AGREEMENT OF LIMITED PARTNERSHIP OF GRAHAM PACKAGING POLAND, L.P

Exhibit 3.16

AGREEMENT OF LIMITED PARTNERSHIP
OF
GRAHAM PACKAGING POLAND, L.P.

DATED AS OF OCTOBER 7, 1994

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AGREEMENT OF LIMITED PARTNERSHIP

OF

GRAHAM PACKAGING POLAND, L.P.

THIS AGREEMENT OF LIMITED PARTNERSHIP is entered into as of the 7th day of October, 1994, by and between Graham Packaging Corporation, a Pennsylvania corporation with its offices at 1420 Sixth Avenue, York, Pennsylvania 17405, as general partner (the “General Partner”), and Graham Packaging Company, a Pennsylvania limited partnership with its offices at 1420 Sixth Avenue, York, Pennsylvania 17405, as limited partner (the “Limited Partner”). The General Partner and the Limited Partner are hereinafter sometimes referred to collectively as the “Partners” and individually as a “Partner.”

W I T N E S S E T H :

WHEREAS, the General Partner and the Limited Partner have formed a limited partnership (the “Partnership”) in accordance with the provisions of the Pennsylvania Revised Uniform Limited Partnership Act, under the name Graham Packaging Poland, L.P. pursuant to a Certificate of Limited Partnership filed on October 7, 1994;

WHEREAS, on the date hereof, the General Partner is contributing to the Partnership $1.00 in exchange for a general partner interest in the Partnership as hereinafter set forth; and

WHEREAS, on the date hereof, the Limited Partner is contributing to the Partnership $99.00 in exchange for a 99% limited partner interest in the Partnership;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto hereby agree that the Agreement of Limited Partnership of the Partnership shall read in its entirety as follows:

ARTICLE 1

THE LIMITED PARTNERSHIP

1.1                                  Formation .

(a)                                   The General Partner and the Limited Partner have become partners in a limited partnership (hereinafter referred to as the “Partnership”) formed under and pursuant to the provisions of the Act to engage in the business hereinafter described for the period and upon the terms and conditions hereinafter set forth.

(b)                                  The General Partner and the Limited Partner have been admitted to the Partnership as a general partner and limited partner, respectively, and have contributed to the capital of the Partnership their initial Capital Contributions, as set forth in Section 3.1 below.

1.2                                  Certificate of Limited Partnership .  The General Partner has executed and caused to be filed on October 7, 1994 a Certificate of Limited Partnership of the Partnership (hereinafter referred to as the “Certificate”) in the office of the Secretary of State of the Commonwealth of Pennsylvania, and hereafter shall execute such further documents (including any further amendments to the Certificate) and take such further action as shall be appropriate to comply with all requirements of law for the formation and operation of a limited partnership in the Commonwealth of Pennsylvania and all other counties and states where the Partnership may elect to do business.

1.3                                  Name .  The name of the Partnership is Graham Packaging Poland, L.P. The General Partner may change the name of the Partnership or cause the business of the Partnership to be conducted under any other name.

1.4                                  Character of Business .  The business of the Partnership shall be the manufacture of plastic blow-molded and injection molded containers and enclosures in Eastern Europe and such other activities and business as are incidental to the foregoing, whether directly or indirectly through the investment in or participation with, one or more partnerships, subsidiaries or joint ventures conducting the foregoing activities and business.  For such purposes, the Partnership shall have and exercise all the powers now or hereafter conferred by the laws of the Commonwealth of Pennsylvania on limited partnerships formed under the laws of that Commonwealth, and to do any and all things as fully as natural persons might or could do as are not prohibited by law, in furtherance of the aforesaid business of the Partnership.  The business of the Partnership shall be conducted in accordance with, and any action required or permitted to be taken by the General Partner or the Limited Partner shall be taken in compliance with, all applicable laws, rules and regulations.

1.5                                  Principal Offices .  The location of the principal offices of the Partnership shall be at 1420 Sixth Avenue, York, Pennsylvania, or at such other location as may be selected from time to time by the General Partner.  The Partnership may maintain such other offices at such other places as the General Partner deems advisable.

1.6                                  Fiscal Year .  The fiscal year of the Partnership shall be the calendar year (the “Partnership Year”).

ARTICLE 2

DEFINITIONS

The following defined terms used in this Agreement shall have the respective meanings specified below.

2.1                                  Act .   “Act” shall mean the Pennsylvania Revised Uniform Limited Partnership Act (15 Pa. Cons. Stat. ch. 85), as amended from time to time and any successor to such Act.

2.2                                  Affiliate .  “Affiliate” shall mean (i) any Person directly or indirectly controlling, controlled by or under common control with another Person, (ii) a Person owning

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or controlling ten percent (10%) or more of the outstanding voting securities of such other Person, (iii) any officer, director or general partner of such other Person, and (iv) if such other Person is an officer, director or general partner, any other entity for which such Person acts in any capacity.

2.3                                  Agreement .  This “Agreement” shall refer to this Agreement of Limited Partnership.

2.4                                  Auditor .  “Auditor” shall mean Ernst & Young or any successor firm of independent auditors selected by the General Partner.

2.5                                  Available Cash .  “Available Cash” shall mean at any point in time all cash and cash equivalents on hand of the Partnership from any source (including, without limitation, any proceeds from borrowings) less cash reasonably reserved or reasonably anticipated to be required for debts and expenses, interest and scheduled principal payments on any indebtedness, capital expenditures, taxes or the activities of the Partnership (including payments to Partners under any agreement other than this Agreement).

2.6                                  Bankruptcy .  The “Bankruptcy” of a Partner shall mean (i) the filing by a Partner of a voluntary petition seeking liquidation, reorganization, arrangement or readjustment, in any form, of its debts under Title 11 of the United States Code or any other federal or state insolvency law, or a Partner’s filing an answer consenting to or acquiescing in any such petition, (ii) the making by a Partner of any assignment for the benefit of its creditors or (iii) the expiration of sixty days after the filing of an involuntary petition under Title 11 of the United States Code, an application for the appointment of a receiver for the assets of a Partner, or an involuntary petition seeking liquidation, reorganization, arrangement or readjustment of its debts under any other Federal or state insolvency law, provided that the same shall not have been vacated, set aside or stayed within such sixty-day period.

2.7                                  Capital Account .  The “Capital Account” of a Partner shall be (a) credited with (i) the amount of cash or, in the case of non-cash asset contributions, the gross fair market value of such capital contributions as agreed upon by the Partners at the time such contribution is made less liabilities assumed by the Partnership in connection with such contributions (or to which any such contributed assets are subject) and (ii) such Partner’s allocable share of Profits of the Partnership and (b) debited with (i) the amount of any cash and the fair market value of any property distributed to it pursuant to Section 5.1, and (ii) such Partner’s allocable share of Losses of the Partnership.

2.8                                  Capital Contribution .  The “Capital Contribution” of a Partner shall be the amount which such Partner contributes to the capital of the Partnership as provided in Article 3.

2.9                                  Certificate . “Certificate” shall have the meaning ascribed to such term in Section 1.2.

2.10                            Code .    “Code” shall mean the Internal Revenue Code of 1986, as amended and in effect from time to time, or the corresponding provisions of any successor statute.

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2.11                            Depreciation . “Depreciation” shall mean, for each fiscal year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis.

2.12                            Event of Withdrawal .  “Event of Withdrawal” shall have the meaning ascribed to such term in Subsection 10.1(b).

2.13                            General Partner . “General Partner” shall have the meaning ascribed to such term in the first paragraph of this Agreement.

2.14                            Generally Accepted Accounting Principles .   “Generally Accepted Accounting Principles” shall refer to generally accepted accounting principles as in effect from time to time in the United States of America.

2.15                            Gross Asset Value .   “Gross Asset Value” shall mean, with respect to any asset, the asset’s adjusted basis for federal income tax purposes except as follows:

(a)                                   The initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be the gross fair market value of such asset at the time of such contribution, as agreed to by the Partners;

(b)                                  The Gross Asset Values of all Partnership assets shall be adjusted to equal their respective gross fair market values, as agreed to by the Partners, as of the following times: (a) the acquisition of an additional interest in the Partnership by any new or existing Partner in exchange for more than a de minimis capital contribution; (b) the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property other than money, unless all Partners receive simultaneous distributions of undivided interests in the distributed property in proportion to their respective Percentage Interests; (c) the liquidation of the Partnership within the meaning of Treas. Reg. §1.704-l(b)(2)(ii)(g); and (d) the termination of the Partnership for federal income tax purposes pursuant to Section 708(b)(l)(B) of the Code; and

(c)                                   The Gross Asset Value of any Partnership asset distributed to any Partner shall be the gross fair market value of such asset on the date of distribution.

If the Gross Asset Value of an asset has been determined or adjusted pursuant to Subsections 2.15(1) or (2) hereof, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses.

2.16                            Limited Partner . “Limited Partner” shall have the meaning ascribed to such term in the first paragraph of this Agreement.

2.17                            Partner . “Partner” shall have the meaning ascribed to such term in the first paragraph of this Agreement.

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2.18                            Partnership . “Partnership” shall have the meaning ascribed to such term in Subsection 1.1(a).

2.19                            Partnership Interest . “Partnership Interest” shall, refer, with respect to a given Partner as of a given date, to such Partner’s general partner interest in the Partnership (if any) and such Partner’s limited partner interest in the Partnership (if any), in each case as of such date.

2.20                            Partnership Year . “Partnership Year” shall have the meaning ascribed to such term in Section 1.6.

2.21                            Percentage Interest .  The “Percentage Interest” of the General Partner shall be 1%, and the “Percentage Interest” of the Limited Partner shall be 99%.

2.22                            Person .     “Person” shall include an individual, a partnership, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof, and any other entity.

2.23                            Profits and Losses . “Profits” and “Losses” shall mean, for each fiscal year or other period, an amount equal to the Partnership’s taxable income or loss for such year or period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments:

(a)                                   Any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this Section 2.23 shall be added to such taxable income or loss;

(b)                                  Any expenditures of the Partnership described in Section 705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B) expenditures pursuant to Treas. Reg. §1.704-l(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this Section 2.23, shall be subtracted from such taxable income or loss;

(c)                                   In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to Subsection 2.15(2) or (3) hereof, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses;

(d)                                  Gain or loss resulting from any disposition of Partnership property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value; and

(e)                                   In lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such fiscal year or other period.

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2.24                            Transfer . “Transfer” shall mean any assignment, mortgage, hypothecation, transfer, pledge, creation of a security interest in or lien upon, encumbrance, gift or other disposition.

2.25                            General Provisions .  As used in this Agreement, except as the context otherwise requires, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, feminine and the neuter.  The words “herein”, “hereof and “hereunder” and other words of similar import refer to this Agreement as a whole, including the Schedules hereto, and not to any particular Article, Section, Subsection, Clause or Subdivision contained in this Agreement.

ARTICLE 3

CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS

3.1                                  Initial Capital Contributions .

(a)                                   The General Partner, as its initial Capital Contribution to the capital of the Partnership, has contributed $1.00 to the Partnership.

(b)                                  The Limited Partner, as its initial Capital Contribution to the capital of the Partnership, has contributed $99.00 to the Partnership.

3.2                                  Capital Accounts .  A Capital Account shall be established and maintained for each Partner on the books of the Partnership.  Each Partner’s interest in the capital of the Partnership shall be represented by its Capital Account.  The initial Capital Account of each Partner shall reflect such Partner’s Capital Contribution pursuant to Section 3.1.

3.3                                  Negative Capital Accounts .  At no time during the term of the Partnership or upon dissolution and liquidation thereof shall a Limited Partner with a negative balance in its Capital Account have any obligation to the Partnership or the other Partners to restore such negative balance.

3.4                                  Compliance with Treasury Regulations .  The foregoing provisions and the other provisions of this Agreement relating to the maintenance of capital accounts are intended to comply with Section 704(b) of the Code and Treas. Reg. §§1.704-l(b) and 1.704-2 (or any corresponding provision of succeeding law) and shall be interpreted and applied in a manner consistent with such Regulation.  In the event the General Partner shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto, are computed in order to comply with such Regulation, the Partnership may make such modifications.  The Partnership also shall make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Section 704(b) of the Code and Treas. Reg. §§1.704-l(b) and 1.704-2 (or any corresponding provision of succeeding law).

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3.5                                  Succession to Capital Accounts .  In the event any interest in the Partnership is transferred in accordance with the terms of this Agreement and the Organization Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred interest.  For purposes of the preceding sentence, the portion of the Capital Account to which the transferee succeeds shall be that percentage of the transferor’s total Capital Account as the Percentage Interest being transferred bears to the total Percentage Interest of the transferor.

3.6                                  Certain Adjustments .  In the event the Gross Asset Values of the assets of the Partnership are adjusted pursuant to the provisions of this Agreement, the Capital Accounts of all Partners shall be adjusted simultaneously to reflect the aggregate net adjustment as if the Partnership recognized gain or loss equal to the amount of such aggregate net adjustment.

3.7                                  No Withdrawal of Capital Contributions .  No Partner shall withdraw any Capital Contributions without the unanimous written approval of the other Partners.  No Partner shall receive any interest with respect to its Capital Contributions.

ARTICLE 4

COSTS AND EXPENSES

4.1                                  Organizational and Other Costs .  The Partnership shall pay or cause to be paid all costs and expenses incurred in connection with the formation and organization of the Partnership.  Such costs and expenses to be borne by the Partnership shall include, without limitation, all related accounting, consulting, filing and registration costs.

4.2                                  Operating Costs .  The Partnership shall (i) pay or cause to be paid all costs and expenses of the Partnership incurred in pursuing and conducting, or otherwise related to, the business of the Partnership, (ii) pay or cause to be paid all employment-related costs and expenses incurred by the General Partner in pursuing and conducting the business of the Partnership, and (iii) reimburse the General Partner for any out-of-pocket costs and expenses incurred by it in connection therewith (including, without limitation, in the performance of its duties as tax matters partner) to the extent permitted by Section 6.5.

ARTICLE 5

DISTRIBUTIONS; PARTNERSHIP ALLOCATIONS;
TAX MATTERS

5.1                                  Distributions Prior to Dissolution .

(a)                                   Except as provided in Section 10.3, all distributions on and after the date of this Agreement shall be made to the Partners in proportion to their respective Percentage Interests.

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(b)                                  Available Cash shall be distributed to the Partners at the following times and in the following amounts:

(i)                                      On or before ninety days after the end of each Partnership Year, Available Cash shall be distributed to the Partners in proportion to their respective Percentage Interests in an aggregate cumulative amount at least equal to the sum of (1) the income tax liability for the Partner with the largest percentage income tax liability (of itself or its shareholders) from cumulative Partnership taxable income allocated to such Partner under Subsection 5.2(b) hereof, and (2) for the other Partners, a proportional cash amount adjusted only for respective Percentage Interests; and

(ii)                                   Any remaining Available Cash shall be distributed to the Partners in proportion to their respective Percentage Interests at such times and in such amounts as the General Partner shall determine.

5.2                                  Partnership Allocations .

(a)                                   Except as otherwise provided in Section 5.2 or elsewhere in this Agreement, for purposes of this Agreement, and for federal, state and local income tax purposes, all items of Profits, Losses, income, gain, loss, deduction or credit shall be determined with respect to each taxable year of the Partnership as of the end thereof, and allocated to the Partners in accordance with their then Percentage Interests.  Each Partner’s Percentage Interest shall constitute its interest in partnership profits for purposes of determining such Partner’s share of nonrecourse liabilities of the Partnership under Treas. Reg. §1.752-3(a)(3).

(b)                                  Notwithstanding Subsection 5.2(a):

(i)                                      Minimum Gain and Hypothetical Capital Accounts .  For purposes of complying with Treasury Regulations relating to tax allocation, the Partnership’s “minimum gain,” “minimum gain attributable to partner nonrecourse debt” and the Partners’ hypothetically adjusted Capital Accounts (“Hypothetical Capital Accounts”) must be determined from time to time.  The amount of minimum gain or minimum gain attributable to partner nonrecourse debt is determined in accordance with Treas. Reg. §.1.704-2(d) or 1.704-2(i), as the case may be, by computing, with respect to each nonrecourse liability of the Partnership, the amount of gain (of whatever character), if any, that would be realized by the Partnership if it disposed of (in a taxable transaction) the Partnership property subject to such liability in full satisfaction thereof, and by then aggregating the amounts so computed.  A Partners’ Hypothetical Capital Account shall equal its true Capital Accou