Draft 6/24/96
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
NATIONAL PROPANE, L.P.
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
1.1 Definitions......................................................1
1.2 Construction....................................................10
ARTICLE II
Organization
2.1 Formation.......................................................11
2.2 Name............................................................11
2.3 Registered Office; Registered Agent; Principal Office;
Other Offices ..................................................11
2.4 Purpose and Business............................................12
2.5 Powers..........................................................12
2.6 Power of Attorney...............................................12
2.7 Term............................................................14
2.8 Title to Partnership Assets.....................................14
ARTICLE III
Rights of the Limited Partners
3.1 Limitation of Liability.........................................14
3.2 Management of Business..........................................14
3.3 Rights of Limited Partners Relating to the Partnership..........15
3.4 Outside Activities of the Limited Partners......................16
ARTICLE IV
Transfer of Partnership Interests
4.1 Transfer Generally..............................................16
4.2 Transfer of a General Partner's Partnership Interest............16
4.3 Transfer of the Limited Partner's Partnership Interests.........17
4.4 Restrictions on Transfers.......................................17
4.5 Exchange by Special General Partner of its General Partner
Partnership Interest in the Partnership and the MLP.............17
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ARTICLE V
Contributions and Initial Transfers
5.1 Initial Contributions...........................................18
5.2 Contributions and Initial Transfers by the MLP and the General
Partners .......................................................18
5.3 Additional Capital Contributions................................19
5.4 Interest and Withdrawal.........................................19
5.5 Capital Accounts................................................19
5.6 Loans from Partners.............................................22
5.7 Limited Preemptive Rights.......................................23
5.8 Fully Paid and Non-Assessable Nature of Limited Partner
Partnership Interests ..........................................23
ARTICLE VI
Allocations and Distributions
6.1 Allocations for Capital Account Purposes........................23
6.2 Allocations for Tax Purposes....................................27
6.3 Distributions...................................................29
ARTICLE VII
Management and Operation of Business
7.1 Management......................................................30
7.2 Certificate of Limited Partnership..............................32
7.3 Restrictions on Managing General Partner's Authority............32
7.4 Reimbursement of the General Partners...........................33
7.5 Outside Activities..............................................34
7.6 Loans from the General Partners; Loans or Contributions from
the Partnership; Contracts with Affiliates; Certain
Restrictions on the General Partners ...........................35
7.7 Indemnification.................................................36
7.8 Liability of Indemnitees........................................38
7.9 Resolution of Conflicts of Interest.............................39
7.10 Other Matters Concerning the Managing General Partner...........40
7.11 Indemnification of National Propane SGP Inc. by National
Propane Corporation ............................................41
7.12 Reliance by Third Parties.......................................41
ARTICLE VIII
Books, Records, Accounting and Reports
8.1 Records and Accounting..........................................42
8.2 Fiscal Year.....................................................42
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ARTICLE IX
Tax Matters
9.1 Preparation of Tax Returns......................................42
9.2 Tax Elections...................................................43
9.3 Tax Controversies...............................................43
9.4 Withholding.....................................................43
ARTICLE X
Admission of Partners
10.1 Admission of the General Partners and Limited Partners..........44
10.2 Admission of Substituted Limited Partners.......................44
10.3 Admission of Successor or Transferee General Partners...........44
10.4 Admission of Additional Limited Partners........................45
10.5 Amendment of Agreement and Certificate of Limited Partnership...45
ARTICLE XI
Withdrawal or Removal of Partners
11.1 Withdrawal of the General Partners..............................45
11.2 Removal of the Managing General Partner.........................48
11.3 Interest of Departing Partner and Successor General Partner.....48
11.4 Withdrawal of the Limited Partner...............................48
ARTICLE XII
Dissolution and Liquidation
12.1 Dissolution.....................................................49
12.2 Continuation of the Business of the Partnership After
Dissolution ....................................................49
12.3 Liquidator......................................................50
12.4 Liquidation.....................................................51
12.5 Cancellation of Certificate of Limited Partnership..............52
12.6 Return of Capital Contributions.................................52
12.7 Waiver of Partition.............................................52
12.8 Capital Account Restoration.....................................52
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ARTICLE XIII
Amendment of Partnership Agreement
13.1 Amendment to be Adopted Solely by the Managing General Partner..52
13.2 Amendment Procedures............................................54
ARTICLE XIV
Merger
14.1 Authority.......................................................54
14.2 Procedure for Merger or Consolidation...........................54
14.3 Approval by Limited Partners of Merger or Consolidation.........55
14.4 Certificate of Merger...........................................56
14.5 Effect of Merger................................................56
ARTICLE XV
General Provisions
15.1 Addresses and Notices...........................................57
15.2 References......................................................57
15.3 Further Action..................................................57
15.4 Binding Effect..................................................57
15.5 Integration.....................................................57
15.6 Creditors.......................................................57
15.7 Waiver..........................................................57
15.8 Counterparts....................................................58
15.9 Applicable Law..................................................58
15.10 Invalidity of Provisions........................................58
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
NATIONAL PROPANE, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF National
Propane, L.P. dated as of _________, 1996, is entered into by and among National
Propane Corporation, a Delaware corporation, as the Managing General Partner,
National Propane SGP, Inc., a Delaware corporation, as the Special General
Partner, and National Propane Partners, L.P., a Delaware limited partnership, as
the initial Limited Partner, together with any other Persons who become Partners
in the Partnership or parties hereto as provided herein. In consideration of the
covenants, conditions and agreements contained herein, the parties hereto hereby
agree as follows:
ARTICLE I
Definitions
1.1 Definitions.
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Additional Limited Partner" means a Person admitted to the Partnership as
a Limited Partner pursuant to Section 10.4 and who is shown as such on the books
and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for each
Partner as of the end of each fiscal year of the Partnership, (a) increased by
any amounts that such Partner is obligated to restore under the standards set by
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b)
decreased by (i) the amount of all losses and deductions that, as of the end of
such fiscal year, are reasonably expected to be allocated to such Partner in
subsequent years under Sections 704(e)(2) and 706(d) of the Code and Treasury
Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions
that, as of the end of such fiscal year, are reasonably expected to be made to
such Partner in subsequent years in accordance with the terms of this Agreement
or otherwise to the extent they exceed offsetting increases to such Partner's
Capital Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made (other than
increases as a result of a minimum gain chargeback pursuant to Section 6.1(d)(i)
or 6.1(d)(ii)). The foregoing definition of Adjusted Capital Account is intended
to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. The
"Adjusted Capital Account" of a Partner in respect of a general partner interest
or any other specified interest in the Partnership shall be the amount which
such adjusted capital account would be if such general partner interest or other
interest in the Partnership were the
1
only interest in the Partnership held by a Partner from and after the date on
which such general partner interest or other interest was first issued.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii). Once an Adjusted
Property is deemed distributed by, and recontributed to, the Partnership for
federal income tax purposes upon a termination thereof pursuant to Section 708
of the Code, such property shall thereafter constitute a Contributed Property
until the Carrying Value of such property is subsequently adjusted pursuant to
Section 5.5(d)(i) or 5.5(d)(ii).
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with (either directly or indirectly),
the Person in question. As used herein, the term "control" means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Agreed Allocation" means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant to the
provisions of Section 6.1, including, without limitation, a Curative Allocation
(if appropriate to the context in which the term "Agreed Allocation" is used).
"Agreed Value" of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution as determined
by the Managing General Partner using such reasonable method of valuation as it
may adopt; provided, however, that the Agreed Value of any property deemed
contributed to the Partnership for federal income tax purposes upon termination
and reconstitution thereof pursuant to Section 708 of the Code shall be
determined in accordance with Section 5.5(c). Subject to Section 5.5(c), the
Managing General Partner shall, in its discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate Agreed Value of Contributed
Properties contributed to the Partnership in a single or integrated transaction
among each separate property on a basis proportional to the fair market value of
each Contributed Property.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership of National Propane, L.P., as it may be amended, supplemented or
restated from time to time.
"Assets" has the meaning assigned to such term in the Contribution and
Assumption Agreement.
"Assumed Liabilities" has the meaning assigned to such term in the
Contribution and Assumption Agreement.
"Audit Committee" means a committee of the Board of Directors of the
Managing General Partner composed entirely of two or more directors who are
neither officers, directors or employees of either of the General Partners or
any Affiliate of either of the General Partners.
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"Available Cash," means, with respect to any Quarter ending prior to the
Liquidation Date,
(a) the sum of (i) all cash and cash equivalents of the Partnership
Group on hand at the end of such Quarter, and (ii) all additional cash and cash
equivalents of the Partnership Group on hand on the date of determination of
Available Cash with respect to such Quarter resulting from borrowings for
working capital purposes, in each case subsequent to the end of such Quarter,
less
(b) the amount of any cash reserves that is necessary or appropriate
in the reasonable discretion of the Managing General Partner to (i) provide for
the proper conduct of the business of the Partnership Group (including reserves
for future capital expenditures) subsequent to such Quarter, (ii) comply with
applicable law or any loan agreement, security agreement, mortgage, debt
instrument or other agreement or obligation to which any member of the
Partnership Group is a party or by which it is bound or its assets are subject
or (iii) provide funds for distributions under Section 6.4 or 6.5 of the MLP
Agreement in respect of any one or more of the next four Quarters; provided,
however, that the Managing General Partner may not establish cash reserves
pursuant to (iii) above if the effect of such reserves would be that the MLP is
unable to distribute the Minimum Quarterly Distribution on all Common Units with
respect to such Quarter; and, provided further, that disbursements made by a
Group Member or cash reserves established, increased or reduced after the end of
such Quarter but on or before the date of determination of Available Cash with
respect to such Quarter shall be deemed to have been made, established,
increased or reduced, for purposes of determining Available Cash, within such
Quarter if the Managing General Partner so determines.
Notwithstanding the foregoing, "Available Cash" with respect to the
Quarter in which the Liquidation Date occurs and any subsequent Quarter shall
equal zero.
"Book-Tax Disparity" means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Section 5.5 and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"Business Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States of
America or the states of New York or Iowa shall not be regarded as a Business
Day.
"Capital Account" means the capital account maintained for a Partner
pursuant to Section 5.5.
"Capital Contribution" means any cash, cash equivalents or the Net Agreed
Value of Contributed Property that a Partner contributes to the Partnership
pursuant to this Agreement.
3
"Cause" means (x) a court of competent jurisdiction has entered a final,
non-appealable judgment finding the Managing General Partner liable for actual
fraud, gross negligence or willful or wanton misconduct in its capacity as a
general partner of the Partnership or (y) the Special General Partner, prior to
the Triarc Merger, does not have the same directors on its Board of Directors as
those of the Managing General Partner.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership of the Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section 2.1, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to time.
"Closing Date" means the first date on which Common Units are sold by the
MLP to the Underwriters pursuant to the provisions of the Underwriting
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time. Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding provision of
future law.
"Common Unit" has the meaning assigned to such term in the MLP Agreement.
"Contributed Property" means each property or other asset, in such form as
may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership (or deemed contributed to the Partnership on termination and
reconstitution thereof pursuant to Section 708 of the Code). Once the Carrying
Value of a Contributed Property is adjusted pursuant to Section 5.5(d), such
property shall no longer constitute a Contributed Property, but shall be deemed
an Adjusted Property.
"Contribution and Conveyance Agreements" means (i) that certain
Contribution, Conveyance and Assumption Agreement, dated, as of the Closing
Date, among the General Partners, the MLP, the Partnership and (ii) the
Contribution and Assumption Agreement, dated as of the Closing Date (the
"Contribution and Assumption Agreement") among the General Partners, the
Partnership and National Sales and Service, Inc., together with the additional
conveyance documents and instruments contemplated or referenced thereunder.
"Curative Allocation" means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 6.1(d)(ix).
"Delaware Act" means the Delaware Revised Uniform Limited Partnership Act,
6 Del C. 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 11.1 or 11.2.
4
"Economic Risk of Loss" has the meaning set forth in Treasury Regulation
Section 1.752-2(a).
"Event of Withdrawal" has the meaning assigned to such term in Section
11.1.
"General Partners" means the Managing General Partner and the Special
General Partner.
"Group Member" means a member of the Partnership Group.
"Indemnitee" means (a) each General Partner, any Departing Partner and any
Person who is or was an Affiliate of one of the General Partners or any
Departing Partner, (b) any Person who is or was a director, officer, employee,
agent or trustee of the Partnership, the MLP or any Subsidiary, (c) any Person
who is or was a director, officer, employee, agent or trustee of one of the
General Partners or any Departing Partner or any such Affiliate, (d) any Person
who is or was serving at the request of a General Partner or any Departing
Partner or any such Affiliate as a director, officer, employee, partner, agent,
fiduciary or trustee of another Person; provided, that a Person shall not be an
Indemnitee by reason of providing, on a fee-for-services basis, trustee,
fiduciary or custodial services.
"Initial Offering" means the initial offering and sale of Common Units to
the public, as described in the Registration Statement.
"Limited Partner" means any Person that is admitted to the Partnership as
a limited partner pursuant to the terms and conditions of this Agreement; but
the term Limited Partner shall not include any Person from and after the time
such Person withdraws as a Limited Partner from the Partnership.
"Liquidation Date" means (a) in the case of an event giving rise to the
dissolution of the Partnership of the type described in clauses (a) and (b) of
the first sentence of Section 12.2, the date on which the applicable time period
during which the Partners have the right to elect to reconstitute the
Partnership and continue its business has expired without such an election being
made, and (b) in the case of any other event giving rise to the dissolution of
the Partnership, the date on which such event occurs.
"Liquidator" means one or more Persons selected by the Managing General
Partner to perform the functions described in Section 12.3.
"Managing General Partner" means National Propane Corporation and its
successors and permitted assignees as Managing General Partner of the
Partnership and any other Person that holds an interest as managing general
partner in the Partnership.
"Merger Agreement" has the meaning assigned to such term in Section 14.1.
5
"Minimum Quarterly Distribution" has the meaning assigned to such term in
the MLP Agreement.
"MLP" means National Propane Partners, L.P., a Delaware limited
partnership.
"MLP Agreement" means the Amended and Restated Agreement of Limited
Partnership of the MLP, dated as of __________ ___, 1996.
"National Securities Exchange" means an exchange registered with the
Commission under Section 6(a) of the Securities Exchange Act of 1934, as
amended, supplemented or restated from time to time, and any successor to such
statute, or the Nasdaq Stock Market or any successor thereto.
"Net Agreed Value" means, (a) in the case of any Contributed Property, the
Agreed Value of such property reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner by the
Partnership, the Partnership's Carrying Value of such property (as adjusted
pursuant to Section 5.5(d)(ii)) at the time such property is distributed,
reduced by any indebtedness either assumed by such Partner upon such
distribution or to which such property is subject at the time of distribution,
in either case, as determined under Section 752 of the Code.
"Net Income" means, for any taxable year, the excess, if any, of the
Partnership's items of income and gain (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of loss and deduction (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Income shall be determined in accordance with Section 5.5(b) and shall
not include any items specially allocated under Section 6.1(d).
"Net Loss" means, for any taxable year, the excess, if any, of the
Partnership's items of loss and deduction (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of income and gain (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Loss shall be determined in accordance with Section 5.5(b) and shall not
include any items specially allocated under Section 6.1(d).
"Net Termination Gain" means, for any taxable year, the sum, if positive,
of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date. The items included in the determination of Net
Termination Gain shall be determined in accordance with Section 5.5(b) and shall
not include any items of income, gain or loss specially allocated under Section
6.1(d).
6
"Net Termination Loss" means, for any taxable year, the sum, if negative,
of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date. The items included in the determination of Net
Termination Loss shall be determined in accordance with Section 5.5(b) and shall
not include any items of income, gain or loss specially allocated under Section
6.1(d).
"Nonrecourse Built-in Gain" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or pledge
securing a Nonrecourse Liability, the amount of any taxable gain that would be
allocated to the Partners pursuant to Sections 6.2(b)(i)(A), 6.2(b)(ii)(A) and
6.2(b)(iii) if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
"Nonrecourse Deductions" means any and all items of loss, deduction or
expenditures (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Treasury Regulation Section 1.704-2(b), are attributable
to a Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2).
"Notes" means the $125 million of First Mortgage Notes issued by the
Managing General Partner and assumed by the Partnership in conjunction with the
Initial Offering.
"OLP Subsidiary" means a Subsidiary of the Partnership.
"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to Triarc, the Partnership or either of the General Partners or
any of their Affiliates) acceptable to the Managing General Partner in its
reasonable discretion.
"Over-allotment Option" has the meaning assigned to such term in the MLP
Agreement.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
"Partner Nonrecourse Deductions" means any and all items of loss,
deduction or expenditure (including, without limitation, any expenditure
described in Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of Treasury Regulation Section 1.704-2(i), are attributable to a
Partner Nonrecourse Debt.
"Partners" means the General Partners and the Limited Partners.
7
"Partnership" means National Propane, L.P., a Delaware limited
partnership, and any successors thereto.
"Partnership Group" means the Partnership and the OLP Subsidiaries,
treated as a single consolidated entity.
"Partnership Interest" means the interest of a Partner in the Partnership.
"Partnership Minimum Gain" means that amount determined in accordance with
the principles of Treasury Regulation Section 1.704-2(d).
"Percentage Interest" means the percentage interest in the Partnership
held by each Partner upon completion of the transactions in Section 5.2 and
shall mean (a) as to each of the General Partners (each in its capacity as
General Partner of the Partnership), 1.0101%, and (b) as to the Limited Partner,
97.9798%.
"Person" means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.
"Pro Rata" means when modifying the General Partners, apportioned equally
between the General Partners.
"Quarter" means, unless the context requires otherwise, a fiscal quarter
of the Partnership.
"Recapture Income" means any gain recognized by the Partnership (computed
without regard to any adjustment required by Sections 734 or 743 of the Code)
upon the disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Registration Statement" means the Registration Statement on Form S-1
(Registration No. 333-2768), as it has been or as it may be amended or
supplemented from time to time, filed by the MLP with the Securities and
Exchange Commission under the Securities Act to register the offering and sale
of the Common Units in the Initial Offering.
"Required Allocations" means (a) any limitation imposed on any allocation
of Net Losses or Net Termination Losses under Section 6.1(b) or 6.1(c)(ii) and
(b) any allocation of an item of income, gain, loss or deduction pursuant to
Section 6.1(d)(i), 6.1(d)(ii), 6.1(d)(iv), 6.1(d)(vii) or 6.1(d)(ix).
"Residual Gain" or "Residual Loss" means any item of gain or loss, as the
case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss
8
is not allocated pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A),
respectively, to eliminate Book-Tax Disparities.
"Restricted Activity" has the meaning assigned to such term in the MLP
Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such statute.
"Special Approval" means approval by a majority of the members of the
Audit Committee.
"Special General Partner" means National Propane SGP, Inc., a Delaware
corporation and a wholly-owned subsidiary of National Propane Corporation and
its successors and assigns as special general partner of the Partnership.
"Subordinated Unit" has the meaning assigned to such term in the MLP
Agreement.
"Subordination Period" has the meaning assigned to such term in the MLP
Agreement.
"Subsidiary" means, with respect to any Person, (a) a corporation of which
more than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
Partnership Interests of such partnership (considering all of the Partnership
Interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person or a combination thereof or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the directors or
other governing body of such Person.
"Substituted Limited Partner" means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 10.2 in place of and with all the
rights of a Limited Partner and who is shown as a Limited Partner on the books
and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such term in
Section 14.2(b).
"Transfer" has the meaning assigned to such term in Section 4.1(a).
"Triarc" means Triarc Companies, Inc., a Delaware corporation.
9
"Triarc Loan" means the $40.7 million loan made on the Closing Date by the
Partnership to Triarc.
"Triarc Merger" has the meaning assigned to such term in Section 4.7 of
the MLP Agreement.
"Underwriter" means each Person named as an underwriter in Exhibit A to
the Underwriting Agreement that purchases Common Units pursuant thereto.
"Underwriting Agreement" means the Purchase Agreement dated_________,
1996, among the Underwriters, the MLP, the Managing General Partner and certain
other parties, providing for the purchase of Common Units by such Underwriters.
"Unit" has the meaning assigned to such term in the MLP Agreement.
"Unit Majority" has the meaning assigned to such term in the MLP
Agreement.
"Unrealized Gain" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the fair market
value of such property as of such date (as determined under Section 5.5(d)) over
(b) the Carrying Value of such property as of such date (prior to any adjustment
to be made pursuant to Section 5.5(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the Carrying Value
of such property as of such date (prior to any adjustment to be made pursuant to
Section 5.5(d) as of such date) over (b) the fair market value of such property
as of such date (as determined under Section 5.5(d)).
"U.S. GAAP" means United States Generally Accepted Accounting Principles
consistently applied.
"Withdrawal Opinion of Counsel" has the meaning assigned to such term in
Section 11.1(b).
1.2 Construction.
Unless the context requires otherwise: (a) any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa; (b) references to Articles and Sections refer to Articles and
Sections of this Agreement; and (c) "include" or "includes" means includes,
without limitation, and "including" means including, without limitation.
10
ARTICLE II
Organization
2.1 Formation.
The General Partners and the MLP have previously formed the Partnership as
a limited partnership pursuant to the provisions of the Delaware Act and hereby
amend and restate the original Agreement of Limited Partnership of National
Propane, L.P. in its entirety. This amendment and restatement shall become
effective on the date of this Agreement. Except as expressly provided to the
contrary in this Agreement, the rights 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.
2.2 Name.
The name of the Partnership shall be "National Propane, L.P." The
Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the Managing General Partner, including, in its sole
discretion, the name of the Managing General Partner. The words "Limited
Partnership," "L.P.," "Ltd." or similar words or letters shall be included in
the Partnership's name where necessary for the purpose of complying with the
laws of any jurisdiction that so requires. The Managing General Partner in its
discretion may change the name of the Partnership at any time and from time to
time and shall notify the Limited Partners of such change in the next regular
communication to the Limited Partners.
2.3 Registered Office; Registered Agent; Principal Office; Other Offices.
Unless and until changed by the Managing General Partner, the registered
office of the Partnership in the State of Delaware shall be located at 1209
Orange Street, New Castle County, Wilmington, Delaware 19801, and the registered
agent for service of process on the Partnership in the State of Delaware at such
registered office shall be CT Corporation System. The principal office of the
Partnership shall be located at Suite 1700, IES Tower, 200 1st Street, S.E.,
P.O. Box 2067, Cedar Rapids, Iowa, 52401-2067 or such other place as the
Managing General Partner may from time to time designate by notice to the
Limited Partner. The Partnership may maintain offices at such other place or
places within or outside the State of Delaware as the General Partner deems
necessary or appropriate. The address of the Managing General Partner shall be
Suite 1700, IES Tower, 200 1st Street, S.E., P.O. Box 2067, Cedar Rapids, Iowa,
52401-2067 or such other place as the Managing General Partner may from time to
time designate by notice to the Limited Partners.
11
2.4 Purpose and Business.
The purpose and nature of the business to be conducted by the Partnership
shall be to (a) acquire, manage and operate the Assets and any similar assets or
properties, and to engage directly in, or to enter into or form any corporation,
partnership, joint venture, limited liability company or other arrangement to
engage indirectly in, any type of business or activity engaged in by the
Managing General Partner immediately prior to the Closing Date and, in
connection therewith, to exercise all of the rights and powers conferred upon
the Partnership pursuant to the agreements relating to such business activity,
(b) engage directly in, or enter into or form any corporation, partnership,
joint venture, limited liability company or other arrangement to engage
indirectly in, any business activity that is approved by the Managing General
Partner and which may lawfully be conducted by a limited partnership organized
pursuant to the Delaware Act and, in connection therewith, to exercise all of
the rights and powers conferred upon the Partnership pursuant to the agreements
relating to such business activity and (c) do anything necessary or appropriate
to the foregoing, including the making of capital contributions or loans to any
Group Member, the MLP or any Subsidiary of the MLP. The Managing General
Partner, the Special General Partner and their Affiliates have no obligation or
duty to the Partnership, the Limited Partners, or the Assignees to propose or
approve, and in its discretion may decline to propose or approve, the conduct by
the Partnership of any business.
2.5 Powers.
The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described in Section
2.4 and for the protection and benefit of the Partnership.
2.6 Power of Attorney.
(a) The Limited Partners hereby constitute and appoint the Managing
General Partner and, if a Liquidator shall have been selected pursuant to
Section 12.3, the Liquidator, severally (and any successor to the Liquidator by
merger, transfer, assignment, election or otherwise) and each of their
authorized officers and attorneys-in-fact, as the case may be, with full power
of substitution, as his true and lawful agent and attorney-in-fact, with full
power and authority in his name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (A) all certificates, documents and
other instruments (including this Agreement and the Certificate of Limited
Partnership and all amendments or restatements hereof or thereof) that the
Managing General Partner or the Liquidator deems necessary or appropriate
to form, qualify or continue the existence or qualification of the
Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) in the State of Delaware and in
all other jurisdictions in which the Partnership may conduct business or
own property; (B) all certificates, documents and other
12
instruments that the Managing General Partner or the Liquidator deems
necessary or appropriate to reflect, in accordance with its terms, any
amendment, change, modification or restatement of this Agreement; (C) all
certificates, documents and other instruments (including conveyances and a
certificate of cancellation) that the Managing General Partner or the
Liquidator deems necessary or appropriate to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this Agreement;
(D) all certificates, documents and other instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to,
or other events described in, Article IV, X, XI or XII; (E) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of any class or
series of Partnership Interests; and (F) all certificates, documents and
other instruments (including agreements and a certificate of merger)
relating to a merger or consolidation of the Partnership pursuant to
Article XIV; and
(ii) execute, swear to, acknowledge, deliver, file and record
all ballots, consents, approvals, waivers, certificates, documents and
other instruments necessary or appropriate, in the discretion of the
Managing General Partner or the Liquidator, to make, evidence, give,
confirm or ratify any vote, consent, approval, agreement or other action
that is made or given by the Partners hereunder or is consistent with the
terms of this Agreement or is necessary or appropriate, in the discretion
of the Managing General Partner or the Liquidator, to effectuate the terms
or intent of this Agreement; provided, that when the approval of the
Limited Partners is required by any provision of this Agreement, the
Managing General Partner or the Liquidator may exercise the power of
attorney made in this Section 2.6(a)(ii) only after the necessary vote,
consent or approval of the Limited Partners is obtained.
Nothing contained in this Section 2.6(a) shall be construed as authorizing the
Managing General Partner to amend this Agreement except in accordance with
Article XIII or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and, to
the maximum extent permitted by law, not be affected by the subsequent death,
incompetency, disability, incapacity, dissolution, bankruptcy or termination of
the Limited Partners and the transfer of all or any portion of the Limited
Partners' Partnership Interest and shall extend to the Limited Partners' heirs,
successors, assigns and personal representatives. The Limited Partners hereby
agree to be bound by any representation made by the Managing General Partner or
the Liquidator acting in good faith pursuant to such power of attorney; and the
Limited Partners hereby waive, to the maximum extent permitted by law, any and
all defenses that may be available to contest, negate or disaffirm the action of
the Managing General Partner or the Liquidator taken in good faith under such
power of attorney. The Limited Partners shall execute and deliver to the
Managing General Partner or the Liquidator, within 15 days after receipt of the
request therefor, such further designation, powers of attorney and other
instruments as the Managing General Partner or the Liquidator deems necessary to
effectuate this Agreement and the purposes of the Partnership.
13
2.7 Term.
The Partnership commenced upon the filing of the Certificate of Limited
Partnership in accordance with the Delaware Act and shall continue in existence
until the close of Partnership business on December 31, 2086, or until the
earlier termination of the Partnership in accordance with the provisions of
Article XII.
2.8 Title to Partnership Assets.
Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to any or all
of the Partnership assets may be held in the name of the Partnership, a General
Partner, one or more of its Affiliates or one or more nominees, as the Managing
General Partner may determine. The General Partners hereby declare and warrant
that any Partnership assets for which record title is held in the name of a
General Partner, one or more of its Affiliates or one or more nominees shall be
held by such General Partner or such Affiliate or nominee for the use and
benefit of the Partnership in accordance with the provisions of this Agreement;
provided, however, that the Managing General Partner shall use reasonable
efforts to cause record title to such assets (other than those assets in respect
of which the Managing General Partner determines that the expense and difficulty
of conveyancing makes transfer of record title to the Partnership impracticable)
to be vested in the Partnership as soon as reasonably practicable; provided,
further, that, prior to the withdrawal or removal of the General Partner or as
soon thereafter as practicable, such General Partner shall use reasonable
efforts to effect the transfer of record title to the Partnership and, prior to
any such transfer, will provide for the use of such assets in a manner
satisfactory to the Managing General Partner. All Partnership assets shall be
recorded as the property of the Partnership in its books and records,
irrespective of the name in which record title to such Partnership assets is
held.
ARTICLE III
Rights of the Limited Partners
3.1 Limitation of Liability.
The Limited Partners shall have no liability under this Agreement except
as expressly provided in this Agreement or the Delaware Act.
3.2 Management of Business.
No Limited Partner (other than the Managing General Partner, or any of its
Affiliates or any officer, director, employee, partner, agent or trustee of the
Managing General Partner or any of its Affiliates, or any officer, director,
employee or agent of a Group Member, in its capacity as such, if such Person
shall also be a Limited Partner) shall participate in the operation, management
or
14
control (within the meaning of Section 17-303(a) of the Delaware Act) of the
Partnership's business, transact any business in the Partnership's name or have
the power to sign documents for or otherwise bind the Partnership. Any action
taken by any Affiliate of the Managing General Partner or any officer, director,
employee, partner, agent or trustee of the Managing General Partner or any of
its Affiliates, or any officer, member of the board of directors, employee or
agent of a Group Member, the MLP or any Subsidiary of the MLP, in its capacity
as such, shall not be deemed to be participation in the control of the business
of the Partnership by a limited partner of the Partnership (within the meaning
of the Delaware Act) and shall not affect, impair or eliminate the limitations
on the liability of the Limited Partners under this Agreement.
3.3 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 3.3(b), each of the Limited
Partners 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 the Limited Partner's own expense:
(i) to obtain true and full information regarding the status
of the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of
the Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to it, a current list of the name and
last known business, residence or mailing address of each Partner;
(iv) to have furnished to it, 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 information regarding the amount of cash and a
description and statement of the Net Agreed Value of any other Capital
Contribution by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each became a Partner; and
(vi) to obtain such other information regarding the affairs of
the Partnership as is just and reasonable.
(b) The General Partners may keep confidential from the Limited
Partners and Assignees, for such period of time as the Managing General Partner
deems reasonable, (i) any information that the Managing General Partner
reasonably believes to be in the nature of trade secrets or (ii) other
information the disclosure of which the Managing General Partner in good faith
15
believes (A) is not in the best interests of the MLP or the Partnership Group,
(B) could damage the MLP or the Partnership Group or (C) that the MLP or any
Group Member is required by law or by agreement with any third party to keep
confidential (other than agreements with Affiliates the primary purpose of which
is to circumvent the obligations set forth in this Section 3.3).
3.4 Outside Activities of the Limited Partners.
Subject to the provisions of Section 7.5, which shall continue to be
applicable to the Persons referred to therein, regardless of whether such Person
shall also be a Limited Partner, any Limited Partner shall be entitled to and
may have business interests and engage in business activities in addition to
those relating to the Partnership, including business interests and activities
in direct competition with the Partnership Group.
ARTICLE IV
Transfer of Partnership Interests
4.1 Transfer Generally.
(a) The term "transfer," when used in this Agreement with respect to
a Partnership Interest, shall be deemed to refer to a transaction by which a
Partner assigns its Partnership Interest to another Person, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any
other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article IV. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article IV shall be null and void.
(c) Nothing contained in this Agreement shall be construed to
prevent a disposition by any shareholder of a General Partner of any or all of
the issued and outstanding capital stock of a General Partner.
4.2 Transfer of a General Partner's Partnership Interest.
Except as provided in Section 4.5, if a General Partner transfers
its partnership interest as a general partner of the MLP to any Person in
accordance with the provisions of the MLP Agreement, such General Partner shall
contemporaneously therewith transfer all, but not less than all, of its
Partnership Interest as a General Partner of the Partnership to such Person, and
the Limited Partners hereby expressly consent to such transfer. Except as set
forth in the immediately preceding sentence and in Section 5.2, a General
Partner may not transfer all or any part of its Partnership Interest as the
General Partner of the Partnership.
16
4.3 Transfer of the Limited Partner's Partnership Interests.
Any Limited Partner may transfer all, but not less than all, of its
Partnership Interest as a limited partner of the Partnership in connection with
the merger, consolidation or other combination of any of the Limited Partners
with or into any other Person or the transfer by any of the Limited Partners of
all or substantially all of its assets to another Person, and following any such
transfer such Person may become a Substituted Limited Partner pursuant to
Article X. Except as set forth in the immediately preceding sentence and in
Section 5.2, or in connection with any pledge of (or any related foreclosure on)
the Limited Partner's Partnership Interest as a limited partner of the
Partnership solely for the purpose of securing, directly or indirectly,
indebtedness of the Partnership or the MLP, and except for the transfers
contemplated by Sections 5.2 and 10.1, a Limited Partner may not transfer all or
any part of its Partnership Interest or withdraw from the Partnership.
4.4 Restrictions on Transfers.
(a) Notwithstanding the other provisions of this Article IV, no
transfer of any Partnership Interest shall be made if such transfer would (i)
violate the then applicable federal or state securities laws or rules and
regulations of the Commission, any state securities commission or any other
governmental authorities with jurisdiction over such transfer, (ii) terminate
the existence or qualification of the Partnership or the MLP under the laws of
the jurisdiction of its formation or (iii) cause the Partnership or the MLP to
be treated as an association taxable as a corporation or otherwise to be taxed
as an entity for federal income tax purposes (to the extent not already so
treated or taxed).
(b) The Managing General Partner may impose restrictions on the
transfer of Partnership Interests if a subsequent Opinion of Counsel determines
that such restrictions are necessary to avoid a significant risk of the
Partnership's or the MLP's becoming taxable as a corporation or otherwise to be
taxed as an entity for federal income tax purposes. The restrictions may be
imposed by making such amendments to this Agreement as the Managing General
Partner may determine to be necessary or appropriate to impose such
restrictions.
4.5 Exchange by Special General Partner of its General Partner
Partnership Interest in the Partnership and the MLP.
If the Managing General Partner has not entered into the Triarc Merger,
then the Special General Partner may, at any time, in one or more exchanges and
in its sole discretion, exchange all or a portion of its Unsubordinated General
Partner Interest (as such term is defined in the MLP Agreement) in the MLP
together with an equal portion of its partnership interest in the Partnership
for Units having rights to distributions of Available Cash from Operating
Surplus (as such terms are defined in the MLP Agreement) equal to the
distribution rights with respect to such Available Cash from Operating Surplus
of the combined effective percentage interest in the Partnership and the MLP
that the Special General Partner exchanged. For example, as of the Closing Date,
the Special General Partner's combined effective 2% interest in the Partnership
and the MLP would be
17
exchanged into 223,419 Units (or 242,765 Units if the over-allotment option for
the issuance of additional Units is exercised, notwithstanding the fact that the
Special General Partner is not required to make any additional capital
contribution upon the exercise of the over-allotment option). Additional capital
contributions pursuant to Section 5.3 of this Agreement or Section 5.2 of the
MLP Agreement will increase the number of Units into which such combined
interest is exchanged. The Units received by the Special General Partner
pursuant to this Section 4.5 shall be (x) limited partner interests and (b)
issued as a combination of Subordinated Units and Common Units; the proportion
of the Subordinated Units to the total Units received in this exchange shall be
in the same proportion that the unconverted Subordinated Units initially issued
pursuant to Section 5.2 of the MLP Agreement that are outstanding immediately
before such exchange represent in relation to the total Subordinated Units
initially issued pursuant to Section 5.2 of the MLP Agreement. Except as
otherwise provided in Sections 4.12, 5.5(c)(ii), 6.1(d)(x) and 6.7(b) of the
MLP Agreement, the Special General Partner at the time of such conversion will
have the same rights with respect to its Common Units and Subordinated Units as
the rights possessed by other holders of such Units. Immediately prior to the
exchange of any portion of the Special General Partners' general partner
interest in the Partnership, the interest being exchanged shall automatically
convert into a limited partner interest in the Partnership. The Managing General
Partner shall be required to take all actions necessary to effectuate such
conversion.
ARTICLE V
Contributions and Initial Transfers
5.1 Initial Contributions.
In connection with the formation of the Partnership under the Delaware Act
and pursuant to an Agreement of Limited Partnership dated March 14, 1996 and an
Amended Agreement of Limited Partnership dated June 21, 1996, (i) the Managing
General Partner and the Special General Partner each made a Capital Contribution
to the Partnership in the aggregate amount of $20.96 in exchange for a 2.0956%
interest in the Partnership and each has been admitted as a General Partner of
the Partnership, (ii) the MLP made a net Capital Contribution to the Partnership
in the amount of $.01 in exchange for a .0001% interest in the Partnership and
has been admitted as a limited partner of the Partnership and (iii) the General
Partners have contributed an aggregate $958.07 in exchange for a 95.8087%
limited partner interest in the Partnership. The Managing General Partner
received a managing general partner interest and the Special General Partner
received a non-managing general partner interest.
5.2 Contributions and Initial Transfers by the MLP and the General
Partners.
On the Closing Date, pursuant to, and subject to the conditions of, the
Contribution and Conveyance Agreements, the following transactions shall occur
in the following order:
(a) The General Partners shall convey substantially all of their
assets (which assets will not include an existing intercompany note from Triarc,
approximately $59.3 million of
18
the net proceeds from the issuance of First Mortgage Notes and certain other
assets of the Managing General Partner). In exchange, the Partnership shall (A)
continue each of the General Partner's 2.0956% general partner interest in the
Partnership, (B) continue the General Partners' 95.8087% limited partner
interest in the Partnership and (C) assume the Assumed Liabilities.
(b) The General Partners shall thereafter convey all their limited
partner interest in the Partnership to the MLP in exchange for the interests
received pursuant to 5.2 of the MLP Agreement.
(c) After the Partnership has utilized approximately $62.2 million
received in Section 5.2(a) above to repay a portion of the indebtedness assumed
in Section 5.2(a) above, the MLP will contribute the net offering proceeds
(approximately $118.2 million) received from the Underwriters on the sale of
Common Units to the Partnership. As a result of the conveyances set forth in
this Section 5.2(c), the MLP will receive an additional limited partner interest
in the Partnership so that its aggregate limited partner interest in the
Partnership will be 97.9798% and the General Partners will each have a 1.0101%
general partner interest in the Partnership. The Managing General Partner will
continue to hold the managing general partner interest and the Special General
Partner will continue to hold a non-managing general partner interest.
5.3 Additional Capital Contributions.
With the consent of the Managing General Partner, any Limited Partner may,
but shall not be obligated to, make additional Capital Contributions to the
Partnership. Contemporaneously with the making of any Capital Contributions by a
Limited Partner in addition to those provided in Sections 5.1 and 5.2 hereof,
each of the General Partners shall be obligated to make an additional Capital
Contribution to the Partnership in an amount equal to 1.0101 [div] 98.9899 of
the Net Agreed Value of the additional Capital Contribution then made by such
Limited Partner (other than with respect to additional Capital Contributions by
the Limited Partner of the net proceeds received by the MLP upon the issuance of
Common Units pursuant to the Over-allotment Option). Except as set forth in the
immediately preceding sentence and Article XII, the General Partners shall not
be obligated to make any additional Capital Contributions to the Partnership.
5.4 Interest and Withdrawal.
No interest shall be paid by the Partnership on Capital Contributions, and
no Partner shall be entitled to withdrawal or return of any part of its Capital
Contributions or to receive any distribution from the Partnership, except as
provided in Articles VI, XI and XII.
5.5 Capital Accounts.
19
(a) The Partnership shall maintain for each Partner owning a
Partnership Interest a separate Capital Account with respect to such Partnership
Interest in accordance with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of
all Capital Contributions made to the Partnership with respect to such
Partnership Interest pursuant to this Agreement and (ii) all items of
Partnership income and gain (including, without limitation, income and gain
exempt from tax) computed in accordance with Section 5.5(b) and allocated with
respect to such Partnership Interest pursuant to Section 6.1, and decreased by
(x) the amount of cash or the Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such Partnership Interest
pursuant to this Agreement and (y) all items of Partnership deduction and loss
computed in accordance with Section 5.5(b) and allocated with respect to such
Partnership Interest pursuant to Section 6.1.
(b) For purposes of computing the amount of any item of income,
gain, loss or deduction which is to be allocated pursuant to Article VI and is
to be reflected in the Partners' Capital Accounts, the determination,
recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes
(including, without limitation, any method of depreciation, cost recovery or
amortization used for that purpose), provided, that:
(i) Solely for purposes of this Section 5.5, the Partnership
shall be treated as owning directly its proportionate share (as determined
by the Managing General Partner) of all property owned by any OLP
Subsidiary that is classified as a partnership for federal income tax
purposes.
(ii) All fees and other expenses incurred by the Partnership
to promote the sale of (or to sell) a Partnership Interest that can
neither be deducted nor amortized under Section 709 of the Code, if any,
shall, for purposes of Capital Account maintenance, be treated as an item
of deduction at the time such fees and other expenses are incurred and
shall be allocated among the Partners pursuant to Section 6.1.
(iii) Except as otherwise provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any election
under Section 754 of the Code which may be made by the Partnership and, as
to those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of the
Code, without regard to the fact that such items are not includable in
gross income or are neither currently deductible nor capitalized for
federal income tax purposes. To the extent an adjustment to the adjusted
tax basis of any Partnership asset pursuant to Section 734(b) or 743(b) of
the Code is required, pursuant to Treasury Regulation Section 1.704-
2(b)(2)(iv)(m) to be taken into account in determining Capital Accounts,
the amount of such adjustment in the Capital Accounts shall be treated as
an item of gain or loss.
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such
20
date of disposition were equal in amount to the Partnership's Carrying
Value with respect to such property as of such date.
(v) In accordance with the requirements of Section 704(b) of
the Code, any deductions for depreciation, cost recovery or amortization
attributable to any Contributed Property shall be determined as if the
adjusted basis of such property on the date it was acquired by the
Partnership were equal to the Agreed Value of such property. Upon an
adjustment pursuant to Section 5.5(d) to the Carrying Value of any
Partnership property subject to depreciation, cost recovery or
amortization, any further deductions for such depreciation, cost recovery
or amortization attributable to such property shall be determined (A) as
if the adjusted basis of such property were equal to the Carrying Value of
such property immediately following such adjustment and (B) using a rate
of depreciation, cost recovery or amortization derived from the same
method and useful life (or, if applicable, the remaining useful life) as
is applied for federal income tax purposes; provided, however, that, if
the asset has a zero adjusted basis for federal income tax purposes,
depreciation, cost recovery or amortization deductions shall be determined
using any reasonable method that the Managing General Partner may adopt.
(vi) If the Partnership's adjusted basis in a depreciable or
cost recovery property is reduced for federal income tax purposes pursuant
to Section 48(q)(1) or 48(q)(3) of the Code, the amount of such reduction
shall, solely for purposes hereof, be deemed to be an additional
depreciation or cost recovery deduction in the year such property is
placed in service and shall be allocated among the Partners pursuant to
Section 6.1. Any restoration of such basis pursuant to Section 48(q)(2) of
the Code shall, to the extent possible, be allocated in the same manner to
the Partners to whom such deemed deduction was allocated.
(c) A transferee of a Partnership Interest shall succeed to a pro
rata portion of the Capital Account of the transferor relating to the
Partnership Interest so transferred; provided, however, that, if the transfer
causes a termination of the Partnership under Section 708(b)(1)(B) of the Code,
the Partnership's properties and liabilities shall be deemed (i) to have been
distributed in liquidation of the Partnership to the Partners (including any
transferee of a Partnership Interest that is a party to the transfer causing
such termination) pursuant to Section 12.4 (after adjusting the balance of the
Capital Accounts of the Partners as provided in Section 5.5(d)(ii)) and
recontributed by such Partners in reconstitution of the Partnership or (ii) to
be treated as mandated by Treasury Regulations issued pursuant to Sections 708
and 704 of the Code as amended. Any such deemed contribution and distribution
shall be treated as an actual contribution and distribution for purposes of this
Section 5.5. In such event, the Carrying Values of the Partnership properties
shall be adjusted immediately prior to such deemed contribution and distribution
pursuant to Section 5.5(d)(ii) and such Carrying Values shall then constitute
the Agreed Values of such properties upon such deemed contribution to the new
Partnership. The Capital Accounts of such new Partnership shall be maintained in
accordance with the principles of this Section 5.5.
21
(d) (i) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership Interests
for cash or Contributed Property, the Capital Account of all Partners and
the Carrying Value of each Partnership property immediately prior to such
issuance shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership property, as if
such Unrealized Gain or Unrealized Loss had been recognized on an actual
sale of each such property immediately prior to such issuance and had been
allocated to the Partners at such time pursuant to Section 6.1(c). In
determining such Unrealized Gain or Unrealized Loss, the aggregate cash
amount and fair market value of all Partnership assets (including, without
limitation, cash or cash equivalents) immediately prior to the issuance of
additional Partnership Interests shall be determined by the Managing
General Partner using such reasonable method of valuation as it may adopt;
provided, however, that the Managing General Partner, in arriving at such
valuation, must take fully into account the fair market value of the
Partnership Interests of all Partners at such time. The Managing General
Partner shall allocate such aggregate value among the assets of the
Partnership (in such manner as it determines in its discretion to be
reasonable) to arrive at a fair market value for individual properties.
(ii) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed
distribution to a Partner of any Partnership property (other than a
distribution of cash that is not in redemption or retirement of a
Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of all Partnership property shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable to
such Partnership property, as if such Unrealized Gain or Unrealized Loss
had been recognized in a sale of such property immediately prior to such
distribution for an amount equal to its fair market value, and had been
allocated to the Partners, at such time, pursuant to Section 6.1(c). In
determining such Unrealized Gain or Unrealized Loss the aggregate cash
amount and fair market value of all Partnership assets (including, without
limitation, cash or cash equivalents) immediately prior to a distribution
shall (A) in the case of an actual distribution which is not made pursuant
to Section 12.4 or in the case of a deemed contribution and/or
distribution occurring as a result of a termination of the Partnership
pursuant to Section 708 of the Code, be determined and allocated in the
same manner as that provided in Section 5.5(d)(i) or (B) in the case of a
liquidating distribution pursuant to Section 12.4, be determined and
allocated by the Liquidator using such reasonable method of valuation as
it may adopt.
5.6 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
22
or collectible only out of the Partnership assets in accordance with the terms
and conditions upon which such advances are made.
5.7 Limited Preemptive Rights.
Except as provided in Section 5.3, no Person shall have preemptive,
preferential or other similar rights with respect to (a) additional Capital
Contributions; (b) issuance or sale of any class or series of Partnership
Interests, whether unissued, held in the treasury or hereafter created; (c)
issuance of any obligations, evidences of indebtedness or other securities of
the Partnership convertible into or exchangeable for, or carrying or accompanied
by any rights to receive, purchase or subscribe to, any such Partnership
Interests; (d) issuance of any right of subscription to or right to receive, or
any warrant or option for the purchase of, any such Partnership Interests; or
(e) issuance or sale of any other securities that may be issued or sold by the
Partnership.
5.8 Fully Paid and Non-Assessable Nature of Limited Partner Partnership
Interests.
All Limited Partner Partnership Interests issued pursuant to, and in
accordance with the requirements of, this Article V shall be fully paid and
non-assessable Partnership Interests in the Partnership, except as such
non-assessability may be affected by Section 17-607 of the Delaware Act.
ARTICLE VI
Allocations and Distributions
6.1 Allocations for Capital Account Purposes.
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Section 5.5(b)) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided hereinbelow.
(a) Net Income. After giving effect to the special allocations set
forth in Section 6.1(d), Net Income for each taxable year and all items of
income, gain, loss and deduction taken into account in computing Net Income for
such taxable year shall be allocated as follows:
(i) First, 100% to the General Partners, Pro Rata, until the
aggregate Net Income allocated to the General Partners pursuant to this
Section 6.1(a)(i) for the current taxable year and all previous taxable
years is equal to the aggregate Net Losses allocated to the General
Partners pursuant to Section 6.1(b)(ii) for all previous taxable years;
(ii) Second, 100% to the General Partners and the Limited
Partners, in accordance with their respective Percentage Interests.
23
(b) Net Losses. After giving effect to the special allocations set
forth in Section 6.1(d), Net Losses for each taxable period and all items of
income, gain, loss and deduction taken into account in computing Net Losses for
such taxable period shall be allocated as follows:
(i) First, 100% to the General Partners and the Limited
Partners, in accordance with their respective Percentage Interests;
provided, that Net Losses shall not be allocated pursuant to this Section
6.1(b)(i) to the extent that such allocation would cause a Limited Partner
to have a deficit balance in its Adjusted Capital Account at the end of
such taxable year (or increase any existing deficit balance in its
Adjusted Capital Account);
(ii) Second, the balance, if any, 100% to the General
Partners, Pro Rata.
(c) Net Termination Gains and Losses. After giving effect to the
special allocations set forth in Section 6.1(d), all items of income, gain, loss
and deduction taken into account in computing Net Termination Gain or Net
Termination Loss for such taxable period shall be allocated in the same manner
as such Net Termination Gain or Net Termination Loss is allocated hereunder. All
allocations under this Section 6.1(c) shall be made after Capital Account
balances have been adjusted by all other allocations provided under this Section
6.1 and after all distributions of Available Cash provided under Section 6.4
have been made with respect to the taxable period ending on or before the
Liquidation Date; provided, however, that solely for purposes of this Section
6.1(c), Capital Accounts shall not be adjusted for distributions made pursuant
to Section 12.4.
(i) If a Net Termination Gain is recognized (or deemed
recognized pursuant to Section 5.5(d)), such Net Termination Gain shall be
allocated between the General Partners and the Limited Partners in the
following manner (and the Capital Accounts of the Partners shall be
increased by the amount so allocated in each of the following subclauses,
in the order listed, before an allocation is made pursuant to the next
succeeding subclause):
(A) First, to each Partner having a deficit balance in
its Capital Account, in the proportion that such deficit balance
bears to the total deficit balances in the Capital Accounts of all
Partners, until each such Partner has been allocated Net Termination
Gain equal to any such deficit balance in its Capital Account; and
(B) Second, 100% to the General Partners and the Limited
Partners in accordance with their respective Percentage Interests.
(ii) If a Net Termination Loss is recognized (or deemed
recognized pursuant to Section 5.5(d)), such Net Termination Loss shall be
allocated to the Partners in the following manner:
24
(A) First, 100% to the General Partners and the Limited
Partners in proportion to, and to the extent of, the positive
balances in their respective Capital Accounts; and
(B) Second, the balance, if any, 100% to the General
Partners, Pro Rata.
(d) Special Allocations. Notwithstanding any other provision of this
Section 6.1, the following special allocations shall be made for such taxable
period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any
other provision of this Section 6.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period, each
Partner shall be allocated items of Partnership income and gain for such
period (and, if necessary, subsequent periods) in the manner and amounts
provided in Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and
1.704-2(j)(2)(i), or any successor provision. For purposes of this Section
6.1(d), each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall
be effected, prior to the application of any other allocations pursuant to
this Section 6.1(d) with respect to such taxable period (other than an
allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vi)). This Section
6.1(d)(i) is intended to comply with the Partnership Minimum Gain
chargeback requirement in Treasury Regulation Section 1.704-2(f) and
shall be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain.
Notwithstanding the other provisions of this Section 6.1 (other than
Section 6.1(d)(i)), except as provided in Treasury Regulation Section
1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain during any Partnership taxable period, any Partner with a
share of Partner Nonrecourse Debt Minimum Gain at the beginning of such
taxable period shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in the manner and
amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions. For purposes of this
Section 6.1(d), each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall
be effected, prior to the application of any other allocations pursuant to
this Section 6.1(d), other than Section 6.1(d)(i) and other than an
allocation pursuant to Sections 6.1(d)(iv) and 6.1(d)(v), with respect to
such taxable period. This Section 6.1(d)(ii) is intended to comply with
the chargeback of items of income and gain requirement in Treasury
Regulation Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(iii) Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership
income and gain shall be specially allocated to such Partner in an amount
and
25
manner sufficient to eliminate, to the extent required by the Treasury
Regulations promulgated under Section 704(b) of the Code, the deficit
balance, if any, in its Adjusted Capital Account created by such
adjustments, allocations or distributions as quickly as possible unless
such deficit balance is otherwise eliminated pursuant to Section 6.1(d)(i)
or (ii).
(iv) Gross Income Allocations. In the event any Partner has a
deficit balance in its Capital Account at the end of any Partnership
taxable period in excess of the sum of (A) the amount such Partner is
required to restore pursuant to the provisions of this Agreement and (B)
the amount such Partner is deemed obligated to restore pursuant to
Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Partner
shall be specially allocated items of Partnership gross income and gain in
the amount of such excess as quickly as possible; provided, that an
allocation pursuant to this Section 6.1(d)(iv) shall be made only if and
to the extent that such Partner would have a deficit balance in its
Capital Account as adjusted after all other allocations provided in this
Section 6.1 have been tentatively made as if this Section 6.1(d)(iv) were
not in this Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the Managing General Partner
determines in its good faith discretion that the Partnership's Nonrecourse
Deductions must be allocated in a different ratio to satisfy the safe
harbor requirements of the Treasury Regulations promulgated under Section
704(b) of the Code, the Managing General Partner is authorized, upon
notice to the Limited Partners, to revise the prescribed ratio to the
numerically closest ratio that does satisfy such requirements.
(vi) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the Partner
that bears the Economic Risk of Loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Treasury Regulation Section 1.704-2(i). If
more than one Partner bears the Economic Risk of Loss with respect to a
Partner Nonrecourse Debt, such Partner Nonrecourse Deductions attributable
thereto shall be allocated between or among such Partners in accordance
with the ratios in which they share such Economic Risk of Loss.
(vii) Nonrecourse Liabilities. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (A) the amount of
Partnership Minimum Gain and (B) the total amount of Nonrecourse Built-in
Gain shall be allocated among the Partners in accordance with their
respective Percentage Interests.
(viii)Code Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant to
Section 734(b) or 743(c) of the Code is required, pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into
26
account in determining Capital Accounts, the amount of such adjustment to
the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which
their Capital Accounts are required to be adjusted pursuant to such
Section of the Treasury Regulations.
(ix) Curative Allocation.
(A) Notwithstanding any other provision of this Section
6.1, other than the Required Allocations, the Required Allocations
shall be taken into account in making the Agreed Allocations so
that, to the extent possible, the net amount of items of income,
gain, loss and deduction allocated to each Partner pursuant to the
Required Allocations and the Agreed Allocations, together, shall be
equal to the net amount of such items that would have been allocated
to each such Partner under the Agreed Allocations had the Required
Allocations and the related Curative Allocation not otherwise been
provided in this Section 6.1. Notwithstanding the preceding
sentence, Required Allocations relating to (1) Nonrecourse
Deductions shall not be taken into account except to the extent that
there has been a decrease in Partnership Minimum Gain and (2)
Partner Nonrecourse Deductions shall not be taken into account
except to the extent that there has been a decrease in Partner
Nonrecourse Debt Minimum Gain. Allocations pursuant to this Section
6.1(d)(ix)(A) shall only be made with respect to Required
Allocations to the extent the Managing General Partner reasonably
determines that such allocations will otherwise be inconsistent with
the economic Agreement among the Partners. Further, allocations
pursuant to this Section 6.1(d)(ix)(A) shall be deferred with
respect to allocations pursuant to clauses (1) and (2) hereof to the
extent the Managing General Partner reasonably determines that such
allocations are likely to be offset by subsequent Required
Allocations.
(B) The Managing General Partner shall have reasonable
discretion, with respect to each taxable period, to (1) apply the
provisions of Section 6.1(d)(ix)(A) in whatever order is most likely
to minimize the economic distortions that might otherwise result
from the Required Allocations, and (2) divide all allocations
pursuant to Section 6.1(d)(ix)(A) among the Partners in a manner
that is likely to minimize such economic distortions.
6.2 Allocations for Tax Purposes.
(a) Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated among
the Partners in the same manner as its correlative item of "book" income, gain,
loss or deduction is allocated pursuant to Section 6.1.
27
(b) In an attempt to eliminate Book-Tax Disparities attributable to
a Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the manner
provided under Section 704(c) of the Code that takes into account the
variation between the Agreed Value of such property and its adjusted basis
at the time of contribution; and (B) any item of Residual Gain or Residual
Loss attributable to a Contributed Property shall be allocated among the
Partners in the same manner as its correlative item of "book" gain or loss
is allocated pursuant to Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items shall
(1) first, be allocated among the Partners in a manner consistent with the
principles of Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and the
allocations thereof pursuant to Section 5.5(d)(i) or (ii), and (2) second,
in the event such property was originally a Contributed Property, be
allocated among the Partners in a manner consistent with Section
6.2(b)(i)(A); and (B) any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be allocated among the Partners
in the same manner as its correlative item of "book" gain or loss is
allocated pursuant to Section 6.1.
(iii) The Managing General Partner shall apply the principles
of Treasury Regulation Section 1.704-3(d) to eliminate Book-Tax
Disparities.
(c) For the proper administration of the Partnership and for the
preservation of uniformity of Units of the MLP (or any class or classes
thereof), the Managing General Partner shall have sole discretion to (i) adopt
such conventions as it deems appropriate in determining the amount of
depreciation, amortization and cost recovery deductions; (ii) make special
allocations for federal income tax purposes of income (including, without
limitation, gross income) or deductions; and (iii) amend the provisions of this
Agreement as appropriate (x) to reflect the proposal or promulgation of Treasury
Regulations under Section 704(b) or Section 704(c) of the Code or (y) otherwise
to preserve or achieve uniformity of Units of the MLP (or any class or classes
thereof). The Managing General Partner may adopt such conventions, make such
allocations and make such amendments to this Agreement as provided in this
Section 6.2(c) only if such conventions, allocations or amendments would not
have a material adverse effect on the Partners, the holders of any class or
classes of Units of the MLP issued and outstanding or the Partnership, and if
such allocations are consistent with the principles of Section 704 of the Code.
28
(d) The Managing General Partner in its discretion may determine to
depreciate or amortize the portion of an adjustment under Section 743(b) of the
Code attributable to unrealized appreciation in any Adjusted Property (to the
extent of the unamortized Book-Tax Disparity) using a predetermined rate derived
from the depreciation or amortization method and useful life applied to the
Partnership's common basis of such property, despite any inconsistency of such
approach with Proposed Treasury Regulation Section 1.168-2(n), Treasury
Regulation Section 1.167(c)-l(a)(6) or the legislative history of Section 197 of
the Code. If the Managing General Partner determines that such reporting
position cannot reasonably be taken, the Managing General Partner may adopt
depreciation and amortization conventions under which all purchasers acquiring
Units of the MLP in the same month would receive depreciation and amortization
deductions, based upon the same applicable rate as if they had purchased a
direct interest in the Partnership's property. If the Managing General Partner
chooses not to utilize such aggregate method, the Managing General Partner may
use any other reasonable depreciation and amortization conventions to preserve
the uniformity of the intrinsic tax characteristics of any class or classes of
Units of the MLP that would not have a material adverse effect on any Limited
Partner or the holders of any class or classes of Units of the MLP.
(e) Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall, to the extent possible,
after taking into account other required allocations of gain pursuant to this
Section 6.2, be characterized as Recapture Income in the same proportions and to
the same extent as such Partners (or their predecessors in interest) have been
allocated any deductions directly or indirectly giving rise to the treatment of
such gains as Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized
by the Partnership for federal income tax purposes and allocated to the Partners
in accordance with the provisions hereof shall be determined without regard to
any election under Section 754 of the Code which may be made by the Partnership;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) The Managing General Partner may adopt such methods of
allocation of income, gain, loss or deduction between a transferor and a
transferee of a Partnership Interest as it determines necessary, to the extent
permitted or required by Section 706 of the Code and the regulations or rulings
promulgated thereunder.
6.3 Distributions.
(a) Within 45 days following the end of each Quarter commencing with
the Quarter ending on September 30, 1996, an amount equal to 100% of Available
Cash with respect to such Quarter shall, subject to Section 17-607 of the
Delaware Act, be distributed in accordance with this Article VI by the
Partnership to the Partners in accordance with their respective Percentage
Interests. The immediately preceding sentence shall not require any distribution
of cash if and to
29
the extent such distribution would be prohibited by applicable law or by any
loan Agreement, security Agreement, mortgage, debt instrument or other Agreement
or obligation to which the Partnership is a party or by which it is bound or its
assets are subject. All distributions required to be made under this Agreement
shall be made subject to Section 17-607 of the Delaware Act.
(b) In the event of the dissolution and liquidation of the
Partnership, all receipts received during or after the Quarter in which the
Liquidation Date occurs (other than from borrowings described in (a)(ii) of the
definition of Available Cash) shall be applied and distributed solely in
accordance with, and subject to the terms and conditions of, Section 12.4.
(c) The Managing General Partner shall have the discretion to treat
taxes paid by the Partnership on behalf of, or amounts withheld with respect to,
all or less than all of the Partners, as a distribution of Available Cash to
such Partners.
ARTICLE VII
Management and Operation of Business
7.1 Management.
(a) The Managing General Partner shall conduct, direct and manage
all activities of the Partnership. Except as otherwise expressly provided in
this Agreement, all management powers over the business and affairs of the
Partnership shall be exclusively vested in the Managing General Partner, and no
Special General Partner (unless it becomes Managing General Partner pursuant to
Section 11.1(d)), Limited Partner shall have any management power over the
business and affairs of the Partnership. In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to the Managing General Partner under any other
provision of this Agreement, the Managing General Partner, subject to Section
7.3, shall have full power and authority to do all things and on such terms as
it, in its sole discretion, may deem necessary or appropriate to conduct the
business of the Partnership, to exercise all powers set forth in Section 2.5 and
to effectuate the purposes set forth in Section 2.4, including the following:
(i) the making of any expenditures, the lending or borrowing
of money, the assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidences of
indebtedness 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
30
combination of the Partnership with or into another Person subject,
however, to any prior approval that may be required pursuant to Section
7.3;
(iv) the use of the assets of the Partnership (including cash
on hand) for any purpose consistent with the terms of this Agreement,
including the financing of the conduct of the operations of the
Partnership Group, the lending of funds to other Persons (including the
MLP, the General Partners and their Affiliates), the repayment of
obligations of the MLP or any member of the Partnership Group and the
making of capital contributions to any member of the Partnership Group;
(v) the negotiation, execution and performance of any
contracts, conveyances or other instruments (including instruments that
limit the liability of the Partnership under contractual arrangements to
all or particular assets of the Partnership, with the other party to the
contract to have no recourse against the General Partners or their assets
other than 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 (including
employees having titles such as "president," "vice president," "secretary"
and "treasurer") and agents, outside attorneys, accountants, consultants
and contractors and the determination of their compensation and other
terms of employment or hiring;
(viii)the maintenance of such insurance for the benefit of the
Partnership Group and the Partners (including the assets of the
Partnership) as it deems necessary or appropriate;
(ix) the formation of, or acquisition of an interest in, and
the contribution of property and the making of loans to, any further
limited or general partnerships, joint ventures, corporations or other
relationships;
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the bringing and defending of
actions at law or in equity and otherwise engaging in the conduct of
litigation and the incurring of legal expense and the settlement of claims
and litigation; and
(xi) the indemnification of any Person against liabilities and
contingencies to the extent permitted by law.
31
(b) Notwithstanding any other provision of this Agreement, the MLP
Agreement, the Delaware Act or any applicable law, rule or regulation, each of
the Partners (i) approves, ratifies and confirms the execution, delivery and
performance by the parties thereto of the MLP Agreement, the Underwriting
Agreement, the Conveyance and 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; (ii)
agrees that the Managing General Partner (on its own or through any officer of
the Partnership) is authorized to execute, deliver and perform the agreements
referred to in clause (i) of this sentence and the other agreements, acts,
transactions and matters described in or contemplated by the Registration
Statement on behalf of the Partnership without any further act, approval or vote
of the Partners; and (iii) agrees that the execution, delivery or performance by
the Managing General Partner, the MLP, any Group Member or any Affiliate of any
of them, of this Agreement or any Agreement authorized or permitted under this
Agreement, shall not constitute a breach by the Managing General Partner of any
duty that the Managing General Partner may owe the Partnership or the Limited
Partners or the Assignees or any other Persons under this Agreement (or any
other agreements) or of any duty stated or implied by law or equity.
7.2 Certificate of Limited Partnership.
The Managing General Partner has caused the Certificate of Limited
Partnership to be filed with the Secretary of State of the State of Delaware as
required by the Delaware Act and shall use all reasonable efforts to cause to be
filed such other certificates or documents as may be determined by the Managing
General Partner in its sole discretion to be reasonable and necessary or
appropriate for the formation, continuation, qualification and operation of a
limited partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware or any other state in which the Partnership
may elect to do business or own property. To the extent that such action is
determined by the Managing General Partner in its sole discretion to be
reasonable and necessary or appropriate, the Managing General Partner shall file
amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a
partnership or other entity in which the limited partners have limited
liability) under the laws of the State of Delaware or of any other state in
which the Partnership may elect to do business or own property. Subject to the
terms of Section 3.3(a), the Managing General Partner shall not be required,
before or after filing, to deliver or mail a copy of the Certificate of Limited
Partnership, any qualification document or any amendment thereto to any Limited
Partner or Assignee.
7.3 Restrictions on Managing General Partner's Authority.
(a) The Managing General Partner may not, without written approval
of the specific act by the Limited Partner or by other written instrument
executed and delivered by the Limited Partner subsequent to the date of this
Agreement, take any action in contravention of this Agreement, including, except
as otherwise provided in this Agreement, (i) committing any act that would make
it impossible to carry on the ordinary business of the Partnership; (ii)
possessing Partnership property, or assigning any rights in specific Partnership
property, for other than a
32
Partnership purpose; (iii) admitting a Person as a Partner; (iv) amending this
Agreement in any manner; or (v) transferring its interest as general partner of
the Partnership.
(b) Except as provided in Articles XII and XIV, the Managing General
Partner may not sell, exchange or otherwise dispose of all or substantially all
of the Partnership's assets in a single transaction or a series of related
transactions without the approval of the Limited Partners; provided, however,
that this provision shall not preclude or limit the Managing General Partner's
ability to mortgage, pledge, hypothecate or grant a security interest in all or
substantially all of the assets of the Partnership and shall not apply to any
forced sale of any or all of the assets of the Partnership pursuant to the
foreclosure of, or other realization upon, any such encumbrance.
(c) At all times while serving as the general partner of the
Partnership, the Managing General Partner shall not make any dividend or
distribution on, or repurchase any shares of, its stock or take any other action
within its control if the effect of such action would cause its net worth,
independent of its interest in the Partnership Group, to be less than $15
million.
7.4 Reimbursement of the General Partners.
(a) Except as provided in this Section 7.4 and elsewhere in this
Agreement or in the MLP Agreement, the General Partners shall not be compensated
for its services as general partners of the MLP or any Group Member.
(b) The General Partners shall be reimbursed on a monthly basis, or
such other reasonable basis as the Managing General Partner may determine in its
sole discretion, for (i) all direct and indirect expenses that they incur or
payments they make on behalf of the Partnership (including salary, bonus,
incentive compensation and other amounts paid to any Person, including
Affiliates of the General Partner, to perform services for the Partnership or
for the General Partners in the discharge of their duties to the Partnership),
and (ii) all other necessary or appropriate expenses allocable to the
Partnership or otherwise reasonably incurred by the Managing General Partner in
connection with operating the Partnership's business (including expenses
allocated to the General Partners by their Affiliates). The Managing General
Partner shall determine the expenses that are allocable to the Partnership in
any reasonable manner determined by the Managing General Partner in its sole
discretion. Reimbursements pursuant to this Section 7.4 shall be in addition to
any reimbursement to the General Partners as a result of indemnification
pursuant to Section 7.7.
(c) The Managing General Partner, in its sole discretion and without
the approval of the Limited Partners (who shall have no right to vote in respect
thereof), may propose and adopt on behalf of the Partnership employee benefit
plans, employee programs and employee practices for the benefit of employees of
the Managing General Partner, any Group Member or any Affiliate, or any of them,
in respect of services performed, directly or indirectly, for the benefit of the
Partnership Group. Expenses incurred by the Managing General Partner in
connection with any such plans, programs and practices shall be reimbursed in
accordance with Section 7.4(b). Any and all obligations of the Managing General
Partner under any employee benefit plans, employee programs
33
or employee practices adopted by the Managing General Partner as permitted by
this Section 7.4(c) shall constitute obligations of the Managing General Partner
hereunder and shall be assumed by any successor Managing General Partner
approved pursuant to Section 11.1 or 11.2 or the transferee of or successor to
all of the Managing General Partner's Partnership Interest as a general partner
in the Partnership pursuant to Section 4.2.
7.5 Outside Activities.
(a) Subject to Section 7.5(f), after the Closing Date, each of the
General Partners, for so long as it is a general partner of the Partnership,
shall not engage in any business or activity or incur any debts or liabilities
(other than tax liabilities) except in connection with or incidental to (i) its
performance as general partner of the MLP or one or more Group Members or as
described in or contemplated by the Registration Statement, (ii) the acquiring,
owning or disposing of debt or equity securities in the MLP or any Group
Members, (iii) holding and making investments in Subsidiaries and pledging its
interest in such Subsidiaries to secure indebtedness of such Subsidiaries, (iv)
the acquisition of businesses or assets to be used by the MLP or a Group Member
and (v) permitting its employees to perform services for its Affiliates,
including Affiliates engaging in an activity permitted by Section 7.5(b).
(b) The Affiliates of the General Partners may engage in any
activity other than a Restricted Activity.
(c) Except as restricted by Sections 7.5(a), each of the General
Partners and their Affiliates shall have the right to engage in businesses of
every type and description and other activities for profit and to engage in and
possess an interest in other business ventures of any and every type or
description, whether in businesses engaged in or anticipated to be engaged in by
the MLP or any Group Member, independently or with others, including business
interests and activities in direct competition with the business and activities
of the MLP or any Group Member, and none of the same shall constitute a breach
of this Agreement or any duty express or implied by law to the MLP or any Group
Member or any Partner or Assignee. Neither the MLP, any Group Member, any
Limited Partner nor any other Person shall have any rights by virtue of this
Agreement, the MLP Agreement or the partnership relationship established hereby
or thereby in any business ventures of any Indemnitee.
(d) Notwithstanding anything to the contrary in this Agreement, (i)
the engaging in competitive activities by any Indemnitees other than a General
Partner in accordance with the provisions of this Section 7.5 is hereby approved
by the Partnership and all Partners and (ii) it shall be deemed not to be a
breach of the General Partners' fiduciary duty or any other obligation of any
type whatsoever of the General Partners for any Affiliate of a General Partner
to engage in such business interests and activities in preference to or to the
exclusion of the Partnership (including, without limitation, the General
Partners and their Affiliates shall have no obligation to present business
opportunities to the Partnership).
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(e) The term "Affiliates" when used in Section 7.5(b) and (c) with
respect to the General Partners shall not include the MLP, any Group Member or
any Subsidiary of the Group Member.
(f) To the extent the Managing General Partner is merged or
liquidated, pursuant to Section 4.7, into Triarc, the restrictions contained in
Section 7.5(a) shall no longer apply to the Managing General Partner and the
Managing General Partner may engage in any activity other than a Restricted
Activity. The restrictions contained in Section 7.5(a), even after a merger or
liquidation of the Managing General Partner, shall continue to apply to the
Special General Partner.
7.6 Loans from the General Partners; Loans or Contributions from the
Partnership; Contracts with Affiliates; Certain Restrictions on the
General Partners.
(a) The General Partners or any of their Affiliates thereof may lend
to the MLP or any Group Member, and the MLP or any Group Member may borrow from
the General Partners or any of their Affiliates, funds needed or desired by the
MLP or the Group Member for such periods of time and in such amounts as the
Managing General Partner may determine; provided, however, that in any such case
the lending party may not charge the borrowing party interest at a rate greater
than the rate that would be charged the borrowing party or impose terms less
favorable to the borrowing party than would be charged or imposed on the
borrowing party by unrelated lenders on comparable loans made on an arms'-length
basis (without reference to the lending party's financial abilities or
guarantees). The borrowing party shall reimburse the lending party for any costs
(other than any additional interest costs) incurred by the lending party in
connection with the borrowing of such funds. For purposes of this Section 7.6(a)
and Section 7.6(b), the term "Group Member" shall include any Affiliate of a
Group Member that is controlled by the Group Member.
(b) The Partnership may lend or contribute to any Group Member, the
General Partners or any of their Affiliates and any Group Member, the General
Partners or any of their Affiliates may borrow from the Partnership, funds on
terms and conditions established in the sole discretion of the Managing General
Partner; provided, however, that the Partnership may not charge the Group
Member, General Partners or their Affiliates interest at a rate less than the
rate that would be charged to the Group Member, the General Partners or any of
their Affiliates by unrelated lenders on comparable loans; provided, however,
that notwithstanding anything else herein contained, the Partnership is
permitted to make the Triarc Loan substantially on the terms described in the
Registration Statement. The foregoing authority shall be exercised by the
Managing General Partner in its sole discretion and shall not create any right
or benefit in favor of any Group Member or any other Person.
(c) The Managing General Partner may itself, or may enter into an
Agreement with any of its Affiliates to, render services to a Group Member or to
the Managing General Partner in the discharge of its duties as a general partner
of the Partnership. Any services rendered to a Group Member by the Managing
General Partner (other than services it renders in its capacity as Managing
General Partner) or any of its Affiliates shall be on terms that are fair and
reasonable to
35
the Partnership; provided, however, that the requirements of this Section 7.6(c)
shall be deemed satisfied as to (i) any transaction approved by Special
Approval, (ii) any transaction, the terms of which are no less favorable to the
Partnership Group than those generally being provided to or available from
unrelated third parties or (iii) any transaction that, taking into account the
totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership Group), is equitable to the Partnership Group. The provisions of
Section 7.4 shall apply to the rendering of services described in this Section
7.6(c).
(d) Any Group Member may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(e) Neither the General Partners nor any of their Affiliates shall
sell, transfer or convey any property to, or purchase any property from the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the requirements
of this Section 7.6(e) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to Sections 5.1 and 5.2, the Conveyance and
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 Partners and their Affiliates will have no
obligation to permit the MLP or any Group Member to use any facilities or assets
of the General Partners and their Affiliates, except as may be provided in
contracts entered into from time to time specifically dealing with such use, nor
shall there be any obligation on the part of the General Partners or their
Affiliates to enter into such contracts.
(g) Without limitation of Sections 7.6(a) through 7.6(f), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement are hereby
approved by all Partners.
7.7 Indemnification.
(a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, all Indemnitees shall be
indemnified and held harmless by the Partnership from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
any Indemnitee may be involved, or is threatened
36
to be involved, as a party or otherwise, by reason of its status as an
Indemnitee, provided, that in each case the Indemnitee acted in good faith and
in a manner that such Indemnitee reasonably believed to be in, or not opposed
to, the best interests of the Partnership and, with respect to any criminal
proceeding, had no reasonable cause to believe its conduct was unlawful;
provided, further, no indemnification pursuant to this Section 7.7 shall be
available to the General Partners with respect to their obligations incurred
pursuant to the Underwriting Agreement or the Conveyance and Contribution
Agreement (other than obligations incurred by the Managing General Partner on
behalf of the Partnership or the MLP). The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that the
Indemnitee acted in a manner contrary to that specified above. Any
indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, it being agreed that the General Partners shall not
be personally liable for such indemnification and shall have no obligation to
contribute or loan any monies or property to the Partnership to enable it to
effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including
legal fees and expenses) incurred by an Indemnitee who is indemnified pursuant
to Section 7.7(a) in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Partnership prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Partnership of any undertaking by or on behalf of the Indemnitee to repay
such amount if it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 7.7.
(c) The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, both as to actions in the Indemnitee's capacity as an Indemnitee and
as to actions in any other capacity (including any capacity under the
Underwriting Agreement), and shall continue as to an Indemnitee who has ceased
to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the
Managing General Partner or its Affiliates for the cost of) insurance, on behalf
of the General Partners, their Affiliates and such other Persons as the Managing
General Partner shall determine, against any liability that may be asserted
against or expense that may be incurred by such Person in connection with the
Partnership's activities or such Person's activities on behalf of the
Partnership, regardless of whether the Partnership would have the power to
indemnify such Person against such liability under the provisions of this
Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of Section 7.7(a); and action taken
or omitted by it with respect to any employee benefit
37
plan in the performance of its duties for a purpose reasonably believed by it to
be in the interest of the participants and beneficiaries of the plan shall be
deemed to be for a purpose which is in, or not opposed to, the best interests of
the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 7.7 or any
provision hereof shall in any manner terminate, reduce or impair (i) the right
of any past, present or future Indemnitee to be indemnified by the Partnership,
or (ii) the obligations of the Partnership to indemnify any such Indemnitee
under and in accordance with the provisions of this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
7.8 Liability of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partners, the Assignees or any other Persons who have
acquired interests in the 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 Managing General
Partner set forth in Section 7.1(a), the Managing General Partner may exercise
any of the powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its agents, and the
General Partners shall not be responsible for any misconduct or negligence on
the part of any such agent appointed by the Managing General Partner in good
faith.
(c) Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Partnership, the Limited Partners, the
General Partners, and the Partnership's and General Partners' directors,
officers and employees under this Section 7.8 as in effect immediately prior to
such amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
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7.9 Resolution of Conflicts of Interest.
(a) Unless otherwise expressly provided in this Agreement or the MLP
Agreement, whenever a potential conflict of interest exists or arises between
one of the General Partners or any of its Affiliates, on the one hand, and the
Partnership, the MLP, any Partner or any Assignee, on the other, any resolution
or course of action by the General Partners or their Affiliates in respect of
such conflict of interest shall be permitted and deemed approved by all
Partners, and shall not constitute a breach of this Agreement, of the MLP
Agreement, of any agreement contemplated herein or therein, or of any duty
stated or implied by law or equity, if the resolution or course of action is, or
by operation of this Agreement is deemed to be, fair and reasonable to the
Partnership. The Managing General Partner shall be authorized but not required
in connection with its resolution of such conflict of interest to seek Special
Approval of such resolution. Any conflict of interest and any resolution of such
conflict of interest shall be conclusively deemed fair and reasonable to the
Partnership if such conflict of interest or resolution is (i) approved by
Special Approval, (ii) on terms no less favorable to the Partnership than those
generally being provided to or available from unrelated third parties or (iii)
fair to the Partnership, taking into account the totality of the relationships
between the parties involved (including other transactions that may be
particularly favorable or advantageous to the Partnership). The Managing General
Partner may also adopt a resolution or course of action that has not received
Special Approval. The Managing General Partner (including the Audit Committee in
connection with Special Approval) shall be authorized in connection with its
determination of what is "fair and reasonable" to the Partnership and in
connection with its resolution of any conflict of interest to consider (A) the
relative interests of any party to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interest; (B) any
customary or accepted industry practices and any customary or historical
dealings with a particular Person; (C) any applicable generally accepted
accounting practices or principles; and (D) such additional factors as the
Managing General Partner (including the Audit Committee) determines in its sole
discretion to be relevant, reasonable or appropriate under the circumstances.
Nothing contained in this Agreement, however, is intended to nor shall it be
construed to require the Managing General Partner (including the Audit
Committee) to consider the interests of any Person other than the Partnership.
In the absence of bad faith by the Managing General Partner, the resolution,
action or terms so made, taken or provided by the Managing General Partner with
respect to such matter shall not constitute a breach of this Agreement or any
other agreement contemplated herein or a breach of any standard of care or duty
imposed herein or therein or, to the extent permitted by law, under the Delaware
Act or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated
hereby provides that the Managing General Partner or any of its Affiliates is
permitted or required to make a decision (i) in its "sole discretion" or
"discretion," that it deems "necessary or appropriate" or "necessary or
advisable" or under a grant of similar authority or latitude, except as
otherwise provided herein, the Managing General Partner or such Affiliate shall
be entitled to consider only such interests and factors as it desires and shall
have no duty or obligation to give any consideration to any interest of, or
factors affecting, the Partnership, the Limited Partner or, any Limited Partner
or any Assignee, (ii) it may make such decision in its sole discretion
(regardless of whether there is
39
a reference to "sole discretion" or "discretion") unless another express
standard is provided for, or (iii) in "good faith" or under another express
standard, the Managing General Partner or such Affiliate shall act under such
express standard and shall not be subject to any other or different standards
imposed by this Agreement, the MLP Agreement, any other agreement contemplated
hereby or under the Delaware Act or any other law, rule or regulation. In
addition, any actions taken by the Managing General Partner or such Affiliate
consistent with the standards of "reasonable discretion" set forth in the
definitions of Available Cash shall not constitute a breach of any duty of the
General Partner to the Partnership, the Limited Partner or any limited partner
of the Limited Partner. The Managing General Partner shall have no duty, express
or implied, to sell or otherwise dispose of any asset of the Partnership Group
other than in the ordinary course of business. No borrowing by any Group Member
or the approval thereof by the Managing General Partner shall be deemed to
constitute a breach of any duty of the General Partner to the Partnership or the
Limited Partners by reason of the fact that the purpose or effect of such
borrowing is directly or indirectly to (A) enable distributions to the General
Partners or their Affiliates (including in their capacities as Limited Partners)
to exceed 2% of the total amount distributed to all partners or (B) hasten the
expiration of the "Subordination Period" under the MLP Agreement or the
conversion of any Subordinated Units in the MLP into Common Units in the MLP.
(c) Whenever a particular transaction, arrangement or resolution of
a conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
(d) The Limited Partner hereby authorizes the Managing General
Partner, on behalf of the Partnership as a partner of a Group Member, to approve
of actions by the general partner of such Group Member similar to those actions
permitted to be taken by the Managing General Partner pursuant to this Section
7.9.
7.10 Other Matters Concerning the Managing General Partner.
(a) The Managing General Partner may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
(b) The Managing General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any act taken or omitted to be
taken in reliance upon the opinion (including an Opinion of Counsel) of such
Persons as to matters that the Managing General Partner reasonably believes to
be within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.
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(c) The Managing General Partner shall have the right, in respect of
any of its powers or obligations hereunder, to act through any of its duly
authorized officers, a duly appointed attorney or attorneys-in-fact or the duly
authorized officers of the Partnership.
(d) Any standard of care and duty imposed by this Agreement or under
the Delaware Act or any applicable law, rule or regulation shall be modified,
waived or limited, to the extent permitted by law, as required to permit the
Managing General Partner to act under this Agreement or any other Agreement
contemplated by this Agreement and to make any decision pursuant to the
authority prescribed in this Agreement, so long as such action is reasonably
believed by the Managing General Partner to be in, or not inconsistent with, the
best interests of the Partnership.
7.11 Indemnification of National Propane SGP, Inc. by National Propane
Corporation.
National Propane Corporation (and after the Triarc Merger, Triarc) hereby
agrees to indemnify, defend and hold harmless National Propane SGP, Inc. from
and against any liabilities, losses or damages it may suffer or incur as a
result of the status of National Propane SGP, Inc. as a general partner of the
Partnership, the MLP or any other Group Member or for any other reason (whether
by operation of law, contract or agreement or otherwise) arising from any
liability with respect to the Notes or the Bank Credit Facility (or arising
under any document or instrument relating thereto), any liability assumed by, or
purported to be assumed by, the MLP or any member of the Partnership Group from
National Propane Corporation or National Propane SGP, Inc., any account payable
or other trade payable, or any other liability of any nature whatsoever no
matter how or when arising. The conversion of the Managing General Partner's
Unsubordinated General Partner Interest into a limited partner interest,
pursuant to Section 11.1(d), shall not affect National Propane Corporation's
indemnification obligation to National Propane SGP, Inc.
7.12 Reliance by Third Parties.
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the Managing
General Partner and any officer of the Managing General Partner authorized by
the Managing General Partner to act on behalf of and in the name of Partnership
has full power and authority to encumber, sell or otherwise use in any manner
any and all assets of the Partnership and to enter into any authorized contracts
on behalf of the Partnership, and such Person shall be entitled to deal with the
Managing General Partner or any such officer as if it were the Partnership's
sole party in interest, both legally and beneficially. Each Limited Partner
hereby waives any and all defenses or other remedies that may be available
against such Person to contest, negate or disaffirm any action of the Managing
General Partner or any such officer in connection with any such dealing. In no
event shall any Person dealing with the Managing General Partner or any such
officer or its representatives be obligated to ascertain that the terms of the
Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the Managing General Partner or any such officer or its
representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the Managing
41
General Partner or its representatives shall be conclusive evidence in favor of
any and every Person relying thereon or claiming thereunder that (a) at the time
of the execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
ARTICLE VIII
Books, Records, Accounting and Reports
8.1 Records and Accounting.
The Managing General Partner shall keep or cause to be kept at the
principal office of the Partnership appropriate books and records with respect
to the Partnership's business, including all books and records necessary to
provide to the Limited Partners any information required to be provided pursuant
to Section 3.3(a). Any books and records maintained by or on behalf of the
Partnership in the regular course of its business, including books of account
and records of Partnership proceedings, may be kept on, or be in the form of,
computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device, provided, that the books
and records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial reporting purposes, on an accrual basis in accordance
with U.S. GAAP.
8.2 Fiscal Year.
The fiscal year of the Partnership shall be the calendar year.
ARTICLE IX
Tax Matters
9.1 Preparation of Tax Returns.
The Partnership shall timely file all returns of the Partnership that are
required for federal, state and local income tax purposes on the basis of the
accrual method and a taxable year ending on December 31. The tax information
reasonably required by the Partners for federal and state income tax reporting
purposes with respect to a taxable year shall be furnished to them within 90
days of the close of the calendar year in which the Partnership's taxable year
ends. The classification, realization and recognition of income and deductions
and other items shall be on the accrual method of accounting for federal income
tax purposes.
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9.2 Tax Elections.
(a) The Partnership shall make the election under Section 754 of the
Code in accordance with applicable regulations thereunder, subject to the
reservation of the right to seek to revoke any such election upon the Managing
General Partner's determination that such revocation is in the best interests of
the Limited Partners.
(b) The Partnership shall elect to deduct expenses incurred in
organizing the Partnership ratably over a sixty-month period as provided in
Section 709 of the Code.
(c) Except as otherwise provided herein, the Managing General
Partner shall determine whether the Partnership should make any other elections
permitted by the Code.
9.3 Tax Controversies.
Subject to the provisions hereof, the Managing General Partner is
designated as 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 resulting administrative and judicial
proceedings, and to expend Partnership funds for professional services and costs
associated therewith. Each Partner agrees to cooperate with the Managing General
Partner and to do or refrain from doing any or all things reasonably required by
the Managing General Partner to conduct such proceedings.
9.4 Withholding.
Notwithstanding any other provision of this Agreement, the Managing
General Partner is authorized to take any action that it determines in its
discretion to be necessary or appropriate to cause the Partnership to comply
with any withholding requirements established under the Code or any other
federal, state or local law including, without limitation, pursuant to Sections
1441, 1442, 1445 and 1446 of the Code. To the extent that the Partnership is
required or elects to withhold and pay over to any taxing authority any amount
resulting from the allocation or distribution of income to any Partner
(including, without limitation, by reason of Section 1446 of the Code), the
amount withheld may be treated as a distribution of cash pursuant to Section 6.3
in the amount of such withholding from such Partner.
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ARTICLE X
Admission of Partners
10.1 Admission of the General Partners and Limited Partners.
(a) The General Partners were previously admitted as the General
Partners and as Limited Partners and the MLP as Limited Partners. Upon the
conveyance referred to in Section 5.2(a), the General Partners shall be continue
as general partners and limited partners of the Partnership.
(b) Upon the transfer referred to in Section 5.2(b), the MLP shall
become the sole Limited Partner and the General Partners shall cease to be
Limited Partners of the Partnership.
10.2 Admission of Substituted Limited Partners.
Any person that is the successor in interest to a Limited Partner as
described in Section 4.3 shall be admitted to the Partnership as a Limited
Partner upon (a) furnishing to the Managing General Partner (i) acceptance in
form satisfactory to the Managing General Partner of all of the terms and
conditions of this Agreement and (ii) such other documents or instruments as may
be required to effect its admission as a Limited Partner in the Partnership and
(b) obtaining the consent of the Managing General Partner, which consent may be
given or withheld in the Managing General Partner's sole discretion. Such Person
shall be admitted to the Partnership as a Limited Partner immediately prior to
the transfer of the Partnership Interest, and the business of the Partnership
shall continue without dissolution.
10.3 Admission of Successor or Transferee General Partners.
A successor General Partner approved pursuant to Section 11.1 or 11.2 or
the transferee of or successor to all of the General Partner's Partnership
Interest as a general partner in the Partnership pursuant to Section 4.2 who is
proposed to be admitted as a successor General Partner shall, subject to
compliance with the terms of Section 11.3, if applicable, be admitted to the
Partnership as a General Partner, effective immediately prior to the withdrawal
or removal of the General Partner pursuant to Section 11.1 or 11.2 or the
transfer of the General Partner's Partnership Interest as a general partner in
the Partnership pursuant to Section 4.2; provided, however, that no such
successor shall be admitted to the Partnership 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 without dissolution.
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10.4 Admission of Additional Limited Partners.
(a) A Person (other than the General Partners, the MLP or a
Substituted Limited Partner) who makes a Capital Contribution to the Partnership
in accordance with this Agreement (other than the Capital Contributions pursuant
to Section 5.2) shall be admitted to the Partnership as an Additional Limited
Partner only upon furnishing to the Managing General Partner (i) evidence of
acceptance in form satisfactory to the General Partner of all of the terms and
conditions of this Agreement, including the granting of the power of attorney
granted in Section 2.6 and (ii) such other documents or instruments as may be
required in the discretion of the Managing General Partner to effect such
Person's admission as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 10.4
but except as provided in Section 10.1, no Person shall be admitted as an
Additional Limited Partner without the consent of the Managing General Partner,
which consent may be given or withheld in the Managing General Partner's
discretion. The admission of any Person as an Additional Limited Partner shall
become effective on the date upon which the name of such Person is recorded as
such in the books and records of the Partnership, following the consent of the
Managing General Partner to such admission.
10.5 Amendment of Agreement and Certificate of Limited Partnership.
To effect the admission to the Partnership of any Partner, the Managing
General Partner shall take all steps necessary and appropriate under the
Delaware Act to amend the records of the Partnership to reflect such admission
and, if necessary, to prepare as soon as practicable an amendment to this
Agreement and, if required by law, the General Partner shall prepare and file an
amendment to the Certificate of Limited Partnership, and the Managing General
Partner may for this purpose, among others, exercise the power of attorney
granted pursuant to Section 2.6.
ARTICLE XI
Withdrawal or Removal of Partners
11.1 Withdrawal of the General Partners.
(a) The Managing General Partner shall be deemed to have withdrawn
from the Partnership upon the occurrence of any one of the following events
(each such event herein referred to as an "Event of Withdrawal");
(i) the Managing General Partner voluntarily withdraws from
the Partnership by giving written notice to the other Partners;
(ii) the Managing General Partner transfers all of its rights
as Managing General Partner pursuant to Section 4.2;
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(iii) the Managing General Partner is removed pursuant to
Section 11.2;
(iv) the managing general partner of the MLP withdraws from,
or is removed as the managing general partner of, the MLP.
(v) the Managing General Partner (A) makes a general
assignment for the benefit of creditors; (B) files a voluntary bankruptcy
petition for relief under Chapter 7 of the United States Bankruptcy Code;
(C) files a petition or answer seeking for itself a liquidation,
dissolution or similar relief (but not a reorganization) under any law;
(D) files an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against the Managing General
Partner in a proceeding of the type described in clauses (A)-(C) of this
Section 11.1(a)(v); or (E) seeks, consents to or acquiesces in the
appointment of a trustee (but not a debtor in possession), receiver or
liquidator of the General Partner or of all or any substantial part of its
properties; provided however that none of the events listed in (A)-(E)
hereof shall be an Event of Default if (x) such event takes place after
the Triarc Merger, (y) the Managing General Partner is Triarc or its
Affiliates, and (z) the Special General Partner is a non-bankrupt General
Partner of the Partnership and the MLP at the time of the events described
in this Section 11.1(a)(v) occur;
(vi) a final and non-appealable order of relief under Chapter
7 of the United States Bankruptcy Code is entered by a court with
appropriate jurisdiction pursuant to a voluntary or involuntary petition
by or against the Managing General Partner; or
(vii) (A) in the event the Managing General Partner is a
corporation, a certificate of dissolution or its equivalent is filed for
the Managing General Partner, or 90 days expire after the date of notice
to the Managing General Partner of revocation of its charter without a
reinstatement of its charter, under the laws of its state of
incorporation; (B) in the event the Managing General Partner is a
partnership, the dissolution and commencement of winding up of the
Managing General Partner; (C) in the event the Managing General Partner is
acting in such capacity by virtue of being a trustee of the trust, the
termination of the trust; (D) in the event the Managing General Partner is
a natural person, his death or adjudication of incompetency; (E) and
otherwise in the event of the termination of the Managing General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv) (with respect to
withdrawal), (v), (vi) or (vii) (A), (B), (C) or (E) occurs, the withdrawing
Managing General Partner shall give notice to the Limited Partners within 30
days after such occurrence. The Partners hereby agree that only the Events of
Withdrawal described in this Section 11.1 shall result in the withdrawal of the
Managing General Partner from the Partnership.
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(b) Withdrawal of the Managing General Partner from the Partnership
upon the occurrence of an Event of Withdrawal shall not constitute a breach of
this Agreement under the following circumstances: (i) at any time during the
period beginning on the Closing Date and ending at 12:00 midnight, Eastern
Standard Time, on June 30, 2006, the Managing General Partner voluntarily
withdraws by giving at least 90 day advance notice of its intention to withdraw
to the Limited Partners; provided, that prior to the effective date of such
withdrawal, all the Limited Partners approve such withdrawal and the Managing
General Partner delivers to the Partnership an Opinion of Counsel ("Withdrawal
Opinion of Counsel") that such withdrawal (following the selection of the
successor Managing General Partner) would not result in the loss of the limited
liability of any Limited Partner, any limited partner of the MLP, or any limited
partner of any Group Member or cause the MLP or the Partnership to be treated as
an association taxable as a corporation or otherwise to be taxed as an entity
for federal income tax purposes; (ii) at any time after 12:00 midnight, Eastern
Standard Time, on June 30, 2006, the Managing General Partner voluntarily
withdraws by giving at least 90 days' advance notice to the Limited Partners,
such withdrawal to take effect on the date specified in such notice; or (iii) at
any time that the Managing General Partner ceases to be the Managing General
Partner pursuant to Section 11.1(a)(ii), (iii) or (iv). If the Managing General
Partner gives a notice of withdrawal pursuant to Section 11.1(a)(i) or Section
11.1(a)(i) of the MLP Agreement, a majority in interest of the Limited Partners
may, prior to the effective date of such withdrawal or removal, elect a
successor Managing General Partner; provided, however, that such successor shall
be the same Person, if any, that is elected by the limited partners of the MLP
pursuant to Section 11.1 of the MLP Agreement as the successor to the Managing
General Partner in its capacity as Managing General Partner of the MLP. If,
prior to the effective date of the Managing General Partner's withdrawal, a
successor is not selected by the Limited Partners as provided herein or the
Partnership does not receive a Withdrawal Opinion of Counsel, the Partnership
shall be dissolved in accordance with Section 12.1. Any successor Managing
General Partner elected in accordance with the terms of this Section 11.1 shall
be subject to the provisions of Section 10.3.
(c) An Event of Withdrawal of the Managing General Partner shall
also be an Event of Withdrawal of the Special General Partner from the
Partnership and the MLP and as general partner of other Group Members at the
same time and upon the same conditions as set forth in Section 11.1(b) with
respect to the Managing General Partner.
(d) The occurrence after the Triarc Merger of an event otherwise
described in Section 11.1(a)(iv)(A), (B), (C), (D) and (E) that is not an Event
of Withdrawal pursuant to Section 11.1(a)(iv) shall result in (i) the conversion
of Triarc's 1.0101% general partner interest into a limited partner interest
having the same rights to distributions of cash and allocations of income, gain,
loss or deduction and obligation to restore its deficit capital account as
provided for in Section 12.8 as the holder of the 1.0101% general partner
interests were entitled and/or obligated but having no rights to participate in
the management of the Partnership, (ii) the Partnership shall continue without
the approval of the Limited Partners and (iii) the Special General Partner shall
become the Managing General Partner of the Partnership and shall have all
rights, authority and powers given to the Managing General Partner pursuant to
this Agreement.
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11.2 Removal of the Managing General Partner.
The Managing General Partner shall be removed if such Managing General
Partner is removed as a Managing General Partner of the MLP pursuant to Section
11.2 of the MLP Agreement. Such removal shall be effective concurrently with the
effectiveness of the removal of such Managing General Partner as the Managing
General Partner of the MLP pursuant to the terms of the MLP Agreement. If a
successor Managing General Partner is elected in connection with the removal of
such Managing General Partner as a Managing General Partner of the MLP, such
successor Managing General Partner shall, upon admission pursuant to Article X,
automatically become a successor Managing General Partner of the Partnership.
The admission of any such successor Managing General Partner to the Partnership
shall be subject to the provisions of Section 10.3.
11.3 Interest of Departing Partner and Successor General Partner.
(a) The Partnership Interest of a Departing Partner departing as a
result of withdrawal or removal pursuant to Section 11.1 or 11.2 shall (unless
it is otherwise required to be converted into Common Units pursuant to Section
11.3(b) of the MLP Agreement or 11.1(d) of this Agreement) be purchased by the
successor to the Departing Partner for cash in the manner specified in the MLP
Agreement. Such purchase (or conversion into Common Units, as applicable) shall
be a condition to the admission to the Partnership of the successor as the
General Partner. Any successor General Partner shall indemnify the Departing
General Partner as to all debts and liabilities of the Partnership arising on or
after the effective date of the withdrawal or removal of the Departing Partner.
(b) The Departing Partner shall be entitled to receive all
reimbursements due such Departing Partner pursuant to Section 7.4, including any
employee-related liabilities (including severance liabilities), incurred in
connection with the termination of any employees employed by such Departing
Partner for the benefit of the Partnership.
11.4 Withdrawal of the Limited Partner.
Without the prior written consent of the Managing General Partner, which
may be granted or withheld in its sole discretion, and except as provided in
Section 10.1, no Limited Partner shall have the right to withdraw from the
Partnership.
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ARTICLE XII
Dissolution and Liquidation
12.1 Dissolution.
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the Managing General Partner, if a successor
General Partner is elected pursuant to Section 11.1 or 11.2, the Partnership
shall not be dissolved and such successor Managing General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
(subject to Section 12.2) its affairs shall be wound up, upon:
(a) the expiration of its term as provided in Section 2.7;
(b) an Event of Withdrawal of the Managing General Partner as
provided in Section 11.1(a) (other than Section 11.1(a)(ii)), unless a successor
is elected and an Opinion of Counsel is received as provided in Section 11.1(b)
or 11.2 and such successor is admitted to the Partnership pursuant to Section
10.3;
(c) an election to dissolve the Partnership by the Managing General
Partner that is approved by all of the Limited Partners;
(d) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act;
(e) the sale of all or substantially all of the assets and
properties of the Partnership Group; or
(f) the dissolution of the MLP.
12.2 Continuation of the Business of the Partnership After Dissolution.
Upon (a) dissolution of the Partnership following an Event of Withdrawal
caused by the withdrawal or removal of the Managing General Partner as provided
in Section 11.1(a)(i) or (iii) and following a failure of the Limited Partners
to appoint a successor Managing General Partner as provided in Section 11.1 or
11.2, then within 90 days thereafter or (b) dissolution of the Partnership upon
an event constituting an Event of Withdrawal pursuant to Section 11.1(a)(iv),
(v) or (vi) of the MLP Agreement, then, to the maximum extent permitted by law,
within 180 days thereafter, all of the Limited Partners may elect to
reconstitute the Partnership and continue its business on the same terms and
conditions set forth in this Agreement by forming a new limited partnership on
terms identical to those set forth in this Agreement and having as a Managing
General Partner a Person
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approved by the majority of the Limited Partners. In addition, upon dissolution
of the Partnership pursuant to Section 12.1(f), if the MLP is reconstituted
pursuant to Section 12.2 of the MLP Agreement, the reconstituted MLP may
(whether or not it is the sole limited partner), within 180 days after such
event of dissolution, as [(a)] Limited Partner, elect to reconstitute the
Partnership in accordance with the immediately preceding sentence. Upon any such
election by the Limited Partners, all Partners shall be bound thereby and shall
be deemed to have approved same. Unless such an election is made within the
applicable time period as set forth above, the Partnership shall conduct only
activities necessary to wind up its affairs. If such an election is so made,
then:
(i) the reconstituted Partnership shall continue until the end
of the term set forth in Section 2.7 unless earlier dissolved in
accordance with this Article XII;
(ii) if the successor General Partner is not the former
Managing General Partner, then the interest of the former Managing General
Partner shall be purchased by the successor General Partner or converted
into Common Units of the MLP or purchased for cash by the MLP as provided
in the MLP Agreement; and
(iii) all necessary steps shall be taken to cancel this
Agreement and the Certificate of Limited Partnership and to enter into
and, as necessary, to file a new partnership agreement and certificate of
limited partnership, and the successor General Partner may for this
purpose exercise the powers of attorney granted the Managing General
Partner pursuant to Section 2.6; provided, that the right to approve a
successor General Partner and to reconstitute and to continue the business
of the Partnership shall not exist and may not be exercised unless the
Partnership has received an Opinion of Counsel that (x) the exercise of
the right would not result in the loss of limited liability of the Limited
Partners or any limited partner of the MLP and (y) neither the
Partnership, the reconstituted limited partnership nor any Group Member
would be treated as an association taxable as a corporation or otherwise
be taxable as an entity for federal income tax purposes upon the exercise
of such right to continue.
12.3 Liquidator.
Upon dissolution of the Partnership, unless the Partnership is continued
under an election to reconstitute and continue the Partnership pursuant to
Section 12.2, the Managing General Partner shall select one or more Persons to
act as Liquidator. The Liquidator (if other than the Managing General Partner)
shall be entitled to receive such compensation for its services as may be
approved by the Limited Partners. The Liquidator (if other than the Managing
General Partner) shall agree not to resign at any time without 15 days' prior
notice and may be removed at any time, with or without cause, by notice of
removal approved by the Limited Partners. 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 a majority in interest of the
Limited Partners. 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
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substitute Liquidator approved in the manner herein provided. Except as
expressly provided in this Article XII, the Liquidator approved in the manner
provided herein shall have and may exercise, without further authorization or
consent of any of the parties hereto, all of the powers conferred upon the
Managing General Partner under the terms of this Agreement (but subject to all
of the applicable limitations, contractual and otherwise, upon the exercise of
such powers, other than the limitation on sale set forth in Section 7.3(a)) to
the extent necessary or desirable in the good faith judgment of the Liquidator
to carry out the duties and functions of the Liquidator hereunder for and during
such period of time as shall be reasonably required in the good faith judgment
of the Liquidator to complete the winding up and liquidation of the Partnership
as provided for herein.
12.4 Liquidation.
The Liquidator shall proceed to dispose of the assets of the Partnership,
discharge its liabilities, and otherwise wind up its affairs in such manner and
over such period as the Liquidator determines to be in the best interest of the
Partners, subject to Section 17-804 of the Delaware Act and the following:
(a) Disposition of Assets. The assets may be disposed of by public
or private sale or by distribution in kind to one or more Partners on such terms
as the Liquidator and such Partner or Partners may agree. If any property is
distributed in kind, the Partner receiving the property shall be deemed for
purposes of Section 12.4(c) to have received cash equal to its fair market
value; and contemporaneously therewith, appropriate cash distributions must be
made to the other Partners. The Liquidator may, in its absolute discretion,
defer liquidation of the Partnership's assets for a reasonable time if it
determines that an immediate sale of all or part of the Partnership's assets
would be impractical or would cause undue loss to the Partners. The Liquidator
may, in its absolute discretion, distribute the Partnership's assets, in whole
or in part, in kind if it determines that a sale would be impractical or would
cause undue loss to the partners.
(b) Discharge of Liabilities. Liabilities of the Partnership include
amounts owed to Partners otherwise than in respect of their distribution rights
under Article VI. With respect to any liability that is contingent or is
otherwise not yet due and payable, the Liquidator shall either settle such claim
for such amount as it thinks appropriate or establish a reserve of cash or other
assets to provide for its payment. When paid, any unused portion of the reserve
shall be distributed as additional liquidation proceeds.
(c) Liquidation Distributions. All property and all cash in excess
of that required to discharge liabilities as provided in Section 12.4(b) shall
be distributed to the Partners in accordance with, and to the extent of, the
positive balances in their respective Capital Accounts, as determined after
taking into account all Capital Account adjustments (other than those made by
reason of distributions pursuant to this Section 12.4(c)) for the taxable year
of the Partnership during which the liquidation of the Partnership occurs (with
such date of occurrence being determined pursuant to Treasury Regulation,
Section 1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of
such taxable year (or, if later, within 90 days after said date of such
occurrence).
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12.5 Cancellation of Certificate of Limited Partnership.
Upon the completion of the distribution of Partnership cash and property
as provided in Section 12.4 in connection with the liquidation of the
Partnership, the Partnership shall be terminated and the Certificate of Limited
Partnership and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware shall be canceled
and such other actions as may be necessary to terminate the Partnership shall be
taken.
12.6 Return of Capital Contributions.
The General Partners shall not be personally liable for, and shall have no
obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate, the return of the Capital Contributions of any Limited
Partner, or any portion thereof, it being expressly understood that any such
return shall be made solely from Partnership assets.
12.7 Waiver of Partition.
To the maximum extent permitted by law, each Partner hereby waives any
right to partition of the Partnership property.
12.8 Capital Account Restoration.
No Limited Partner shall have any obligation to restore any negative
balance in its Capital Account upon liquidation of the Partnership. The Special
General Partner shall have no obligation to restore any negative balance in its
Capital Account upon the liquidation of the Partnership. The Managing 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.
ARTICLE XIII
Amendment of Partnership Agreement
13.1 Amendment to be Adopted Solely by the Managing General Partner.
Each Partner agrees that the Managing General Partner, without the
approval of any Partner, may amend any provision of this Agreement, to 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;
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(b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the sole discretion of the Managing General
Partner, is necessary or advisable to qualify or continue the qualification of
the Partnership as a limited partnership or a partnership in which the Limited
Partners have limited liability under the laws of any state or to ensure that
the Partnership and the MLP will not be treated as an association taxable as a
corporation or otherwise taxed as an entity for federal income tax purposes;
(d) a change that, in the discretion of the Managing General
Partner, (i) does not adversely affect the Limited Partners in any material
respect, (ii) is necessary or advisable 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 the Delaware Act), compliance with any of which the
Managing General Partner determines in its discretion to be in the best
interests of the Partnership and the Limited Partners, (iii) is required to
effect the intent expressed in the Registration Statement or the intent of the
provisions of this Agreement or is otherwise contemplated by this Agreement or
(iv) is required to conform the provisions of this Agreement with the provisions
of the MLP Agreement as the provisions of the MLP Agreement may be amended,
supplemented or restated from time to time;
(e) a change in the fiscal year or taxable year of the Partnership
and any changes that, in the discretion of the Managing General Partner, are
necessary or advisable as a result of a change in the fiscal year or taxable
year of the Partnership including, if the Managing General Partner shall so
determine, a change in the definition of "Quarter" and the dates on which
distributions are to be made by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership or the General Partners or their directors, officers,
trustees or agents from in any manner being subjected to the provisions of the
Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940,
as amended, or "plan asset" regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, regardless of whether such are
substantially similar to plan asset regulations currently applied or proposed by
the United States Department of Labor;
(g) any amendment expressly permitted in this Agreement to be made
by the Managing General Partner acting alone (including a conversion of a
general partner interest into a limited partner interest pursuant to Section 4.6
hereof);
(h) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 14.3;
53
(i) an amendment that, in the discretion of the Managing General
Partner, is necessary or advisable to reflect, account for and deal with
appropriately the formation by the Partnership of, or investment by the
Partnership in, any corporation, partnership, joint venture, limited liability
company or other entity in connection with the conduct by the Partnership of
activities permitted by the terms of Section 2.4;
(j) a merger or conveyance pursuant to Section 14.3(d); or
(k) any other amendments substantially similar to the foregoing.
13.2 Amendment Procedures.
Except as provided in Section 13.1, all amendments to this Agreement shall
be made in accordance with the following requirements: Amendments to this
Agreement may be proposed only by or with the consent of the Managing General
Partner which consent may be given or withheld in its sole discretion. A
proposed amendment shall be effective upon its approval by a majority in
interest of the Limited Partners.
ARTICLE XIV
Merger
14.1 Authority.
The Partnership may merge or consolidate with one or more corporations,
business trusts or associations, real estate investment trusts, common law
trusts or unincorporated businesses, including a general partnership or limited
partnership, formed under the laws of the State of Delaware or any other state
of the United States of America, pursuant to a written agreement of merger or
consolidation ("Merger Agreement") in accordance with this Article XIV.
14.2 Procedure for Merger or Consolidation.
Merger or consolidation of the Partnership pursuant to this Article XIV
requires the prior approval of the Managing General Partner. If the Managing
General Partner shall determine, in the exercise of its discretion, to consent
to the merger or consolidation, the Managing General Partner shall approve the
Merger Agreement, which shall set forth:
(a) The names and jurisdictions of formation or organization of each
of the business entities proposing to merge or consolidate;
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(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 partner interests, rights, securities or obligations of the
Surviving Business Entity; and (i) if any general or limited partner interests,
securities or rights of any constituent business entity are not to be exchanged
or converted solely for, or into, cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving Business Entity,
the cash, property or general or limited partner interests, rights, securities
or obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) which the holders of such general or
limited partner interests, securities or rights are to receive in exchange for,
or upon conversion of their general or limited partner interests, securities or
rights, and (ii) in the case of securities represented by certificates, upon the
surrender of such certificates, which cash, property or general or limited
partner interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;
(e) A statement of any changes in the constituent documents or the
adoption of new constituent documents (the articles or certificate of
incorporation, articles of trust, declaration of trust, certificate or agreement
of limited partnership or other similar charter or governing document) of the
Surviving Business Entity to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date of the
filing of the certificate of merger pursuant to Section 14.4 or a later date
specified in or determinable in accordance with the Merger Agreement (provided,
that if the effective time of the merger is to be later than the date of the
filing of the certificate of merger, the effective time shall be fixed no later
than the time of the filing of the certificate of merger and stated therein);
and
(g) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the Managing General
Partner.
14.3 Approval by Limited Partners of Merger or Consolidation.
(a) Except as provided in Section 14.3(d), the Managing General
Partner, upon its approval of the Merger Agreement, shall direct that a copy or
a summary of the Merger Agreement be submitted to the Limited Partners for their
approval.
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(b) Except as provided in Section 14.3(d) The Merger Agreement shall
be approved upon receiving the approval of a majority in interest of the Limited
Partners.
(c) After such approval by the Limited Partners, and at any time
prior to the filing of the certificate of merger pursuant to Section 14.4, the
merger or consolidation may be abandoned pursuant to provisions therefor, if
any, set forth in the Merger Agreement.
14.4 Certificate of Merger.
Upon the required approval by the Managing 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.
14.5 Effect of Merger.
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all property, real,
personal and mixed, and all debts due to any of those business entities
and all other things and causes of action belonging to each of those
business entities shall be vested in the Surviving Business Entity and
after the merger or consolidation shall be the property of the Surviving
Business Entity to the extent they were of each constituent business
entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not revert
and is not in any way impaired because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security
interests in property of any of those constituent business entities shall
be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity, and may
be enforced against it to the same extent as if the debts, liabilities and
duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article XIV
shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another.
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ARTICLE XV
General Provisions
15.1 Addresses and Notices.
Any notice, demand, request, report or proxy materials required or
permitted to be given or made to a Partner under this Agreement shall be in
writing and shall be deemed given or made when received by it at the principal
office of the Partnership referred to in Section 2.3.
15.2 References.
Except as specifically provided as otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
15.3 Further Action.
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
15.4 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
15.5 Integration.
This Agreement constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.
15.6 Creditors.
None of the provisions of this Agreement shall be for the benefit of, or
shall be enforceable by, any creditor of the Partnership.
15.7 Waiver.
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach of any other covenant, duty, agreement or condition.
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15.8 Counterparts.
This Agreement may be executed in counterparts, all of which together
shall constitute an agreement binding on all the parties hereto, notwithstanding
that all such parties are not signatories to the original or the same
counterpart. Each party shall become bound by this Agreement immediately upon
affixing its signature hereto, independently of the signature of any other
party.
15.9 Applicable Law.
This Agreement shall be construed in accordance with and governed by the
laws of the State of Delaware, without regard to the principles of conflicts of
law.
15.10 Invalidity of Provisions.
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
Managing General Partner:
National Propane Corporation
By: ________________________________
Name:
Title:
Special General Partner:
National Propane SGP, Inc.
By: ________________________________
Name:
Title:
58
LIMITED PARTNERS:
NATIONAL PROPANE PARTNERS, L.P.
By: National Propane Corporation, as
Managing General Partner
By: ________________________________
Name:
Title:
NATIONAL PROPANE CORPORATION
By: ________________________________
Name:
Title:
NATIONAL PROPANE SGP, INC.
By: ________________________________
Name:
Title:
59