<PAGE>
Exhibit 10.2
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............................................ 8
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................................................
9
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..
12
3.6 Project
Leader......................................... 15
3.7
Delegation.............................................
18
3.8
Officers...............................................
19
3.9
Claims.................................................
19
3.10
Disputed Charges.......................................
19
ARTICLE IV FINANCING OF THE
PARTNERSHIP.................................. 20
4.1 Existing
Capital Accounts Balances..................... 20
4.2 Capital
Contributions.................................. 20
4.3 Failure to
Contribute.................................. 21
4.4 Capital
Accounts....................................... 22
4.5 Loans by
Partners...................................... 22
4.6
Interest...............................................
22
4.7
Time for
Return of Contributions....................... 22
4.8 Limited
Liability of the Limited Partners.............. 22
4.9 Benefits
of Agreement.................................. 22
i
<PAGE>
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................................. 23
5.4
Preferential Allocations.................................
23
5.5 Special
Profits Allocations.............................. 25
5.6
Other
Allocation Rules................................... 26
5.7 Cash
Distributions....................................... 26
5.8 Amounts
Withheld......................................... 27
5.9
Reimbursements...........................................
27
ARTICLE VI RELATIONS OF THE
PARTNERS....................................... 27
6.1 Restricted
Transactions.................................. 27
6.2
Exculpation from Liability...............................
28
6.3
Indemnification..........................................
29
6.4 Title to
Partnership Assets.............................. 30
ARTICLE VII ASSIGNABILITY OF PARTNERS'
INTERESTS........................... 31
7.1
Restrictions on Transfer of Partner's Interest...........
31
7.2 Right of
First Refusal................................... 31
7.3 Opinion of
Counsel....................................... 31
7.4
Substituted Partner......................................
32
7.5
Recognition of Transferee as Partner.....................
32
7.6 Binding
Effect........................................... 33
7.7 Permitted
Transfers of Partnership Interests............. 33
7.8 Succession
to Capital Account............................ 33
ARTICLE VIII WITHDRAWAL AND REMOVAL;
ADMISSION OF SUCCESSOR AND ADDITIONAL
GENERAL
PARTNERS..........................................................
33
8.1 Voluntary
Withdrawal.................................... 33
8.2 Other
Withdrawal Events................................. 33
8.3 Removal of
a Partner.................................... 34
8.4 Liability
of a Withdrawn General Partner................ 34
8.5 Additional
or Successor Partners........................ 34
8.6
Continuation of Partnership.............................
34
8.7 Automatic
Suspension of the Vote and Right to
Participate in Management of Partnership Affairs .......
34
ARTICLE IX DISSOLUTION AND
LIQUIDATION.................................... 35
9.1
Dissolution.............................................
35
9.2
Liquidation.............................................
35
ii
<PAGE>
ARTICLE X ALLOCATIONS AND DISTRIBUTIONS ON
LIQUIDATION................... 35
10.1
Liquidation and Termination............................
35
10.2
Capital Account Deficits...............................
36
10.3
Special Distributions..................................
36
10.4
Deemed Distribution and Recontribution.................
37
ARTICLE XI CERTIFICATES AND OTHER
DOCUMENTS.............................. 37
11.1
Project Leader as Attorney for Partners................
37
11.2
Making and Filing of Certificate.......................
38
11.3
Cancellation of Certificates Evidencing
Partnership Interests..................................
39
ARTICLE XII BOOKS OF ACCOUNT, FINANCIAL
STATEMENTS AND FISCAL MATTERS.... 39
12.1
Books of Account.......................................
39
12.2
Reports and Financial Statements.......................
39
12.3
Tax Returns and Other Reports..........................
40
12.4
Fiscal Year............................................
40
12.5
Bank Accounts, Funds and Assets........................
40
12.6
Tax Elections..........................................
40
12.7
Other Partnership Records..............................
41
12.8
Survival of Tax Provision..............................
42
12.9
Deposit of Funds ......................................
42
ARTICLE XIII DISPUTE RESOLUTION
......................................... 42
13.1
Invoking Procedure.....................................
42
13.2
Stalemate Defined......................................
43
13.3
Investigation..........................................
43
13.4
Neutral................................................
43
13.5
Schedule...............................................
44
13.6
Discovery..............................................
44
13.7
Written Submission.....................................
44
13.8
Representatives........................................
44
13.9
Structure..............................................
44
13.10
Mandatory..............................................
44
13.11
Fees...................................................
45
13.12
Later Proceedings......................................
45
13.13
Dispute Resolution.....................................
45
ARTICLE XIV LIMITATION OF
AUTHORITY...................................... 47
ARTICLE XV LIMITATION OF
LIABILITIES..................................... 47
ARTICLE XVI
MISCELLANEOUS................................................
48
iii
<PAGE>
16.1
Notices................................................
48
16.2
Captions and Pronouns..................................
49
16.3
Binding Effect.........................................
49
16.4
Amendment of the Agreement.............................
49
16.5
Governing Law..........................................
49
16.6
Counterparts and Execution.............................
50
16.7
Severability...........................................
50
16.8
Waiver.................................................
50
16.9
Attorneys' Fees........................................
50
16.10
Construction...........................................
50
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
<PAGE>
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.
2
<PAGE>
(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
<PAGE>
(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
<PAGE>
"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
<PAGE>
"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;
9
<PAGE>
(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
10
<PAGE>
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
11
<PAGE>
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.
12
<PAGE>
(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.
13
<PAGE>
(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
14
<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
<PAGE>
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
<PAGE>
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
<PAGE>
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
18
<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
19
<PAGE>
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
20
<PAGE>
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
21
<PAGE>
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.
22
<PAGE>
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
