EXHIBIT 3.2
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SUBURBAN PROPANE, L.P.
TABLE OF CONTENTS
PAGE
----
RECITALS:................................................................
1
ARTICLE I
DEFINITIONS.................................................
2
1.1
Definitions.................................................
2
1.2
Construction................................................
10
ARTICLE II
ORGANIZATION................................................
10
2.1
Formation...................................................
10
2.2
Name........................................................
11
2.3
Registered Office; Registered Agent; Principal Office;
Other Offices...............................................
11
2.4
Purpose and Business........................................
11
2.5
Powers......................................................
12
2.6
Power of Attorney...........................................
12
2.7
Term........................................................
13
2.8
Title to Partnership Assets.................................
13
ARTICLE III
RIGHTS OF THE LIMITED PARTNERS..............................
14
3.1
Limitation of Liability.....................................
14
3.2
Management of Business......................................
14
3.3
Rights of Limited Partners Relating to the Partnership......
14
3.4
Outside Activities of the Limited Partners..................
15
ARTICLE IV
TRANSFER OF PARTNERSHIP INTERESTS...........................
16
4.1
Transfer Generally..........................................
16
4.2
Transfer of the General Partner's Partnership Interest......
16
4.3
Transfer of the Limited Partners' Partnership Interests.....
16
4.4
Restrictions on Transfers...................................
17
ARTICLE V
CONTRIBUTIONS AND INITIAL TRANSFERS.........................
17
5.1
Organizational Contributions................................
17
5.2
[Intentionally Deleted.]....................................
17
5.3
Additional Capital Contributions............................
17
5.4
Interest and Withdrawal.....................................
17
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TABLE OF CONTENTS
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PAGE
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5.5
Capital Accounts............................................
18
5.6
Loans from Partners.........................................
20
5.7
No Preemptive Rights........................................
20
5.8
Fully Paid and Non-Assessable Nature of Limited Partner
Partnership Interests.......................................
21
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS...............................
21
6.1
Allocations for Capital Account Purposes....................
21
6.2
Allocations for Tax Purposes................................
24
6.3
[Intentionally Deleted.]....................................
25
6.4
General Distributions.......................................
26
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS........................
26
7.1
Management..................................................
26
7.2
The Board of Supervisors; Appointment; Manner of Acting.....
29
7.3
Removal of Members of the Board of Supervisors..............
29
7.4
Resignations of Members of the Board of Supervisors.........
29
7.5
Vacancies on the Board of Supervisors.......................
29
7.6
Meetings; Committees; Chairman..............................
29
7.7
Officers....................................................
31
7.8
Compensation................................................
33
7.9
Restrictions on General Partner's and Board of Supervisors'
Authority...................................................
33
7.10
Reimbursement of the General Partner; Employee Benefit
Plans.......................................................
33
7.11
Outside Activities of the General Partner...................
34
7.12
Loans from the General Partner; Contracts with Affiliates;
Certain Restrictions on the General Partner.................
35
7.13
Indemnification.............................................
36
7.14
Liability of Indemnitees....................................
38
7.15
Resolution of Conflicts of Interest.........................
39
7.16
Other Matters Concerning the General Partner and the Board
of Supervisors..............................................
40
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TABLE OF CONTENTS
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PAGE
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7.17
Reliance by Third Parties...................................
41
ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND
REPORTS......................
42
8.1
Records and Accounting......................................
42
8.2
Fiscal Year.................................................
42
ARTICLE IX
TAX MATTERS.................................................
42
9.1
Tax Returns and Information.................................
42
9.2
Tax Elections...............................................
43
9.3
Tax Controversies...........................................
43
9.4
Withholding.................................................
43
ARTICLE X
ADMISSION OF PARTNERS.......................................
43
10.1
Current Partners............................................
43
10.2
Admission of Substituted Limited Partners...................
43
10.3
Admission of Successor General Partner......................
44
10.4
Admission of Additional Limited Partners....................
44
10.5
Amendment of Agreement and Certificate of Limited
Partnership.................................................
45
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS...........................
45
11.1
Withdrawal of the General Partner...........................
45
11.2
Removal of the General Partner..............................
47
11.3
Interest of Departing Partner and Successor General Partner;
Delegation of Authority to the Board of Supervisors by
Successor General Partner...................................
47
11.4
Withdrawal of the Limited Partner...........................
47
ARTICLE XII
DISSOLUTION AND LIQUIDATION.................................
48
12.1
Dissolution.................................................
48
12.2
[Intentionally omitted].....................................
48
12.3
Liquidator..................................................
48
12.4
Liquidation.................................................
49
12.5
Cancellation of Certificate of Limited Partnership..........
50
12.6
Return of Capital Contributions.............................
50
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12.7
Waiver of Partition.........................................
50
12.8
Capital Account Restoration.................................
50
ARTICLE XIII AMENDMENT OF PARTNERSHIP
AGREEMENT..........................
50
13.1
Amendment to be Adopted Solely by the Board of Supervisors..
50
13.2
Amendment Procedures........................................
52
ARTICLE XIV
MERGER......................................................
52
14.1
Authority...................................................
52
14.2
Procedure for Merger or Consolidation.......................
52
14.3
Approval by Limited Partners of Mergers or Consolidations...
53
14.4
Certificate of Merger.......................................
53
14.5
Effect of Merger............................................
54
ARTICLE XV
GENERAL PROVISIONS..........................................
54
15.1
Addresses and Notices.......................................
54
15.2
References..................................................
54
15.3
Further Action..............................................
55
15.4
Binding Effect..............................................
55
15.5
Integration.................................................
55
15.6
Creditors...................................................
55
15.7
Waiver......................................................
55
15.8
Counterparts................................................
55
15.9
Applicable Law..............................................
55
15.10
Invalidity of Provisions....................................
56
iv
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SUBURBAN PROPANE, L.P.
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
SUBURBAN PROPANE, L.P. dated as of October 19, 2006, is entered
into by and
among Suburban Energy Services Group LLC, a Delaware limited
liability company,
as the General Partner, Suburban Propane Partners, L.P., a Delaware
limited
partnership, as a Limited Partner, and Suburban LP Holding, LLC, a
Delaware
limited liability company, as a Limited Partner, together with any
other Persons
who become Partners in the Partnership or parties hereto as
provided herein. In
consideration of the covenants, conditions and agreements contained
herein, the
parties hereto hereby agree as follows:
RECITALS:
WHEREAS, Suburban Propane GP, Inc., a Delaware corporation and the
initial general partner of the Partnership (the "Initial General
Partner"), and
certain other parties organized the Partnership as a Delaware
limited
partnership pursuant to an Amended and Restated Agreement of
Limited Partnership
dated as of March 4, 1996 (the "Original Agreement"); and
WHEREAS, the Second Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as of May 26, 1999 amended
and restated
the Original Agreement in its entirety, (the "Second Restated
Agreement"); and
WHEREAS, the Partnership, the MLP and the General Partner have
entered
into an Exchange Agreement, dated as of July 27, 2006 (the
"Exchange
Agreement"); and the MLP, Suburban LP, Suburban LP Holding, Inc.,
and the
General Partner have entered into a First Amendment and Assignment
Agreement
amending the Second Restated Agreement, dated as of the date hereof
(the "OLP
Amendment"); and
WHEREAS, pursuant to the OLP Amendment, inter alia Suburban LP has
been admitted to the Partnership as a Limited Partner; and
WHEREAS, in connection with the transactions contemplated by the
Exchange Agreement, the OLP Amendment and the MLP Agreement (as
defined herein),
the Partners, pursuant to their authority under Section 13 of the
Agreement,
desire to amend and restate the Second Restated Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements
made
herein, the Second Restated Agreement is hereby amended and
restated in its
entirety as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
The following definitions shall be for all purposes, unless
otherwise
clearly indicated to the contrary, applied to the terms used in
this Agreement.
Capitalized terms used herein but not otherwise defined shall have
the meanings
assigned to such terms in the MLP Agreement.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 10.4 and who
is shown as
such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each calendar year, (a) increased by
any amounts
that such Partner is obligated to restore under the standards set
by Treasury
Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under
Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b)
decreased by
(i) the amount of all losses and deductions that, as of the end of
such calendar
year, are reasonably expected to be allocated to such Partner in
subsequent
years under Sections 704(e)(2) and 706(d) of the Code and Treasury
Regulation
Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions
that, as of
the end of such calendar year, are reasonably expected to be made
to such
Partner in subsequent years in accordance with the terms of this
Agreement or
otherwise to the extent they exceed offsetting increases to such
Partner's
Capital Account that are reasonably expected to occur during (or
prior to) the
year in which such distributions are reasonably expected to be made
(other than
increases as a result of a minimum gain chargeback pursuant to
Section 6.1(c)(i)
or 6.1(c)(ii)). The foregoing definition of Adjusted Capital
Account is intended
to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
"Adjusted Property" means any property the Carrying Value of which
has
been adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii).
"Affiliate" means, with respect to any Person, any other Person
that
directly or indirectly through one or more intermediaries controls,
is
controlled by or is under common control with, the Person in
question. As used
herein, the term "control" means the possession, direct or
indirect, of the
power to direct or cause the direction of the management and
policies of a
Person, whether through ownership of voting securities, by contract
or
otherwise.
"Agreed Allocation" means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant
to the
provisions of Section 6.1, including, without limitation, a
Curative Allocation
(if appropriate to the context in which the term "Agreed
Allocation" is used).
2
"Agreed Value" of any Contributed Property means the fair market
value
of such property or other consideration at the time of contribution
as
determined by the Board of Supervisors using such reasonable method
of valuation
as it may adopt. The Board of Supervisors shall, in its discretion,
use such
method as it deems reasonable and appropriate to allocate the
aggregate Agreed
Value of Contributed Properties contributed to the Partnership in a
single or
integrated transaction among each separate property on a basis
proportional to
the fair market value of each Contributed Property.
"Agreement" means this Third Amended and Restated Agreement of
Limited
Partnership of Suburban Propane, L.P., as it may be amended,
supplemented or
restated from time to time.
"Audit Committee" means a committee of the Board of Supervisors of
the
Partnership composed of the same individuals who serve as the audit
committee of
the MLP.
"Available Cash," means, with respect to any Quarter ending prior
to
the Liquidation Date,
(a) the sum of (i) all cash and cash equivalents of the Partnership
Group on hand at the end of such Quarter, and (ii) all additional
cash and cash
equivalents of the Partnership Group on hand on the date of
determination of
Available Cash with respect to such Quarter resulting from
borrowings for
working capital purposes, in each case subsequent to the end of
such Quarter,
less
(b) the amount of any cash reserves that is necessary or
appropriate
in the reasonable discretion of the Board of Supervisors to (i)
provide for the
proper conduct of the business of the Partnership Group (including
reserves for
future capital expenditures) subsequent to such Quarter, and (ii)
comply with
applicable law or any loan agreement, security agreement, mortgage,
debt
instrument or other agreement or obligation to which any Group
Member is a party
or by which it is bound or its assets are subject; provided,
however, that
disbursements made by a Group Member or cash reserves established,
increased or
reduced after the end of such Quarter but on or before the date of
determination
of Available Cash with respect to such Quarter shall be deemed to
have been
made, established, increased or reduced, for purposes of
determining Available
Cash, within such Quarter if the Board of Supervisors so
determines.
Notwithstanding the foregoing, "Available Cash" with respect to the
Quarter in which the Liquidation Date occurs and any subsequent
Quarter shall
equal zero.
"Board of Supervisors" shall mean the board of supervisors of the
Partnership, composed of those individuals who serve as members of
the MLP's
board of supervisors, to whom the General Partner irrevocably
delegates, and in
which is vested, pursuant to Section 7.1, and subject to Section
7.9, the power
to manage the business and activities of the Partnership. The Board
of
Supervisors shall constitute a committee with the meaning of
Section
17-303(b)(7) of the Delaware Act.
3
"Book-Tax Disparity" means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination,
the
difference between the Carrying Value of such Contributed Property
or Adjusted
Property and the adjusted basis thereof for federal income tax
purposes as of
such date. A Partner's share of the Partnership's Book-Tax
Disparities in all of
its Contributed Property and Adjusted Property will be reflected by
the
difference between such Partner's Capital Account balance as
maintained pursuant
to Section 5.5 and the hypothetical balance of such Partner's
Capital Account
computed as if it had been maintained strictly in accordance with
federal income
tax accounting principles.
"Business Day" means Monday through Friday of each week, except
that a
legal holiday recognized as such by the government of the United
States of
America or the states of New York or New Jersey shall not be
regarded as a
Business Day.
"Capital Account" means the capital account maintained for a
Partner
pursuant to Section 5.5.
"Capital Contribution" means any cash, cash equivalents or the Net
Agreed Value of Contributed Property that a Partner contributes or
has
contributed to the Partnership pursuant to this Agreement (or the
Original
Agreement) or the Contribution and Conveyance Agreement.
"Capitalized Lease Obligations" means obligations to pay rent or
other
amounts under any lease of (or other arrangement conveying the
right to use)
real and/or personal property, which obligations are accounted for
as a capital
lease on a balance sheet under U.S. GAAP; for the purpose hereof
the amount of
such obligations shall be the capitalized amount reflected on such
balance
sheet.
"Carrying Value" means (a) with respect to a Contributed Property,
the
Agreed Value of such property reduced (but not below zero) by all
depreciation,
amortization and cost recovery deductions charged to the Partners'
Capital
Accounts in respect of such Contributed Property, and (b) with
respect to any
other Partnership property, the adjusted basis of such property for
federal
income tax purposes, all as of the time of determination. The
Carrying Value of
any property shall be adjusted from time to time in accordance with
Sections
5.5(d)(i) and 5.5(d)(ii) and to reflect changes, additions or other
adjustments
to the Carrying Value for dispositions and acquisitions of
Partnership
properties, as deemed appropriate by the Board of Supervisors.
"Cause" means a court of competent jurisdiction has entered a
final,
non-appealable judgment finding a Person liable for actual fraud,
gross
negligence or willful or wanton misconduct in its capacity as
general partner of
the Partnership or as a member of the Board of Supervisors, as the
case may be.
"Certificate of Limited Partnership" means the Certificate of
Limited
Partnership of the Partnership filed with the Secretary of State of
the State of
Delaware as referenced in Section 2.1, as such Certificate of
Limited
Partnership may be amended, supplemented or restated from time to
time.
4
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time. Any reference herein to a specific
section or sections
of the Code shall be deemed to include a reference to any
corresponding
provision of future law.
"Commission" means the United States Securities and Exchange
Commission.
"Contributed Property" means each property or other asset, in such
form as may be permitted by the Delaware Act, but excluding cash,
contributed to
the Partnership. Once the Carrying Value of a Contributed Property
is adjusted
pursuant to Section 5.5(d), such property shall no longer
constitute a
Contributed Property, but shall be deemed an Adjusted Property.
"Contribution and Conveyance Agreement" means that certain
Contribution, Conveyance and Assumption Agreement, dated as of
March 4, 1996,
among the Initial General Partner, the MLP, the Partnership and
certain other
parties, together with the additional conveyance documents and
instruments
contemplated or referenced thereunder.
"Curative Allocation" means any allocation of an item of income,
gain,
deduction, loss or credit pursuant to the provisions of Section
6.1(c)(ix).
"Delaware Act" means the Delaware Revised Uniform Limited
Partnership
Act, 6 Del C. Sections 17-101, et seq., as amended, supplemented or
restated
from time to time, and any successor to such statute.
"Departing Partner" means a former General Partner from and after
the
effective date of any event of withdrawal, including the removal of
such former
General Partner pursuant to Section 11.1 or 11.2.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"Event of Withdrawal" has the meaning assigned to such term in
Section
11.1(a).
"Exchange Agreement" has the meaning assigned to such term in the
Recitals hereof.
"General Partner" means Suburban Energy Services Group LLC, a
Delaware
limited liability company, as general partner of the Partnership.
"Group Member" means a member of the Partnership Group.
"Indebtedness," as used in Section 7.9(b), means, as applied to any
Person, without duplication, any indebtedness, exclusive of
deferred taxes, (i)
in respect of borrowed money (whether or not the recourse of the
lender is to
the whole of the assets of such Person or only to a portion
thereof); (ii)
evidenced by bonds, notes, debentures or similar instruments or
letters of
credit in support of bonds, notes, debentures or similar
instruments; (iii)
representing the balance deferred and unpaid of the purchase price
of any
property, if and to the extent such
5
indebtedness would appear as a liability on a balance sheet of such
Person
prepared in accordance with U.S. GAAP (but excluding trade accounts
payable
arising in the ordinary course of business that are not overdue by
more than 90
days or are being contested by such Person in good faith); (iv) any
Capitalized
Lease Obligations of such Person; and (v) Indebtedness of others
guaranteed by
such Person, including, without limitation, every obligation of
such Person (A)
to purchase or pay (or advance or supply funds for the purchase or
payment of)
such Indebtedness or to purchase (or to advance or supply funds for
the purchase
of) any security for the payment of such Indebtedness, or (B) to
maintain
working capital, equity capital or other financial statement
condition or
liquidity of the primary obligor so as to enable the primary
obligor to pay such
Indebtedness.
"Indemnitee" means (a) the members of the Board of Supervisors or
the
members of the board of supervisors of the MLP or any other Group
Member, (b)
the General Partner, any Departing Partner and any Person who is or
was an
Affiliate of the General Partner or any Departing Partner, (c) any
Person who is
or was a member, partner, director, officer, employee, agent or
trustee of the
MLP, any Group Member, the General Partner or any Departing Partner
or any
Affiliate or the MLP, any Group Member, the General Partner or any
Departing
Partner and (e) any Person who is or was serving at the request of
the Board of
Supervisors, the General Partner or any Departing Partner or any
Affiliate of
the General Partner or any Departing Partner as a member, partner,
director,
officer, employee, partner, agent, fiduciary or trustee of another
Person, in
each case, acting in such capacity; provided, that a Person shall
not be an
Indemnitee by reason of providing, on a fee-for-services basis,
trustee,
fiduciary or custodial services.
"Initial General Partner" means Suburban Propane GP, Inc., a
Delaware
corporation.
"Limited Partner" means, collectively, unless the context otherwise
requires, the MLP, Suburban LP, each Substituted Limited Partner,
each
Additional Limited Partner and any Departing Partner upon the
change of its
status from General Partner to Limited Partner pursuant to Section
11.3.
"Liquidation Date" means (a) in the case of an event giving rise to
the dissolution of the Partnership of the type described in clauses
(a) and (b)
of the first sentence of Section 12.2, the date on which the
applicable time
period during which the Partners have the right to elect to
reconstitute the
Partnership and continue its business has expired without such an
election being
made, and (b) in the case of any other event giving rise to the
dissolution of
the Partnership, the date on which such event occurs.
"Liquidator" means one or more Persons selected by the Board of
Supervisors to perform the functions described in Section 12.3.
"Merger Agreement" has the meaning assigned to such term in Section
14.1.
"MLP" means Suburban Propane Partners, L.P., a Delaware limited
partnership.
6
"MLP Agreement" means the Third Amended and Restated Agreement of
Limited Partnership of the MLP, as it may be amended, supplemented
or restated
from time to time.
"Net Agreed Value" means, (a) in the case of any Contributed
Property,
the Agreed Value of such property reduced by any liabilities either
assumed by
the Partnership upon such contribution or to which such property is
subject when
contributed, and (b) in the case of any property distributed to a
Partner by the
Partnership, the Partnership's Carrying Value of such property (as
adjusted
pursuant to Section 5.5(d)(ii)) at the time such property is
distributed,
reduced by any indebtedness either assumed by such Partner upon
such
distribution or to which such property is subject at the time of
distribution,
in either case, as determined under Section 752 of the Code.
"Net Income" means, for any taxable year, the excess, if any, of
the
Partnership's items of income and gain for such taxable year over
the
Partnership's items of loss and deduction for such taxable year.
The items
included in the calculation of Net Income shall be determined in
accordance with
Section 5.5(b) and shall not include any items specially allocated
under Section
6.1(c).
"Net Loss" means, for any taxable year, the excess, if any, of the
Partnership's items of loss and deduction for such taxable year
over the
Partnership's items of income and gain for such taxable year. The
items included
in the calculation of Net Loss shall be determined in accordance
with Section
5.5(b) and shall not include any items specially allocated under
Section 6.1(c).
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or
pledge
securing a Nonrecourse Liability, the amount of any taxable gain
that would be
allocated to the Partners pursuant to Sections 6.2(b)(i)(A),
6.2(b)(ii)(A) and
6.2(b)(iii) if such properties were disposed of in a taxable
transaction in full
satisfaction of such liabilities and for no other consideration.
"Nonrecourse Deductions" means any and all items of loss, deduction
or
expenditures (including, without limitation, any expenditure
described in
Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of
Treasury Regulation Section 1.704-2(b), are attributable to a
Nonrecourse
Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
"OLP Subsidiary" means a Subsidiary of the Partnership.
"Officers" means the Chief Executive Officer, the President, any
Vice
Presidents, the Secretary, the Treasurer, any Assistant Secretaries
or Assistant
Treasurers and any other officers of the Partnership appointed by
the Board of
Supervisors pursuant to Section 7.7.
7
"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to the Partnership or the General Partner or any of
their
Affiliates) acceptable to the Board of Supervisors in its
reasonable discretion.
"Original Agreement" has the meaning assigned to such term in the
Recitals to this Agreement.
"Original Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of the MLP dated as of March 4,
1996.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth
in
Treasury Regulation Section 1.704-2(i)(2).
"Partner Nonrecourse Deductions" means any and all items of loss,
deduction or expenditure (including, without limitation, any
expenditure
described in Section 705(a)(2)(B) of the Code) that, in accordance
with the
principles of Treasury Regulation Section 1.704-2(i), are
attributable to a
Partner Nonrecourse Debt.
"Partners" means the General Partner and the Limited Partner.
"Partnership" means Suburban Propane, L.P., a Delaware limited
partnership, and any successors thereto.
"Partnership Group" means the Partnership and the OLP Subsidiaries,
treated as a single consolidated entity.
"Partnership Interest" means the interest of a Partner in the
Partnership.
"Partnership Minimum Gain" means that amount determined in
accordance
with the principles of Treasury Regulation Section 1.704-2(d).
"Percentage Interest" means (a) as to the General Partner (in its
capacity as General Partner without reference to any limited
partner interests
held by it) zero, (b) as to the MLP as a Limited Partner, 99.9%,
and (c) as to
Suburban LP as a Limited Partner, 0.1%.
"Person" means an individual or a corporation, limited liability
company, partnership, limited liability partnership, joint venture,
trust,
unincorporated organization, association, government agency or
political
subdivision thereof or other entity.
"Quarter" means, unless the context requires otherwise, a fiscal
quarter of the Partnership.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 734
or 743 of the
Code) upon the
8
disposition of any property or asset of the Partnership, which gain
is
characterized as ordinary income because it represents the
recapture of
deductions previously taken with respect to such property or asset.
"Required Allocations" means (a) any limitation imposed on any
allocation of Net Losses, and (b) any allocation of an item of
income, gain,
loss or deduction pursuant to Section 6.1(c)(i), 6.1(c)(ii),
6.1(c)(iii),
6.1(c)(vi) or 6.1(c)(viii).
"Residual Gain" or "Residual Loss" means any item of gain or loss,
as
the case may be, of the Partnership recognized for federal income
tax purposes
resulting from a sale, exchange or other disposition of a
Contributed Property
or Adjusted Property, to the extent such item of gain or loss is
not allocated
pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to
eliminate
Book-Tax Disparities.
"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to
such statute.
"Special Approval" means approval by a majority of the members of
the
Audit Committee.
"Subsidiary" means, with respect to any Person, (a) a corporation
of
which more than 50% of the voting power of shares entitled (without
regard to
the occurrence of any contingency) to vote in the election of
directors or other
governing body of such corporation is owned, directly or
indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of
such Person or
a combination thereof, (b) a partnership (whether general or
limited) in which
such Person or a Subsidiary of such Person is, at the date of
determination, a
general or limited partner of such partnership, but only if more
than 50% of the
partnership interests of such partnership (considering all of the
partnership
interests of the partnership as a single class) is owned, directly
or
indirectly, at the date of determination, by such Person, by one or
more
Subsidiaries of such Person or a combination thereof, or (c) any
other Person
(other than a corporation or a partnership) in which such Person,
one or more
Subsidiaries of such Person, or a combination thereof, directly or
indirectly,
at the date of determination, has (i) at least a majority ownership
interest or
(ii) the power to elect or direct the election of a majority of the
directors or
other governing body of such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 10.2 in
place of and with
all the rights of a Limited Partner and who is shown as a Limited
Partner on the
books and records of the Partnership.
"Suburban LP" means Suburban LP Holding, LLC, a Delaware limited
liability company.
"Surviving Business Entity" has the meaning assigned to such term
in
Section 14.2(b).
"Transfer" has the meaning assigned to such term in Section 4.1(a).
9
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a)
the fair
market value of such property as of such date (as determined under
Section
5.5(d)) over (b) the Carrying Value of such property as of such
date (prior to
any adjustment to be made pursuant to Section 5.5(d) as of such
date).
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a)
the Carrying
Value of such property as of such date (prior to any adjustment to
be made
pursuant to Section 5.5(d) as of such date) over (b) the fair
market value of
such property as of such date (as determined under Section 5.5(d)).
"U.S. GAAP" means United States Generally Accepted Accounting
Principles consistently applied.
"Withdrawal Opinion of Counsel" has the meaning assigned to such
term
in Section 11.1(b).
1.2 Construction.
Unless the context requires otherwise: (a) any pronoun used in this
Agreement shall include the corresponding masculine, feminine or
neuter forms,
and the singular form of nouns, pronouns and verbs shall include
the plural and
vice versa; (b) references to Articles and Sections refer to
Articles and
Sections of this Agreement; and (c) "include" or "includes" means
includes,
without limitation, and "including" means including, without
limitation.
ARTICLE II
ORGANIZATION
2.1 Formation.
The Initial General Partner and the MLP previously formed the
Partnership as a limited partnership upon the filing on December
19, 1995 of the
Certificate of Limited Partnership with the Secretary of State of
the State of
Delaware pursuant to the provisions of the Delaware Act. The
General Partner and
the MLP hereby amend and restate the Second Restated Agreement in
its entirety
to continue the Partnership as a limited partnership pursuant to
the provisions
of the Delaware Act and to set forth the rights and obligations of
the Partners
and certain matters related thereto. This amendment and restatement
shall become
effective on the date of this Agreement. Except as expressly
provided to the
contrary in this Agreement, the rights and obligations of the
Partners and the
administration, dissolution and termination of the Partnership
shall be governed
by the Delaware Act. All Partnership Interests shall constitute
personal
property of the owner thereof for all purposes.
The Initial General Partner has caused the Certificate of Limited
Partnership to be filed with the Secretary of State of the State of
Delaware as
required by the Delaware Act and the General Partner shall use all
reasonable
efforts to cause to be filed such other certificates or
10
documents as may be determined by the Board of Supervisors to be
reasonable and
necessary or appropriate for the formation, continuation,
qualification and
operation of a limited partnership (or a partnership in which the
limited
partners have limited liability) in the State of Delaware or any
other state in
which the Partnership may elect to do business or own property. To
the extent
that such action is determined by the Board of Supervisors to be
reasonable and
necessary or appropriate, the General Partner shall file amendments
to and
restatements of the Certificate of Limited Partnership and do all
things to
maintain the Partnership as a limited partnership (or a partnership
in which the
limited partners have limited liability) under the laws of the
State of Delaware
or of any other state in which the Partnership may elect to do
business or own
property, including in connection with the Exchange Agreement and
the
transactions contemplated thereby. Subject to the provisions of
Section 3.4(a),
the Partnership shall not be required, before or after filing, to
deliver or
mail a copy of the Certificate of Limited Partnership, any
qualification
document or any amendment thereto to any Limited Partner.
2.2 Name.
The name of the Partnership shall be "Suburban Propane, L.P." The
Partnership's business may be conducted under any other name or
names deemed
necessary or appropriate by the Board of Supervisors, including, if
consented to
by the General Partner in its sole discretion, the name of the
General Partner.
The words "Limited Partnership," "L.P.," "Ltd." or similar words or
letters
shall be included in the Partnership's name where necessary for the
purpose of
complying with the laws of any jurisdiction that so requires. The
Board of
Supervisors in its discretion may change the name of the
Partnership at any time
and from time to time and shall notify the Limited Partners of such
change in
the next regular communication to the Limited Partners.
2.3 Registered Office; Registered Agent; Principal Office; Other
Offices.
Unless and until changed by the Board of Supervisors or the Chief
Executive Officer, the registered office of the Partnership in the
State of
Delaware shall be located at Corporation Trust Center, 1209 Orange
Street, New
Castle County, Wilmington, Delaware 19801, and the registered agent
for service
of process on the Partnership in the State of Delaware at such
registered office
shall be The Corporation Trust Company. The principal office of the
Partnership
shall be located at One Suburban Plaza, 240 Route 10 West,
Whippany, New Jersey
07981-0206 or such other place as the Board of Supervisors may from
time to time
designate by notice to the Limited Partner. The Partnership may
maintain offices
at such other place or places within or outside the State of
Delaware as the
Board of Supervisors deems necessary or appropriate. The address of
the General
Partner shall be One Suburban Plaza, 240 Route 10 West, Whippany,
New Jersey
07981-0106 or such other place as the General Partner may from time
to time
designate by notice to the Limited Partners.
2.4 Purpose and Business.
The purpose and nature of the business to be conducted by the
Partnership shall be to (a) acquire, manage and operate the assets
and
properties held by the Partnership, (b) engage directly in, or
enter into or
form any corporation, partnership, joint venture, limited
11
liability company or other arrangement to engage indirectly in, any
business
activity that is approved by the Board of Supervisors and which may
lawfully be
conducted by a limited partnership organized pursuant to the
Delaware Act and,
in connection therewith, to exercise all of the rights and powers
conferred upon
the Partnership pursuant to the agreements relating to such
business activity
and (c) do anything necessary or appropriate to the foregoing,
including the
making of capital contributions or loans to any Group Member, the
MLP or any
Subsidiary of the MLP. The Board of Supervisors has no obligation
or duty to the
Partnership or the Limited Partners to propose or approve, and in
its discretion
may decline to propose or approve, the conduct by the Partnership
of any
business.
2.5 Powers.
The Partnership shall be empowered to do any and all acts and
things
necessary, appropriate, proper, advisable, incidental to or
convenient for the
furtherance and accomplishment of the purposes and business
described in Section
2.4 and for the protection and benefit of the Partnership.
2.6 Power of Attorney.
(a) The Limited Partners hereby constitute and appoint the Chief
Executive Officer and President of the Partnership and, if a
Liquidator shall
have been selected pursuant to Section 12.3, the Liquidator,
severally (and any
successor to the Liquidator by merger, transfer, assignment,
election or
otherwise) and each of their authorized officers and
attorneys-in-fact, as the
case may be, with full power of substitution, as his true and
lawful agent and
attorney-in-fact, with full power and authority in his name, place
and stead,
to:
(i) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (A) all certificates, documents and
other
instruments (including this Agreement and the Certificate of
Limited
Partnership and all amendments or restatements thereof) that the
Board of
Supervisors or the Liquidator deems necessary or appropriate to
form,
qualify or continue the existence or qualification of the
Partnership as a
limited partnership (or a partnership in which the limited partners
have
limited liability) in the State of Delaware and in all other
jurisdictions
in which the Partnership may conduct business or own property; (B)
all
certificates, documents and other instruments that the Board of
Supervisors
or the Liquidator deems necessary or appropriate to reflect, in
accordance
with its terms, any amendment, change, modification or restatement
of this
Agreement; (C) all certificates, documents and other instruments
(including
conveyances and a certificate of cancellation) that the Board of
Supervisors or the Liquidator deems necessary or appropriate to
reflect the
dissolution and liquidation of the Partnership pursuant to the
terms of
this Agreement; (D) all certificates, documents and other
instruments
relating to the admission, withdrawal, removal or substitution of
any
Partner pursuant to, or other events described in, Article IV, X,
XI or
XII; (E) all certificates, documents and other instruments relating
to the
determination of the rights, preferences and privileges of any
class or
series of Partnership Interests; and (F) all certificates,
documents and
other instruments (including agreements and a certificate of
merger)
relating to a merger or consolidation of the Partnership pursuant
to
Article XIV; and
12
(ii) execute, swear to, acknowledge, deliver, file and record all
ballots, consents, approvals, waivers, certificates, documents and
other
instruments necessary or appropriate, in the discretion of the
Board of
Supervisors or the Liquidator, to make, evidence, give, confirm or
ratify
any vote, consent, approval, agreement or other action that is made
or
given by the Partners hereunder or is consistent with the terms of
this
Agreement or is necessary or appropriate, in the discretion of the
Board of
Supervisors or the Liquidator, to effectuate the terms or intent of
this
Agreement; provided, that when the approval of the Limited Partners
is
required by any provision of this Agreement, the Chief Executive
Officer
and President of the Partnership and the Liquidator may exercise
the power
of attorney made in this Section 2.6(a)(ii) only after the
necessary
consent or approval of the Limited Partners is obtained.
Nothing contained in this Section 2.6(a) shall be construed as
authorizing the
Board of Supervisors to amend this Agreement except in accordance
with Article
XIII or as may be otherwise expressly provided for in this
Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall
survive and, to
the maximum extent permitted by law, not be affected by the
subsequent death,
incompetency, disability, incapacity, dissolution, bankruptcy or
termination of
the Limited Partners and the transfer of all or any portion of the
Limited
Partner's Partnership Interest and shall extend to the Limited
Partner's heirs,
successors, assigns and personal representatives. The Limited
Partners hereby
agree to be bound by any representation made by the Chief Executive
Officer or
President of the Partnership or the Liquidator acting in good faith
pursuant to
such power of attorney; and the Limited Partners hereby waive, to
the maximum
extent permitted by law, any and all defenses that may be available
to contest,
negate or disaffirm the action of the Chief Executive Officer or
President of
the Partnership or the Liquidator taken in good faith under such
power of
attorney. The Limited Partners shall execute and deliver to the
Chief Executive
Officer or President of the Partnership or the Liquidator, within
15 days after
receipt of the request therefor, such further designation, powers
of attorney
and other instruments as the Chief Executive Officer or President
of the
Partnership or the Liquidator deems necessary to effectuate this
Agreement and
the purposes of the Partnership.
2.7 Term.
The term of the Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware
Act and shall
continue until the close of Partnership business on September 30,
2085, or until
the earlier dissolution of the Partnership in accordance with the
provisions of
Article XII.
2.8 Title to Partnership Assets.
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the
Partnership
as an entity, and no Partner individually or collectively, shall
have any
ownership interest in such Partnership assets or any
13
portion thereof. Title to any or all of the Partnership assets may
be held in
the name of the Partnership, the General Partner or one or more
nominees, as the
Board of Supervisors may determine. The General Partner hereby
declares and
warrants that any Partnership assets for which record title is held
in the name
of the General Partner or one or more nominees shall be held by the
General
Partner or nominee for the use and benefit of the Partnership in
accordance with
the provisions of this Agreement; provided, however, that the
General Partner
shall use reasonable efforts to cause record title to such assets
(other than
those assets in respect of which the Board of Supervisors
determines that the
expense and difficulty of conveyancing makes transfer of record
title to the
Partnership impracticable) to be vested in the Partnership as soon
as reasonably
practicable; provided, further, that, prior to an event of
withdrawal of the
General Partner or as soon thereafter as practicable, the General
Partner shall
use reasonable efforts to effect the transfer of record title to
the Partnership
and, prior to any such transfer, will provide for the use of such
assets in a
manner satisfactory to the Board of Supervisors. All Partnership
assets shall be
recorded as the property of the Partnership in its books and
records,
irrespective of the name in which record title to such Partnership
assets is
held.
ARTICLE III
RIGHTS OF THE LIMITED PARTNERS
3.1 Limitation of Liability.
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement or the Delaware Act.
3.2 Management of Business.
No Limited Partner (other than the General Partner, or any of its
Affiliates or any member, officer, director, employee, partner,
agent or trustee
of the General Partner or any of its Affiliates, or any officer,
member of the
board of supervisors or directors, employee or agent of a Group
Member, in its
capacity as such, if such Person shall also be a Limited Partner)
shall
participate in the operation, management or control (within the
meaning of
Section 17-303(a) of the Delaware Act) of the Partnership's
business, transact
any business in the Partnership's name or have the power to sign
documents for
or otherwise bind the Partnership. Any action taken by any
Affiliate of the
General Partner or any member, officer, director, employee,
partner, agent or
trustee of the General Partner or any of its Affiliates, or any
officer, member
of the board of supervisors or directors, member, partner, employee
or agent of
a Group Member, the MLP or any Subsidiary of the MLP, in its
capacity as such,
shall not be deemed to be participation in the control of the
business of the
Partnership by a limited partner of the Partnership (within the
meaning of
Section 17-303(a) of the Delaware Act) and shall not affect, impair
or eliminate
the limitations on the liability of the Limited Partners under this
Agreement.
3.3 Rights of Limited Partners Relating to the Partnership.
(a) In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 3.3(b), each of
the Limited
Partners shall have the right, for
14
a purpose reasonably related to such Limited Partner's interest as
a limited
partner in the Partnership, upon reasonable demand and at the
Limited Partner's
own expense:
(i) to obtain true and full information regarding the status of the
business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of the
Partnership's federal, state and local tax returns for each year, ,
provided, however, that only the requesting Limited Partner's
Schedule K-1
will be included therewith;
(iii) to have furnished to it, upon notification to the
Partnership, a
current list of the name and last known business, residence or
mailing
address of each Partner;
(iv) to have furnished to it, upon notification to the Partnership,
a
copy of this Agreement and the Certificate of Limited Partnership
and all
amendments thereto, together with a copy of the executed copies of
all
powers of attorney pursuant to which this Agreement, the
Certificate of
Limited Partnership and all amendments thereto have been executed;
(v) to obtain true and full information regarding the amount of
cash
and a description and statement of the Net Agreed Value of any
other
Capital Contribution by each Partner and which each Partner has
agreed to
contribute in the future, and the date on which each became a
Partner; and
(vi) to obtain such other information regarding the affairs of the
Partnership as is just and reasonable.
(b) The Board of Supervisors may keep confidential from the Limited
Partners, for such period of time as the Board of Supervisors deems
reasonable,
(i) any information that the Board of Supervisors reasonably
believes to be in
the nature of trade secrets or (ii) other information the
disclosure of which
the Board of Supervisors in good faith believes (A) is not in the
best interests
of the Partnership Group, (B) could damage the Partnership Group or
(C) that any
Group Member is required by law or by agreements with third parties
to keep
confidential (other than agreements with Affiliates the primary
purpose of which
is to circumvent the obligations set forth in this Section 3.3).
3.4 Outside Activities of the Limited Partners.
Subject to the provisions of Section 7.11, which shall continue to
be
applicable to the Persons referred to therein, regardless of
whether such Person
shall also be a Limited Partner, any Limited Partner shall be
entitled to and
may have business interests and engage in business activities in
addition to
those relating to the Partnership, including business interests and
activities
in direct competition with the Partnership Group.
15
ARTICLE IV
TRANSFER OF PARTNERSHIP INTERESTS
4.1 Transfer Generally.
(a) The term "transfer," when used in this Agreement with respect
to a
Partnership Interest, shall be deemed to refer to a transaction by
which a
Partner assigns its Partnership Interest to another Person, and
includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage,
exchange or any
other disposition by law or otherwise, in whole or in part.
(b) No Partnership Interest shall be transferred, in whole or in
part,
except in accordance with the terms and conditions set forth in
this Article IV.
Any transfer or purported transfer of a Partnership Interest not
made in
accordance with this Article IV shall be null and void.
(c) Nothing contained in this Agreement shall be construed to
prevent
a disposition by any securityholder of the General Partner of any
or all of the
issued and outstanding equity interests in the General Partner.
4.2 Transfer of the General Partner's Partnership Interest.
If the General Partner transfers its partnership interest as the
general partner of the MLP to any Person in accordance with the
provisions of
the MLP Agreement, upon the request of the Board of Supervisors,
the General
Partner shall contemporaneously therewith, transfer all, but not
less than all,
of its Partnership Interest as the general partner of the
Partnership to such
Person for consideration of $10, and the Limited Partner hereby
expressly
consents to such transfer. Except as set forth in the immediately
preceding
sentence, the General Partner may not transfer all or any part of
its
Partnership Interest as the general partner of the Partnership. Any
transferee
of the Partnership Interests of the General Partner pursuant to
this Section 4.2
shall be deemed to be a successor to the General Partner for
purposes of this
Agreement.
4.3 Transfer of the Limited Partners' Partnership Interests.
Any Limited Partner may transfer all, but not less than all, of its
Partnership Interest as a limited partner of the Partnership in
connection with
the merger, consolidation or other combination of any of the
Limited Partners
with or into any other Person or the transfer by any of the Limited
Partners of
all or substantially all of its assets to another Person, and
following any such
transfer such Person may become a Substituted Limited Partner
pursuant to
Article X. Except as set forth in the immediately preceding
sentence or pursuant
to the Exchange Agreement, or in connection with any pledge of (or
any related
foreclosure on) the Limited Partner's Partnership Interest as a
limited partner
of the Partnership solely for the purpose of securing, directly or
indirectly,
indebtedness of the Partnership or the MLP, a Limited Partner may
not transfer
all or any part of its Partnership Interest or withdraw from the
Partnership.
16
4.4 Restrictions on Transfers.
(a) Notwithstanding the other provisions of this Article IV, no
transfer of any Partnership Interest shall be made if such transfer
would (i)
violate the then applicable federal or state securities laws or
rules and
regulations of the Commission, any state securities commission or
any other
governmental authorities with jurisdiction over such transfer, (ii)
terminate
the existence or qualification of the Partnership or the MLP under
the laws of
the jurisdiction of its formation or (iii) cause the Partnership or
the MLP to
be treated as an association taxable as a corporation or otherwise
to be taxed
as an entity for federal income tax purposes (to the extent not
already so
treated or taxed).
(b) The Board of Supervisors may impose restrictions on the
transfer
of Partnership Interests if a subsequent Opinion of Counsel
determines that such
restrictions are necessary to avoid a significant risk of the
Partnership or the
MLP becoming taxable as a corporation or otherwise to be taxed as
an entity for
federal income tax purposes. The restrictions may be imposed by
making such
amendments to this Agreement as the Board of Supervisors may
determine to be
necessary or appropriate to impose such restrictions.
ARTICLE V
CONTRIBUTIONS AND INITIAL TRANSFERS
5.1 Organizational Contributions.
In connection with the formation of the Partnership under the
Delaware
Act, the Initial General Partner made an initial Capital
Contribution to the
Partnership and was admitted as the general partner of the
Partnership, and the
MLP made an initial Capital Contribution to the Partnership and was
admitted as
a limited partner of the Partnership.
5.2 [Intentionally Deleted.]
5.3 Additional Capital Contributions.
With the consent of the Board of Supervisors, any Limited Partner
may,
but shall not be obliged to, make additional Capital Contributions
to the
Partnership. Except as provided in Section 12.8, the General
Partner shall not
be obligated, nor permitted, to make any additional Capital
Contributions to the
Partnership in its capacity as the General Partner of the
Partnership.
5.4 Interest and Withdrawal.
No interest shall be paid by the Partnership on Capital
Contributions,
and no Partner shall be entitled to withdraw or return of any part
of its
Capital Contributions or to receive any distribution from the
Partnership,
except as provided in Articles VI, XI and XII.
17
5.5 Capital Accounts.
(a) The Partnership shall maintain for each Partner owning a
Partnership Interest a separate Capital Account with respect to
such Partnership
Interest in accordance with the rules of Treasury Regulation
Section
1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i)
the amount of
all Capital Contributions made to the Partnership with respect to
such
Partnership Interest pursuant to this Agreement (or any previous
partnership
agreement of the Partnership) and (ii) all items of Partnership
income and gain
(including, without limitation, income and gain exempt from tax)
computed in
accordance with Section 5.5(b) and allocated with respect to such
Partnership
Interest pursuant to Section 6.1, and decreased by (x) the amount
of cash or the
Net Agreed Value of all actual and deemed distributions of cash or
property made
with respect to such Partnership Interest pursuant to this
Agreement (or any
previous partnership agreement of the Partnership) and (y) all
items of
Partnership deduction and loss computed in accordance with Section
5.5(b) and
allocated with respect to such Partnership Interest pursuant to
Section 6.1.
Immediately following the consummation of the transactions
contemplated in the
Exchange Agreement, the General Partner's initial Capital Account
shall be zero.
(b) For purposes of computing the amount of any item of income,
gain,
loss or deduction which is to be allocated pursuant to Article VI
and is to be
reflected in the Partners' Capital Accounts, the determination,
recognition and
classification of any such item shall be the same as its
determination,
recognition and classification for federal income tax purposes
(including,
without limitation, any method of depreciation, cost recovery or
amortization
used for that purpose), provided, that:
(i) Solely for purposes of this Section 5.5, the Partnership shall
be
treated as owning directly its proportionate share (as determined
by the
Board of Supervisors) of all property owned by any OLP Subsidiary
that is
classified as a partnership for federal income tax purposes.
(ii) All fees and other expenses incurred by the Partnership to
promote the sale of (or to sell) a Partnership Interest that can
neither be
deducted nor amortized under Section 709 of the Code, if any,
shall, for
purposes of Capital Account maintenance, be treated as an item of
deduction
at the time such fees and other expenses are incurred and shall be
allocated among the Partners pursuant to Section 6.1.
(iii) Except as otherwise provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain,
loss
and deduction shall be made without regard to any election under
Section
754 of the Code which may be made by the Partnership and, as to
those items
described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code,
without
regard to the fact that such items are not includable in gross
income or
are neither currently deductible nor capitalized for federal income
tax
purposes. To the extent an adjustment to the adjusted tax basis of
any
Partnership asset pursuant to Section 734(b) or 743(b) of the Code
is
required, pursuant to Treasury Regulation Section
1.704-2(b)(2)(iv)(m) to
be taken into
18
account in determining Capital Accounts, the amount of such
adjustment in
the Capital Accounts shall be treated as an item of gain or loss.
(iv) Any income, gain or loss attributable to the taxable
disposition
of any Partnership property shall be determined as if the adjusted
basis of
such property as of such date of disposition were equal in amount
to the
Partnership's Carrying Value with respect to such property as of
such date.
(v) In accordance with the requirements of Section 704(b) of the
Code,
any deductions for depreciation, cost recovery or amortization
attributable
to any Contributed Property shall be determined as if the adjusted
basis of
such property on the date it was acquired by the Partnership were
equal to
the Agreed Value of such property. Upon an adjustment pursuant to
Section
5.5(d) to the Carrying Value of any Partnership property subject to
depreciation, cost recovery or amortization, any further deductions
for
such depreciation, cost recovery or amortization attributable to
such
property shall be determined (A) as if the adjusted basis of such
property
were equal to the Carrying Value of such property immediately
following
such adjustment and (B) using a rate of depreciation, cost recovery
or
amortization derived from the same method and useful life (or, if
applicable, the remaining useful life) as is applied for federal
income tax
purposes; provided, however, that, if the asset has a zero adjusted
basis
for federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable
method
that the Board of Supervisors may adopt.
(vi) If the Partnership's adjusted basis in a depreciable or cost
recovery property is reduced for federal income tax purposes
pursuant to
Section 48(q)(1) or 48(q)(3) of the Code, the amount of such
reduction
shall, solely for purposes hereof, be deemed to be an additional
depreciation or cost recovery deduction in the year such property
is placed
in service and shall be allocated among the Partners pursuant to
Section
6.1. Any restoration of such basis pursuant to Section 48(q)(2) of
the Code
shall, to the extent possible, be allocated in the same manner to
the
Partners to whom such deemed deduction was allocated.
(c) A transferee of a Partnership Interest shall succeed to a pro
rata
portion of the Capital Account of the transferor relating to the
Partnership
Interest so transferred.
(d) (i) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership
Interests
for cash or Contributed Property, the Capital Account of all
Partners and
the Carrying Value of each Partnership property immediately prior
to such
issuance shall be adjusted upward or downward to reflect any
Unrealized
Gain or Unrealized Loss attributable to such Partnership property,
as if
such Unrealized Gain or Unrealized Loss had been recognized on an
actual
sale of each such property immediately prior to such issuance and
had been
allocated to the Partners at such time pursuant to Section 6.1. In
determining such Unrealized Gain or Unrealized Loss, the aggregate
cash
amount and fair market value of all Partnership assets (including,
without
limitation, cash or cash equivalents) immediately prior to the
issuance of
additional Partnership Interests shall be determined by the Board
of
Supervisors using
19
such reasonable method of valuation as it may adopt; provided,
however,
that the Board of Supervisors, in arriving at such valuation, must
take
fully into account the fair market value of the Partnership
Interests of
all Partners at such time. The Board of Supervisors shall allocate
such
aggregate value among the assets of the Partnership (in such manner
as it
determines in its discretion to be reasonable) to arrive at a fair
market
value for individual properties.
(ii) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed
distribution to a Partner of any Partnership property (other than a
distribution of cash that is not in redemption or retirement of a
Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of all Partnership property shall be adjusted upward
or
downward to reflect any Unrealized Gain or Unrealized Loss
attributable to
such Partnership property, as if such Unrealized Gain or Unrealized
Loss
had been recognized in a sale of such property immediately prior to
such
distribution for an amount equal to its fair market value, and had
been
allocated to the Partners, at such time, pursuant to Section 6.1.
In
determining such Unrealized Gain or Unrealized Loss the aggregate
cash
amount and fair market value of all Partnership assets (including,
without
limitation, cash or cash equivalents) immediately prior to a
distribution
shall (A) in the case of an actual distribution which is not made
pursuant
to Section 12.4, be determined and allocated in the same manner as
that
provided in Section 5.5(d)(i) or (B) in the case of a liquidating
distribution pursuant to Section 12.4, be determined and allocated
by the
Liquidator using such reasonable method of valuation as it may
adopt.
5.6 Loans from Partners.
Loans by a Partner to the Partnership shall not constitute Capital
Contributions. If any Partner shall advance funds to the
Partnership in excess
of the amounts required hereunder to be contributed by it to the
capital of the
Partnership, the making of such excess advances shall not result in
any increase
in the amount of the Capital Account of such Partner. The amount of
any such
excess advances shall be a debt obligation of the Partnership to
such Partner
and shall be payable or collectible only out of the Partnership
assets in
accordance with the terms and conditions upon which such advances
are made.
5.7 No Preemptive Rights.
No Person shall have any preemptive, preferential or other similar
rights with respect to (a) additional Capital Contributions; (b)
issuance or
sale of any class or series of Partnership Interests, whether
unissued, held in
treasury by the Partnership or hereafter created; (c) issuance of
any
obligations, evidences of indebtedness or other securities of the
Partnership
convertible into or exchangeable for, or carrying or accompanied by
any rights
to receive, purchase or subscribe to, any such Partnership
Interests; (d)
issuance of any right of subscription to or right to receive, or
any warrant or
option for the purchase of, any such Partnership Interests; or (e)
issuance or
sale of any other securities that may be issued or sold by the
Partnership.
20
5.8 Fully Paid and Non-Assessable Nature of Limited Partner
Partnership
Interests.
All Limited Partner Partnership Interests issued pursuant to, and
in
accordance with the requirements of, this Article V shall be fully
paid and
non-assessable Partnership Interests in the Partnership, except as
such
non-assessability may be affected by Sections 17-607 and 17-804 of
the Delaware
Act.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 Allocations for Capital Account Purposes.
(a) General. In maintaining the Capital Accounts that determine the
rights of the Partners among themselves, the Partnership's items of
income,
gain, loss and deduction (computed in accordance with Section
5.5(b)), shall be
allocated among the Partners in accordance with their relative
Percentage
Interests, except as otherwise provided below.
(b) Limitation on Losses. Any deduction otherwise allocable to a
Limited Partner that would create or add to a deficit in its
Adjusted Capital
Account shall instead be allocated to the General Partner.
Thereafter, any
income that would otherwise be allocable to such Limited Partner
shall be
allocated to the General Partner until the aggregate amount so
allocated under
this sentence equals the aggregate deductions previously allocated
to the
General Partner under the preceding sentence.
(c) Special Allocations. Notwithstanding any other provision of
this
Section 6.1, the following special allocations shall be made for
such taxable
period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any other
provision of this Section 6.1, if there is a net decrease in
Partnership
Minimum Gain during any Partnership taxable period, each Partner
shall be
allocated items of Partnership income and gain for such period
(and, if
necessary, subsequent periods) in the manner and amounts provided
in
Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and
1.704-2(j)(2)(i), or any successor provision. For purposes of this
Section
6.1(c), each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder
shall
be effected, prior to the application of any other allocations
pursuant to
this Section 6.1(c) with respect to such taxable period (other than
an
allocation pursuant to Sections 6.1(c)(v) and 6.1(c)(vi)). This
Section
6.1(c)(i) is intended to comply with the Partnership Minimum Gain
chargeback requirement in Treasury Regulation Section 1.704-2(f)
and shall
be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain.
Notwithstanding the other provisions of this Section 6.1 (other
than
Section 6.l(c)(i)), except as provided in Treasury Regulation
Section
1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse
Debt
Minimum Gain during any Partnership taxable period, any
21
Partner with a share of Partner Nonrecourse Debt Minimum Gain at
the
beginning of such taxable period shall be allocated items of
Partnership
income and gain for such period (and, if necessary, subsequent
periods) in
the manner and amounts provided in Treasury Regulation Sections
1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any successor provisions.
For
purposes of this Section 6.1(c), each Partner's Adjusted Capital
Account
balance shall be determined, and the allocation of income or gain
required
hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 6.1(c), other than Section
6.1(c)(i)
and other than an allocation pursuant to Sections 6.1(c)
