Exhibit 3.4
Execution Copy
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
GENESIS CRUDE OIL, L.P.
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Definitions 2
1.2 Construction 11
ARTICLE II
ORGANIZATION
2.1 Continuation of Existence 11
2.2 Name 12
2.3 Registered Office; Registered Agent; Principal Office; Other
Offices 12
2.4 Purpose and Business 12
2.5 Powers 12
2.6 Power of Attorney 12
2.7 Term 13
2.8 Title to Partnership Assets 14
ARTICLE III
RIGHTS OF LIMITED PARTNERS
3.1 Limitation of Liability 14
3.2 Management of Business 14
3.3 Outside Activities of Limited Partners 14
3.4 Rights of Limited Partners 15
ARTICLE IV
TRANSFER OF PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS
4.1 Transfer Generally 15
4.2 Transfer of General Partner's Partnership Interest 16
4.3 Transfer of a Limited Partner Interest 16
4.4 Restrictions on Transfers 16
4.5 Elimination and Cancellation of Subordinated LP Units and APIs 16
4.6 Conversion of General Partner Interests 16
ARTICLE V
CAPITAL CONTRIBUTIONS AND
ISSUANCE OF PARTNERSHIP INTERESTS
5.1 Previous Capital Contributions 17
5.2 Additional Contributions by General Partner 17
5.3 Interest and Withdrawal 17
5.4 Capital Accounts 17
5.5 Issuances of Additional Partnership Securities 19
5.6 Limited Preemptive Right 19
5.7 Fully Paid and Non-Assessable Nature of Limited Partner Interests 20
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 Allocations for Capital Account Purposes 20
6.2 Allocations for Tax Purposes 23
6.3 Requirement and Characterization of Distributions; Distributions to
Record Holders 24
6.4 Distributions of Available Cash from Operating Surplus 25
6.5 Distributions of Available Cash from Capital Surplus 25
6.6 Adjustment of Minimum Quarterly Distribution and Target Distribution
Levels 25
6.7 Entity-Level Taxation 26
6.8 Characterization of Distributions as Advances or Drawings 26
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
7.1 Management 26
7.2 Certificate of Limited Partnership 28
7.3 Restrictions on the General Partner's Authority 28
7.4 Reimbursement of the General Partner 28
7.5 Outside Activities 29
7.6 Loans from the General Partner; Loans or Contributions from the
Partnership; Contracts with Affiliates; Certain Restrictions on
the General Partner 30
7.7 Indemnification 31
7.8 Liability of Indemnitees 32
7.9 Resolution of Conflicts of Interest 33
7.10 Other Matters Concerning the General Partner 34
7.11 Reliance by Third Parties 34
7.12 Incentive Compensation Payments to the General Partner 35
7.13 Conversion of General Partner's Incentive Compensation Payment Rights 35
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 Records and Accounting 36
8.2 Fiscal Year 36
ARTICLE IX
TAX MATTERS
9.1 Tax Returns and Information 36
9.2 Tax Elections 36
9.3 Tax Controversies 36
9.4 Withholding 37
ARTICLE X
ADMISSION OF PARTNERS
10.1 Status of General Partner 37
10.2 Admission of Successor General Partner 37
10.3 Admission of Substituted Limited Partner 37
10.4 Admission of Additional Limited Partners 37
10.5 Amendment of Agreement and Certificate of Limited Partnership 38
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
11.1 Withdrawal of the General Partner 38
11.2 Removal of the General Partner 39
11.3 Interest of Departing Partner 39
11.4 Withdrawal of Limited Partners 40
ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 Dissolution 40
12.2 Continuation of the Business of the Partnership After Dissolution 40
12.3 Liquidator 41
12.4 Liquidation 41
12.5 Cancellation of Certificate of Limited Partnership 42
12.6 Return of Contributions 42
12.7 Waiver of Partition 42
12.8 Capital Account Restoration 42
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
13.1 Amendment to be Adopted Solely by General Partner 43
13.2 Amendment Procedures 44
ARTICLE XIV
MERGER
14.1 Authority 44
14.2 Procedure for Merger or Consolidation 44
14.3 Approval by Limited Partners of Merger or Consolidation 45
14.4 Certificate of Merger 46
14.5 Effect of Merger 46
ARTICLE XV
GENERAL PROVISIONS
15.1 Addresses and Notices 46
15.2 Further Action 46
15.3 Binding Effect 47
15.4 Integration 47
15.5 Creditors 47
15.6 Waiver 47
15.7 Counterparts 47
15.8 Applicable Law 47
15.9 Invalidity of Provisions 47
15.10 Consent of Partners 47
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
GENESIS CRUDE OIL, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Genesis
Crude Oil, L.P., dated as of December 7, 2000, is entered into by and among
Genesis Energy, L.L.C., a Delaware limited liability company, as the General
Partner, Genesis Energy, L.P. ("Genesis MLP"), a Delaware limited partnership,
as the 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:
RECITALS
WHEREAS, immediately prior to the execution of this Agreement, the partners
of the Partnership were Genesis Energy, L.L.C., as the operating general
partner, Genesis MLP, as the managing general partner, and Salomon Smith
Barney Holdings Inc. ("Salomon") and Howell Corporation ("Howell") as
limited partners, all in accordance with the Amended and Restated Agreement
of Limited Partnership of Genesis Crude Oil, L.P. dated as of December 3,
1996 (the "Previous Agreement"); and
WHEREAS, the partners of the Partnership and of Genesis MLP have approved
by requisite vote a restructuring (the "Restructuring") of the Partnership
and Genesis MLP pursuant to which (a) all outstanding Subordinated LP Units
and APIs will be abandoned by their respective holders and cancelled by the
Partnership, (b) the Previous Agreement and the Genesis MLP Partnership
Agreement will be amended to, among other things, reduce the amounts of
Minimum Quarterly Distribution, the First Target Distribution, the Second
Target Distribution and the Third Target Distribution as provided in the
Previous Agreement and provide that the Common Units will not accrue
arrearages if the Minimum Quarterly Distribution is not paid in full in any
Quarter, (c) Salomon will contribute to the Partnership the remaining
$3,802,000 of its distribution support obligation under the Distribution
Support Agreement (the "Remaining Distribution Support"), (d) the
Partnership will make a special distribution of the Remaining Distribution
Support less the costs incurred in connection with the Restructuring to
Genesis MLP and Genesis MLP will make a special distribution of such amount
to the holders of MLP Common Units, (e) the Distribution Support Agreement
will be terminated, (f) Genesis MLP will withdraw as a general partner of
the Partnership and Genesis MLP's 80.01% general partner interest in the
Partnership represented by 8,801,020 Subordinated GP Units will be
converted to a 99.99% limited partner interest, (g) the General partner's
0.40% general partner interest in the Partnership represented by 43,980
Subordinated GP Units will be converted into a 0.01% general partner
interest and (h) Salomon's $300 million credit support obligation under the
Master Credit Support Agreement will be extended until December 31, 2001 on
the current terms and conditions; and
WHEREAS, Genesis Energy, L.L.C., as the sole general partner, and Genesis
MLP, as the sole limited partner, now desire to amend and restate the
Previous Agreement to reflect the Restructuring and such other changes
that, in the discretion of the General Partner, do not adversely affect the
Limited Partners in any material respect;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby amend and restate the Previous
Agreement in its entirety:
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.
"Acquisition" means any transaction in which any Group Member acquires (through
an asset acquisition, merger, stock acquisition or other form of investment)
control over all or a portion of the assets, properties or business of another
Person for the purpose of increasing the operating capacity or revenues of the
Partnership Group from the operating capacity or revenues of the Partnership
Group existing immediately prior to such transaction.
"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.
"Adjusted Property" means any property the Carrying Value of which has been
adjusted pursuant to Section 5.4(d)(i) or 5.4(d)(ii).
"Affiliate" means, with respect to any Person, any other Person that (i)
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question or (ii)
owns, beneficially, directly or indirectly, 20% or more of the outstanding
capital stock, shares or other equity interests of 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
General Partner using such reasonable method of valuation as it may adopt. The
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 Second Amended and Restated Agreement of Limited
Partnership of Genesis Crude Oil, L.P., as it may be amended, supplemented or
restated from time to time.
"APIs" mean the non-voting Limited Partner Interests issued to Salomon pursuant
to Section 5.6 of the Previous Agreement and in accordance with the Distribution
Support Agreement.
"Assets" means all of the assets now owned or hereafter acquired by the
Partnership.
"Assignee" means a Person to whom one or more Limited Partner Interests have
been transferred in a manner permitted under this Agreement and who has executed
and delivered a Transfer Application as required by this Agreement, but who has
not been admitted as a Substituted Limited Partner.
"Audit Committee" means a committee of the Board of Directors of the General
Partner composed entirely of two or more directors who are neither officers nor
employees of the General Partner or officers, directors or employees of any
Affiliate of the General Partner.
"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, less
(b) the amount of any cash reserves that is necessary or appropriate in the
reasonable discretion of the General Partner to (i) provide for the proper
conduct of the business of the Partnership Group (including reserves for future
capital expenditures and for anticipated future credit needs of the business of
the Partnership Group) subsequent to such Quarter, (ii) comply with applicable
law or any loan agreement (including the Master Credit Support Agreement),
security agreement (including the Security Agreement), mortgage, debt instrument
or other agreement or obligation to which any Group Member 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 or to make Incentive Compensation
Payments to the General Partner in respect of any one or more of the next four
Quarters; provided, however, that the General Partner may not establish cash
reserves pursuant to (iii) above if the effect of such reserves would be that
Genesis MLP is unable to distribute an amount equal to the Minimum Quarterly
Distribution on all MLP Common Units and the MLP General Partner Interest 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 General Partner so determines, less
(c) the amount necessary to make Incentive Compensation Payments to the
General Partner pursuant to Section 7.12 with respect to such Quarter.
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
5.4 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 Texas shall not be regarded as a Business Day.
"Capital Account" means the capital account maintained for a Partner pursuant to
Section 5.4.
"Capital Contribution" means any cash, cash equivalents or the Net Agreed Value
of Contributed Property contributed to the Partnership pursuant to this
Agreement (or the Previous Agreement) or the Conveyance Agreement.
"Capital Improvement" means any (a) addition or improvement to the capital
assets owned by any Group Member or (b) acquisition of existing or the
construction of new capital assets (including pipeline systems, storage
facilities and related assets), made to increase the operating capacity or
revenues of the Partnership Group from the operating capacity or revenues of the
Partnership Group existing immediately prior to such addition, improvement,
acquisition or construction.
"Capital Surplus" has the meaning assigned to such term in Section 6.3(a).
"Carrying Value" means (a) with respect to a Contributed Property, the Agreed
Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' and
Assignees' Capital Accounts in respect of such Contributed Property and (b) with
respect to any other Partnership property, the adjusted basis of such property
for federal income tax purposes, all as of the time of determination. The
Carrying Value of any property shall be adjusted from time to time in accordance
with Sections 5.4(d)(i) and 5.4(d)(ii) and to reflect changes, additions or
other adjustments to the Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the General Partner.
"Certificate of Limited Partnership" means the Amended and Restated Certificate
of Limited Partnership of the Partnership filed with the Secretary of State of
the State of Delaware as referenced in Section 7.2, as such Certificate of
Limited Partnership may be amended, supplemented or restated from time to time.
"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.
"Commission" means the United States Securities and Exchange Commission.
"Contributed Property" means each property or other asset, in such form as may
be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership. Once the Carrying Value of a Contributed Property is adjusted
pursuant to Section 5.4(d), such property shall no longer constitute a
Contributed Property, but shall be deemed an Adjusted Property.
"Conversion Election" has the meaning assigned to such term in Section 7.13.
"Conveyance Agreement" means that certain Purchase & Sale and Contribution &
Conveyance Agreement, dated as of November 26, 1996, among the Partnership,
Genesis MLP, Genesis Energy, L.L.C., Howell and a Subsidiary of Salomon,
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. 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.
"Distribution Support Agreement" means the Distribution Support Agreement, dated
as of December 3, 1996, between the Partnership and Salomon, which sets forth
the agreement of the Partnership and Salomon relating to the purchase of APIs.
"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(a).
"First Target Distribution" means with respect to any Quarter, an amount equal
to the product of (a) the total number of MLP Units entitled to receive
distributions of Available Cash (as defined in the Genesis MLP Partnership
Agreement) from Genesis MLP on the Record Date (as defined in the Genesis MLP
Partnership Agreement) for such Quarter and (b) $0.25, subject to adjustment in
accordance with Section 6.6.
"General Partner" means Genesis Energy, L.L.C. and its successors and permitted
assigns as general partner of the Partnership.
"General Partner Interest" means the ownership interest of the General Partner
in the Partnership (in its capacity as a general partner without reference to
any Limited Partner Interest held by it), which may be evidenced by Partnership
Securities or a combination thereof or interest therein, and includes any and
all benefits to which the General Partner is entitled as provided in this
Agreement (other than the right of the General Partner to receive Incentive
Compensation Payments pursuant to Section 7.12), together with all obligations
of the General Partner to comply with the terms and provisions of this
Agreement.
"Genesis MLP" means Genesis Energy, L.P., a Delaware limited partnership, and
its successors.
"Genesis MLP Partnership Agreement" means the Second Amended and Restated
Agreement of Limited Partnership of Genesis Energy, L.P., as it may be amended,
supplemented or restated from time to time.
"Group Member" means a member of the Partnership Group.
"Howell" means Howell Corporation, a Delaware corporation, and its Subsidiaries.
"Incentive Compensation Payment" means a payment made to the General Partner
pursuant to Section 7.12.
"Indemnitee" means (a) the General Partner, any Departing Partner and any Person
who is or was an Affiliate of the General Partner or any Departing Partner, (b)
any Person who is or was a director, officer, employee, agent or trustee of a
Group Member, (c) any Person who is or was a member, officer, director,
employee, agent, or trustee of the General Partner or any Departing Partner or
any Affiliate of the General Partner or any Departing Partner, or any Affiliate
of any such Person and (d) any Person who is or was serving at the request of
the General Partner or any Departing Partner or any such Affiliate as a
director, officer, employee, member, partner, agent, fiduciary or trustee of
another Person; provided, however, that a Person shall not be an Indemnitee by
reason of providing, on a fee-for-services basis, trustee, fiduciary or
custodial services.
"Initial Closing Date" means December 3, 1996.
"Initial Unit Price" means, with respect to any MLP Common Unit $20.625,
adjusted as appropriate to give effect to any distribution, subdivision or
combination of MLP Common Units.
"Interim Capital Transactions" means the following transactions if they occur
prior to the Liquidation Date: (a) borrowings, refinancings or refundings of
indebtedness and sales of debt securities (other than for working capital
purposes and other than for items purchased on open account in the ordinary
course of business) by any Group Member; (b) sales of equity interests by any
Group Member; and (c) sales or other voluntary or involuntary dispositions of
any assets of any Group Member other than (i) sales or other dispositions of
inventory in the ordinary course of business, (ii) sales or other dispositions
of other current assets, including receivables and accounts in the ordinary
course of business and (iii) sales or other dispositions of assets as part of
normal retirements or replacements.
"Limited Partner" means, unless the context otherwise requires, (a) Genesis MLP,
each Substituted Limited Partner, each Additional Limited Partner and (b) solely
for purposes of Articles V, VI, VII and IX and Section 12.4, each Assignee.
"Limited Partner Interest" means the ownership interest of a Limited Partner or
Assignee in the Partnership, which may be evidenced by Units or other
Partnership Securities or a combination thereof or interest therein, and
includes any and all benefits to which such Limited Partner or Assignee is
entitled as provided in this Agreement, together with all obligations of such
Limited Partner or Assignee to comply with the terms and provisions of this
Agreement.
"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 holders of Outstanding Units have the right to elect to
reconstitute the Partnership and continue its business has expired without such
an election being made and (b) in the case of any other event giving rise to the
dissolution of the Partnership, the date on which such event occurs.
"Liquidator" means one or more Persons selected by the General Partner to
perform the functions described in Section 12.3 as liquidating trustee of the
Partnership within the meaning of the Delaware Act.
"Majority Interest" means at least a majority in Voting Power of the Limited
Partner Interests.
"Master Credit Support Agreement" means the Master Credit Support Agreement
dated December 3, 1996, among the Partnership and Salomon which sets forth the
agreement of the Partnership and Salomon relating to the credit support to be
provided by Salomon to the Partnership.
"Merger Agreement" has the meaning assigned to such term in Section 14.1.
"Minimum Quarterly Distribution" means, with respect to any Quarter, an amount
equal to the product of (a) the total number of MLP Units entitled to receive
distributions of Available Cash (as defined in the Genesis MLP Partnership
Agreement) from Genesis MLP on the Record Date (as defined in the Genesis MLP
Partnership Agreement) for such Quarter and (b) $0.20, subject to adjustment in
accordance with Section 6.6.
"MLP Common Unit" has the meaning assigned to the term "Common Unit" in the
Genesis MLP Partnership Agreement.
"MLP General Partner Interest" has the meaning assigned to the term "General
Partner Interest" in the Genesis MLP Partnership Agreement.
"MLP Partnership Security" has the meaning assigned to the term "Partnership
Security" in the Genesis MLP Partnership Agreement.
"MLP Unit" has the meaning assigned to the term "Unit" in the Genesis MLP
Partnership Agreement.
"Net Agreed Value" means, (a) in the case of any Contributed Property, the
Agreed Value of such property reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
(as adjusted pursuant to Section 5.4(d)(ii)) at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner or
Assignee upon such distribution or to which such property is subject at the time
of distribution, in either case, as determined under Section 752 of the Code.
"Net Income" means, for any taxable 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 5.4(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 5.4(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 5.4(b) and shall not include
any items of income, gain or loss specially allocated under Section 6.1(d).
"Net Termination Loss" means, for any taxable period, the sum, if negative, of
all items of income, gain, loss or deduction recognized by the Partnership after
the Liquidation Date. The items included in the determination of Net Termination
Loss shall be determined in accordance with Section 5.4(b) and shall not include
any items of income, gain or loss specially allocated under Section 6.1(d).
"Non-Competition Agreement" means the Non-Competition Agreement dated December
3, 1996, among the Partnership, Genesis MLP, Salomon, Basis Petroleum, Inc. and
Howell.
"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 (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(b), are attributable to a Nonrecourse
Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury Regulation Section
1.752-1(a)(2).
"Operating Expenditures" means all Partnership Group expenditures,
including, but not limited to, taxes, reimbursements of the General Partner,
Incentive Compensation Payments to the General Partner, debt service payments,
guarantee fees and capital expenditures, subject to the following:
(a) Payments (including prepayments) of principal of and premium on
indebtedness shall not be an Operating Expenditure if the payment is (i)
required in connection with the sale or other disposition of assets or (ii) made
in connection with the refinancing or refunding of indebtedness with the
proceeds from new indebtedness or from the sale of equity interests. For
purposes of the foregoing, at the election and in the reasonable discretion of
the General Partner, any payment of principal or premium shall be deemed to be
refunded or refinanced by any indebtedness incurred or to be incurred by the
Partnership Group within 180 days before or after such payment to the extent of
the principal amount of such indebtedness.
(b) Operating Expenditures shall not include (i) capital expenditures made
for Acquisitions or for Capital Improvements, (ii) payment of transaction
expenses relating to Interim Capital Transactions or (iii) distributions to
Partners. Where capital expenditures are made in part for Acquisitions or for
Capital Improvements and in part for other purposes, the General Partner's good
faith allocation between the amounts paid for each shall be conclusive.
"Operating Surplus" means, with respect to any period ending prior to the
Liquidation Date, on a cumulative basis and without duplication,
(a) the sum of (i) $20 million plus all cash and cash equivalents of the
Partnership Group on hand as of the close of business on the Initial Closing
Date, (ii) all cash receipts of the Partnership Group for the period beginning
on the Initial Closing Date and ending with the last day of such period, other
than cash receipts from Interim Capital Transactions (except to the extent
specified in Section 6.5) and (iii) all cash receipts of the Partnership Group
after the end of such period but on or before the date of determination of
Operating Surplus with respect to such period resulting from borrowings for
working capital purposes, less
(b) the sum of (i) Operating Expenditures for the period beginning on the
Initial Closing Date and ending with the last day of such period and (ii) the
amount of cash reserves that is necessary or advisable in the reasonable
discretion of the General Partner to provide funds for future Operating
Expenditures provided, however, that disbursements made (including contributions
to a Group Member or disbursements on behalf of a Group Member) or cash reserves
established, increased or reduced after the end of such period but on or before
the date of determination of Available Cash with respect to such period shall be
deemed to have been made, established, increased or reduced for purposes of
determining Operating Surplus, within such period if the General Partner so
determines.
Notwithstanding the foregoing, "Operating Surplus" with respect to the Quarter
in which the Liquidation Date occurs and any subsequent Quarter shall equal
zero.
"Opinion of Counsel" means a written opinion of counsel (who may be regular
counsel to the Partnership or the General Partner or any of its Affiliates)
acceptable to the General Partner in its reasonable discretion.
"Outstanding" means, with respect to Partnership Securities, all Partnership
Securities that are issued by the Partnership and reflected as Outstanding on
the Partnership's books and records as of the date of determination.
"Partner" means the General Partner and each Limited Partner.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury Regulation
Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in Treasury
Regulation Section 1.704-2(i)(2).
"Partner Nonrecourse Deductions" means any and all items of loss, deduction or
expenditure (including, without limitation, any expenditure described in Section
705(a)(2)(B) of the Code) that, in accordance with the principles of Treasury
Regulation Section 1.704-2(i), are attributable to a Partner Nonrecourse Debt.
"Partnership" means Genesis Crude Oil, L.P., a Delaware limited partnership, and
any successors thereto.
"Partnership Group" means the Partnership and any Subsidiary of the Partnership,
treated as a single consolidated entity.
"Partnership Interest" means an ownership interest in the Partnership which
shall include General Partner Interests and Limited Partner Interests.
"Partnership Minimum Gain" means that amount determined in accordance with the
principles of Treasury Regulation Section 1.704-2(d).
"Partnership Security" means any class or series of equity interest in the
Partnership.
"Percentage Interest" means (a) as to the General Partner, .01% and (b) as to
Genesis MLP, 99.99%, subject to adjustment to reflect the issuance of any
additional Partnership Securities in accordance with Section 5.5.
"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.
"Previous Agreement" has the meaning assigned to such term in the recitals to
this Agreement.
"Pro Rata" means (a) when modifying Units or any class thereof, apportioned
among all designated Units in accordance with their relative Percentage
Interests and (b) when modifying Partners and Assignees, apportioned among all
Partners and Assignees in accordance with their respective Percentage Interests.
"Proxy Statement" means the definitive Proxy Statement filed by Genesis MLP
with the Commission under the Securities Exchange Act of 1934, as amended, for
the purpose of soliciting the votes of the holders of MLP Common Units with
respect to the Restructuring, as it has been or as it may be amended or
supplemented from time to time.
"Quarter" means, unless the context requires otherwise, a calendar quarter.
"Recapture Income" means any gain recognized by the Partnership (computed
without regard to any adjustment required by Section 734 or 743 of the Code)
upon the disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Registration Statement" means the Registration Statement on Form S-1
(Registration No. 333-11545) as amended, filed by Genesis MLP with the
Commission under the Securities Act to register the initial offering and sale of
MLP Common Units to the public.
"Required Allocations" means (a) any limitation imposed on any allocation of Net
Loss or Net Termination Loss under Section 6.1(b) or Section 6.1(c) 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 is not allocated pursuant to
Section 6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to eliminate Book-Tax
Disparities.
"Restructuring" has the meaning set forth in the recitals to this Agreement.
"Restructuring Closing Date" means the date on which the Restructuring is
closed.
"Salomon" means Salomon Smith Barney Holdings Inc., a Delaware corporation, and
Salomon Brothers Holdings, Inc., a Delaware corporation.
"Second Target Distribution" means, with respect to any Quarter, an amount equal
to the product of (a) the total number of MLP Units entitled to receive
distributions of Available Cash (as defined in the Genesis MLP Partnership
Agreement) from Genesis MLP on the Record Date (as defined in the Genesis MLP
Partnership Agreement) for such Quarter and (b) $0.28, subject to adjustment in
accordance with Section 6.6.
"Securities Act" means the Securities Act of 1933, as amended, supplemented or
restated from time to time and any successor to such statute.
"Security Agreement" means the Security Agreement, dated as of December 3, 1996,
among the Partnership, Salomon and the Secured Parties (as defined in the
Security Agreement) securing the obligations of the Partnership under the Master
Credit Support Agreement and creating a security interest in the Collateral (as
defined in the Security Agreement) in favor of the Collateral Agent (as defined
in the Security Agreement).
"Special Approval" means approval by a majority of the members of the Audit
Committee.
"Subordinated GP Units" means the Subordinated GP Units representing a General
Partner Interest held by the General Partner and Genesis MLP immediately prior
to the closing of the Restructuring.
"Subordinated LP Units" means the Subordinated LP Units representing a Limited
Partner Interest held by Salomon and Howell immediately prior to the closing of
the Restructuring.
"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 such 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 10.3 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).
"Third Target Distribution" means, with respect to any Quarter, an amount equal
to the product of (a) the total number of MLP Units entitled to receive
distributions of Available Cash (as defined in the Genesis MLP Partnership
Agreement) from Genesis MLP on the Record Date (as defined in the Genesis MLP
Partnership Agreement) for such Quarter and (b) $0.33, subject to adjustment in
accordance with Section 6.6.
"transfer" has the meaning assigned to such term in Section 4.1(a).
"Transfer Application" means an application and agreement for transfer of
Partnership Securities in the form set forth on the back of a Certificate or in
a form substantially to the same effect in a separate instrument.
"Unit" means a Partnership Security that is designated as a "Unit."
"Unitholder" means a holder of a Unit.
"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 5.4(d)) over (b) the
Carrying Value of such property as of such date (prior to any adjustment to be
made pursuant to Section 5.4(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
5.4(d) as of such date) over (b) the fair market value of such property as of
such date (as determined under Section 5.4(d)).
"Unrecovered Capital" means at any time, with respect to a MLP Common Unit, the
Initial Unit Price less the sum of (i) all distributions constituting Capital
Surplus theretofore made in respect of an MLP Common Unit sold in the initial
offering and sale of MLP Common Units to the public, as described in the
Registration Statement and (ii) any distributions of cash (or the Net Agreed
Value of any distributions in kind) in connection with the dissolution and
liquidation of the Partnership theretofore made in respect of such a MLP Common
Unit, adjusted as the General Partner determines to be appropriate to give
effect to any distribution, subdivision or combination of such MLP Common Units.
"U.S. GAAP" means United States Generally Accepted Accounting Principles
consistently applied.
"Voting Power" means the right, if any, of the holder of a Partnership Security
to vote on Partnership matters. Each Common Unit shall entitle the holder
thereof to one vote. Each additional Partnership Security shall entitle the
holder thereof to such vote, if any, as shall be established at the time of
issuance of such Partnership Security.
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.
ARTICLE II
ORGANIZATION
2.1 Continuation of Existence
The General Partner and the Limited Partner hereby amend and restate the
Previous Agreement in its entirety to continue the Partnership as a limited
partnership pursuant to the provisions of the Delaware Act and to set forth the
rights and obligations of the Partners and certain matters related thereto.
This amendment and restatement shall become effective on the date of this
Agreement. Except as expressly provided to the contrary in this Agreement, the
rights, duties (including fiduciary duties), liabilities 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 and a Partner
has no interest in specific Partnership property.
2.2 Name
The name of the Partnership shall be "Genesis Crude Oil, L.P." The Partnership's
business may be conducted under any other name or names deemed necessary or
appropriate by the General Partner in its sole discretion, including the name of
the General Partner. The words "Limited Partnership," "L.P.," "Ltd." or similar
words or letters shall be included in the Partnership's name where necessary for
the purpose of complying with the laws of any jurisdiction that so requires. The
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 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 500 Dallas, Suite 2500, Houston, Texas 77002 or such other place as
the General Partner may from time to time designate by notice to the Limited
Partner. The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the General Partner deems necessary
or appropriate. The address of the General Partner shall be 500 Dallas, Suite
2500, Houston, Texas 77002 or such other place as the General Partner may from
time to time designate by notice to the Limited Partner.
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 associated with, or
reasonably related to, the Assets 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 to
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 General Partner and which lawfully may be
conducted by a limited partnership organized pursuant to the Delaware Act and,
in connection therewith, to exercise all of the rights and powers conferred upon
the Partnership pursuant to the agreements relating to such business activity,
and (c) do anything necessary or appropriate to the foregoing, including the
making of capital contributions or loans to a Group Member or Genesis MLP;
provided however, in the case of (b) above, that the General Partner reasonably
determines, as of the date of the acquisition or commencement of such activity,
that such activity (i) generates "qualifying income" (as such term is defined
pursuant to Section 7704 of the Code) or (ii) enhances the operations of an
activity of the Partnership that generates qualifying income. The General
Partner has no obligation or duty to the Partnership, the 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 Partner and each Assignee hereby constitutes and appoints the
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 General Partner or the
Liquidator deems necessary or appropriate to form, qualify or continue the
existence or qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware and in all other jurisdictions in which the Partnership may conduct
business or own property; (B) all certificates, documents and other instruments
that the General Partner or the Liquidator deems necessary or appropriate to
reflect, in accordance with its terms, any amendment, change, modification or
restatement of this Agreement; (C) all certificates, documents and other
instruments (including conveyances and a certificate of cancellation) that the
General Partner or the Liquidator deems necessary or appropriate to reflect the
dissolution and liquidation of the Partnership pursuant to the terms of this
Agreement; (D) all certificates, documents and other instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to, or
other events described in, Article 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 Securities
issued pursuant to Section 5.5; 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 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 General Partner or the Liquidator, to
effectuate the terms or intent of this Agreement; provided, that when required
by any provision of this Agreement that establishes a percentage of the Limited
Partners or of the Limited Partners of any class or series required to take any
action, the General Partner and 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 or of the Limited Partners of such class or
series, as applicable.
Nothing contained in this Section 2.6(a) shall be construed as authorizing the
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 any Limited
Partner or Assignee and the transfer of all or any portion of such Limited
Partner's or Assignee's Partnership Interest and shall extend to such Limited
Partner's or Assignee's heirs, successors, assigns and personal representatives.
Each such Limited Partner and Assignee hereby agrees to be bound by any
representation made by the General Partner or the Liquidator acting in good
faith pursuant to such power of attorney; and each such Limited Partner and
Assignee, to the maximum extent permitted by law, hereby waives any and all
defenses that may be available to contest, negate or disaffirm the action of the
General Partner or the Liquidator taken in good faith under such power of
attorney. Each Limited Partner and Assignee shall execute and deliver to the
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 General Partner or the Liquidator deems necessary to effectuate this
Agreement and the purposes of the Partnership.
2.7 Term
The term of the Partnership shall continue until the close of Partnership
business on December 31, 2086 or until the earlier dissolution of the
Partnership in accordance with the provisions of Article XII. The existence of
the Partnership as a separate legal entity shall continue until the cancellation
of the Certificate of Limited Partnership as provided in the Delaware Act.
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 or Assignee, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner, one or more of the General Partner's Affiliates or one or
more nominees, as the General Partner may determine. The General Partner hereby
declares and warrants that any Partnership assets for which record title is held
in the name of the General Partner or one or more of its Affiliates or one or
more nominees shall be held by the General Partner or such Affiliate or nominee
for the use and benefit of the Partnership in accordance with the provisions of
this Agreement; provided, however, that the General Partner shall use reasonable
efforts to cause record title to such assets (other than those assets in respect
of which the General Partner determines that the expense and difficulty of
conveyancing makes transfer of record title to the Partnership impracticable) to
be vested in the Partnership as soon as reasonably practicable; provided,
further, that, prior to the withdrawal or removal of the General Partner or as
soon thereafter as practicable, the General Partner shall use reasonable efforts
to effect the transfer of record title to the Partnership and, prior to any such
transfer, will provide for the use of such assets in a manner satisfactory to
the 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 LIMITED PARTNERS
3.1 Limitation of Liability
The Limited Partners and the Assignees shall have no liability under this
Agreement except as expressly provided in this Agreement or the Delaware Act.
3.2 Management of Business
No Limited Partner or Assignee, in its capacity as such, shall participate in
the operation, management or control (within the meaning of the Delaware Act) of
the Partnership's business, transact any business in the Partnership's name or
have the power to sign documents for or otherwise bind the Partnership. Any
action taken by any Affiliate of the General Partner or any officer, director,
employee, member, general partner, agent or trustee of the General Partner or
any of its Affiliates, or any officer, director, employee, member, general
partner, agent or trustee of a Group Member, 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 Section 17-303(a)
of the Delaware Act) and shall not affect, impair or eliminate the limitations
on the liability of the Limited Partners or Assignees under this Agreement.
3.3 Outside Activities of 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 Persons shall
also be Limited Partners or Assignees, any Limited Partner or Assignee shall be
entitled to and may have business interests and engage in business activities in
addition to those relating to the Partnership, including business interests and
activities in direct competition with the Partnership Group. Neither the
Partnership nor any of the other Partners or Assignees shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner or
Assignee.
3.4 Rights of Limited Partners
(a) In addition to other rights provided by this Agreement or by applicable
law, and except as limited by Section 3.4(b), each Limited Partner shall have
the right, for a purpose reasonably related to such Limited Partner's interest
as a limited partner in the Partnership, upon reasonable written demand and at
such Limited Partner's own expense:
(i) to obtain true and full information regarding the status of the business
and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of the
Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to him a current list of the name and last known
business, residence or mailing address of each Partner;
(iv) to have furnished to him a copy of this Agreement and the Certificate of
Limited Partnership and all amendments thereto, together with a copy of the
executed copies of all powers of attorney pursuant to which this Agreement, the
Certificate of Limited Partnership and all amendments thereto have been
executed;
(v) to obtain true and full information regarding the amount of cash and a
description and statement of the 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 Partner may keep confidential from the Limited Partners and
Assignees, for such period of time as the General Partner deems reasonable, (i)
any information that the General Partner reasonably believes to be in the nature
of trade secrets or (ii) other information the disclosure of which the General
Partner in good faith believes (A) is not in the best interests of Genesis MLP
or the Partnership Group, (B) could damage Genesis MLP or the Partnership Group
or (C) that any Group Member is required by law or by agreement with any third
party to keep confidential (other than agreements with Affiliates of the
Partnership the primary purpose of which is to circumvent the obligations set
forth in this Section 3.4).
ARTICLE IV
TRANSFER OF PARTNERSHIP INTERESTS;
REDEMPTION 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 the
General Partner assigns its General Partner Interest to another Person who
becomes the General Partner (or an Assignee) or by which the holder of a Limited
Partner Interest assigns such Limited Partner Interest to another Person who
becomes a Limited Partner (or an Assignee), and includes a sale, assignment,
gift, pledge, encumbrance, hypothecation, mortgage, exchange or any other
disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in part, except
in accordance with the terms and conditions set forth in this Article 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 member of the General Partner of any or all of the issued and
outstanding membership interests of the General Partner.
4.2 Transfer of General Partner's Partnership Interest
If the General Partner transfers its interest as the general partner of Genesis
MLP to any Person in accordance with the provisions of the Genesis MLP
Partnership Agreement, the General Partner shall contemporaneously therewith
transfer all, but not less than all, of its General Partner Interest herein to
such Person, and the Limited Partners and Assignees, if any, hereby expressly
consent to such transfer. Except as set forth in the immediately preceding
sentence and in Section 5.2, the General Partner may not transfer all or any
part of its General Partner Interest.
4.3 Transfer of a Limited Partner Interest
A Limited Partner may transfer all, but not less than all, of its Limited
Partner Interest in connection with the merger, consolidation or other
combination of such Limited Partner with or into any other Person or the
transfer by such Limited Partner 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, or in connection with any pledge of (or any
related foreclosure on) a Limited Partner Interest solely for the purpose of
securing, directly or indirectly, indebtedness of the Partnership or Genesis
MLP, and except for the transfers contemplated by Section 10.3, a Limited
Partner may not transfer all or any part of its Limited Partner 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 Genesis MLP under the laws of the
jurisdiction of its formation, or (iii) cause the Partnership or Genesis 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 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 or
Genesis MLP 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 General Partner may determine to
be necessary or appropriate to impose such restrictions.
4.5 Elimination and Cancellation of Subordinated LP Units and APIs
At the closing of the Restructuring, notwithstanding any other provision of this
Agreement, the Outstanding Subordinated LP Units and Outstanding APIs will be
eliminated and cancelled and all obligations associated with either the
Outstanding Subordinated LP Units or the Outstanding APIs shall cease and be no
longer in effect.
4.6 Conversion of General Partner Interests
At the closing of the Restructuring, Genesis MLP's Subordinated GP Units will be
converted into a 99.99% Limited Partner Interest and the General Partner's
Subordinated GP Units will be converted into a .01% General Partner Interest.
ARTICLE V
CAPITAL CONTRIBUTIONS AND
ISSUANCE OF PARTNERSHIP INTERESTS
5.1 Previous Capital Contributions
The Partners (or their predecessors) have heretofore made Capital Contributions
to the Partnership as provided in the previous versions of the partnership
agreement superseded by this Agreement.
5.2 Additional Contributions by General Partner
Upon the issuance of any additional Limited Partner Interests, the General
Partner shall be required to make an additional Capital Contribution equal to
(i) .01 divided by 99.99 times (ii) the amount contributed to the Partnership by
the Limited Partners in exchange for such additional Limited Partner Interests.
Except as set forth in the immediately preceding sentence and Article XII, the
General Partner shall not be obligated to make any Capital Contributions to the
Partnership.
5.3 Interest and Withdrawal
No interest shall be paid by the Partnership on Capital Contributions. No
Partner or Assignee shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent, if any, that distributions made pursuant to
this Agreement or upon termination of the Partnership may be considered as such
by law and then only to the extent provided for in this Agreement. Except to the
extent expressly provided in this Agreement, no Partner or Assignee shall have
priority over any other Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses or distributions. Any such return shall
be a compromise to which all Partners and Assignees agree within the meaning of
Section 17-502(b) of the Delaware Act.
5.4 Capital Accounts
(a) The Partnership shall maintain for each Partner (or a beneficial owner of
Partnership Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the General
Partner in its sole discretion) owning a Partnership Interest a separate Capital
Account with respect to such Partnership Interest in accordance with the rules
of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be
increased by (i) the amount of all Capital Contributions made to the Partnership
with respect to such Partnership Interest pursuant to this Agreement (including
the Previous Agreement) and (ii) all items of Partnership income and gain
(including, without limitation, income and gain exempt from tax) computed in
accordance with Section 5.4(b) and allocated with respect to such Partnership
Interest pursuant to Section 6.1, and decreased by (x) the amount of cash or Net
Agreed Value of all actual and deemed distributions of cash or property made
with respect to such Partnership Interest pursuant to this Agreement (including
the Previous Agreement) and (y) all items of Partnership deduction and loss
computed in accordance with Section 5.4(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) 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.
(ii) Except as otherwise provided in Treasury Regulation Section 1.704-
1(b)(2)(iv)(m), the computation of all items of income, gain, loss and deduction
shall be made without regard to any election under Section 754 of the Code which
may be made by the Partnership and, as to those items described in Section
705(a)(1)(B) or 705(a)(2)(B) of the Code, without regard to the fact that such
items are not includable in gross income or are neither currently deductible nor
capitalized for federal income tax purposes. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Treasury Regulation Section 1.704-
1(b)(2)(iv)(m) to be taken into account in determining Capital Accounts, the
amount of such adjustment in the Capital Accounts shall be treated as an item of
gain or loss.
(iii) Any income, gain or loss attributable to the taxable disposition of any
Partnership property shall be determined as if the adjusted basis of such
property as of such date of disposition were equal in amount to the
Partnership's Carrying Value with respect to such property as of such date.
(iv) In accordance with the requirements of Section 704(b) of the Code, any
deductions for depreciation, cost recovery or amortization attributable to any
Contributed Property shall be determined as if the adjusted basis of such
property on the date it was acquired by the Partnership were equal to the Agreed
Value of such property. Upon an adjustment pursuant to Section 5.4(d) to the
Carrying Value of any Partnership property subject to depreciation, cost
recovery or amortization, any further deductions for such depreciation, cost
recovery or amortization attributable to such property shall be determined (A)
as if the adjusted basis of such property were equal to the Carrying Value of
such property immediately following such adjustment and (B) using a rate of
depreciation, cost recovery or amortization derived from the same method and
useful life (or, if applicable, the remaining useful life) as is applied for
federal income tax purposes; provided, however, that, if the asset has a zero
adjusted basis for federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable method that the
General Partner may adopt.
(v) If the Partnership's adjusted basis in a depreciable or cost recovery
property is reduced for federal income tax purposes pursuant to Section 48(q)(1)
or 48(q)(3) of the Code, the amount of such reduction shall, solely for purposes
hereof, be deemed to be an additional depreciation or cost recovery deduction in
the year such property is placed in service and shall be allocated among the
Partners pursuant to Section 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.
(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 conversion of the General Partner's Partnership Interest to MLP
Common Units pursuant to Section 11.3(b) of the Genesis MLP Partnership
Agreement, or the conversion of the General Partner's right to Incentive
Compensation Payments pursuant to Section 7.13, the Capital Account of all
Partners and the Carrying Value of each Partnership property immediately prior
to such issuance or conversion 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 the
same manner as any item of gain or loss actually recognized during such period
would have been allocated. In determining such Unrealized Gain or Unrealized
Loss, the aggregate cash amount and fair market value of all Partnership assets
(including, without limitation, cash or cash equivalents) immediately prior to
the issuance of additional Partnership Interests shall be determined by the
General Partner using such reasonable method of valuation as it may adopt;
provided, however, that the General Partner, in arriving at such valuation, must
take fully into account the fair market value of the Partnership Interests of
all Partners at such time. The General Partner shall allocate such aggregate
value among the assets of the Partnership (in such manner as it determines in
its 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 the same
manner as any item of gain or loss actually recognized during such period would
have been allocated. 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 5.4(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.
5.5 Issuances of Additional Partnership Securities
(a) The Partnership may issue additional Partnership Securities and options,
rights, warrants and appreciation rights relating to Partnership Securities for
any Partnership purpose at any time and from time to time to such Persons for
such consideration and on such terms and conditions as shall be established by
the General Partner in its sole discretion, all without the approval of any
Limited Partners.
(b) Each additional Partnership Security authorized to be issued by the
Partnership pursuant to Section 5.5(a) may be issued in one or more classes, or
one or more series of any such classes, with such designations, preferences,
rights, powers and duties (which may be senior to existing classes and series of
Partnership Securities), as shall be fixed by the General Partner in the
exercise of its sole discretion, including (i) the right to share Partnership
profits and losses or items thereof; (ii) the right to share in Partnership
distributions; (iii) the rights upon dissolution and liquidation of the
Partnership; (iv) whether, and the terms and conditions upon which, the
Partnership may redeem such Partnership Security; (v) whether such Partnership
Security is issued with the privilege of conversion or exchange and, if so, the
terms and conditions of such conversion or exchange; (vi) the terms and
conditions upon which such Partnership Security will be issued, evidenced by
Certificates and assigned or transferred; and (vii) the right, if any, of such
Partnership Security to vote on Partnership matters, including matters relating
to the relative rights, preferences and privileges of such Partnership Security.
(c) The General Partner is hereby authorized and directed to take all actions
that it deems necessary or appropriate in connection with (i) each issuance of
Partnership Securities pursuant to this Section 5.5, (ii) the admission of
Additional Limited Partners and (iii) all additional issuances of Partnership
Securities. The General Partner is further authorized and directed to specify
the relative rights, powers and duties of the holders of Partnership Securities
being so issued. The General Partner shall do all things necessary to comply
with the Delaware Act and is authorized and directed to do all things it deems
to be necessary or advisable in connection with any future issuance of
Partnership Securities pursuant to the terms of this Agreement, including
compliance with any statute, rule, regulation or guideline of any federal, state
or other governmental agency.
5.6 Limited Preemptive Right
Except as provided in this Section 5.6 and in Section 5.5, no Person shall have
any preemptive, preferential or other similar right with respect to (a)
additional Capital Contributions; (b) the issuance 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.
5.7 Fully Paid and Non-Assessable Nature of Limited Partner Interests
All Limited Partner Interests issued to Limited Partners pursuant to, and in
accordance with the requirements of, this Article V shall be fully paid and non-
assessable Limited Partner 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 5.4(b)) shall be allocated
among the Partners in each taxable year (or portion thereof) as provided herein
below.
(a) Net Income. After giving effect to the 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 among the Partners as follows:
(i) First, 100% to the General Partner until the aggregate Net Income
allocated to the General Partner pursuant to this Section 6.1(a)(i) for the
current taxable year and all previous taxable years is equal to the aggregate
Net Loss allocated to the General Partner pursuant to Section 6.1(b)(ii) for all
previous taxable years;
(ii) Second, 100% to the Partners in accordance with their respective
Percentage Interests, until the aggregate Net Income allocated to the Partners
pursuant to this Section 6.1(a)(ii) for the current taxable year and all
previous taxable years is equal to the aggregate Net Loss allocated to the
Partners pursuant to Section 6.1(b)(ii) for all previous taxable years; and
(iii) Third, the balance, if any, 100% to the Partners in accordance with
their respective Percentage Interests.
(b) Net Loss. After giving effect to the special allocations set forth in
Section 6.1(d), Net Loss for each taxable period and all items of income, gain,
loss and deduction taken into account in computing Net Loss for such taxable
period shall be allocated among the Partners as follows:
(i) First, 100% to the Partners in accordance with their respective
Percentage Interests, until the aggregate Net Loss allocated pursuant to this
Section 6.1(b)(i) for the current taxable year and all previous taxable years is
equal to the aggregate Net Income allocated to the Partners pursuant to Section
6.1(a)(iii) for all previous taxable years; provided, however, that Net Loss
shall not be allocated to a Limited Partner 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 such Limited Partner's Adjusted
Capital Account);
(ii) Second, the balance, if any, 100% to the General Partner.
(c) Net Termination Gain and Loss. 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 Sections 6.4
and 6.5 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 5.4(d)), such Net Termination Gain shall be allocated among the 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 bears to the total deficit balances in the
Capital Accounts of all Partners, until each Partner has been allocated Net
Termination Gain equal to any such deficit balance in its Capital Account; and
(B) Second, the balance, if any, 100% to the Partners in accordance with
their respective Percentage Interests.
(ii) If a Net Termination Loss is recognized (or deemed recognized pursuant
to Section 5.4(d)), such Net Termination Loss shall be allocated to the Partners
in the following manner:
(A) First, to the 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 Partner.
(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)(v) 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)(v)
and 6.1(d)(vi), 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 Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-
1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate, to
the extent required by the Treasury Regulations promulgated under Section 704(b)
of the Code, the deficit balance, if any, in its Adjusted Capital Account
created by such adjustments, allocations or distributions as quickly as possible
unless such deficit balance is otherwise eliminated pursuant to Section
6.1(d)(i) or 6.1(d)(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 for 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 General Partner determines in its good faith
discretion that the Partnership's Nonrecourse Deductions must be allocated in a
different ratio to satisfy the safe harbor requirements of the Treasury
Regulations promulgated under Section 704(b) of the Code, the General Partner is
authorized, upon notice to the other 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 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 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 General Partner reasonably
determines that such allocations are likely to be offset by subsequent Required
Allocations.
(B) The General Partner shall have reasonable discretion, with respect to
each taxable period, to (1) apply the provisions of Section 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.
(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 5.4(d)(i) or 5.4(d)(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 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 Partnership Interests (or any class or classes thereof), the
General Partner shall have sole discretion to (i) adopt such conventions as it
deems appropriate in determining the amount of depreciation, amortization and
cost recovery deductions; (ii) make special allocations for federal income tax
purposes of income (including, without limitation, gross income) or deductions;
and (iii) amend the provisions of this Agreement as appropriate (x) to reflect
the proposal or promulgation of Treasury regulations under Section 704(b) or
704(c) of the Code or (y) otherwise to preserve or achieve uniformity of Units
or other limited partner interests of Genesis MLP (or any class or classes
thereof). The General Partner may adopt such conventions, make such allocations
and make such amendments to this Agreement as provided in this Section 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 or
other limited partner interests of Genesis MLP issued and outstanding or the
Partnership, and if such allocations are consistent with the principles of
Section 704 of the Code.
(d) The General Partner in its 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 Treasury Regulation Section 1.167(c)-l(a)(6) or Treasury
Regulation Section 1.197-2(g)(3). If the General Partner determines that such
reporting position cannot reasonably be taken, the General Partner may adopt
depreciation and amortization conventions under which all purchasers acquiring
limited partnership interests of Genesis 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
General Partner chooses not to utilize such aggregate method, the General
Partner may use any other reasonable depreciation and amortization conventions
to preserve the uniformity of the intrinsic tax characteristics of any limited
partnership interests of Genesis MLP that would not have a material adverse
effect on the Partners or the holders of any class or classes of limited
partnership interests of Genesis 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 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.
(h) Allocations that would otherwise be made to a Partner under the
provisions of this Article VI shall instead be made to the beneficial owner of
Partnership Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the General
Partner in its sole discretion.
6.3 Requirement and Characterization of Distributions; Distributions to
Record Holders
(a) Within 45 days following the end of each Quarter, 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. All amounts of Available Cash distributed by the Partnership on any
date from any source shall be deemed to be Operating Surplus until the sum of
all amounts of Available Cash theretofore distributed by the Partnership to the
Partners pursuant to Section 6.4 equals the Operating Surplus from the Initial
Closing Date through the close of the immediately preceding Quarter. Any
remaining amounts of Available Cash distributed by the Partnership on such date
shall, except as otherwise provided in Section 6.5, be deemed to be "Capital
Surplus." 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 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.
6.4 Distributions of Available Cash from Operating Surplus
Available Cash that is deemed to be Operating Surplus pursuant to the provisions
of Section 6.3 or 6.5 shall, subject to Section 17-607 of the Delaware Act and
except as otherwise required by Section 5.5(b) (in respect of additional
Partnership Securities issued pursuant thereto) or permitted by Section 6.8, be
distributed:
(a) First, 100% to all Partners, in accordance with their relative Percentage
Interests, until there has been distributed to the Partners an amount equal to
the Minimum Quarterly Distribution for such Quarter; and
(b) Thereafter, 100% to all Partners, in accordance with their respective
Percentage Interests.
6.5 Distributions of Available Cash from Capital Surplus
Available Cash with respect to any Quarter that is deemed to be Capital Surplus
pursuant to the provisions of Section 6.3 shall, subject to Section 17-607 of
the Delaware Act, be distributed as follows, unless the provisions of Section
6.3 require otherwise:
(a) First, 100% to all Partners, in accordance with their respective
Percentage Interests, until there has been distributed to the Partners an amount
such that, after giving effect to the distribution of such amount by Genesis
MLP, a hypothetical holder of a MLP Common Unit acquired on the Initial Closing
Date has received with respect to such MLP Common Unit, during the period since
the Initial Closing Date through such date, distributions of Available Cash that
are deemed to be Capital Surplus in an aggregate amount equal to the Initial
Unit Price; and
(b) Thereafter, all Available Cash that is deemed to be Capital Surplus
pursuant to the provisions of Section 6.3 shall be distributed as if it were
Operating Surplus and shall be distributed in accordance with Section 6.4.
6.6 Adjustment of Minimum Quarterly Distribution and Target Distribution
Levels
(a) The Minimum Quarterly Distribution, First Target Distribution, Second
Target Distribution and Third Target Distribution shall be proportionately
adjusted in the event of any distribution, combination or subdivision (whether
effected by a distribution payable in MLP Units or otherwise) of MLP Units or
other Partnership Securities of Genesis MLP in accordance with Section 5.8 of
the Genesis MLP Partnership Agreement. In the event of a distribution of
Available Cash that is deemed to be from Capital Surplus, the then applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution shall be adjusted proportionately
downward to equal the product obtained by multiplying the otherwise applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution, as the case may be, by a fraction of
which the numerator is the Unrecovered Capital of the MLP Common Units
immediately after giving effect to such distribution and of which the
denominator is the Unrecovered Capital of the MLP Common Units immediately prior
to giving effect to such distribution.
(b) The Minimum Quarterly Distribution, First Target Distribution, Second
Target Distribution and Third Target Distribution shall also be subject to
adjustment pursuant to Section 6.7.
6.7 Entity-Level Taxation
If legislation is enacted or the interpretation of existing language is modified
by the relevant governmental authority which causes the Partnership or Genesis
MLP to be treated as an association taxable as a corporation or otherwise
subjects the Partnership or Genesis MLP to entity-level taxation for federal
income tax purposes, the then applicable Minimum Quarterly Distribution, First
Target Distribution, Second Target Distribution and Third Target Distribution
shall be adjusted to equal the product obtained by multiplying (a) the amount
thereof by (b) one minus the sum of (i) the highest marginal federal corporate
(or other entity, as applicable) income tax rate of the Partnership or Genesis
MLP for the taxable year of the Partnership or Genesis MLP in which such Quarter
occurs (expressed as a percentage) plus (ii) the effective overall state and
local income tax rate (expressed as a percentage) applicable to the Partnership
or Genesis MLP for the calendar year next preceding the calendar year in which
such Quarter occurs (after taking into account the benefit of any deduction
allowable for federal income tax purposes with respect to the payment of state
and local income taxes), but only to the extent of the increase in such rates
resulting from such legislation or interpretation. Such effective overall state
and local income tax rate shall be determined for the taxable year next
preceding the first taxable year during which the Partnership or Genesis MLP is
taxable for federal income tax purposes as an association taxable as a
corporation or is otherwise subject to entity-level taxation by determining such
rate as if the Partnership had been subject to such state and local taxes during
such preceding taxable year.
6.8 Characterization of Distributions as Advances or Drawings
Any distribution made to a Partner pursuant to Section 6.4, Section 6.5 or
Section 12.4 of this Agreement shall be treated as an advance or drawing against
such Partner's share of Partnership income under Treasury Regulation Section
1.731-1(a)(1)(ii). Any other distribution made to a Partner pursuant to the
terms of this Agreement shall not be treated as an advance or drawing against
such Partner's share of Partnership income under Treasury Regulation Section
1.731-1(a)(1)(ii).
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
7.1 Management
(a) The General Partner shall conduct, direct and manage all activities of
the Partnership. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership shall be
exclusively vested in the General Partner, and no Limited Partner or Assignee
shall have any management power over the business and affairs of the
Partnership. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which are granted to
the General Partner under any other provision of this Agreement, the General
Partner, subject to Section 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, including indebtedness
that is convertible into a Partnership Interest, and the incurring of any other
obligations;
(ii) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies having jurisdiction
over the business or assets of the Partnership;
(iii) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the Partnership or the
merger or other combination of the Partnership with or into another Person (the
matters described in this clause (iii) being subject, however, to any prior
approval that may be required by Section 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, subject to Section
7.6, the lending of funds to other Persons (including Genesis MLP and any Group
Member), the repayment of obligations of Genesis MLP or any Group Member 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 Partner or its assets other than its interest in the Partnership,
even if same results in the terms of the transaction being less favorable to the
Partnership than would otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (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 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 subject,
however, to the restrictions set forth in Section 2.4;
(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;
(xi) the indemnification of any Person against liabilities and contingencies
to the extent permitted by law; and
(xii) the purchase, sale or other acquisition or disposition of Partnership
Securities, or, unless restricted or prohibited by Section 5.5, the issuance of
additional Partnership Securities and options, rights, warrants and appreciation
rights relating to Partnership Securities.
(b) Notwithstanding any other provision of this Agreement, the Genesis MLP
Partnership Agreement, the Delaware Act or any applicable law, rule or
regulation, each of the Partners and Assignees and each other Person who may
acquire an interest in the Partnership hereby (i) approves, ratifies and
confirms the execution, delivery and performance by the parties thereto of this
Agreement, the Genesis MLP Partnership Agreement, and the other agreements
described in or filed as part of the Proxy Statement; (ii) agrees that the
General Partner (on its own or through any officer of the Partnership) is
authorized to execute, deliver and perform the agreements referred to in clause
(i) of this sentence and the other agreements, acts, transactions and matters
described in or contemplated by the Proxy Statement on behalf of the Partnership
without any further act, approval or vote of the Partners or the Assignees or
the other Persons who may acquire an interest in the Partnership; and (iii)
agrees that the execution, delivery or performance by the General Partner,
Genesis 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 General Partner of any duty that the General Partner
may owe the Partnership or the Limited Partners 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 General Partner has caused the Amended and Restated Certificate of Limited
Partnership to be filed with the Secretary of State of the State of Delaware as
required by the Delaware Act and shall use all reasonable efforts to cause to be
filed such other certificates or documents as may be determined by the General
Partner in its sole discretion to be reasonable and necessary or appropriate for
the formation, continuation, qualification and operation of a limited
partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware or any other state in which the Partnership
may elect to do business or own property. To the extent that such action is
determined by the General Partner in its sole discretion to be reasonable and
necessary or appropriate, the General Partner shall file amendments to and
restatements of the Certificate of Limited Partnership and do all things to
maintain the Partnership as a limited partnership (or a partnership 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 3.4(a), the
General Partner shall not be required, before or after filing, to deliver or
mail a copy of the Certificate of Limited Partnership, any qualification
document or any amendment thereto to any Limited Partner or Assignee.
7.3 Restrictions on the General Partner's Authority
(a) The General Partner may not, without written approval of the specific act
by the Limited Partners or by other written instrument executed and delivered by
the Limited Partners 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
Partnership purpose; (iii) admitting a Person as a Partner; (iv) amending this
Agreement in any manner; or (v) transferring its General Partner Interest.
(b) Except as provided in Articles XII and XIV, the General Partner may not
sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related transactions
(including by way of merger, consolidation or other combination) or approve on
behalf of the Partnership the sale, exchange or other disposition of all or
substantially all of the assets of the Partnership, without the approval of
holders of a Majority Interest; provided, however, that this provision shall not
preclude or limit the General Partner's ability to mortgage, pledge, hypothecate
or grant a security interest in all or substantially all of the 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.
7.4 Reimbursement of the General Partner
(a) Except as provided in this Section 7.4 and elsewhere in this Agreement or
the Genesis MLP Partnership Agreement, the General Partner shall not be
compensated for its services as General Partner, general partner of Genesis MLP
or as general partner of any Group Member.
(b) The General Partner shall be reimbursed on a monthly basis, or such other
reasonable basis as the General Partner may determine in its sole discretion,
for (i) all direct and indirect expenses it incurs or payments it makes on
behalf of the Partnership (including 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 Partner in the
discharge of its duties to the Partnership), and (ii) all other necessary or
appropriate expenses allocable to the Partnership or otherwise reasonably
incurred by the General Partner in connection with operating the Partnership's
business (including expenses allocated to the General Partner by its
Affiliates). The General Partner shall determine the expenses that are allocable
to the Partnership in any reasonable manner determined by the General Partner in
its sole discretion. Reimbursements pursuant to this Section 7.4 shall be in
addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.7.
(c) Expenses incurred by the General Partner in connection with any employee
benefit plans, employee programs and employee practices (including the net cost
to the General Partner or such Affiliate of MLP Units or other MLP Partnership
Securities purchased by the General Partner or such Affiliate from the
Partnership to fulfill options or awards under such plans, programs and
practices) shall be reimbursed in accordance with Section 7.4(b). Any and all
obligations of the General Partner under any employee benefit plans, employee
programs or employee practices adopted by the General Partner as permitted by
this Section 7.4(c) shall constitute obligations of the General Partner
hereunder and shall be assumed by any 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 General Partner Interest pursuant to Section 4.2.
7.5 Outside Activities
(a) After the Restructuring Closing Date, the General Partner, for so long as
it is the General Partner of the Partnership, (i) agrees that its sole business
will be to act as a general partner or managing member, as the case may be, of
the Partnership, Genesis MLP and any other partnership or limited liability
company of which the Partnership or Genesis MLP is, directly or indirectly, a
partner or member, and to undertake activities that are ancillary or related
thereto (including being a limited partner or member in the Genesis MLP or any
other such partnership or limited liability company) and (ii) shall not,
directly or indirectly, engage in any business or activity or incur any debts or
liabilities except in connection with or incidental to (A) its performance as
general partner or managing member, as the case may be, of the Partnership,
Genesis MLP or one or more Group Members or as described in or contemplated by
the Registration Statement or the Proxy Statement or (B) the acquiring, owning
or disposing of debt or equity securities in any Group Member.
(b) Salomon, Basis Petroleum, Inc. and Howell continue to be parties to the
Non-Competition Agreement, which agreement sets forth certain restrictions on
their ability to engage in the business of (i) crude oil gathering at the
wellhead in the states of Alabama, Florida, Kansas, Louisiana, Mississippi, New
Mexico, Oklahoma or Texas, or any states contiguous to such states, and (ii)
transporting for third parties crude oil by pipeline along the routes of the
Partnership's crude oil pipelines owned as of the Initial Closing Date. The Non-
Competition Agreement remains in effect in accordance with its terms.
(c) Except as specifically restricted by Section 7.5(a) and the Non-
Competition Agreement, each Indemnitee (other than the General Partner) 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 Genesis MLP or any Group Member,
independently or with others, including business interests and activities in
direct competition with the business and activities of Genesis 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 Genesis MLP or any Group Member or any Partner
or Assignee. Neither Genesis MLP nor any Group Member, any Limited Partner nor
any other Person shall have any rights by virtue of this Agreement, the Genesis
MLP Partnership Agreement or the partnership relationship established hereby in
any business ventures of any Indemnitee.
(d) Subject to the terms of Sections 7.5(a), 7.5(b) and 7.5(c) and the Non-
Competition Agreement, but otherwise notwithstanding anything to the contrary in
this Agreement, (i) the engaging in competitive activities by any Indemnitees
(other than the 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 Partner's fiduciary duty or
any other obligation of any type whatsoever of the General Partner for the
Indemnitees (other than the General Partner) to engage in such business
interests and activities in preference to or to the exclusion of the
Partnership, and the General Partner and the Indemnitees shall have no
obligation to present business opportunities to the Partnership.
(e) The General Partner and any of its Affiliates may acquire Partnership
Securities in addition to those heretofore acquired and, except as otherwise
provided in this Agreement, shall be entitled to exercise all rights relating to
such Partnership Securities.
(f) The term "Affiliates" when used in this Section 7.5 with respect to the
General Partner shall not include any Group Member or any Subsidiary of Genesis
MLP or any Group Member.
7.6 Loans from the General Partner; Loans or Contributions from the
Partnership; Contracts with Affiliates; Certain Restrictions on the General
Partner
(a) The General Partner or any of its Affiliates may lend to Genesis MLP or
any Group Member, and Genesis MLP or any Group Member may borrow from the
General Partner or any of its Affiliates, funds needed or desired by Genesis MLP
or the Group Member for such periods of time and in such amounts as the 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 arm's-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. No Group Member may lend funds to the General
Partner or any of its Affiliates (other than Genesis MLP or another Group
Member).
(b) The Partnership may lend or contribute to any Group Member, and any Group
Member may borrow from the Partnership, funds on terms and conditions
established in the sole discretion of the General Partner; provided, however,
that the Partnership may not charge the Group Member interest at a rate less
than the rate that would be charged to the Group Member (without reference to
the General Partner's financial abilities or guarantees) by unrelated lenders on
comparable loans. The foregoing authority shall be exercised by the General
Partner in its sole discretion and shall not create any right or benefit in
favor of any Group Member or any other Person.
(c) The General Partner may itself, or may enter into an agreement with any
of its Affiliates to, render services to a Group Member or to the General
Partner in the discharge of its duties as general partner of the Partnership.
Any services rendered to a Group Member by the General Partner or any of its
Affiliates shall be on terms that are fair and reasonable to the Partnership;
provided, however, that the requirements of this Section 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) The Partnership Group may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(e) Neither the General Partner nor any of its Affiliates shall sell,
transfer or convey any property to, or purchase any property from the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the requirements
of this Section 7.6(e) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to Sections 5.1, 5.2 and 5.3 of the Previous
Agreement, the Conveyance Agreement and any other transactions described in or
contemplated by the Registration Statement or the Proxy 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. With respect
to any contribution of assets to the Partnership in exchange for Partnership
Securities, the Audit Committee, in determining whether the appropriate number
of Partnership Securities are being issued, may take into account, among other
things, the fair market value of the assets, the liquidated and contingent
liabilities assumed, the tax basis in the assets, the extent to which tax-only
allocations to the transferor will protect the existing partners of the
Partnership against a low tax basis, and such other factors as the Audit
Committee deems relevant under the circumstances.
(f) The General Partner and its Affiliates will have no obligation to permit
any Group Member to use any facilities or assets of the General Partner and its
Affiliates, except as may be provided in contracts entered into from time to
time specifically dealing with such use, nor shall there be any obligation on
the part of the General Partner or its Affiliates to enter into such contracts.
(g) Without limitation of Sections 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 or the Proxy 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 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. 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
Partner shall not be personally liable for such indemnification and shall have
no obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including 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
dated November 26, 1996 among the Partnership, Genesis MLP, and the underwriters
and other parties named therein), and shall continue as to an Indemnitee who has
ceased to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the General
Partner or its Affiliates for the cost of) insurance, on behalf of the General
Partner, its Affiliates and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expense that
may be incurred by such Person in connection with the Partnership's activities
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 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 the right of any past,
present or future Indemnitee to be indemnified by the Partnership, nor 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
Partnership Securities or MLP 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 the General Partner set forth in
Section 7.1(a), the General Partner may exercise any of the powers granted to it
by this Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents, and the General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
(c) To the extent that, at law or in equity, an Indemnitee has duties
(including fiduciary duties) and liabilities relating thereto to the Partnership
or to the Limited Partners, the General Partner and any other Indemnitee acting
in connection with the Partnership's business or affairs shall not be liable to
the Partnership or to any Partner for its good faith reliance on the provisions
of this Agreement. The provisions of this Agreement, to the extent that they
restrict or otherwise modify the duties and liabilities of an Indemnitee
otherwise existing at law or in equity, are agreed by the Partners to replace
such other duties and liabilities of such Indemnitee.
(d) 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 of the Indemnitees 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.
7.9 Resolution of Conflicts of Interest
(a) Unless otherwise expressly provided in this Agreement or the Genesis MLP
Partnership Agreement, whenever a potential conflict of interest exists or
arises between the General Partner or any of its Affiliates, on the one hand,
and the Partnership, Genesis MLP, any Partner, or any Assignee on the other, any
resolution or course of action by the General Partner or its 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
Genesis MLP Partnership Agreement, of any agreement contemplated herein or
therein, or of any duty stated or implied by law or equity, if the resolution or
course of action is, or by operation of this Agreement is deemed to be, fair and
reasonable to the Partnership. The General Partner shall be authorized but not
required in connection with its resolution of such conflict 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 (as long as the material facts known to the General Partner or
any of its Affiliates regarding any proposed transaction were disclosed to the
Audit Committee at the time it gave its approval), (ii) on terms no less
favorable to the Partnership than those generally being provided to or available
from unrelated third parties or (iii) fair to the Partnership, taking into
account the totality of the relationships between the parties involved
(including other transactions that may be particularly favorable or advantageous
to the Partnership). The General Partner may also adopt a resolution or course
of action that has not received Special Approval. The General Partner (including
the Audit Committee in connection with Special Approval) shall be authorized in
connection with its determination of what is "fair and reasonable" to the
Partnership and in connection with its resolution of any conflict of interest to
consider (A) the relative interests of any party to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such interest;
(B) any customary or accepted industry practices and any customary or historical
dealings with a particular Person; (C) any applicable generally accepted
accounting practices or principles; and (D) such additional factors as the
General Partner (including 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 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 General Partner, the resolution, action or terms so made,
taken or provided by the General Partner with respect to such matter shall not
constitute a breach of this Agreement or any other agreement contemplated herein
or a breach of any standard of care or duty imposed herein or therein or, 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 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
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, Genesis MLP, the
Partnership, any Limited Partner or any Assignee, (ii) it may make such decision
in its sole discretion (regardless of whether there is a reference to "sole
discretion" or "discretion") unless another express standard is provided for, or
(iii) in "good faith" or under another express standard, the General Partner or
such Affiliate shall act under such express standard and shall not be subject to
any other or different standards imposed by this Agreement, any other agreement
contemplated hereby or under the Delaware Act or any other law, rule or
regulation. In addition, any actions taken by the General Partner or such
Affiliate consistent with the standards of "reasonable discretion" set forth in
the definitions of Available Cash or Operating Surplus shall not constitute a
breach of any duty of the General Partner to the Partnership or the Limited
Partner. The General Partner shall have no duty, express or implied, to sell or
otherwise dispose of any asset of the Partnership Group other than in the
ordinary course of business. No borrowing by any Group Member or the approval
thereof by the General Partner shall be deemed to constitute a breach of any
duty of the General Partner to the Partnership, any Limited Partner or any
Assignee by reason of the fact that the purpose or effect of such borrowing is
directly or indirectly to enable the General Partner to receive Incentive
Compensation Payments.
(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 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 General Partner pursuant to this Section 7.9.
7.10 Other Matters Concerning the General Partner
(a) The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion (including an Opinion of Counsel) of such Persons as to matters
that the General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of its powers
or obligations hereunder, to act through any of its duly authorized officers, 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 General
Partner to act under this Agreement or any other agreement contemplated by this
Agreement and to make any decision pursuant to the authority prescribed in this
Agreement, so long as such action is reasonably believed by the General Partner
to be in, or not inconsistent with, the best interests of the Partnership.
7.11 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement, any Person dealing
with the Partnership shall be entitled to assume that the General Partner and
any officer of the General Partner authorized by the General Partner to act on
behalf of and in the name of the Partnership has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any authorized contracts on behalf of the
Partnership, and such Person shall be entitled to deal with the General Partner
or any such officer as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies that may be available against such Person to contest,
negate or disaffirm any action of the General Partner or any such officer in
connection with any such dealing. In no event shall any Person dealing with the
General Partner or any such officer or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
any such officer or its representatives. Each and every certificate, document or
other instrument executed on behalf of the Partnership by the General Partner or
its representatives shall be conclusive evidence in favor of any and every
Person relying thereon or claiming thereunder that (a) at the time of the
execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
7.12 Incentive Compensation Payments to the General Partner
(a) Within 45 days following the end of each Quarter and ending with the
Quarter immediately preceding the Quarter in which a Conversion Election is
made, the Partnership shall make the following payments to the General Partner
as compensation for management and other services provided to the Partnership
(such payments will be characterized for federal income tax purposes as
guaranteed payments within the meaning of Section 707(c) of the Code):
(i) An amount equal to 13/85ths of the amount distributed to the Partners
with respect to such Quarter pursuant to Section 6.4 that is in excess of the
First Target Distribution up to and including the Second Target Distribution;
(ii) An amount equal to 23/75ths of the amount distributed to the Partners
with respect to such Quarter pursuant to Section 6.4 that is in excess of the
Second Target Distribution up to and including the Third Target Distribution;
and
(iii) An amount equal to 48/50ths of the amount distributed to the Partners
with respect to such Quarter pursuant to Section 6.4 that is in excess of the
Third Target Distribution.
(b) The General Partner shall not be entitled to transfer the right to
receive Incentive Compensation Payments to any Person; provided, however, that
upon the admission of a successor General Partner pursuant to Section 10.3(a),
such successor General Partner shall, unless a Conversion Election has been
previously made, be entitled to receive Incentive Compensation Payments and
shall have the right to elect to convert its right to receive Incentive
Compensation Payments into a right to participate with all other Partners in
distributions made in excess of the First Target Distribution as provided in
Section 7.13.
7.13 Conversion of General Partner's Incentive Compensation Payment Rights
At any time following the second anniversary of the Initial Closing Date, the
General Partner may elect to convert (a "Conversion Election") its right to
receive Incentive Compensation Payments pursuant to Section 7.12 into a right to
participate with all other Partners in distributions made in excess of the First
Target Distribution in a ratio which would result in the General Partner
receiving additional cash distributions with respect to the Quarter in which the
Conversion Election is made and for any subsequent Quarter in an amount equal to
the amount of Incentive Compensation Payments which would have otherwise been
made to the General Partner pursuant to Section 7.12 for such Quarters. If the
General Partner makes a Conversion Election, this Agreement shall be amended to
reflect the following:
(a) the General Partner's right to Incentive Compensation Payments has been
extinguished;
(b) the General Partner's right to participate in distributions in excess of
the First Target Distribution in a ratio which would result in the General
Partner receiving additional cash distributions with respect to the Quarter in
which the Conversion Election is made and for any subsequent Quarter pursuant to
such provisions in an amount equal to the amount of Incentive Compensation
Payments which would have otherwise been made to the General Partner pursuant to
Section 7.12 for such Quarters;
(c) the special allocation of additional Net Income to the General Partner in
a manner which matches the General Partner's increased share of subsequent
distributions, but only to the extent that the Partnership has sufficient net
income to achieve such matching in that year or later years;
(d) the General Partner's right to participate in an increased share of any
gains realized (or deemed realized) by the Partnership following the Conversion
Election in connection with (i) an issuance of additional Partnership Interests,
(ii) distributions of Partnership property, or (iii) the liquidation of the
Partnership; and
(e) any special allocations or other matters associated with and reasonably
necessary to the implementation of the foregoing to the extent such special
allocations or other matters do not adversely impact the interests of the other
Partners.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 Records and Accounting
The General Partner shall keep or cause to be kept at the principal office of
the Partnership, appropriate books and records with respect to the Partnership's
business, including all books and records necessary to provide to the Limited
Partners any information required to be provided pursuant to Section 3.4(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 Tax Returns and Information
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, gain, losses
and deductions and other items shall be on the accrual method of accounting for
federal income tax purposes.
9.2 Tax Elections
(a) The Partnership has made 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 General Partner's
determination that such revocation is in the best interests of the Limited
Partners.
(b) The Partnership has elected 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 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 General Partner is designated as the Tax
Matters Partner (as defined in 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 General Partner and to do or refrain from doing any
or all things reasonably required by the General Partner to conduct such
proceedings.
9.4 Withholding
Notwithstanding any other provision of this Agreement, the 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 or Assignee (including, without
limitation, by reason of Section 1446 of the Code), the amount withheld may at
the discretion of the General Partner be treated by the Partnership as a
distribution of cash pursuant to Section 6.3 in the amount of such withholding
from such Partner.
ARTICLE X
ADMISSION OF PARTNERS
10.1 Status of General Partner
Upon the execution of this Agreement, the General Partner shall be the sole
general partner of the Partnership.
10.2 Admission of Successor General Partner
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 General Partner
Interest pursuant to Section 4.6 who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General Partner,
effective immediately prior to the withdrawal or removal of the predecessor or
transferring General Partner pursuant to Section 11.1 or 11.2 or the transfer of
the General Partner Interest pursuant to Section 4.2; provided, however, that no
such successor shall be admitted to the Partnership until compliance with the
terms of Section 4.4(a) has occurred and such successor has executed and
delivered such other documents or instruments as may be required to effect such
admission. Any such successor shall, subject to the terms hereof, carry on the
business of the Group Members without dissolution.
10.3 Admission of Substituted Limited Partner
By transfer of a Limited Partner Interest in accordance with Article IV, the
transferor shall be deemed to have given the transferee the right to seek
admission as a Substituted Limited Partner subject to the conditions of, and in
the manner permitted under, this Agreement. A transferor of a Limited Partner
Interest shall, however, only have the authority to convey to a purchaser or
other transferee (a) the right to negotiate such Limited Partner Interest to a
purchaser or other transferee and (b) the right to request admission as a
Substituted Limited Partner to such purchaser or other transferee in respect of
the transferred Limited Partner Interests. Each transferee of a Limited Partner
Interest shall be an Assignee and be deemed to have applied to become a
Substituted Limited Partner with respect to the Limited Partner Interest so
transferred to such Person. Such Assignee shall become a Substituted Limited
Partner (x) at such time as the General Partner consents thereto, which consent
may be given or withheld in the General Partner's discretion and (y) when any
such admission is shown on the books and records of the Partnership. If such
consent is withheld, such transferee shall be an Assignee. An Assignee shall
have an interest in the Partnership equivalent to that of a Limited Partner with
respect to allocations and distributions, including liquidating distributions,
of the Partnership. With respect to voting rights attributable to Limited
Partner Interests that are held by Assignees, the General Partner shall be
deemed to be the Limited Partner with respect thereto and shall, in exercising
the voting rights in respect of such Limited Partner Interests on any matter,
vote such Limited Partner Interests at the written direction of the Assignee.
If no such written direction is received, such Partnership Interests will not be
voted. An Assignee shall have no other rights of a Limited Partner.
10.4 Admission of Additional Limited Partners
(a) A Person (other than the General Partner, Genesis MLP or a Substituted
Limited Partner) who makes a Capital Contribution to the Partnership in
accordance with this Agreement in exchange for Limited Partner Interests shall
be admitted to the Partnership as an Additional Limited Partner only upon
furnishing to the General Partner (i) evidence of acceptance in form
satisfactory to the General Partner of all of the terms and conditions of this
Agreement, including 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
General Partner to effect such Person's admission as an Additional Limited
Partner.
(b) Notwithstanding anything to the contrary in this Section 10.4, no Person
shall be admitted as an Additional Limited Partner without the consent of the
General Partner, which consent may be given or withheld in the General Partner's
discretion. The admission of any Person as an Additional Limited Partner shall
become effective on the date upon which the name of such Person is recorded as
such in the books and records of the Partnership, following the consent of the
General Partner to such admission.
10.5 Amendment of Agreement and Certificate of Limited Partnership
To effect the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Delaware Act to amend
the records of the Partnership to reflect such admission and, if necessary, to
prepare as soon as 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 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 Partner
(a) The General Partner shall be deemed to have withdrawn from the
Partnership upon the occurrence of any one of the following events (each such
event herein referred to as an "Event of Withdrawal");
(i) the General Partner voluntarily withdraws from the Partnership by giving
written notice to the other Partners (and it shall be deemed that the General
Partner has withdrawn pursuant to this Section 11.1(a)(i) if the General Partner
voluntarily withdraws as the general partner of Genesis MLP);
(ii) the General Partner transfers all of its General Partner Interest
pursuant to Section 4.2;
(iii) the General Partner is removed pursuant to Section 11.2;
(iv) the 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 General Partner
in a proceeding of the type described in clauses (A) - (C) of this Section
11.1(a)(iv); 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;
(v) 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 General
Partner; or
(vi) (A) in the event the General Partner is a corporation, a certificate of
dissolution or its equivalent is filed for the General Partner, or 90 days
expire after the date of notice to the General Partner of revocation of its
charter without a reinstatement of its charter, under the laws of its state of
incorporation; (B) in the event the General Partner is a partnership or a
limited liability company, the dissolution and commencement of winding up of the
General Partner; (C) in the event the General Partner is acting in such capacity
by virtue of being a trustee of a trust, the termination of the trust; (D) in
the event the General Partner is a natural person, his death or adjudication of
incompetency; and (E) otherwise in the event of the termination of the General
Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A), (B),
(C) or (E) occurs, the withdrawing General Partner shall give notice to the
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 General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following circumstances: (i) if the General Partner has
voluntarily withdrawn as the general partner of Genesis MLP and such withdrawal
was not in breach of the Genesis MLP Partnership Agreement or (ii) at any time
that the General Partner ceases to be the General Partner pursuant to Section
11.1(a)(ii) or is removed pursuant to Section 11.2. The withdrawal of the
General Partner from the Partnership upon the occurrence of an Event of
Withdrawal shall also constitute the withdrawal of the General Partner as
general partner or managing member of the other Group Members. If the General
Partner gives a notice of withdrawal pursuant to Section 11.1(a)(i), the Person
elected as successor general partner of Genesis MLP shall, upon admission as a
successor general partner of Genesis MLP, automatically become the successor
General Partner and a successor general partner or managing member of the other
Group Members of which the General Partner is a general partner. If, prior to
the effective date of the General Partner's withdrawal, a successor General
Partner is not selected as provided herein, the Partnership shall be dissolved
in accordance with Section 12.1. Any successor General Partner selected in
accordance with the terms of this Section 11.1 shall be subject to the
provisions of Section 10.3.
11.2 Removal of the General Partner
The General Partner may not be removed as the general partner of the Partnership
unless the General Partner is removed as the general partner of Genesis MLP
pursuant to Section 11.2 of the Genesis MLP Partnership Agreement. If the
General Partner is removed as the general partner of Genesis MLP pursuant to
Section 11.2 of the Genesis MLP Partnership Agreement, the General Partner shall
be removed as the general partner of the Partnership. Such removal shall be
effective concurrently with the effectiveness of the removal of the General
Partner as the general partner of Genesis MLP pursuant to the terms of the
Genesis MLP Partnership Agreement. If a Person is elected as a successor general
partner of Genesis MLP in connection with the removal of the General Partner as
the general partner of Genesis MLP, such Person shall, upon admission as a
successor general partner of Genesis MLP, automatically become the successor
General Partner of the Partnership and a successor general partner of the other
Group Members of which the General Partner is the general partner.
11.3 Interest of Departing Partner
(a) The General Partner 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 MLP Common Units pursuant to Section
11.3(b) of the Genesis MLP Partnership Agreement) be purchased by the successor
to the Departing Partner for cash in the manner specified in the Genesis MLP
Partnership Agreement. Such purchase (or conversion into MLP 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 Limited Partners
Without the prior written consent of the 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.
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 General Partner, if a successor General Partner is selected
as provided in Section 11.1 or 11.2, the Partnership shall not be dissolved and
such successor General Partner shall continue the business of the Partnership.
The Partnership shall dissolve, and (subject to Section 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 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 General Partner that is
approved by the holders of a Majority Interest;
(d) the entry of a decree of judicial dissolution of the Partnership pursuant
to the provisions of the Delaware Act;
(e) the dissolution of Genesis MLP; or
(f) the sale of all or substantially all of the assets and properties of the
Partnership Group.
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 General Partner as provided in Section
11.1(a)(i) or (iii) and the failure of the Partners to select a successor to
such Departing Partner pursuant to 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 as defined in Section 11.1(a)(iv), (v) or (vi), then, to the
maximum extent permitted by law, within 180 days thereafter, the holders of a
Majority Interest may elect to reconstitute the Partnership and continue its
business on the same terms and conditions set forth in this Agreement by forming
a new limited partnership on terms identical to those set forth in this
Agreement and having as the general partner a Person approved by the holders of
a Majority Interest. 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 General Partner, then
the interest of the former General Partner shall be treated in the manner
provided in Section 11.3; and
(iii) all necessary steps shall be taken to cancel this Agreement and the
Certificate of Limited Partnership and to enter into and, as necessary, to file
a new partnership agreement and certificate of limited partnership, and the
successor general partner may for this purpose exercise the powers of attorney
granted the General Partner pursuant to Section 2.6; provided, that the right of
the holders of a Majority Interest to approve a successor General Partner and to
reconstitute and to continue the business of the Partnership shall not exist and
may not be exercised unless the Partnership has received an Opinion of Counsel
that (x) the exercise of the right would not result in the loss of limited
liability of any Limited Partner or any limited partner of Genesis MLP and (y)
neither the Partnership, the reconstituted limited partnership, Genesis MLP 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 General Partner shall select one or more Persons to act as Liquidator.
The Liquidator (if other than the General Partner) shall be entitled to receive
such compensation for its services as may be approved by the holders of a
Majority Interest. The Liquidator (if other than the 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 holders
of a Majority Interest. Upon dissolution, removal or resignation of the
Liquidator, a successor and substitute Liquidator (who shall have and succeed to
all rights, powers and duties of the original Liquidator) shall within 30 days
thereafter be approved by the holders of a Majority Interest. The right to
approve a successor or substitute Liquidator in the manner provided herein shall
be deemed to refer also to any such successor or substitute Liquidator approved
in the manner herein provided. Except as expressly provided in this Article 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 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(b)) to the extent necessary or desirable in the good
faith judgment of the Liquidator to carry out the duties and functions of the
Liquidator hereunder for and during such period of time as shall be reasonably
required in the good faith judgment of the Liquidator to complete the winding up
and liquidation of the Partnership as provided for herein.
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 or distribution of the Partnership's assets for a reasonable
time if it determines that an immediate sale of all or some 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, conditional or
unmatured 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
reasonable 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).
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 Contributions
The General Partner shall not be personally liable for, and shall have no
obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate, the return of the Capital Contributions of the Limited
Partners, or any portion thereof, it being expressly understood that any such
return shall be made solely from Partnership assets.
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 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; MEETINGS
13.1 Amendment to be Adopted Solely by General Partner
Each Partner agrees that the General Partner, without the approval of any
Partner or Assignee, may amend any provision of this Agreement and execute,
swear to, acknowledge, deliver, file and record whatever documents may be
required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the principal
place of business of the Partnership, the registered agent of the Partnership or
the registered office of the Partnership;
(b) the admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the sole discretion of the General Partner, is
necessary or 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 no
Group Member will 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 General Partner, (i) does not
adversely affect the Limited Partners in any material respect, (ii) is necessary
or advisable (A) 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), (B) to facilitate the trading of limited partner
interests of Genesis MLP (including the division of any class or classes of
outstanding limited partner interests of Genesis MLP into different classes to
facilitate uniformity of tax consequences within such classes of limited partner
interests of Genesis MLP), or comply with any rule, regulation, guideline or
requirement of any National Securities Exchange on which such limited partner
interests are or will be listed for trading, compliance with any of which the
General Partner determines in its discretion to be in the best interests of
Genesis MLP and the limited partners of Genesis MLP, (C) in connection with
action taken by the General Partner pursuant to Section 5.7, or (D) to effect
the conversion of the General Partner's Incentive Compensation Payment as
provided in Section 7.13, or (iii) is required to effect the intent expressed in
the Registration Statement or the Proxy 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 Genesis MLP Partnership Agreement as the provisions of the Genesis MLP
Partnership 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 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 General Partner shall so determine, a change in
the definition of "Quarter" and the dates on which distributions are to be made
by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to prevent the
Partnership, or the General Partner or its directors, 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) an amendment that, in the discretion of the General Partner, is necessary
or advisable in connection with the authorization of issuance of any class or
series of Partnership Securities pursuant to Section 5.5;
(h) any amendment expressly permitted in this Agreement to be made by the
General Partner acting alone;
(i) an amendment effected, necessitated or contemplated by a Merger Agreement
approved in accordance with Section 14.3;
(j) an amendment that, in the discretion of the 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;
(k) a merger or conveyance pursuant to Section 14.3(d); or
(l) any other amendments substantially similar to the foregoing.
13.2 Amendment Procedures
Except with respect to amendments of the type described 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 General Partner which consent may be given or withheld in its
sole discretion. A proposed amendment shall be effective upon its approval by
the holders of a Majority Interest.
ARTICLE XIV
MERGER
14.1 Authority
The Partnership may merge or consolidate with one or more corporations, limited
liability companies, 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 General Partner. If the General Partner shall
determine, in the exercise of its discretion, to consent to the merger or
consolidation, the General Partner shall approve the Merger Agreement, which
shall set forth:
(a) The names and jurisdictions of formation or organization of each of the
business entities proposing to merge or consolidate;
(b) The name and jurisdiction 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, certificate of formation or limited liability company agreement 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 General Partner.
14.3 Approval by Limited Partners of Merger or Consolidation
(a) Except as provided in Section 14.3(d), the General Partner, upon its
approval of the Merger Agreement, shall direct that the Merger Agreement be
submitted to a vote of Limited Partners, whether at a special meeting or by
written consent, in either case in accordance with the requirements of Article
XIII. A copy or a summary of the Merger Agreement shall be included in or
enclosed with the notice of a special meeting or the written consent.
(b) Except as provided in Section 14.3(d), the Merger Agreement shall be
approved upon receiving the affirmative vote or consent of the holders of a
Majority Interest unless the Merger Agreement contains any provision that, if
contained in an amendment to this Agreement, the provisions of this Agreement or
the Delaware Act would require the vote or consent of a greater percentage of
the Outstanding Partnership Securities or of any class of Partners in which case
such greater percentage vote or consent shall be required for approval of the
Merger Agreement.
(c) Except as provided in Section 14.3(d), after such approval by vote or
consent of the Limited Partners, and at any time prior to the filing of the
certificate of merger pursuant to Section 14.4, the merger or consolidation may
be abandoned pursuant to provisions therefor, if any, set forth in the Merger
Agreement.
(d) Notwithstanding anything else contained in this Article XIV or in this
Agreement, the General Partner is permitted, in its discretion, without Limited
Partner approval, to merge the Partnership or any Group Member into, or convey
all of the Partnership's assets to, another limited liability entity which shall
be newly formed and shall have no assets, liabilities or operations at the time
of such Merger other than those it receives from the Partnership or other Group
Member if (i) the General Partner has received an Opinion of Counsel that the
merger or conveyance, as the case may be, would not result in the loss of the
limited liability of any Limited Partner or cause the Partnership or Genesis 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 previously
treated as such), (ii) the sole purpose of such merger or conveyance is to
effect a mere change in the legal form of the Partnership into another limited
liability entity and (iii) the governing instruments of the new entity provide
the Limited Partners and the General Partner with the same rights and
obligations as are herein contained.
14.4 Certificate of Merger
Upon the required approval by the General Partner and the Limited Partners of a
Merger Agreement, a certificate of merger shall be executed and filed with the
Secretary of State of the State of Delaware in conformity with the requirements
of the Delaware Act.
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 shall not be
deemed to result in a transfer or assignment of assets or liabilities from one
entity to another.
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 or Assignee under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent
by first class United States mail or by other means of written communication to
the Partner or Assignee at the address described below. Any notice to the
Partnership shall be deemed given if received by the General Partner at the
principal office of the Partnership designated pursuant to Section 2.3. The
General Partner may rely and shall be protected in relying on any notice or
other document from a Partner, Assignee or other Person if believed by it to be
genuine.
15.2 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.
15.3 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.
15.4 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.
15.5 Creditors
None of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Partnership.
15.6 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.
15.7 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.
15.8 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.
15.9 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.
15.10 Consent of Partners
Each Partner hereby expressly consents and agrees that, whenever in this
Agreement it is specified that an action may be taken upon the affirmative vote
or consent of less than all of the Partners, such action may be so taken upon
the concurrence of less than all of the Partners and each Partner shall be bound
by the results of such action.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
GENERAL PARTNER
GENESIS ENERGY, L.L.C.
By: /s/ Mark J. Gorman
------------------------
Name: Mark J. Gorman
Title: President and Chief Executive Officer
LIMITED PARTNER
GENESIS ENERGY, L.P.
By: GENESIS ENERGY, L.L.C.,
As General Partner
By: /s/ Mark J. Gorman
------------------------
Name: Mark J. Gorman
Title: President and Chief Executive Officer