<PAGE>
Exhibit 10.9
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
NOARK
PIPELINE SYSTEM, LIMITED PARTNERSHIP
JANUARY 12, 1998
<PAGE>
TABLE OF CONTENTS
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF NOARK
PIPELINE
SYSTEM, LIMITED
PARTNERSHIP.............................................
1
ARTICLE I
DEFINITIONS....................................................
2
1.1
Definitions............................................
2
1.2 Other
Terms............................................ 9
ARTICLE II FORMATION OF LIMITED
PARTNERSHIP.............................. 9
2.1
Formation..............................................
9
2.2
Name...................................................
9
2.3 Offices
and Registered Agent........................... 9
2.4 Term of
Partnership.................................... 9
2.5
Purpose................................................
10
2.6
Representations and Warranties Concerning Partnership..
10
ARTICLE III MANAGEMENT OF THE
PARTNERSHIP................................ 10
3.1 Management
Committee................................... 10
3.2
Composition of Management Committee....................
10
3.3 Meetings
of Management Committee....................... 10
3.4 Partners
Meetings...................................... 11
3.5
Restrictions on Authority of the Management Committee..
13
3.6 Project
Leader......................................... 15
3.7
Delegation.............................................
18
3.8
Officers...............................................
19
3.9
Claims.................................................
19
3.10
Disputed Charges.......................................
20
ARTICLE IV FINANCING OF THE
PARTNERSHIP.................................. 20
4.1 Existing
Capital Accounts Balances..................... 20
4.2 Capital
Contributions.................................. 20
4.3 Failure to
Contribute.................................. 22
4.4
Capital
Accounts....................................... 22
4.5 Loans by
Partners...................................... 22
4.6
Interest...............................................
22
4.7 Time for
Return of Contributions....................... 23
4.8 Limited
Liability of the Limited Partners.............. 23
4.9 Benefits
of Agreement.................................. 23
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ARTICLE V CAPITAL AND INCOME ALLOCATIONS AND
DISTRIBUTIONS................ 22
5.1
Allocations Controlling for Capital Account Purpose......
22
5.2 General
Allocation of Profits and Losses................. 23
5.3 Special
Interest Expense................................. 24
5.4
Preferential Allocations.................................
24
5.5 Special
Profits Allocations.............................. 26
5.6 Other
Allocation Rules................................... 27
5.7 Cash
Distributions....................................... 27
5.8 Amounts
Withheld......................................... 27
5.9
Reimbursements...........................................
28
ARTICLE VI RELATIONS OF THE
PARTNERS....................................... 28
6.1 Restricted
Transactions.................................. 28
6.2
Exculpation from Liability...............................
29
6.3
Indemnification..........................................
30
6.4 Title to
Partnership Assets.............................. 31
ARTICLE VII ASSIGNABILITY OF PARTNERS'
INTERESTS........................... 32
7.1
Restrictions on Transfer of Partner's Interest...........
32
7.2 Right of
First Refusal................................... 32
7.3 Opinion of
Counsel....................................... 32
7.4
Substituted
Partner...................................... 33
7.5
Recognition of Transferee as Partner.....................
33
7.6 Binding
Effect........................................... 34
7.7 Permitted
Transfers of Partnership Interests............. 34
7.8 Succession
to Capital Account............................ 34
ARTICLE VIII WITHDRAWAL AND REMOVAL; ADMISSION OF SUCCESSOR AND
ADDITIONAL
GENERAL
PARTNERS..........................................................
34
8.1 Voluntary
Withdrawal.................................... 34
8.2 Other
Withdrawal Events................................. 34
8.3 Removal of
a Partner.................................... 34
8.4 Liability
of a Withdrawn General Partner................ 35
8.5 Additional
or Successor Partners........................ 35
8.6
Continuation of Partnership.............................
35
8.7
Automatic
Suspension of the Vote and Right to
Participate in Management of Partnership Affairs .......
35
ARTICLE IX DISSOLUTION AND
LIQUIDATION.................................... 36
9.1
Dissolution.............................................
36
9.2
Liquidation.............................................
36
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ARTICLE X ALLOCATIONS AND DISTRIBUTIONS ON
LIQUIDATION................... 36
10.1
Liquidation and Termination............................
36
10.2
Capital Account Deficits...............................
37
10.3
Special Distributions..................................
37
10.4
Deemed Distribution and Recontribution.................
38
ARTICLE XI CERTIFICATES AND OTHER
DOCUMENTS.............................. 38
11.1
Project Leader as Attorney for Partners................
38
11.2
Making and Filing of Certificate.......................
40
11.3
Cancellation of Certificates Evidencing
Partnership Interests..................................
40
ARTICLE XII BOOKS OF ACCOUNT, FINANCIAL STATEMENTS AND FISCAL
MATTERS.... 40
12.1
Books of Account.......................................
40
12.2
Reports and Financial Statements.......................
40
12.3
Tax Returns and Other Reports..........................
41
12.4
Fiscal Year............................................
41
12.5
Bank Accounts, Funds and Assets........................
41
12.6
Tax Elections..........................................
41
12.7
Other Partnership Records..............................
42
12.8
Survival of Tax Provision..............................
43
12.9
Deposit of Funds ......................................
43
ARTICLE XIII DISPUTE RESOLUTION
......................................... 43
13.1
Invoking Procedure.....................................
43
13.2
Stalemate Defined......................................
44
13.3
Investigation..........................................
44
13.4
Neutral................................................
45
13.5
Schedule...............................................
45
13.6
Discovery..............................................
45
13.7
Written Submission.....................................
45
13.8
Representatives........................................
45
13.9
Structure..............................................
45
13.10
Mandatory..............................................
46
13.11
Fees...................................................
46
13.12
Later Proceedings......................................
46
13.13
Dispute
Resolution..................................... 46
ARTICLE XIV LIMITATION OF
AUTHORITY...................................... 49
ARTICLE XV LIMITATION OF
LIABILITIES..................................... 49
ARTICLE XVI
MISCELLANEOUS................................................
49
iii
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16.1
Notices................................................
49
16.2
Captions and Pronouns..................................
50
16.3
Binding Effect.........................................
51
16.4
Amendment of the Agreement.............................
51
16.5
Governing Law..........................................
51
16.6
Counterparts and Execution.............................
51
16.7
Severability...........................................
51
16.8
Waiver.................................................
51
16.9
Attorneys' Fees........................................
51
16.10
Construction...........................................
52
I.
EXHIBITS:
EX. NO.
- Description of
Interconnection, Integration and
Expansion of Pipeline Facilities of NOARK and Ozark
A
- Accounting
Procedures
B
II. SCHEDULES:
SCH. NO.
- Initial Capital
Account Balances
4.1
- Special Revenue
Allocation Base Amounts
5.4(a)
- Supply Receipt
Points on NOARK Pipeline System
5.4(b)
- Special Revenue
Allocation Examples (5)
5.4(d)
- Insurance
6.3(d)
iv
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THE SECURITIES REPRESENTED BY THIS AGREEMENT OF LIMITED PARTNERSHIP
HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. SUCH
SECURITIES MAY NOT
BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME
WHATSOEVER,
EXCEPT UPON REGISTRATION OR UPON DELIVERY TO THE PARTNERSHIP OF AN
OPINION OF
COUNSEL SATISFACTORY TO THE GENERAL PARTNERS THAT REGISTRATION IS
NOT REQUIRED
FOR SUCH TRANSFER OR THE SUBMISSION TO THE GENERAL PARTNERS OF THE
PARTNERSHIP
OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE GENERAL
PARTNERS TO THE
EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE
SECURITIES ACT OF
1933, AS AMENDED, APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR
REGULATION
PROMULGATED UNDER SUCH ACT OR LAWS.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
NOARK PIPELINE SYSTEM, LIMITED PARTNERSHIP
This
Amended and Restated Agreement of Limited Partnership
("Agreement")
is made as of January 12, 1998, by and among the Partners (as
defined below).
RECITALS
A. NOARK
Pipeline System, Limited Partnership, an Arkansas limited
partnership (the "Partnership") was formed and organized under the
terms of that
certain Limited Partnership Agreement dated as of October 10, 1991
(the
"Original Agreement").
B. The
Original Agreement was amended by that certain Amendment No. 1
to
the Original Agreement, dated February 24, 1993.
C. SWPL
and EAPC and their Affiliates have entered into an Omnibus
Project
Agreement dated January 12, 1998 which contemplates, among other
things, this
amendment and restatement of the Original Agreement, as amended, in
its
entirety.
D. The
Parties intend that this Agreement replaces and supersedes the
Original Agreement, as amended, in its entirety.
In
consideration of the mutual promises made herein, and for other
good
and valuable consideration, the receipt and sufficiency of which
are hereby
acknowledged, the Partners hereby agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.1
Definitions. The following terms used in this Agreement shall
(unless
otherwise expressly provided herein or unless the context otherwise
requires)
have the following respective meanings:
"Act"
means the Arkansas Revised Limited Partnership Act of 1991,
Ark.
Code Ann. Section 4-43-101 et seq., as it may be amended from time
to time, and
any successor act.
"Affiliate" or "Affiliates" means with respect to any Person,
except as
otherwise provided herein: (i) any person or entity directly or
indirectly
controlling, controlled or under common control with such Person;
(ii) any
person or entity directly or indirectly owning or controlling ten
percent (10%)
or more of the outstanding voting securities or ownership interests
of such
Person; (iii) any person or entity ten percent (10%) or more of
whose
outstanding voting securities or ownership interests are directly
or indirectly
owned or controlled by such Person; (iv) any officer, director,
partner, manager
or member of a Person; and (v) any company for which a Person acts
as an
officer, director, partner, manager or member.
"Budget"
means the annual budget of anticipated capital and operating
costs of the Partnership described in Section 3.6(g) hereof.
"Capital
Account" means, with respect to a Partner, the Capital Account
determined and maintained for such Partner in accordance with the
following
provisions:
(a) The
initial balances of each Capital Account shall be the amounts
set forth in Schedule 4.1.
(b) To
each Partner's Capital Account there shall be credited such
Partner's future Capital Contributions when made, such Partner's
distributive
share of Profits, allocated pursuant to Section 5.2 hereof, any
items in the
nature of income or gain that are specially or curatively allocated
pursuant to
Sections 5.3 through 5.5 hereof, and the amount of any Partnership
liabilities
assumed by such Partner or which are secured by any asset of the
Partnership
distributed to such Partner.
(c) To
each Partner's Capital Account there shall be debited the
amount
of cash and the Gross Asset Value of any Partnership asset
distributed to such
Partner pursuant to any provision of this Agreement, such Partner's
distributive
share of Losses allocated pursuant to Section 5.2 hereof, any items
in the
nature of deductions or losses that are specially or curatively
allocated
pursuant to Sections 5.3 through 5.5 hereof, and the amount of any
liabilities
of such Partner assumed by the Partnership or which are secured by
any property
contributed by such Partner to the Partnership.
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(d) In the
event all or a portion of a Partnership Interest is transferred
in accordance with the terms of this Agreement, the transferee
shall succeed to
the Capital Account of the transferor to the extent it relates to
the
transferred Partnership Interest.
(e) In
determining the amount of any liability for purposes of this
definition of Capital Accounts, there shall be taken into account
Code Section
752(c) and any other applicable provisions of the Code and
Regulations.
The
foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to
have a
"substantial economic effect" and to reflect the Partners' economic
interests in
the Partnership for tax purposes. However, in the event that
changes in the
allocations are required by the Service or any other taxing
authority or other
curative allocations and adjustments to the Capital Accounts may be
required for
income tax purposes to comply with Treas. Reg. Section 1.704-1(b)
or otherwise,
the Partners agree that such allocations and adjustments will not
be made to the
Capital Accounts and the Capital Accounts as herein calculated will
control upon
liquidation.
"Capital
Contributions" means, with respect to any Partner, the amount
of
money and the initial Gross Asset Value of any property (other than
money)
contributed in the future to the Partnership with respect to the
Partnership
Interest held by such Partner. Loans to the Partnership shall not
be included in
the Capital Account of any Partner. The principal amount of a
promissory note
which is not readily traded on an established securities market and
which is
contributed to the Partnership by the maker of the note shall not
be included in
the Capital Account of any Partner until the Partnership makes a
taxable
disposition of the note or until (and to the extent) principal
payments are made
on the note, all in accordance with Treas. Reg. Section 1.704-1
(b)(2)(iv)(d)(2)
(relating to the contributions to a partnership of promissory
notes).
"Certificate of Limited Partnership" means the Certificate of
Limited
Partnership of the Partnership filed with the Secretary of the
State of
Arkansas, as it may be amended and/or restated from time to
time.
"Code"
means the Internal Revenue Code of 1986, as amended from time
to
time (or any corresponding provisions of succeeding law).
"Depreciation" means, 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; provided, however, that if the Federal income
tax
depreciation, amortization, or other cost recovery deduction for
such year is
zero, Depreciation shall
3
<PAGE>
be determined with reference to such beginning Gross Asset Value
using any
reasonable method selected by the Management Committee.
"EAPC"
means Enogex Arkansas Pipeline Corporation, an Oklahoma
corporation.
"Existing
Loans" means the NOARK Debt, and any subsequent loans to the
Partnership replacing the then existing principal balance of the
NOARK Debt, or
the then existing principal balance of such subsequent loans, as
applicable.
"Expansion" means an expansion of the pipeline facilities included
within
the System by looping, adding compression, extending the mainline,
or by
constructing or purchasing laterals or gathering facilities linking
such
pipeline facilities to a Partner's or a third party's
facilities.
"General
Partner" or "General Partners" means EAPC and SWPL, and any
additional Person admitted as a general partner of the Partnership,
but does not
include any Person who has ceased to be a general partner of the
Partnership.
"Gross
Asset Value" means, with respect to any asset, the asset's
adjusted
basis for Federal income tax purposes, except as follows:
(a) The
Gross Asset Value of the Partnership's assets as of the date of
this Agreement shall be consistent with the initial balances of the
Capital
Accounts as set forth in Schedule 4.1.
(b) 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,
as
determined by agreement between the contributing Partner and the
other Partners;
(c) The
Gross Asset Values of all Partnership assets shall be adjusted
to
equal their respective gross fair market values, as determined by
a
SuperMajority in Interest of the Partners as of the following
times: (i) the
acquisition of an additional interest in the Partnership by a new
or existing
Partner in exchange for more than a de minimis Capital
Contribution; (ii) the
distribution by the Partnership to a Partner of more than a de
minimis amount of
Property as consideration for an interest in the Partnership; and
(iii) the
liquidation of the Partnership within the meaning of Treas. Reg.
Section
1.704-1(b)(2)(ii)(g) (relating to when a liquidation of a
partnership occurs);
provided, however, that adjustments pursuant to clauses (i) and
(ii) above shall
be made only if a SuperMajority in Interest of the Partners
determines that such
adjustments are necessary or appropriate to reflect the relative
economic
interests of the Partners in the Partnership;
(d) 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 as determined by the Partners (or by an independent
appraiser if
the Partners are unable to agree upon a value); and
4
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(e) The
Gross Asset Values of Partnership assets shall be increased or
decreased to reflect any adjustments to the adjusted basis of such
assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent
that such adjustments are taken into account in determining Capital
Accounts
pursuant to Treas.
Reg. Section 1.704-1(b)(2)(iv)(m)(relating to Code Section
754 elections) and the definition of Capital Account hereof.
"Indemnitee" shall mean (i) any Partner or any former Partner, (ii)
any
Project Leader or former Project Leader, (iii) the Management
Committee or any
member or former member of the Management Committee, (iv) any
Person who is or
was a NOARK Related Entity, (v) any Person who is or was an
Affiliate of a
Partner or a former Partner who is or was performing or providing
services on
behalf of the Partnership (including any NOARK Related Entity),
(vi) any Person
who is or was an officer, director, employee, partner, agent or
trustee of the
Partner, the Partnership (including any NOARK Related Entity), any
former
Partner, or any such Affiliate, or (vii) any Person who is or was
serving at the
request of a Partner, any former Partner, or any such Affiliate, as
a director,
officer, employee, partner, agent, attorney or trustee of such
Partner, former
Partner or Affiliate.
"Inservice
Expansion Date" means the date on which the interconnection,
integration and expansion of the pipeline facilities of the
Partnership and
Ozark (as more fully described on Exhibit A) are completed and
commence full
time operations.
"Limited
Partner" or "Limited Partners" means EAPC with respect to its
Partnership Interest as a Limited Partner and its successor, and
any other
person or entity admitted as a Limited Partner of the Partnership
pursuant to
this Agreement, but does not include any Person who has ceased to
be a Limited
Partner.
"Liquidator" means the Person in charge of the liquidation of
the
Partnership's assets which shall be the Management Committee unless
a
SuperMajority in Interest of Partners designates another Person as
Liquidator.
"Major
Decision" shall have the meaning set forth in Section 3.5 of
this
Agreement.
"Management Committee" means the Management Committee described in
Article
III of this Agreement.
"Management Committee Approval" shall have the meaning set forth
in
Section 3.3 of this Agreement.
5
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"NOARK
Debt" means (a) the debt incurred by NOARK pursuant to the terms
of
that certain Credit Agreement and related documents dated as of
February 26,
1993 among NOARK, the lenders and The First National Bank of
Chicago, as Agent,
as amended by the First Amendment to NOARK Pipeline System, Limited
Partnership
Credit Agreement dated February 1, 1994 and (b) the debt incurred
by NOARK
pursuant to the terms of that certain Construction Loan and Note
Purchase
Agreement and related documents dated as of October 10, 1991 and as
amended by
Amendment No. 1 and Amendment No. 2 to the Construction Loan and
Note Purchase
Agreement dated as of January 29, 1993 and February 24, 1993,
respectively,
between NOARK and The Prudential Insurance Company of America.
"NOARK
Related Entity" means any Person which is wholly owned by the
Partnership.
"Omnibus
Agreement" means that certain Omnibus Project Agreement dated
as
of January 12, 1998, by and among EAPC, SWPL, Southwestern Energy
Company and
Enogex Inc.
"Ozark"
means Ozark Pipeline, Inc., a Delaware corporation.
"Ozark
Acquisition" means the transaction in which Enogex Interstate
Transmission, L.L.C. will acquire all of the pipeline assets of
Ozark or all of
the issued and outstanding capital stock of Ozark.
"Partners"
or "Partner" means the General Partners and the Limited
Partner, or any of them individually.
"Partnership" means NOARK Pipeline System, Limited Partnership,
an
Arkansas limited partnership.
"Partnership Agreement" or "Agreement" means this Amended and
Restated
Agreement of Limited Partnership.
"Partnership Interest" means that interest of a Partner in the
Partnership, as described in this Agreement.
"Partnership Percentage" means the percentage of each Partner in
the
Partnership as the same may change from time to time in accordance
with the
terms of this Agreement. As of the date of this Agreement, the
Partnership
Percentage of each Partner is as set forth below:
SWPL
60% (entirely as a General Partner)
EAPC
40% (39% as a General Partner and 1% as a Limited Partner)
6
<PAGE>
At such time as the Ozark Acquisition is consummated and all of the
ownership
interests of Enogex Interstate Transmission, L.L.C. are contributed
to the
Partnership as provided for in Section 3 of the Omnibus Agreement,
the
Partnership Percentage of each Partner shall be changed to the
following:
SWPL
32% (entirely as a General Partner)
EAPC
68% (67% as a General Partner and 1% as a Limited Partner)
On the Inservice
Expansion Date, the Partnership Percentage of each
Partner shall be changed to the following:
SWPL
25% (entirely as a General Partner)
EAPC
75% (74% as a General Partner and 1% as Limited Partner)
"Person" means
any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint
stock company,
trust, unincorporated organization or other entity.
"Profits"
and "Losses" means, 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 Code Section 703(a) (for this
purpose, all items
of income, gain, loss, or deduction required to be stated
separately pursuant to
Code Section 703(a)(1) 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 definition of Profits and Losses shall be added to such
taxable income or
loss;
(b) Any
expenditures of the Partnership described in Code Section
705(a)
(2)(B)or treated as Code Section 705(a)(2)(B) expenditures pursuant
to Treas.
Reg. Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into
account in
computing Profits or Losses pursuant to this definition of Profits
and Losses,
shall be subtracted from such taxable income or loss;
(c) In the
event the Gross Asset Value of any Partnership asset is
adjusted as required by the terms of subsections (c), (d) or (e) of
the
definition of Gross Asset Value 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 assets
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
7
<PAGE>
(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 in
accordance with the definition of Depreciation herein.
(f) Any
items of gross income specially allocated pursuant to Section
5.4
or interest expense allocated pursuant to Section 5.3 shall not be
considered
when calculating "Profits" or "Losses" because such items are
specially
allocated.
"Project
Leader" means the person designated as Project Leader in
accordance with Section 3.6 hereof.
"Proposing
Partner" shall have the meaning set forth in Section 4.2(b) of
this Agreement.
"SWPL"
means Southwestern Energy Pipeline Company, an Arkansas
corporation
and its permitted successors and assigns.
"Service"
means the Internal Revenue Service of the United States of
America.
"Substituted Partner" shall refer to a Transferee of a
Partner's
Partnership Interest who is admitted to the Partnership as a
Partner in
accordance with the provisions of Section 7.4 of this
Agreement.
"SuperMajority in Interest" means such of the Partners as have, at
the
time of determination, eighty percent (80%) or more of the
Partnership
Percentages of all Partners.
"System"
shall mean the pipeline system and related equipment and
property
owned, directly or indirectly, by the Partnership (including any
NOARK Related
Entity) on the date hereof together with the pipeline assets and
related
equipment and property to be contributed to the Partnership under
the terms of
the Omnibus Agreement (whether directly or indirectly through
contributions of
ownership interests), and all pipeline facilities and related
equipment and
property hereafter acquired directly or indirectly, by the
Partnership
(including any NOARK Related Entity), all as same may be modified
or expanded
pursuant to the provisions of this Agreement.
"Transfer"
means, as a noun, any voluntary or involuntary transfer,
assignment, sale, pledge, gift, hypothecation or other disposition
and, as a
verb, voluntarily or involuntarily to transfer, assign, sell,
pledge, gift,
hypothecate or otherwise dispose of.
"Transferee" shall have the meaning set forth in Section 7.1
hereof.
"Transferor" shall have the meaning set forth in Section 7.1
hereof.
8
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"Treasury
Regulations" or "Treas. Reg." means the income tax regulations,
including proposed and temporary regulations, promulgated under the
Code, as
such regulations may be amended from time to time (including
corresponding
provisions of succeeding regulations).
1.2 Other
Terms. Other terms may be defined elsewhere in the text of this
Agreement and shall have the meaning indicated therein.
ARTICLE II
FORMATION OF LIMITED PARTNERSHIP
2.1
Formation. The Partnership has been formed pursuant to the Act,
and
shall be governed by the Act and the terms and conditions set
forth
herein.
2.2 Name.
The name of the Partnership shall be, and the business of the
Partnership shall be conducted under the name of, NOARK Pipeline
System, Limited
Partnership. The Partnership's business may be conducted under any
other name or
names deemed advisable by the Management Committee.
2.3
Offices and Registered Agent. The principal offices of the
Partnership
shall be at such place or places as the Management Committee may
determine;
provided, that, such place or places shall as soon as reasonably
practicable
after the date of this Agreement be established in Oklahoma City,
Oklahoma, in
an office which is separate from that of any Partner. The
Partnership shall
maintain a registered agent and a registered office in Arkansas as
the
Management Committee shall designate from time to time on the
Partnership's
Certificate of Limited Partnership. As of the date of this
Agreement, the
principal office shall be located at 600 Central Park Two, 515
Central Park
Drive, Oklahoma City, Oklahoma 74124-0300 and the registered agent
and
registered office shall be The Corporation Company, 417 Spring
Street, Little
Rock, AR 72201. The Partnership may maintain offices at such other
place or
places as the Management Committee deems advisable.
2.4 Term
of Partnership. The Partnership commenced as of the date of the
filing of the Certificate of Limited Partnership as required under
the Act and
shall continue for a period ending the earlier of:
(a)
September 30, 2047;
(b) The
date on which all of the assets acquired by the Partnership
have
been sold and converted to cash (or to cash equivalents, or
securities tradeable
on a national securities exchange) or otherwise disposed of and all
installment
obligation receivables have been collected;
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(c) The
date on which the Partnership is voluntarily dissolved upon
approval by a SuperMajority in Interest of the Partners;
(d) The
date on which the Partnership is dissolved by operation of law
or
judicial decree; or
(e) The
date on which the Partnership no longer has any General
Partners.
2.5
Purpose. The purpose and business of the Partnership shall be
any
business which may lawfully be conducted by a limited partnership
organized
pursuant to the Act. In particular, and not by way of limitation,
the
Partnership (including any NOARK Related Entity) shall engage in
the gathering,
processing, compression, transmission and marketing of natural gas
and natural
gas liquids.
2.6
Representations and Warranties Concerning Partnership. Each
Partner
represents and warrants that (i) the execution and delivery of this
Agreement by
such Partner and the performance thereof by such Partner of its
obligations will
not contravene any provision of, or constitute a default under, any
indenture,
mortgage or other agreement of such Partner, any applicable law or
regulation or
any order of any court, commission or governmental agency having
jurisdiction,
(ii) this Agreement is a legal, valid and binding obligation of
such Partner
enforceable against such Partner in accordance with its terms,
except insofar as
enforcement may be limited by bankruptcy, insolvency,
reorganization or other
similar laws relating to or affecting the enforcement of creditors'
rights
generally and by general equitable principles (regardless of
whether enforcement
is considered in equity or at law), and (iii) it is acquiring its
interest in
the Partnership for its own account for investment, and not with a
view to the
sale or distribution thereof.
ARTICLE III
MANAGEMENT OF THE PARTNERSHIP
3.1
Management Committee. The Partnership (including all NOARK
Related
Entities) shall be managed by the Management Committee, which,
except as
otherwise provided in this Agreement (including without limitation,
those
matters which under Section 3.5 require the approval of a
SuperMajority in
Interest of Partners) shall have exclusive authority with respect
to all affairs
of the Partnership (including any NOARK Related Entities).
3.2
Composition of Management Committee. The Management Committee shall
be
composed of five (5) members. One member shall be the Project
Leader as
determined in Section 3.6 below. EAPC (together with any
Substituted Partner(s)
succeeding to EAPC's Partnership Interest) shall designate two of
the four
remaining members of the Management Committee, and SWPL, (together
with any
Substituted Partner(s) succeeding to SWPL's Partnership Interest) ,
shall
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designate the two remaining members of the Management Committee.
Each Partner
shall notify all other Partners in writing of their designations to
the
Management Committee, including any alternate members they may
choose to
designate. Such alternate members shall have full authority to act
in the
absence of a primary member. The Partners shall have authority to
remove their
respective designees to the Management Committee at any time and to
replace them
with new designees at any time upon giving written notice to the
other Partners.
3.3
Meetings of Management Committee. The Project Leader shall preside
at
all meetings of the Management Committee, which shall meet at least
quarterly.
Special meetings of the Management Committee may be called at such
times and
places, and in such manner, as the Project Leader or any Partner
deems necessary
and requests in writing, and at such times as requested in writing
by any member
of the Management Committee. Unless notice is waived by all members
of the
Management Committee, notice of all meetings shall be given by the
Project
Leader to all Management Committee members and to all Partners at
least five (5)
days in advance of the time set for the meeting. The notice will be
accompanied
by an agenda of the matters the proponent of the meeting intends to
present at
the meeting; provided, that, the scope of the issues to be
discussed at the
Management Committee meeting need not be limited to the matters
stated in the
notice. Any member of the Management Committee may require that
items be added
to the agenda by notice to all other Management Committee members
and Partners
given at least forty-eight (48) hours prior to the meeting. Items
may be added
to the agenda at a Management Committee meeting only if all members
of the
Management Committee are present at such meeting and agree to the
addition of
such items. Although discussions of other matters may take place,
only agenda
items may be formally decided at any Management Committee meeting.
All meetings
of the Management Committee shall be held in person or by means of
conference
telephone or similar communications equipment by means of which all
persons
participating in the meeting can hear each other. The members of
the Management
Committee may act through written proxies, and the Management
Committee may take
action in lieu of a meeting through a written consent signed by all
of the
members of the Management Committee. The presence in person, by
proxy or through
alternates of not less than fifty percent (50%) of the members of
the Management
Committee shall be necessary to constitute a quorum at any meeting
for the
transaction of business. Unless otherwise provided herein, the
affirmative vote
of a majority of the members in attendance at a meeting of the
Management
Committee at which a quorum is present ("Management Committee
Approval") shall
be necessary and sufficient to take any action on behalf of the
Management
Committee. Each member on the Management Committee shall have one
vote. In the
absence of a quorum, a majority of the members present at the
meeting may
adjourn such meeting from time to time until a quorum is present.
Written
minutes of all Management Committee meetings shall be maintained
and distributed
promptly to all members of the Management Committee.
3.4
Partners Meetings.
(a) Immediately upon execution of this Agreement, each Partner
shall
designate,
by notice given to each other Partner and to the Partnership,
an
individual to serve as its
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primary
representative to vote
at meetings of the Partners. By like
notice,
each Partner may designate not more than one alternative
representative who shall have authority to act in lieu of its
primary
representative. In the absence of a primary representative, the
designated
alternate
may serve in the place of the primary representative. Any
Partner
may at any time, by written notice to all other Partners and to
the
Partnership, remove its primary representative or alternate
representative and designate a new primary representative or
alternate
representative.
(b) The Project Leader shall preside at all meetings of the
Partners.
Meetings of the Partners may be called at such times and
places,
and in
such manner, as requested in writing by a representative of any
Partner.
Such request shall identify the items the Partner proposes to
be
placed on
the agenda for such meeting. Unless notice is waived by the
representatives of all Partners, notice of all meetings shall be
given by
the
Project Leader to all representatives and alternates at least
five
days in
advance of the time set for the meeting. The notice will be
accompanied by an agenda of matters to be presented by the Project
Leader.
Any
representative may require that items be added to the agenda by
notice
to the
representatives of all other Partners given at least two days
prior
to the date of the
meeting. Although discussion of other matters may take
place,
only agenda items may be formally decided; provided, that by
unanimous
vote of the representatives at a meeting in which at least a
SuperMajority in Interest of the Partners are represented, items
may be
added to
the agenda. All meetings of the Partners shall be held in
person
or by
means of conference telephone or similar communications equipment
by
means of
which all persons participating in the meeting can hear each
other. All
expenses of the meeting and notification shall be borne by the
Partnership. Representatives of Partners (or their respective
designated
alternates) holding at least 80% of the Partnership Percentages
shall be
necessary
to constitute a quorum at any meeting for the transaction of
business.
In the absence of a quorum, a majority of the representatives
present at
the meeting may adjourn such meeting from time to time until a
quorum is
present. Written minutes of all meetings shall be maintained
and
distributed promptly to all representatives.
(c) Each representative at a meeting of Partners shall have a
vote
equal to
the Partnership Percentages of the Partner he represents.
(d) Personal presence of Partners' representatives shall not be
required,
provided that at or prior to the meeting time either (i) an
effective
written consent to or rejection of such proposed action is
submitted
to the Project Leader or (ii) a proxy is submitted to the
Project
Leader. Attendance by the representatives of the Partner (or
its
respective
designated alternate) and voting in person at any meeting shall
revoke any
written consents or rejections of such Partner or any proxies
previously
submitted with respect to the action proposed to be taken at
such
meeting.
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(e) Any matter on which the Partners are authorized to take
action
under this
Agreement or under law may be taken by the Partners without a
meeting
and shall be as valid and effective as action taken by the
Partners
at a meeting assembled, if written consents to such action by
the
Partners are
signed by the Partners entitled to vote upon such action at a
meeting
who hold the Partnership Percentages required to authorize such
action,
and are delivered to the Project Leader.
3.5
Restrictions on Authority of the Management Committee.
Notwithstanding
anything to the contrary in this Agreement (other than Section
3.6(j)),
including the provisions set forth in Section 3.1, the following
actions of the
Management Committee (a "Major Decision") shall require the consent
of a
SuperMajority in Interest of Partners and without such consent, may
not be taken
by the Partnership (nor any Partner or other Person on behalf of
the
Partnership), unless such actions are approved as a result of
arbitration
pursuant to Section 13.13 below):
(a)
Admitting any General Partner or Limited Partner.
(b) Any
incurrence of indebtedness for borrowed money other than the
NOARK
Debt, the loan entered into with Enogex Inc. as contemplated by
Section 9 of the
Omnibus Agreement, or in the ordinary course of business. A
borrowing, or series
of borrowings for purposes that are operationally related and that
take place in
a consecutive 24 month period, shall be considered other than in
the ordinary
course of business only if such borrowing or series of borrowings
involves more
than $150,000.
(c)
Entering into any gas transportation, gas purchase or gas sales
contract or any other contract or transaction between i) any
Partner or any of
its Affiliates and ii) the Partnership (including any NOARK Related
Entity),
other than contracts or transactions satisfying the parameters of
the applicable
policy established by the Partners under Section 3.5(p).
(d)
Amending this Agreement.
(e)
Changing the nature of the Partnership's business.
(f)
Establishing the nature and scope of the business of any NOARK
Related
Entity including NOARK Energy Services L.L.C. and Ozark Gas
Gathering, L.L.C.,
including, without limitation, their operating parameters,
functions and
activities.
(g)
Selling, exchanging, leasing, mortgaging, pledging or otherwise
transferring Partnership (including any NOARK Related Entity)
assets other than
in the ordinary course of business. For purposes of this Section
3.5(g), a sale,
exchange, lease, mortgage, pledge or other transfer of assets or a
series of
such transactions that are operationally related and that take
place in a
consecutive 24 month period, shall be considered other than in the
ordinary
course of business only if such transaction or series of
transactions involves
more than $250,000.
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(h)
Dissolving or winding up the Partnership.
(i)
Amending the Certificate of Limited Partnership of the
Partnership
except as otherwise permitted under this Agreement.
(j)
Forming or dissolving any Partnership committee or changing the
authority or responsibilities of any committee.
(k) Except
for expenditures, commitments, or contracts involving
Expansions or matters for which EAPC has agreed to make
contributions to the
Partnership pursuant to Section 10(c) of the Omnibus Agreement:
(i) Entering into any contract which involves expenditures or
commitments by the Partnership in excess of $100,000 for projects
not
included
in any approved Budget or accepting performance under such
contract.
(ii) Entering into any contract which involves expenditures or
commitments by the Partnership in excess of $500,000 for projects
included
in any approved Budget
or accepting performance under such contract.
(iii) Entering into any contract (x) for the transportation,
purchase,
sale, exchange or balancing of natural gas or (y) which creates
any
material restrictions, conditions or impediments to the
Partnership,
and which
in the case of either (x) or (y) has a term in excess of one
year.
(l)
Approving or amending the Budget.
(m)
Acquiring assets for the Partnership involving an amount more
than
$100,000 (for matters not included in any approved Budget) or
$500,000 (for
matters included in any approved Budget), other than i) for
purposes of an
Expansion, which shall be governed by Section 4.2(b), or ii) for
matters for
which EAPC has agreed to make contributions to the Partnership
pursuant to
Section 10(c) of the Omnibus Agreement, provided, however, that any
such
acquisition involves terms that are standard and customary in the
industry and
would not have a material adverse effect on the Partnership.
(n)
Determining any matter which any contract to which the Partnership
is
a party expressly provides shall be approved, decided, determined,
or otherwise
resolved or acted upon by the Management Committee.
(o)
Determining any material Partnership tax policy, other than that
fixed
by this Agreement and approving the annual federal and state income
tax returns
of the Partnership. For purposes of the foregoing material
Partnership tax
policy shall include without limitation the making
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<PAGE>
of any material tax election and the adoption of a method of
accounting with
respect to any material item.
(p)
Approving any material policy decisions of the Partnership and
changes
thereof, which approvals shall not be unreasonably withheld. For
purposes of the
foregoing, material policy decisions shall include without
limitation i) the
making of any decision regarding actions to be taken with any
governmental
agency which would have a material effect on the Partnership or the
System, ii)
the establishment of parameters for the Partnership (including any
NOARK Related
Entity) to enter into gathering or transportation agreements on the
System and
iii) the establishment of parameters for the Partnership (including
any NOARK
Related Entity) to engage in gas marketing activities. The Partners
hereby
acknowledge and agree that it is not their intent to use this
provision to
micro-manage the operations of the Partnership.
(q)
Determining the gross fair market value of the Partnership assets
as
provided for in subsection (c) of the definition of Gross Asset
value.
(r)
Determining the form of a nominee agreement as contemplated by
Section
6.4.
(s)
Approving appointment of directors, managers or officers of
NOARK
(except for the Project Leader whose approval shall be subject to
Section
3.6(e)) or any NOARK Related Entity who are employees of any
Partner or their
Affiliates; and the Project Leader shall consult with the Partners
regarding the
appointment of any director, manager or officer of NOARK or any
NOARK Related
Entity who is not an employee of any Partner or their Affiliates,
but no
approval of such appointment shall be required.
(t)
Approving the final design of the interconnection, integration
and
expansion of the pipeline facilities of NOARK and Ozark described
on Exhibit "A"
and any contracts for the supply of fuel or electricity to power
the compressor
operations of the System. For purposes of the foregoing, the
"final" design
shall mean those aspects of the design which would significantly
impact future
operating expenses, or future operations, of the System.
(u) The
decision to settle or to litigate and defend a claim against
the
Partnership as provided in Section 3.9.
3.6
Project
Leader.
(a) The
Project Leader shall be the chief executive officer of the
Partnership (including the NOARK Related Entities) and, subject to
directives of
the Management Committee and the other provisions of this
Agreement, shall have
general supervision of the affairs of the Partnership (including
the NOARK
Related Entities) and shall have all power and authority reasonably
necessary to
perform or cause to be performed the general operation and conduct
of the
Partnership. The Project Leader shall preside when present at
meetings of the
Partners and the Management Committee. He shall have general
authority to
execute bonds, deeds and contracts in the name of the
15
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Partnership (including the NOARK Related Entities) and in general
to exercise
all the powers usually appertaining to the office of president of a
company,
except as otherwise provided by statute or this Agreement.
(b) The
Project Leader shall manage the day-to-day operations of the
Partnership (including the NOARK Related Entities); provided, that,
the Project
Leader shall undertake no Major Decision without the approval of a
SuperMajority
in Interest of the Partners. Subject at all times to the control
and direction
of the Management Committee, the Project Leader shall oversee the
executive,
administrative and operating level services of the Partnership
(including the
NOARK Related Entities). The Project Leader's executive level
management
responsibilities shall include, without limitation: (1)
implementation of
decisions of the Management Committee; (2) supervision and
oversight of the
System's operations and financial affairs; and (3) such other
duties and
services reasonably incidental to the foregoing which the
Management Committee
may request the Project Leader to provide. The Project Leader's
oversight of
administrative and operating level responsibilities shall include,
without
limitation, oversight of: (i) contract and gas management services;
(ii) finance
and accounting services; (iii) marketing services; (iv) engineering
services;
(v) data systems and operations oversight; (vi) gathering
activities and (vii)
day-to-day operating services necessary for the System.
(c) By way
of illustration and not by way of limitation, the powers of the
Project Leader shall include: (i) executing, acknowledging and
delivering any
and all agreements and instruments on behalf of the Partnership
(including any
NOARK Related Entity); (ii) preparing and submitting annual Budgets
to the
Partners for approval; (iii) employing or contracting with Persons
in the
operations and management of the business of the Partnership
(including any
NOARK Related Entity) on such terms and for such compensation as
the Project
Leader shall determine, subject to the constraints and restrictions
established
by the Budget, and, in the case of Persons employed by or
affiliated with any
Partner or an Affiliate of any Partner, the provisions of the
Accounting
Procedures attached hereto as Exhibit B; (iv) preparing or causing
to be
prepared reports, statements and other relevant information for
distribution to
the Partners; (v) opening accounts and deposits and maintaining
funds in the
name of the Partnership (including any NOARK Related Entity) in
banks or other
financial institutions or investing such funds; and (vi) making all
reports and
filings required by governmental authorities.
(d) The
Project Leader shall initially be E. Keith Mitchell who shall
serve in such capacity until the earlier of his death, resignation
or removal.
In order for the Project Leader to receive the benefits he has
heretofore
received, the Project Leader shall be employed by EAPC, but shall
be dedicated
full time to the Partnership. The Project Leader shall maintain his
office at
the principal business office of the Partnership.
(e) The
Project Leader shall be subject to removal with or without
cause
at any time by EAPC (or any Substituted Partner succeeding to all
of EAPC's
Partnership Interest); provided such removal shall not be arbitrary
or
capricious. If a vacancy occurs in the office of Project
Leader,
16
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whether through death, resignation, removal or otherwise, the
Partners shall
consult regarding the appointment of a new Project Leader. After
such
consultation, EAPC (or any Subsequent Partner succeeding to all of
EAPC's
Partnership Interest) shall have the authority to propose the new
Project Leader
who shall become the Project Leader upon the consent of SWPL (or
any Subsequent
Partner(s) succeeding to SWPL's Partnership Interest), which
consent shall not
be unreasonably withheld. It shall be deemed unreasonable for SWPL
(or any
Subsequent Partner(s) succeeding to SWPL's Partnership Interest) to
withhold its
consent by reason of the fact that the proposed Project Leader is
or was an
employee of EAPC (or any Subsequent Partner succeeding to all of
EAPC's
Partnership Interest) or of an Affiliate of EAPC.
(f) The
Project Leader shall have power to contract with third parties
on
behalf of and in the name of the Partnership (including any NOARK
Related
Entity) when the contract is approved by the Management Committee
(or is within
the approval levels delegated to him by the Management Committee),
and to make
expenditures on behalf of the Partnership (including any NOARK
Related Entity)
when such expenditures have been approved by the Management
Committee (subject,
where applicable, to the provisions of Section 3.5) or when such
expenditures do
not exceed that permitted under the approved annual Budget by more
than ten
percent (10%) for the line item or items in question (based on a
Budget format
similar to that historically used by the Partnership) or $50,000.
Upon execution
of this Agreement, the Project Leader shall have authority to make
expenditures
in fiscal year 1998 in accordance with the existing Budget of the
Partnership
for fiscal year 1997 until a new Budget is approved.
(g) The
Project Leader shall submit to the Partners for approval an
annual
Budget setting forth on a monthly basis the anticipated costs to be
incurred in
connection with the Partnership (including the NOARK Related
Entities),
including without limitation the cost of operating and field
personnel providing
day-to-day operations of the System, and the anticipated capital
costs to be
incurred in connection with the System based on a Budget format
similar to that
historically used by the Partnership. A proposed Budget shall be
provided to the
Partners as soon as practicable following execution of this
Agreement for the
period covering calendar year 1998 and by December 1st for each
year thereafter
during the term of this Agreement. Such Budgets shall be subject to
the approval
requirements of Section 3.5. In the event Partner approval of any
Budget as
required by Section 3.5 is not obtained by the commencement of the
year to which
such Budget applies, the most recently approved Budget shall be
utilized until
such new Budget is approved.
(h) The
Project Leader 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. The Project Leader 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 in reliance upon an opinion including, without limitation,
a written
opinion of counsel (who shall be regular or special counsel to the
Partnership)
acceptable to the Project Leader of such persons as to matters that
the Project
Leader
17
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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.
(i) The
Project Leader shall have the right, in respect of any of his
powers or duties hereunder, to delegate same to any employee of the
Partnership
or, to any Partner. Each such Person shall have full power and
authority to do
and perform each and every act and duty that is so delegated to
such Person.
(j) In the
event the Project Leader incurs expenditures in emergency
situations to safeguard life or property or to maintain the
operational
integrity of the System at design capacity, the Project Leader
shall notify the
Management Committee and the Partners of the emergency situation as
soon as
reasonably possible after any such emergency situation. Such costs
so incurred
by the Project Leader shall not require the prior approval of the
Management
Committee or the Partners; provided, however, that any expenditures
or
transactions undertaken shall involve terms that are standard and
customary in
the industry and do not expose or subject the Partnership to any
inordinate,
unusual or unreasonable risks, liabilities or obligations given the
facts and
circumstances which exist at the time of the Project Leader
committing to any
such expenditures or transactions. The Partners acknowledge that
the facts and
circumstances of an emergency situation may require terms,
expenditures or
transactions which under normal situations would be different.
3.7
Delegation
(a) The
Management Committee shall have the authority to delegate any
of
its duties and authority to any Partner, the Project Leader, or,
subject to
Section 3.5, a committee. Any such delegation shall be in writing
and shall be
revocable at any time by the Management Committee.
(b) The
Partners shall make available to the Partnership (including any
NOARK Related Entity) executive, administrative and operating
personnel with the
appropriate backgrounds and experience to provide such services as
the
Management Committee may reasonably delegate for them to provide
and to make
available to the Management Committee sufficient time of such
executives,
administrative and operating personnel to promptly, faithfully
and
professionally provide such services. A Partner may utilize the
personnel and
resources of not only itself, but also of its Affiliates and other
Persons in
the performance of such services.
(c) The
Partners shall be reimbursed by the Partnership in accordance
with
the Accounting Procedures attached hereto as Exhibit B, for all
direct and
indirect costs and expenses incurred in providing services
delegated by the
Management Committee to be provided by them.
(d)
Subject to the provisions of this Section 3.7, the Management
Committee shall be deemed to have delegated i) to SWPL the
continued performance
of the accounting services for the Partnership and the performance
of field
operations and field operations support services SWPL has
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<PAGE>
historically provided to the Partnership in Arkansas as well as the
performance
of field operations and field operations support services in those
areas where
the facilities of NOARK and Ozark are in close proximity for which
the Partners
agree SWPL should provide such services and ii) to EAPC the
performance of
operations and operations support services to provide support,
direction and
assistance to the Project Leader in the operation of the
Partnership (including
the NOARK Related Entities) and the System.
(e)
Subject to Section 3.5, the Management Committee may designate one
or
more committees (including, specifically, an executive committee),
each of which
shall be comprised of one or more of its members, and may designate
one or more
of its members as alternate members of any committee, who may,
subject to any
limitations imposed by the Management Committee, replace absent or
disqualified
members at any meeting of that committee. Any such committee, to
the extent
provided in such resolution, shall have and may exercise the
authority delegated
to it by the Management Committee in the management of the business
and affairs
of the Partnership, subject to the limitations set forth in the Act
and this
Agreement.
3.8
Officers.
(a) Except
for the chief executive officer, who shall be the Project
Leader, the Management Committee may appoint such officers and
agents as it
deems necessary or appropriate, who shall be appointed for such
terms and shall
exercise such powers and perform such duties as shall be determined
from time to
time by the Management Committee. Any two or more offices may be
held by the
same person.
(b) Any
officer, agent or member of a committee elected or appointed by
the Management Committee may be removed by the Management Committee
at any time
with or without cause.
3.9
Claims. The Project Leader shall be responsible for overseeing
the
settlement or litigation and defending of any and all claims,
damages, or causes
of action in favor of any one other than the Partners arising out
of the
Operation of the System (as defined in the Accounting Procedures)
which are not
covered by insurance; provided, that Project Leader shall report to
the
Management Committee from time to time with respect to such claims,
damages or
causes of action and the disposition thereof. The decision to
settle or to
litigate and defend against any such claim, demand or cause of
action may be
made by Project Leader in accordance with its best judgment and
discretion when
the amount involved is $50,000 or less, provided, however, that if
the aggregate
of the amounts payable by the Partnership in connection with any
final judgment
against the Partnership and/or the settlement of any claim or
claims against the
Partnership during any fiscal year exceeds $250,000, any subsequent
settlements
shall be effected during such fiscal year only with the
approval
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of a SuperMajority in Interest of the Partners. Decisions to settle
or to defend
and litigate (i) any single claim which involves any amount in
excess of
$50,000, (ii) any claim which is commenced against the Partnership
during any
fiscal year when the aggregate of all claims commenced against the
Partnership
during the same fiscal year have involved amounts in excess of
$250,000, and
(iii) any claim in which the Project Leader is named as a defendant
or
respondent or has an interest in the claim or the proceedings which
is adverse
to the Partnership, shall be made only with the approval of a
SuperMajority in
Interest of the Partners.
3.10
Disputed Charges. Within the time provided in the Accounting
Procedures and regardless of whether the applicable Budget has been
exceeded,
the Management Committee or any Partner may take written exception
to all or any
portion of any bill or statement rendered by a Partner to the
Partnership on the
ground that the same was not a reasonable expense or expenditure
incurred in
good faith in connection with the Operation of the System (as such
term is
defined in the Accounting Procedures). NOARK shall nevertheless pay
in full when
due the amount of all statements submitted by a Partner.
Thereafter, at its
discretion on the vote of Partners representing at least 70% of the
Partnership
Interests remaining after excluding the Partner's Partnership
Interest whose
bill or statement is in dispute, the Management Committee may
submit the dispute
to the dispute resolution procedures set forth in Article XIII,
and, in such
event the Partners agree to utilize such procedures in resolving
such dispute.
If the amount as to which such written exception is taken or any
part thereof is
ultimately determined in arbitration not to be a reasonable expense
or
expenditure incurred in good faith in connection with the Operation
of the
System, such amount or portion thereof (as the case may be) shall
be refunded to
NOARK together with interest thereon at one hundred basis points
over the prime
rate from time to time charged by Citibank, N.A., New York, N.Y. to
responsible
commercial and industrial borrowers, not in excess of the maximum
lawful rate,
for the period from the date of payment by NOARK to the date of
refund.
ARTICLE IV
FINANCING OF THE PARTNERSHIP
4.1
Existing Capital Accounts Balances. Schedule 4.1 hereto sets forth
the
Capital Accounts of the Partners as of the date of this Agreement
which have
been agreed to by the Partners.
4.2
Capital Contributions.
(a) In
order to meet the funding requirements of the Partnership
(including any NOARK Related Entity), the Management Committee
shall have
authority to make mandatory capital calls on the Partners for cash
contributions
in amounts that the Management Committee deems necessary or
advisable to fund
capital and operational needs of the Partnership (including any
NOARK Related
Entity). With respect to each mandatory capital call, each Partner
shall within
thirty (30) days of
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receiving such written notice contribute to the Partnership in cash
that portion
of the total call equal to its Partnership Percentage.
(b)
Notwithstanding the language of Section 4.2(a) above, the
Management
Committee shall not have authority to issue mandatory capital calls
to fund a
proposed Expansion of the System, other than Expansions included
within an
approved Budget. Any such Expansion shall be subject to the consent
of a
SuperMajority in Interest of the Partners; provided, that, if such
consent is
not obtained within thirty (30) days of the submittal to the
Partners of a
proposal for such an Expansion (which consent of any Partner may be
conditioned
upon approval of such Partner's board of directors to be obtained
(i.e. approved
or rejected) within sixty (60) days of the submittal to the
Partners of the
proposed Expansion), but one of the Partners (the "Proposing
Partner") desires
to pursue such Expansion, the Proposing Partner shall contribute to
the capital
of the Partnership all of the funds necessary to finance such
Expansion (such
contribution a "Special Capital Contribution") and shall following
such
contribution receive, in addition to any other distributions
provided for in
this Agreement, an additional cash distribution equal to all of the
additional
net operating income attributable to the Expansion (which shall not
include any
revenues realized from the replacement of volumes being transported
on the
System prior to the Expansion) until the Proposing Partner has
received an
amount equal to 200% of the Special Capital Contribution made by
the Proposing
Partner.
(c) The
Partners agree that the Existing Loans, including applicable
interest, shall be repaid as follows: (i) sixty percent (60%) of
the Existing
Loans, including applicable interest, shall be repaid out of any
amounts
otherwise distributable to SWPL, before taking into account debt
service on the
Existing Loans, under this Agreement and (ii) forty percent (40%)
of the
Existing Loans, including applicable interest, shall be repaid out
of any
amounts otherwise distributable to EAPC, before taking into account
debt service
on the Existing Loans, under this Agreement. If such amounts are
insufficient to
pay a Partner's percentage share (i.e. 60% or 40% as set forth
above) of the
debt service on the Existing Loans, including applicable interest,
in accordance
with their terms, then such Partner shall be responsible to
contribute to the
capital of the Partnership amounts sufficient to pay its percentage
share (i.e.
60% or 40% as set forth above) of the debt service on the Existing
Loans,
including applicable interest, and shall do so upon notice from the
Project
Leader. Such Capital Contributions by the Partners shall not alter
the
Partnership Percentages of the Partners. Default by a Partner in
the making of
such Capital Contributions shall cause it to be deemed a Delinquent
Partner
subject to the provisions of Section 4.3 hereof.
(d)
Notwithstanding anything to the contrary in Section 4.2(c) above
or
elsewhere in this Agreement, it is understood and agreed that the
terms of any
Existing Loans may in the future (but do not currently) provide
that the
amortization of the principal amount thereof shall be borne or
allocated in a
manner different from the percentages set forth in Section 4.2(c)
or any Partner
may direct the Project Leader to apply amounts of Partnership cash
otherwise
distributable to such Partner (except amounts to be paid to other
Partners
pursuant to the other provisions of this Agreement) to the
repayment or
prepayment of the principal amount of the Existing Loans in excess
of the
amounts
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required to be repaid under the terms of the Existing Loans,
provided such
Partner bears all costs and penalties of doing so. Consequently, a
Partner may
thereby pay or bear more than its attributable percentage (i.e. 60%
or 40%) of
the principal amount of the Existing Loans to be repaid. In such
event, the
percentages of the then outstanding principal amount of the
Existing Loans
payable out of the distributable amounts attributable to the
Partners set forth
in Section 4.2(c) shall be adjusted as appropriate to reflect the
resulting
percentage of the aggregate outstanding principal amount of the
Existing Loans
then attributable to each Partner.
4.3
Failure to Contribute. If any Partner fails to make a Capital
Contribution as required under Section 4.2(a) or (c) above, the
Partnership may,
in addition to the other rights and remedies the Partnership may
have under the
Act or applicable law, take such enforcement action (including, the
commencement
and prosecution of court proceedings) against such Partner as the
Management
Committee considers appropriate and such Partner shall be deemed to
be
delinquent ("Delinquent Partner"). Moreover, each remaining Partner
who is not
delinquent shall have the right, but not the obligation, to
contribute that
portion of the amount defaulted by the Delinquent Partner equal to
such
remaining Partner's Partnership Percentage expressed as a
percentage of the
Partnership Percentage of all such remaining Partners who elect to
contribute
their applicable portion of the defaulted Capital Contribution. In
such an
event, the Partner(s) who contributes on behalf of the Delinquent
Partner
("Contributing Partner") will be entitled to a priority
distribution out of the
first cash distributions which would otherwise be distributable to
the
Delinquent Partner equal to three hundred percent (300%) of the
amount which the
Contributing Partner contributed on behalf of the Delinquent
Partner. Following
satisfaction of this priority distribution, and any other priority
distributions
provided for in this Agreement, distributions would be made in
accordance with
Section 5.7 hereof. The amount contributed on behalf of a
Delinquent Partner
shall be secured by such Delinquent Partner's interest in the
Partnership. Each
Partner who may hereafter be deemed delinquent hereby grants to
each
Contributing Partner, a security interest in such Delinquent
Partner's
Partnership Interest.
4.4
Capital Accounts. A separate Capital Account shall be established
and
maintained by the Partnership for each Partner in the manner
described in the
definition of the term "Capital Account" in Article I hereof.
4.5 Loans
by Partners. No Partner shall be required to make loans to the
Partnership. Loans may be made, however, with the approval of the
Management
Committee, by any Partner to the Partnership and such loans shall
not be
considered contributions to the capital of the Partnership. To the
extent loans
are made by any Partner to the Partnership, they shall be made on
terms, as to
interest rates and other finance charges, as are comparable to
amounts that are
charged by unrelated banks and other financial institutions on
comparable loans
for the same purpose.
4.6
Interest. No interest shall be paid to any Partner on the initial
or
any subsequent Capital Contribution to the Partnership.
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4.7 Time
for Return of Contributions. No Partner shall be entitled to
compel the return of its Capital Contribution. Upon the full and
complete
winding up and liquidation of the business and affairs of the
Partnership, the
Partners shall be entitled to distributions as set forth in Article
X.
4.8
Limited Liability of the Limited Partners. Notwithstanding anything
to
the contrary contained herein, the liability of a Limited Partner
for any of the
debts, losses or obligations of the Partnership shall be limited to
the Limited
Partner's Capital Contributions. No Limited Partner shall have any
personal
liability whatsoever, whether to the Partnership or any third
party, for the
debts of the Partnership or any of its losses.
4.9
Benefits of Agreement. Nothing in this Agreement, and, without
limiting the generality of the foregoing, in this Article IV,
expressed or
implied, is intended or shall be construed to give to any creditor
of the
Partnership or any creditor of any Partner or of any other Person,
other than
the Partners and the Partnership, any legal or equitable right,
remedy or claim
under or in respect to this Agreement or any covenant, condition or
provisions
herein contained, and such provisions are and shall be held to be
for the sole
and exclusive benefit of the Partners and the Partnership.
ARTICLE V
CAPITAL AND INCOME ALLOCATIONS AND DISTRIBUTIONS
5.1
Allocations Controlling for Capital Account Purpose. The
Partners
agree that all items of Partnership income, gain, loss and
deduction realized by
the Partnership from its operation or upon the sale or other
disposition of its
assets shall be credited or charged to the Capital Accounts of the
Partners and
further, to the extent allowed by the law, among the Partners for
Federal income
tax purposes in accordance with Sections 5.2 through 5.6. The
allocation of
Partnership income, gain, loss and deduction to a Partner whose
interest in the
Partnership terminates or to a newly admitted Partner shall be
based upon an
actual closing of the books of the Partnership for the period
ending on the date
of such termination or admission except as otherwise determined by
the
Management Committee. In addition, upon the closing of the Ozark
Acquisition,
there shall be
