Exhibit 3.7
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PORT ARTHUR COKER COMPANY L.P.
SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
Dated as of June 6, 2002
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TABLE OF CONTENTS
Page
ARTICLE I Definitions .................................................................... 1
SECTION 1.1 Definitions ............................................................ 1
SECTION 1.2 Terms Generally ........................................................ 6
ARTICLE II General Provisions ............................................................ 6
SECTION 2.1 Formation .............................................................. 6
SECTION 2.2 Partners ............................................................... 6
SECTION 2.3 Name ................................................................... 6
SECTION 2.4 Term ................................................................... 7
SECTION 2.5 Purpose; Powers ........................................................ 7
SECTION 2.6 Place of Business ...................................................... 7
ARTICLE III Management and Operation of the Partnership .................................. 8
SECTION 3.1 Management ............................................................. 8
SECTION 3.2 Certain Duties and Obligations of the Partners ......................... 8
SECTION 3.3 Restrictions on Authority of the General Partner ....................... 9
ARTICLE IV Activities of Partner's Affiliates ............................................ 10
ARTICLE V Capital Contributions; Distributions ........................................... 10
SECTION 5.1 Capital Contributions .................................................. 10
SECTION 5.2 Distributions .......................................................... 10
SECTION 5.3 Reimbursement of Expenses .............................................. 10
ARTICLE VI Books and Reports; Tax Matters; Capital Accounts; Allocations ................. 11
SECTION 6.1 General Accounting Matters ............................................. 11
SECTION 6.2 Certain Tax Matters .................................................... 11
SECTION 6.3 Capital Accounts ....................................................... 12
SECTION 6.4 Allocations ............................................................ 12
ARTICLE VII Dissolution .................................................................. 14
SECTION 7.1 Dissolution ............................................................ 14
SECTION 7.2 Winding-up ............................................................. 14
SECTION 7.3 Final Distribution ..................................................... 14
ARTICLE VIII Transfer of Partner's Interests; Rights of First Refusal .................... 15
SECTION 8.1 Restrictions on Transfer of Partnership Interests ...................... 15
SECTION 8.2 Other Transfer Provisions .............................................. 15
SECTION 8.3 Partnership Interests as Securities; Evidence of Partnership Interest .. 16
ARTICLE IX Miscellaneous ................................................................. 16
SECTION 9.1 Equitable Relief ....................................................... 16
SECTION 9.2 Officers ............................................................... 16
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Page
SECTION 9.3 Governing Law .............................................................. 17
SECTION 9.4 Successors and Assigns ..................................................... 17
SECTION 9.5 Access; Confidentiality .................................................... 17
SECTION 9.6 Notices .................................................................... 17
SECTION 9.7 Counterparts ............................................................... 17
SECTION 9.8 Entire Agreement ........................................................... 17
SECTION 9.9 Amendments ................................................................. 17
SECTION 9.10 Section Titles ............................................................ 18
SECTION 9.11 Representations and Warranties ............................................ 18
Schedule A Name, Address and Sharing Percentage of Partners
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PORT ARTHUR COKER COMPANY L.P.
SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT,
dated as of June 6, 2002, by and among SABINE RIVER HOLDING CORP., a Delaware
corporation, as the general partner (the "General Partner") and NECHES RIVER
HOLDING CORP., a Delaware limited partnership, as the limited partner (the
"Limited Partner"; together with the General Partner, the "Partners").
Preliminary Statement
A. The General Partner and the Limited Partner are parties to
that certain Amended and Restated Limited Partnership Agreement of Port Arthur
Coker Company L.P. (the "Partnership") dated as of August 2, 1999 the ("Original
Partnership Agreement"). The Partnership has previously filed a certificate of
limited partnership for the Partnership with the Department of State of
Delaware.
B. The Partners desire to amend and restate the Original
Partnership Agreement and to set forth the terms and conditions upon which the
Partnership will continue.
Agreement
Accordingly, in consideration of the mutual promises and
agreements herein made and intending to be legally bound hereby, the parties
hereto agree to amend and restate the Original Partnership Agreement in its
entirety as follows:
ARTICLE I
Definitions
SECTION 1.1 Definitions. Unless the context otherwise
requires, the following terms shall have the following meanings for purposes of
this Agreement:
"Act" means the Delaware Revised Uniform Limited Partnership
Act, 6 Del. C.(S)(S) 17-101, et seq., as it may be amended from time to time,
and any successor to such statute.
"Affiliate" means with respect to any entity, any entity other
than the entity itself: (i) which owns beneficially, directly or
indirectly, 10% or more of the outstanding shares of the common stock
of the entity, or which controls the entity; (ii) of which 10% or more
of the outstanding voting securities are owned beneficially, directly
or indirectly, by the entity or any entity described in clause (i)
above; or (iii) which controls or is controlled
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by the entity or any entity described in clause (i) above. For purposes
of this definition of Affiliate, the terms "control" and "controlled
by" shall have the meaning ascribed to them in Rule 405 under the
Securities Act of 1933, as amended.
"Agreement" means this Limited Partnership Agreement, as it
may be amended, supplemented, modified or restated from time to time.
"Capital Account" has the meaning set forth in Section 6.3.
"Capital Contribution" shall mean the amount of money and/or
the agreed upon fair market value of property contributed to the
Partnership by a Partner or its predecessor in interest on the date of
contribution. Capital Contributions shall include a Partner's payments
made to third party creditors of the Partnership with respect to
Partnership obligations to the extent such Partner is required by this
Agreement to make such additional Capital Contributions, unless and
until reimbursed by the Partnership.
"Capital Proceeds" means (A) the cash or other consideration
received by the Partnership (including interest on installment sales
when received) as a result of (i) any sale, exchange, abandonment,
foreclosure, insurance award, condemnation, easement sale or other
similar transaction relating to any property of the Partnership, (ii)
any financing or refinancing relating to any property of the
Partnership, (iii) Capital Contributions to the Partnership upon
admission of new partners, (iv) any other transaction which, in
accordance with generally accepted accounting principles, would be
treated as a capital event, in each case less (B) any such cash which
is applied to (i) the payment of transaction costs and expenses, (ii)
the repayment of debt of the Partnership which is required under the
terms of any indebtedness of the Partnership or has been authorized by
the General Partner, (iii) the repair, restoration or other improvement
of Partnership Assets which is required under any contractual
obligation of the Partnership or has been authorized by the General
Partner, and (iv) the establishment of reserves by the General Partner.
"Capital Proceeds" shall also mean any of the foregoing which are
received by a partnership or other vehicle in which the Partnership is
a partner or investor or in which the Partnership otherwise has an
interest, to the extent received by the Partnership as dividends or
distributions.
"Carrying Value" shall mean, with respect to any Partnership
Asset, the asset's adjusted basis for federal income tax purposes,
except that the Carrying values of all Partnership Assets shall be
adjusted to equal their respective fair market values, in accordance
with the rules set forth in Regulations Section 1.704-1(b)(2)(iv)(f),
except as otherwise provided herein, as of: (a) the date of the
acquisition of any additional Interest by any new or existing Partner
in exchange for more than a de minimis Capital Contribution, other than
pursuant to the initial closing of the sale of Interests; (b) the date
of the distribution of more than a de minimis amount of Partnership
Assets to a Partner; (c) the date an Interest is relinquished to the
Partnership or (d) the date of the termination of the Partnership under
Section 708(b)(i)(B) of the Code; provided, however, that adjustments
pursuant to clauses (a), (b) and (c) above shall be made only if the
General Partner determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the Partners.
The Carrying Value of any Partnership Asset
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distributed to any Partner shall be adjusted immediately prior to such
distribution to equal its fair market value and depreciation shall be
calculated by reference to Carrying Value, instead of tax basis once
Carrying Value differs from tax basis. The carrying value of any asset
contributed (or deemed contributed under Regulations Section
1.704-1(b)(1)(iv)) by a Partner to the Partnership will be the fair
market value of the asset at the date of its contribution thereto.
"Certificate" has the meaning set forth in Section 2.1.
"Clark" means Clark Refining & Marketing, Inc., a Delaware
corporation, the predecessor of Premcor Refining Group Inc.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute. Any reference herein to a
particular provision of the Code shall mean, where appropriate, the
corresponding provision in any successor statute.
"Financing Company" means Port Arthur Finance Corp., a
Delaware corporation.
"Financing Documents" means any and all documents to be
executed in connection with the Project which evidence or secure the
financing of the construction of new delayed coking unit, hydrocracker,
sulfur complex and related assets by the Partnership at the Clark
refinery in Port Arthur, Texas or the on-going working capital
requirements of the Partnership including, without limitation (i) a
common security agreement, (ii) one or more loan agreements, (iii) a
transfer restrictions agreement, (iv) an intercreditor agreement, (v) a
guaranty insurance policy and reimbursement agreement, (vi) a debt
service reserve account insurance guarantee, (vii) a note purchase
agreement, (viii) an indenture, (ix) notes, (x) one or more mortgages,
(xi) one or more pledge agreements, (xii) a registration rights
agreement and (xiii) any other documents delivered under or in
connection with any of the foregoing.
"Financing Parties" means any financing parties that may at
any time be party to the Financing Documents and any trustee or agent
action on their behalf.
"Fiscal Period" means each fiscal quarter or such other period
as may be established by the General Partner.
"Fiscal Year" means the calendar year ending on December 31 of
each year.
"General Partner" means Sabine River Holding Corp., a Delaware
corporation, and any other person admitted to the Partnership as an
additional or substitute general partner of the Partnership in
accordance with the terms of this Agreement.
"Interests" means a Partner's share of the profits and losses
of the Partnership and a Partner's right to receive distributions of
Partnership Assets.
"Limited Partners" means Neches River Holding Corp. and any
other person admitted to the Partnership as an additional or substitute
limited partner of the Partnership in accordance with the terms of this
Agreement.
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"Liquidator" has the meaning set forth in Section 7.2.
"Minimum Gain" shall have the meaning set forth in Regulations
section 1.704-2(d)(1) and shall mean the amount determined by (i)
computing for each nonrecourse liability of the Partnership any gain
the Partnership would realize if it disposed of the property subject to
that liability for no consideration other than full satisfaction of the
liability and (ii) aggregating the separately computed gains. If,
pursuant to Regulations sections 1.704-1(b)(2)(iv)(d) or
1.704-1(b)(2)(iv)(f), Partnership Assets are properly reflected on the
books of the Partnership at a book value that differs from the adjusted
tax basis of such property, the calculation of Minimum Gain pursuant to
the preceding sentence shall be made by reference to such book value.
For purposes hereof, a liability of the Partnership is a nonrecourse
liability to the extent that no Partner or related person bears the
economic risk of loss for that liability within the meaning of
Regulations section 1.752-1.
"Net Income (Loss)" for any Fiscal Period means the taxable
income or loss of the Partnership for such period as determined in
accordance with the accounting method used by the Partnership for
federal income tax purposes with the following adjustments: (i) all
items of income, gain, loss or deduction allocated pursuant to
paragraphs 6.4(b)-(d) shall not be taken into account in computing such
taxable income or loss; (ii) any income of the Partnership that is
exempt from federal income taxation and not otherwise taken into
account in computing Net Income (Loss) shall be added to such taxable
income or loss; (iii) if the Carrying Value of any asset differs from
its adjusted tax basis for federal income tax purposes, any
depreciation, amortization or gain resulting from a disposition of such
asset shall be calculated with reference to such Carrying Value; (iv)
upon an adjustment to the Carrying Value of any asset, pursuant to the
definition of Carrying Value, the amount of the adjustment shall be
included as gain or loss in computing such taxable income or loss; and
(v) except for items in (i) above, any expenditures of the Partnership
not deductible in computing taxable income or loss, not properly
capitalizable and not otherwise taken into account in computing Net
Income (Loss) pursuant to this definition shall be treated as
deductible items.
"Non-Capital Proceeds" means (x) any cash or other
consideration received by the Partnership other than Capital Proceeds
less (y) any such cash that is applied to the establishment of reserves
established by the General Partner.
"Nonrecourse Deductions" shall have the meaning ascribed to
such term in Regulations section 1.704-2(b)(1).
"Organizational Expenses" means all reasonable third-party
costs and expenses pertaining to the organization of the Partnership
and the registration, qualification or exemption of the Partnership
under any applicable federal, state or foreign laws, including fees of
counsel to the Partnership and the Partners.
"Partner" means any person who is a partner of the
Partnership, whether a General Partner, a Limited Partner, or both.
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"Partner Nonrecourse Debt" shall have the meaning ascribed to
such term in Regulations section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" shall have the meaning
ascribed to such term in Regulations section 1.704-2(i)(2).
"Partner Nonrecourse Deductions" shall mean any item of
company loss, deduction, or expenditure under section 705(a)(2)(B) of
the Code that is attributable to a Partner Nonrecourse Debt, as
determined pursuant to Regulations section 1.704-2(i)(2).
"Partnership" means Port Arthur Coker Company L.P., a Delaware
limited partnership.
"Partnership Assets" means all right, title and interest of
the Partnership in and to all or any portion of the assets of the
Partnership and any property (real or personal) or estate acquired in
exchange therefor or in connection therewith.
"Proceeds" shall mean the collective reference to Capital
Proceeds and Non-Capital Proceeds.
"Project" means the financing, construction, ownership and
operation by the Partnership of a new delayed coking unit,
hydrocracker, sulfur complex and related assets to be located at the
Port Arthur, Texas refinery of Clark and the leasing from Clark, and
operation of, the crude unit, the vacuum tower, two distillate
hydrotreaters and one naphtha hydrotreater owned by Clark and located
at its Port Arthur, Texas refinery.
"Project Companies" means, collectively, the Partnership, the
Financing Company, Sabine River Holding Corp. and Neches River Holding
Corp.
"Project Documents" means, collectively, the following to be
entered into by the Partnership: (i) a contract for engineering,
procurement and construction services with Foster Wheeler USA for the
design and construction of the new coking unit, hydrocracker, sulfur
complex and related assets; (ii) a long-term oil supply agreement with
P.M.I. Comercio Internacional for the supply of heavy sour crude oil
for the Project; (iii) a services and supply agreement with Clark for
the provision of other necessary supplies and services for the Project;
(iv) a product purchase agreement with Clark for the purchase of all
the intermediate and refined products produced by the equipment owned
and leased by the Partnership; (v) a ground lease and easement
agreement with Clark for the lease of the sites for the new coking
unit, hydrocracker, sulfur complex and related assets and the granting
by Clark to the Partnership of various easements over, and licenses to
use other facilities at, Clark's Port Arthur refinery in connection
with the Project; (vi) a site and equipment lease and easement
agreement with Clark for the lease of the crude unit, vacuum tower and
three hydrotreaters at Clark's Port Arthur refinery and the site(s) on
which such equipment is located and the granting by Clark to the
Partnership of additional easements at the Port Arthur refinery; (vii)
a hydrogen supply agreement with Air Products and Chemicals, Inc. for
the construction of a hydrogen supply plant at Clark's Port Arthur
refinery and the supply of hydrogen to the
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Partnership; (viii) a purchase agreement with Clark for work in progress
related to the new coking unit, hydrocracker, sulfur complex and related
assets; (ix) contracts for the supply of additional crude oil requirements
for the Project; and (x) any other contracts with third parties that are
incidental to and necessary, convenient or advisable in connection with the
Project.
"Regulations" means the regulations promulgated under the Code.
"Sharing Percentage" means the percentage interest of a Partner as set
forth on Schedule A hereto, as amended from time to time in accordance
herewith.
"Tax Matters Partner" shall have the meaning ascribed to such term in
Section 6.2.
"Transfer" shall have the meaning ascribed to such term in Section
8.1.
"Transferee" shall have the meaning ascribed to such term in Section
8.1.
SECTION 1.2 Terms Generally. The definitions in Section 1.1 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The term "person" includes individuals,
partnerships, joint ventures, corporations, trusts, governments (or agencies or
political subdivisions thereof) and other associations and entities. Unless the
context requires otherwise, the words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The term
"hereunder" shall mean this entire Agreement as a whole unless reference to a
specific section of this Agreement is made.
ARTICLE II
General Provisions
SECTION 2.1 Formation. The Partnership is hereby formed under the
provisions of the Act. The General Partner is hereby designated as an authorized
person, within the meaning of the Act, to execute, deliver and file the
certificate of limited partnership of the Partnership and any amendments and/or
restatements thereof (collectively, the "Certificate") and any other
certificates necessary for the Partnership to qualify to do business in a
jurisdiction in which the Partnership may wish to conduct business.
SECTION 2.2 Partners. Schedule A hereto contains the name, address and
Sharing Percentage of each Partner as of the date of this Agreement. Schedule A
shall be revised by the General Partner from time to time to reflect the
admission or withdrawal of a Partner or the transfer or assignment of interests
in the Partnership in accordance with the terms of this Agreement and other
modifications to or changes in the information set forth therein.
SECTION 2.3 Name. The Partnership shall conduct its activities under
the name of Port Arthur Coker Company L.P. The General Partner shall have the
power at any time to
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change the name of the Partnership; provided, that the name shall always contain
the words "Limited Partnership" or the letters "L.P." Prompt notice of any such
change shall be given to each Partner.
SECTION 2.4 Term. The term of the Partnership shall commence on the
date of filing the certificate of limited partnership of the Partnership in
accordance with the Act and shall continue until December 31, 2049, unless
sooner dissolved, wound up and terminated in accordance with Article VII.
SECTION 2.5 Purpose; Powers. (a) The purpose of the Partnership shall
be (i) to engage in the Project, (ii) to engage in any other lawful business
permitted by the Act or the laws of any jurisdiction in which the Partnership
may do business and (iii) to do all things necessary or incidental thereto.
(b) In furtherance of its purposes, the Partnership shall have all
powers necessary, statutory or otherwise suitable or convenient for the
accomplishment of its purposes, including the following:
(i) the power to engage in the ownership of one hundred percent
(100%) of the issued and outstanding equity securities of the Financing
Company and to pledge such ownership interest to the Financing Parties to
secure the financing of the Project;
(ii) the power to enter into, and perform its obligations under,
any and all documents required in connection with the loans to be made by
the Financing Company to the Partnership in connection with the Project;
(iii) the power to enter into, and perform its obligations under,
any and all Project Documents or Financing Documents to which the
Partnership is to be a party including, without limitation, (x) issuing one
or more guarantees of the debt of the Financing Company which is to be
incurred in connection with the Project and (y) granting security interests
in substantially all of its assets to the Financing Parties as collateral
security for such debt;
(iv) the power to enter into, and perform its obligations under,
one or more equity contribution agreements in connection with the equity
funding of the Project by Blackstone Capital Partners III Merchant Banking
Fund L.P., Blackstone Offshore Capital Partners III L.P. and Blackstone
Family Investment Partnership III L.P. and Occidental Petroleum
Corporation.
SECTION 2.6 Place of Business. The Partnership shall maintain a
registered office at The Corporation Trust Company, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801, or such other office within the
State of Delaware as directed by the General Partner. The Partnership shall
maintain an office and principal place of business at 1801 South Gulfway Drive,
Port Arthur, Texas 77641 or at such other place as may from time to time be
determined by the General Partner as its principal place of business. The name
and address of
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the Partnership's registered agent as of the date of this Agreement is The
Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19801.
ARTICLE III
Management and Operation of the Partnership
SECTION 3.1 Management. (a) Except as otherwise provided herein, the
management, control and operation of the Partnership and the formulation and
execution of business and investment policy shall be vested exclusively in the
General Partner, and the General Partner shall exercise all powers necessary and
convenient for the purposes of the Partnership, including those enumerated in
Section 2.5, on behalf and in the name of the Partnership.
(b) Except as otherwise provided herein, no Limited Partner shall
have the right to, and no Limited Partner shall, take part in the management or
affairs of the Partnership, nor in any event shall any Limited Partner have the
power to act or bind the Partnership in any way unless delegated such power by
the General Partner. The exercise by any Limited Partner of any right or power
conferred herein shall not be construed to constitute participation by such
Limited Partner in the control of the business of the Partnership so as to make
such Limited Partner liable as a general partner for the debts and obligations
of the Partnership for purposes of the Act.
(c) A Partner shall not be obligated to abstain from voting on any
matter (or vote in any particular manner) because of any interest (or conflict
of interest) of such Partner (or any Affiliate thereof) in such matter.
(d) Each Partner agrees that, except as otherwise expressly provided
herein and to the fullest extent permitted by applicable law, the approval of
any proposed action of or relating to the Partnership, by the General Partner as
provided herein shall bind each Partner and shall have the same legal effect as
the approval of each Partner of such action.
SECTION 3.2 Certain Duties and Obligations of the Partners. (a)
Subject to the terms of this Agreement, the General Partner shall take all
action which may be reasonably necessary or appropriate (i) for the formation
and continuation of the Partnership as a limited partnership under the laws of
the State of Delaware and (ii) for the development, maintenance, preservation
and operation of the business of the Partnership in accordance with the
provisions of this Agreement and applicable laws and regulations. The General
Partner shall take all action which is necessary to form or qualify the
Partnership to conduct the business in which the Partnership is engaged under
the laws of any jurisdiction in which the Partnership is doing business and to
continue in effect such formation or qualification.
(b) No Partner shall take any action so as to cause the Partnership
to be classified for Federal income tax purposes as an association taxable as a
corporation and not as a partnership.
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(c) The General Partner shall not take, or cause to be taken, any
action that would result in any Limited Partner having any personal liability
for the obligations of the Partnership. The General Partner shall be under a
duty as described herein to conduct the affairs of the Partnership in the best
interests of the Partnership and of the Partners including the safekeeping and
use of all Partnership funds and assets and the use thereof for the exclusive
benefit of the Partnership.
(d) The General Partner shall not be liable, responsible or
accountable in damages or otherwise to the Partnership or to any other Partner
for: (a) any act performed within the scope of the authority conferred on the
General Partner by this Agreement, except for the gross negligence or willful
misconduct of the General Partner in carrying out the obligations of such
Partner hereunder; (b) the General Partner's failure or refusal to perform any
act, except those expressly required by or pursuant to the terms of this
Agreement; (c) the General Partner's performance of, or failure to perform, any
act on the reasonable reliance on advice of legal counsel to the Partnership; or
(d) the negligence, dishonesty or bad faith of any agent, consultant or broker
of the Partnership selected, engaged or retained in good faith. In any
threatened, pending or completed action, suit or proceeding, the General Partner
shall be fully protected and indemnified and held harmless by the Partnership
against all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, proceedings, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, reasonable attorneys' fees,
costs of investigation, fines, judgments and amounts paid in settlement,
actually incurred by the General Partner in connection with such action, suit or
proceeding) by virtue of its status as the General Partner or with respect to
any action or omission taken or suffered in good faith, other than liabilities
and losses resulting from the gross negligence or willful misconduct of the
General Partner; provided, however, that the General Partner shall not be so
indemnified for any acts determined to be in contravention of this Agreement or
in breach of its fiduciary duties. The indemnification provided by this
paragraph shall be recoverable only out of the assets of the Partnership, and no
Partner shall have any personal liability on account thereof.
SECTION 3.3 Restrictions on Authority of the General Partner. The
General Partner shall not have the authority to:
(a) do any act in contravention of this Agreement;
(b) do any act which would make it impossible to carry on the
ordinary business of the Partnership, except in connection with the
dissolution, winding up and termination of the Partnership as provided by
Article VII;
(c) possess Partnership property, or assign their respective rights
in specific Partnership property, for other than a Partnership purpose;
(d) admit a person as a Partner except as provided in this Agreement;
or
(e) knowingly perform any act that would subject any Limited Partner
to liability as a general partner in any jurisdiction.
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ARTICLE IV
Activities of Partner's Affiliates
Except as expressly provided hereunder, this Agreement shall not be
construed in any manner to preclude any Affiliate of any Partner from engaging
in any activity whatsoever permitted by applicable law (whether or not such
activity might compete, or constitute a conflict of interest, with the
Partnership).
ARTICLE V
Capital Contributions;
Distributions
SECTION 5.1 Capital Contributions. (a) Partners shall make Capital
Contributions to the Partnership in such amounts and at such times as directed
by the General Partner pro rata in accordance with their respective Sharing
Percentages, which amounts shall be set forth in the books and records of the
Partnership.
(b) No Partner shall be required to make a Capital Contribution
except as provided in this Article V. No Partner shall have any obligation to
restore any negative balance in the Partner's Capital Account upon liquidation
of the Partnership. No Partner shall be entitled to withdraw all or any part of
its Capital Contributions except as expressly provided in this Agreement. No
interest shall be payable by the Partnership on the Capital Contributions of any
Partner except as otherwise provided herein. In no event shall any Partner be
entitled to demand any property from the Partnership other than cash.
SECTION 5.2 Distributions. (a) Distributions shall be made in such
amounts and at such times as determined by the General Partner from time to
time.
(b) Each distribution of Non-Capital Proceeds or Capital Proceeds
shall be made to the Partners pro rata in accordance with their Sharing
Percentages.
SECTION 5.3 Reimbursement of Expenses. Promptly after the date of this
Agreement, the Partnership, to the extent it does not pay such costs and
expenses directly, will reimburse each Partner for Organizational Expenses
incurred by such Partner and all other third-party out-of-pocket costs and
expenses incurred prior to the execution of this Agreement in connection with
the formation of the Partnership. Calculation of such reimbursement amounts
shall be made by the General Partner.
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ARTICLE VI
Books and Reports; Tax Matters; Capital Accounts; Allocations
SECTION 6.1 General Accounting Matters. (a) Allocations of Net Income
(Loss) pursuant to Section 6.4 shall be made by or under the direction of the
General Partner at the end of each Fiscal Period.
(b) Each Partner shall be supplied with the Partnership information
necessary to enable such Partner to prepare in a timely manner its Federal,
state and local income tax returns and such other financial or other statements
and reports that are approved by the General Partner.
(c) The General Partner shall keep or cause to be kept books and
records pertaining to the Partnership's business showing all of its assets and
liabilities, receipts and disbursements, realized profits and losses, Partners'
Capital Accounts and all transactions entered into by the Partnership. Such
books and records of the Partnership shall be kept at the office of the
Partnership and the Partners and their representatives shall at all reasonable
times have free access thereto for the purpose of inspecting or copying the
same. The Partnership's books of account shall be kept on an accrual basis or as
otherwise provided by the General Partner and otherwise in accordance with
generally accepted accounting principles, except that for income tax purposes
such books shall be kept in accordance with applicable tax accounting
principles.
(d) All determinations, valuations and other matters of judgment
required to be made for accounting and tax purposes under this Agreement shall
be made by or under the direction of the General Partner and shall be conclusive
and binding on all Partners, former Partners, their successors or legal
representatives and any other person except for computational errors or fraud,
and to the fullest extent permitted by law no such person shall have the right
to an accounting or an appraisal of the assets of the Partnership or any
successor thereto except for computational errors or fraud.
(e) If approved the General Partner, the books of the Partnership
shall be examined, certified and audited annually as of the end of a Fiscal
Year, by a recognized firm of independent certified public accountants. For each
Fiscal Year of the Partnership that the General Partner has so approved an
audit, such accountants shall determine and prepare full financial statements,
including, without limitation, a balance sheet, an income statement, a statement
of changes in financial position and a statement of the Non-Capital Proceeds and
Capital Proceeds of the Partnership. The Tax Matters Partner shall promptly upon
receipt of any such financial statements transmit copies thereof to each
Partner, together with the report and management letter of such accountants
covering the results of such audit. The cost of all audits and reports provided
to the Partners pursuant to this Section shall be an expense of the Partnership.
SECTION 6.2 Certain Tax Matters. The taxable year of the Partnership
shall be the same as its Fiscal Year. The Tax Matters Partner shall cause to be
prepared all Federal, state and local tax returns of the Partnership for each
year for which such returns are required to be
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filed and shall cause such returns to be timely filed. The General Partner shall
determine the appropriate treatment of each item of income, gain, loss,
deduction and credit of the Partnership and the accounting methods and
conventions under the tax laws of the United States, the several states and
other relevant jurisdictions as to the treatment of any such item or any other
method or procedure related to the preparation of such tax returns. The Tax
Matters Partner shall make the election provided for in Section 754 of the Code,
if, and only if the Partner who or which has acquired an interest in the
Partnership or a distribution of Partnership property with respect to which the
election is made will have provided to the Tax Matters Partner concurrently, or
within 30 days after the Transfer of such interest, its undertaking to the
effect that it, and its successors in interest hereunder, will reimburse the
Partnership annually for its additional administrative costs incurred by reason
of such election as determined by the auditor of the Partnership. The Tax
Matters Partner shall also make the election to amortize Organizational Expenses
pursuant to Code Section 709 and the regulation promulgated thereunder. In
addition, the General Partner may cause the Partnership to make or refrain from
making any and all other elections permitted by the tax laws of the United
States, the several states and other relevant jurisdictions. The "tax matters
partner" for purposes of Section 6231(a)(7) of the Code (the "Tax Matters
Partner") shall be the General Partner. The Tax Matters Partner shall have all
of the rights, duties, powers and obligations provided for in Sections 6221
through 6232 of the Code with respect to the Partnership.
SECTION 6.3 Capital Accounts. There shall be established for each
Partner on the books of the Partnership as of the date hereof, or such later
date on which such Partner is admitted to the Partnership, a capital account
(each being a "Capital Account"). Each Capital Contribution shall be credited to
the Capital Account of such Partner on the date such contribution of capital is
paid to the Partnership. In addition, each Partner's Capital Account shall be
(a) credited with such Partner's allocable share of any Net Income of the
Partnership, (b) debited with (i) distributions to such Partner of cash or the
fair market value of other property and (ii) such Partner's allocable share of
Net Loss of the Partnership and expenditures of the Partnership described or
treated under Section 704(b) as described in Section 705(a)(2)(B) of the Code,
and (c) otherwise maintained in accordance with the provisions of the Code. Any
other item which is required to be reflected in a Partner's Capital Account
under Section 704(b) of the Code or otherwise under this Agreement shall be so
reflected. Capital Accounts shall be appropriately adjusted to reflect transfers
of part (but not all) of a Partner's interest in the Partnership. Interest shall
not be payable on Capital Account balances. Notwithstanding anything to the
contrary contained in this Agreement, the Partnership shall maintain the Capital
Accounts of the Partners in accordance with the principles and requirements set
forth in section 704(b) of the Code and Regulations section 1.704-1(b)(2)(iv).
SECTION 6.4 Allocations. (a) Net Income (Loss) of the Partnership
shall be allocated among all Partners in proportion to their respective Sharing
Percentages.
(b) Notwithstanding anything herein to the contrary, in the event any
Partner unexpectedly receives any adjustments, allocations or distributions
described in paragraphs (b)(2)(ii)(d)(4), (5) or (6) of Section 1.704-1 of the
regulations under the Code, there shall be specially allocated to such Partner
such items of Partnership income and gain, at such times and in such amounts as
will eliminate as quickly as possible that portion of any deficit in its Capital
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Account caused or increased by such adjustments, allocations or distributions.
To the extent permitted by the Code and the regulations thereunder, any special
allocations of items of income or gain pursuant to this Section 6.4(b) shall be
taken into account in computing subsequent allocations of Net Income (Loss)
pursuant to this Section 6.4 so that the net amount of any items so allocated
and the subsequent allocations of Net Income (Loss) to the Partners pursuant to
this Section 6.4 shall, to the extent possible, be equal to the net amounts that
would have been allocated to each such Partner pursuant to the provisions of
this Section 6.4 if such unexpected adjustments, allocations or distributions
had not occurred.
(c) All items of income, gain, loss, deduction and credit of the
Partnership shall be allocated among the Partners for Federal, state and local
income tax purposes consistent with the manner that the corresponding
constituent items of Net Income (Loss) shall be allocated among the Partners
pursuant to this Agreement, except as may otherwise be provided herein or by the
Code. To the extent Treasury Regulations promulgated pursuant to Subchapter K of
the Code (including under Sections 704(b) and (c) of the Code) require
allocations for tax purposes that differ from the foregoing allocations, the
General Partner determine the manner in which such tax allocations shall be made
so as to comply more fully with such Treasury Regulations or other applicable
law and, at the same time to the extent reasonably possible, preserve the
economic relationships among the Partners as set forth in this Agreement.
(d) Notwithstanding the provisions of this Section 6.4, net income,
net gain, and net loss of the Partnership (or items of income, gain, loss,
deduction, or credit, as the case may be) shall be allocated in accordance with
the following provisions of this Section 6.4 to the extent such provisions shall
be applicable.
(i) Nonrecourse Deductions of the Partnership for any Fiscal
Year shall be specially allocated to the Partners in proportion to
their Sharing Percentages. Partner Nonrecourse Deductions of the
Partnership for any Fiscal Year shall be specially allocated to the
Partner who bears the economic risk of loss for the liability in
question. The provisions of this Section 6.4(d)(i) are intended to
satisfy the requirements of Regulations sections 1.704-2(e)(2) and
1.704-2(i)(1) and shall be interpreted in accordance therewith for all
purposes under this Agreement.
(ii) If there is a net decrease in the Minimum Gain of the
Partnership during any Partnership Fiscal Year, each Partner shall be
specially allocated items of Partnership income and gain for such year
equal to that Partner's share of the net decrease in Minimum Gain,
within the meaning of Regulations section 1.704-2(g)(2). The
provisions of this Section 6.4(d)(ii) are intended to comply with the
Minimum Gain chargeback requirements of Regulations section 1.704-2(f)
and shall be interpreted in accordance therewith for all purposes
under this Agreement.
(iii) If there is a net decrease in Partner Nonrecourse Debt
Minimum Gain during any Fiscal Year, each Partner that has a share of
such partner Nonrecourse Debt Minimum Gain, determined in accordance
with Regulations section 1.704-2(i)(5), as of the beginning of such
year shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, for succeeding years) equal to such
Partner's share of the net decrease in Partner Nonrecourse Debt
Minimum Gain. The provisions of
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this Section 6.4(d)(iii) are intended to comply with the Partner
Nonrecourse Debt Minimum Gain chargeback requirement of Regulations
section 1.704-2(i)(4) and shall be interpreted in accordance therewith
for all purposes under this Agreement.
ARTICLE VII
Dissolution
SECTION 7.1 Dissolution. The Partnership shall be dissolved and
subsequently terminated upon the occurrence of the first of the following
events:
(a) decision by the General Partner to dissolve and subsequently
terminate the Partnership; and
(b) December 31, 2049.
SECTION 7.2 Winding-up. When the Partnership is dissolved, the
business and property of the Partnership shall be wound up and liquidated by the
General Partner (in such capacity, the "Liquidator"). The Liquidator shall use
its best efforts to reduce to cash and cash equivalent items such assets of the
Partnership as the Liquidator shall deem it advisable to sell, subject to
obtaining fair value for such assets and any tax or other legal considerations.
SECTION 7.3 Final Distribution. Within 90 calendar days after the
effective date of dissolution of the Partnership, the assets of the Partnership
shall be distributed in the following manner and order:
(a) to the payment of the expenses of the winding-up, liquidation
and dissolution of the Partnership;
(b) to pay all creditors of the Partnership, other than Partners,
either by the payment thereof or the making of reasonable provision
therefor;
(c) to establish reserves, in amounts established by the General
Partner or such Liquidator, to meet other liabilities of the
Partnership; and
(d) to pay, in accordance with the provisions of this Agreement
applicable to such loans or in accordance with the terms agreed among
them and otherwise on a pro rata basis, all creditors of the
Partnership that are Partners, either by the payment thereof or the
making of reasonable provision therefor.
The remaining assets of the Partnership shall be applied and distributed in
accordance with the positive balances of the Partners' Capital Accounts, as
determined after taking into account all adjustments to Capital Accounts for the
Partnership taxable year during which the liquidation occurs.
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ARTICLE VIII
Transfer of Partner's Interests; Rights of First Refusal
SECTION 8.1 Restrictions on Transfer of Partnership Interests. (a)
Except as permitted by the Financing Documents, no Partner may, directly or
indirectly, assign, sell, exchange, transfer, pledge, hypothecate or otherwise
dispose of all or any part of its interest in the Partnership (any assignment,
sale, exchange, transfer, pledge, hypothecation or other disposition of an
interest in the Partnership being herein collectively called a "Transfer") to
any person, other than in accordance with paragraph (b) below.
(b) As required by the Financing Documents or otherwise on or after
the Financing Trigger Date, a Partner may mortgage, pledge, hypothecate or
otherwise encumber all or any portion of such Partner's interests as a Partner
under this Agreement, including its right to receive a portion of the
Non-Capital Proceeds, Capital Proceeds, Net Income and Net Losses provided,
however, that upon a foreclosure of such mortgage, pledge, hypothecation or
encumbrance, the holder thereof (or its nominee) shall not be admitted as a
substitute Partner (a "Transferee") without the consent of the General Partner
and its execution of an instrument satisfactory to the General Partner under
which it accepts and adopts all of the terms and provisions of the Agreement.
SECTION 8.2 Other Transfer Provisions. (a) Any purported Transfer by a
Partner of all or any part of its interest in the Partnership in violation of
this Article VIII shall be null and void and of no force or effect.
(b) Notwithstanding anything to the contrary in (S)(S) 17-402(a)(4) or
(S)(S) 17-402(a)(5) of the Act, the General Partner shall not cease to be the
General Partner of the Partnership if such General Partner: (i) makes an
assignment for the benefit of creditors; (ii) files a voluntary petition in
bankruptcy; (iii) is adjudicated as bankrupt or insolvent, or has entered
against him an order for relief in any bankruptcy or insolvency proceeding; (iv)
files a petition or answer seeking for himself, or has commenced against him any
proceeding seeking, any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or regulation;
(v) files an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against him in any proceeding of this
nature; or (vi) seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of the General Partner or of all or any
substantial part of his properties.
(c) Except as provided in this Article VIII, no Partner shall have the
right to withdraw from the Partnership prior to its termination and no
additional Partner may be admitted to the Partnership unless approved by the
General Partner. Notwithstanding any provision of this Agreement to the
contrary, a Partner may not Transfer all or any part of its interest in the
Partnership if such Transfer would jeopardize the status of the Partnership as a
partnership for federal income tax purposes, or would violate, or would cause
the Partnership to violate, any applicable law or regulation, including any
applicable federal or state securities laws.
(d) Concurrently with the admission of any substitute or additional
Partner, the General Partner shall forthwith cause any necessary papers to be
filed and recorded and
16
notice to be given wherever and to the extent required showing the substitution
of a Transferee as a substitute Partner in place of the Partner Transferring its
interest, or the admission of an additional Partner, all at the expense,
including payment of any professional and filing fees incurred, of such
substituted or additional Partner. The admission of any person as a substitute
or additional Partner shall be conditioned upon such person's written acceptance
and adoption of all the terms and provisions of this Agreement.
(e) If any interest in the Partnership is Transferred during any
accounting period in compliance with the provisions of this Article VIII, each
item of income, gain, loss, expense, deduction and credit and all other items
attributable to such interest for such period shall be divided and allocated
between the transferor and the transferee by taking into account their varying
interests during such period in accordance with Section 706(d) of the Code,
using any conventions permitted by law and selected by the General Partner. All
distributions on or before the date of such Transfer shall be made to the
transferor, and all distributions thereafter shall be made to the transferee.
Solely for purposes of making such allocations and distributions, the
Partnership shall recognize a Transfer on the date that the General Partner
receives notice of the Transfer which complies with this Article VIII from the
Partner Transferring its interest.
SECTION 8.3 Partnership Interests as Securities; Evidence of Partnership
Interest. Pursuant to Section 8-103(c) of the Uniform Commercial Code of the
State of New York (the "UCC"), the interest of the Partners in the Partnership
are hereby expressly declared to be securities governed by Article 8 of the UCC
and the Partnership is hereby authorized to issue certificates governed by
Article 8 of the UCC to the Partners to evidence their respective interests in
the Partnership.
ARTICLE IX
Miscellaneous
SECTION 9.1 Equitable Relief. The Partners hereby confirm that damages
at law may be an inadequate remedy for a breach or threatened breach of this
Agreement and agree that, in the event of a breach or threatened breach of any
provision hereof, the respective rights and obligations hereunder shall be
enforceable by specific performance, injunction or other equitable remedy, but,
nothing herein contained is intended to, nor shall it, limit or affect any right
or rights at law or by statute or otherwise of a Partner aggrieved as against
the other for a breach or threatened breach of any provision hereof, it being
the intention by this Section 9.1 to make clear the agreement of the Partners
that the respective rights and obligations of the Partners hereunder shall be
enforceable in equity as well as at law or otherwise and that the mention herein
of any particular remedy shall not preclude a Partner from any other remedy it
or he might have, either in law or in equity.
SECTION 9.2 Officers. The Partnership and the General Partner on behalf
of the Partnership, acting singly or jointly, may employ and retain persons as
may be necessary or appropriate for the conduct of the Partnership's business
(subject to the supervision and control of the General Partner), including
employees and agents who may be designated as officers with
17
titles, including, but not limited to, "chairman," "chief executive officer,"
"president," "vice president," "treasurer," "secretary," "director" and "chief
financial officer," as and to the extent authorized by the General Partner and
with such powers as authorized by the General Partner.
SECTION 9.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
any conflict of law provisions that would result in a choice of law other than
the laws of the State of Delaware. In particular, the Partnership is formed
pursuant to the Act, and the rights and liabilities of the Partners shall be as
provided therein, except as herein otherwise expressly provided.
SECTION 9.4 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto, their respective
successors and assigns.
SECTION 9.5 Access; Confidentiality. By executing this Agreement, each
Partner expressly agrees, at all times during the term of the Partnership and
thereafter and whether or not at the time a Partner of the Partnership (i) not
to issue any press release or advertisement or take any similar action
concerning the Partnership's business or affairs without first obtaining the
consent of the General Partner which shall not be unreasonably withheld, (ii)
not to publicize detailed financial information concerning the Partnership and
(iii) not to disclose the Partnership's affairs generally without using
reasonable efforts to consult with the General Partner prior to such disclosure;
provided, however, the foregoing shall not restrict any Partner from disclosing
information concerning such Partner's investment in the Partnership to its
officers, directors, employees, agents, legal counsel, accountants, other
professional advisors, limited partners and Affiliates, or to prospective or
existing investors of such Partner or its Affiliates or to prospective or
existing lenders to such Partner or its Affiliates. The provisions of this
Section 9.5 shall survive the termination of the Partnership.
SECTION 9.6 Notices. Whenever notice is required or permitted by this
Agreement to be given, such notice may be in writing (including facsimile) and
if in writing shall be given to any Partner at its address or facsimile number
shown in the Partnership's books and records (including Schedule A hereto).
SECTION 9.7 Counterparts. This Agreement may be executed in any number
of counterparts, all of which together shall constitute a single instrument.
SECTION 9.8 Entire Agreement. This Agreement embodies the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth or
referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter hereof.
SECTION 9.9 Amendments. Any amendment to this Agreement shall be
effective only if such amendment is evidenced by a written instrument duly
executed and delivered by the General Partner.
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SECTION 9.10 Section Titles. Section titles are for descriptive purposes
only and shall not control or alter the meaning of this Agreement as set forth
in the text hereof.
SECTION 9.11 Representations and Warranties. Each Partner represents,
warrants and covenants to each other Partner and to the Partnership that:
(a) such Partner, if not a natural person, is duly formed and validly
existing under the laws of the jurisdiction of its organization with full
power and authority to conduct its business to the extent contemplated in
this Agreement;
(b) this Agreement has been duly authorized, executed and delivered by
such Partner and constitutes the valid and legally binding agreement of such
Partner enforceable in accordance with its terms against such Partner except
as enforceability hereof may be limited by bankruptcy, insolvency,
moratorium and other similar laws relating to creditors' rights generally
and by general equitable principles;
(c) the execution and delivery of this Agreement by such Partner and the
performance of its duties and obligations hereunder do not result in a
breach of any of the terms, conditions or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, credit agreement,
note or other evidence of indebtedness, or any lease or other agreement, or
any license, permit, franchise or certificate, to which such Partner is a
party or by which it is bound or to which its properties are subject, or
require any authorization or approval under or pursuant to any of the
foregoing, or violate any statute, regulation, law, order, writ, injunction,
judgment or decree to which such Partner is subject;
(d) such Partner is not in default (nor has any event occurred which
with notice, lapse of time, or both, would constitute a default) in the
performance of any obligation, agreement or condition contained in any
indenture, mortgage, deed of trust, credit agreement, note or other evidence
of indebtedness or any lease or other agreement, or any license, permit,
franchise or certificate, to which it is a party or by which it is bound or
to which the properties of it are subject, nor is it in violation of any
statute, regulation, law, order, writ, injunction, judgment or decree to
which it is subject, which default or violation would materially adversely
affect such Partner's ability to carry out its obligations under this
Agreement;
(e) there is no litigation, investigation or other proceeding pending
or, to the knowledge of such Partner, threatened against such Partner or any
of its Affiliates which, if adversely determined, would materially adversely
affect such Partner's ability to carry out its obligations under this
Agreement;
(f) no consent, approval or authorization of, or filing, registration or
qualification with, any court or governmental authority on the part of such
Partner is required for the execution and delivery of this Agreement by such
Partner and the performance of its obligations and duties hereunder.
19
IN WITNESS WHEREOF, the parties have executed this Second
Amended and Restated Limited Partnership Agreement as of the day and year first
above written.
General Partner:
SABINE RIVER HOLDING CORP.
By:__________________________________
Name: Dennis R. Eichholz
Title: Senior Vice President -
Finance and Controller
Limited Partner:
NECHES RIVER HOLDING CORP.
By:__________________________________
Name: Dennis R. Eichholz
Title: Senior Vice President -
Finance and Controller
SCHEDULE A
Partners of the Partnership
Sharing Percentage
Partners Address as of August 2, 1999
- -------- ------- --------------------
General Partner:
Sabine River Holding Corp. 1801 South Gulfway Drive 1%
Port Arthur, Texas 77641
Limited Partner:
Neches River Holding Corp. c/o Corporation Trust Company 99%
1209 Orange Street
Wilmington, DE 19801