Exhibit 4.2
Execution Copy
THIRD 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
THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
GENESIS CRUDE OIL, L.P.
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Genesis
Crude Oil, L.P., dated as of July 31, 2002, is entered into by and among
Genesis Energy, Inc., a Delaware corporation, 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, the General Partner and certain other parties organized the
Partnership as a Delaware limited partnership pursuant to an Amended
and Restated Agreement of Limited Partnership of Genesis Crude Oil,
L.P. dated as of December 3, 1996 (the "Previous Agreement"); and
WHEREAS, on December 7, 2000, the partners of the Partnership and of
Genesis MLP 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 were abandoned by
their respective holders and cancelled by the Partnership, (b) the
Previous Agreement and the Genesis MLP Partnership Agreement were
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 would not accrue
arrearages if the Minimum Quarterly Distribution is not paid in full in
any Quarter, (c) Salomon contributed 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 made a special distribution of the Remaining
Distribution Support less the costs incurred in connection with the
Restructuring to Genesis MLP and Genesis MLP made a special
distribution of such amount to the holders of MLP Common Units, (e) the
Distribution Support Agreement was terminated, (f) Genesis MLP withdrew
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 was 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 was
converted into a 0.01% general partner interest and (h) Salomon's $300
million credit support obligation under the Master Credit Support
Agreement was extended until December 31, 2001 on the current terms and
conditions;
WHEREAS, on December 7, 2000, the General Partner and certain other
parties amended and restated the Previous Agreement to enter into the
Second Amended and Restated Agreement of Limited Partnership of Genesis
Crude Oil, L.P. ("Second Amended Agreement") to reflect the
Restructuring and such other changes that, in the discretion of the
General Partner, did not adversely affect the Limited Partners in any
material respect;
WHEREAS, on May 14, 2002, Genesis Energy, L.L.C., the sole general
partner was converted from a Delaware limited liability company to a
Delaware corporation pursuant to Delaware law and such corporation is
incorporated in the state of Delaware as Genesis Energy, Inc.; and
WHEREAS, Genesis Energy, Inc., as the sole general partner, and Genesis
MLP, as the sole limited partner, now desire to amend and restate the
Second Amended Agreement to reflect the change in the General Partner's
name and form as a Delaware corporation on May 14, 2002, 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 Second
Amended 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 Third 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 Third 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, INC.
By: /s/ Mark J. Gorman
------------------------
Name: Mark J. Gorman
Title: President and Chief Executive Officer
LIMITED PARTNER
GENESIS ENERGY, L.P.
By: GENESIS ENERGY, INC.,
As General Partner
By: /s/ Mark J. Gorman
------------------------
Name: Mark J. Gorman
Title: President and Chief Executive Officer