
- ------------------------------------ ---------------------------------------
(Please print or typewrite name (Please insert Social Security or other
and address of Assignee) identifying number of Assignee)
Senior Units representing limited partner interests
- ---------------------------
evidenced by this Certificate, subject to the Partnership Agreement, and does
hereby irrevocably constitute and appoint
------------------------------------
as its attorney-in-fact with full power of substitution to transfer the same on
the books of Ferrellgas Partners, L.P.
Date: NOTE: The signature to any endorsement hereon must
----------------- correspond with the name as written upon the face of
this Certificate in every particular, without
alteration, enlargement or change.
---------------------------------------------
(Signature)
No transfer of the Senior Units evidenced hereby will be registered on
the books of the Partnership, unless the Certificate evidencing the Senior Units
to be transferred is surrendered for registration or transfer and an Application
for Transfer of Senior Units has been executed by a transferee either (a) on the
form set forth below or (b) on a separate application that the Partnership will
furnish on request without charge. A transferor of the Senior Units shall have
no duty to the transferee with respect to execution of the transfer application
in order for such transferee to obtain registration of the transfer of the
Senior Units.
Page 4 of Exhibit B
APPLICATION FOR TRANSFER OF SENIOR UNITS
The undersigned ("Assignee") hereby applies for transfer to the name of
the Assignee of the Senior Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited Partner
and agrees to comply with and be bound by, and hereby executes, the Third
Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners,
L.P. (the "Partnership"), as amended, supplemented or restated to the date
hereof (the "Partnership Agreement"), (b) represents and warrants that the
Assignee has all right, power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement, (c) grants the powers of
attorney provided for in the Partnership Agreement and (d) makes the waivers and
gives the consents and approvals contained in the Partnership Agreement.
Capitalized terms not defined herein have the meanings assigned to such
terms in the Partnership Agreement.
Date:
------------------- ---------------------------------------
Signature of Assignee
- ------------------------------------ ---------------------------------------
Social Security or other identifying Name and Address of Assignee
number of Assignee
- ------------------------------------
Purchase Price
including commissions, if any
Type of Entity (check one)
Individual Partnership Corporation
- ------------- ----------- ------------------------
Trust Other (specify)
- -------------------- ----------- --------------------
Nationality (Check One):
U.S. Citizen, Resident or Domestic Entity
- ---------
Foreign Corporation, or Non-resident alien
- --------- ---------
If the U.S. Citizen, Resident or Domestic Entity box is checked, the
following certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the
"Code"), the Partnership must withhold tax with respect to certain transfers of
property if a holder of an interest in the Partnership is a foreign person. To
inform the Partnership that no withholding is required with respect to the
undersigned interest holder's interest in it, the undersigned hereby certifies
the following (or, if applicable, certifies the following on behalf of the
interest holder).
Complete Either A or B:
Page 5 of Exhibit B
A. Individual Interest Holder
1. I am not a non-resident alien for purposes of U.S. income taxation.
2. My U.S. taxpayer identifying number (Social Security Number) is.
------------------------------------
3. My home address is
---------------------------------------------------------------.
B. Partnership, Corporate or Other Interest-Holder
1. is not a
----------------------------------------------------------
(Name of Interest-Holder)
foreign corporation, foreign partnership, foreign trust or foreign
estate (as those terms are defined in the Code and Treasury
Regulations).
2. The interest-holder's U.S. employer identification number is
-------------------------------------------------------------------.
3. The interest-holder's office address and place of incorporation
(if applicable) is
------------------------------------------------.
The interest-holder agrees to notify the Partnership within 60 days of the
date the interest-holder becomes a foreign person.
The interest-holder understands that this certificate may be disclosed to
the Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete and, if applicable, I further declare that I have authority to sign
this document on behalf of
- --------------------------------------------------------------------------------
(Name of Interest-Holder)
- --------------------------------------------------------------------------------
Signature and Date
- --------------------------------------------------------------------------------
Title (if applicable)
Note: If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee holder or an agent of any of the foregoing, and is
holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or
Page 6 of Exhibit B
dealer, by a registered representative who is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc., or, in the case of any other nominee holder, a person performing
a similar function. If the Assignee is a broker, dealer, bank trust company,
clearing corporation, other nominee owner or an agent of any of the foregoing,
the above certification as to any person for whom the Assignee will hold the
Senior Units shall be made to the best of the Assignee's knowledge.
Page 7 of Exhibit B
Form of Election to Convert
To Ferrellgas Partners, L.P.
The undersigned owner of the Senior Units evidenced by this Certificate
hereby exercises the option to convert all such Senior Units, or the number of
Senior Units below designated, into Common Units of Ferrellgas Partners, L.P. in
accordance with the terms of the Partnership Agreement referred to in this
Certificate, and directs that the Common Units issuable and deliverable upon
conversion, together with any check in payment for fractional shares, be issued
with any check in payment for fractional shares, be issued in the name of and
delivered to the undersigned registered Holder hereof, unless a different name
has been indicated in the assignment below. If Common Units are to be issued in
the name of person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto. Any amount required to be paid by
the undersigned on account of accumulated and undistributed distributions
accompanies this Certificate.
Dated:
------------------
Number of Senior Units to be converted:
- ---------------
----------------------------------------
Signature (for conversion only)
If Common Units are to be issued and
registered otherwise than to the
registered Holder named above, please
print or typewrite name and address,
including zip code, and social security
or other taxpayer identification number.
Page 8 of Exhibit B