Exhibit 3.1
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
UNIVERSAL COMPRESSION PARTNERS, L.P.
TABLE OF CONTENTS
|
|
|
|
|
|
|
ARTICLE I
|
DEFINITIONS
|
|
|
|
|
|
|
|
Section 1.1.
|
|
Definitions
|
|
|
1
|
|
Section 1.2.
|
|
Construction
|
|
|
20
|
|
|
|
|
|
|
|
|
ARTICLE II
|
ORGANIZATION
|
|
|
|
|
|
|
|
Section 2.1.
|
|
Formation
|
|
|
21
|
|
Section 2.2.
|
|
Name
|
|
|
21
|
|
Section 2.3.
|
|
Registered Office; Registered Agent; Principal Office; Other Offices
|
|
|
21
|
|
Section 2.4.
|
|
Purpose and Business
|
|
|
21
|
|
Section 2.5.
|
|
Powers
|
|
|
22
|
|
Section 2.6.
|
|
Power of Attorney
|
|
|
22
|
|
Section 2.7.
|
|
Term
|
|
|
23
|
|
Section 2.8.
|
|
Title to Partnership Assets
|
|
|
23
|
|
|
|
|
|
|
|
|
ARTICLE III
|
RIGHTS OF LIMITED PARTNERS
|
|
|
|
|
|
|
|
Section 3.1.
|
|
Limitation of Liability
|
|
|
24
|
|
Section 3.2.
|
|
Management of Business
|
|
|
24
|
|
Section 3.3.
|
|
Outside Activities of the Limited Partners
|
|
|
24
|
|
Section 3.4.
|
|
Rights of Limited Partners
|
|
|
25
|
|
|
|
|
|
|
|
|
ARTICLE IV
|
CERTIFICATES; RECORD HOLDERS; TRANSFER OF
|
PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS
|
|
|
|
|
|
|
|
Section 4.1.
|
|
Certificates
|
|
|
25
|
|
Section 4.2.
|
|
Mutilated, Destroyed, Lost or Stolen Certificates
|
|
|
26
|
|
Section 4.3.
|
|
Record Holders
|
|
|
27
|
|
Section 4.4.
|
|
Transfer Generally
|
|
|
27
|
|
Section 4.5.
|
|
Registration and Transfer of Limited Partner Interests
|
|
|
28
|
|
Section 4.6.
|
|
Transfer of the General Partners General Partner Interest
|
|
|
28
|
|
Section 4.7.
|
|
Transfer of Incentive Distribution Rights
|
|
|
29
|
|
Section 4.8.
|
|
Restrictions on Transfers
|
|
|
30
|
|
Section 4.9.
|
|
Citizenship Certificates; Non-citizen Assignees
|
|
|
31
|
|
Section 4.10.
|
|
Redemption of Partnership Interests of Non-citizen Assignees
|
|
|
32
|
|
|
|
|
|
|
|
|
ARTICLE V
|
CAPITAL CONTRIBUTIONS AND
|
ISSUANCE OF PARTNERSHIP INTERESTS
|
|
|
|
|
|
|
|
Section 5.1.
|
|
Organizational Contributions
|
|
|
33
|
|
Section 5.2.
|
|
Contributions by the General Partner and its Affiliates
|
|
|
33
|
|
Section 5.3.
|
|
Contributions by Initial Limited Partners and Distributions to the General Partner and its Affiliates
|
|
|
34
|
|
Section 5.4.
|
|
Interest and Withdrawal
|
|
|
35
|
|
i
|
|
|
|
|
|
|
Section 5.5.
|
|
Capital Accounts
|
|
|
35
|
|
Section 5.6.
|
|
Issuances of Additional Partnership Securities
|
|
|
38
|
|
Section 5.7.
|
|
Conversion of Subordinated Units
|
|
|
39
|
|
Section 5.8.
|
|
Limited Preemptive Right
|
|
|
41
|
|
Section 5.9.
|
|
Splits and Combinations
|
|
|
41
|
|
Section 5.10.
|
|
Fully Paid and Non-Assessable Nature of Limited Partner Interests
|
|
|
42
|
|
|
|
|
|
|
|
|
ARTICLE VI
|
ALLOCATIONS AND DISTRIBUTIONS
|
|
|
|
|
|
|
|
Section 6.1.
|
|
Allocations for Capital Account Purposes
|
|
|
42
|
|
Section 6.2.
|
|
Allocations for Tax Purposes
|
|
|
51
|
|
Section 6.3.
|
|
Requirement and Characterization of Distributions; Distributions to Record Holders
|
|
|
53
|
|
Section 6.4.
|
|
Distributions of Available Cash from Operating Surplus
|
|
|
54
|
|
Section 6.5.
|
|
Distributions of Available Cash from Capital Surplus
|
|
|
56
|
|
Section 6.6.
|
|
Adjustment of Minimum Quarterly Distribution and Target Distribution Levels
|
|
|
56
|
|
Section 6.7.
|
|
Special Provisions Relating to the Holders of Subordinated Units
|
|
|
57
|
|
Section 6.8.
|
|
Special Provisions Relating to the Holders of Incentive Distribution Rights
|
|
|
57
|
|
Section 6.9.
|
|
Entity-Level Taxation
|
|
|
58
|
|
|
|
|
|
|
|
|
ARTICLE VII
|
MANAGEMENT AND OPERATION OF BUSINESS
|
|
|
|
|
|
|
|
Section 7.1.
|
|
Management
|
|
|
58
|
|
Section 7.2.
|
|
Certificate of Limited Partnership
|
|
|
61
|
|
Section 7.3.
|
|
Restrictions on the General Partners Authority
|
|
|
61
|
|
Section 7.4.
|
|
Reimbursement of the General Partner
|
|
|
61
|
|
Section 7.5.
|
|
Outside Activities
|
|
|
62
|
|
Section 7.6.
|
|
Loans from the General Partner; Loans or Contributions from the Partnership or Group Members
|
|
|
63
|
|
Section 7.7.
|
|
Indemnification
|
|
|
64
|
|
Section 7.8.
|
|
Liability of Indemnitees
|
|
|
66
|
|
Section 7.9.
|
|
Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties
|
|
|
66
|
|
Section 7.10.
|
|
Other Matters Concerning the General Partner
|
|
|
68
|
|
Section 7.11.
|
|
Purchase or Sale of Partnership Securities
|
|
|
69
|
|
Section 7.12.
|
|
Registration Rights of the General Partner and its Affiliates
|
|
|
69
|
|
Section 7.13.
|
|
Reliance by Third Parties
|
|
|
73
|
|
|
|
|
|
|
|
|
ARTICLE VIII
|
BOOKS, RECORDS, ACCOUNTING AND REPORTS
|
|
|
|
|
|
|
|
Section 8.1.
|
|
Records and Accounting
|
|
|
73
|
|
Section 8.2.
|
|
Fiscal Year
|
|
|
73
|
|
Section 8.3.
|
|
Reports
|
|
|
74
|
|
|
|
|
|
|
|
|
ARTICLE IX
|
TAX MATTERS
|
ii
|
|
|
|
|
|
|
Section 9.1.
|
|
Tax Returns and Information
|
|
|
74
|
|
Section 9.2.
|
|
Tax Elections
|
|
|
74
|
|
Section 9.3.
|
|
Tax Controversies
|
|
|
75
|
|
Section 9.4.
|
|
Withholding
|
|
|
75
|
|
|
|
|
|
|
|
|
ARTICLE X
|
ADMISSION OF PARTNERS
|
|
|
|
|
|
|
|
Section 10.1.
|
|
Admission of Initial Limited Partners
|
|
|
75
|
|
Section 10.2.
|
|
Admission of Limited Partners
|
|
|
75
|
|
Section 10.3.
|
|
Admission of Successor General Partner
|
|
|
76
|
|
Section 10.4.
|
|
Amendment of Agreement and Certificate of Limited Partnership
|
|
|
76
|
|
|
|
|
|
|
|
|
ARTICLE XI
|
WITHDRAWAL OR REMOVAL OF PARTNERS
|
|
|
|
|
|
|
|
Section 11.1.
|
|
Withdrawal of the General Partner
|
|
|
77
|
|
Section 11.2.
|
|
Removal of the General Partner
|
|
|
78
|
|
Section 11.3.
|
|
Interest of Departing General Partner and Successor General Partner
|
|
|
79
|
|
Section 11.4.
|
|
Termination of Subordination Period, Conversion of Subordinated Units and
Extinguishment of Cumulative Common Unit Arrearages
|
|
|
81
|
|
Section 11.5.
|
|
Withdrawal of Limited Partners
|
|
|
81
|
|
|
|
|
|
|
|
|
ARTICLE XII
|
DISSOLUTION AND LIQUIDATION
|
|
|
|
|
|
|
|
Section 12.1.
|
|
Dissolution
|
|
|
81
|
|
Section 12.2.
|
|
Continuation of the Business of the Partnership After Dissolution
|
|
|
81
|
|
Section 12.3.
|
|
Liquidator
|
|
|
82
|
|
Section 12.4.
|
|
Liquidation
|
|
|
83
|
|
Section 12.5.
|
|
Cancellation of Certificate of Limited Partnership
|
|
|
83
|
|
Section 12.6.
|
|
Return of Contributions
|
|
|
84
|
|
Section 12.7.
|
|
Waiver of Partition
|
|
|
84
|
|
Section 12.8.
|
|
Capital Account Restoration
|
|
|
84
|
|
|
|
|
|
|
|
|
ARTICLE XIII
|
AMENDMENT OF PARTNERSHIP AGREEMENT;
|
MEETINGS; RECORD DATE
|
|
|
|
|
|
|
|
Section 13.1.
|
|
Amendments to be Adopted Solely by the General Partner
|
|
|
84
|
|
Section 13.2.
|
|
Amendment Procedures
|
|
|
85
|
|
Section 13.3.
|
|
Amendment Requirements
|
|
|
86
|
|
Section 13.4.
|
|
Special Meetings
|
|
|
87
|
|
Section 13.5.
|
|
Notice of a Meeting
|
|
|
87
|
|
Section 13.6.
|
|
Record Date
|
|
|
87
|
|
Section 13.7.
|
|
Adjournment
|
|
|
87
|
|
Section 13.8.
|
|
Waiver of Notice; Approval of Meeting; Approval of Minutes
|
|
|
88
|
|
Section 13.9.
|
|
Quorum and Voting
|
|
|
88
|
|
Section 13.10.
|
|
Conduct of a Meeting
|
|
|
88
|
|
Section 13.11.
|
|
Action Without a Meeting
|
|
|
89
|
|
Section 13.12.
|
|
Right to Vote and Related Matters
|
|
|
89
|
|
iii
|
|
|
|
|
|
|
ARTICLE XIV
|
MERGER, CONSOLIDATION OR CONVERSION
|
|
|
|
|
|
|
|
Section 14.1.
|
|
Authority
|
|
|
90
|
|
Section 14.2.
|
|
Procedure for Merger, Consolidation or Conversion
|
|
|
90
|
|
Section 14.3.
|
|
Approval by Limited Partners
|
|
|
92
|
|
Section 14.4.
|
|
Certificate of Merger
|
|
|
93
|
|
Section 14.5.
|
|
Effect of Merger, Consolidation or Conversion
|
|
|
93
|
|
|
|
|
|
|
|
|
ARTICLE XV
|
RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
|
|
|
|
|
|
|
|
Section 15.1.
|
|
Right to Acquire Limited Partner Interests
|
|
|
95
|
|
|
|
|
|
|
|
|
ARTICLE XVI
|
GENERAL PROVISIONS
|
|
|
|
|
|
|
|
Section 16.1.
|
|
Addresses and Notices
|
|
|
96
|
|
Section 16.2.
|
|
Further Action
|
|
|
97
|
|
Section 16.3.
|
|
Binding Effect
|
|
|
97
|
|
Section 16.4.
|
|
Integration
|
|
|
97
|
|
Section 16.5.
|
|
Creditors
|
|
|
97
|
|
Section 16.6.
|
|
Waiver
|
|
|
97
|
|
Section 16.7.
|
|
Third-Party Beneficiaries
|
|
|
97
|
|
Section 16.8.
|
|
Counterparts
|
|
|
98
|
|
Section 16.9.
|
|
Applicable Law
|
|
|
98
|
|
Section 16.10.
|
|
Invalidity of Provisions
|
|
|
98
|
|
Section 16.11.
|
|
Consent of Partners
|
|
|
98
|
|
Section 16.12.
|
|
Facsimile Signatures
|
|
|
98
|
|
|
|
|
|
|
|
|
Exhibit A Form of Common Unit Certificate
|
iv
FIRST AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF UNIVERSAL COMPRESSION PARTNERS, L.P.
THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF UNIVERSAL COMPRESSION
PARTNERS, L.P. dated as of October 20, 2006, is entered into by and between UCO General Partner,
LP, a Delaware limited partnership, as the General Partner, and Universal Compression, Inc., a
Texas limited partnership, as the Organizational 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:
ARTICLE I
DEFINITIONS
Section 1.1.
Definitions
. The following terms shall be defined for all purposes of this Agreement as follows, unless
otherwise clearly indicated to the contrary.
Acquisition
means any transaction in which any Group Member acquires (through an asset
acquisition, merger, stock acquisition or other form of investment) control over all or a portion
of the assets, properties or business of another Person for the purpose of increasing the operating
capacity or revenues of the Partnership Group from the operating capacity or revenues of the
Partnership Group existing immediately prior to such transaction.
Additional Book Basis
means the portion of any remaining Carrying Value of an Adjusted
Property that is attributable to positive adjustments made to such Carrying Value as a result of
Book-Up Events. For purposes of determining the extent that Carrying Value constitutes Additional
Book Basis:
(i) Any negative adjustment made to the Carrying Value of an Adjusted Property as a
result of either a Book-Down Event or a Book-Up Event shall first be deemed to offset or
decrease that portion of the Carrying Value of such Adjusted Property that is attributable
to any prior positive adjustments made thereto pursuant to a Book-Up Event or Book-Down
Event.
(ii) If Carrying Value that constitutes Additional Book Basis is reduced as a result of
a Book-Down Event and the Carrying Value of other property is increased as a result of such
Book-Down Event, an allocable portion of any such increase in Carrying Value shall be
treated as Additional Book Basis;
provided
, that the amount treated as Additional Book Basis
pursuant hereto as a result of such Book-Down Event shall not exceed the amount by which the
Aggregate Remaining Net Positive Adjustments after such Book-Down Event exceeds the
remaining Additional Book Basis attributable to all of the Partnerships Adjusted Property
after such Book-Down Event (determined without regard to the application of this clause (ii)
to such Book-Down Event).
Additional Book Basis Derivative Items
means any Book Basis Derivative Items that are
computed with reference to Additional Book Basis. To the extent that the Additional Book
Basis attributable to all of the Partnerships Adjusted Property as of the beginning of any
taxable period exceeds the Aggregate Remaining Net Positive Adjustments as of the beginning of such
period (the
Excess Additional Book Basis
), the Additional Book Basis Derivative Items for such
period shall be reduced by the amount that bears the same ratio to the amount of Additional Book
Basis Derivative Items determined without regard to this sentence as the Excess Additional Book
Basis bears to the Additional Book Basis as of the beginning of such period.
Adjusted Capital Account
means the Capital Account maintained for each Partner as of the end
of each fiscal year of the Partnership, (a) increased by any amounts that such Partner is obligated
to restore under the standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is
deemed obligated to restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and
(b) decreased by (i) the amount of all losses and deductions that, as of the end of such fiscal
year, are reasonably expected to be allocated to such Partner in subsequent years under Sections
704(e)(2) and 706(d) of the Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the
amount of all distributions that, as of the end of such fiscal year, are reasonably expected to be
made to such Partner in subsequent years in accordance with the terms of this Agreement or
otherwise to the extent they exceed offsetting increases to such Partners Capital Account that are
reasonably expected to occur during (or prior to) the year in which such distributions are
reasonably expected to be made (other than increases as a result of a minimum gain chargeback
pursuant to Section 6.1(d)(i) or Section 6.1(d)(ii)). The foregoing definition of Adjusted Capital
Account is intended to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. The
Adjusted Capital
Account
of a Partner in respect of a General Partner Unit, a Common Unit, a Subordinated Unit or
an Incentive Distribution Right or any other Partnership Interest shall be the amount that such
Adjusted Capital Account would be if such General Partner Unit, Common Unit, Subordinated Unit,
Incentive Distribution Right or other Partnership Interest were the only interest in the
Partnership held by such Partner from and after the date on which such General Partner Unit, Common
Unit, Subordinated Unit, Incentive Distribution Right or other Partnership Interest was first
issued.
Adjusted Operating Surplus
means, with respect to any period, Operating Surplus generated
with respect to such period (a) less any net decrease in cash reserves for Operating Expenditures
with respect to such period not relating to an Operating Expenditure made with respect to such
period, and (b) plus (i) any net decrease made in subsequent periods in cash reserves for Operating
Expenditures initially established with respect to such period to the extent such decrease results
in a reduction in Adjusted Operating Surplus in subsequent periods pursuant to clause (a) above,
and (ii) any net increase in cash reserves for Operating Expenditures with respect to such period
to the extent such reserve is required by any debt instrument for the repayment of principal,
interest or premium. Adjusted Operating Surplus does not include that portion of Operating Surplus
included in clause (a)(i) of the definition of Operating Surplus.
Adjusted Property
means any property the Carrying Value of which has been adjusted pursuant
to Section 5.5(d)(i) or Section 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
2
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.
Aggregate Remaining Net Positive Adjustments
means, as of the end of any taxable period, the
sum of the Remaining Net Positive Adjustments of all the Partners.
Agreed Allocation
means any allocation, other than a Required Allocation, of an item of
income, gain, loss or deduction pursuant to the provisions of Section 6.1, including, without
limitation, a Curative Allocation (if appropriate to the context in which the term
Agreed
Allocation
is used).
Agreed Value
of any Contributed Property means the fair market value of such property or
other consideration at the time of contribution as determined by the General Partner. The General
Partner shall use such method as it determines to be 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 First Amended and Restated Agreement of Limited Partnership of
Universal Compression Partners, L.P., as it may be amended, supplemented or restated from time to
time.
Associate
means, when used to indicate a relationship with any Person, (a) any corporation
or organization of which such Person is a director, officer or partner or is, directly or
indirectly, the owner of 20% or more of any class of voting stock or other voting interest; (b) any
trust or other estate in which such Person has at least a 20% beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity; and (c) any relative or spouse of
such Person, or any relative of such spouse, who has the same principal residence as such Person.
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) if the General Partner so determines, all or any portion
of any additional cash and cash equivalents of the Partnership Group on hand on the date of
determination of Available Cash with respect to such Quarter, less
(b) the amount of any cash reserves established by the General Partner (i) to provide
for the proper conduct of the business of the Partnership Group (including reserves for
future capital expenditures and for anticipated future credit needs of the Partnership
Group) subsequent to such Quarter, (ii) to 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 or (iii) to
provide funds for distributions under Section 6.4 or Section 6.5 in respect of any one or
more of the next four Quarters;
provided, however
, that the General Partner may not
establish cash reserves pursuant to (iii) above if the effect of such reserves would be that
the Partnership is unable to distribute the Minimum Quarterly
Distribution on all Common Units, plus any Cumulative Common Unit Arrearage on all
3
Common Units, with respect to such Quarter; and, provided further, that disbursements made
by a Group Member or cash reserves established, increased or reduced after the end of such
Quarter but on or before the date of determination of Available Cash with respect to such
Quarter shall be deemed to have been made, established, increased or reduced, for purposes
of determining Available Cash, within such Quarter if the General Partner so determines.
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 Directors
means, with respect to the Board of Directors of the General Partner, its
board of directors or managers, as applicable, if a corporation or limited liability company, or if
a limited partnership, the board of directors or board of managers of the general partner of the
General Partner.
Book Basis Derivative Item
means any item of income, deduction, gain or loss included in the
determination of Net Income or Net Loss that is computed with reference to the Carrying Value of an
Adjusted Property (
e.g.
, depreciation, depletion, or gain or loss with respect to an Adjusted
Property).
Book-Down Event
means an event that triggers a negative adjustment to the Capital Accounts
of the Partners pursuant to Section 5.5(d).
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 Partners share of the Partnerships Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the difference between such
Partners Capital Account balance as maintained pursuant to Section 5.5 and the hypothetical
balance of such Partners Capital Account computed as if it had been maintained strictly in
accordance with federal income tax accounting principles.
Book-Up Event
means an event that triggers a positive adjustment to the Capital Accounts of
the Partners pursuant to Section 5.5(d).
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 State of New York or
Texas shall not be regarded as a Business Day.
Capital Account
means the capital account maintained for a Partner pursuant to Section 5.5.
The
Capital Account
of a Partner in respect of a General Partner Unit, a Common Unit, a
Subordinated Unit, an Incentive Distribution Right or any other Partnership Interest shall be the
amount that such Capital Account would be if such General Partner Unit, Common Unit, Subordinated
Unit, Incentive Distribution Right or other Partnership Interest were the only interest in the
Partnership held by such Partner from and after the date on which such General
Partner Unit, Common Unit, Subordinated Unit, Incentive Distribution Right or other
Partnership Interest was first issued.
4
Capital Contribution
means any cash, cash equivalents or the Net Agreed Value of Contributed
Property that a Partner contributes to the Partnership.
Capital Improvement
means any (a) addition or improvement to the capital assets owned by any
Group Member (including, without limitation, overhauls of existing capital assets owned by any
Group Member), or (b) acquisition of existing, or the construction of new, capital assets
(including, without limitation, any natural gas compression equipment and any related or similar
assets), or (c) capital contributions by a Group Member to a Person in which a Group Member has an
equity interest to fund such Group Members pro rata share of the cost of the acquisition of
existing, or the construction of new, capital assets (including, without limitation, any natural
gas compression equipment and any related or similar assets) by such Person, in each case if such
addition, improvement, acquisition or construction is made to increase the operating capacity or
revenues of the Partnership Group, in the case of clauses (a) and (b), or such Person, in the case
of clause (c), from the operating capacity or revenues of the Partnership Group or such Person, as
the case may be, existing immediately prior to such addition, improvement, acquisition or
construction.
Capital Surplus
has the meaning assigned to such term in Section 6.3(a).
Carrying Value
means (a) with respect to a Contributed Property, the Agreed Value of such
property reduced (but not below zero) by all depreciation, amortization and cost recovery
deductions charged to the Partners 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 Section 5.5(d)(i) and Section 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 General Partner.
Cause
means a court of competent jurisdiction has entered a final, non-appealable judgment
finding the General Partner liable for actual fraud or willful misconduct in its capacity as a
general partner of the Partnership.
Certificate
means (a) a certificate (i) substantially in the form of
Exhibit A
to
this Agreement, (ii) issued in global form in accordance with the rules and regulations of the
Depositary or (iii) in such other form as may be adopted by the General Partner, issued by the
Partnership evidencing ownership of one or more Common Units or (b) a certificate, in such form as
may be adopted by the General Partner, issued by the Partnership evidencing ownership of one or
more other Partnership Securities.
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
7.2, as such Certificate of Limited Partnership may be amended, supplemented or restated from time
to time.
Citizenship Certification
means a properly completed certificate in such form as may be
specified by the General Partner by which a Limited Partner certifies that he (and if he is a
5
nominee holding for the account of another Person, that to the best of his knowledge such other
Person) is an Eligible Citizen.
claim
(as used in Section 7.12(e)) has the meaning assigned to such term in Section 7.12(e).
Closing Date
means the first date on which Common Units are sold by the Partnership to the
Underwriters pursuant to the provisions of the Purchase Agreement.
Closing Price
has the meaning assigned to such term in Section 15.1(a).
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 any successor law.
Combined Interest
has the meaning assigned to such term in Section 11.3(a).
Commission
means the United States Securities and Exchange Commission.
Common Unit
means a Partnership Security representing a fractional part of the Partnership
Interests of all Limited Partners, and having the rights and obligations specified with respect to
Common Units in this Agreement. The term Common Unit does not include a Subordinated Unit prior
to its conversion into a Common Unit pursuant to the terms hereof.
Common Unit Arrearage
means, with respect to any Common Unit, whenever issued, as to any
Quarter within the Subordination Period, the excess, if any, of (a) the Minimum Quarterly
Distribution with respect to a Common Unit in respect of such Quarter over (b) the sum of all
Available Cash distributed with respect to a Common Unit in respect of such Quarter pursuant to
Section 6.4(a)(i).
Conflicts Committee
means a committee of the Board of Directors composed entirely of two or
more directors who are not (a) security holders, officers or employees of the General Partner, (b)
officers, directors or employees of any Affiliate of the General Partner or (c) holders of any
ownership interest in the Partnership Group other than Common Units and who also meet the
independence standards required of directors who serve on an audit committee of a board of
directors established by the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder and by the National Securities Exchange on which the
Common Units are listed or admitted to trading.
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 Agreement
means that certain Contribution, Conveyance and Assumption Agreement,
dated as of the Closing Date, among UCO GP, LLC, the General Partner, the
Partnership, the Operating Partnership, OLP GP, UCI, UCO Compression 2005 and the other
parties named therein, together with the additional conveyance documents and instruments
6
contemplated or referenced thereunder, as such may be amended, supplemented or restated from time
to time.
Cumulative Common Unit Arrearage
means, with respect to any Common Unit, whenever issued,
and as of the end of any Quarter, the excess, if any, of (a) the sum resulting from adding together
the Common Unit Arrearage as to an Initial Common Unit for each of the Quarters within the
Subordination Period ending on or before the last day of such Quarter over (b) the sum of any
distributions theretofore made pursuant to Section 6.4(a)(ii) and the second sentence of Section
6.5 with respect to an Initial Common Unit (including any distributions to be made in respect of
the last of such Quarters).
Curative Allocation
means any allocation of an item of income, gain, deduction, loss or
credit pursuant to the provisions of Section 6.1(d)(xi).
Current Market Price
has the meaning assigned to such term in Section 15.1(a).
Delaware Act
means the Delaware Revised Uniform Limited Partnership Act, 6 Del C. Section
17-101, et seq., as amended, supplemented or restated from time to time, and any successor to such
statute.
Departing General Partner
means a former General Partner from and after the effective date
of any withdrawal or removal of such former General Partner pursuant to Section 11.1 or Section
11.2.
Depositary
means, with respect to any Units issued in global form, The Depository Trust
Company and its successors and permitted assigns.
Economic Risk of Loss
has the meaning set forth in Treasury Regulation Section 1.752-2(a).
Eligible Citizen
means a Person qualified to own interests in real property in jurisdictions
in which any Group Member does business or proposes to do business from time to time, and whose
status as a Limited Partner the General Partner determines does not or would not subject such Group
Member to a significant risk of cancellation or forfeiture of any of its properties or any interest
therein.
Estimated Incremental Quarterly Tax Amount
has the meaning assigned to such term in Section
6.9.
Event of Withdrawal
has the meaning assigned to such term in Section 11.1(a).
Expansion Capital Expenditures
means cash expenditures for Acquisitions or Capital
Improvements, and shall not include Maintenance Capital Expenditures.
Final Subordinated Units
has the meaning assigned to such term in Section 6.1(d)(x).
First Liquidation Target Amount
has the meaning assigned to such term in Section
6.1(c)(i)(D).
7
First Target Distribution
means $0.4025 per Unit per Quarter (or, with respect to the period
commencing on the Closing Date and ending on December 31, 2006, it means the product of $0.4025
multiplied by a fraction of which the numerator is the number of days in such period, and of which
the denominator is 92), subject to adjustment in accordance with Section 6.6 and Section 6.9.
Fully Diluted Basis
means, when calculating the number of Outstanding Units for any period,
a basis that includes, in addition to the Outstanding Units, all Partnership Securities and
options, rights, warrants and appreciation rights relating to an equity interest in the Partnership
(a) that are convertible into or exercisable or exchangeable for Units that are senior to or pari
passu with the Subordinated Units, (b) whose conversion, exercise or exchange price is less than
the Current Market Price on the date of such calculation, (c) that may be converted into or
exercised or exchanged for such Units prior to or during the Quarter immediately following the end
of the period for which the calculation is being made without the satisfaction of any contingency
beyond the control of the holder other than the payment of consideration and the compliance with
administrative mechanics applicable to such conversion, exercise or exchange and (d) that were not
converted into or exercised or exchanged for such Units during the period for which the calculation
is being made;
provided, however
, that for purposes of determining the number of Outstanding Units
on a Fully Diluted Basis when calculating whether the Subordination Period has ended or the
Subordinated Units are entitled to convert into Common Units pursuant to Section 5.7, such
Partnership Securities, options, rights, warrants and appreciation rights shall be deemed to have
been Outstanding Units only for the four Quarters that comprise the last four Quarters of the
measurement period;
provided
,
further
, that if consideration will be paid to any Group Member in
connection with such conversion, exercise or exchange, the number of Units to be included in such
calculation shall be that number equal to the difference between (i) the number of Units issuable
upon such conversion, exercise or exchange and (ii) the number of Units that such consideration
would purchase at the Current Market Price.
General Partner
means UCO General Partner, LP, a Delaware limited partnership and its
successors and permitted assigns that are admitted to the Partnership as general partner of the
Partnership, in its capacity as general partner of the Partnership (except as the context otherwise
requires).
General Partner Interest
means the ownership interest of the General Partner in the
Partnership (in its capacity as a general partner without reference to any Limited Partner Interest
held by it), which is evidenced by General Partner Units, and includes any and all benefits to
which the General Partner is entitled as provided in this Agreement, together with all obligations
of the General Partner to comply with the terms and provisions of this Agreement.
General Partner Unit
means a fractional part of the General Partner Interest having the
rights and obligations specified with respect to the General Partner Interest. A General Partner
Unit is not a Unit.
Group
means a Person that with or through any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except
voting pursuant to a revocable proxy or consent given to such Person in response to a proxy or
consent solicitation made to 10 or more Persons), exercising investment power or disposing of
8
any Partnership Interests with any other Person that beneficially owns, or whose Affiliates or
Associates beneficially own, directly or indirectly, Partnership Interests.
Group Member
means a member of the Partnership Group.
Group Member Agreement
means the partnership agreement of any Group Member, other than the
Partnership, that is a limited or general partnership, the limited liability company agreement of
any Group Member that is a limited liability company, the certificate of incorporation and bylaws
or similar organizational documents of any Group Member that is a corporation, the joint venture
agreement or similar governing document of any Group Member that is a joint venture and the
governing or organizational or similar documents of any other Group Member that is a Person other
than a limited or general partnership, limited liability company, corporation or joint venture, as
such may be amended, supplemented or restated from time to time.
Holder
as used in Section 7.12, has the meaning assigned to such term in Section 7.12(a).
Incentive Distribution Right
means a non-voting Limited Partner Interest issued to the
General Partner in connection with the transactions contemplated pursuant to the Contribution
Agreement, which Limited Partner Interest will confer upon the holder thereof only the rights and
obligations specifically provided in this Agreement with respect to Incentive Distribution Rights
(and no other rights otherwise available to or other obligations of a holder of a Partnership
Interest). Notwithstanding anything in this Agreement to the contrary, the holder of an Incentive
Distribution Right shall not be entitled to vote such Incentive Distribution Right on any
Partnership matter except as may otherwise be required by law.
Incentive Distributions
means any amount of cash distributed to the holders of the Incentive
Distribution Rights pursuant to Section 6.4(a)(v), (vi) and (vii) and Section 6.4(b)(iii), (iv) and
(v).
Incremental Income Taxes
has the meaning assigned to such term in Section 6.9.
Indemnified Persons
has the meaning assigned to such term in Section 7.12(d).
Indemnitee
means (a) the General Partner, (b) any Departing General Partner, (c) any Person
who is or was an Affiliate of the General Partner or any Departing General Partner, (d) any Person
who is or was a member, partner, director, officer, fiduciary or trustee of any Group Member, the
General Partner or any Departing General Partner or any Affiliate of any Group Member, the General
Partner or any Departing General Partner, (e) any Person who is or was serving at the request of
the General Partner or any Departing General Partner or any Affiliate of the General Partner or any
Departing General Partner as an officer, director, member, partner, fiduciary or trustee of another
Person, provided that that Person shall not be an Indemnitee by
reason of providing, on a fee-for-services basis, trustee, fiduciary or custodial services,
and (f) any Person the General Partner designates as an Indemnitee for purposes of this
Agreement.
Initial Common Units
means the Common Units sold in the Initial Offering.
9
Initial Limited Partners
means UCI and the General Partner (with respect to the Incentive
Distribution Rights received by it pursuant to Section 5.2), and the Underwriters, in each case
upon being admitted to the Partnership in accordance with Section 10.1.
Initial Offering
means the initial offering and sale of Common Units to the public, as
described in the Registration Statement.
Initial Unit Price
means (a) with respect to the Common Units and the Subordinated Units,
the initial public offering price per Common Unit at which the Underwriters offered the Common
Units to the public for sale as set forth on the cover page of the prospectus included as part of
the Registration Statement and first issued at or after the time the Registration Statement first
became effective or (b) with respect to any other class or series of Units, the price per Unit at
which such class or series of Units is initially sold by the Partnership, as determined by the
General Partner, in each case adjusted as the General Partner determines to be appropriate to give
effect to any distribution, subdivision or combination of Units.
Interim Capital Transactions
means the following transactions if they occur prior to the
Liquidation Date: (a) borrowings, refinancings or refundings of indebtedness (other than for items
purchased on open account in the ordinary course of business) by any Group Member and sales of debt
securities of any Group Member; (b) sales of equity interests of any Group Member (including the
Common Units sold to the Underwriters pursuant to the exercise of the Over-Allotment Option); (c)
sales or other voluntary or involuntary dispositions of any assets of any Group Member other than
(i) sales or other dispositions of inventory, accounts receivable and other assets in the ordinary
course of business, and (ii) sales or other dispositions of assets as part of normal retirements or
replacements; or (d) capital contributions received.
Issue Price
means the price at which a Unit is purchased from the Partnership, net of any
sales commission or underwriting discount charged to the Partnership.
Limited Partner
means, unless the context otherwise requires, the Organizational Limited
Partner prior to its withdrawal from the Partnership, each Initial Limited Partner, each additional
Person that becomes a Limited Partner pursuant to the terms of this Agreement and any Departing
General Partner upon the change of its status from General Partner to Limited Partner pursuant to
Section 11.3, in each case, in such Persons capacity as a limited partner of the Partnership;
provided, however
, that when the term Limited Partner is used herein in the context of any vote
or other approval, including Article XIII and Article XIV, such term shall not, solely for such
purpose, include any holder of an Incentive Distribution Right (solely with respect to its
Incentive Distribution Rights and not with respect to any other Limited Partner Interest held by
such Person) except as may otherwise be required by law.
Limited Partner Interest
means the ownership interest of a Limited Partner in the
Partnership, which may be evidenced by Common Units, Subordinated Units, Incentive
Distribution Rights or other Partnership Securities or a combination thereof or interest
therein, and includes any and all benefits to which such Limited Partner is entitled as provided in
this Agreement, together with all obligations of such Limited Partner to comply with the terms and
provisions of this Agreement;
provided, however
, that when the term Limited Partner Interest is
used herein in the context of any vote or other approval, including Article XIII and
10
Article XIV, such term shall not, solely for such purpose, include any Incentive Distribution Right except as
may otherwise be required by law.
Liquidation Date
means (a) in the case of an event giving rise to the dissolution of the
Partnership of the type described in clauses (a) and (b) of the first sentence of Section 12.2, the
date on which the applicable time period during which the holders of Outstanding Units have the
right to elect to continue the business of the Partnership has expired without such an election
being made, and (b) in the case of any other event giving rise to the dissolution of the
Partnership, the date on which such event occurs.
Liquidator
means one or more Persons selected by the General Partner to perform the
functions described in Section 12.4 as liquidating trustee of the Partnership within the meaning of
the Delaware Act.
Maintenance Capital Expenditures
means any cash expenditures (including expenditures for the
addition or improvement to the capital assets owned by any Group Member or for the acquisition of
existing, or the construction of new, capital assets) if such expenditures are made to maintain,
including over the long term, the operating capacity or revenues of the Partnership Group.
Merger Agreement
has the meaning assigned to such term in Section 14.1.
Minimum Quarterly Distribution
means $0.35 per Unit per Quarter (or with respect to the
period commencing on the Closing Date and ending on December 31, 2006, it means the product of
$0.35 multiplied by a fraction of which the numerator is the number of days in such period and of
which the denominator is 92), subject to adjustment in accordance with Section 6.6 and Section 6.9.
National Securities Exchange
means an exchange registered with the Commission under Section
6(a) of the Securities Exchange Act of 1934, as amended, supplemented or restated from time to
time, and any successor to such statute, or The Nasdaq Global Market or any successor thereto.
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, (b) in the case of any property distributed
to a Partner by the Partnership, the Partnerships 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,
and (c) in the case of a contribution of Common Units by the General Partner to the Partnership as
a Capital Contribution pursuant to Section 5.2(b), an amount per
Common Unit contributed equal to the Current Market Price per Common Unit as of the date of
the contribution.
Net Income
means, for any taxable year, the excess, if any, of the Partnerships items of
income and gain (other than those items taken into account in the computation of Net
11
Termination Gain or Net Termination Loss) for such taxable year over the Partnerships items of loss and
deduction (other than those items taken into account in the computation of Net Termination Gain or
Net Termination Loss) for such taxable year. The items included in the calculation of Net Income
shall be determined in accordance with Section 5.5(b) and shall not include any items specially
allocated under Section 6.1(d);
provided
, that the determination of the items that have been
specially allocated under Section 6.1(d) shall be made as if Section 6.1(d)(xii) were not in this
Agreement.
Net Loss
means, for any taxable year, the excess, if any, of the Partnerships items of loss
and deduction (other than those items taken into account in the computation of Net Termination Gain
or Net Termination Loss) for such taxable year over the Partnerships items of income and gain
(other than those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation of Net Loss shall
be determined in accordance with Section 5.5(b) and shall not include any items specially allocated
under Section 6.1(d);
provided
, that the determination of the items that have been specially
allocated under Section 6.1(d) shall be made as if Section 6.1(d)(xii) were not in this Agreement.
Net Positive Adjustments
means, with respect to any Partner, the excess, if any, of the
total positive adjustments over the total negative adjustments made to the Capital Account of such
Partner pursuant to Book-Up Events and Book-Down Events.
Net Termination Gain
means, for any taxable year, the sum, if positive, of all items of
income, gain, loss or deduction recognized by the Partnership after the Liquidation Date. The
items included in the determination of Net Termination Gain shall be determined in accordance with
Section 5.5(b) and shall not include any items of income, gain or loss specially allocated under
Section 6.1(d).
Net Termination Loss
means, for any taxable year, the sum, if negative, of all items of
income, gain, loss or deduction recognized by the Partnership after the Liquidation Date. The
items included in the determination of Net Termination Loss shall be determined in accordance with
Section 5.5(b) and shall not include any items of income, gain or loss specially allocated under
Section 6.1(d).
Non-citizen Assignee
means a Person whom the General Partner has determined does not
constitute an Eligible Citizen and as to whose Partnership Interest the General Partner has become
the Limited Partner, pursuant to Section 4.9.
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 Section 6.2(b)(i)(A), Section
6.2(b)(ii)(A) and Section 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 expenditure (including,
without limitation, any expenditure described in Section 705(a)(2)(B) of the Code)
12
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).
Notice of Election to Purchase
has the meaning assigned to such term in Section 15.1(b).
OLP GP
mean UCLP OLP GP LLC, a Delaware limited liability company and the general partner of
the Operating Partnership, and any successors thereto.
Omnibus Agreement
means that certain Omnibus Agreement, dated as of the Closing Date, by and
among the General Partner, the Partnership, the Operating Partnership and certain other parties
thereto, as such may be amended, supplemented or restated from time to time.
Operating Expenditures
means all Partnership Group cash expenditures, including, but not
limited to, taxes, reimbursements of the General Partner in accordance with this Agreement,
interest payments, Maintenance Capital Expenditures and non-Pro Rata repurchases of Units (other
than those made with the proceeds of an Interim Capital Transaction), but excluding, subject to the
following:
(a) payments (including prepayments and prepayment penalties) of principal of and premium on
indebtedness shall not constitute Operating Expenditures; and
(b) Operating Expenditures shall not include (i) Expansion Capital Expenditures, (ii) payment
of transaction expenses (including taxes) relating to Interim Capital Transactions or (iii)
distributions to Partners. Where capital expenditures consist of both Maintenance Capital
Expenditures and Expansion Capital Expenditures, the General Partner, with the concurrence of the
Conflicts Committee, shall determine the allocation between the portion consisting of Maintenance
Capital Expenditures and the portion consisting of Expansion Capital Expenditures and, with respect
to the part of such capital expenditures consisting of Maintenance Capital Expenditures, the period
over which the capital expenditures made for other purposes will be deducted as an Operating
Expenditure in calculating Operating Surplus.
Operating Partnership
means UC Operating Partnership, L.P., a Delaware limited partnership,
and any successors thereto.
Operating Partnership Agreement
means the Agreement of the Limited Partnership of the
Operating Partnership, as it may be amended, supplemented or restated from time to time.
Operating Surplus
means, with respect to any period ending prior to the Liquidation Date, on
a cumulative basis and without duplication,
(a) the sum of (i) an amount equal to three times the amount needed for any one Quarter for
the Partnership to pay a distribution on all Units, the General Partner Units and the Incentive
Distribution Rights at the same per Unit amount as was distributed immediately preceding the date
of determination (or with respect to the period commencing on the Closing
13
Date and ending on
December 31, 2006, it means the product of (x) $0.35 multiplied by (y) a fraction of which the
numerator is the number of days in such period and the denominator is 92 multiplied by (z) the
number of Units and General Partner Units Outstanding on the Record Date with respect to such
period), and (ii) all cash receipts of the Partnership Group for the period beginning on the
Closing Date and ending on the last day of such period, but excluding cash receipts from Interim
Capital Transactions (except to the extent specified in Section 6.5) less
(b) the sum of (i) Operating Expenditures for the period beginning on the Closing Date and
ending on the last day of such period and (ii) the amount of cash reserves established by the
General Partner to provide funds for future Operating Expenditures;
provided, however
, that
disbursements made (including contributions to a Group Member or disbursements on behalf of a Group
Member) or cash reserves established, increased or reduced after the end of such period but on or
before the date of determination of Available Cash with respect to such period shall be deemed to
have been made, established, increased or reduced, for purposes of determining Operating Surplus,
within such period if the General Partner so determines.
Notwithstanding the foregoing,
Operating Surplus
with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.
Opinion of Counsel
means a written opinion of counsel (who may be regular counsel to the
Partnership or the General Partner or any of its Affiliates) acceptable to the General Partner.
Option Closing Date
means the date or dates on which any Common Units are sold by the
Partnership to the Underwriters upon exercise of the Over-Allotment Option.
Organizational Limited Partner
means UCI in its capacity as the organizational limited
partner of the Partnership pursuant to this Agreement.
Outstanding
means, with respect to Partnership Securities, all Partnership Securities that
are issued by the Partnership and reflected as outstanding on the Partnerships books and records
as of the date of determination;
provided, however
, that if at any time any Person or Group (other
than the General Partner or its Affiliates) beneficially owns 20% or more of any Outstanding
Partnership Securities of any class then Outstanding, none of the Partnership Securities owned by
such Person or Group shall be voted on any matter and shall not be considered to be Outstanding
when sending notices of a meeting of Limited Partners to vote on any matter (unless otherwise
required by law), calculating required votes, determining the presence of a quorum or for other
similar purposes under this Agreement, except that Common Units so owned shall be considered to be
Outstanding for purposes of Section 11.1(b)(iv) (such Common Units shall not, however, be treated
as a separate class of Partnership Securities for purposes of this Agreement);
provided
,
further
,
that the foregoing limitation shall not apply (i) to any Person or Group who acquired 20% or more
of any Outstanding Partnership Securities of any class then Outstanding directly from the General
Partner or its Affiliates, (ii) to any Person or Group who acquired 20% or more of any Outstanding
Partnership Securities of any class then
Outstanding directly or indirectly from a Person or Group described in clause (i) provided
that the General Partner shall have notified such Person or Group in writing that such limitation
shall not apply, or (iii) to any Person or Group who acquired 20% or more of any Partnership
14
Securities issued by the Partnership with the prior approval of the Board of Directors of the
General Partner.
Over-Allotment Option
means the over-allotment option granted to the Underwriters by the
Partnership pursuant to the Purchase Agreement.
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 Partners.
Partnership
means Universal Compression Partners, L.P., a Delaware limited partnership, and
any successors thereto.
Partnership Group
means the Partnership and its Subsidiaries treated as a single
consolidated entity.
Partnership Interest
means an interest in the Partnership, which shall include the General
Partner Interest and Limited Partner Interests.
Partnership Minimum Gain
means that amount determined in accordance with the principles of
Treasury Regulation Section 1.704-2(d).
Partnership Security
means any class or series of equity interest in the Partnership (but
excluding any options, rights, warrants and appreciation rights relating to an equity interest in
the Partnership), including without limitation, Common Units, Subordinated Units, General Partner
Units and Incentive Distribution Rights.
Per Unit Capital Amount
means, as of any date of determination, the Capital Account, stated
on a per Unit basis, underlying any Unit held by a Person other than the General Partner or any
Affiliate of the General Partner who holds Units.
Percentage Interest
means as of any date of determination (a) as to the General Partner with
respect to General Partner Units and as to any Unitholder with respect to Units, the product
obtained by multiplying (i) 100% less the percentage applicable to clause (b) below by (ii) the
quotient obtained by dividing (A) the number of General Partner Units held by the General Partner
or the number of Units held by such Unitholder, as the case may be, by (B) the total
number of all Outstanding Units and all General Partner Units, and (b) as to the holders of
other Partnership Securities issued by the Partnership in accordance with Section 5.6, the
percentage
15
established as a part of such issuance. The Percentage Interest with respect to an
Incentive Distribution Right shall at all times be zero.
Person
means an individual or a corporation, firm, limited liability company, partnership,
joint venture, trust, unincorporated organization, association, governmental agency or political
subdivision thereof or other entity.
Pro Rata
means (a) when used with respect to Units or any class thereof, apportioned equally
among all designated Units in accordance with their relative Percentage Interests, (b) when used
with respect to Partners or Record Holders, apportioned among all Partners or Record Holders, in
accordance with their relative Percentage Interests and (c) when used with respect to holders of
Incentive Distribution Rights, apportioned equally among all holders of Incentive Distribution
Rights in accordance with the relative number or percentage of Incentive Distribution Rights held
by each such holder.
Purchase Agreement
means that certain Purchase Agreement dated as of October 16, 2006 among
the Underwriters, the Partnership, the General Partner, the Operating Partnership and other parties
thereto, providing for the purchase of Common Units by the Underwriters.
Purchase Date
means the date determined by the General Partner as the date for purchase of
all Outstanding Limited Partner Interests of a certain class (other than Limited Partner Interests
owned by the General Partner and its Affiliates) pursuant to Article XV.
Quarter
means, unless the context requires otherwise, a fiscal quarter of the Partnership
or, with respect to the first fiscal quarter of the Partnership after the Closing Date, the portion
of such fiscal quarter after the Closing Date.
Recapture Income
means any gain recognized by the Partnership (computed without regard to
any adjustment required by Section 734 or Section 743 of the Code) upon the disposition of any
property or asset of the Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to such property or asset.
Record Date
means the date established by the General Partner or otherwise in accordance
with this Agreement for determining (a) the identity of the Record Holders entitled to notice of,
or to vote at, any meeting of Limited Partners or entitled to vote by ballot or give approval of
Partnership action in writing without a meeting or entitled to exercise rights in respect of any
lawful action of Limited Partners or (b) the identity of Record Holders entitled to receive any
report or distribution or to participate in any offer.
Record Holder
means the Person in whose name a Common Unit is registered on the books of the
Transfer Agent as of the opening of business on a particular Business Day or, with respect to other
Partnership Interests, the Person in whose name any such other Partnership Interest is registered
on the books that the General Partner has caused to be kept as of the opening of business on such
Business Day.
16
Redeemable Interests
means any Partnership Interests for which a redemption notice has been
given, and has not been withdrawn, pursuant to Section 4.10.
Registration Statement
means the Registration Statement on Form S-1 (Registration No.
333-135351) as it has been and may be amended or supplemented from time to time, filed by the
Partnership with the Commission under the Securities Act to register the offering, sale and
delivery of the Common Units in the Initial Offering.
Remaining Net Positive Adjustments
means as of the end of any taxable period, (i) with
respect to the Unitholders holding Common Units or Subordinated Units, the excess of (a) the Net
Positive Adjustments of the Unitholders holding Common Units or Subordinated Units as of the end of
such period over (b) the sum of those Partners Share of Additional Book Basis Derivative Items for
each prior taxable period, (ii) with respect to the General Partner (as holder of the General
Partner Units), the excess of (a) the Net Positive Adjustments of the General Partner as of the end
of such period over (b) the sum of the General Partners Share of Additional Book Basis Derivative
Items with respect to the General Partner Units for each prior taxable period, and (iii) with
respect to the holders of Incentive Distribution Rights, the excess of (a) the Net Positive
Adjustments of the holders of Incentive Distribution Rights as of the end of such period over (b)
the sum of the Share of Additional Book Basis Derivative Items of the holders of the Incentive
Distribution Rights for each prior taxable period.
Required Allocations
means (a) any limitation imposed on any allocation of Net Losses or Net
Termination Losses under Section 6.1(b) or Section 6.1(c)(ii) and (b) any allocation of an item of
income, gain, loss or deduction pursuant to Section 6.1(d)(i), Section 6.1(d)(ii), Section
6.1(d)(iv), Section 6.1(d)(v), Section 6.1(d)(vi), Section 6.1(d)(vii) or Section 6.1(d)(ix).
Residual Gain
or
Residual Loss
means any item of gain or loss, as the case may be, of the
Partnership recognized for federal income tax purposes resulting from a sale, exchange or other
disposition of a Contributed Property or Adjusted Property, to the extent such item of gain or loss
is not allocated pursuant to Section 6.2(b)(i)(A) or Section 6.2(b)(ii)(A), respectively, to
eliminate Book-Tax Disparities.
Retained Converted Subordinated Unit
has the meaning assigned to such term in Section
5.5(c)(ii).
Second Liquidation Target Amount
has the meaning assigned to such term in Section
6.1(c)(i)(E).
Second Target Distribution
means $0.4375 per Unit per Quarter (or, with respect to the
period commencing on the Closing Date and ending on December 31, 2006, it means the product of
$0.4375 multiplied by a fraction of which the numerator is equal to the number of days in such
period and of which the denominator is 92), subject to adjustment in accordance with Section 6.6
and Section 6.9.
Securities Act
means the Securities Act of 1933, as amended, supplemented or restated from
time to time and any successor to such statute.
17
Securities Exchange Act
means the Securities Exchange Act of 1934, as amended, supplemented
or restated from time to time and any successor to such statute.
Share of Additional Book Basis Derivative Items
means in connection with any allocation of
Additional Book Basis Derivative Items for any taxable period, (i) with respect to the Unitholders
holding Common Units or Subordinated Units, the amount that bears the same ratio to such Additional
Book Basis Derivative Items as the Unitholders Remaining Net Positive Adjustments as of the end of
such period bears to the Aggregate Remaining Net Positive Adjustments as of that time, (ii) with
respect to the General Partner (as holder of the General Partner Units), the amount that bears the
same ratio to such Additional Book Basis Derivative Items as the General Partners Remaining Net
Positive Adjustments as of the end of such period bears to the Aggregate Remaining Net Positive
Adjustment as of that time, and (iii) with respect to the Partners holding Incentive Distribution
Rights, the amount that bears the same ratio to such Additional Book Basis Derivative Items as the
Remaining Net Positive Adjustments of the Partners holding the Incentive Distribution Rights as of
the end of such period bears to the Aggregate Remaining Net Positive Adjustments as of that time.
Special Approval
means approval by a majority of the members of the Conflicts Committee
acting in good faith.
Subordinated Unit
means a Partnership Security representing a fractional part of the
Partnership Interests of all Limited Partners and having the rights and obligations specified with
respect to Subordinated Units in this Agreement. The term
Subordinated Unit
does not include a
Common Unit. A Subordinated Unit that is convertible into a Common Unit shall not constitute a
Common Unit until such conversion occurs.
Subordination Period
means the period commencing on the Closing Date and ending on the first
to occur of the following dates:
(a) the first day of any Quarter beginning after September 30, 2011 in respect of which
(i) (A) distributions of Available Cash from Operating Surplus on each of the Outstanding
Common Units, Subordinated Units and General Partner Units and any other Outstanding Units
that are senior or equal in right of distribution to the Subordinated Units and the General
Partner Units with respect to each of the three consecutive, non-overlapping four-Quarter
periods immediately preceding such date equaled or exceeded the sum of the Minimum Quarterly
Distribution on all Outstanding Common Units, Subordinated Units and General Partner Units
and any other Outstanding Units that are senior or equal in right of distribution to the
Subordinated Units during such periods and (B) the Adjusted Operating Surplus for each of
the three consecutive, non-overlapping four-Quarter periods immediately preceding such date
equaled or exceeded the sum of the Minimum Quarterly Distribution on all of the Outstanding
Common Units, Subordinated Units and General Partner Units and any other Outstanding Units
that are senior or equal in right of distribution to the Subordinated Units during such
periods on a Fully Diluted Basis and (ii) there are no Cumulative Common Unit Arrearages;
18
(b) the first date on which there are no longer outstanding any Subordinated Units due
to the conversion of Subordinated Units into Common Units pursuant to Section 5.7; and
(c) the date on which the General Partner is removed as general partner of the
Partnership upon the requisite vote by holders of Outstanding Units under circumstances
where Cause does not exist and Units held by the General Partner and its Affiliates are not
voted in favor of such removal.
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.
Surviving Business Entity
has the meaning assigned to such term in Section 14.2(b).
Target Distribution
means, collectively, the First Target Distribution, Second Target
Distribution and Third Target Distribution.
Third Liquidation Target Amount
has the meaning assigned to such term in Section
6.1(c)(i)(F).
Third Target Distribution
means $0.5250 per Unit per Quarter (or, with respect to the period
commencing on the Closing Date and ending on December 31, 2006, it means the product of $0.5250
multiplied by a fraction of which the numerator is equal to the number of days in such period and
of which the denominator is 92), subject to adjustment in accordance with Section 6.6 and Section
6.9.
Trading Day
has the meaning assigned to such term in Section 15.1(a).
transfer
has the meaning assigned to such term in Section 4.4(a).
Transfer Agent
means such bank, trust company or other Person (including the General Partner
or one of its Affiliates) as shall be appointed from time to time by the General Partner to act as
registrar and transfer agent for the Common Units;
provided
, that if no Transfer Agent is
specifically designated for any other Partnership Securities, the General Partner shall act in such
capacity.
19
UCI
means Universal Compression, Inc., a Texas corporation.
UCO Compression 2005
means UCO Compression 2005 LLC, a Delaware limited liability company.
Underwriter
means each Person named as an underwriter in Schedule
A
to the Purchase
Agreement who purchases Common Units pursuant thereto.
Unit
means a Partnership Security that is designated as a
Unit
and shall include Common
Units and Subordinated Units but shall not include (i) General Partner Units (or the General
Partner Interest represented thereby) or (ii) Incentive Distribution Rights.
Unit Majority
means (i) during the Subordination Period, at least a majority of the
Outstanding Common Units (excluding Common Units owned by the General Partner and its Affiliates),
voting as a class and at least a majority of the Outstanding Subordinated Units voting as a class,
and (ii) after the end of the Subordination Period, at least a majority of the Outstanding Common
Units voting as a class.
Unitholders
means the holders of Units.
Unpaid MQD
has the meaning assigned to such term in Section 6.1(c)(i)(B).
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)).
Unrecovered Capital
means at any time, with respect to a Unit, the Initial Unit Price less
the sum of all distributions constituting Capital Surplus theretofore made in respect of an Initial
Common Unit and any distributions of cash (or the Net Agreed Value of any distributions in kind) in
connection with the dissolution and liquidation of the Partnership theretofore made in respect of
an Initial Common Unit, adjusted as the General Partner determines to be appropriate to give effect
to any distribution, subdivision or combination of such Units.
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).
Section 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)
20
references to Articles and Sections refer to
Articles and Sections of this Agreement; (c) the term
include
or
includes
means includes,
without limitation, and
including
means including, without limitation; (d) the conjunctives and
and or shall include both the conjunctive and the disjunctive; and (e) the terms hereof,
herein or hereunder refer to this Agreement as a whole and not to any particular provision of
this Agreement. The table of contents and headings contained in this Agreement are for reference
purposes only, and shall not affect in any way the meaning or interpretation of this Agreement.
ARTICLE II
ORGANIZATION
Section 2.1.
Formation
. The General Partner and the Organizational Limited Partner have previously formed the
Partnership as a limited partnership pursuant to the provisions of the Delaware Act and hereby
amend and restate the original Agreement of Limited Partnership of Universal Compression Partners,
L.P. in its entirety. This amendment and restatement shall become effective on the date of this
Agreement. Except as expressly provided to the contrary in this Agreement, the rights, duties
(including fiduciary duties), liabilities and obligations of the Partners and the administration,
dissolution and termination of the Partnership shall be governed by the Delaware Act. All
Partnership Interests shall constitute personal property of the owner thereof for all purposes.
Section 2.2.
Name
. The name of the Partnership shall be Universal Compression Partners, L.P. The Partnerships
business may be conducted under any other name or names as determined by the General Partner,
including the name of the General Partner. The words Limited Partnership, L.P., Ltd. or
similar words or letters shall be included in the Partnerships name where necessary for the
purpose of complying with the laws of any jurisdiction that so requires. The General Partner 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.
Section 2.3.
Registered Office; Registered Agent; Principal Office; Other Offices
. Unless and until changed by the General Partner, the registered office of the Partnership in the
State of Delaware shall be located at 1209 Orange Street, Wilmington, New Castle County, Delaware
19801, and the registered agent for service of process on the Partnership in the State of Delaware
at such registered office shall be Corporation Trust Center. The principal office of the
Partnership shall be located at 4444 Brittmoore Road, Houston, Texas 77041 or such other place as
the General Partner may from time to time designate by notice to the Limited Partners. The
Partnership may maintain offices at such other place or places within or outside the State of
Delaware as the General Partner determines to be necessary or appropriate. The address of the
General Partner shall be 4444 Brittmoore Road, Houston, Texas 77041 or such other place as the
General Partner may from time to time designate by notice to the Limited Partners.
Section 2.4.
Purpose and Business
. The purpose and nature of the business to be conducted by the Partnership shall be to (a) engage
directly in, or enter into or form, hold or dispose of any corporation, partnership, joint venture,
limited liability company or other arrangement to engage indirectly in, any business activity that
is approved by the General Partner and that lawfully may be conducted by a limited partnership
organized pursuant to the Delaware
21
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 (b) do anything necessary or appropriate to the foregoing, including the making of
capital contributions or loans to a Group Member;
provided, however
, that the General Partner shall
not cause the Partnership to engage, directly or indirectly, in any business activity that the
General Partner determines would cause the Partnership to be treated as an association taxable as a
corporation or otherwise taxable as an entity for federal income tax purposes. To the fullest
extent permitted by law, the General Partner shall have no duty or obligation to propose or
approve, and may decline to propose or approve, the conduct by the Partnership of any business free
of any fiduciary duty or obligation whatsoever to the Partnership or any Limited Partner and, in
declining to so propose or approve, shall not be required to act in good faith or pursuant to any
other standard imposed by this Agreement, any Group Member Agreement, any other agreement
contemplated hereby or under the Delaware Act or any other law, rule or regulation or at equity.
Section 2.5.
Powers
. The Partnership shall be empowered to do any and all acts and things necessary and appropriate
for the furtherance and accomplishment of the purposes and business described in Section 2.4 and
for the protection and benefit of the Partnership.
Section 2.6.
Power of Attorney
.
(a) Each Limited Partner hereby constitutes and appoints the General Partner and, if a
Liquidator shall have been selected pursuant to Section 12.3, the Liquidator (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:
(i) execute, swear to, acknowledge, deliver, file and record in the appropriate
public offices (A) all certificates, documents and other instruments (including this
Agreement and the Certificate of Limited Partnership and all amendments or
restatements hereof or thereof) that the General Partner or the Liquidator
determines to be necessary or appropriate to form, qualify or continue the existence
or qualification of the Partnership as a limited partnership (or a partnership in
which the limited partners have limited liability) in the State of Delaware and in
all other jurisdictions in which the Partnership may conduct
business or own property; (B) all certificates, documents and other instruments
that the General Partner or the Liquidator determines to be necessary or appropriate
to reflect, in accordance with its terms, any amendment, change, modification or
restatement of this Agreement; (C) all certificates, documents and other instruments
(including conveyances and a certificate of cancellation) that the General Partner
or the Liquidator determines to be 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, Article X, Article XI or Article XII; (E) all
certificates, documents and other instruments relating to the determination of the
rights, preferences and privileges of any class or series of Partnership Securities
22
issued pursuant to Section 5.6; and (F) all certificates, documents and other
instruments (including agreements and a certificate of merger) relating to a merger,
consolidation or conversion of the Partnership pursuant to Article XIV; and
(ii) to execute, swear to, acknowledge, deliver, file and record all ballots,
consents, approvals, waivers, certificates, documents and other instruments that the
General Partner or the Liquidator determines to be necessary or appropriate to (A)
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 (B) effectuate the terms or intent of this Agreement;
provided
, that when required by Section 13.3 or any other provision of this
Agreement that establishes a percentage of the Limited Partners or of the Limited
Partners of any class or series required to take any action, the General Partner and
the Liquidator may exercise the power of attorney made in this Section 2.6(a)(ii)
only after the necessary vote, consent or approval of the Limited Partners or of the
Limited Partners of such class or series, as applicable.
Nothing contained in this Section 2.6(a) shall be construed as authorizing the General
Partner to amend this Agreement except in accordance with Article XIII or as may be
otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be irrevocable and a power
coupled with an interest, and it shall survive and, to the maximum extent permitted by law,
not be affected by the subsequent death, incompetency, disability, incapacity, dissolution,
bankruptcy or termination of any Limited Partner, the transfer of all or any portion of such
Limited Partners Limited Partner Interest and shall extend to such Limited Partners heirs,
successors, assigns and personal representatives. Each such Limited Partner hereby agrees
to be bound by any representation made by the General Partner or the Liquidator acting in
good faith pursuant to such power of attorney; and each such Limited Partner, to the maximum
extent permitted by law, hereby waives any and all defenses that may be available to
contest, negate or disaffirm the action of the General Partner or the Liquidator taken in
good faith under such power of attorney. Each Limited Partner shall execute and deliver to
the General Partner or the Liquidator, within
15 days after receipt of the request therefor, such further designation, powers of
attorney and other instruments as the General Partner or the Liquidator may request in order
to effectuate this Agreement and the purposes of the Partnership.
Section 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 in existence until the dissolution of the
Partnership in accordance with the provisions of Article XII. The existence of the Partnership as
a separate legal entity shall continue until the cancellation of the Certificate of Limited
Partnership as provided in the Delaware Act.
Section 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
23
Partnership as an entity, and no Partner, individually or
collectively, shall have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the Partnership, the
General Partner, one or more of its Affiliates or one or more nominees, as the General Partner may
determine. The General Partner hereby declares and warrants that any Partnership assets for which
record title is held in the name of the General Partner or one or more of its Affiliates or one or
more nominees shall be held by the General Partner or such Affiliate or nominee for the use and
benefit of the Partnership in accordance with the provisions of this Agreement;
provided, however
,
that the General Partner shall use reasonable efforts to cause record title to such assets (other
than those assets in respect of which the General Partner determines that the expense and
difficulty of conveyancing makes transfer of record title to the Partnership impracticable) to be
vested in the Partnership as soon as reasonably practicable;
provided
,
further
, that, prior to the
withdrawal or removal of the General Partner or as soon thereafter as practicable, the General
Partner shall use reasonable efforts to effect the transfer of record title to the Partnership and,
prior to any such transfer, will provide for the use of such assets in a manner satisfactory to the
General Partner. All Partnership assets shall be recorded as the property of the Partnership in
its books and records, irrespective of the name in which record title to such Partnership assets is
held.
ARTICLE III
RIGHTS OF LIMITED PARTNERS
Section 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.
Section 3.2.
Management of Business
. No Limited Partner, in its capacity as such, shall participate in the operation, management or
control (within the meaning of the Delaware Act) of the Partnerships business, transact any
business in the Partnerships name or have the power to sign documents for or otherwise bind the
Partnership. Any action taken by any Affiliate of the General Partner or any officer, director,
employee, manager, member, general partner, agent or trustee of the General Partner or any of its
Affiliates, or any officer, director, employee, manager, member, general partner, agent or trustee
of a Group Member, in its capacity as such, shall not be deemed to be participation in the control
of the business of the Partnership by a limited partner of the Partnership (within the meaning of
Section 17-303(a) of the Delaware Act) and shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners under this Agreement.
Section 3.3.
Outside Activities of the Limited Partners
. Subject to the provisions of Section 7.5, which shall continue to be applicable to the Persons
referred to therein, regardless of whether such Persons shall also be Limited Partners, 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. Neither the Partnership nor any of the other
Partners shall have any rights by virtue of this Agreement in any business ventures of any Limited
Partner.
24
Section 3.4.
Rights of Limited Partners
.
(a) In addition to other rights provided by this Agreement or by applicable law, and
except as limited by Section 3.4(b), each Limited Partner shall have the right, for a
purpose reasonably related to such Limited Partners interest as a Limited Partner in the
Partnership, upon reasonable written demand stating the purpose of such demand and at such
Limited Partners own expense:
(i) promptly after its becoming available, to obtain a copy of the
Partnerships federal, state and local income tax returns for each year;
(ii) to obtain a current list of the name and last known business, residence or
mailing address of each Partner;
(iii) 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
which each other Partner has made or agreed to contribute in the future, and the
date on which each other Partner became a Partner;
(iv) to obtain a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with a copy of each power 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 status of the business
and financial condition of the Partnership Group; and
(vi) to obtain such other information regarding the affairs of the Partnership
as is just and reasonable.
(b) The General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner deems reasonable, (i) any information that the General
Partner reasonably believes to be in the nature of trade secrets or (ii) other information
the disclosure of which the General Partner in good faith believes (A) is not in the best
interests of the Partnership Group, (B) could damage the Partnership Group or its business
or (C) that any Group Member is required by law or by agreement with any third party to keep
confidential (other than agreements with Affiliates of the Partnership the primary purpose
of which is to circumvent the obligations set forth in this Section 3.4).
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF
PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS
Section 4.1.
Certificates
. Upon the Partnerships issuance of Common Units or Subordinated Units to any Person, the
Partnership shall issue, upon the request of such Person, one or more Certificates in the name of
such Person evidencing the number of such Units being so issued. In addition, (a) upon the General
Partners request, the Partnership shall issue to it one
25
or more Certificates in the name of the
General Partner evidencing its General Partner Units and (b) upon the request of any Person owning
Incentive Distribution Rights or any other Partnership Securities other than Common Units or
Subordinated Units, the Partnership shall issue to such Person one or more certificates evidencing
such Incentive Distribution Rights or other Partnership Securities other than Common Units or
Subordinated Units. Certificates shall be executed on behalf of the Partnership by the Chairman of
the Board, President, or any Executive Vice President, Senior Vice President or Vice President and
the Secretary or any Assistant Secretary of the General Partner. No Common Unit Certificate shall
be valid for any purpose until it has been countersigned by the Transfer Agent;
provided, however
,
that if the General Partner elects to issue Common Units in global form, the Common Unit
Certificates shall be valid upon receipt of a certificate from the Transfer Agent certifying that
the Common Units have been duly registered in accordance with the directions of the Partnership.
Subject to the requirements of Section 6.7(c), the Partners holding Certificates evidencing
Subordinated Units may exchange such Certificates for Certificates evidencing Common Units on or
after the date on which such Subordinated Units are converted into Common Units pursuant to the
terms of Section 5.7.
Section 4.2.
Mutilated, Destroyed, Lost or Stolen Certificates
.
(a) If any mutilated Certificate is surrendered to the Transfer Agent (for Common
Units) or the General Partner (for Partnership Securities other than Common Units), the
appropriate officers of the General Partner on behalf of the Partnership shall execute, and
the Transfer Agent (for Common Units) or the General Partner (for Partnership Securities
other than Common Units) shall countersign and deliver in exchange therefor, a new
Certificate evidencing the same number and type of Partnership Securities as the Certificate
so surrendered.
(b) The appropriate officers of the General Partner on behalf of the Partnership shall
execute and deliver, and the Transfer Agent (for Common Units) shall countersign, a new
Certificate in place of any Certificate previously issued if the Record Holder of the
Certificate:
(i) makes proof by affidavit, in form and substance satisfactory to the General
Partner, that a previously issued Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate before the General Partner has
notice that the Certificate has been acquired by a purchaser for value in good faith
and without notice of an adverse claim;
(iii) upon request by the General Partner, delivers to the General Partner a
bond, in form and substance satisfactory to the General Partner, with surety or
sureties and with fixed or open penalty as the General Partner may direct to
indemnify the Partnership, the Partners, the General Partner and the Transfer Agent
against any claim that may be made on account of the alleged loss, destruction or
theft of the Certificate; and
26
(iv) satisfies any other reasonable requirements imposed by the General
Partner.
If a Limited Partner fails to notify the General Partner within a reasonable period of time
after he has notice of the loss, destruction or theft of a Certificate, and a transfer of
the Limited Partner Interests represented by the Certificate is registered before the
Partnership, the General Partner or the Transfer Agent receives such notification, the
Limited Partner shall be precluded from making any claim against the Partnership, the
General Partner or the Transfer Agent for such transfer or for a new Certificate.
(c) As a condition to the issuance of any new Certificate under this Section 4.2, the
General Partner may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Transfer Agent) reasonably connected therewith.
Section 4.3.
Record Holders
. The Partnership shall be entitled to recognize the Record Holder as the Partner with respect to
any Partnership Interest and, accordingly, shall not be bound to recognize any equitable or other
claim to, or interest in, such Partnership Interest on the part of any other Person, regardless of
whether the Partnership shall have actual or other notice thereof, except as otherwise provided by
law or any applicable rule, regulation, guideline or requirement of any National Securities
Exchange on which such Partnership Interests are listed or admitted to trading. Without limiting
the foregoing, when a Person (such as a broker, dealer, bank, trust company or clearing corporation
or an agent of any of the foregoing) is acting as nominee, agent or in some other representative
capacity for another Person in acquiring and/or holding Partnership Interests, as
between the Partnership on the one hand, and such other Persons on the other, such representative
Person shall be the Record Holder of such Partnership Interest.
Section 4.4.
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 (i) by which the General Partner assigns
its General Partner Units to another Person or by which a holder of Incentive Distribution
Rights assigns its Incentive Distribution Rights to another Person, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange and any other
disposition by law or otherwise or (ii) by which the holder of a Limited Partner Interest
(other than an Incentive Distribution Right) assigns such Limited Partner Interest to
another Person who is or becomes a Limited Partner, and includes a sale, assignment, gift,
exchange and any other disposition by law or otherwise, including any transfer upon
foreclosure of any pledge, encumbrance, hypothecation or mortgage.
(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.
27
(c) Nothing contained in this Agreement shall be construed to prevent a disposition by
any stockholder, member, partner or other owner of the General Partner of any or all of the
shares of stock, membership interests, partnership interests or other ownership interests in
the General Partner.
Section 4.5.
Registration and Transfer of Limited Partner Interests
.
(a) The General Partner shall keep or cause to be kept on behalf of the Partnership a
register in which, subject to such reasonable regulations as it may prescribe and subject to
the provisions of Section 4.5(b), the Partnership will provide for the registration and
transfer of Limited Partner Interests. The Transfer Agent is hereby appointed registrar and
transfer agent for the purpose of registering Common Units and transfers of such Common
Units as herein provided. The Partnership shall not recognize transfers of Certificates
evidencing Limited Partner Interests unless such transfers are effected in the manner
described in this Section 4.5. Upon surrender of a Certificate for registration of transfer
of any Limited Partner Interests evidenced by a Certificate, and subject to the provisions
of Section 4.5(b), the appropriate officers of the General Partner on behalf of the
Partnership shall execute and deliver, and in the case of Common Units, the Transfer Agent
shall countersign and deliver, in the name of the holder or the designated transferee or
transferees, as required pursuant to the holders instructions, one or more new Certificates
evidencing the same aggregate number and type of Limited Partner Interests as was evidenced
by the Certificate so surrendered.
(b) Except as otherwise provided in Section 4.9, the General Partner shall not
recognize any transfer of Limited Partner Interests until the Certificates evidencing such
Limited Partner Interests are surrendered for registration of transfer. No charge shall be
imposed by the General Partner for such transfer;
provided
, that as a condition to the
issuance of any new Certificate under this Section 4.5, the General Partner may require the
payment of a sum sufficient to cover any tax or other governmental charge that may be
imposed with respect thereto.
(c) Subject to (i) the foregoing provisions of this Section 4.5, (ii) Section 4.3,
(iii) Section 4.8, (iv) with respect to any class or series of Limited Partner Interests,
the provisions of any statement of designations or an amendment to this Agreement
establishing such class or series, (v) any contractual provisions binding on any Limited
Partner and (vi) provisions of applicable law including the Securities Act, Limited Partner
Interests (other than the Incentive Distribution Rights) shall be freely transferable.
(d) The General Partner and its Affiliates shall have the right at any time to transfer
their Subordinated Units and Common Units (whether issued upon conversion of the
Subordinated Units or otherwise) to one or more Persons.
Section 4.6.
Transfer of the General Partners General Partner Interest
.
(a) Subject to Section 4.6(c) below, prior to September 30, 2016, the General Partner
shall not transfer all or any part of its General Partner Interest (represented by General
Partner Units) to a Person unless such transfer (i) has been approved by the prior
28
written consent or vote of the holders of at least a majority of the Outstanding Common Units
(excluding Common Units held by the General Partner and its Affiliates) or (ii) is of all,
but not less than all, of its General Partner Interest to (A) an Affiliate of the General
Partner (other than an individual) or (B) another Person (other than an individual) in
connection with the merger or consolidation of the General Partner with or into such other
Person or the transfer by the General Partner of all or substantially all of its assets to
such other Person.
(b) Subject to Section 4.6(c) below, on or after September 30, 2016, the General
Partner may transfer all or any of its General Partner Interest without Unitholder approval.
(c) Notwithstanding anything herein to the contrary, no transfer by the General Partner
of all or any part of its General Partner Interest to another Person shall be permitted
unless (i) the transferee agrees to assume the rights and duties of the General Partner
under this Agreement and to be bound by the provisions of this Agreement, (ii) the
Partnership receives an Opinion of Counsel that such transfer would not result in the loss
of limited liability of any Limited Partner under the Delaware Act or cause the Partnership
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) and
(iii) such transferee also agrees to purchase all (or the appropriate portion thereof, if
applicable) of the partnership or membership interest of the General Partner as the general
partner or managing member, if any, of each other Group Member. In the case of a transfer
pursuant to and in compliance with this Section 4.6, the transferee or successor (as the
case may be) shall, subject to compliance with the terms of Section 10.3, be admitted to the
Partnership as the General Partner immediately prior to the transfer of
the General Partner Interest, and the business of the Partnership shall continue
without dissolution.
Section 4.7.
Transfer of Incentive Distribution Rights
. Prior to September 30, 2016, a holder of Incentive Distribution Rights may transfer any or all
of the Incentive Distribution Rights held by such holder without any consent of the Unitholders to
(a) an Affiliate of such holder (other than an individual) or (b) another Person (other than an
individual) in connection with (i) the merger or consolidation of such holder of Incentive
Distribution Rights with or into such other Person, (ii) the transfer by such holder of all or
substantially all of its assets to such other Person or (iii) the sale of all of the ownership
interests in such holder. Any other transfer of the Incentive Distribution Rights prior to
September 30, 2016 shall require the prior approval of holders of at least a majority of the
Outstanding Common Units (excluding Common Units held by the General Partner and its Affiliates).
On or after September 30, 2016, the General Partner or any other holder of Incentive Distribution
Rights may transfer any or all of its Incentive Distribution Rights without Unitholder approval.
Notwithstanding anything herein to the contrary, no transfer of Incentive Distribution Rights to
another Person shall be permitted unless the transferee agrees to be bound by the provisions of
this Agreement.
29
Section 4.8.
Restrictions on Transfers
.
(a) Except as provided in Section 4.8(d) below, but notwithstanding the other
provisions of this Article IV, no transfer of any Partnership Interests 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 authority with jurisdiction over such transfer, (ii) terminate the existence or
qualification of the Partnership under the laws of the jurisdiction of its formation or
(iii) cause the Partnership to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes (to the extent not
already so treated or taxed).
(b) The General Partner may impose restrictions on the transfer of Partnership
Interests if it receives an Opinion of Counsel that such restrictions are necessary to avoid
a significant risk of the Partnership becoming taxable as a corporation or otherwise
becoming taxable as an entity for federal income tax purposes. The General Partner may
impose such restrictions by amending this Agreement;
provided
,
however
, that any amendment
that would result in the delisting or suspension of trading of any class of Limited Partner
Interests on the principal National Securities Exchange on which such class of Limited
Partner Interests is then listed or admitted to trading must be approved, prior to such
amendment being effected, by the holders of at least a majority of the Outstanding Limited
Partner Interests of such class.
(c) The transfer of a Subordinated Unit that has converted into a Common Unit shall be
subject to the restrictions imposed by Section 6.7(c).
(d) Nothing contained in this Article IV, or elsewhere in this Agreement, shall
preclude the settlement of any transactions involving Partnership Interests entered into
through the facilities of any National Securities Exchange on which such Partnership
Interests are listed or admitted to trading.
(e) Each certificate evidencing Partnership Interests shall bear a conspicuous legend
in substantially the following form:
THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF UNIVERSAL COMPRESSION
PARTNERS, L.P. THAT THIS SECURITY MAY NOT BE SOLD, OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED IF SUCH TRANSFER WOULD (A) VIOLATE THE THEN APPLICABLE FEDERAL
OR STATE SECURITIES LAWS OR RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE
COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER GOVERNMENTAL AUTHORITY WITH
JURISDICTION OVER SUCH TRANSFER, (B) TERMINATE THE EXISTENCE OR QUALIFICATION OF
UNIVERSAL COMPRESSION PARTNERS, L.P. UNDER THE LAWS OF THE STATE OF DELAWARE, OR (C)
CAUSE UNIVERSAL COMPRESSION PARTNERS, L.P. TO BE TREATED AS AN ASSOCIATION TAXABLE
AS A CORPORATION OR OTHERWISE TO BE TAXED AS AN ENTITY FOR
30
FEDERAL INCOME TAX PURPOSES (TO THE EXTENT NOT ALREADY SO TREATED OR TAXED). UCO GENERAL PARTNER, LP,
THE GENERAL PARTNER OF UNIVERSAL COMPRESSION PARTNERS, L.P., MAY IMPOSE ADDITIONAL
RESTRICTIONS ON THE TRANSFER OF THIS SECURITY IF IT RECEIVES AN OPINION OF COUNSEL
THAT SUCH RESTRICTIONS ARE NECESSARY TO AVOID A SIGNIFICANT RISK OF UNIVERSAL
COMPRESSION PARTNERS, L.P. BECOMING TAXABLE AS A CORPORATION OR OTHERWISE BECOMING
TAXABLE AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES. THE RESTRICTIONS SET FORTH
ABOVE SHALL NOT PRECLUDE THE SETTLEMENT OF ANY TRANSACTIONS INVOLVING THIS SECURITY
ENTERED INTO THROUGH THE FACILITIES OF ANY NATIONAL SECURITIES EXCHANGE ON WHICH
THIS SECURITY IS LISTED OR ADMITTED TO TRADING.
Section 4.9.
Citizenship Certificates; Non-citizen Assignees
.
(a) If any Group Member is or becomes subject to any federal, state or local law or
regulation that the General Partner determines would create a substantial risk of
cancellation or forfeiture of any property in which the Group Member has an interest based
on the nationality, citizenship or other related status of a Limited Partner, the General
Partner may request any Limited Partner to furnish to the General Partner, within 30 days
after receipt of such request, an executed Citizenship Certification or such other
information concerning his nationality, citizenship or other related status (or, if the
Limited Partner is a nominee holding for the account of another Person, the nationality,
citizenship or other related status of such Person) as the General Partner may request. If
a Limited Partner fails to furnish to the General Partner within the aforementioned
30-day period such Citizenship Certification or other requested information or if upon
receipt of such Citizenship Certification or other requested information the General Partner
determines that a Limited Partner is not an Eligible Citizen, the Limited Partner Interests
owned by such Limited Partner shall be subject to redemption in accordance with the
provisions of Section 4.10. In addition, the General Partner may require that the status of
any such Limited Partner be changed to that of a Non-citizen Assignee and, thereupon, the
General Partner shall be substituted for such Non-citizen Assignee as the Limited Partner in
respect of the Non-citizen Assignees Limited Partner Interests.
(b) The General Partner shall, in exercising voting rights in respect of Limited
Partner Interests held by it on behalf of Non-citizen Assignees, distribute the votes in the
same ratios as the votes of Partners (including the General Partner) in respect of Limited
Partner Interests other than those of Non-citizen Assignees are cast, either for, against or
abstaining as to the matter.
(c) Upon dissolution of the Partnership, a Non-citizen Assignee shall have no right to
receive a distribution in kind pursuant to Section 12.4 but shall be entitled to the cash
equivalent thereof, and the Partnership shall provide cash in exchange for an assignment of
the Non-citizen Assignees share of any distribution in kind. Such payment and assignment
shall be treated for Partnership purposes as a purchase by the
31
Partnership from the
Non-citizen Assignee of his Limited Partner Interest (representing his right to receive his
share of such distribution in kind).
(d) At any time after he can and does certify that he has become an Eligible Citizen, a
Non-citizen Assignee may, upon application to the General Partner, request that with respect
to any Limited Partner Interests of such Non-citizen Assignee not redeemed pursuant to
Section 4.10, such Non-citizen Assignee be admitted as a Limited Partner, and upon approval
of the General Partner, such Non-citizen Assignee shall be admitted as a Limited Partner and
shall no longer constitute a Non-citizen Assignee and the General Partner shall cease to be
deemed to be the Limited Partner in respect of the Non-citizen Assignees Limited Partner
Interests.
Section 4.10.
Redemption of Partnership Interests of Non-citizen Assignees
.
(a) If at any time a Limited Partner fails to furnish a Citizenship Certification or
other information requested within the 30-day period specified in Section 4.9(a), or if upon
receipt of such Citizenship Certification or other information the General Partner
determines, with the advice of counsel, that a Limited Partner is not an Eligible Citizen,
the Partnership may, unless the Limited Partner establishes to the satisfaction of the
General Partner that such Limited Partner is an Eligible Citizen or has transferred his
Partnership Interests to a Person who is an Eligible Citizen and who furnishes a Citizenship
Certification to the General Partner prior to the date fixed for redemption as provided
below, redeem the Limited Partner Interest of such Limited Partner as follows:
(i) The General Partner shall, not later than the 30th day before the date
fixed for redemption, give notice of redemption to the Limited Partner, at his
last address designated on the records of the Partnership or the Transfer
Agent, by registered or certified mail, postage prepaid. The notice shall be deemed
to have been given when so mailed. The notice shall specify the Redeemable
Interests, the date fixed for redemption, the place of payment, that payment of the
redemption price will be made upon surrender of the Certificate evidencing the
Redeemable Interests and that on and after the date fixed for redemption no further
allocations or distributions to which the Limited Partner would otherwise be
entitled in respect of the Redeemable Interests will accrue or be made.
(ii) The aggregate redemption price for Redeemable Interests shall be an amount
equal to the Current Market Price (the date of determination of which shall be the
date fixed for redemption) of Limited Partner Interests of the class to be so
redeemed multiplied by the number of Limited Partner Interests of each such class
included among the Redeemable Interests. The redemption price shall be paid, as
determined by the General Partner, in cash or by delivery of a promissory note of
the Partnership in the principal amount of the redemption price, bearing interest at
the rate of 10% annually and payable in three equal annual installments of principal
together with accrued interest, commencing one year after the redemption date.
32
(iii) Upon surrender by or on behalf of the Limited Partner, at the place
specified in the notice of redemption, of the Certificate evidencing the Redeemable
Interests, duly endorsed in blank or accompanied by an assignment duly executed in
blank, the Limited Partner or his duly authorized representative shall be entitled
to receive the payment therefor.
(iv) After the redemption date, Redeemable Interests shall no longer constitute
issued and Outstanding Limited Partner Interests.
(b) The provisions of this Section 4.10 shall also be applicable to Limited Partner
Interests held by a Limited Partner as nominee of a Person determined to be other than an
Eligible Citizen.
(c) Nothing in this Section 4.10 shall prevent the recipient of a notice of redemption
from transferring his Limited Partner Interest before the redemption date if such transfer
is otherwise permitted under this Agreement. Upon receipt of notice of such a transfer, the
General Partner shall withdraw the notice of redemption, provided the transferee of such
Limited Partner Interest certifies to the satisfaction of the General Partner that he is an
Eligible Citizen. If the transferee fails to make such certification, such redemption shall
be effected from the transferee on the original redemption date.
ARTICLE V
CAPITAL CONTRIBUTIONS AND
ISSUANCE OF PARTNERSHIP INTERESTS
Section 5.1.
Organizational Contributions
. In connection with the formation of the Partnership under the Delaware Act, the General Partner
made an initial Capital Contribution to the Partnership in the amount of $20.00, for a 2% General
Partner Interest in the Partnership and has been admitted as the General Partner of the
Partnership, and the Organizational Limited Partner made an initial Capital Contribution to the
Partnership in the amount of $980.00 for a 98% Limited Partner Interest in the Partnership and has
been admitted as a Limited Partner of the Partnership. As of the Closing Date, the interest of the
Organizational Limited Partner shall be redeemed as provided in the Contribution Agreement; and the
initial Capital Contribution of the Organizational Limited Partner shall thereupon be refunded.
Ninety-eight percent of any interest or other profit that may have resulted from the investment or
other use of such initial Capital Contributions shall be allocated and distributed to the
Organizational Limited Partner, and the balance thereof shall be allocated and distributed to the
General Partner.
Section 5.2.
Contributions by the General Partner and its Affiliates
.
(a) On the Closing Date and pursuant to the Contribution Agreement: (i) the General
Partner shall contribute to the Partnership, as a Capital Contribution, all of its ownership
interests in the Operating Partnership in exchange for (A) a continuation of its 2% General
Partner Interest, subject to all of the rights, privileges and duties of the General Partner
under this Agreement, and (B) the Incentive Distribution Rights; and (ii) UCI shall
contribute to the Partnership, as a Capital Contribution, all of (A) its member
33
interest in the OLP GP and (B) all of its ownership interest in the Operating Partnership in exchange
for 825,000 Common Units, 6,325,000 Subordinated Units.
(b) Upon the issuance of any additional Limited Partner Interests by the Partnership
(other than the Common Units issued in the Initial Offering, the Common Units issued
pursuant to the Over-Allotment Option, and the Common Units and the Subordinated Units
issued pursuant to Section 5.2(a)), the General Partner may, in exchange for a proportionate
number of General Partner Units, make additional Capital Contributions in an amount equal to
the product obtained by multiplying (i) the quotient determined by dividing (A) the General
Partners Percentage Interest by (B) 100 less the General Partners Percentage Interest
times (ii) the amount contributed to the Partnership by the Limited Partners in exchange for
such additional Limited Partner Interests. Except as set forth in Article XII, the General
Partner shall not be obligated to make any additional Capital Contributions to the
Partnership.
Section 5.3.
Contributions by Initial Limited Partners and Distributions to the General
Partner and its Affiliates
.
(a) On the Closing Date and pursuant to the Purchase Agreement, each Underwriter shall
contribute to the Partnership cash in an amount equal to the Issue Price
per Initial Common Unit, multiplied by the number of Common Units specified in the
Purchase Agreement to be purchased by such Underwriter at the Closing Date. In exchange for
such Capital Contributions by the Underwriters, the Partnership shall issue Common Units to
each Underwriter on whose behalf such Capital Contribution is made in an amount equal to the
quotient obtained by dividing (i) the cash contribution to the Partnership by or on behalf
of such Underwriter by (ii) the Issue Price per Initial Common Unit.
(b) Upon the exercise of the Over-Allotment Option, each Underwriter shall contribute
to the Partnership cash in an amount equal to the Issue Price per Initial Common Unit,
multiplied by the number of Common Units to be purchased by such Underwriter at the Option
Closing Date. In exchange for such Capital Contributions by the Underwriters, the
Partnership shall issue Common Units to each Underwriter on whose behalf such Capital
Contribution is made in an amount equal to the quotient obtained by dividing (i) the cash
contributions to the Partnership by or on behalf of such Underwriter by (ii) the Issue Price
per Initial Common Unit. Upon receipt by the Partnership of the Capital Contributions from
the Underwriters as provided in this Section 5.3(b), the Partnership shall use the net
proceeds from such exercise to redeem a number of Common Units from UCI (or UCI MLP LP LLC)
equal to the number of Common Units issued upon the exercise of the Over-Allotment Option.
(c) No Limited Partner Interests will be issued or issuable as of or at the Closing
Date other than (i) the Common Units issuable pursuant to subparagraph (a) hereof in
aggregate number equal to 5,500,000, (ii) the Option Units as such term is used in the
Purchase Agreement in an aggregate number up to 825,000 issuable upon exercise of the
Over-Allotment Option pursuant to subparagraph (b) hereof, (iii) the 825,000 Common Units
and 6,325,000 Subordinated Units issuable pursuant to Section
34
5.2 hereof, (iv) the Incentive
Distribution Rights and (v) any Common Units issuable under, or to satisfy the obligations
of the Partnership or any of its Affiliates under the UCO GP, LLC Long-Term Incentive Plan.
Section 5.4.
Interest and Withdrawal
. No interest shall be paid by the Partnership on Capital Contributions. No Partner shall be
entitled to the withdrawal or return of its Capital Contribution, except to the extent, if any,
that distributions made pursuant to this Agreement or upon termination of the Partnership may be
considered as such by law and then only to the extent provided for in this Agreement. Except to
the extent expressly provided in this Agreement, no Partner shall have priority over any other
Partner either as to the return of Capital Contributions or as to profits, losses or distributions.
Any such return shall be a compromise to which all Partners agree within the meaning of Section
17-502(b) of the Delaware Act.
Section 5.5.
Capital Accounts
.
(a) The Partnership shall maintain for each Partner (or a beneficial owner of
Partnership Interests held by a nominee in any case in which the nominee has furnished the
identity of such owner to the Partnership in accordance with Section 6031(c) of the
Code or any other method acceptable to the General Partner) 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 and (ii) all items of Partnership income and gain
(including 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 Net Agreed Value of all actual and deemed distributions of cash
or property made with respect to such Partnership Interest 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.
(b) For purposes of computing the amount of any item of income, gain, loss or deduction
that 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 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 General Partner
based upon the provisions of the applicable Group Member Agreement or governing,
organizational or similar documents) of all property owned by (x) any other Group
Member classified as a partnership for federal income tax purposes and (y) any other
partnership, limited liability company, unincorporated business or other entity
classified as a partnership for federal income tax purposes of which a Group Member
is, directly or indirectly, a partner.
35
(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
that may be made by the Partnership and, as to those items described in Section
705(a)(1)(B) or 705(a)(2)(B) of the Code, without regard to the fact that such items
are not includable in gross income or are neither currently deductible nor
capitalized for federal income tax purposes. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b) of
the Code is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital
Accounts, the amount of such adjustment in the Capital Accounts shall be
treated as an item of gain or loss.
(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 Partnerships 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 any method that the General Partner may
adopt;
provided
, the General Partner may elect not to amortize any goodwill property
of the Partnership.
(vi) If the Partnerships 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.
36
(c) (i) 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.
(ii) Subject to Section 6.7(c), immediately prior to the transfer of a
Subordinated Unit or of a Subordinated Unit that has converted into a Common Unit
pursuant to Section 5.7 by a holder thereof (other than a transfer to an Affiliate
unless the General Partner elects to have this Section 5.5(c)(ii) apply), the
Capital Account maintained for such Person with respect to its Subordinated Units or
converted Subordinated Units will (A) first, be allocated to the Subordinated Units
or converted Subordinated Units to be transferred in an amount equal to the product
of (x) the number of such Subordinated Units or converted Subordinated Units to be
transferred and (y) the Per Unit Capital Amount for a Common Unit, and (B) second,
any remaining balance in such Capital Account will be retained by the transferor,
regardless of whether it has retained any Subordinated Units or converted
Subordinated Units (
Retained Converted Subordinated Units
). Following any such
allocation, the transferors Capital Account, if any, maintained with respect to the retained Subordinated
Units or Retained Converted Subordinated Units, if any, will have a balance equal to
the amount allocated under clause (B) hereinabove, and the transferees Capital
Account established with respect to the transferred Subordinated Units or converted
Subordinated Units will have a balance equal to the amount allocated under clause
(A) hereinabove.
(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 issuance
of Partnership Interests as consideration for the provision of services or the conversion of
the General Partners Combined Interest to Common Units pursuant to Section 11.3(b), 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(c) in the same manner as any item of gain or loss actually
recognized during such period would have been allocated. In determining such Unrealized
Gain or Unrealized Loss, the aggregate cash amount and fair market value of all Partnership
assets (including cash or cash equivalents) immediately prior to the issuance of additional
Partnership Interests shall be determined by the General Partner using such method of
valuation as it may adopt;
provided
,
however
, that the General Partner, in arriving at such
valuation, must take fully into account the fair market value of the Partnership Interests
of all Partners at such time. The General Partner shall allocate such aggregate value among
the assets of the Partnership (in such manner as it determines) 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
37
redemption or retirement of a Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of all Partnership property shall be adjusted upward or downward to
reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership
property, as if such Unrealized Gain or Unrealized Loss had been recognized in a
sale of such property immediately prior to such distribution for an amount equal to
its fair market value, and had been allocated to the Partners, at such time,
pursuant to Section 6.1(c) in the same manner as any item of gain or loss actually
recognized during such period would have been allocated. In determining such
Unrealized Gain or Unrealized Loss the aggregate cash amount and fair market value
of all Partnership assets (including, without limitation, cash or cash equivalents)
immediately prior to a distribution shall (A) in the case of an actual distribution
that is not made pursuant to Section 12.4 or in the case of a deemed distribution,
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 method of valuation as it may
adopt.
Section 5.6.
Issuances of Additional Partnership Securities
.
(a) The Partnership may issue additional Partnership Securities and options, rights,
warrants and appreciation rights relating to the Partnership Securities for any Partnership
purpose at any time and from time to time to such Persons for such consideration and on such
terms and conditions as the General Partner shall determine, all without the approval of any
Limited Partners.
(b) Each additional Partnership Security authorized to be issued by the Partnership
pursuant to Section 5.6(a) may be issued in one or more classes, or one or more series of
any such classes, with such designations, preferences, rights, powers and duties (which may
be senior to existing classes and series of Partnership Securities), as shall be fixed by
the General Partner, including (i) the right to share in Partnership profits and losses or
items thereof; (ii) the right to share in Partnership distributions; (iii) the rights upon
dissolution and liquidation of the Partnership; (iv) whether, and the terms and conditions
upon which, the Partnership may redeem the Partnership Security; (v) whether such
Partnership Security is issued with the privilege of conversion or exchange and, if so, the
terms and conditions of such conversion or exchange; (vi) the terms and conditions upon
which each Partnership Security will be issued, evidenced by certificates and assigned or
transferred; (vii) the method for determining the Percentage Interest as to such Partnership
Security; and (viii) the right, if any, of each such Partnership Security to vote on
Partnership matters, including matters relating to the relative rights, preferences and
privileges of such Partnership Security.
(c) The General Partner shall take all actions that it determines to be necessary or
appropriate in connection with (i) each issuance of Partnership Securities and options,
rights, warrants and appreciation rights relating to Partnership Securities pursuant to this
Section 5.6, (ii) the conversion of the General Partner Interest (represented by General
Partner Units) or any Incentive Distribution Rights into Units pursuant to the terms of this
Agreement, (iii) reflecting admission of such additional
38
Limited Partners in the books and
records of the Partnership as the Record Holder of such Limited Partner Interest and (iv)
all additional issuances of Partnership Securities. The General Partner shall determine the
relative rights, powers and duties of the holders of the Units or other Partnership
Securities being so issued. The General Partner shall do all things necessary to comply
with the Delaware Act and is authorized and directed to do all things that it determines to
be necessary or appropriate in connection with any future issuance of Partnership Securities
or in connection with the conversion of the General Partner Interest or any Incentive
Distribution Rights into Units pursuant to the terms of this Agreement, including compliance
with any statute, rule, regulation or guideline of any federal, state or other governmental
agency or any National Securities Exchange on which the Units or other Partnership
Securities are listed or admitted to trading.
(d) No fractional Units shall be issued by the Partnership.
Section 5.7.
Conversion of Subordinated Units
.
(a) A total of 25% of the Outstanding Subordinated Units will convert into Common Units
on a one-for-one basis on the second Business Day following the distribution of Available
Cash to Partners pursuant to Section 6.3(a) in respect of any Quarter ending on or after
September 30, 2009, in respect of which:
(i) distributions of Available Cash from Operating Surplus under Section 6.4(a)
on each of the Outstanding Common Units, Subordinated Units and General Partner
Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units with respect to each of the three
consecutive, non-overlapping four-Quarter periods immediately preceding such date
equaled or exceeded the sum of the Minimum Quarterly Distribution on all of the
Outstanding Common Units, Subordinated Units and General Partner Units and any other
Outstanding Units that are senior or equal in right of distribution to the
Subordinated Units during such periods;
(ii) the Adjusted Operating Surplus generated during each of the three
consecutive, non-overlapping four-Quarter periods immediately preceding such date
equaled or exceeded the sum of the Minimum Quarterly Distribution on all of the
Common Units, Subordinated Units and General Partner Units and any other Units that
are senior or equal in right of distribution to the Subordinated Units that were
Outstanding during such periods on a Fully Diluted Basis; and
(iii) there are no Cumulative Common Unit Arrearages.
(b) An additional 25% of the Outstanding Subordinated Units (without giving effect to
the reduction in the number of Outstanding Subordinated Units as a result of the conversion
of Subordinated Units pursuant to Section 5.7(a) above) will convert into Common Units on a
one-for-one basis on the second Business Day following the distribution of Available Cash to
Partners pursuant to Section 6.3(a) in respect of any Quarter ending on or after September
30, 2010, in respect of which:
39
(i) distributions of Available Cash from Operating Surplus under Section 6.4(a)
on each of the Outstanding Common Units, Subordinated Units and General Partner
Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units with respect to each of the three
consecutive, non-overlapping four-Quarter periods immediately preceding such date
equaled or exceeded the sum of the Minimum Quarterly Distribution on all of the
Outstanding Common Units, Subordinated Units and General Partner Units and any other
Outstanding Units that are senior or equal in right of distribution to the
Subordinated Units during such periods;
(ii) the Adjusted Operating Surplus generated during each of the three
consecutive, non-overlapping four-Quarter periods immediately preceding such date
equaled or exceeded the sum of the Minimum Quarterly Distribution on all of the
Common Units, Subordinated Units and General Partner Units and any
other Units that are senior or equal in right of distribution to the
Subordinated Units that were Outstanding during such periods on a Fully Diluted
Basis; and
(iii) there are no Cumulative Common Unit Arrearages;
provided, however
, that the conversion of Subordinated Units pursuant to this Section 5.7(b) may
not occur until at least one year following the end of the last four-Quarter period in respect of
which conversion of Subordinated Units pursuant to Section 5.7(a) occurred.
(c) In the event that less than all of the Outstanding Subordinated Units shall convert
into Common Units pursuant to Section 5.7(a) or (b) at a time when there shall be more than
one holder of Subordinated Units, then, unless all of the holders of Subordinated Units
shall agree to a different allocation, the Subordinated Units that are to be converted into
Common Units shall be allocated among the holders of Subordinated Units pro rata based on
the number of Subordinated Units held by each such holder.
(d) Notwithstanding Section 5.7(a), (b) and (c) above, the Subordination Period shall
terminate and all Outstanding Subordinated Units shall convert into Common Units on a
one-for-one basis on the second Business Day following the distribution of Available Cash to
Partners pursuant to Section 6.3(a) in respect of any Quarter ending on or after September
30, 2008, in respect of which:
(i) distributions of Available Cash from Operating Surplus under Section 6.4(a)
on each of the Outstanding Common Units, Subordinated Units and General Partner
Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units with respect to the four-Quarter period
immediately preceding such date equaled or exceeded 150% of the sum of the Minimum
Quarterly Distribution on all of the Outstanding Common Units and Subordinated Units
and General Partner Units and any other Outstanding Units that are senior or equal
in right of distribution to the Subordinated Units during such period;
40
(ii) the Adjusted Operating Surplus generated during the four-Quarter period
immediately preceding such date equaled or exceeded 150% of the sum of the Minimum
Quarterly Distribution on all of the Common Units, Subordinated Units and General
Partner Units and any other Units that are senior or equal in right of distribution
to the Subordinated Units that were Outstanding during such period on a Fully
Diluted Basis; and
(iii) there are no Cumulative Common Unit Arrearages.
(e) Any Subordinated Units that are not converted into Common Units pursuant to Section
5.7(a), (b) or (d) shall convert into Common Units on a one-for-one basis on the second
Business Day following the distribution of Available Cash to Partners pursuant to Section
6.3(a) in respect of the final Quarter of the Subordination Period.
(f) Notwithstanding any other provision of this Agreement, all the then Outstanding
Subordinated Units will automatically convert into Common Units on a one-for-one basis as
set forth in, and pursuant to the terms of, Section 11.4.
(g) A Subordinated Unit that has converted into a Common Unit shall be subject to the
provisions of Section 6.7(b) and Section 6.7(c).
Section 5.8.
Limited Preemptive Right
. Except as provided in this Section 5.8 and in Section 5.2(b), no Person shall have any
preemptive, preferential or other similar right with respect to the issuance of any Partnership
Security, whether unissued, held in the treasury or hereafter created. The General Partner shall
have the right, which it may from time to time assign in whole or in part to any of its Affiliates,
to purchase Partnership Securities from the Partnership whenever, and on the same terms that, the
Partnership issues Partnership Securities to Persons other than the General Partner and its
Affiliates, to the extent necessary to maintain the Percentage Interests of the General Partner and
its Affiliates equal to that which existed immediately prior to the issuance of such Partnership
Securities.
Section 5.9.
Splits and Combinations
.
(a) Subject to Section 5.9(d), Section 6.6 and Section 6.9 (dealing with adjustments of
distribution levels), the Partnership may make a Pro Rata distribution of Partnership
Securities to all Record Holders or may effect a subdivision or combination of Partnership
Securities so long as, after any such event, each Partner shall have the same Percentage
Interest in the Partnership as before such event, and any amounts calculated on a per Unit
basis (including any Common Unit Arrearage or Cumulative Common Unit Arrearage) or stated as
a number of Units (including the number of Subordinated Units that may convert prior to the
end of the Subordination Period) are proportionately adjusted.
(b) Whenever such a distribution, subdivision or combination of Partnership Securities
is declared, the General Partner shall select a Record Date as of which the distribution,
subdivision or combination shall be effective and shall send notice thereof at least 20 days
prior to such Record Date to each Record Holder as of a date not less than
41
10 days prior to
the date of such notice. The General Partner also may cause a firm of independent public
accountants selected by it to calculate the number of Partnership Securities to be held by
each Record Holder after giving effect to such distribution, subdivision or combination.
The General Partner shall be entitled to rely on any certificate provided by such firm as
conclusive evidence of the accuracy of such calculation.
(c) Promptly following any such distribution, subdivision or combination, the
Partnership may issue Certificates to the Record Holders of Partnership Securities as of the
applicable Record Date representing the new number of Partnership Securities held by such
Record Holders, or the General Partner may adopt such other procedures that it determines to
be necessary or appropriate to reflect such changes. If any such
combination results in a smaller total number of Partnership Securities Outstanding,
the Partnership shall require, as a condition to the delivery to a Record Holder of such new
Certificate, the surrender of any Certificate held by such Record Holder immediately prior
to such Record Date.
(d) The Partnership shall not issue fractional Units upon any distribution, subdivision
or combination of Units. If a distribution, subdivision or combination of Units would
result in the issuance of fractional Units but for the provisions of this Section 5.9(d),
each fractional Unit shall be rounded to the nearest whole Unit (and a 0.5 Unit shall be
rounded to the next higher Unit).
Section 5.10.
Fully Paid and Non-Assessable Nature of Limited Partner Interests
. All Limited Partner Interests issued pursuant to, and in accordance with the requirements of,
this Article V shall be fully paid and non-assessable Limited Partner Interests in the Partnership,
except as such non-assessability may be affected by Section 17-607 of the Delaware Act.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
Section 6.1.
Allocations for Capital Account Purposes
. For purposes of maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnerships items of income, gain, loss and deduction (computed in
accordance with Section 5.5(b)) shall be allocated among the Partners in each taxable year (or
portion thereof) as provided herein below.
(a)
Net Income
. After giving effect to the special allocations set forth in Section
6.1(d), Net Income for each taxable year and all items of income, gain, loss and deduction
taken into account in computing Net Income for such taxable year shall be allocated as
follows:
(i)
First
, 100% to the General Partner, in an amount equal to the aggregate Net
Losses allocated to the General Partner pursuant to Section 6.1(b)(iii) for all
previous taxable years until the aggregate Net Income allocated to the General
Partner pursuant to this Section 6.1(a)(i) for the current taxable year and all
previous taxable years is equal to the aggregate Net Losses
42
allocated to the General
Partner pursuant to Section 6.1(b)(iii) for all previous taxable years;
(ii)
Second
, 100% to the General Partner and the Unitholders, in accordance
with their respective Percentage Interests, until the aggregate Net Income allocated
to such Partners pursuant to this Section 6.1(a)(ii) for the current taxable year
and all previous taxable years is equal to the aggregate Net Losses allocated to
such Partners pursuant to Section 6.1(b)(ii) for all previous taxable years; and
(iii)
Third
, the balance, if any, 100% to the General Partner and the
Unitholders, in accordance with their respective Percentage Interests.
(b)
Net Losses
. After giving effect to the special allocations set forth in Section
6.1(d), Net Losses for each taxable period and all items of income, gain, loss and deduction
taken into account in computing Net Losses for such taxable period shall be allocated as
follows:
(i)
First
, 100% to the General Partner and the Unitholders, in accordance with
their respective Percentage Interests, until the aggregate Net Losses allocated
pursuant to this Section 6.1(b)(i) for the current taxable year and all previous
taxable years is equal to the aggregate Net Income allocated to such Partners
pursuant to Section 6.1(a)(iii) for all previous taxable years;
provided
, that the
Net Losses shall not be allocated pursuant to this Section 6.1(b)(i) to the extent
that such allocation would cause any Unitholder to have a deficit balance in its
Adjusted Capital Account at the end of such taxable year (or increase any existing
deficit balance in its Adjusted Capital Account);
(ii)
Second
, 100% to the General Partner and the Unitholders, in accordance
with their respective Percentage Interests;
provided
, that Net Losses shall not be
allocated pursuant to this Section 6.1(b)(ii) to the extent that such allocation
would cause any Unitholder to have a deficit balance in its Adjusted Capital Account
at the end of such taxable year (or increase any existing deficit balance in its
Adjusted Capital Account); and
(iii)
Third
, the balance, if any, 100% to the General Partner.
(c)
Net Termination Gains and Losses
. After giving effect to the special allocations
set forth in Section 6.1(d), all items of income, gain, loss and deduction taken into
account in computing Net Termination Gain or Net Termination Loss for such taxable period
shall be allocated in the same manner as such Net Termination Gain or Net Termination Loss
is allocated hereunder. All allocations under this Section 6.1(c) shall be made after
Capital Account balances have been adjusted by all other allocations provided under this
Section 6.1 and after all distributions of Available Cash provided under Section 6.4 and
Section 6.5 have been made;
provided, however
, that solely for purposes of this Section
6.1(c), Capital Accounts shall not be adjusted for distributions made pursuant to Section
12.4.
43
(i) If a Net Termination Gain is recognized (or deemed recognized pursuant to
Section 5.5(d)), such Net Termination Gain shall be allocated among the Partners in
the following manner (and the Capital Accounts of the Partners shall be increased by
the amount so allocated in each of the following subclauses, in the order listed,
before an allocation is made pursuant to the next succeeding subclause):
A.
First
, to each Partner having a deficit balance in its Capital
Account, in the proportion that such deficit balance bears to the total
deficit balances in the Capital Accounts of all Partners, until each
such Partner has been allocated Net Termination Gain equal to any such
deficit balance in its Capital Account;
B.
Second
, (x) to the General Partner in accordance with its Percentage
Interest and (y) to all Unitholders holding Common Units, Pro Rata, a
percentage equal to 100% less the percentage applicable to subclause (x) of
this clause (B), until the Capital Account in respect of each Common Unit
then Outstanding is equal to the sum of (1) its Unrecovered Capital plus (2)
the Minimum Quarterly Distribution for the Quarter during which the
Liquidation Date occurs, reduced by any distribution pursuant to Section
6.4(a)(i) or Section 6.4(b)(i) with respect to such Common Unit for such
Quarter (the amount determined pursuant to this clause (2) is hereinafter
defined as the
Unpaid MQD
) and (3) any then existing Cumulative Common
Unit Arrearage;
C.
Third
, if such Net Termination Gain is recognized (or is deemed to
be recognized) prior to the conversion of the last Outstanding Subordinated
Unit, (x) to the General Partner in accordance with its Percentage Interest
and (y) all Unitholders holding Subordinated Units, Pro Rata, a percentage
equal to 100% less the percentage applicable to subclause (x) of this clause
(C), until the Capital Account in respect of each Subordinated Unit then
Outstanding equals the sum of (1) its Unrecovered Capital, determined for
the taxable year (or portion thereof) to which this allocation of gain
relates, and (2) the Minimum Quarterly Distribution for the Quarter during
which the Liquidation Date occurs, reduced by any distribution pursuant to
Section 6.4(a)(iii) with respect to such Subordinated Unit for such Quarter;
D.
Fourth
, 100% to the General Partner and all Unitholders, in
accordance with their respective Percentage Interests, until the Capital
Account in respect of each Common Unit then Outstanding is equal to the sum
of (1) its Unrecovered Capital, (2) the Unpaid MQD, (3) any then existing
Cumulative Common Unit Arrearage, and (4) the excess of (aa) the First
Target Distribution less the Minimum Quarterly Distribution for each Quarter
of the Partnerships existence over (bb) the cumulative per Unit amount of
any distributions of Available Cash that is deemed to be Operating Surplus
made pursuant to Section 6.4(a)(iv) and
44
Section 6.4(b)(ii) (the sum of (1),
(2), (3) and (4) is hereinafter defined as the
First Liquidation Target
Amount
);
E.
Fifth
, (x) to the General Partner in accordance with its Percentage
Interest and (y) 13% to the holders of the Incentive Distribution Rights,
Pro Rata, and (z) to all Unitholders, Pro Rata, a percentage equal to 100%
less the sum of the percentages applicable to subclause (x) and (y) of this
clause (E), until the Capital Account in respect of each Common Unit then
Outstanding is equal to the sum of (1)
the First Liquidation Target Amount, and (2) the excess of (aa) the
Second Target Distribution less the First Target Distribution for each
Quarter of the Partnerships existence over (bb) the cumulative per Unit
amount of any distributions of Available Cash that is deemed to be Operating
Surplus made pursuant to Section 6.4(a)(v) and Section 6.4(b)(iii) (the sum
of (1) and (2) is hereinafter defined as the
Second Liquidation Target
Amount
);
F.
Sixth
, (x) to the General Partner in accordance with its Percentage
Interest, (y) 23% to the holders of the Incentive Distribution Rights, Pro
Rata, and (z) to all Unitholders, Pro Rata, a percentage equal to 100% less
the sum of the percentages applicable to subclause (x) and (y) of this
clause (F), until the Capital Account in respect of each Common Unit then
Outstanding is equal to the sum of (1) the Second Liquidation Target Amount,
and (2) the excess of (aa) the Third Target Distribution less the Second
Target Distribution for each Quarter of the Partnerships existence over
(bb) the cumulative per Unit amount of any distributions of Available Cash
that is deemed to be Operating Surplus made pursuant to Section 6.4(a)(vi)
and Section 6.4(b)(iv) (the sum of (1) and (2) is hereinafter defined as the
Third Liquidation Target Amount
); and
G.
Finally
, (x) to the General Partner in accordance with its
Percentage Interest and (y) 48% to the holders of the Incentive Distribution
Rights, Pro Rata, and (z) to all Unitholders, Pro Rata, a percentage equal
to 100% less the sum of the percentages applicable to subclause (x) and (y)
of this clause (G).
(ii) If a Net Termination Loss is recognized (or deemed recognized pursuant to
Section 5.5(d)), such Net Termination Loss shall be allocated among the Partners in
the following manner:
A.
First
, if such Net Termination Loss is recognized (or is deemed to
be recognized) prior to the conversion of the last Outstanding Subordinated
Unit, (x) to the General Partner in accordance with its Percentage Interest
and (y) to all Unitholders holding Subordinated Units, Pro Rata, a
percentage equal to 100% less the percentage applicable to subclause (x) of
this clause (A), until the Capital Account in respect of each Subordinated
Unit then Outstanding has been reduced to zero;
45
B.
Second
, (x) to the General Partner in accordance with its Percentage
Interest and (y) to all Unitholders holding Common Units, Pro Rata, a
percentage equal to 100% less the percentage applicable to subclause (x) of
this clause (B), until the Capital Account in respect of each Common Unit
then Outstanding has been reduced to zero; and
C.
Third
, the balance, if any, 100% to the General Partner.
(d)
Special Allocations
. Notwithstanding any other provision of this Section 6.1, the
following special allocations shall be made for such taxable period:
(i)
Partnership Minimum Gain Chargeback
. Notwithstanding any other provision
of this Section 6.1, if there is a net decrease in Partnership Minimum Gain during
any Partnership taxable period, each Partner shall be allocated items of Partnership
income and gain for such period (and, if necessary, subsequent periods) in the
manner and amounts provided in Treasury Regulation Sections 1.704-2(f)(6),
1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor provision. For purposes of
this Section 6.1(d), each Partners Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall be
effected, prior to the application of any other allocations pursuant to this Section
6.1(d) with respect to such taxable period (other than an allocation pursuant to
Section 6.1(d)(vi) and Section 6.1(d)(vii)). This Section 6.1(d)(i) is intended to
comply with the Partnership Minimum Gain chargeback requirement in Treasury
Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.
(ii)
Chargeback of Partner Nonrecourse Debt Minimum Gain
. Notwithstanding the
other provisions of this Section 6.1 (other than Section 6.1(d)(i)), except as
provided in Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in
Partner Nonrecourse Debt Minimum Gain during any Partnership taxable period, any
Partner with a share of Partner Nonrecourse Debt Minimum Gain at the beginning of
such taxable period shall be allocated items of Partnership income and gain for such
period (and, if necessary, subsequent periods) in the manner and amounts provided in
Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any successor
provisions. For purposes of this Section 6.1(d), each Partners Adjusted Capital
Account balance shall be determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any other allocations
pursuant to this Section 6.1(d), other than Section 6.1(d)(i) and other than an
allocation pursuant to Section 6.1(d)(vi) and Section 6.1(d)(vii), with respect to
such taxable period. This Section 6.1(d)(ii) is intended to comply with the
chargeback of items of income and gain requirement in Treasury Regulation Section
1.704-2(i)(4) and shall be interpreted consistently therewith.
(iii)
Priority Allocations
.
46
A. If the amount of cash or the Net Agreed Value of any property
distributed (except cash or property distributed pursuant to Section 12.4)
to any Unitholder with respect to its Units for a taxable year is greater
(on a per Unit basis) than the amount of cash or the Net Agreed Value of
property distributed to the other Unitholders with respect to their Units
(on a per Unit basis), then (1) each Unitholder receiving such greater cash
or property distribution shall be allocated gross income in an amount equal
to the product of (aa) the amount by which the distribution (on a per Unit
basis) to such Unitholder exceeds the distribution (on a per Unit basis)
to the Unitholders receiving the smallest distribution and (bb) the
number of Units owned by the Unitholder receiving the greater distribution;
and (2) the General Partner shall be allocated gross income in an aggregate
amount equal to the product obtained by multiplying (aa) the quotient
determined by dividing (x) the General Partners Percentage Interest at the
time in which the greater cash or property distribution occurs by (y) the
sum of 100 less the General Partners Percentage Interest at the time in
which the greater cash or property distribution occurs times (bb) the sum of
the amounts allocated in clause (1) above.
B. After the application of Section 6.1(d)(iii)(A), all or any portion
of the remaining items of Partnership gross income or gain for the taxable
period, if any, shall be allocated (1) to the holders of Incentive
Distribution Rights, Pro Rata, until the aggregate amount of such items
allocated to the holders of Incentive Distribution Rights pursuant to this
Section 6.1(d)(iii)(B) for the current taxable year and all previous taxable
years is equal to the cumulative amount of all Incentive Distributions made
to the holders of Incentive Distribution Rights from the Closing Date to a
date 45 days after the end of the current taxable year and (2) to the
General Partner an amount equal to the product of (aa) an amount equal to
the quotient determined by dividing (x) the General Partners Percentage
Interest by (y) the sum of 100 less the General Partners Percentage
Interest times (bb) the sum of the amounts allocated in clause (1) above.
(iv)
Qualified Income Offset
. In the event any Partner unexpectedly receives
any adjustments, allocations or distributions described in Treasury Regulation
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate, to the
extent required by the Treasury Regulations promulgated under Section 704(b) of the
Code, the deficit balance, if any, in its Adjusted Capital Account created by such
adjustments, allocations or distributions as quickly as possible unless such deficit
balance is otherwise eliminated pursuant to Section 6.1(d)(i) or Section 6.1(d)(ii).
(v)
Gross Income Allocations
. In the event any Partner has a deficit balance
in its Capital Account at the end of any Partnership taxable period in excess of the
sum of (A) the amount such Partner is required to restore pursuant
47
to the provisions
of this Agreement and (B) the amount such Partner is deemed obligated to restore
pursuant to Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Partner
shall be specially allocated items of Partnership gross income and gain in the
amount of such excess as quickly as possible;
provided
, that an allocation pursuant
to this Section 6.1(d)(v) shall be made only if and to the extent that such Partner
would have a deficit balance in its Capital Account as adjusted after all other
allocations provided for in this Section 6.1 have been tentatively made as if this
Section 6.1(d)(v) were not in this Agreement.
(vi)
Nonrecourse Deductions
. Nonrecourse Deductions for any taxable period
shall be allocated to the Partners in accordance with their respective Percentage
Interests. If the General Partner determines that the Partnerships Nonrecourse
Deductions should be allocated in a different ratio to satisfy the safe harbor
requirements of the Treasury Regulations promulgated under Section 704(b) of the
Code, the General Partner is authorized, upon notice to the other Partners, to
revise the prescribed ratio to the numerically closest ratio that does satisfy such
requirements.
(vii)
Partner Nonrecourse Deductions
. Partner Nonrecourse Deductions for any
taxable period shall be allocated 100% to the Partner that bears the Economic Risk
of Loss with respect to the Partner Nonrecourse Debt to which such Partner
Nonrecourse Deductions are attributable in accordance with Treasury Regulation
Section 1.704-2(i). If more than one Partner bears the Economic Risk of Loss with
respect to a Partner Nonrecourse Debt, such Partner Nonrecourse Deductions
attributable thereto shall be allocated between or among such Partners in accordance
with the ratios in which they share such Economic Risk of Loss.
(viii)
Nonrecourse Liabilities
. For purposes of Treasury Regulation Section
1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of the Partnership in
excess of the sum of (A) the amount of Partnership Minimum Gain and (B) the total
amount of Nonrecourse Built-in Gain shall be allocated among the Partners in
accordance with their respective Percentage Interests.
(ix)
Code Section 754 Adjustments
. To the extent an adjustment to the adjusted
tax basis of any Partnership asset pursuant to Section 734(b) or 743(b) of the Code
is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be
taken into account in determining Capital Accounts, the amount of such adjustment to
the Capital Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases such basis),
and such item of gain or loss shall be specially allocated to the Partners in a
manner consistent with the manner in which their Capital Accounts are required to be
adjusted pursuant to such Section of the Treasury Regulations.
(x)
Economic Uniformity
. At the election of the General Partner with respect
to any taxable period ending upon, or after, the termination of the
48
Subordination
Period, all or a portion of the remaining items of Partnership gross income or gain
for such taxable period, after taking into account allocations pursuant to Section
6.1(d)(iii), shall be allocated 100% to each Partner holding Subordinated Units that
are Outstanding as of the termination of such Subordination Period (
Final
Subordinated Units
) in the proportion of the number of Final Subordinated Units
held by such Partner to the total number of Final Subordinated Units then
Outstanding, until each such Partner has been allocated an amount of gross income or
gain that increases the Capital Account maintained with respect to such Final
Subordinated Units to an amount equal to
the product of (A) the number of Final Subordinated Units held by such Partner
and (B) the Per Unit Capital Amount for a Common Unit. The purpose of this
allocation is to establish uniformity between the Capital Accounts underlying Final
Subordinated Units and the Capital Accounts underlying Common Units held by Persons
other than the General Partner and its Affiliates immediately prior to the
conversion of such Final Subordinated Units into Common Units. This allocation
method for establishing such economic uniformity will be available to the General
Partner only if the method for allocating the Capital Account maintained with
respect to the Subordinated Units between the transferred and retained Subordinated
Units pursuant to Section 5.5(c)(ii) does not otherwise provide such economic
uniformity to the Final Subordinated Units.
(xi)
Curative Allocation
.
A. Notwithstanding any other provision of this Section 6.1, other than
the Required Allocations, the Required Allocations shall be taken into
account in making the Agreed Allocations so that, to the extent possible,
the net amount of items of income, gain, loss and deduction allocated to
each Partner pursuant to the Required Allocations and the Agreed
Allocations, together, shall be equal to the net amount of such items that
would have been allocated to each such Partner under the Agreed Allocations
had the Required Allocations and the related Curative Allocation not
otherwise been provided in this Section 6.1. Notwithstanding the preceding
sentence, Required Allocations relating to (1) Nonrecourse Deductions shall
not be taken into account except to the extent that there has been a
decrease in Partnership Minimum Gain and (2) Partner Nonrecourse Deductions
shall not be taken into account except to the extent that there has been a
decrease in Partner Nonrecourse Debt Minimum Gain. Allocations pursuant to
this Section 6.1(d)(xi)(A) shall only be made with respect to Required
Allocations to the extent the General Partner determines that such
allocations will otherwise be inconsistent with the economic agreement among
the Partners. Further, allocations pursuant to this Section 6.1(d)(xi)(A)
shall be deferred with respect to allocations pursuant to clauses (1) and
(2) hereof to the extent the General Partner determines that such
allocations are likely to be offset by subsequent Required Allocations.
49
B. The General Partner shall, with respect to each taxable period, (1)
apply the provisions of Section 6.1(d)(xi)(A) in whatever order is most
likely to minimize the economic distortions that might otherwise result from
the Required Allocations, and (2) divide all allocations pursuant to Section
6.1(d)(xi)(A) among the Partners in a manner that is likely to minimize such
economic distortions.
(xii)
Corrective Allocations
. In the event of any allocation of Additional
Book Basis Derivative Items or any Book-Down Event or any recognition of a Net
Termination Loss, the following rules shall apply:
A. In the case of any allocation of Additional Book Basis Derivative
Items (other than an allocation of Unrealized Gain or Unrealized Loss under
Section 5.5(d) hereof), the General Partner shall allocate additional items
of gross income and gain away from the holders of Incentive Distribution
Rights to the Unitholders and the General Partner, or additional items of
deduction and loss away from the Unitholders and the General Partner to the
holders of Incentive Distribution Rights, to the extent that the Additional
Book Basis Derivative Items allocated to the Unitholders or the General
Partner exceed their Share of Additional Book Basis Derivative Items. For
this purpose, the Unitholders and the General Partner shall be treated as
being allocated Additional Book Basis Derivative Items to the extent that
such Additional Book Basis Derivative Items have reduced the amount of
income that would otherwise have been allocated to the Unitholders or the
General Partner under the Partnership Agreement (e.g., Additional Book Basis
Derivative Items taken into account in computing cost of goods sold would
reduce the amount of book income otherwise available for allocation among
the Partners). Any allocation made pursuant to this Section 6.1(d)(xii)(A)
shall be made after all of the other Agreed Allocations have been made as if
this Section 6.1(d)(xii) were not in this Agreement and, to the extent
necessary, shall require the reallocation of items that have been allocated
pursuant to such other Agreed Allocations.
B. In the case of any negative adjustments to the Capital Accounts of
the Partners resulting from a Book-Down Event or from the recognition of a
Net Termination Loss, such negative adjustment (1) shall first be allocated,
to the extent of the Aggregate Remaining Net Positive Adjustments, in such a
manner, as determined by the General Partner, that to the extent possible
the aggregate Capital Accounts of the Partners will equal the amount that
would have been the Capital Account balance of the Partners if no prior
Book-Up Events had occurred, and (2) any negative adjustment in excess of
the Aggregate Remaining Net Positive Adjustments shall be allocated pursuant
to Section 6.1(c) hereof.
C. In making the allocations required under this Section 6.1(d)(xii),
the General Partner may apply whatever conventions
50
or other methodology it
determines will satisfy the purpose of this Section 6.1(d)(xii).
Section 6.2.
Allocations for Tax Purposes
.
(a) Except as otherwise provided herein, for federal income tax purposes, each item of
income, gain, loss and deduction shall be allocated among the Partners in the same manner as
its correlative item of
book
income, gain, loss or deduction is allocated pursuant to
Section 6.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a Contributed
Property or Adjusted Property, items of income, gain, loss, depreciation, amortization and
cost recovery deductions shall be allocated for federal income tax purposes among the
Partners as follows:
(i) (A) In the case of a Contributed Property, such items attributable thereto
shall be allocated among the Partners in the manner provided under Section 704(c) of
the Code that takes into account the variation between the Agreed Value of such
property and its adjusted basis at the time of contribution; and (B) any item of
Residual Gain or Residual Loss attributable to a Contributed Property shall be
allocated among the Partners in the same manner as its correlative item of
book
gain or loss is allocated pursuant to Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items shall (1) first, be
allocated among the Partners in a manner consistent with the principles of Section
704(c) of the Code to take into account the Unrealized Gain or Unrealized Loss
attributable to such property and the allocations thereof pursuant to Section
5.5(d)(i) or Section 5.5(d)(ii), and (2) second, in the event such property was
originally a Contributed Property, be allocated among the Partners in a manner
consistent with Section 6.2(b)(i)(A); and (B) any item of Residual Gain or Residual
Loss attributable to an Adjusted Property shall be allocated among the Partners in
the same manner as its correlative item of
book
gain or loss is allocated pursuant
to Section 6.1.
(iii) The General Partner shall apply the principles of Treasury Regulation
Section 1.704-3(d) to eliminate Book-Tax Disparities, except as otherwise determined
by the General Partner with respect to any goodwill property of the Partnership.
(c) For the proper administration of the Partnership and for the preservation of
uniformity of the Limited Partner Interests (or any class or classes thereof), the General
Partner shall (i) adopt such conventions as it deems appropriate in determining the amount
of depreciation, amortization and cost recovery deductions, (ii) make special allocations
for federal income tax purposes of income (including, without limitation, gross income) or
deductions, and (iii) amend the provisions of this Agreement as appropriate (x) to reflect
the proposal or promulgation of Treasury Regulations under Section 704(b) or Section 704(c)
of the Code or (y) otherwise to preserve or achieve
51
uniformity of the Limited Partner
Interests (or any class or classes thereof). The General Partner may adopt such
conventions, make such allocations and make such amendments to this Agreement as provided in
this Section 6.2(c) only if such conventions, allocations or amendments would not have a
material adverse effect on the Partners, the holders of any class or classes of Limited
Partner Interests issued and Outstanding or the Partnership, and if such allocations are
consistent with the principles of Section 704 of the Code.
(d) The General Partner may determine not to depreciate or amortize the portion of an
adjustment under Section 743(b) of the Code attributable to unrealized appreciation in any
Adjusted Property (to the extent of the unamortized Book-Tax
Disparity) or to depreciate or amortize such portion of an adjustment using a
predetermined rate derived from the depreciation or amortization method and useful life
applied to the Partnerships common basis of such property, despite any inconsistency of
such approach with Treasury Regulation Section 1.167(c)-l(a)(6), Treasury Regulation Section
1.197-2(g)(3), the legislative history of Section 743 of the Code or any successor
regulations thereto. If the General Partner determines that such reporting position cannot
reasonably be taken, the General Partner may adopt depreciation and amortization conventions
under which all purchasers acquiring Limited Partner Interests in the same month would
receive depreciation and amortization deductions, based upon the same applicable rate as if
they had purchased a direct interest in the Partnerships property. If the General Partner
chooses not to utilize such aggregate method, the General Partner may use any other
depreciation and amortization conventions to preserve the uniformity of the intrinsic tax
characteristics of any Limited Partner Interests, so long as such conventions would not have
a material adverse effect on the Limited Partners or the Record Holders of any class or
classes of Limited Partner Interests.
(e) Any gain allocated to the Partners upon the sale or other taxable disposition of
any Partnership asset shall, to the extent possible, after taking into account other
required allocations of gain pursuant to this Section 6.2, be characterized as Recapture
Income in the same proportions and to the same extent as such Partners (or their
predecessors in interest) have been allocated any deductions directly or indirectly giving
rise to the treatment of such gains as Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized by the Partnership
for federal income tax purposes and allocated to the Partners in accordance with the
provisions hereof shall be determined without regard to any election under Section 754 of
the Code that may be made by the Partnership;
provided, however
, that such allocations, once
made, shall be adjusted (in the manner determined by the General Partner) to take into
account those adjustments permitted or required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction shall for federal income
tax purposes, be determined on an annual basis and prorated on a monthly basis and shall be
allocated to the Partners as of the opening of the National Securities Exchange on which the
Units are then traded on the first Business Day of each month;
provided, however
, such items
for the period beginning on the Closing Date and ending on the last day of the month in
which the Option Closing Date or the expiration of the
52
Over-Allotment Option occurs shall be
allocated to the Partners as of the opening of the National Securities Exchange on which the
Units are then traded on the first Business Day of the next succeeding month; and provided,
further, that gain or loss on a sale or other disposition of any assets of the Partnership
or any other extraordinary item of income or loss realized and recognized other than in the
ordinary course of business, as determined by the General Partner, shall be allocated to the
Partners as of the opening of the National Securities Exchange on which the Units are then
traded on the first Business Day of the month in which such gain or loss is recognized for
federal income tax purposes. The General Partner may revise, alter or otherwise modify such
methods of
allocation to the extent permitted or required by Section 706 of the Code and the
regulations or rulings promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited Partner under the provisions
of this Article VI shall instead be made to the beneficial owner of Limited Partner
Interests held by a nominee in any case in which the nominee has furnished the identity of
such owner to the Partnership in accordance with Section 6031(c) of the Code or any other
method determined by the General Partner.
Section 6.3.
Requirement and Characterization of Distributions; Distributions to Record
Holders
.
(a) Within 45 days following the end of each Quarter commencing with the Quarter ending
on December 31, 2006, an amount equal to 100% of Available Cash with respect to such Quarter
shall, subject to Section 17-607 of the Delaware Act, be distributed in accordance with this
Article VI by the Partnership to the Partners as of the Record Date selected by the General
Partner. All amounts of Available Cash distributed by the Partnership on any date from any
source shall be deemed to be Operating Surplus until the sum of all amounts of Available
Cash theretofore distributed by the Partnership to the Partners pursuant to Section 6.4
equals the Operating Surplus from the Closing Date through the close of the immediately
preceding Quarter. Any remaining amounts of Available Cash distributed by the Partnership
on such date shall, except as otherwise provided in Section 6.5, be deemed to be
Capital
Surplus.
All distributions required to be made under this Agreement shall be made subject
to Section 17-607 of the Delaware Act.
(b) Notwithstanding Section 6.3(a), in the event of the dissolution and liquidation of
the Partnership, all receipts received during or after the Quarter in which the Liquidation
Date occurs shall be applied and distributed solely in accordance with, and subject to the
terms and conditions of, Section 12.4.
(c) The General Partner may treat taxes paid by the Partnership on behalf of, or
amounts withheld with respect to, all or less than all of the Partners, as a distribution of
Available Cash to such Partners.
(d) Each distribution in respect of a Partnership Interest shall be paid by the
Partnership, directly or through the Transfer Agent or through any other Person or agent,
only to the Record Holder of such Partnership Interest as of the Record Date set for such
53
distribution. Such payment shall constitute full payment and satisfaction of the
Partnerships liability in respect of such payment, regardless of any claim of any Person
who may have an interest in such payment by reason of an assignment or otherwise.
Section 6.4.
Distributions of Available Cash from Operating Surplus
.
(a)
During Subordination Period
. Available Cash with respect to any Quarter within the
Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of
Section 6.3 or Section 6.5 shall, subject to Section 17-607 of the Delaware
Act, be distributed as follows, except as otherwise required by Section 5.6(b) in
respect of other Partnership Securities issued pursuant thereto:
(i)
First
, to the General Partner and to the Unitholders holding Common Units,
in accordance with their respective Percentage Interests, until there has been
distributed in respect of each Common Unit then Outstanding an amount equal to the
Minimum Quarterly Distribution for such Quarter;
(ii)
Second
, to the General Partner and to the Unitholders holding Common
Units, in accordance with their respective Percentage Interests, until there has
been distributed in respect of each Common Unit then Outstanding an amount equal to
the Cumulative Common Unit Arrearage existing with respect to such Quarter;
(iii)
Third
, to the General Partner and to the Unitholders holding Subordinated
Units, in accordance with their respective Percentage Interests, until there has
been distributed in respect of each Subordinated Unit then Outstanding an amount
equal to the Minimum Quarterly Distribution for such Quarter;
(iv)
Fourth
, to the General Partner and the Unitholders in accordance with
their respective Percentage Interests, until there has been distributed in respect
of each Unit then Outstanding an amount equal to the excess of the First Target
Distribution over the Minimum Quarterly Distribution for such Quarter;
(v)
Fifth
, (A) to the General Partner in accordance with its Percentage
Interest; (B) 13% to the holders of the Incentive Distribution Rights, Pro Rata; and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (A) and (B) of this clause (v), until there has
been distributed in respect of each Unit then Outstanding an amount equal to the
excess of the Second Target Distribution over the First Target Distribution for such
Quarter;
(vi)
Sixth
, (A) to the General Partner in accordance with its Percentage
Interest, (B) 23% to the holders of the Incentive Distribution Rights, Pro Rata; and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (A) and (B) of this clause (vi), until there
has been distributed in respect of each Unit then Outstanding an
54
amount equal to the
excess of the Third Target Distribution over the Second Target Distribution for such
Quarter; and
(vii)
Thereafter
, (A) to the General Partner in accordance with its Percentage
Interest; (B) 48% to the holders of the Incentive Distribution Rights, Pro Rata; and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (A) and (B) of this clause (vii);
provided, however
, if the Minimum Quarterly Distribution, the First Target Distribution, the
Second Target Distribution and the Third Target Distribution have been reduced to zero
pursuant to the second sentence of Section 6.6(a), the distribution of Available Cash that
is deemed to be Operating Surplus with respect to any Quarter will be made solely in
accordance with Section 6.4(a)(vii).
(b)
After Subordination Period
. Available Cash with respect to any Quarter after the
Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of
Section 6.3 or Section 6.5, subject to Section 17-607 of the Delaware Act, shall be
distributed as follows, except as otherwise required by Section 5.6(b) in respect of
additional Partnership Securities issued pursuant thereto:
(i)
First
, 100% to the General Partner and the Unitholders in accordance with
their respective Percentage Interests, until there has been distributed in respect
of each Unit then Outstanding an amount equal to the Minimum Quarterly Distribution
for such Quarter;
(ii)
Second
, 100% to the General Partner and the Unitholders in accordance with
their respective Percentage Interests, until there has been distributed in respect
of each Unit then Outstanding an amount equal to the excess of the First Target
Distribution over the Minimum Quarterly Distribution for such Quarter;
(iii)
Third
, (A) to the General Partner in accordance with its Percentage
Interest; (B) 13% to the holders of the Incentive Distribution Rights, Pro Rata; and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (A) and (B) of this clause (iii), until there
has been distributed in respect of each Unit then Outstanding an amount equal to the
excess of the Second Target Distribution over the First Target Distribution for such
Quarter;
(iv)
Fourth
, (A) to the General Partner in accordance with its Percentage
Interest; (B) 23% to the holders of the Incentive Distribution Rights, Pro Rata; and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (A) and (B) of this clause (iv), until there
has been distributed in respect of each Unit then Outstanding an amount equal to the
excess of the Third Target Distribution over the Second Target Distribution for such
Quarter; and
55
(v)
Thereafter
, (A) to the General Partner in accordance with its Percentage
Interest; (B) 48% to the holders of the Incentive Distribution Rights, Pro Rata; and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (A) and (B) of this clause (v);
provided, however
, if the Minimum Quarterly Distribution, the First Target Distribution, the
Second Target Distribution and the Third Target Distribution have been reduced to zero
pursuant to the second sentence of Section 6.6(a), the distribution of Available Cash
that is deemed to be Operating Surplus with respect to any Quarter will be made solely in
accordance with Section 6.4(b)(v).
Section 6.5.
Distributions of Available Cash from Capital Surplus
. Available Cash that is deemed to be Capital Surplus pursuant to the provisions of Section 6.3(a)
shall, subject to Section 17-607 of the Delaware Act, be distributed, unless the provisions of
Section 6.3 require otherwise, 100% to the General Partner and the Unitholders in accordance with
their respective Percentage Interests, until a hypothetical holder of a Common Unit acquired on the
Closing Date has received with respect to such Common Unit, during the period since the Closing
Date through such date, distributions of Available Cash that are deemed to be Capital Surplus in an
aggregate amount equal to the Initial Unit Price. Available Cash that is deemed to be Capital
Surplus shall then be distributed to the General Partner and to all Unitholders holding Common
Units, in accordance with their respective Percentage Interests, until there has been distributed
in respect of each Common Unit then Outstanding an amount equal to the Cumulative Common Unit
Arrearage. Thereafter, all Available Cash shall be distributed as if it were Operating Surplus and
shall be distributed in accordance with Section 6.4.
Section 6.6.
Adjustment of Minimum Quarterly Distribution and Target Distribution
Levels
.
(a) The Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution, Third Target Distribution, Common Unit Arrearages and Cumulative Common Unit
Arrearages shall be proportionately adjusted in the event of any distribution, combination
or subdivision (whether effected by a distribution payable in Units or otherwise) of Units
or other Partnership Securities in accordance with Section 5.9. In the event of a
distribution of Available Cash that is deemed to be from Capital Surplus, the then
applicable Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution, shall be adjusted proportionately downward to
equal the product obtained by multiplying the otherwise applicable Minimum Quarterly
Distribution, First Target Distribution, Second Target Distribution and Third Target
Distribution, as the case may be, by a fraction of which the numerator is the Unrecovered
Capital of the Common Units immediately after giving effect to such distribution and of
which the denominator is the Unrecovered Capital of the Common Units immediately prior to
giving effect to such distribution.
(b) The Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution, shall also be subject to adjustment pursuant to
Section 6.9.
56
Section 6.7.
Special Provisions Relating to the Holders of Subordinated Units
.
(a) Except with respect to the right to vote on or approve matters requiring the vote
or approval of a percentage of the holders of Outstanding Common Units and the right to
participate in allocations of income, gain, loss and deduction and distributions made with
respect to Common Units, the holder of a Subordinated Unit shall have all of the rights and
obligations of a Unitholder holding Common Units hereunder;
provided,
however
, that immediately upon the conversion of Subordinated Units into Common Units
pursuant to Section 5.7, the Unitholder holding a Subordinated Unit shall possess all of the
rights and obligations of a Unitholder holding Common Units hereunder, including the right
to vote as a Common Unitholder and the right to participate in allocations of income, gain,
loss and deduction and distributions made with respect to Common Units;
provided, however
,
that such converted Subordinated Units shall remain subject to the provisions of Section
5.5(c)(ii), Section 6.1(d)(x) and Section 6.7(b) and (c).
(b) A Unitholder shall not be permitted to transfer a Subordinated Unit or a
Subordinated Unit that has converted into a Common Unit pursuant to Section 5.8 (other than
a transfer to an Affiliate) if the remaining balance in the transferring Unitholders
Capital Account with respect to the retained Subordinated Units or retained converted
Subordinated Units would be negative after giving effect to the allocation under Section
5.5(c)(ii)(B).
(c) The Unitholder holding a Common Unit that has resulted from the conversion of a
Subordinated Unit pursuant to Section 5.7 shall not be issued a Common Unit Certificate
pursuant to Section 4.1, and shall not be permitted to transfer such Common Units to a
Person that is not an Affiliate of the holder until such time as the General Partner
determines, based on advice of counsel, that each such Common Unit should have, as a
substantive matter, like intrinsic economic and federal income tax characteristics, in all
material respects, to the intrinsic economic and federal income tax characteristics of an
Initial Common Unit. In providing such advice, counsel may rely upon the fact that the
General Partner will take positions in filing the tax returns of the Partnership (including
information returns to unitholders) which are intended to preserve the uniformity of units,
as described at Material Tax ConsequencesUniformity of Units in the Registration
Statement, and may assume the validity of such positions. In connection with the condition
imposed by this Section 6.7(c), the General Partner may take whatever steps are required to
provide economic uniformity to such Common Units in preparation for a transfer of such
Common Units, including the application of Section 5.5(c)(ii) and Section 6.1(d)(x);
provided, however
, that no such steps may be taken that would have a material adverse effect
on the Unitholders holding Common Units represented by Common Unit Certificates.
Section 6.8.
Special Provisions Relating to the Holders of Incentive Distribution
Rights
. Notwithstanding anything to the contrary set forth in this Agreement, the holders of the
Incentive Distribution Rights (a) shall (i) possess the rights and obligations provided in this
Agreement with respect to a Limited Partner pursuant to Article III and Article VII and (ii) have a
Capital Account as a Partner pursuant to Section 5.5 and all other provisions related thereto and
(b) shall not (i) be entitled to vote on any matters requiring the approval or vote of the holders
of
57
Outstanding Units, except as provided by law, (ii) be entitled to any distributions other than
as provided in Section 6.4(a)(v), (vi) and (vii), Section 6.4(b)(iii), (iv) and (v), and Section
12.4 or (iii) be allocated items of income, gain, loss or deduction other than as specified in this
Article VI.
Section 6.9.
Entity-Level Taxation
. If legislation is enacted or the interpretation of existing language is modified by a
governmental taxing authority so that a Group Member is treated as an association taxable as a
corporation or is otherwise subject to an entity-level tax for federal, state or local income tax
purposes, then the General Partner may reduce the Minimum Quarterly Distribution, the First Target
Distribution, the Second Target Distribution and the Third Target Distribution by the amount of the
income taxes that are payable by reason of any such new legislation or interpretation (the
Incremental Income Taxes), or any portion thereof selected by the General Partner, in the manner
provided in this Section 6.9. If the General Partner elects to reduce the Minimum Quarterly
Distribution, the First Target Distribution, the Second Target Distribution and the Third Target
Distribution for any Quarter with respect to all or a portion of any Incremental Income Taxes, the
General Partner shall estimate for such Quarter the Partnership Groups aggregate liability (the
Estimated Incremental Quarterly Tax Amount
) for all (or the relevant portion of) such Incremental
Income Taxes;
provided
that any difference between such estimate and the actual tax liability for
Incremental Income Taxes (or the relevant portion thereof) for such Quarter may, to the extent
determined by the General Partner, be taken into account in determining the Estimated Incremental
Quarterly Tax Amount with respect to each Quarter in which any such difference can be determined.
For each such Quarter, the Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution, shall be the product obtained by multiplying (a) the
amounts therefor that are set out herein prior to the application of this Section 6.9 times (b) the
quotient obtained by dividing (i) Available Cash with respect to such Quarter by (ii) the sum of
Available Cash with respect to such Quarter and the Estimated Incremental Quarterly Tax Amount for
such Quarter, as determined by the General Partner. For purposes of the foregoing, Available Cash
with respect to a Quarter will be deemed reduced by the Estimated Incremental Quarterly Tax Amount
for that Quarter.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
Section 7.1.
Management
.
(a) The General Partner shall conduct, direct and manage all activities of the
Partnership. Except as otherwise expressly provided in this Agreement, all management
powers over the business and affairs of the Partnership shall be exclusively vested in the
General Partner, and no Limited Partner shall have any management power over the business
and affairs of the Partnership. In addition to the powers now or hereafter granted a
general partner of a limited partnership under applicable law or that are granted to the
General Partner under any other provision of this Agreement, the General Partner, subject to
Section 7.3, shall have full power and authority to do all things and on such terms as it
determines to be necessary or appropriate to conduct the business of the Partnership, to
exercise all powers set forth in Section 2.5 and to effectuate the purposes set forth in
Section 2.4, including the following:
58
(i) the making of any expenditures, the lending or borrowing of money, the
assumption or guarantee of, or other contracting for, indebtedness and
other liabilities, the issuance of evidences of indebtedness, including
indebtedness that is convertible into Partnership Securities, and the incurring of
any other obligations;
(ii) the making of tax, regulatory and other filings, or rendering of periodic
or other reports to governmental or other agencies having jurisdiction over the
business or assets of the Partnership;
(iii) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the Partnership or the
merger or other combination of the Partnership with or into another Person (the
matters described in this clause (iii) being subject, however, to any prior approval
that may be required by Section 7.3 and Article XIV);
(iv) the use of the assets of the Partnership (including cash on hand) for any
purpose consistent with the terms of this Agreement, including the financing of the
conduct of the operations of the Partnership Group; subject to Section 7.6(a), the
lending of funds to other Persons (including other Group Members); the repayment or
guarantee of obligations of any Group Member; and the making of capital
contributions to any Group Member;
(v) the negotiation, execution and performance of any contracts, conveyances or
other instruments (including instruments that limit the liability of the Partnership
under contractual arrangements to all or particular assets of the Partnership, with
the other party to the contract to have no recourse against the General Partner or
its assets other than its interest in the Partnership, even if same results in the
terms of the transaction being less favorable to the Partnership than would
otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including employees having
titles such as
president,
vice president,
secretary
and
treasurer
) and
agents, outside attorneys, accountants, consultants and contractors and the
determination of their compensation and other terms of employment or hiring;
(viii) the maintenance of insurance for the benefit of the Partnership Group;
the Partners and Indemnitees;
(ix) the formation of, or acquisition of an interest in, and the contribution
of property and the making of loans to, any further limited or general partnerships,
joint ventures, corporations, limited liability companies or other relationships
(including the acquisition of interests in, and the contributions of property to,
any Group Member from time to time) subject to the restrictions set forth in Section
2.4;
59
(x) the control of any matters affecting the rights and obligations of the
Partnership, including the bringing and defending of actions at law or in equity and
otherwise engaging in the conduct of litigation, arbitration or mediation and the
incurring of legal expense and the settlement of claims and litigation;
(xi) the indemnification of any Person against liabilities and contingencies to
the extent permitted by law;
(xii) the entering into of listing agreements with any National Securities
Exchange and the delisting of some or all of the Limited Partner Interests from, or
requesting that trading be suspended on, any such exchange (subject to any prior
approval that may be required under Section 4.8);
(xiii) the purchase, sale or other acquisition or disposition of Partnership
Securities and the issuance of options, rights, warrants and appreciation rights
relating to Partnership Securities;
(xiv) the undertaking of any action in connection with the Partnerships
participation in any Group Member; and
(xv) the entering into of agreements with any of its Affiliates to render
services to a Group Member or to itself in the discharge of its duties as General
Partner of the Partnership.
(b) Notwithstanding any other provision of this Agreement, any Group Member Agreement,
the Delaware Act or any applicable law, rule or regulation, each of the Partners and each
other Person who may acquire an interest in Partnership Securities hereby (i) approves,
ratifies and confirms the execution, delivery and performance by the parties thereto of this
Agreement and the Group Member Agreement of each other Group Member, the Purchase Agreement,
the Omnibus Agreement, the Contribution Agreement, any Group Member Agreement and the other
agreements described in or filed as exhibits to the Registration Statement that are related
to the transactions contemplated by the Registration Statement; (ii) agrees that the General
Partner (on its own or through any officer of the Partnership) is authorized to execute,
deliver and perform the agreements referred to in clause (i) of this sentence and the other
agreements, acts, transactions and matters described in or contemplated by the Registration
Statement on behalf of the Partnership without any further act, approval or vote of the
Partners or the other Persons who may acquire an interest in Partnership Securities; and
(iii) agrees that the execution, delivery or performance by the General Partner, any Group
Member or any Affiliate of any of them of this Agreement or any agreement authorized or
permitted under this Agreement (including the exercise by the General Partner or any
Affiliate of the General Partner of the rights accorded pursuant to Article XV) shall not
constitute a breach by the General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partners or any other Persons under this Agreement (or any other
agreements) or of any duty stated or implied by law or equity.
60
Section 7.2.
Certificate of Limited Partnership
. The 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. The General Partner
shall use all reasonable efforts to cause to be filed such other certificates or documents that the
General Partner determines to be 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 the General Partner determines
such action to be necessary or appropriate, the General Partner shall file amendments to and
restatements of the Certificate of Limited Partnership and do all things to maintain the
Partnership as a limited partnership (or a partnership or other entity in which the limited
partners have limited liability) under the laws of the State of Delaware or of any other state in
which the Partnership may elect to do business or own property. Subject to the terms of Section
3.4(a), the General Partner shall not be required, before or after filing, to deliver or mail a
copy of the Certificate of Limited Partnership, any qualification document or any amendment thereto
to any Limited Partner.
Section 7.3.
Restrictions on the General Partners Authority
. Except as provided in Article XII and Article XIV, the General Partner may not sell, exchange or
otherwise dispose of all or substantially all of the assets of the Partnership Group, taken as a
whole, in a single transaction or a series of related transactions (including by way of merger,
consolidation or other combination or sale of ownership interests of the Partnerships
Subsidiaries) without the approval of holders of a Unit Majority;
provided, however
, that this
provision shall not preclude or limit the General Partners ability to mortgage, pledge,
hypothecate or grant a security interest in all or substantially all of the assets of the
Partnership Group and shall not apply to any forced sale of any or all of the assets of the
Partnership Group pursuant to the foreclosure of, or other realization upon, any such encumbrance.
Without the approval of holders of a Unit Majority, the General Partner shall not, on behalf of the
Partnership, except as permitted under Section 4.6, Section 11.1 and Section 11.2, elect or cause
the Partnership to elect a successor general partner of the Partnership.
Section 7.4.
Reimbursement of the General Partner
.
(a) Except as provided in this Section 7.4 and elsewhere in this Agreement, the General
Partner shall not be compensated for its services as a general partner or managing member of
any Group Member.
(b) The General Partner shall be reimbursed on a monthly basis, or such other basis as
the General Partner may determine, for (i) all direct and indirect expenses it incurs or
payments it makes on behalf of the Partnership Group (including salary, bonus, incentive
compensation and other amounts paid to any Person including Affiliates of the General
Partner to perform services for the Partnership Group or for the General Partner in the
discharge of its duties to the Partnership Group, which amounts shall also include
reimbursement for any Common Units purchased to satisfy obligations of the Partnership under
any of its equity compensation plans), and (ii) all other expenses allocable to the
Partnership Group or otherwise incurred by the General Partner in connection with
operating the Partnership Groups business (including expenses allocated to the General
Partner by its Affiliates). The General Partner shall determine the expenses that are
61
allocable to the Partnership Group. Reimbursements pursuant to this Section 7.4 shall be in
addition to any reimbursement to the General Partner as a result of indemnification pursuant
to Section 7.7.
(c) The General Partner, without the approval of the Limited Partners (who shall have
no right to vote in respect thereof), may propose and adopt on behalf of the Partnership
employee benefit plans, employee programs and employee practices (including plans, programs
and practices involving the issuance of Partnership Securities or options to purchase or
rights, warrants or appreciation rights relating to Partnership Securities), or cause the
Partnership to issue Partnership Securities in connection with, or pursuant to, any employee
benefit plan, employee program or employee practice maintained or sponsored by the General
Partner, Group Member or any Affiliates in each case for the benefit of employees of the
General Partner, any Group Member or any Affiliate, or any of them, in respect of services
performed, directly or indirectly, for the benefit of the Partnership Group. The
Partnership agrees to issue and sell to the General Partner or any of its Affiliates any
Partnership Securities that the General Partner or such Affiliates are obligated to provide
to any employees pursuant to any such employee benefit plans, employee programs or employee
practices. Expenses incurred by the General Partner in connection with any such plans,
programs and practices (including the net cost to the General Partner or such Affiliates of
Partnership Securities purchased by the General Partner or such Affiliates from the
Partnership to fulfill options or awards under such plans, programs and practices) shall be
reimbursed in accordance with Section 7.4(b). Any and all obligations of the General
Partner under any employee benefit plans, employee programs or employee practices adopted by
the General Partner as permitted by this Section 7.4(c) shall constitute obligations of the
General Partner hereunder and shall be assumed by any successor General Partner approved
pursuant to Section 11.1 or Section 11.2 or the transferee of or successor to all of the
General Partners General Partner Interest (represented by General Partner Units) pursuant
to Section 4.6.
Section 7.5.
Outside Activities
.
(a) After the Closing Date, the General Partner, for so long as it is the General
Partner of the Partnership (i) agrees that its sole business will be to act as a general
partner or managing member, as the case may be, of the Partnership and any other partnership
or limited liability company of which the Partnership is, directly or indirectly, a partner
or member and to undertake activities that are ancillary or related thereto (including being
a limited partner in the Partnership) and (ii) shall not engage in any business or activity
or incur any debts or liabilities except in connection with or incidental to (A) its
performance as general partner or managing member, if any, of one or more Group Members or
as described in or contemplated by the Registration Statement or (B) the acquiring, owning
or disposing of debt or equity securities in any Group Member.
(b) Except as specifically restricted by the Omnibus Agreement, each Indemnitee (other
than the General Partner) shall have the right to engage in businesses
of every type and description and other activities for profit and to engage in and
possess an interest in other business ventures of any and every type or description, whether
in
62
businesses engaged in or anticipated to be engaged in by any Group Member, independently
or with others, including business interests and activities in direct competition with the
business and activities of any Group Member, and none of the same shall constitute a breach
of this Agreement or any duty expressed or implied by law to any Group Member or any
Partner. Notwithstanding anything to the contrary in this Agreement, (i) the engaging in
competitive activities by any Indemnitees (other than the General Partner) in accordance
with the provisions of this Section 7.5 is hereby approved by the Partnership and all
Partners, (ii) it shall be deemed not to be a breach of any fiduciary duty or any other
obligation of any type whatsoever of the General Partner or of any Indemnitee for the
Indemnitees (other than the General Partner) to engage in such business interests and
activities in preference to or to the exclusion of the Partnership.
(c) None of any Group Member, any Limited Partner or any other Person shall have any
rights by virtue of this Agreement, any Group Member Agreement, or the partnership
relationship established hereby in any business ventures of any Indemnitee.
(d) The General Partner and each of its Affiliates may acquire Units or other
Partnership Securities in addition to those acquired on the Closing Date and, except as
otherwise provided in this Agreement, shall be entitled to exercise, at their option, all
rights relating to all Units or other Partnership Securities acquired by them. For purposes
of this Section 7.5(d), the term
Affiliates,
when used with respect to the General
Partner, shall not include any Group Member.
(e) Notwithstanding anything to the contrary in this Agreement, to the extent that any
provision of this Section 7.5 purports or is interpreted to have the effect of restricting,
eliminating or otherwise modifying the fiduciary duties that might otherwise, as a result of
Delaware or other applicable law, be owed by the General Partner to the Partnership and its
Limited Partners, or to constitute a waiver or consent by the Limited Partners to any such
fiduciary duty, such provisions in this Section 7.5 shall be deemed to have been approved by
the Partners.
Section 7.6.
Loans from the General Partner; Loans or Contributions from the Partnership
or Group Members
.
(a) The General Partner or any of its Affiliates may lend to any Group Member, and any
Group Member may borrow from the General Partner or any of its Affiliates, funds needed or
desired by the Group Member for such periods of time and in such amounts as the General
Partner may determine;
provided, however
, that in any such case the lending party may not
charge the borrowing party interest at a rate greater than the rate that would be charged
the borrowing party or impose terms less favorable to the borrowing party than would be
charged or imposed on the borrowing party by unrelated lenders on comparable loans made on
an arms-length basis (without reference to the lending partys financial abilities or
guarantees), all as determined by the General Partner. The borrowing party shall reimburse
the lending party for any costs (other than any additional interest costs) incurred by the
lending party in connection with the borrowing
of such funds. For purposes of this Section 7.6(a) and Section 7.6(b), the term
Group
63
Member
shall include any Affiliate of a Group Member that is controlled by the Group
Member.
(b) The Partnership may lend or contribute to any Group Member, and any Group Member
may borrow from the Partnership, funds on terms and conditions determined by the General
Partner. No Group Member may lend funds to the General Partner or any of its Affiliates
(other than another Group Member).
(c) No borrowing by any Group Member or the approval thereof by the General Partner
shall be deemed to constitute a breach of any duty, expressed or implied, of the General
Partner or its Affiliates to the Partnership or the Limited Partners by reason of the fact
that the purpose or effect of such borrowing is directly or indirectly to (i) enable
distributions to the General Partner or its Affiliates (including in their capacities as
Limited Partners) to exceed the General Partners Percentage Interest of the total amount
distributed to all partners or (ii) hasten the expiration of the Subordination Period or the
conversion of any Subordinated Units into Common Units.
Section 7.7.
Indemnification
.
(a) To the fullest extent permitted by law but subject to the limitations expressly
provided in this Agreement, all Indemnitees shall be indemnified and held harmless by the
Partnership from and against any and all losses, claims, damages, liabilities, joint or
several, expenses (including legal fees and expenses), judgments, fines, penalties,
interest, settlements or other amounts arising from any and all claims, demands, actions,
suits or proceedings, whether civil, criminal, administrative or investigative, in which any
Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, by
reason of its status as an Indemnitee;
provided
, that the Indemnitee shall not be
indemnified and held harmless if there has been a final and non-appealable judgment entered
by a court of competent jurisdiction determining that, in respect of the matter for which
the Indemnitee is seeking indemnification pursuant to this Section 7.7, the Indemnitee acted
in bad faith or engaged in fraud, willful misconduct or, in the case of a criminal matter,
acted with knowledge that the Indemnitees conduct was unlawful;
provided
,
further
, no
indemnification pursuant to this Section 7.7 shall be available to the General Partner or
its Affiliates (other than a Group Member) with respect to its or their obligations incurred
pursuant to the Purchase Agreement, the Omnibus Agreement or the Contribution Agreement
(other than obligations incurred by the General Partner on behalf of the Partnership). Any
indemnification pursuant to this Section 7.7 shall be made only out of the assets of the
Partnership, it being agreed that the General Partner shall not be personally liable for
such indemnification and shall have no obligation to contribute or lend any monies or
property to the Partnership to enable it to effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including legal fees and
expenses) incurred by an Indemnitee who is indemnified pursuant to Section 7.7(a) in
defending any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Partnership prior to a determination that the Indemnitee is not entitled to
be indemnified upon receipt by the Partnership of an undertaking by or on behalf of the
64
Indemnitee to repay such amount if it shall be determined that the Indemnitee is not
entitled to be indemnified as authorized in this Section 7.7.
(c) The indemnification provided by this Section 7.7 shall be in addition to any other
rights to which an Indemnitee may be entitled under any agreement, pursuant to any vote of
the holders of Outstanding Limited Partner Interests, as a matter of law or otherwise, both
as to actions in the Indemnitees capacity as an Indemnitee and as to actions in any other
capacity (including any capacity under the Purchase Agreement), and shall continue as to an
Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the
heirs, successors, assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the General Partner or its
Affiliates for the cost of) insurance, on behalf of the General Partner, its Affiliates and
such other Persons as the General Partner shall determine, against any liability that may be
asserted against, or expense that may be incurred by, such Person in connection with the
Partnerships activities or such Persons activities on behalf of the Partnership,
regardless of whether the Partnership would have the power to indemnify such Person against
such liability under the provisions of this Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be deemed to have requested
an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by
it of its duties to the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law shall
constitute
fines
within the meaning of Section 7.7(a); and action taken or omitted by it
with respect to any employee benefit plan in the performance of its duties for a purpose
reasonably believed by it to be in the best interest of the participants and beneficiaries
of the plan shall be deemed to be for a purpose that is in the best interests of the
Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to personal liability by
reason of the indemnification provisions set forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in part under this
Section 7.7 because the Indemnitee had an interest in the transaction with respect to which
the indemnification applies if the transaction was otherwise permitted by the terms of this
Agreement.
(h) The provisions of this Section 7.7 are for the benefit of the Indemnitees, their
heirs, successors, assigns and administrators and shall not be deemed to create any rights
for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 7.7 or any provision hereof
shall in any manner terminate, reduce or impair the right of any past, present or future
Indemnitee to be indemnified by the Partnership, nor the obligations of the Partnership to
indemnify any such Indemnitee under and in accordance with the
provisions of this Section 7.7 as in effect immediately prior to such amendment,
65
modification or repeal with respect to claims arising from or relating to matters occurring,
in whole or in part, prior to such amendment, modification or repeal, regardless of when
such claims may arise or be asserted.
Section 7.8.
Liability of Indemnitees
.
(a) Notwithstanding anything to the contrary set forth in this Agreement, no Indemnitee
shall be liable for monetary damages to the Partnership, the Limited Partners or any other
Persons who have acquired interests in the Partnership Securities, for losses sustained or
liabilities incurred as a result of any act or omission of an Indemnitee unless there has
been a final and non-appealable judgment entered by a court of competent jurisdiction
determining that, in respect of the matter in question, the Indemnitee acted in bad faith or
engaged in fraud, willful misconduct or, in the case of a criminal matter, acted with
knowledge that the Indemnitees conduct was criminal.
(b) Subject to its obligations and duties as General Partner set forth in Section
7.1(a), the General Partner may exercise any of the powers granted to it by this Agreement
and perform any of the duties imposed upon it hereunder either directly or by or through its
agents, and the General Partner shall not be responsible for any misconduct or negligence on
the part of any such agent appointed by the General Partner in good faith.
(c) To the extent that, at law or in equity, an Indemnitee has duties (including
fiduciary duties) and liabilities relating thereto to the Partnership or to the Partners,
the General Partner and any other Indemnitee acting in connection with the Partnerships
business or affairs shall not be liable to the Partnership or to any Partner for its good
faith reliance on the provisions of this Agreement.
(d) Any amendment, modification or repeal of this Section 7.8 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the liability
of the Indemnitees under this Section 7.8 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating to matters occurring,
in whole or in part, prior to such amendment, modification or repeal, regardless of when
such claims may arise or be asserted.
Section 7.9.
Resolution of Conflicts of Interest; Standards of Conduct and Modification of
Duties
.
(a) Unless otherwise expressly provided in this Agreement or any Group Member
Agreement, whenever a potential conflict of interest exists or arises between the General
Partner or any of its Affiliates, on the one hand, and the Partnership, any Group Member or
any Partner, on the other, any resolution or course of action by the General Partner or its
Affiliates in respect of such conflict of interest shall be permitted and deemed approved by
all Partners, and shall not constitute a breach of this Agreement, of any Group Member
Agreement, of any agreement contemplated herein or therein, or of any duty stated or implied
by law or equity, if the resolution or course of action in respect
of such conflict of interest is (i) approved by Special Approval, (ii) approved by the
vote
66
of a majority of the Common Units (excluding Common Units owned by the General Partner
and its Affiliates), (iii) on terms no less favorable to the Partnership than those
generally being provided to or available from unrelated third parties or (iv) fair and
reasonable to the Partnership, taking into account the totality of the relationships between
the parties involved (including other transactions that may be particularly favorable or
advantageous to the Partnership). The General Partner shall be authorized but not required
in connection with its resolution of such conflict of interest to seek Special Approval of
such resolution, and the General Partner may also adopt a resolution or course of action
that has not received Special Approval. If Special Approval is sought, then it shall be
presumed that, in making its decision, the Conflicts Committee acted in good faith, and if
Special Approval is not sought and the Board of Directors determines that the resolution or
course of action taken with respect to a conflict of interest satisfies either of the
standards set forth in clauses (iii) or (iv) above, then it shall be presumed that, in
making its decision, the Board of Directors acted in good faith, and, in either case, in any
proceeding brought by any Limited Partner or by or on behalf of such Limited Partner or any
other Limited Partner or the Partnership challenging such approval, the Person bringing or
prosecuting such proceeding shall have the burden of overcoming such presumption.
Notwithstanding anything to the contrary in this Agreement or any duty otherwise existing at
law or equity, the existence of the conflicts of interest described in the Registration
Statement are hereby approved by all Partners and shall not constitute a breach of this
Agreement.
(b) Whenever the General Partner makes a determination or takes or declines to take any
other action, or any of its Affiliates causes it to do so, in its capacity as the general
partner of the Partnership as opposed to in its individual capacity, whether under this
Agreement, any Group Member Agreement or any other agreement contemplated hereby or
otherwise, then, unless another express standard is provided for in this Agreement, the
General Partner, or such Affiliates causing it to do so, shall make such determination or
take or decline to take such other action in good faith and shall not be subject to any
other or different standards imposed by this Agreement, any Group Member Agreement, any
other agreement contemplated hereby or under the Delaware Act or any other law, rule or
regulation or at equity. In order for a determination or other action to be in
good faith
for purposes of this Agreement, the Person or Persons making such determination or taking or
declining to take such other action must believe that the determination or other action is
in the best interests of the Partnership.
(c) Whenever the General Partner makes a determination or takes or declines to take any
other action, or any of its Affiliates causes it to do so, in its individual capacity as
opposed to in its capacity as the general partner of the Partnership, whether under this
Agreement, any Group Member Agreement or any other agreement contemplated hereby or
otherwise, then the General Partner, or such Affiliates causing it to do so, are entitled to
make such determination or to take or decline to take such other action free of any
fiduciary duty or obligation whatsoever to the Partnership, any Limited Partner, and the
General Partner, or such Affiliates causing it to do so, shall not be required to act in
good faith or pursuant to any other standard imposed by this Agreement, any Group Member
Agreement, any other agreement contemplated hereby or under the
Delaware Act or any other law, rule or regulation or at equity. By way of illustration
and
67
not of limitation, whenever the phrase, at the option of the General Partner, or some
variation of that phrase, is used in this Agreement, it indicates that the General Partner
is acting in its individual capacity. For the avoidance of doubt, whenever the General
Partner votes or transfers its Partnership Interests, or refrains from voting or
transferring its Partnership Interests, it shall be acting in its individual capacity. The
General Partners organizational documents may provide that determinations to take or
decline to take any action in its individual, rather than representative, capacity may or
shall be determined by its members, if the General Partner is a limited liability company,
stockholders, if the General Partner is a corporation, or the members or stockholders of the
General Partners general partner, if the General Partner is a partnership.
(d) Notwithstanding anything to the contrary in this Agreement, the General Partner and
its Affiliates shall have no duty or obligation, express or implied, to (i) sell or
otherwise dispose of any asset of the Partnership Group other than in the ordinary course of
business or (ii) permit any Group Member to use any facilities or assets of the General
Partner and its Affiliates, except as may be provided in contracts entered into from time to
time specifically dealing with such use. Any determination by the General Partner or any of
its Affiliates to enter into such contracts shall be at its option.
(e) Except as expressly set forth in this Agreement, neither the General Partner nor
any other Indemnitee shall have any duties or liabilities, including fiduciary duties, to
the Partnership or any Limited Partner and the provisions of this Agreement, to the extent
that they restrict, eliminate or otherwise modify the duties and liabilities, including
fiduciary duties, of the General Partner or any other Indemnitee otherwise existing at law
or in equity, are agreed by the Partners to replace such other duties and liabilities of the
General Partner or such other Indemnitee.
(f) The Unitholders hereby authorize the General Partner, on behalf of the Partnership
as a partner or member of a Group Member, to approve of actions by the general partner or
managing member of such Group Member similar to those actions permitted to be taken by the
General Partner pursuant to this Section 7.9.
Section 7.10.
Other Matters Concerning the General Partner
.
(a) The General Partner may rely and shall be protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants, appraisers,
management consultants, investment bankers and other consultants and advisers selected by
it, and any act taken or omitted to be taken in reliance upon the opinion (including an
Opinion of Counsel) of such Persons as to matters that the General Partner reasonably
believes to be within such Persons professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such opinion.
68
(c) The General Partner shall have the right, in respect of any of its powers or
obligations hereunder, to act through any of its duly authorized officers, a duly appointed
attorney or attorneys-in-fact or the duly authorized officers of the Partnership.
Section 7.11.
Purchase or Sale of Partnership Securities
. The General Partner may cause the Partnership to purchase or otherwise acquire Partnership
Securities;
provided
that, except as permitted by Section 4.10, the General Partner may not cause
any Group Member to purchase Subordinated Units during the Subordination Period. Such Partnership
Securities shall be held by the Partnership as treasury securities unless they are expressly
cancelled by action of an appropriate officer of the General Partner. As long as Partnership
Securities are held by any Group Member, such Partnership Securities shall not be considered
Outstanding for any purpose, except as otherwise provided herein. The General Partner or any
Affiliate of the General Partner may also purchase or otherwise acquire and sell or otherwise
dispose of Partnership Securities for its own account, subject to the provisions of Articles IV and
X.
Section 7.12.
Registration Rights of the General Partner and its Affiliates
.
(a) If (i) the General Partner or any Affiliate of the General Partner (including for
purposes of this Section 7.12, any Person that is an Affiliate of the General Partner at the
date hereof notwithstanding that it may later cease to be an Affiliate of the General
Partner) holds Partnership Securities that it desires to sell and (ii) Rule 144 of the
Securities Act (or any successor rule or regulation to Rule 144) or another exemption from
registration is not available to enable such holder of Partnership Securities (the
Holder
)
to dispose of the number of Partnership Securities it desires to sell at the time it desires
to do so without registration under the Securities Act, then at the option and upon the
request of the Holder, the Partnership shall file with the Commission as promptly as
practicable after receiving such request, and use all commercially reasonable efforts to
cause to become effective and remain effective for a period of not less than six months
following its effective date or such shorter period as shall terminate when all Partnership
Securities covered by such registration statement have been sold, a registration statement
under the Securities Act registering the offering and sale of the number of Partnership
Securities specified by the Holder;
provided, however,
that the Partnership shall not be
required to effect more than three registrations pursuant to Section 7.12(a) and Section
7.12(b); and
provided further
, however, that if the Conflicts Committee determines that the
requested registration would be materially detrimental to the Partnership and its Partners
because such registration would (x) materially interfere with a significant acquisition,
reorganization or other similar transaction involving the Partnership, (y) require premature
disclosure of material information that the Partnership has a bona fide business purpose for
preserving as confidential or (z) render the Partnership unable to comply with requirements
under applicable securities laws, then the Partnership shall have the right to postpone such
requested registration for a period of not more than three months after receipt of the
Holders request, such right pursuant to this Section 7.12(a) or Section 7.12(b) not to be
utilized more than twice in any twelve-month period. Except as provided in the preceding
sentence, the Partnership shall be deemed not to have used all commercially reasonable
efforts to keep the registration statement
effective during the applicable period if it voluntarily takes any action that would
result in Holders of Partnership Securities covered thereby not being able to offer and sell
such
69
Partnership Securities at any time during such period, unless such action is required
by applicable law. In connection with any registration pursuant to the first sentence of
this Section 7.12(a), the Partnership shall (i) promptly prepare and file (A) such documents
as may be necessary to register or qualify the securities subject to such registration under
the securities laws of such states as the Holder shall reasonably request;
provided,
however
, that no such qualification shall be required in any jurisdiction where, as a result
thereof, the Partnership would become subject to general service of process or to taxation
or qualification to do business as a foreign corporation or partnership doing business in
such jurisdiction solely as a result of such registration, and (B) such documents as may be
necessary to apply for listing or to list the Partnership Securities subject to such
registration on such National Securities Exchange as the Holder shall reasonably request,
and (ii) do any and all other acts and things that may be necessary or appropriate to enable
the Holder to consummate a public sale of such Partnership Securities in such states.
Except as set forth in Section 7.12(d), all costs and expenses of any such registration and
offering (other than the underwriting discounts and commissions) shall be paid by the
Partnership, without reimbursement by the Holder.
(b) If any Holder holds Partnership Securities that it desires to sell and Rule 144 of
the Securities Act (or any successor rule or regulation to Rule 144) or another exemption
from registration is not available to enable such Holder to dispose of the number of
Partnership Securities it desires to sell at the time it desires to do so without
registration under the Securities Act, then at the option and upon the request of the
Holder, the Partnership shall file with the Commission as promptly as practicable after
receiving such request, and use all reasonable efforts to cause to become effective and
remain effective for a period of not less than six months following its effective date or
such shorter period as shall terminate when all Partnership Securities covered by such shelf
registration statement have been sold, a
shelf
registration statement covering the
Partnership Securities specified by the Holder on an appropriate form under Rule 415 under
the Securities Act, or any similar rule that may be adopted by the Commission;
provided
,
however
, that the Partnership shall not be required to effect more than three registrations
pursuant to Section 7.12(a) and this Section 7.12(b); and provided further, however, that if
the Conflicts Committee determines in good faith that any offering under, or the use of any
prospectus forming a part of, the shelf registration statement would be materially
detrimental to the Partnership and its Partners because such offering or use would (x)
materially interfere with a significant acquisition, reorganization or other similar
transaction involving the Partnership, (y) require premature disclosure of material
information that the Partnership has a bona fide business purpose for preserving as
confidential or (z) render the Partnership unable to comply with requirements under
applicable securities laws, then the Partnership shall have the right to suspend such
offering or use for a period of not more than three months after receipt of the Holders
request, such right pursuant to Section 7.12(a) or this Section 7.12(b) not to be utilized
more than twice in any twelve-month period.
(c) Except as provided in the first sentence of each of subsection (a) and (b) of this
Section 7.12, the Partnership shall be deemed not to have used all reasonable efforts
to keep the registration statement effective during the applicable period if it
voluntarily takes any action that would result in Holders of Partnership Securities covered
thereby
70
not being able to offer and sell such Partnership Securities at any time during such
period, unless such action is required by applicable law. In connection with any shelf
registration pursuant to subsection (a) or (b) of this Section 7.12(c), the Partnership
shall (i) promptly prepare and file (A) such documents as may be necessary to register or
qualify the securities subject to such shelf registration under the securities laws of such
states as the Holder shall reasonably request;
provided
,
however
, that no such qualification
shall be required in any jurisdiction where, as a result thereof, the Partnership would
become subject to general service of process or to taxation or qualification to do business
as a foreign corporation or partnership doing business in such jurisdiction solely as a
result of such shelf registration, and (B) such documents as may be necessary to apply for
listing or to list the Partnership Securities subject to such shelf registration on such
National Securities Exchange as the Holder shall reasonably request, and (ii) do any and all
other acts and things that may be necessary or appropriate to enable the Holder to
consummate a public sale of such Partnership Securities in such states. Except as set forth
in Section 7.12(e), all costs and expenses of any such shelf registration and offering
(other than the underwriting discounts and commissions) shall be paid by the Partnership,
without reimbursement by the Holder.
(d) If the Partnership shall at any time propose to file a registration statement under
the Securities Act for an offering of equity securities of the Partnership for cash (other
than an offering relating solely to an employee benefit plan), the Partnership shall use all
reasonable efforts to provide notice of its intention to file such registration statement
and shall use all reasonable efforts to include such number or amount of securities held by
the Holder in such registration statement as the Holder shall request;
provided
, that the
Partnership is not required to make any effort or take any action to so include the
securities of the Holder once the registration statement is declared effective by the
Commission or otherwise becomes effective, including any registration statement providing
for the offering from time to time of securities pursuant to Rule 415 of the Securities Act.
If the proposed offering pursuant to this Section 7.12(d) shall be an underwritten
offering, then, if the managing underwriter or managing underwriters of such offering advise
the Partnership and the Holder in writing that in their opinion the inclusion of all or some
of the Holders Partnership Securities would adversely and materially affect the success of
the offering, the Partnership shall include in such offering only that number or amount, if
any, of securities held by the Holder that, in the opinion of the managing underwriter or
managing underwriters, will not so adversely and materially affect the offering. Except as
set forth in Section 7.12(e), all costs and expenses of any such registration and offering
(other than the underwriting discounts and commissions) shall be paid by the Partnership,
without reimbursement by the Holder.
(e) If underwriters are engaged in connection with any registration referred to in this
Section 7.12, the Partnership shall provide indemnification, representations, covenants,
opinions and other assurance to the underwriters in form and substance reasonably
satisfactory to such underwriters. Further, in addition to and not in limitation of the
Partnerships obligation under Section 7.7, the Partnership shall, to the fullest extent
permitted by law, indemnify and hold harmless the Holder, its officers, directors
and each Person who controls the Holder (within the meaning of the Securities Act) and
any agent thereof (collectively,
Indemnified Persons
) from and against any and all
71
losses,
claims, damages, liabilities, joint or several, expenses (including legal fees and
expenses), judgments, fines, penalties, interest, settlements or other amounts arising from
any and all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnified Person may be involved, or is
threatened to be involved, as a party or otherwise under the Securities Act or otherwise
(hereinafter referred to in this Section 7.12(e) as a
claim
and in the plural as
claims
)
based upon, arising out of or resulting from any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under which any
Partnership Securities were registered under the Securities Act or any state securities or
Blue Sky laws, in any preliminary prospectus (if used prior to the effective date of such
registration statement), or in any summary or final prospectus or in any amendment or
supplement thereto (if used during the period the Partnership is required to keep the
registration statement current), or arising out of, based upon or resulting from the
omission or alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements made therein not misleading;
provided
,
however
, that the
Partnership shall not be liable to any Indemnified Person to the extent that any such claim
arises out of, is based upon or results from an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, such preliminary,
summary or final prospectus or such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Partnership by or on behalf of such
Indemnified Person specifically for use in the preparation thereof.
(f) The provisions of Section 7.12(a), Section 7.12(b) and Section 7.12(d) shall
continue to be applicable with respect to the General Partner (and any of the General
Partners Affiliates) after it ceases to be a general partner of the Partnership, during a
period of two years subsequent to the effective date of such cessation and for so long
thereafter as is required for the Holder to sell all of the Partnership Securities with
respect to which it has requested during such two-year period inclusion in a registration
statement otherwise filed or that a registration statement be filed;
provided
,
however
, that
the Partnership shall not be required to file successive registration statements covering
the same Partnership Securities for which registration was demanded during such two-year
period. The provisions of Section 7.12(d) shall continue in effect thereafter.
(g) The rights to cause the Partnership to register Partnership Securities pursuant to
this Section 7.12 may be assigned (but only with all related obligations) by a Holder to a
transferee or assignee of such Partnership Securities, provided (i) the Partnership is,
within a reasonable time after such transfer, furnished with written notice of the name and
address of such transferee or assignee and the Partnership Securities with respect to which
such registration rights are being assigned; and (ii) such transferee or assignee agrees in
writing to be bound by and subject to the terms set forth in this Section 7.12.
(h) Any request to register Partnership Securities pursuant to this Section 7.12 shall
(i) specify the Partnership Securities intended to be offered and sold by the Person making
the request, (ii) express such Persons present intent to offer such Partnership
Securities for distribution, (iii) describe the nature or method of the proposed offer
and sale of Partnership Securities, and (iv) contain the undertaking of such Person to
provide
72
all such information and materials and take all action as may be required in order
to permit the Partnership to comply with all applicable requirements in connection with the
registration of such Partnership Securities.
Section 7.13.
Reliance by Third Parties
. Notwithstanding anything to the contrary in this Agreement, any Person dealing with the
Partnership shall be entitled to assume that the General Partner and any officer of the General
Partner authorized by the General Partner to act on behalf of and in the name of the Partnership
has full power and authority to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf of the Partnership, and such
Person shall be entitled to deal with the General Partner or any such officer as if it were the
Partnerships sole party in interest, both legally and beneficially. Each Limited Partner hereby
waives any and all defenses or other remedies that may be available against such Person to contest,
negate or disaffirm any action of the General Partner or any such officer in connection with any
such dealing. In no event shall any Person dealing with the General Partner or any such officer or
its representatives be obligated to ascertain that the terms of this Agreement have been complied
with or to inquire into the necessity or expedience of any act or action of the General Partner or
any such officer or its representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its representatives shall be
conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that
(a) at the time of the execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on behalf of the
Partnership and (c) such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon the Partnership.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 8.1.
Records and Accounting
. The General Partner shall keep or cause to be kept at the principal office of the Partnership
appropriate books and records with respect to the Partnerships business, including all books and
records necessary to provide to the Limited Partners any information required to be provided
pursuant to Section 3.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including the record of the Record Holders of Units or other
Partnership Securities, books of account and records of Partnership proceedings, may be kept on, or
be in the form of, computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device;
provided
, that the books and records so
maintained are convertible into clearly legible written form within a reasonable period of time.
The books of the Partnership shall be maintained, for financial reporting purposes, on an accrual
basis in accordance with U.S. GAAP.
Section 8.2.
Fiscal Year
. The fiscal year of the Partnership shall be a fiscal year ending December 31.
73
Section 8.3.
Reports
.
(a) As soon as practicable, but in no event later than 120 days after the close of each
fiscal year of the Partnership, the General Partner shall cause to be mailed or made
available, by any reasonable means (including posting on or accessible through the
Partnerships website), to each Record Holder of a Unit as of a date selected by the General
Partner, an annual report containing financial statements of the Partnership for such fiscal
year of the Partnership, presented in accordance with U.S. GAAP, including a balance sheet
and statements of operations, Partnership equity and cash flows, such statements to be
audited by a firm of independent public accountants selected by the General Partner.
(b) As soon as practicable, but in no event later than 90 days after the close of each
Quarter except the last Quarter of each fiscal year, the General Partner shall cause to be
mailed or made available, by any reasonable means (including posting on or accessible
through the Partnerships website), to each Record Holder of a Unit, as of a date selected
by the General Partner, a report containing unaudited financial statements of the
Partnership and such other information as may be required by applicable law, regulation or
rule of any National Securities Exchange on which the Units are listed or admitted to
trading, or as the General Partner determines to be necessary or appropriate.
ARTICLE IX
TAX MATTERS
Section 9.1.
Tax Returns and Information
. The Partnership shall timely file all returns of the Partnership that are required for federal,
state and local income tax purposes on the basis of the accrual method and the taxable year or
years that it is required by law to adopt, from time to time, as determined by the General Partner.
In the event the Partnership is required to use a taxable year other than a year ending on
December 31, the General Partner shall use reasonable efforts to change the taxable year of the
Partnership to a taxable year ending on December 31. The tax information reasonably required by
Record Holders for federal and state income tax reporting purposes with respect to a taxable year
shall be furnished to them within 90 days of the close of the calendar year in which the
Partnerships taxable year ends. The classification, realization and recognition of income, gain,
losses and deductions and other items shall be on the accrual method of accounting for federal
income tax purposes.
Section 9.2.
Tax Elections
.
(a) The Partnership shall make the election under Section 754 of the Code in accordance
with applicable regulations thereunder, subject to the reservation of the right to seek to
revoke any such election upon the General Partners determination that such
revocation is in the best interests of the Limited Partners. Notwithstanding any other
provision herein contained, for the purposes of computing the adjustments under Section
743(b) of the Code, the General Partner shall be authorized (but not required) to adopt a
convention whereby the price paid by a transferee of a Limited Partner Interest will be
deemed to be the lowest quoted closing price of the Limited Partner Interests on any
National Securities Exchange on which such Limited Partner Interests are listed or
74
admitted
to trading during the calendar month in which such transfer is deemed to occur pursuant to
Section 6.2(g) without regard to the actual price paid by such transferee.
(b) Except as otherwise provided herein, the General Partner shall determine whether
the Partnership should make any other elections permitted by the Code.
Section 9.3.
Tax Controversies
. Subject to the provisions hereof, the General Partner is designated as the Tax Matters Partner
(as defined in the Code) and is authorized and required to represent the Partnership (at the
Partnerships expense) in connection with all examinations of the Partnerships affairs by tax
authorities, including resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. Each Partner agrees to cooperate
with the General Partner and to do or refrain from doing any or all things reasonably required by
the General Partner to conduct such proceedings.
Section 9.4.
Withholding
. Notwithstanding any other provision of this Agreement, the General Partner is authorized to take
any action that may be required to cause the Partnership and other Group Members to comply with any
withholding requirements established under the Code or any other federal, state or local law
including pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that the
Partnership is required or elects to withhold and pay over to any taxing authority any amount
resulting from the allocation or distribution of income to any Partner (including by reason of
Section 1446 of the Code), the General Partner may treat the amount withheld as a distribution of
cash pursuant to Section 6.3 in the amount of such withholding from such Partner.
ARTICLE X
ADMISSION OF PARTNERS
Section 10.1.
Admission of Initial Limited Partners
. Upon the issuance by the Partnership of Common Units, Subordinated Units and Incentive
Distribution Rights to the General Partner, UCI and the Underwriters as described in Article V in
connection with the Initial Offering, the General Partner shall admit such parties to the
Partnership as Initial Limited Partners in respect of the Common Units, Subordinated Units or
Incentive Distribution Rights issued to them.
Section 10.2.
Admission of Limited Partners
.
(a) By acceptance of the transfer of any Limited Partner Interests in accordance with
Article IV or the acceptance of any Limited Partner Interests issued
pursuant to Article V or pursuant to a merger or consolidation pursuant to Article XIV,
and except as provided in Section 4.9, each transferee of, or other such Person acquiring, a
Limited Partner Interest (including any nominee holder or an agent or representative
acquiring such Limited Partner Interests for the account of another Person) (i) shall be
admitted to the Partnership as a Limited Partner with respect to the Limited Partner
Interests so transferred or issued to such Person when any such transfer, issuance or
admission is reflected in the books and records of the Partnership and such Limited Partner
becomes the Record Holder of the Limited Partner Interests so transferred, (ii)
75
shall become
bound by the terms of this Agreement, (iii) represents that the transferee has the capacity,
power and authority to enter into this Agreement, (iv) grants the powers of attorney set
forth in this Agreement and (v) makes the consents and waivers contained in this Agreement,
all with or without execution of this Agreement by such Person. The transfer of any Limited
Partner Interests and the admission of any new Limited Partner shall not constitute an
amendment to this Agreement. A Person may become a Limited Partner or Record Holder of a
Limited Partner Interest without the consent or approval of any of the Partners. A Person
may not become a Limited Partner without acquiring a Limited Partner Interest and until such
Person is reflected in the books and records of the Partnership as the Record Holder of such
Limited Partner Interest. The rights and obligations of a Person who is a Non-citizen
Assignee shall be determined in accordance with Section 4.9 hereof.
(b) The name and mailing address of each Limited Partner shall be listed on the books
and records of the Partnership maintained for such purpose by the Partnership or the
Transfer Agent. The General Partner shall update the books and records of the Partnership
from time to time as necessary to reflect accurately the information therein (or shall cause
the Transfer Agent to do so, as applicable). A Limited Partner Interest may be represented
by a Certificate, as provided in Section 4.1 hereof.
(c) Any transfer of a Limited Partner Interest shall not entitle the transferee to
share in the profits and losses, to receive distributions, to receive allocations of income,
gain, loss, deduction or credit or any similar item or to any other rights to which the
transferor was entitled until the transferee becomes a Limited Partner pursuant to Section
10.2(a).
Section 10.3.
Admission of Successor General Partner
. A successor General Partner approved pursuant to Section 11.1 or Section 11.2 or the transferee
of or successor to all of the General Partner Interest (represented by General Partner Units)
pursuant to Section 4.6 who is proposed to be admitted as a successor General Partner shall be
admitted to the Partnership as the General Partner, effective immediately prior to the withdrawal
or removal of the predecessor or transferring General Partner, pursuant to Section 11.1 or Section
11.2 or the transfer of the General Partner Interest (represented by General Partner Units)
pursuant to Section 4.6,
provided, however
, that no such successor shall be admitted to the
Partnership until compliance with the terms of Section 4.6 has occurred and such successor has
executed and delivered such other documents or instruments as may be required to effect such
admission. Any such successor shall, subject to the terms hereof, carry on the business of the
members of the Partnership Group without dissolution.
Section 10.4.
Amendment of Agreement and Certificate of Limited Partnership
. To effect the admission to the Partnership of any Partner, the General Partner shall take all
steps necessary or appropriate under the Delaware Act to amend the records of the Partnership to
reflect such admission and, if necessary, to prepare as soon as practicable an amendment to this
Agreement and, if required by law, the General Partner shall prepare and file an amendment to the
Certificate of Limited Partnership, and the General Partner may for this purpose, among others,
exercise the power of attorney granted pursuant to Section 2.6.
76
ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
Section 11.1.
Withdrawal of the General Partner
.
(a) The General Partner shall be deemed to have withdrawn from the Partnership upon the
occurrence of any one of the following events (each such event herein referred to as an
Event of Withdrawal
);
(i) The General Partner voluntarily withdraws from the Partnership by giving
written notice to the other Partners;
(ii) The General Partner transfers all of its rights as General Partner
pursuant to Section 4.6;
(iii) The General Partner is removed pursuant to Section 11.2;
(iv) The General Partner (A) makes a general assignment for the benefit of
creditors; (B) files a voluntary bankruptcy petition for relief under Chapter 7 of
the United States Bankruptcy Code; (C) files a petition or answer seeking for itself
a liquidation, dissolution or similar relief (but not a reorganization) under any
law; (D) files an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against the General Partner in a proceeding
of the type described in clauses (A)-(C) of this Section 11.1(a)(iv); or (E) seeks,
consents to or acquiesces in the appointment of a trustee (but not a
debtor-in-possession), receiver or liquidator of the General Partner or of all or
any substantial part of its properties;
(v) A final and non-appealable order of relief under Chapter 7 of the United
States Bankruptcy Code is entered by a court with appropriate jurisdiction pursuant
to a voluntary or involuntary petition by or against the General Partner; or
(vi) If the General Partner is a corporation, a certificate of dissolution or
its equivalent is filed for the General Partner, or 90 days expire after the date of
notice to the General Partner of revocation of its charter without a reinstatement
of its charter, under the laws of its state of incorporation; (B) if the General
Partner is a partnership or a limited liability company, the dissolution and
commencement of winding up of the General Partner; (C) if the General Partner is
acting in such capacity by virtue of being a trustee of a trust, the
termination of the trust; (D) if the General Partner is a natural person, his death
or adjudication of incompetency; and (E) otherwise in the event of the termination
of the General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A), (B), (C) or (E)
occurs, the withdrawing General Partner shall give notice to the Limited Partners within 30
days after such occurrence. The Partners hereby agree that only the Events of
77
Withdrawal
described in this Section 11.1 shall result in the withdrawal of the General Partner from
the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the occurrence of an
Event of Withdrawal shall not constitute a breach of this Agreement under the following
circumstances: (i) at any time during the period beginning on the Closing Date and ending at
12:00 midnight, Central Time, on September 30, 2016, the General Partner voluntarily
withdraws by giving at least 90 days advance notice of its intention to withdraw to the
Limited Partners;
provided
, that prior to the effective date of such withdrawal, the
withdrawal is approved by Unitholders holding at least a majority of the Outstanding Common
Units (excluding Common Units held by the General Partner and its Affiliates) and the
General Partner delivers to the Partnership an Opinion of Counsel (
Withdrawal Opinion of
Counsel
) that such withdrawal (following the selection of the successor General Partner)
would not result in the loss of the limited liability of any Limited Partner or any Group
Member or cause any Group Member 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); (ii) at any time after 12:00 midnight, Central Time, on
September 30, 2016, the General Partner voluntarily withdraws by giving at least 90 days
advance notice to the Unitholders, such withdrawal to take effect on the date specified in
such notice; (iii) at any time that the General Partner ceases to be the General Partner
pursuant to Section 11.1(a)(ii) or is removed pursuant to Section 11.2; or (iv)
notwithstanding clause (i) of this sentence, at any time that the General Partner
voluntarily withdraws by giving at least 90 days advance notice of its intention to
withdraw to the Limited Partners, such withdrawal to take effect on the date specified in
the notice, if at the time such notice is given one Person and its Affiliates (other than
the General Partner and its Affiliates) own beneficially or of record or control at least
50% of the Outstanding Units. The withdrawal of the General Partner from the Partnership
upon the occurrence of an Event of Withdrawal shall also constitute the withdrawal of the
General Partner as general partner or managing member, if any, to the extent applicable, of
the other Group Members. If the General Partner gives a notice of withdrawal pursuant to
Section 11.1(a)(i), the holders of a Unit Majority, may, prior to the effective date of such
withdrawal, elect a successor General Partner. The Person so elected as successor General
Partner shall automatically become the successor general partner or managing member, to the
extent applicable, of the other Group Members of which the General Partner is a general
partner or a managing member. If, prior to the effective date of the General Partners
withdrawal, a successor is not selected by the Unitholders as provided herein or the
Partnership does not receive a Withdrawal Opinion of Counsel, the Partnership shall be
dissolved in accordance with Section 12.1. Any successor General
Partner elected in accordance with the terms of this Section 11.1 shall be subject to
the provisions of Section 10.3.
Section 11.2.
Removal of the General Partner
. The General Partner may be removed if such removal is approved by the Unitholders holding at
least 66 2/3% of the Outstanding Units (including Units held by the General Partner and its
Affiliates) voting as a single class. Any such action by such holders for removal of the General
Partner must also provide for the election of a successor General Partner by the Unitholders
holding a majority of the outstanding Common
78
Units voting as a class and a majority of the
outstanding Subordinated Units (if any Subordinated Units are then Outstanding) voting as a class
(including, in each case, Units held by the General Partner and its Affiliates). Such removal
shall be effective immediately following the admission of a successor General Partner pursuant to
Section 10.3. The removal of the General Partner shall also automatically constitute the removal
of the General Partner as general partner or managing member, to the extent applicable, of the
other Group Members of which the General Partner is a general partner or a managing member. If a
Person is elected as a successor General Partner in accordance with the terms of this Section 11.2,
such Person shall, upon admission pursuant to Section 10.3, automatically become a successor
general partner or managing member, to the extent applicable, of the other Group Members of which
the General Partner is a general partner or a managing member. The right of the holders of
Outstanding Units to remove the General Partner shall not exist or be exercised unless the
Partnership has received an opinion opining as to the matters covered by a Withdrawal Opinion of
Counsel. Any successor General Partner elected in accordance with the terms of this Section 11.2
shall be subject to the provisions of Section 10.3.
Section 11.3.
Interest of Departing General Partner and Successor General Partner
.
(a) In the event of (i) withdrawal of the General Partner under circumstances in which
such withdrawal does not violate this Agreement or (ii) removal of the General Partner by
the holders of Outstanding Units under circumstances where Cause does not exist, if the
successor General Partner is elected in accordance with the terms of Section 11.1 or Section
11.2, the Departing General Partner shall have the option, exercisable prior to the
effective date of the departure of such Departing General Partner, to require its successor
to purchase its General Partner Interest (represented by General Partner Units) and its
general partner interest (or equivalent interest), if any, in the other Group Members and
all of its Incentive Distribution Rights (collectively, the
Combined Interest
) in exchange
for an amount in cash equal to the fair market value of such Combined Interest, such amount
to be determined and payable as of the effective date of its departure. If the General
Partner is removed by the Unitholders under circumstances where Cause exists or if the
General Partner withdraws under circumstances where such withdrawal violates this Agreement,
and if a successor General Partner is elected in accordance with the terms of Section 11.1
or Section 11.2 (or if the business of the Partnership is continued pursuant to Section 12.2
and the successor General Partner is not the former General Partner), such successor shall
have the option, exercisable prior to the effective date of the departure of such Departing
General Partner (or, if the business of the Partnership is continued, prior to the date the
business of the Partnership is continued), to purchase the Combined Interest for such fair
market value of such Combined Interest
of the Departing General Partner. In either event, the Departing General Partner shall
be entitled to receive all reimbursements due such Departing General Partner pursuant to
Section 7.4, including any employee-related liabilities (including severance liabilities),
incurred in connection with the termination of any employees employed by the Departing
General Partner or its Affiliates (other than any Group Member) for the benefit of the
Partnership or the other Group Members.
For purposes of this Section 11.3(a), the fair market value of the Departing General
Partners Combined Interest shall be determined by agreement between the Departing
79
General
Partner and its successor or, failing agreement within 30 days after the effective date of
such Departing General Partners departure, by an independent investment banking firm or
other independent expert selected by the Departing General Partner and its successor, which,
in turn, may rely on other experts, and the determination of which shall be conclusive as to
such matter. If such parties cannot agree upon one independent investment banking firm or
other independent expert within 45 days after the effective date of such departure, then the
Departing General Partner shall designate an independent investment banking firm or other
independent expert, the Departing General Partners successor shall designate an independent
investment banking firm or other independent expert, and such firms or experts shall
mutually select a third independent investment banking firm or independent expert, which
third independent investment banking firm or other independent expert shall determine the
fair market value of the Combined Interest of the Departing General Partner. In making its
determination, such third independent investment banking firm or other independent expert
may consider the then current trading price of Units on any National Securities Exchange on
which Units are then listed or admitted to trading, the value of the Partnerships assets,
the rights and obligations of the Departing General Partner and other factors it may deem
relevant.
(b) If the Combined Interest is not purchased in the manner set forth in Section
11.3(a), the Departing General Partner (or its transferee) shall become a Limited Partner
and its Combined Interest shall be converted into Common Units pursuant to a valuation made
by an investment banking firm or other independent expert selected pursuant to Section
11.3(a), without reduction in such Partnership Interest (but subject to proportionate
dilution by reason of the admission of its successor). Any successor General Partner shall
indemnify the Departing General Partner (or its transferee) as to all debts and liabilities
of the Partnership arising on or after the date on which the Departing General Partner (or
its transferee) becomes a Limited Partner. For purposes of this Agreement, conversion of
the Combined Interest of the Departing General Partner to Common Units will be characterized
as if the Departing General Partner (or its transferee) contributed its Combined Interest to
the Partnership in exchange for the newly issued Common Units.
(c) If a successor General Partner is elected in accordance with the terms of Section
11.1 or Section 11.2 (or if the business of the Partnership is continued pursuant to Section
12.2 and the successor General Partner is not the former General Partner) and the option
described in Section 11.3(a) is not exercised by the party entitled to do so, the successor
General Partner shall, at the effective date of its admission to the Partnership, contribute
to the Partnership cash in the amount equal to the product of the Percentage
Interest of the Departing General Partner and the Net Agreed Value of the Partnerships
assets on such date. In such event, such successor General Partner shall, subject to the
following sentence, be entitled to its Percentage Interest of all Partnership allocations
and distributions to which the Departing General Partner was entitled. In addition, the
successor General Partner shall cause this Agreement to be amended to reflect that, from and
after the date of such successor General Partners admission, the successor General
Partners interest in all Partnership distributions and allocations shall be its Percentage
Interest.
80
Section 11.4.
Termination of Subordination Period, Conversion of Subordinated Units and
Extinguishment of Cumulative Common Unit Arrearages
. Notwithstanding any provision of this
Agreement, if the General Partner is removed as general partner of the Partnership under
circumstances where Cause does not exist and Units held by the General Partner and its Affiliates
are not voted in favor of such removal, (i) the Subordination Period will end and all Outstanding
Subordinated Units will immediately and automatically convert into Common Units on a one-for-one
basis, (ii) all Cumulative Common Unit Arrearages on the Common Units will be extinguished and
(iii) the General Partner will have the right to convert its General Partner Interest (represented
by General Partner Units) and its Incentive Distribution Rights into Common Units or to receive
cash in exchange therefore in accordance with Section 11.3.
Section 11.5.
Withdrawal of Limited Partners
. No Limited Partner shall have any right to
withdraw from the Partnership;
provided
,
however
, that when a transferee of a Limited Partners
Limited Partner Interest becomes a Record Holder of the Limited Partner Interest so transferred,
such transferring Limited Partner shall cease to be a Limited Partner with respect to the Limited
Partner Interest so transferred.
ARTICLE XII
DISSOLUTION AND LIQUIDATION
Section 12.1.
Dissolution
. The Partnership shall not be dissolved by the admission of
additional Limited Partners or by the admission of a successor General Partner in accordance with
the terms of this Agreement. Upon the removal or withdrawal of the General Partner, if a successor
General Partner is elected pursuant to Section 11.1 or Section 11.2, the Partnership shall not be
dissolved and such successor General Partner shall continue the business of the Partnership. The
Partnership shall dissolve, and (subject to Section 12.2) its affairs shall be wound up, upon:
(a) an election to dissolve the Partnership by the General Partner that is approved by
the holders of a Unit Majority;
(b) the entry of a decree of judicial dissolution of the Partnership pursuant to the
provisions of the Delaware Act;
(c) an Event of Withdrawal of the General Partner as provided in Section 11.1(a) (other
than Section 11.1(a)(ii)), unless a successor is elected and an Opinion of Counsel is
received as provided in Section 11.1(b) or Section 11.2 and such successor is admitted to
the Partnership pursuant to Section 10.3; or
(d) at any time there are no Limited Partners, unless the Partnership is continued
without dissolution in accordance with the Delaware Act.
Section 12.2.
Continuation of the Business of the Partnership After Dissolution
. Upon (a)
dissolution of the Partnership following an Event of Withdrawal caused by the withdrawal or removal
of the General Partner as provided in Section 11.1(a)(i) or (iii) and the failure of the Partners
to select a successor to such Departing General Partner pursuant to Section
81
11.1 or Section 11.2,
then within 90 days thereafter, or (b) dissolution of the Partnership upon an event constituting an
Event of Withdrawal as defined in Section 11.1(a)(iv), (v) or (vi), then, to the maximum extent
permitted by law, within 180 days thereafter, the holders of a Unit Majority may elect to continue
the business of the Partnership on the same terms and conditions set forth in this Agreement by
appointing as a successor General Partner a Person approved by the holders of a Unit Majority.
Unless such an election is made within the applicable time period as set forth above, the
Partnership shall conduct only activities necessary to wind up its affairs. If such an election is
so made, then:
(i) the Partnership shall continue without dissolution unless earlier dissolved in
accordance with this Article XII;
(ii) if the successor General Partner is not the former General Partner, then the
interest of the former General Partner shall be treated in the manner provided in Section
11.3; and
(iii) the successor General Partner shall be admitted to the Partnership as General
Partner, effective as of the Event of Withdrawal, by agreeing in writing to be bound by this
Agreement;
provided
,
however
, that the right of the holders of a Unit Majority to approve a
successor General Partner and to continue the business of the Partnership shall not exist
and may not be exercised unless the Partnership has received an Opinion of Counsel that (x)
the exercise of the right would not result in the loss of limited liability of any Limited
Partner and (y) neither the Partnership nor any Group Member would be treated as an
association taxable as a corporation or otherwise be taxable as an entity for federal income
tax purposes upon the exercise of such right to continue (to the extent not already so
treated or taxed).
Section 12.3.
Liquidator
. Upon dissolution of the Partnership, unless the business of the
Partnership is continued pursuant to Section 12.2, the General Partner shall select one or more
Persons to act as Liquidator. The Liquidator (if other than the General Partner) shall be entitled
to receive such compensation for its services as may be approved by holders of at least a majority
of the Outstanding Common Units and Subordinated Units voting as a single class. The Liquidator
(if
other than the General Partner) shall agree not to resign at any time without 15 days prior notice
and may be removed at any time, with or without cause, by notice of removal approved by holders of
at least a majority of the Outstanding Common Units and Subordinated Units voting as a single
class. Upon dissolution, removal or resignation of the Liquidator, a successor and substitute
Liquidator (who shall have and succeed to all rights, powers and duties of the original Liquidator)
shall within 30 days thereafter be approved by holders of at least a majority of the Outstanding
Common Units and Subordinated Units voting as a single class. The right to approve a successor or
substitute Liquidator in the manner provided herein shall be deemed to refer also to any such
successor or substitute Liquidator approved in the manner herein provided. Except as expressly
provided in this Article XII, the Liquidator approved in the manner provided herein shall have and
may exercise, without further authorization or consent of any of the parties hereto, all of the
powers conferred upon the General Partner under the terms of this Agreement (but subject to all of
the applicable limitations, contractual and otherwise, upon the exercise of such powers, other than
the limitation on sale set forth in Section 7.3) necessary or appropriate to carry out the duties
and functions of the Liquidator hereunder for and during the
82
period of time required to complete
the winding up and liquidation of the Partnership as provided for herein.
Section 12.4.
Liquidation
. The Liquidator shall proceed to dispose of the assets of the
Partnership, discharge its liabilities, and otherwise wind up its affairs in such manner and over
such period as determined by the Liquidator, subject to Section 17-804 of the Delaware Act and the
following:
(a) The assets may be disposed of by public or private sale or by distribution in kind
to one or more Partners on such terms as the Liquidator and such Partner or Partners may
agree. If any property is distributed in kind, the Partner receiving the property shall be
deemed for purposes of Section 12.4(c) to have received cash equal to its fair market value;
and contemporaneously therewith, appropriate cash distributions must be made to the other
Partners. The Liquidator may defer liquidation or distribution of the Partnerships assets
for a reasonable time if it determines that an immediate sale or distribution of all or some
of the Partnerships assets would be impractical or would cause undue loss to the Partners.
The Liquidator may distribute the Partnerships assets, in whole or in part, in kind if it
determines that a sale would be impractical or would cause undue loss to the Partners.
(b) Liabilities of the Partnership include amounts owed to the Liquidator as
compensation for serving in such capacity (subject to the terms of Section 12.3) and amounts
to Partners otherwise than in respect of their distribution rights under Article VI. With
respect to any liability that is contingent, conditional or unmatured or is otherwise not
yet due and payable, the Liquidator shall either settle such claim for such amount as it
thinks appropriate or establish a reserve of cash or other assets to provide for its
payment. When paid, any unused portion of the reserve shall be distributed as additional
liquidation proceeds.
(c) All property and all cash in excess of that required to discharge liabilities as
provided in Section 12.4(b) shall be distributed to the Partners in accordance with, and to
the extent of, the positive balances in their respective Capital Accounts, as determined
after taking into account all Capital Account adjustments (other than those made by
reason of distributions pursuant to this Section 12.4(c)) for the taxable year of the
Partnership during which the liquidation of the Partnership occurs (with such date of
occurrence being determined pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(g)),
and such distribution shall be made by the end of such taxable year (or, if later, within 90
days after said date of such occurrence).
Section 12.5.
Cancellation of Certificate of Limited Partnership
. Upon the completion of
the distribution of Partnership cash and property as provided in Section 12.4 in connection with
the liquidation of the Partnership, the Certificate of Limited Partnership and all qualifications
of the Partnership as a foreign limited partnership in jurisdictions other than the State of
Delaware shall be canceled and such other actions as may be necessary to terminate the Partnership
shall be taken.
83
Section 12.6.
Return of Contributions
. The General Partner shall not be personally liable
for, and shall have no obligation to contribute or loan any monies or property to the Partnership
to enable it to effectuate, the return of the Capital Contributions of the Limited Partners or
Unitholders, or any portion thereof, it being expressly understood that any such return shall be
made solely from Partnership assets.
Section 12.7.
Waiver of Partition
. To the maximum extent permitted by law, each Partner
hereby waives any right to partition of the Partnership property.
Section 12.8.
Capital Account Restoration
. No Limited Partner shall have any obligation to
restore any negative balance in its Capital Account upon liquidation of the Partnership. The
General Partner shall be obligated to restore any negative balance in its Capital Account upon
liquidation of its interest in the Partnership by the end of the taxable year of the Partnership
during which such liquidation occurs, or, if later, within 90 days after the date of such
liquidation.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS; RECORD DATE
Section 13.1.
Amendments to be Adopted Solely by the General Partner
. Each Partner agrees
that the General Partner, without the approval of any Partner may amend any provision of this
Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be
required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the principal place of
business of the Partnership, the registered agent of the Partnership or the registered
office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners in accordance with this
Agreement;
(c) a change that the General Partner determines to be necessary or appropriate to
qualify or continue the qualification of the Partnership as a limited partnership or a
partnership in which the Limited Partners have limited liability under the laws of any state
or to ensure that the Group Members will not be treated as associations taxable as
corporations or otherwise taxed as entities for federal income tax purposes;
(d) a change that the General Partner determines (i) does not adversely affect the
Limited Partners (including any particular class of Partnership Interests as compared to
other classes of Partnership Interests) in any material respect, (ii) to be necessary or
appropriate (A) to satisfy any requirements, conditions or guidelines contained in any
opinion, directive, order, ruling or regulation of any federal or state agency or judicial
authority or contained in any federal or state statute (including the Delaware Act) or (B)
to facilitate the trading of the Units (including the division of any class or classes of
Outstanding Units into different classes to facilitate uniformity of tax consequences within
such classes of Units) or comply with any rule, regulation, guideline or
84
requirement of any
National Securities Exchange on which the Units are or will be listed or admitted to
trading, (iii) to be necessary or appropriate in connection with action taken by the General
Partner pursuant to Section 5.9 or (iv) is required to effect the intent expressed in the
Registration Statement or the intent of the provisions of this Agreement or is otherwise
contemplated by this Agreement;
(e) a change in the fiscal year or taxable year of the Partnership and any other
changes that the General Partner determines to be necessary or appropriate as a result of a
change in the fiscal year or taxable year of the Partnership including, if the General
Partner shall so determine, a change in the definition of
Quarter
and the dates on which
distributions are to be made by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to prevent the
Partnership, or the General Partner or its directors, officers, trustees or agents from in
any manner being subjected to the provisions of the Investment Company Act of 1940, as
amended, the Investment Advisers Act of 1940, as amended, or plan asset regulations
adopted under the Employee Retirement Income Security Act of 1974, as amended, regardless of
whether such are substantially similar to plan asset regulations currently applied or
proposed by the United States Department of Labor;
(g) an amendment that the General Partner determines to be necessary or appropriate in
connection with the authorization or issuance of any class or series of Partnership
Securities pursuant to Section 5.6;
(h) any amendment expressly permitted in this Agreement to be made by the General
Partner acting alone;
(i) an amendment effected, necessitated or contemplated by a Merger Agreement approved
in accordance with Section 14.3;
(j) an amendment that the General Partner determines to be necessary or appropriate to
reflect and account for the formation by the Partnership of, or investment by the
Partnership in, any corporation, partnership, joint venture, limited liability company or
other entity, in connection with the conduct by the Partnership of activities permitted by
the terms of Section 2.4;
(k) an amendment necessary to require Limited Partners to provide a statement,
certification or other evidence to the Partnership regarding whether such Limited Partner is
subject to United States federal income taxation on the income generated by the Partnership;
(l) a merger, conveyance or conversion pursuant to Section 14.3(d); or
(m) any other amendments substantially similar to the foregoing.
Section 13.2.
Amendment Procedures
. Except as provided in Section 13.1 and Section 13.3,
all amendments to this Agreement shall be made in accordance with the following requirements.
Amendments to this Agreement may be proposed only by the General Partner;
85
provided
,
however
, that
the General Partner shall have no duty or obligation to propose any amendment to this Agreement and
may decline to do so free of any fiduciary duty or obligation whatsoever to the Partnership or any
Limited Partner and, in declining to propose an amendment, to the fullest extent permitted by law
shall not be required to act in good faith or pursuant to any other standard imposed by this
Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the
Delaware Act or any other law, rule or regulation or at equity. A proposed amendment shall be
effective upon its approval by the General Partner and the holders of a Unit Majority, unless a
greater or different percentage is required under this Agreement or by Delaware law. Each proposed
amendment that requires the approval of the holders of a specified percentage of Outstanding Units
shall be set forth in a writing that contains the text of the proposed amendment. If such an
amendment is proposed, the General Partner shall seek the written approval of the requisite
percentage of Outstanding Units or call a meeting of the Unitholders to consider and vote on such
proposed amendment. The General Partner shall notify all Record Holders upon final adoption of any
such proposed amendments.
Section 13.3.
Amendment Requirements
.
(a) Notwithstanding the provisions of Section 13.1 and Section 13.2, no provision of
this Agreement that establishes a percentage of Outstanding Units (including Units deemed
owned by the General Partner) required to take any action shall be amended, altered,
changed, repealed or rescinded in any respect that would have the effect of reducing such
voting percentage unless such amendment is approved by the written consent or the
affirmative vote of holders of Outstanding Units whose aggregate Outstanding Units
constitute not less than the voting requirement sought to be reduced.
(b) Notwithstanding the provisions of Section 13.1 and Section 13.2, no amendment to
this Agreement may (i) enlarge the obligations of any Limited Partner
without its consent, unless such shall be deemed to have occurred as a result of an
amendment approved pursuant to Section 13.3(c), or (ii) enlarge the obligations of, restrict
in any way any action by or rights of, or reduce in any way the amounts distributable,
reimbursable or otherwise payable to, the General Partner or any of its Affiliates without
its consent, which consent may be given or withheld at its option.
(c) Except as provided in Section 14.3, and without limitation of the General Partners
authority to adopt amendments to this Agreement without the approval of any Partners as
contemplated in Section 13.1, any amendment that would have a material adverse effect on the
rights or preferences of any class of Partnership Interests in relation to other classes of
Partnership Interests must be approved by the holders of not less than a majority of the
Outstanding Partnership Interests of the class affected.
(d) Notwithstanding any other provision of this Agreement, except for amendments
pursuant to Section 13.1 and except as otherwise provided by Section 14.3(b), no amendments
shall become effective without the approval of the holders of at least 90% of the
Outstanding Units voting as a single class unless the Partnership obtains an Opinion of
Counsel to the effect that such amendment will not affect the limited liability of any
Limited Partner under applicable partnership law of the state under whose laws the
Partnership is organized.
86
(e) Except as provided in Section 13.1, this Section 13.3 shall only be amended with
the approval of the holders of at least 90% of the Outstanding Units.
Section 13.4.
Special Meetings
. All acts of Limited Partners to be taken pursuant to this
Agreement shall be taken in the manner provided in this Article XIII. Special meetings of the
Limited Partners may be called by the General Partner or by Limited Partners owning 20% or more of
the Outstanding Units of the class or classes for which a meeting is proposed. Limited Partners
shall call a special meeting by delivering to the General Partner one or more requests in writing
stating that the signing Limited Partners wish to call a special meeting and indicating the general
or specific purposes for which the special meeting is to be called. Within 60 days after receipt
of such a call from Limited Partners or within such greater time as may be reasonably necessary for
the Partnership to comply with any statutes, rules, regulations, listing agreements or similar
requirements governing the holding of a meeting or the solicitation of proxies for use at such a
meeting, the General Partner shall send a notice of the meeting to the Limited Partners either
directly or indirectly through the Transfer Agent. A meeting shall be held at a time and place
determined by the General Partner on a date not less than 10 days nor more than 60 days after the
mailing of notice of the meeting. Limited Partners shall not vote on matters that would cause the
Limited Partners to be deemed to be taking part in the management and control of the business and
affairs of the Partnership so as to jeopardize the Limited Partners limited liability under the
Delaware Act or the law of any other state in which the Partnership is qualified to do business.
Section 13.5.
Notice of a Meeting
. Notice of a meeting called pursuant to Section 13.4 shall be given to the Record Holders of the
class or classes of Units for which a meeting is proposed in writing by mail or other means of
written communication in accordance with Section 16.1. The notice shall be deemed to have been
given at the time when deposited in the mail or sent by other means of written communication.
Section 13.6.
Record Date
. For purposes of determining the Limited Partners entitled to
notice of or to vote at a meeting of the Limited Partners or to give approvals without a meeting as
provided in Section 13.11 the General Partner may set a Record Date, which shall not be less than
10 nor more than 60 days before (a) the date of the meeting (unless such requirement conflicts with
any rule, regulation, guideline or requirement of any National Securities Exchange on which the
Units are listed or admitted to trading, in which case the rule, regulation, guideline or
requirement of such National Securities Exchange shall govern) or (b) if approvals are sought
without a meeting, the date by which Limited Partners are requested in writing by the General
Partner to give such approvals. If the General Partner does not set a Record Date, then (a) the
Record Date for determining the Limited Partners entitled to notice of or to vote at a meeting of
the Limited Partners shall be the close of business on the day next preceding the day on which
notice is given, and (b) the Record Date for determining the Limited Partners entitled to give
approvals without a meeting shall be the date the first written approval is deposited with the
Partnership in care of the General Partner in accordance with Section 13.11.
Section 13.7.
Adjournment
. When a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting and a new Record Date need not be fixed, if the time and
place thereof are announced at the meeting at which the adjournment is taken, unless such
adjournment shall be for more than 45 days. At the adjourned meeting, the
87
Partnership may transact
any business which might have been transacted at the original meeting. If the adjournment is for
more than 45 days or if a new Record Date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given in accordance with this Article XIII.
Section 13.8.
Waiver of Notice; Approval of Meeting; Approval of Minutes
. The transactions
of any meeting of Limited Partners, however called and noticed, and whenever held, shall be as
valid as if it had occurred at a meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy. Attendance of a Limited Partner at a meeting shall
constitute a waiver of notice of the meeting, except when the Limited Partner attends the meeting
for the express purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened; and except that attendance at a
meeting is not a waiver of any right to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, if the disapproval is expressly made at
the meeting.
Section 13.9.
Quorum and Voting
. The holders of a majority of the Outstanding Units of the class or classes for which a meeting
has been called (including Outstanding Units deemed owned by the General Partner) represented in
person or by proxy shall constitute a quorum at a meeting of Limited Partners of such class or
classes unless any such action by the Limited Partners requires approval by holders of a greater
percentage of such Units, in which case the quorum shall be such greater percentage. At any
meeting of the Limited Partners duly called and held in accordance with this Agreement at which a
quorum is present, the act of Limited Partners holding Outstanding Units that in the aggregate
represent a majority of the Outstanding Units entitled to vote and be present in person or by proxy
at such meeting shall be deemed to constitute the act of all Limited Partners, unless a greater or
different percentage is required with respect to such action under the provisions of this
Agreement, in which case the act of the Limited Partners holding Outstanding Units that in the
aggregate represent at least such greater or different percentage shall be required. The Limited
Partners present at a duly called or held meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the withdrawal of enough Limited Partners to
leave less than a quorum, if any action taken (other than adjournment) is approved by the required
percentage of Outstanding Units specified in this Agreement (including Outstanding Units deemed
owned by the General Partner). In the absence of a quorum any meeting of Limited Partners may be
adjourned from time to time by the affirmative vote of holders of at least a majority of the
Outstanding Units entitled to vote at such meeting (including Outstanding Units deemed owned by the
General Partner) represented either in person or by proxy, but no other business may be transacted,
except as provided in Section 13.7.
Section 13.10.
Conduct of a Meeting
. The General Partner shall have full power and
authority concerning the manner of conducting any meeting of the Limited Partners or solicitation
of approvals in writing, including the determination of Persons entitled to vote, the existence of
a quorum, the satisfaction of the requirements of Section 13.4, the conduct of voting, the validity
and effect of any proxies and the determination of any controversies, votes or challenges arising
in connection with or during the meeting or voting. The General Partner shall designate a Person
to serve as chairman of any meeting and shall further designate a Person to take the minutes of any
meeting. All minutes shall be kept with the records of the Partnership maintained by the General
Partner. The General Partner may make such other regulations
88
consistent with applicable law and
this Agreement as it may deem advisable concerning the conduct of any meeting of the Limited
Partners or solicitation of approvals in writing, including regulations in regard to the
appointment of proxies, the appointment and duties of inspectors of votes and approvals, the
submission and examination of proxies and other evidence of the right to vote, and the revocation
of approvals in writing.
Section 13.11.
Action Without a Meeting
. If authorized by the General Partner, any action
that may be taken at a meeting of the Limited Partners may be taken without a meeting if an
approval in writing setting forth the action so taken is signed by Limited Partners owning not less
than the minimum percentage of the Outstanding Units (including Units deemed owned by the General
Partner) that would be necessary to authorize or take such action at a meeting at which all the
Limited Partners were present and voted (unless such provision conflicts with any rule, regulation,
guideline or requirement of any National Securities Exchange on which the Units are listed or
admitted to
trading, in which case the rule, regulation, guideline or requirement of such National Securities
Exchange shall govern). Prompt notice of the taking of action without a meeting shall be given to
the Limited Partners who have not approved in writing. The General Partner may specify that any
written ballot submitted to Limited Partners for the purpose of taking any action without a meeting
shall be returned to the Partnership within the time period, which shall be not less than 20 days,
specified by the General Partner. If a ballot returned to the Partnership does not vote all of the
Units held by the Limited Partners, the Partnership shall be deemed to have failed to receive a
ballot for the Units that were not voted. If approval of the taking of any action by the Limited
Partners is solicited by any Person other than by or on behalf of the General Partner, the written
approvals shall have no force and effect unless and until (a) they are deposited with the
Partnership in care of the General Partner, (b) approvals sufficient to take the action proposed
are dated as of a date not more than 90 days prior to the date sufficient approvals are deposited
with the Partnership and (c) an Opinion of Counsel is delivered to the General Partner to the
effect that the exercise of such right and the action proposed to be taken with respect to any
particular matter (i) will not cause the Limited Partners to be deemed to be taking part in the
management and control of the business and affairs of the Partnership so as to jeopardize the
Limited Partners limited liability, and (ii) is otherwise permissible under the state statutes
then governing the rights, duties and liabilities of the Partnership and the Partners.
Section 13.12.
Right to Vote and Related Matters
.
(a) Only those Record Holders of the Units on the Record Date set pursuant to Section
13.6 (and also subject to the limitations contained in the definition of
Outstanding
)
shall be entitled to notice of, and to vote at, a meeting of Limited Partners or to act with
respect to matters as to which the holders of the Outstanding Units have the right to vote
or to act. All references in this Agreement to votes of, or other acts that may be taken
by, the Outstanding Units shall be deemed to be references to the votes or acts of the
Record Holders of such Outstanding Units.
(b) With respect to Units that are held for a Persons account by another Person (such
as a broker, dealer, bank, trust company or clearing corporation, or an agent of any of the
foregoing), in whose name such Units are registered, such other Person shall, in exercising
the voting rights in respect of such Units on any matter, and unless the
89
arrangement between
such Persons provides otherwise, vote such Units in favor of, and at the direction of, the
Person who is the beneficial owner, and the Partnership shall be entitled to assume it is so
acting without further inquiry. The provisions of this Section 13.12(b) (as well as all
other provisions of this Agreement) are subject to the provisions of Section 4.3.
ARTICLE XIV
MERGER, CONSOLIDATION OR CONVERSION
Section 14.1.
Authority
.
(a) The Partnership may merge or consolidate with or into one or more corporations,
limited liability companies, statutory trusts or associations, real estate investment
trusts, common law trusts or unincorporated businesses, including a
partnership (whether general or limited (including a limited liability partnership)) or
convert into any such entity, whether such entity is formed under the laws of the State of
Delaware or any other state of the United States of America, pursuant to a written plan of
merger or consolidation (
Merger Agreement
) or a written plan of conversion (
Plan of
Conversion
), as the case may be, in accordance with this Article XIV.
Section 14.2.
Procedure for Merger, Consolidation or Conversion
.
(a) Merger, consolidation or conversion of the Partnership pursuant to this Article XIV
requires the prior consent of the General Partner, provided, however, that, to the fullest
extent permitted by law, the General Partner shall have no duty or obligation to consent to
any merger, consolidation or conversion of the Partnership and may decline to do so free of
any fiduciary duty or obligation whatsoever to the Partnership, any Limited Partner and, in
declining to consent to a merger, consolidation or conversion, shall not be required to act
in good faith or pursuant to any other standard imposed by this Agreement, any other
agreement contemplated hereby or under the Act or any other law, rule or regulation or at
equity.
(b) If the General Partner shall determine to consent to the merger or consolidation,
the General partner shall approve the Merger Agreement, which shall set forth:
(i) name and state of domicile of each of the business entities proposing to
merge or consolidate;
(ii) the name and state of domicile of the business entity that is to survive
the proposed merger or consolidation (the
Surviving Business Entity
);
(iii) the terms and conditions of the proposed merger or consolidation;
(iv) the manner and basis of exchanging or converting the equity securities of
each constituent business entity for, or into, cash, property or interests, rights,
securities or obligations of the Surviving Business Entity; and (i)
90
if any general
or limited partner interests, securities or rights of any constituent business
entity are not to be exchanged or converted solely for, or into, cash, property or
general or limited partner interests, rights, securities or obligations of the
Surviving Business Entity, the cash, property or interests, rights, securities or
obligations of any general or limited partnership, corporation, trust, limited
liability company, unincorporated business or other entity (other than the Surviving
Business Entity) which the holders of such general or limited partner interests,
securities or rights are to receive in exchange for, or upon conversion of their
interests, securities or rights, and (ii) in the case of securities represented by
certificates, upon the surrender of such certificates, which cash, property or
general or limited partner interests, rights, securities or obligations of the
Surviving Business Entity or any general or limited partnership, corporation, trust,
limited liability company, unincorporated business or other entity (other than
the Surviving Business Entity), or evidences thereof, are to be delivered;
(v) a statement of any changes in the constituent documents or the adoption of
new constituent documents (the articles or certificate of incorporation, articles of
trust, declaration of trust, certificate or agreement of limited partnership,
operating agreement or other similar charter or governing document) of the Surviving
Business Entity to be effected by such merger or consolidation;
(vi) the effective time of the merger, which may be the date of the filing of
the certificate of merger pursuant to Section 14.4 or a later date specified in or
determinable in accordance with the Merger Agreement (provided, that if the
effective time of the merger is to be later than the date of the filing of such
certificate of merger, the effective time shall be fixed at a date or time certain
at or prior to the time of the filing of such certificate of merger and stated
therein); and
(vii) such other provisions with respect to the proposed merger or
consolidation that the General Partner determines to be necessary or appropriate.
(c) If the General Partner shall determine to consent to the conversion, the General
Partner shall approve the Plan of Conversion, which shall set forth:
(i) the name of the converting entity and the converted entity;
(ii) a statement that the Partnership is continuing its existence in the
organizational form of the converted entity;
(iii) a statement as to the type of entity that the converted entity is to be
and the state or country under the laws of which the converted entity is to be
incorporated, formed or organized;
(iv) the manner and basis of exchanging or converting the equity securities of
each constituent business entity for, or into, cash, property or interests, rights,
securities or obligations of the converted entity;
91
(v) in an attachment or exhibit, the certificate of limited partnership of the
Partnership; and
(vi) in an attachment or exhibit, the certificate of limited partnership,
articles of incorporation, or other organizational documents of the converted
entity;
(vii) the effective time of the conversion, which may be the date of the filing
of the articles of conversion or a later date specified in or determinable in
accordance with the Plan of Conversion (provided, that if the effective time of the
conversion is to be later than the date of the filing of such articles of
conversion, the effective time shall be fixed at a date or time certain at or
prior to the time of the filing of such articles of conversion and stated therein);
and
(viii) such other provisions with respect to the proposed conversion that the
General Partner determines to be necessary or appropriate.
Section 14.3.
Approval by Limited Partners
.
(a) Except as provided in Sections 14.3(d), the General Partner, upon its approval of
the Merger Agreement or the Plan of Conversion, as the case may be, shall direct that the
Merger Agreement or the Plan of Conversion, as applicable, be submitted to a vote of Limited
Partners, whether at a special meeting or by written consent, in either case in accordance
with the requirements of Article XIII. A copy or a summary of the Merger Agreement or the
Plan of Conversion, as the case may be, shall be included in or enclosed with the notice of
a special meeting or the written consent.
(b) Except as provided in Section 14.3(d), the Merger Agreement or Plan of Conversion,
as the case may be, shall be approved upon receiving the affirmative vote or consent of the
holders of a Unit Majority.
(c) Except as provided in Section 14.3(d), after such approval by vote or consent of
the Limited Partners, and at any time prior to the filing of the certificate of merger or
articles of conversion pursuant to Section 14.4, the merger, consolidation or conversion may
be abandoned pursuant to provisions therefor, if any, set forth in the Merger Agreement or
Plan of Conversion, as the case may be.
(d) Notwithstanding anything else contained in this Article XIV or in this Agreement,
the General Partner is permitted, without Limited Partner approval, to convert the
Partnership or any Group Member into a new limited liability entity, to merge the
Partnership or any Group Member into, or convey all of the Partnerships assets to, another
limited liability entity that shall be newly formed and shall have no assets, liabilities or
operations at the time of such conversion, merger or conveyance other than those it receives
from the Partnership or other Group Member if (i) the General Partner has received an
Opinion of Counsel that the conversion, merger or conveyance, as the case may be, would not
result in the loss of the limited liability of any Limited Partner or cause the Partnership
to be treated as an association taxable as a corporation or otherwise
92
to be taxed as an
entity for federal income tax purposes (to the extent not previously treated as such), (ii)
the sole purpose of such conversion, merger, or conveyance is to effect a mere change in the
legal form of the Partnership into another limited liability entity and (iii) the governing
instruments of the new entity provide the Limited Partners and the General Partner with the
same rights and obligations as are herein contained.
(e) Additionally, notwithstanding anything else contained in this Article XIV or in
this Agreement, the General Partner is permitted, without Limited Partner approval, to merge
or consolidate the Partnership with or into another entity if (A) the General Partner has
received an Opinion of Counsel that the merger or consolidation, as the case may be, would
not result in the loss of the limited liability of any Limited Partner or
cause the Partnership to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes (to the extent not
previously treated as such), (B) the merger or consolidation would not result in an
amendment to the Partnership Agreement, other than any amendments that could be adopted
pursuant to Section 13.1, (C) the Partnership is the Surviving Business Entity in such
merger or consolidation, (D) each Unit outstanding immediately prior to the effective date
of the merger or consolidation is to be an identical Unit of the Partnership after the
effective date of the merger or consolidation, and (E) the number of Partnership Securities
to be issued by the Partnership in such merger or consolidation do not exceed 20% of the
Partnership Securities Outstanding immediately prior to the effective date of such merger or
consolidation.
(f) Pursuant to Section 17-211(g) of the Delaware Act, an agreement of merger or
consolidation approved in accordance with this Article XIV may (a) effect any amendment to
this Agreement or (b) effect the adoption of a new partnership agreement for the Partnership
if it is the Surviving Business Entity. Any such amendment or adoption made pursuant to
this Section 14.5 shall be effective at the effective time or date of the merger or
consolidation
.
Section 14.4.
Certificate of Merger
.
Upon the required approval by the General Partner and the Unitholders of a Merger
Agreement or the Plan of Conversion, as the case may be, a certificate of merger or articles
of conversion, as applicable, shall be executed and filed with the Secretary of State of the
State of Delaware in conformity with the requirements of the Delaware Act.
Section 14.5.
Effect of Merger, Consolidation or Conversion
.
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the business entities
that has merged or consolidated, and all property, real, personal and mixed, and all
debts due to any of those business entities and all other things and causes of
action belonging to each of those business entities, shall be vested in the
Surviving Business Entity and after the merger or consolidation shall be the
93
property of the Surviving Business Entity to the extent they were of each
constituent business entity;
(ii) the title to any real property vested by deed or otherwise in any of those
constituent business entities shall not revert and is not in any way impaired
because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security interests in
property of any of those constituent business entities shall be preserved
unimpaired; and
(iv) all debts, liabilities and duties of those constituent business entities
shall attach to the Surviving Business Entity and may be enforced against it to the
same extent as if the debts, liabilities and duties had been incurred or contracted
by it.
(b) At the effective time of the articles of conversion:
(i) the Partnership shall continue to exist, without interruption, but in the
organizational form of the converted entity rather than in its prior organizational
form;
(ii) all rights, title, and interests to all real estate and other property
owned by the Partnership shall continue to be owned by the converted entity in its
new organizational form without reversion or impairment, without further act or
deed, and without any transfer or assignment having occurred, but subject to any
existing liens or other encumbrances thereon;
(iii) all liabilities and obligations of the Partnership shall continue to be
liabilities and obligations of the converted entity in its new organizational form
without impairment or diminution by reason of the conversion;
(iv) all rights of creditors or other parties with respect to or against the
prior interest holders or other owners of the Partnership in their capacities as
such in existence as of the effective time of the conversion will continue in
existence as to those liabilities and obligations and may be pursued by such
creditors and obligees as if the conversion did not occur;
(v) a proceeding pending by or against the Partnership or by or against any of
Partners in their capacities as such may be continued by or against the converted
entity in its new organizational form and by or against the prior partners without
any need for substitution of parties; and
(vi) the Partnership Units that are to be converted into partnership interests,
shares, evidences of ownership, or other securities in the converted entity as
provided in the plan of conversion shall be so converted, and Partners shall be
entitled only to the rights provided in the Plan of Conversion.
94
ARTICLE XV
RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
Section 15.1.
Right to Acquire Limited Partner Interests
.
(a) Notwithstanding any other provision of this Agreement, if at any time the General
Partner and its Affiliates hold more than 80% of the total Limited Partner Interests of any
class then Outstanding, the General Partner shall then have the right, which right it may
assign and transfer in whole or in part to the Partnership or any Affiliate of the General
Partner, exercisable at its option, to purchase all, but not less than all, of such Limited
Partner Interests of such class then Outstanding held by Persons other
than the General Partner and its Affiliates, at the greater of (x) the Current Market
Price as of the date three days prior to the date that the notice described in Section
15.1(b) is mailed and (y) the highest price paid by the General Partner or any of its
Affiliates for any such Limited Partner Interest of such class purchased during the 90-day
period preceding the date that the notice described in Section 15.1(b) is mailed. As used
in this Agreement, (i)
Current Market Price
as of any date of any class of Limited Partner
Interests means the average of the daily Closing Prices (as hereinafter defined) per Limited
Partner Interest of such class for the 20 consecutive Trading Days (as hereinafter defined)
immediately prior to such date; (ii)
Closing Price
for any day means the last sale price
on such day, regular way, or in case no such sale takes place on such day, the average of
the closing bid and asked prices on such day, regular way, as reported in the principal
consolidated transaction reporting system with respect to securities listed on the principal
National Securities Exchange (other than The Nasdaq Stock Market) on which such Limited
Partner Interests are listed or admitted to trading or, if such Limited Partner Interests of
such class are not listed or admitted to trading on any National Securities Exchange (other
than The Nasdaq Stock Market), the last quoted price on such day or, if not so quoted, the
average of the high bid and low asked prices on such day in the over-the-counter market, as
reported by The Nasdaq Stock Market or such other system then in use, or, if on any such day
such Limited Partner Interests of such class are not quoted by any such organization, the
average of the closing bid and asked prices on such day as furnished by a professional
market maker making a market in such Limited Partner Interests of such class selected by the
General Partner, or if on any such day no market maker is making a market in such Limited
Partner Interests of such class, the fair value of such Limited Partner Interests on such
day as determined by the General Partner; and (iii)
Trading Day
means a day on which the
principal National Securities Exchange on which such Limited Partner Interests of any class
are listed or admitted for trading is open for the transaction of business or, if Limited
Partner Interests of a class are not listed or admitted for trading on any National
Securities Exchange, a day on which banking institutions in New York City generally are
open.
(b) If the General Partner, any Affiliate of the General Partner or the Partnership
elects to exercise the right to purchase Limited Partner Interests granted pursuant to
Section 15.1(a), the General Partner shall deliver to the Transfer Agent notice of such
election to purchase (the
Notice of Election to Purchase
) and shall cause the Transfer
Agent to mail a copy of such Notice of Election to Purchase to the Record Holders of Limited
Partner Interests of such class (as of a Record Date selected by the
95
General Partner) at
least 10, but not more than 60, days prior to the Purchase Date. Such Notice of Election to
Purchase shall also be published for a period of at least three consecutive days in at least
two daily newspapers of general circulation printed in the English language and published in
the Borough of Manhattan, New York. The Notice of Election to Purchase shall specify the
Purchase Date and the price (determined in accordance with Section 15.1(a)) at which Limited
Partner Interests will be purchased and state that the General Partner, its Affiliate or the
Partnership, as the case may be, elects to purchase such Limited Partner Interests, upon
surrender of Certificates representing such Limited Partner Interests in exchange for
payment, at such office or offices of the Transfer Agent as the Transfer Agent may specify,
or as may be required
by any National Securities Exchange on which such Limited Partner Interests are listed.
Any such Notice of Election to Purchase mailed to a Record Holder of Limited Partner
Interests at his address as reflected in the records of the Transfer Agent shall be
conclusively presumed to have been given regardless of whether the owner receives such
notice. On or prior to the Purchase Date, the General Partner, its Affiliate or the
Partnership, as the case may be, shall deposit with the Transfer Agent cash in an amount
sufficient to pay the aggregate purchase price of all of such Limited Partner Interests to
be purchased in accordance with this Section 15.1. If the Notice of Election to Purchase
shall have been duly given as aforesaid at least 10 days prior to the Purchase Date, and if
on or prior to the Purchase Date the deposit described in the preceding sentence has been
made for the benefit of the holders of Limited Partner Interests subject to purchase as
provided herein, then from and after the Purchase Date, notwithstanding that any Certificate
shall not have been surrendered for purchase, all rights of the holders of such Limited
Partner Interests (including any rights pursuant to Article IV, Article V, Article VI and
Article XII) shall thereupon cease, except the right to receive the purchase price
(determined in accordance with Section 15.1(a)) for Limited Partner Interests therefor,
without interest, upon surrender to the Transfer Agent of the Certificates representing such
Limited Partner Interests, and such Limited Partner Interests shall thereupon be deemed to
be transferred to the General Partner, its Affiliate or the Partnership, as the case may be,
on the record books of the Transfer Agent and the Partnership, and the General Partner or
any Affiliate of the General Partner, or the Partnership, as the case may be, shall be
deemed to be the owner of all such Limited Partner Interests from and after the Purchase
Date and shall have all rights as the owner of such Limited Partner Interests (including all
rights as owner of such Limited Partner Interests pursuant to Article IV, Article V, Article
VI and Article XII).
(c) At any time from and after the Purchase Date, a holder of an Outstanding Limited
Partner Interest subject to purchase as provided in this Section 15.1 may surrender his
Certificate evidencing such Limited Partner Interest to the Transfer Agent in exchange for
payment of the amount described in Section 15.1(a), therefor, without interest thereon.
ARTICLE XVI
GENERAL PROVISIONS
Section 16.1.
Addresses and Notices
. Any notice, demand, request, report or proxy
materials required or permitted to be given or made to a Partner under this Agreement shall be in
96
writing and shall be deemed given or made when delivered in person or when sent by first class
United States mail or by other means of written communication to the Partner at the address
described below. Any notice, payment or report to be given or made to a Partner hereunder shall be
deemed conclusively to have been given or made, and the obligation to give such notice or report or
to make such payment shall be deemed conclusively to have been fully satisfied, upon sending of
such notice, payment or report to the Record Holder of such Partnership Securities at his address
as shown on the records of the Transfer Agent or as otherwise shown on the records of the
Partnership, regardless of any claim of any Person who may have an interest in such Partnership
Securities by reason of any
assignment or otherwise. An affidavit or certificate of making of any notice, payment or report in
accordance with the provisions of this Section 16.1 executed by the General Partner, the Transfer
Agent or the mailing organization shall be prima facie evidence of the giving or making of such
notice, payment or report. If any notice, payment or report addressed to a Record Holder at the
address of such Record Holder appearing on the books and records of the Transfer Agent or the
Partnership is returned by the United States Postal Service marked to indicate that the United
States Postal Service is unable to deliver it, such notice, payment or report and any subsequent
notices, payments and reports shall be deemed to have been duly given or made without further
mailing (until such time as such Record Holder or another Person notifies the Transfer Agent or the
Partnership of a change in his address) if they are available for the Partner at the principal
office of the Partnership for a period of one year from the date of the giving or making of such
notice, payment or report to the other Partners. Any notice to the Partnership shall be deemed
given if received by the General Partner at the principal office of the Partnership designated
pursuant to Section 2.3. The General Partner may rely and shall be protected in relying on any
notice or other document from a Partner or other Person if believed by it to be genuine.
Section 16.2.
Further Action
. The parties shall execute and deliver all documents, provide
all information and take or refrain from taking action as may be necessary or appropriate to
achieve the purposes of this Agreement.
Section 16.3.
Binding Effect
. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 16.4.
Integration
. This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.
Section 16.5.
Creditors
. None of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
Section 16.6.
Waiver
. No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy
consequent upon a breach thereof shall constitute waiver of any such breach of any other covenant,
duty, agreement or condition.
Section 16.7.
Third-Party Beneficiaries
. Each Partner agrees that any Indemnitee shall be entitled to assert rights and remedies
hereunder as a third-party beneficiary hereto with
97
respect to those provisions of this Agreement
affording a right, benefit or privilege to such Indemnitee.
Section 16.8.
Counterparts
. This Agreement may be executed in counterparts, all of which
together shall constitute an agreement binding on all the parties hereto, notwithstanding that all
such parties are not signatories to the original or the same counterpart. Each party shall become
bound by this Agreement immediately upon affixing its signature hereto or, in the case of a Person
acquiring a Limited Partner Interest, pursuant to Section 10.2(a) without execution of this
Agreement.
Section 16.9.
Applicable Law
. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAW.
Section 16.10.
Invalidity of Provisions
. If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 16.11.
Consent of Partners
. Each Partner hereby expressly consents and agrees
that, whenever in this Agreement it is specified that an action may be taken upon the affirmative
vote or consent of less than all of the Partners, such action may be so taken upon the concurrence
of less than all of the Partners and each Partner shall be bound by the results of such action.
Section 16.12.
Facsimile Signatures
. The use of facsimile signatures affixed in the name
and on behalf of the transfer agent and registrar of the Partnership on certificates representing
Common Units is expressly permitted by this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
98
IN WITNESS WHEREOF
, the parties hereto have executed this Agreement as of the date first
written above.
|
|
|
|
|
|
|
|
|
|
|
|
|
GENERAL PARTNER:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UCO GENERAL PARTNER, LP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
UCO GP, LLC,
|
|
|
|
|
|
|
its General Partner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ J. Michael Anderson
|
|
|
|
|
|
|
|
|
Name:
|
|
J. Michael Anderson
|
|
|
|
|
|
|
|
|
Title:
|
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORGANIZATIONAL LIMITED PARTNER:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNIVERSAL COMPRESSION, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ J. Michael Anderson
|
|
|
|
|
|
|
|
|
Name:
|
|
J. Michael Anderson
|
|
|
|
|
|
|
|
|
Title:
|
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Limited Partners now and hereafter admitted as
Limited Partners of the Partnership, pursuant to
powers of attorney now and hereafter executed in
favor of, and granted and delivered to the General
Partner or without execution hereof pursuant to
Section 10.2(a) hereof.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UCO GENERAL PARTNER, LP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
UCO GP, LLC,
|
|
|
|
|
|
|
its General Partner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ J. Michael Anderson
|
|
|
|
|
|
|
|
|
Name:
|
|
J. Michael Anderson
|
|
|
|
|
|
|
|
|
Title:
|
|
Senior Vice President
|
|
|
Signature Page to First Amended and Restated Agreement of Limited Partnership
EXHIBIT A
to the First Amended and Restated
Agreement of Limited Partnership of
Universal Compression Partners, L.P.
Certificate Evidencing Common Units
Representing Limited Partner Interests in
Universal Compression Partners, L.P.
In accordance with Section 4.1 of the Amended and Restated Agreement of Limited Partnership of
Universal Compression Partners, L.P., as amended, supplemented or restated from time to time (the
Partnership Agreement
), Universal Compression Partners, L.P., a Delaware limited partnership (the
Partnership
), hereby certifies that
(the
Holder
) is the registered owner of
Common Units representing limited partner interests in the Partnership (the
Common Units
) transferable on the books of the Partnership, in person or by duly authorized
attorney, upon surrender of this Certificate properly endorsed. The rights, preferences and
limitations of the Common Units are set forth in, and this Certificate and the Common Units
represented hereby are issued and shall in all respects be subject to the terms and provisions of,
the Partnership Agreement. Copies of the Partnership Agreement are on file at, and will be
furnished without charge on delivery of written request to the Partnership at, the principal office
of the Partnership located at 4444 Brittmoore Road, Houston, Texas 77041. Capitalized terms used
herein but not defined shall have the meanings given them in the Partnership Agreement.
The Holder, by accepting this Certificate, is deemed to have (i) requested admission as, and
agreed to become, a Limited Partner and to have agreed to comply with and be bound by and to have
executed the Partnership Agreement, (ii) represented and warranted that the Holder has all right,
power and authority and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (iii) granted the powers of attorney provided for in the Partnership Agreement and (iv)
made the waivers and given the consents and approvals contained in the Partnership Agreement.
THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF THE PARTNERSHIP THAT THIS
SECURITY MAY NOT BE SOLD, OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IF SUCH TRANSFER WOULD
(A) VIOLATE THE THEN APPLICABLE FEDERAL OR STATE SECURITIES LAWS OR RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER GOVERNMENTAL
AUTHORITY WITH JURISDICTION OVER SUCH TRANSFER, (B) TERMINATE THE EXISTENCE OR QUALIFICATION OF THE
PARTNERSHIP UNDER THE LAWS OF THE STATE OF DELAWARE, OR (C) CAUSE THE PARTNERSHIP 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
A-1
ALREADY SO TREATED OR TAXED). UCO GP, LLC, THE GENERAL PARTNER OF UCO GENERAL PARTNER, LP,
THE GENERAL PARTNER OF THE PARTNERSHIP, MAY IMPOSE ADDITIONAL RESTRICTIONS ON THE TRANSFER OF THIS
SECURITY IF IT RECEIVES AN OPINION OF COUNSEL THAT SUCH RESTRICTIONS ARE NECESSARY TO AVOID A
SIGNIFICANT RISK OF THE PARTNERSHIP BECOMING TAXABLE AS A CORPORATION OR OTHERWISE BECOMING TAXABLE
AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES. THE RESTRICTIONS SET FORTH ABOVE SHALL NOT PRECLUDE
THE SETTLEMENT OF ANY TRANSACTIONS INVOLVING THIS SECURITY ENTERED INTO THROUGH THE FACILITIES OF
ANY NATIONAL SECURITIES EXCHANGE ON WHICH THIS SECURITY IS LISTED OR ADMITTED TO TRADING.
This Certificate shall not be valid for any purpose unless it has been countersigned and
registered by the Transfer Agent and Registrar.
|
|
|
|
|
|
|
|
|
Dated:
|
|
|
|
Universal Compression Partners, L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Countersigned and Registered by:
|
|
By:
|
|
UCO General Partner, LP,
|
|
|
|
|
|
|
its General Partner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
UCO GP, LLC,
|
|
|
|
|
|
|
|
as Transfer Agent and Registrar
|
|
|
|
its General Partner
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Authorized Signature
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secretary
|
|
|
[Reverse of Certificate]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Certificate,
shall be construed as follows according to applicable laws or regulations:
|
|
|
|
|
TEN COM -
|
|
as tenants in common
|
|
UNIF GIFT/TRANSFERS MIN ACT
|
TEN ENT -
|
|
as tenants by the entireties
|
|
Custodian
|
|
|
|
|
(Cust)
(Minor)
|
JT TEN -
|
|
as joint tenants with right of
survivorship and not as
tenants in common
|
|
under Uniform Gifts/Transfers to
Minors Act (State)
|
Additional abbreviations, though not in the above list, may also be used.
A-2
ASSIGNMENT OF COMMON UNITS
in
UNIVERSAL COMPRESSION PARTNERS, L.P.
FOR VALUE RECEIVED,
hereby assigns, conveys, sells and transfers unto
|
|
|
|
|
|
(Please print or typewrite name
and address of assignee)
|
|
(Please insert Social Security or other
identifying number of assignee)
|
Common Units representing limited partner interests evidenced by this Certificate,
subject to the Partnership Agreement, and does hereby irrevocably constitute and appoint
as its attorney-in-fact with full power of substitution to transfer the same on the books of
Universal Compression Partners, L.P.
|
|
|
|
|
Date:
|
|
NOTE:
|
|
The signature to any endorsement hereon must correspond with the name as written upon
the face of this Certificate in every particular, without alteration, enlargement or change.
|
A-3
|
|
|
THE SIGNATURE(S) MUST BE
|
|
|
GUARANTEED BY AN ELIGIBLE
|
|
|
|
|
|
GUARANTOR INSTITUTION (BANKS,
|
|
(Signature)
|
STOCKBROKERS, SAVINGS AND
|
|
|
LOAN ASSOCIATIONS AND CREDIT
|
|
|
UNIONS WITH MEMBERSHIP IN AN
|
|
|
|
|
|
APPROVED SIGNATURE
|
|
(Signature)
|
GUARANTEE MEDALLION
|
|
|
PROGRAM), PURSUANT TO S.E.C.
|
|
|
RULE 17Ad-15
|
|
|
|
|
|
|
|
|
|
|
|
No transfer of the Common Units evidenced hereby will be registered on the books of the
Partnership, unless the Certificate evidencing the Common Units to be transferred is surrendered
for registration or transfer.
ASSIGNEE CERTIFICATION
|
|
|
|
|
|
|
Type of Entity (check one):
|
|
|
|
|
o
Individual
|
|
o
Partnership
|
|
o
Corporation
|
|
|
o
Trust
|
|
o
Other (specify)
|
|
|
|
|
|
|
|
|
|
Nationality (check one):
|
|
|
|
|
¨
U.S. Citizen, Resident or Domestic Entity
|
|
|
¨
Foreign Corporation
|
|
¨
Non-resident Alien
|
|
|
If the U.S. Citizen, Resident or Domestic Entity is checked, the following certification must
be completed:
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the
Code
), the
Partnership must withhold tax with respect to certain transfers of property if a holder of an
interest in the Partnership is a foreign person. To inform the Partnership that no withholding is
required with respect to the undersigned Interestholders Interest in it, the undersigned hereby
certifies the following (or, if applicable, certifies the following on behalf of the
Interestholder).
Complete either A or B:
|
A.
|
|
Individual Interestholder
|
|
1.
|
|
I am not a non-resident alien for purposes of U.S. income taxation;
|
|
|
2.
|
|
My U.S. taxpayer identification number (social security number) is:
|
|
|
3.
|
|
My home address is
|
|
B.
|
|
Partnership, Corporation or Other Interestholder
|
|
1.
|
|
is not a foreign corporation, foreign partnership, foreign
trust or foreign estate (as those terms are defined in the Code and Treasury
Regulations)
|
|
|
2.
|
|
The interestholders U.S. employer identification number is
|
|
|
3.
|
|
The interestholders office address and place of incorporation
(if applicable) is
|
The interestholder agrees to notify the Partnership within sixty (60) days of the date
the Interestholder becomes a foreign person.
The interestholder understands that this certificate may be disclosed to the Internal
Revenue Service by the Partnership and that any false statement contained herein could be
punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this certification and to
the best of my knowledge and belief it is a true, correct and complete and, if applicable, I
further declare that I have authority to sign this document on behalf of:
|
|
|
|
|
|
|
|
|
|
|
Name of Interest holder
|
|
|
|
|
|
|
|
|
|
|
|
Signature and Date
|
|
|
|
|
|
|
|
|
|
|
|
Title (if applicable)
|
Note: If the assignee is a broker, dealer, bank, trust company, clearing corporation, other
nominee holder or an agent of any of the foregoing, and is holding for the account of any other
person, this application should be completed by an officer thereof or, in the case of a broker or
dealer, by a registered representative who is a member of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc. or, in the case of any other
nominee holder, a person performing a similar function. If the assignee is a broker, dealer, bank,
trust company, clearing corporation, other nominee owner or an agent of any of the foregoing, the
above certification as to any person for whom the assignee will hold the Common Units shall be made
to the best of assignees knowledge.
Exhibit 3.3
AMENDED & RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
UCO GP, LLC
A Delaware Limited Liability Company
Dated as of
October 20, 2006
TABLE OF CONTENTS
|
|
|
|
|
ARTICLE I DEFINITIONS
|
|
|
1
|
|
|
|
|
|
|
Section 1.1 Definitions
|
|
|
1
|
|
Section 1.2 Construction
|
|
|
9
|
|
|
|
|
|
|
ARTICLE II ORGANIZATION
|
|
|
9
|
|
|
|
|
|
|
Section 2.1 Formation
|
|
|
9
|
|
Section 2.2 Name
|
|
|
9
|
|
Section 2.3 Registered Office; Registered Agent; Principal Office
|
|
|
9
|
|
Section 2.4 Purposes
|
|
|
10
|
|
Section 2.5 Foreign Qualification
|
|
|
11
|
|
Section 2.6 Term
|
|
|
11
|
|
Section 2.7 No State Law Partnership
|
|
|
11
|
|
Section 2.8 Certain Undertakings Relating to the Separateness of the
Company and the Partnership
|
|
|
11
|
|
|
|
|
|
|
ARTICLE III MEMBERSHIP
|
|
|
12
|
|
|
|
|
|
|
Section 3.1 Membership Interests; Additional Members; Certificates
|
|
|
12
|
|
Section 3.2 Access to Information
|
|
|
12
|
|
Section 3.3 Liability
|
|
|
13
|
|
Section 3.4 Withdrawal
|
|
|
13
|
|
Section 3.5 Meetings
|
|
|
13
|
|
Section 3.6 Notice
|
|
|
13
|
|
Section 3.7 Action by Consent of Members
|
|
|
14
|
|
Section 3.8 Conference Telephone Meetings
|
|
|
14
|
|
Section 3.9 Quorum
|
|
|
14
|
|
|
|
|
|
|
ARTICLE IV ADMISSION OF MEMBERS; DISPOSITION OF MEMBERSHIP INTERESTS
|
|
|
14
|
|
|
|
|
|
|
Section 4.1 General Restriction
|
|
|
14
|
|
Section 4.2 Admission of Assignee as a Member
|
|
|
15
|
|
Section 4.3 Requirements Applicable to All Dispositions and Admissions
|
|
|
15
|
|
|
|
|
|
|
ARTICLE V CAPITAL CONTRIBUTIONS
|
|
|
15
|
|
|
|
|
|
|
Section 5.1 Initial Capital Contributions
|
|
|
15
|
|
Section 5.2 Loans
|
|
|
15
|
|
Section 5.3 Return of Contributions
|
|
|
15
|
|
Section 5.4 Capital Accounts
|
|
|
16
|
|
|
|
|
|
|
ARTICLE VI DISTRIBUTIONS AND ALLOCATIONS
|
|
|
16
|
|
|
|
|
|
|
Section 6.1 Distributions
|
|
|
16
|
|
Section 6.2 Distributions on Dissolution and Winding Up
|
|
|
16
|
|
Section 6.3 Allocations
|
|
|
16
|
|
Section 6.4 Varying Interests
|
|
|
19
|
|
Section 6.5 Withheld Taxes
|
|
|
19
|
|
Section 6.6 Limitations on Distributions
|
|
|
19
|
|
|
|
|
|
|
ARTICLE VII MANAGEMENT
|
|
|
19
|
|
|
|
|
|
|
Section 7.1 Management by Members
|
|
|
19
|
|
Section 7.2 Regular Meetings
|
|
|
20
|
|
Section 7.3 Special Meetings
|
|
|
20
|
|
Section 7.4 Notice
|
|
|
20
|
|
Section 7.5 Action by Consent of Board
|
|
|
21
|
|
Section 7.6 Conference Telephone Meetings
|
|
|
21
|
|
Section 7.7 Quorum
|
|
|
21
|
|
Section 7.8 Vacancies; Increases in the Number of Directors
|
|
|
21
|
|
Section 7.9 Committees
|
|
|
21
|
|
Section 7.10 Removal
|
|
|
23
|
|
Section 7.11 Compensation of Directors
|
|
|
23
|
|
|
|
|
|
|
ARTICLE VIII OFFICERS
|
|
|
23
|
|
|
|
|
|
|
Section 8.1 Officers
|
|
|
23
|
|
Section 8.2 Election and Term of Office
|
|
|
23
|
|
Section 8.3 Chairman of the Board; Chief Executive Officer
|
|
|
24
|
|
Section 8.4 Chief Operating Officer
|
|
|
24
|
|
Section 8.5 Vice Presidents
|
|
|
24
|
|
Section 8.6 Treasurer
|
|
|
24
|
|
Section 8.7 Secretary
|
|
|
25
|
|
Section 8.8 Removal
|
|
|
25
|
|
Section 8.9 Vacancies
|
|
|
25
|
|
|
|
|
|
|
ARTICLE IX INDEMNITY AND LIMITATION OF LIABILITY
|
|
|
25
|
|
|
|
|
|
|
Section 9.1 Indemnification
|
|
|
25
|
|
Section 9.2 Liability of Indemnitees
|
|
|
27
|
|
|
|
|
|
|
ARTICLE X TAXES
|
|
|
28
|
|
|
|
|
|
|
Section 10.1 Tax Returns
|
|
|
28
|
|
Section 10.2 Tax Elections
|
|
|
28
|
|
Section 10.3 Tax Matters Officer
|
|
|
28
|
|
|
|
|
|
|
ARTICLE XI BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
|
|
|
29
|
|
ii
|
|
|
|
|
Section 11.1 Maintenance of Books
|
|
|
29
|
|
Section 11.2 Reports
|
|
|
30
|
|
Section 11.3 Bank Accounts
|
|
|
30
|
|
|
|
|
|
|
ARTICLE XII DISSOLUTION, WINDING-UP, TERMINATION AND CONVERSION
|
|
|
30
|
|
|
|
|
|
|
Section 12.1 Dissolution
|
|
|
30
|
|
Section 12.2 Winding-Up and Termination
|
|
|
31
|
|
Section 12.3 Deficit Capital Accounts
|
|
|
32
|
|
Section 12.4 Certificate of Cancellation
|
|
|
32
|
|
|
|
|
|
|
ARTICLE XIII GENERAL PROVISIONS
|
|
|
32
|
|
|
|
|
|
|
Section 13.1 Offset
|
|
|
32
|
|
Section 13.2 Notices
|
|
|
33
|
|
Section 13.3 Entire Agreement; Superseding Effect
|
|
|
33
|
|
Section 13.4 Effect of Waiver or Consent
|
|
|
33
|
|
Section 13.5 Amendment or Restatement
|
|
|
34
|
|
Section 13.6 Binding Effect
|
|
|
34
|
|
Section 13.7 Governing Law; Severability
|
|
|
34
|
|
Section 13.8 Further Assurances
|
|
|
34
|
|
Section 13.9 Waiver of Certain Rights
|
|
|
35
|
|
Section 13.10 Counterparts
|
|
|
35
|
|
Section 13.11 Jurisdiction
|
|
|
35
|
|
Section 13.12 Suspension of Certain Provisions If Only One Member
|
|
|
35
|
|
iii
AMENDED & RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
UCO GP, LLC
This
AMENDED & RESTATED LIMITED LIABILITY COMPANY AGREEMENT
(this
Agreement
) of UCO GP, LLC
(the
Company
), dated as of October 20, 2006, is adopted, executed and agreed to for good and
valuable consideration by Universal Compression, Inc., a Texas Corporation (
UCI
), as the member
(
Member
).
R E C I T A L S
:
The Company was formed as a Delaware limited liability company pursuant to a Certificate
of Formation that was filed with the Secretary of State of Delaware on June 13, 2006, and pursuant
to the Limited Liability Company Agreement dated June 16, 2006 (the
Original Limited Liability
Company Agreement
).
Pursuant to Section 14 of the Original Limited Liability Company Agreement, the Member (being
the
Organizational Member
thereunder) may amend the limited liability company agreement of the
Company at any time.
The Member desires to amend the Original Limited Liability Company Agreement and, as so
amended, to restate it as this the Amended and Restated Limited Liability Company Agreement.
ARTICLE I
DEFINITIONS
Section 1.1
Definitions.
(a) As used in this Agreement, the following terms have the respective meanings set forth
below or set forth in the Sections referred to below:
Act
means the Delaware Limited Liability Company Act (Delaware General Corporations Code
Sections 18-101, et seq.), as it may be amended from time to time, and any corresponding provisions
of succeeding law. All references in this Agreement to provisions of the Act shall be deemed to
refer, if applicable, to their successor statutory provisions to the extent appropriate in light of
the context herein in which such references are used.
Adjusted Capital Account Deficit
means, with respect to any Member, the deficit balance, if
any, in such Members Capital Account as of the end of the relevant fiscal year, after giving
effect to the following adjustments:
(i) Credit to such Capital Account any amounts which such Member is obligated to
restore pursuant to any provision of this Agreement or pursuant to
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) or is deemed to be obligated to
restore pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1)
and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account Deficit is intended to comply with
the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
Affiliate
means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with, such Person. For the
purposes of this definition, control when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms controlling and
controlled have meanings correlative to the foregoing.
Agreement
has the meaning given such term in the Recitals, as the same may be amended from
time to time.
Applicable Law
means (a) any United States Federal, state or local law, statute or ordinance
or any rule, regulation, order, writ, injunction, judgment, decree or permit of any Governmental
Authority and (b) any rule or listing requirement of any applicable national stock exchange or
listing requirement of any national stock exchange or Commission recognized trading market on which
securities issued by the Partnership are listed or quoted.
Assignee
means any Person that acquires a Members share of the income, gain, loss,
deduction and credits of, and the right to receive distributions from, the Company or any portion
thereof through a Disposition;
provided
,
however
, that, an Assignee shall have no right to be
admitted to the Company as a Member except in accordance with Article IV. The Assignee of a
dissolved Member is the shareholder, partner, member or other equity owner or owners of the
dissolved Member to whom such Members Membership Interest is assigned by the Person conducting the
liquidation or winding up of such Member.
Audit Committee
has the meaning given such term in Section 7.9(b).
Bankruptcy
or
Bankrupt
means, with respect to any Person, that (a) such Person (i) makes a
general assignment for the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
becomes the subject of an order for relief or is declared insolvent in any federal or state
bankruptcy or insolvency proceedings; (iv) files a petition or answer seeking for such Person a
reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief
under any Applicable Law; (v) files an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against such Person in a proceeding of the type described
in subclauses (i) through (iv) of this clause (a); or (vi) seeks, consents to, or
2
acquiesces in the appointment of a trustee, receiver, or liquidator of such Person or of all
or any substantial part of such Persons properties; or (b) a proceeding seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any
Applicable Law has been commenced against such Person and 120 Days have expired without dismissal
thereof or with respect to which, without such Persons consent or acquiescence, a trustee,
receiver, or liquidator of such Person or of all or any substantial part of such Persons
properties has been appointed and 90 Days have expired without the appointments having been
vacated or stayed, or 90 Days have expired after the date of expiration of a stay, if the
appointment has not previously been vacated. The foregoing definition of Bankruptcy is intended
to replace and shall supercede and replace the definition of Bankruptcy set forth in the Act.
Board
has the meaning given such term in Section 7.1.
Business Day
means any day other than a Saturday, a Sunday, or a day when banks in New York,
New York or Houston, Texas are authorized or required by Applicable Law to be closed.
Capital Account
means, with respect to any Member, the Capital Account maintained for such
Member in accordance with the following provisions:
(i) To each Members Capital Account there shall be credited such Members Capital
Contributions, such Members distributive share of Profits and any items in the nature of
income or gain that are specially allocated pursuant to Section 6.3 hereof, and the amount
of any Company liabilities assumed by such Member or that are secured by any property (other
than money) distributed to such Member.
(ii) To each Members Capital Account there shall be debited the amount of cash and the
Gross Asset Value of any property (other than money) distributed to such Member pursuant to
any provision of this Agreement, such Members distributive share of Losses and any items in
the nature of expenses or losses that are specially allocated pursuant to Section 6.3
hereof, and the amount of any liabilities of such Member assumed by the Company or that are
secured by any property (other than money) contributed by such Member to the Company.
(iii) If all or a portion of a Membership 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 Membership Interest so transferred.
(iv) In determining the amount of any liability for purposes of the foregoing
subparagraphs (i) and (ii) of this definition of Capital Account, Section 752(c) of the
Code and any other applicable provisions of the Code and Treasury Regulations shall be taken
into account.
The foregoing provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Treasury
3
Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner
consistent with such Treasury Regulations.
Capital Contribution
means, with respect to any Member, the amount of money and the net
agreed value of any property (other than money) contributed to the Company by such Member. Any
reference in this Agreement to the Capital Contribution of a Member shall include any Capital
Contribution of its predecessors in interest.
Certified Public Accountants
means a firm of independent public accountants selected from
time to time by the Board.
Claim
means any and all judgments, claims, causes of action, demands, lawsuits, suits,
proceedings, Governmental investigations or audits, losses, assessments, fines, penalties,
administrative orders, obligations, costs, expenses, liabilities and damages (whether actual,
consequential or punitive), including interest, penalties, reasonable attorneys fees,
disbursements and costs of investigations, deficiencies, levies, duties and imposts.
Code
means the Internal Revenue Code of 1986, as amended from time to time.
Company
has the meaning given such term in the Recitals.
Compensation Committee
has the meaning given such term in Section 7.9(d).
Conflicts Committee
has the meaning given such term in Section 7.9(c).
Day
means a calendar day; provided, however, that, if any period of Days referred to in this
Agreement shall end on a Day that is not a Business Day, then the expiration of such period shall
be automatically extended until the end of the next succeeding Business Day.
Delaware Certificate
has the meaning given such term in Section 2.1.
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 be determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the Tax Matters Officer.
Director
or
Directors
means a member or members of the Board.
Dispose
,
Disposing
or
Disposition
means with respect to any asset (including a
Membership Interest or any portion thereof), a sale, assignment, transfer,
4
conveyance, gift, exchange or other disposition of such asset, whether such disposition be
voluntary, involuntary or by operation of Applicable Law.
Disposing Member
has the meaning given such term in Section 4.2.
Dissolution Event
has the meaning given such term in Section 12.1(a).
Encumber
,
Encumbering
, or
Encumbrance
means the creation of a security interest, lien,
pledge, mortgage or other encumbrance, whether such encumbrance be voluntary, involuntary or by
operation of Applicable Law.
GAAP
means generally accepted accounting principles as applied in the United States.
General Partner
means UCO General Partner, LP, a Delaware limited partnership and the
general partner of the Partnership.
Governmental Authority
or
Governmental
means any Federal, state or local court or
governmental or regulatory agency or authority or any arbitration board, tribunal or mediator
having jurisdiction over the Company or its assets or Members.
Group Member
has the meaning set forth in the Partnership Agreement.
Gross Asset Value
means, with respect to any asset, the assets adjusted basis for Federal
income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a Member to the Company
shall be the gross fair market value of said asset, as determined by the contributing Member
and the Board, in a manner that is consistent with Section 7701(g) of the Code;
(ii) The Gross Asset Values of all Company assets shall be adjusted to equal their
respective gross fair market values, as determined by the Board, in a manner that is
consistent with Section 7701(g) of the Code, as of the following times: (a) the acquisition
of an additional Membership Interest by any new or existing Member in exchange for more than
a de minimis Capital Contribution; (b) the distribution by the Company to a Member of more
than a de minimis amount of property other than money as consideration for an Membership
Interest; and (c) the liquidation of the Company within the meaning of Treasury Regulations
Section 1.704-1(b)(2)(ii)(g);
provided
,
however
, that adjustments pursuant to clauses (a)
and (b) above shall be made only if the Tax Matters Officer reasonably determines that such
adjustments are necessary or appropriate to reflect the relative economic interests of the
Members in the Company;
(iii) The Gross Asset Value of any Company asset distributed to any Member shall be the
gross fair market value (taking Section 7701(g) of the Code into account) of such asset on
the date of distribution; and
5
(iv) The Gross Asset Values of any Company assets shall be increased (or decreased) to
reflect any adjustments to the adjusted basis of such assets pursuant to Section 734(b) of
the Code or Section 743(b) of the Code, but only to the extent that such adjustments are
taken into account in determining Capital Accounts pursuant to Treasury Regulations Section
1.704-1 (b)(2)(iv)(m) and the definition of Capital Account hereof;
provided
,
however
, that
Gross Asset Values shall not be adjusted pursuant to this subparagraph (iv) to the extent
the Tax Matter Officer determines that an adjustment pursuant to the foregoing subparagraph
(ii) of this definition is necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment pursuant to this subparagraph (iv).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to the
foregoing subparagraphs (i), (ii) or (iv), such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such asset for purposes of
computing Profits and Losses.
Incentive Plan
means any plan or arrangement pursuant to which the Company may compensate
its employees, consultants, directors and/or service providers.
Indemnitee
means (a) any Person who is or was an Affiliate of the Company (other than the
General Partner, the Partnership and its Subsidiaries), (b) any Person who is or was a member,
partner, officer, director, employee, agent or trustee of the Company or any Affiliate of the
Company, (c) any Person who is or was serving at the request of the Company or any Affiliate of the
Company as an officer, director, employee, member, partner, agent, fiduciary or trustee of another
Person;
provided
,
however
, that a Person shall not be an Indemnitee by reason of providing, on a
fee-for-services basis, trustee, fiduciary or custodial services and (d) any Person the Company
designates as an Indemnitee for purposes of this Agreement..
Independent Director
has the meaning given such term in Section 7.9(b).
Limited Partner
and
Limited Partners
shall have the meaning given such terms in the
Partnership Agreement.
Majority Interest
means Membership Interests in the Company entitled to more than 50% of the
Sharing Ratios.
Member
means any Person executing this Agreement as of the date of this Agreement as a
member of the Company or hereafter admitted to the Company as a member as provided in this
Agreement, but such term does not include any Person who has ceased to be a member in the Company.
Membership Interest
means, with respect to any Member, (a) that Members status as a Member;
(b) that Members share of the income, gain, loss, deduction and credits of, and the right to
receive distributions from, the Company; (c) all other rights, benefits and privileges enjoyed by
that Member (under the Act, this Agreement, or otherwise) in its capacity as a Member, including
that Members rights to vote, consent and approve and otherwise to
6
participate in the management of the Company; and (d) all obligations, duties and liabilities
imposed on that Member (under the Act, this Agreement or otherwise) in its capacity as a Member,
including any obligations to make Capital Contributions.
Notices
has the meaning given such term in Section 13.2.
Omnibus Agreement
has the meaning given such term in the Partnership Agreement.
Operating Partnership
has the meaning given such term in the Partnership Agreement.
Original Filing Date
has the meaning given such term in Section 2.1.
Partnership
means Universal Compression Partners L.P., a Delaware limited partnership.
Partnership Agreement
means the First Amended and Restated Agreement of Limited Partnership
of the Partnership, dated as of October 20, 2006, as it may be further amended and restated, or any
successor agreement.
Partnership Group
means the Partnership and its Subsidiaries treated as a single
consolidated entity.
Person
means any individual, firm, partnership, corporation, limited liability company,
association, joint-stock company, unincorporated organization, joint venture, trust, court,
Governmental Authority or any political subdivision thereof, or any other entity.
Profits
and
Losses
means, for each fiscal year or other period, an amount equal to the
Companys taxable income or loss for such year or period, determined in accordance with Section
703(a) of the Code (for this purpose, all items of income, gain, loss, or deduction required to be
stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or
loss), with the following adjustments:
(i) Any income of the Company that is exempt from Federal income tax and not otherwise
taken into account in computing Profits or Losses pursuant to this definition shall be added
to such taxable income or loss;
(ii) Any expenditures of the Company described in Section 705(a)(2)(B) of the Code, and
not otherwise taken into account in computing Profits or Losses pursuant to this definition
shall be subtracted from such taxable income or loss;
(iii) If the Gross Asset Value of any Company asset is adjusted pursuant to
subparagraph (ii) or (iv) 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;
7
(iv) Gain or loss resulting from any disposition of property (other than money) 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;
(v) 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, computed in accordance with the
definition of Depreciation hereof; and
(vi) Notwithstanding any other provision of this definition of Profits and Losses,
any items that are specially allocated pursuant to Section 6.3(d) and Section 6.3(e) hereof
shall not be taken into account in computing Profits or Losses.
Sharing Ratio
means, subject in each case to adjustments in accordance with this Agreement
or in connection with Dispositions of Membership Interests, (a) in the case of a Member executing
this Agreement as of the date of this Agreement or a Person acquiring such Members Membership
Interest, the percentage specified for that Member as its Sharing Ratio on
Exhibit A
, and
(b) in the case of Membership Interests issued pursuant to Section 3.1, the Sharing Ratio
established pursuant thereto;
provided
,
however
, that the total of all Sharing Ratios shall always
equal 100%.
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.
Target Capital Account Amount
means, with respect to a Member, the distribution the Member
would receive pursuant to Section 6.2 if the amount to be distributed to the Member equaled the
product of (i) the amount described in Section 12.2(a)(iii)(C) multiplied by (ii) the Members
Sharing Ratio.
Tax Matters Officer
has the meaning given such term in Section 10.3(a).
8
Term
has the meaning given such term in Section 2.6.
Treasury Regulations
means the regulations (including temporary regulations) promulgated by
the United States Department of the Treasury pursuant to and in respect of provisions of the Code.
All references herein to sections of the Treasury Regulations shall include any corresponding
provision or provisions of succeeding, similar or substitute, temporary or final Treasury
Regulations.
UCH Group
means UCH and its Subsidiaries, including UCI, and Affiliates (other than the
Company, the General Partner and the Partnership and its Subsidiaries).
Withdraw
,
Withdrawing
or
Withdrawal
means the withdrawal, resignation or retirement of a
Member from the Company as a Member. Such terms shall not include any Dispositions of Membership
Interest (which are governed by Article IV), even though the Member making a Disposition may cease
to be a Member as a result of such Disposition.
(b) Other terms defined herein have the meanings so given them.
Section 1.2
Construction.
Whenever the context requires, (a) the gender of all words used in this Agreement includes the
masculine, feminine and neuter, (b) the singular forms of nouns, pronouns and verbs shall include
the plural and vice versa, (c) all references to Articles and Sections refer to articles and
sections in this Agreement, each of which is made a part for all purposes and (d) the term
include or includes means includes, without limitation, and including means including,
without limitation.
ARTICLE II
ORGANIZATION
Section 2.1
Formation.
UCI formed the Company as a Delaware limited liability company by the filing of the
Certificate of Formation (the
Delaware Certificate
), dated as of June 13, 2006 (the
Original
Filing Date
), with the Secretary of State of Delaware pursuant to the Act.
Section 2.2
Name.
The name of the Company is UCO GP, LLC and all Company business must be conducted in that
name or such other names that comply with Applicable Law as the Members or the Board may select.
Section 2.3
Registered Office; Registered Agent; Principal Office.
The name of the Companys registered agent for service of process is The Corporation Trust
Company, and the address of the Companys registered office in the State of Delaware is
9
1209 Orange Street, Wilmington, Delaware 19801. The principal place of business of the
Company shall be located at 4444 Brittmoore Road, Houston, Texas 77041. The Members may change
the Companys registered agent or the location of the Companys registered office or principal
place of business as the Members may from time to time determine.
Section 2.4
Purposes.
(a) The Company may (i) act as the general partner of the General Partner (and acquire, hold
and dispose of partnership interests and related rights in the General Partner in connection with
such purpose) and only undertake activities that are ancillary or related thereto and (ii), in
connection with acting in such capacity, carry on any lawful business or activity permitted by the
Act.
(b) Subject to the limitations expressly set forth in this Agreement, the Company shall have
the power and authority to do any and all acts and things deemed necessary or desirable by the
Members and, to the extent delegated to the Board hereby, by the Board to further the Companys
purposes and carry on its business, including, without limitation, the following:
(i) acting as the general partner of the General Partner;
(ii) entering into any kind of activity and performing contracts of any kind necessary or
desirable for the accomplishment of its business (including the business of the General Partner,
the Partnership and the Operating Partnership);
(iii) acquiring any property, real or personal, in fee or under lease or license, or any
rights therein or appurtenant thereto, necessary or desirable for the accomplishment of its
business (including the business of the General Partner, the Partnership and the Operating
Partnership);
(iv) borrowing money and issuing evidences of indebtedness and securing any such indebtedness
by mortgage or pledge of, or other lien on, the assets of the Company, the General Partner, the
Partnership and the Operating Partnership;
(v) entering into any such instruments and agreements necessary or desirable for the
ownership, management, operation, leasing and sale of the property of the Company, the General
Partner, the Partnership and the Operating Partnership; and
(vi) negotiating and concluding agreements for the sale, exchange or other disposition of all
or substantially all of the properties of the Company (including the properties of the General
Partner, the Partnership and the Operating Partnership), or for the refinancing of any loan or
payment obtained by the Company (including any loan or payment obtained by the General Partner, the
Partnership and the Operating Partnership).
10
Section 2.5
Foreign Qualification.
Prior to the Companys conducting business in any jurisdiction other than Delaware, the
officers shall cause the Company to comply, to the extent procedures are available and those
matters are reasonably within the control of the officers, with all requirements necessary to
qualify the Company as a foreign limited liability company in that jurisdiction. At the request of
the officers, the Members shall execute, acknowledge, swear to, and deliver all certificates and
other instruments conforming with this Agreement that are necessary or appropriate to qualify,
continue, and, if applicable, terminate the Company as a foreign limited liability company in all
such jurisdictions in which the Company may conduct business or in which it has ceased to conduct
business.
Section 2.6
Term.
The period of existence of the Company (the
Term
) commenced on the Original Filing Date and
shall end at such time as a certificate of cancellation is filed with the Secretary of State of
Delaware in accordance with Section 12.4.
Section 2.7
No State Law Partnership.
The Members intend that the Company shall not be a partnership (whether general, limited or
other) or joint venture, and that no Member shall be a partner or joint venturer with any other
Member, for any purposes other than (if the Company has more than one Member) Federal and state
income tax purposes, and this Agreement may not be construed or interpreted to the contrary.
Section 2.8
Certain Undertakings Relating to the Separateness of the Company and the
Partnership.
(a)
Separate Records
. The Company shall cause each of the General Partner and Partnership to
maintain (i) its books and records, (ii) its accounts, and (iii) its financial statements separate
from those of any other Person, except its consolidated Subsidiaries.
(b)
Separate Assets
. The Company shall not permit either the General Partner or the
Partnership to commingle or pool its funds or other assets with those of any other Person, except
its consolidated Subsidiaries, and shall cause each of the General Partner and the Partnership to
maintain its assets in a manner in which it is not costly or difficult to segregate, ascertain or
otherwise identify its assets as separate from those of any other Person.
(c)
Separate Name
. The Company shall cause each of the General Partner and the Partnership
(i) to conduct its business in its own name, (ii) to use separate stationery, invoices and checks,
(iii) to correct any known misunderstanding regarding its separate identity, and (iv) generally to
hold itself out as a separate entity.
(d)
[Reserved]
11
(e)
Separate Formalities
. The Company shall cause each of the General Partner and the
Partnership (i) to observe all limited liability company or limited partnership formalities, as the
case may be, and other formalities required by its organizational documents, the laws of the
jurisdiction of its formation and other Applicable Laws, (ii) to engage in transactions with any
member of the UCH Group in conformity with the requirements of Section 7.9(c) and (iii) subject to
the terms of the Omnibus Agreement, promptly to pay, from its own funds, and on a current basis,
its allocable share of general and administrative expenses, capital expenditures, and costs for
shared services performed by any member of the UCH Group. Each material contract between the
Company, the General Partner or the Partnership, on the one hand, and any member of the UCH Group,
on the other hand, shall be in writing.
ARTICLE III
MEMBERSHIP
Section 3.1
Membership Interests; Additional Members; Certificates.
The Members own Membership Interests in the Company as reflected in
Exhibit A
attached
hereto. Persons may be admitted to the Company as Members, on such terms and conditions as the
Members determine at the time of admission. The terms of admission or issuance must specify the
Sharing Ratios applicable thereto and may provide for the creation of different classes or groups
of Members having different rights, powers and duties. The Members may reflect the creation of any
new class or group in an amendment to this Agreement, indicating the different rights, powers and
duties, and such an amendment shall be approved and executed by the Members. Any such admission
shall be effective only after such new Member has executed and delivered to the Members and the
Company an instrument containing the notice address of the new Member, the new Members
ratification of this Agreement and agreement to be bound by it. The Company shall deliver
certificates representing the Membership Interests to which the Members are entitled. Certificates
representing the Membership Interests of the Company shall be in such form as shall be approved and
adopted by the Members and shall be numbered consecutively and entered in the records of the
Company as they are issued. Each certificate shall state on the face thereof that the Company is
organized under the laws of the State of Delaware, the name of the member, and the Membership
Interest represented thereby. Certificates shall be signed by an officer of the Company and the
signature of such officer may be a facsimile. Certificates representing Membership Interests shall
be transferable only on the records of the Company by the holder thereof in person or by his duly
authorized attorney and such transfers shall be subject in all respects to the provisions of
Article IV hereof. The certificated Membership Interests in the Company described herein are
governed by Article 8 of the Uniform Commercial Code, as adopted by the State of Delaware
Section 3.2
Access to Information.
Each Member shall be entitled to receive any information that it may request concerning the
Company;
provided
,
however
, that this Section 3.2 shall not obligate the Company to create any
information that does not already exist at the time of such request (other than to convert existing
information from one medium to another, such as providing a printout of information
12
that is stored in a computer database). Each Member shall also have the right, upon
reasonable notice, and at all reasonable times during usual business hours to inspect the
properties of the Company and to audit, examine and make copies of the books of account and other
records of the Company. Such right may be exercised through any agent or employee of such Member
designated in writing by it or by an independent public accountant, engineer, attorney or other
consultant so designated. All costs and expenses incurred in any inspection, examination or audit
made on such Members behalf shall be borne by such Member.
Section 3.3
Liability.
(a) No Member shall be liable for the debts, obligations or liabilities of the Company solely
by reason of being a member of the Company.
(b) The Company and the Members agree that the rights, duties and obligations of the Members
in their capacities as members of the Company are only as set forth in this Agreement and as
otherwise arise under the Act. Furthermore, the Members agree that the existence of any rights of
a Member, or the exercise or forbearance from exercise of any such rights, shall not create any
duties or obligations of the Member in its capacity as a member of the Company, nor shall such
rights be construed to enlarge or otherwise to alter in any manner the duties and obligations of
such Member.
Section 3.4
Withdrawal.
A Member does not have the right or power to Withdraw.
Section 3.5
Meetings
.
A meeting of the Members may be called at any time at the request of any Member.
Section 3.6
Notice
.
Written notice of all meetings of the Members must be given to all Members one Business Day
prior to any meeting of Members. All notices and other communications to be given to Members shall
be sufficiently given for all purposes hereunder (i) if in writing and delivered by hand, courier
or overnight delivery service, then upon receipt, (ii) if mailed by certified or registered mail,
return receipt requested, with appropriate postage prepaid, then three days after the date of
mailing, or (iii) if sent by e-mail, telegram or facsimile, then when received. All such notices
and communications shall be directed to the address, e-mail address or facsimile number of each
Member as such Member shall designate by notice to the Company. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Members need be specified
in the notice of such meeting, except for amendments to this Agreement, as provided herein. A
meeting may be held at any time without notice if all the Members are present or if those not
present waive notice of the meeting either before or after such meeting.
13
Section 3.7
Action by Consent of Members.
Except as otherwise required by Applicable Law, all decisions of the Members shall require the
affirmative vote of the Members owning a majority of Sharing Ratios present at a meeting at which a
quorum is present in accordance with Section 3.9. To the extent permitted by Applicable Law, the
Members may act without a meeting and without notice so long as the number of Members who would be
required to take such action at a duly held meeting shall have executed a written consent with
respect to any such action taken in lieu of a meeting.
Section 3.8
Conference Telephone Meetings.
Any Member may participate in a meeting of the Members or by means of conference telephone or
similar communications equipment by means of which all persons participating in the meeting can
hear each other, and such participation in a meeting shall constitute presence in person at such
meeting.
Section 3.9
Quorum.
The Members owning a majority of Sharing Ratios, present in person or participating in
accordance with Section 3.8, shall constitute a quorum for the transaction of business, but, if at
any meeting of the Members there shall be less than a quorum present, a majority of the Members
present may adjourn the meeting from time to time without further notice. Any act of the Members
owning a majority of Sharing Ratios present at a meeting at which a quorum is present shall be the
act of the Members. The Members present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough Members to leave less than a
quorum.
ARTICLE IV
ADMISSION OF MEMBERS; DISPOSITION OF MEMBERSHIP INTERESTS
Section 4.1
General Restriction.
A Member may not Dispose of all or any portion of its Membership Interests except in strict
accordance with this Article IV. References in this Article IV to Dispositions of a Membership
Interest shall also refer to Dispositions of a portion of a Membership Interest. Any attempted
Disposition of a Membership Interest, other than in strict accordance with this Article IV, shall
be, and is hereby declared, null and void ab initio. The Members agree that a breach of the
provisions of this Article IV may cause irreparable injury to the Company and to the other Members
for which monetary damages (or other remedy at law) are inadequate in view of (a) the complexities
and uncertainties in measuring the actual damages that would be sustained by reason of the failure
of a Member to comply with such provision and (b) the uniqueness of the business of the Company and
the relationship among the Members. Accordingly, the Members agree that the provisions of this
Article IV may be enforced by specific performance.
14
Section 4.2
Admission of Assignee as a Member.
An Assignee has the right to be admitted to the Company as a Member, with the Membership
Interests (and attendant Sharing Ratio) so transferred to such Assignee, only if (a) the Member
making the Disposition (a
Disposing Member
) has granted the Assignee either (i) all, but not less
than all, of such Disposing Members Membership Interests or (ii) the express right to be so
admitted and (b) such Disposition is effected in strict compliance with this Article IV.
Section 4.3
Requirements Applicable to All Dispositions and Admissions.
Any Disposition of Membership Interests and any admission of an Assignee as a Member shall
also be subject to the following requirements, and such Disposition (and admission, if applicable)
shall not be effective unless such requirements are complied with:
(a) Payment of Expenses. The Disposing Member and its Assignee shall pay, or reimburse the
Company for, all reasonable costs and expenses incurred by the Company in connection with the
Disposition and admission of the Assignee as a Member.
(b) No Release. No Disposition of Membership Interests shall effect a release of the
Disposing Member from any liabilities to the Company or the other Members arising from events
occurring prior to the Disposition, except as otherwise may be provided in any instrument or
agreement pursuant to which a Disposition of Membership Interests is effected.
ARTICLE V
CAPITAL CONTRIBUTIONS
Section 5.1
Initial Capital Contributions.
At the time of the formation of the Company, UCI, as the initial or organizational Member of
the Company, made the Capital Contribution as set forth next to the Members name on
Exhibit
A
.
Section 5.2
Loans.
If the Company does not have sufficient cash to pay its obligations, any Member(s) that may
agree to do so may advance all or part of the needed funds to or on behalf of the Company. An
advance described in this Section 5.2 constitutes a loan from the Member to the Company, bears
interest at a rate determined by the Members from the date of the advance until the date of payment
and is not a Capital Contribution.
Section 5.3
Return of Contributions.
Except as expressly provided herein, no Member is entitled to the return of any part of its
Capital Contributions or to be paid interest in respect of either its Capital Account or its
Capital Contributions. A Capital Contribution remaining unpaid by the Company is not a liability
of the
15
Company or of any Member. A Member is not required to contribute or to lend any cash or
property to the Company to enable the Company to return any Members Capital Contributions.
Section 5.4
Capital Accounts.
An individual Capital Account shall be established and maintained for each Member. A Member
that has more than one class or series of Membership Interest shall have a single Capital Account
that reflects all such classes or series of Membership Interests, regardless of the classes or
series of Membership Interests owned by such Member and regardless of the time or manner in which
such Membership Interests were acquired. Upon the Disposition of all or a portion of a Membership
Interest, the Capital Account of the Disposing Member that is attributable to such Membership
Interest shall carry over to the Assignee in accordance with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(l).
ARTICLE VI
DISTRIBUTIONS AND ALLOCATIONS
Section 6.1
Distributions.
Except as otherwise provided in Section 6.2, distributions to the Members shall be made only
to all Members simultaneously in proportion to their respective Sharing Ratios (at the time the
amounts of such distributions are determined) and in such aggregate amounts and at such times as
shall be determined by the Members representing a Majority Interest (at the time the amounts of
such distributions are determined);
provided
,
however
, that any loans from Members pursuant to
Section 5.2 shall be repaid prior to any distributions to Members pursuant to this Section 6.1.
Section 6.2
Distributions on Dissolution and Winding Up.
Upon the dissolution and winding up of the Company, after adjusting the Capital Accounts, if
any, for all distributions made under Section 6.1 and all allocations under Article VI, all
available proceeds distributable to the Members as determined under Section 12.2 shall be
distributed (i) to all of the Members in amounts equal to the Members positive Capital Account
balances, or (ii) if the obligation to maintain Capital Accounts has been suspended under Section
13.12 of this Agreement, to the sole Member.
Section 6.3
Allocations.
Subject to the allocation rules of Section 6.3(c), (d) and (e) hereof, Profits and Losses of
the Company for any fiscal year shall be allocated as follows:
(a) Profits for any fiscal year shall be allocated in the following order of priority:
(i) First, to all Members, in proportion to the deficit balances (if any) in their Capital
Accounts, in an amount necessary to eliminate any deficits in the Members Capital Accounts and
restore such Capital Accounts balances to zero;
16
(ii) Second, to the Members until each Member has been allocated an amount equal to the amount
distributed to such Member pursuant to Section 6.1 in the current and in all previous fiscal years
in excess of amounts previously allocated to such Members pursuant to this Section 6.3(a)(ii);
(iii) Third, to the Members, to the greatest extent possible, an amount required to cause the
positive Capital Account balances of each of the Members to be in the same proportion as the
Members respective Sharing Ratios; and
(iv) Thereafter, to the Members in proportion their respective Sharing Ratios.
(b) Losses for any fiscal year shall be allocated in the following order of priority:
(i) First, to the Members, to the greatest extent possible, an amount required to cause the
positive Capital Account balances of each of the Members to be in the same proportion as the
Members respective Sharing Ratios;
(ii) Next, to the Members in proportion to their respective Sharing Ratios until the Capital
Account balances of such Members have been reduced to zero;
(iii) Next, to any Member that has a positive Capital Account balance until the Capital
Account balances of all of the Members have been reduced to zero; and
(iv) Thereafter, to the Members in proportion to their respective Sharing Ratios.
(c) Notwithstanding the allocation provisions of Section 6.3(a) and (b), if the allocation of
Profits or Losses to a Member pursuant to Sections 6.3(a) and (b) in the current fiscal year would
cause a Member to have a positive Capital Account balance that is greater than or less than the
amount that has been distributed to such Member in the current fiscal year pursuant to Section 6.1,
then the allocations of Profits and Losses in the current fiscal year shall be adjusted, to the
greatest extent possible, to cause the positive Capital Account balances of each Member to equal
the amount of distributions made to such Member in the current fiscal year. In addition, in the
event of the dissolution of the Company pursuant to Section 12.1 hereof, if the allocation of
Profits or Losses to a Member pursuant to Sections 6.3(a) and (b) would cause a Member to have a
Capital Account balance in an amount that is greater than or less than the Members Target Capital
Account Amount, then the allocations of Profits and Losses shall be adjusted, to the greatest
extent possible, to cause the positive Capital Account balances of each Member to equal such an
amount.
(d) The following special allocations shall be made in the following order:
(i) Qualified Income Offset. In the event any Member unexpectedly receives any adjustments,
allocations, or distributions described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Company income and gain shall be
specially allocated to each such Member in an amount and manner sufficient to
17
restore, to the extent required by the Treasury Regulations, the Members Adjusted Capital
Account Deficit of such Member as quickly as possible,
provided
that an allocation pursuant to this
Section 6.3(d)(i) shall be made only if and to the extent that such Member would have an Adjusted
Capital Account Deficit after all other allocations provided for in this Article VI have been
tentatively made as if this Section 6.3(d)(i) was not in this Agreement.
(ii) Gross Income Allocation. In the event any Member has a deficit Capital Account at the
end of any Company fiscal year which is in excess of the sum of (x) the amount such Member is
obligated to restore pursuant to any provision of this Agreement and (y) the amount such Member is
deemed to be obligated to restore pursuant to the penultimate sentence of Treasury Regulation
Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be specially allocated items of
Company income and gain in the amount of such excess as quickly as possible,
provided
that an
allocation pursuant to this Section 6.3(d)(ii) shall be made only if and to the extent that such
Member would have a deficit Capital Account balance in excess of such sum after all other
allocations provided for in this Article VI have been made as if Section 6.3(d)(i) hereof and this
Section 6.3(d)(ii) were not in this Agreement.
(iii) Section 754 Adjustments. To the extent an adjustment of the adjusted tax basis of any
Company asset pursuant to Section 734(b) of the Code or Section 743(b) of the Code is required,
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members
in a manner consistent with the manner in which their Capital Accounts are required to be adjusted
pursuant to such section of the Treasury Regulations.
(e) In accordance with Section 704(c) of the Code and the Treasury Regulations thereunder,
income, gain, loss, and deduction with respect to any property contributed to the capital of the
Company shall, solely for tax purposes, be allocated among the Members to take account of any
variation between the adjusted basis of such property to the Company for federal income tax
purposes and its initial Gross Asset Value (computed in accordance with the definition of same
under this Agreement). In the event the Gross Asset Value of any Company asset is adjusted
pursuant to subparagraph (ii) of the definition of Gross Asset Value hereof, subsequent allocations
of income, gain, loss, and deduction with respect to such asset shall take account of any variation
between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value
in the same manner as under Section 704(c) of the Code and the Treasury Regulations thereunder.
Any elections or other decisions relating to such allocations shall be made by the Tax Matters
Officer in any manner that reasonably reflects the purpose and intention of this Agreement,
provided
that the Company shall use the remedial allocation method set forth in Treasury Regulation
Section 1.704-3(d). Allocations pursuant to this Section 6.3(e) are solely for purposes of
federal, state, and local taxes and shall not affect, or in any way be taken into account in
computing, any Members Capital Account or share of Profits, Losses, other items, or distributions
pursuant to any provision of this Agreement.
18
Section 6.4
Varying Interests.
All items of income, gain, loss, deduction or credit shall be allocated, and all distributions
shall be made, to the Persons shown on the records of the Company to have been Members as of the
last calendar day of the period for which the allocation or distribution is to be made.
Notwithstanding the foregoing, if during any taxable year there is a change in any Members Sharing
Ratio, the Members agree that their allocable shares of such items for the taxable year shall be
determined on any method determined by the Board to be permissible under Code Section 706 and the
related Treasury Regulations to take account of the Members varying Sharing Ratios.
Section 6.5
Withheld Taxes.
All amounts withheld pursuant to the Code or any provision of any state or local tax law with
respect to any payment, distribution or allocation to the Company or the Members shall be treated
as amounts distributed to the Members pursuant to this Article VI for all purposes of this
Agreement. The Board is authorized to withhold from distributions, or with respect to allocations,
to the Members and to pay over to any federal, state or local government any amounts required to be
so withheld pursuant to the Code or any provision of any other federal, state or local law and
shall allocate such amounts to those Members with respect to which such amounts were withheld.
Section 6.6
Limitations on Distributions.
Notwithstanding any provision to the contrary contained in this Agreement, the Company shall
not make a distribution to any Member on account of its interest in the Company if such
distribution would violate Section 18-607 of the Act or other Applicable Law.
ARTICLE VII
MANAGEMENT
Section 7.1
Management by Members.
(a) The management of the Company is fully reserved to the Members, and the Company shall not
have managers as that term is used in the Act. The powers of the Company shall be exercised by
or under the authority of, and the business and affairs of the Company shall be managed under the
direction of, the Members, who shall make all decisions and take all actions for the Company.
(b) The Members shall have the power and authority to delegate to one or more other persons
the Members rights and power to manage and control the business and affairs, or any portion
thereof, of the Company, including to delegate to agents, officers and employees of a Member or the
Company, and to delegate by a management agreement with or otherwise to other Persons.
19
(c) The Members have heretofore delegated, and hereby expressly continue to delegate to the
Board of Directors of the Company (the
Board
), to the fullest extent permitted under this
Agreement and Delaware law, all of the Companys power and authority to manage and control the
business and affairs of the Partnership. The number of directors constituting the Board shall be
fixed from time to time pursuant to a resolution adopted by Members representing a Majority
Interest. The initial Directors of the Company in office at the date of approval of this Agreement
are set forth on Exhibit B hereto. The Board may designate one or more other persons to be
officers of the Company to assist in carrying out the Boards decisions and the day-to-day
activities of the Company in its role as the general partner of the Partnership. Officers are not
managers as that term is used in the Act. Any officers who are so designated shall have such
titles and authority and perform such duties as the Board may delegate to them. The salaries or
other compensation, if any, of the officers of the Company shall be fixed by the Board. Any
officer may be removed as such, either with or without cause, by the Board and any vacancy
occurring in any office of the Company may be filled by the Board. Designation of an officer shall
not of itself create contract rights.
Section 7.2
Regular Meetings.
The Board shall meet at least quarterly, and a regular meeting of the Board shall be held
without notice other than this Section 7.2 immediately after, and at the same place as, an annual
meeting of the Members. The Board may, by resolution, provide the time and place for the holding
of additional regular meetings without other notice than such resolution.
Section 7.3
Special Meetings.
A special meeting of the Board may be called at any time at the request of (a) the Chairman of
the Board or (b) a majority of the Directors then in office.
Section 7.4
Notice.
Written notice of all regular meetings of the Board, except for regular meetings scheduled by
resolution as set forth in Section 7.2, must be given to all Directors at least five Days prior to
the regular meeting of the Board and one Business Day prior to any special meeting of the Board.
All notices and other communications to be given to Directors shall be sufficiently given for all
purposes hereunder if in writing and delivered by hand, courier or overnight delivery service or
three Days after being mailed by certified or registered mail, return receipt requested, with
appropriate postage prepaid, or when received in the form of an e-mail, telegram or facsimile, and
shall be directed to the address, e-mail address or facsimile number as such Director shall
designate by notice to the Company. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the Board need be specified in the notice of such meeting, except
for amendments to this Agreement, as provided herein. A meeting may be held at any time without
notice if all the Directors are present or if those not present waive notice of the meeting either
before or after such meeting.
20
Section 7.5
Action by Consent of Board.
Except as otherwise required by Applicable Law, all decisions of the Board shall require the
affirmative vote of a majority of the Directors present at a meeting at which a quorum, as
described in Section 7.7, is present. To the extent permitted by Applicable Law, the Board may act
without a meeting so long as the number of Directors who would be required to take such action at a
duly held meeting shall have executed a written consent with respect to any Board action taken in
lieu of a meeting.
Section 7.6
Conference Telephone Meetings.
Directors or members of any committee of the Board may participate in a meeting of the Board
or such committee by means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at such meeting.
Section 7.7
Quorum.
A majority of Directors, present in person or participating in accordance with Section 7.6,
shall constitute a quorum for the transaction of business, but if at any meeting of the Board there
shall be less than a quorum present, a majority of the Directors present may adjourn the meeting
from time to time without further notice. The Directors present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal of enough Directors
to leave less than a quorum.
Section 7.8
Vacancies; Increases in the Number of Directors.
Unless otherwise provided in this Agreement, vacancies and newly created directorships
resulting from any increase in the authorized number of Directors may be filled by Members
representing a Majority Interest.
Section 7.9
Committees.
(a) The Board may establish committees of the Board and may delegate certain of its
responsibilities to such committees. The Board may combine two or more committees of the Board
into one committee of the Board satisfying the requirements of each such committee so combined.
(b) The Board shall have an audit committee (the
Audit Committee
) comprised of directors who
meet the independence standards required of directors who serve on an audit committee of a board of
directors established by the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder and by the Nasdaq Stock Market or any National Securities
Exchange on which the Common Units are listed. The Audit Committee shall establish a written audit
committee charter in accordance with the rules and regulations of the NASDAQ National Market or any
National Securities Exchange on which the Common Units are listed from time to time, and the
Securities and Exchange Commission, as
21
amended from time to time. The Audit Committee shall review the financial statements of the
Company and the Partnership, review the external financial reporting of the Partnership, recommend
engagement of the Partnerships independent auditors, review procedures for internal auditing and
the adequacy of the Partnerships internal accounting controls and perform such other related
functions as may be directed by the Board from time to time. Each member of the Audit Committee
shall satisfy the rules and regulations of the NASDAQ National Market or any National Securities
Exchange on which the Common Units are listed from time to time and the Securities and Exchange
Commission, as amended from time to time, pertaining to qualification for service on an audit
committee;
provided
, that the Audit Committee may initially be comprised of one or more directors
who do not meet all of the applicable provisions of such rules and regulations pertaining to
qualification for service on an audit committee in accordance with the phase in provisions of
such rules and regulations. An
Independent Director
shall mean a Director so satisfying all of
such rules and regulations.
(c) The Board shall have a conflicts committee comprised of no fewer than two Directors (the
Conflicts Committee
), all of whom shall be Independent Directors, but none of whom may be (i)
security holders, officers or employees of the General Partner, (ii) officers, directors or
employees of any Affiliate (other than the Company) of the General Partner or (iii) holders of any
ownership interest in the Partnership Group other than Common Units. The Conflicts Committee may
review, and approve or disapprove, transactions in which a potential conflict of interest exists or
arises between the Company, or any of its Affiliates (other than a Group Member), on the one hand,
and any Group Member or any Partner (as defined in the Partnership Agreement), all in accordance
with the applicable provisions of the Partnership Agreement. Any matter approved by the Conflicts
Committee in good faith in accordance with the provisions, and subject to the limitations, of the
Partnership Agreement, shall not be deemed to be a breach of any fiduciary or other duties owed by
the Board or any Director to the Company or the Members.
(d) The Board may have a compensation committee (the
Compensation Committee
). The
Compensation Committee shall be charged with such matters pertaining to the compensation of
Directors, Officers and other personnel of the Company, the review, approval and administration of
any Incentive Plans put in place by the Company or the Partnership and such other related matters
as may be directed by the Board from time to time.
(e) A majority of any committee may determine its action and fix the time and place of its
meetings unless the Board shall otherwise provide. Notice of such meetings shall be given to each
member of the committee in the manner provided for in Section 7.4. The Board shall have power at
any time to fill vacancies in, or to change the membership of, any committee, to determine the
Chairman of any committee, or to dissolve any such committee other than the Conflicts Committee.
Nothing herein shall be deemed to prevent the Board from appointing one or more committees
consisting in whole or in part of persons who are not Directors;
provided
,
however
, that no such
committee shall have or may exercise any authority of the Board.
22
Section 7.10
Removal.
Any Director or the entire Board may be removed, with or without cause, by the holders of a
Majority Interest then entitled to vote at an election of Directors.
Section 7.11
Compensation of Directors.
Except as expressly provided in any written agreement between the Company and a Director or by
resolution of the Board pursuant to Section 7.5, no Director shall receive any compensation from
the Company for services provided to the Company in its capacity as a Director, except that each
Director shall be compensated for attendance at Board meetings at rates of compensation as from
time to time established by the Board or a committee thereof;
provided
,
however
, that Directors who
are also employees of the Company or any Affiliate thereof shall receive no compensation for their
services as Directors or committee members. In addition, the Directors who are not employees of the
Company or any Affiliate thereof shall be entitled to be reimbursed for out-of-pocket costs and
expenses incurred in connection with attending meetings of the Board or committees thereof.
ARTICLE VIII
OFFICERS
Section 8.1
Officers.
The officers of the Company shall serve at the pleasure of the Board. Such officers shall
have the authority and duties delegated to each of them, respectively, by the Board from time to
time. The officers of the Company shall be a Chairman of the Board, a President, a Secretary, a
Treasurer, and such other officers (including, without limitation, Executive Vice Presidents,
Senior Vice Presidents and Vice Presidents) as the Board from time to time may deem proper. The
Chairman of the Board shall be chosen from among the Directors. All officers elected by the Board
shall each have such powers and duties as generally pertain to their respective offices, subject to
the specific provisions of this Article VIII. The Board or any committee thereof may from time to
time elect such other officers (including one or more Vice Presidents, General Counsels,
Controllers, Assistant Secretaries and Assistant Treasurers) as may be necessary or desirable for
the conduct of the business of the Company. Such other officers and agents shall have such duties
and shall hold their offices for such terms as shall be provided in this Agreement or as may be
prescribed by the Board or such committee, as the case may be.
Section 8.2
Election and Term of Office.
The names and titles of the officers of the Company in office as of the date of approval of
this Agreement are set forth on Exhibit C hereto. Thereafter, the officers of the Company shall be
elected annually by the Board at the regular meeting of the Board held after the annual meeting of
Members referred to in Section 7.2. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as convenient. Each officer shall hold office until
such persons successor shall have been duly elected and shall have qualified or until such
persons death or until he shall resign or be removed pursuant to Section 8.8.
23
Section 8.3
Chairman of the Board; Chief Executive Officer.
The Chairman of the Board shall preside at all meetings of the Limited Partners, the Members
and the Board and shall be the President and Chief Executive Officer of the Company. The Chairman
of the Board shall be responsible for the general management of the affairs of the Company and
shall perform all duties incidental to such persons office which may be required by law and all
such other duties as are properly required of him by the Board. He shall make reports to the Board
and the Members and shall see that all orders and resolutions of the Board and of any committee
thereof are carried into effect. The Directors also may elect a Vice-Chairman to act in the place
of the Chairman upon his or her absence or inability to act.
Section 8.4
Chief Operating Officer.
The Chief Operating Officer of the Company shall assist the Chairman of the Board in the
administration and operation of the Companys business and general supervision of its policies and
affairs. The Chief Operating Officer, if he is also a director, shall, in the absence of or
because of the inability to act of the Chairman of the Board, perform all duties of the Chairman of
the Board and preside at all meetings of the Limited Partners, the Members and the Board.
Section 8.5
Vice Presidents.
Each Executive Vice President and Senior Vice President and any Vice President shall have such
powers and shall perform such duties as shall be assigned to him by the Board.
Section 8.6
Treasurer.
The Treasurer shall exercise general supervision over the receipt, custody and disbursement of
corporate funds. The Treasurer shall cause the funds of the Company to be deposited in such banks
as may be authorized by the Board, or in such banks as may be designated as depositories in the
manner provided by resolution of the Board. The Treasurer shall, in general, perform all duties
incident to the office of the Treasurer and shall have such further powers and duties and shall be
subject to such directions as may be granted or imposed from time to time by the Board.
(a) Assistant Treasurers shall have such of the authority and perform such of the duties of
the Treasurer as may be provided in this Agreement or assigned to them by the Board or the
Treasurer. Assistant Treasurers shall assist the Treasurer in the performance of the duties
assigned to the Treasurer, and in assisting the Treasurer, each Assistant Treasurer shall for such
purpose have the powers of the Treasurer. During the Treasurers absence or inability, the
Secretarys authority and duties shall be possessed by such Assistant Treasurer or Assistant
Treasurers as the Board may designate.
24
Section 8.7
Secretary.
(a) The Secretary shall keep or cause to be kept, in one or more books provided for that
purpose, the minutes of all meetings of the Board, the committees of the Board and the Members and
of the Limited Partners pursuant to Article VII. The Secretary shall see that all notices are duly
given in accordance with the provisions of this Agreement and as required by law; shall be
custodian of the records and the seal of the Company and affix and attest the seal to all documents
to be executed on behalf of the Company under its seal; and shall see that the books, reports,
statements, certificates and other documents and records required by law to be kept and filed are
properly kept and filed; and in general, shall perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to the Secretary by the Board.
(b) Assistant Secretaries shall have such of the authority and perform such of the duties of
the Secretary as may be provided in this Agreement or assigned to them by the Board or the
Secretary. Assistant Secretaries shall assist the Secretary in the performance of the duties
assigned to the Secretary, and in assisting the Secretary, each Assistant Secretary shall for such
purpose have the powers of the Secretary. During the Secretarys absence or inability, the
Secretarys authority and duties shall be possessed by such Assistant Secretary or Assistant
Secretaries as the Board may designate.
Section 8.8
Removal.
Any officer elected, or agent appointed, by the Board may be removed by the affirmative vote
of a majority of the Board whenever, in their judgment, the best interests of the Company would be
served thereby. No officer shall have any contractual rights against the Company for compensation
by virtue of such election beyond the date of the election of such persons successor, such
persons death, such persons resignation or such persons removal, whichever event shall first
occur, except as otherwise provided in an employment contract or under an employee deferred
compensation plan.
Section 8.9
Vacancies.
A newly created elected office and a vacancy in any elected office because of death,
resignation or removal may be filled by the Board for the unexpired portion of the term at any
meeting of the Board.
ARTICLE IX
INDEMNITY AND LIMITATION OF LIABILITY
Section 9.1
Indemnification.
(a) To the fullest extent permitted by law but subject to the limitations expressly provided
in this Agreement, all Indemnitees shall be indemnified and held harmless by the Company from and
against any and all losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or
25
other amounts arising from any and all claims, demands, actions, suits or proceedings, whether
civil, criminal, administrative or investigative, in which any Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise, by reason of its status as an Indemnitee;
provided
, that the Indemnitee shall not be indemnified and held harmless if there has been a final
and non-appealable judgment entered by a court of competent jurisdiction determining that, in
respect of the matter for which the Indemnitee is seeking indemnification pursuant to this Section
9.1, the Indemnitee acted in bad faith or engaged in fraud, willful misconduct or, in the case of a
criminal matter, acted with knowledge that the Indemnitees conduct was unlawful. Any
indemnification pursuant to this Section 9.1 shall be made only out of the assets of the Company,
it being agreed that the Members shall not be personally liable for such indemnification and shall
have no obligation to contribute or lend any monies or property to the Company to enable it to
effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including legal fees and expenses)
incurred by an Indemnitee who is indemnified pursuant to Section 9.1(a) in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to a
determination that the Indemnitee is not entitled to be indemnified upon receipt by the Company of
an undertaking by or on behalf of the Indemnitee to repay such amount if it shall be determined
that the Indemnitee is not entitled to be indemnified as authorized in this Section 9.1.
(c) The indemnification provided by this Section 9.1 shall be in addition to any other rights
to which an Indemnitee may be entitled under any agreement, as a matter of law or otherwise, both
as to actions in the Indemnitees capacity as an Indemnitee and as to actions in any other capacity
(including any capacity under the Purchase Agreement (as such term is defined in the Partnership
Agreement)), and shall continue as to an Indemnitee who has ceased to serve in such capacity and
shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee.
(d) The Company may purchase and maintain (or reimburse the General Partner or its Affiliates
for the cost of) insurance on behalf of the Indemnitees, the Company and its Affiliates and such
other Persons as the Company shall determine, against any liability that may be asserted against or
expense that may be incurred by such Person in connection with the Companys activities or such
Persons activities on behalf of the Company, regardless of whether the Company would have the
power to indemnify such Person against such liability under the provisions of this Agreement.
(e) For purposes of this Section 9.1, the Company shall be deemed to have requested an
Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Company also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to
an employee benefit plan pursuant to Applicable Law shall constitute fines within the meaning of
Section 9.1(a); and action taken or omitted by it with respect to any employee benefit plan in the
performance of its duties for a purpose reasonably believed by it to be in the
26
interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose
that is in the best interests of the Company.
(f) An Indemnitee shall not be denied indemnification in whole or in part under this Section
9.1 because the Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.
(g) The provisions of this Section 9.1 are for the benefit of the Indemnitees, their heirs,
successors, assigns and administrators and shall not be deemed to create any rights for the benefit
of any other Persons.
(h) No amendment, modification or repeal of this Section 9.1 or any provision hereof shall in
any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be
indemnified by the Company, nor the obligations of the Company to indemnify any such Indemnitee
under and in accordance with the provisions of this Section 9.1 as in effect immediately prior to
such amendment, modification or repeal with respect to claims arising from or relating to matters
occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when
such claims may arise or be asserted.
(i) THE PROVISIONS OF THE INDEMNIFICATION PROVIDED IN THIS SECTION 9.1 ARE INTENDED BY THE
PARTIES TO APPLY EVEN IF SUCH PROVISIONS HAVE THE EFFECT OF EXCULPATING THE INDEMNITEE FROM LEGAL
RESPONSIBILITY FOR THE CONSEQUENCES OF SUCH PERSONS NEGLIGENCE, FAULT OR OTHER CONDUCT.
Section 9.2
Liability of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in this Agreement, no Indemnitee shall
be liable for monetary damages to the Company, the Partnership,
the Members or any other Persons who have
acquired membership interests in the Company, for losses sustained or liabilities incurred as a
result of any act or omission of an Indemnitee unless there has been a final and non-appealable
judgment entered by a court of competent jurisdiction determining that, in respect of the matter in
question, the Indemnitee acted in bad faith or engaged in fraud, willful misconduct or, in the case
of a criminal matter, acted with knowledge that the Indemnitees conduct was criminal.
(b) To the extent that, at law or in equity, an Indemnitee has duties (including fiduciary
duties) and liabilities relating thereto to the Company, such Indemnitee acting in connection with
the Companys business or affairs shall not be liable to the Company or to any Member for its good
faith reliance on the provisions of this Agreement.
(c) Any amendment, modification or repeal of this Section 9.2 or any provision hereof shall be
prospective only and shall not in any way affect the limitations on the liability of the
Indemnitees under this Section 9.2 as in effect immediately prior to such amendment, modification
or repeal with respect to claims arising from or relating to matters occurring, in
27
whole or in part, prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
ARTICLE X
TAXES
Section 10.1
Tax R
e
turns.
The Tax Matters Officer (as defined below) of the Company shall prepare and timely file (on
behalf of the Company) all federal, state and local tax returns required to be filed by the
Company. Each Member shall furnish to the Company all pertinent information in its possession
relating to the Companys operations that is necessary to enable the Companys tax returns to be
timely prepared and filed. The Company shall bear the costs of the preparation and filing of its
returns.
Section 10.2
Tax Elections.
(a) The Company shall make the following elections on the appropriate tax returns:
(i) to adopt as the Companys fiscal year the calendar year;
(ii) to adopt the accrual method of accounting;
(iii) if a distribution of the Companys property as described in Section 734 of the Code
occurs or upon a transfer of Membership Interest as described in Section 743 of the Code occurs, on
request by notice from any Member, to elect, pursuant to Section 754 of the Code, to adjust the
basis of the Companys properties;
(iv) to elect to amortize the organizational expenses of the Company ratably over a period of
60 months as permitted by Section 709(b) of the Code; and
(v) any other election the Members may deem appropriate.
(b) Neither the Company nor any Member shall make an election for the Company to be excluded
from the application of the provisions of subchapter K of chapter 1 of subtitle A of the Code or
any similar provisions of applicable state law and no provision of this Agreement (including
Section 2.7) shall be construed to sanction or approve such an election.
Section 10.3
Tax Matters Officer.
(a) The Board shall select the President or the Chief Financial Officer (or, if there are no
officers serving under such titles, such other officer in a comparable position), of the Company to
act as the tax matters partner of the Company pursuant to Section 6231(a)(7) of the Code (the
Tax Matters Officer
). The Tax Matters Officer shall take such action as may be necessary to
cause to the extent possible each Member to become a notice partner within the meaning of Section
6223 of the Code. The Tax Matters Officer shall inform each Member of all
28
significant matters that may come to its attention in its capacity as Tax Matters Officer by
giving notice thereof on or before the fifth Business Day after becoming aware thereof and, within
that time, shall forward to each Member copies of all significant written communications it may
receive in that capacity.
(b) The Tax Matters Officer shall take no action without the authorization of the Board, other
than such action as may be required by Applicable Law. Any cost or expense incurred by the Tax
Matters Officer in connection with its duties, including the preparation for or pursuance of
administrative or judicial proceedings, shall be paid by the Company.
(c) The Tax Matters Officer shall not enter into any extension of the period of limitations
for making assessments on behalf of the Members without first obtaining the consent of the Members.
The Tax Matters Officer shall not bind any Member to a settlement agreement without obtaining the
consent of such Member. Any Member that enters into a settlement agreement with respect to any
Company item (as described in Section 6231(a)(3) of the Code) shall notify the other Members of
such settlement agreement and its terms within 90 Days from the date of the settlement.
(d) No Member shall file a request pursuant to Section 6227 of the Code for an administrative
adjustment of Company items for any taxable year without first notifying the other Members. If the
Members consent to the requested adjustment, the Tax Matters Officer shall file the request for the
administrative adjustment on behalf of the Members. If such consent is not obtained within 30 Days
from such notice, or within the period required to timely file the request for administrative
adjustment, if shorter, any Member may file a request for administrative adjustment on its own
behalf. Any Member intending to file a petition under Sections 6226, 6228 or other Section of the
Code with respect to any item involving the Company shall notify the other Members of such
intention and the nature of the contemplated proceeding. In the case where the Tax Matters Officer
is intending to file such petition on behalf of the Company, such notice shall be given within a
reasonable period of time to allow the Members to participate in the choosing of the forum in which
such petition will be filed.
(e) If any Member intends to file a notice of inconsistent treatment under Section 6222(b) of
the Code, such Member shall give reasonable notice under the circumstances to the other Members of
such intent and the manner in which the Members intended treatment of an item is (or may be)
inconsistent with the treatment of that item by the other Members.
ARTICLE XI
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
Section 11.1
Maintenance of Books.
(a) The Members shall cause to be kept a record containing the minutes of the proceedings of
the meetings of the Members. The Board shall cause to be kept a record containing the minutes of
the proceedings of the meetings of the Board and of the Limited
29
Partners pursuant to Article VII, appropriate registers and such books of records and accounts
as may be necessary for the proper conduct of the business of the Company.
(b) The books of account of the Company shall be (i) maintained on the basis of a fiscal year
that is the calendar year, (ii) maintained on an accrual basis in accordance with GAAP,
consistently applied and (iii) audited by the Certified Public Accountants at the end of each
calendar year.
Section 11.2
Reports.
With respect to each calendar year, the Board shall prepare, or cause to be prepared, and deliver,
or cause to be delivered, to each Member:
(a) Within 120 Days after the end of such calendar year, a profit and loss statement and a
statement of cash flows for such year, a balance sheet and a statement of each Members Capital
Account as of the end of such year, together with a report thereon of the Certified Public
Accountants; and
(b) Such federal, state and local income tax returns and such other accounting, tax
information and schedules as shall be necessary for the preparation by each Member on or before
June 15 following the end of each calendar year of its income tax return with respect to such year.
Section 11.3
Bank Accounts.
Funds of the Company shall be deposited in such banks or other depositories as shall be
designated from time to time by the Board. All withdrawals from any such depository shall be made
only as authorized by the Board and shall be made only by check, wire transfer, debit memorandum or
other written instruction.
ARTICLE XII
DISSOLUTION, WINDING-UP, TERMINATION AND CONVERSION
Section 12.1
Dissolution.
(a) The Company shall dissolve and its affairs shall be wound up on the first to occur of the
following events (each a
Dissolution Event
):
(i) the unanimous consent of the Members; or
(ii) entry of a decree of judicial dissolution of the Company under Section 18-802 of the Act;
or
(iii) at any time there are no Members of the Company, unless the Company is continued in
accordance with the Act or this Agreement.
30
(b) No other event shall cause a dissolution of the Company.
(c) Upon the occurrence of any event that causes there to be no Members of the Company, to the
fullest extent permitted by law, the personal representative of the last remaining Member is hereby
authorized to, and shall, within 90 days after the occurrence of the event that terminated the
continued membership of such Member in the Company, agree in writing (i) to continue the Company
and (ii) to the admission of the personal representative or its nominee or designee, as the case
may be, as a substitute Member of the Company, effective as of the occurrence of the event that
terminated the continued membership of such Member in the Company.
(d) Notwithstanding any other provision of this Agreement, the Bankruptcy of a Member shall
not cause such Member to cease to be a member of the Company and, upon the occurrence of such an
event, the Company shall continue without dissolution.
Section 12.2
Winding-Up and Termination.
(a) On the occurrence of a Dissolution Event, the Members shall act as liquidator. The
liquidator shall proceed diligently to wind up the affairs of the Company and make final
distributions as provided herein and in the Act. The costs of winding up shall be borne as a
Company expense. The steps to be accomplished by the liquidator are as follows:
(i) as promptly as possible after dissolution and again after final winding up, the liquidator
shall cause a proper accounting to be made by a recognized firm of certified public accountants of
the Companys assets, liabilities, and operations through the last Day of the month in which the
dissolution occurs or the final winding up is completed, as applicable;
(ii) the liquidator shall discharge from Company funds all of the debts, liabilities and
obligations of the Company (including all expenses incurred in winding up or otherwise make
adequate provision for payment and discharge thereof (including the establishment of a cash escrow
fund for contingent, conditional and unmatured liabilities in such amount and for such term as the
liquidator may reasonably determine); and
(iii) all remaining assets of the Company shall be distributed to the Members as follows:
A. the liquidator may sell any or all Company property, including to Members, and any
resulting gain or loss from each sale shall be computed and allocated to the Capital Accounts of
the Members in accordance with the provisions of Article VI;
B. with respect to all Company property that has not been sold, the fair market value of that
property shall be determined and the Capital Accounts of the Members shall be adjusted to reflect
the manner in which the unrealized income, gain, loss, and deduction inherent in property that has
not been reflected in the Capital Accounts previously would be allocated among the Members if there
were a taxable disposition of that property for the fair market value of that property on the date
of distribution; and
31
C. Company property (including cash) shall be distributed among the Members in accordance with
Section 6.2; and, to the extent practicable, those distributions shall be made by the end of the
taxable year of the Company during which the liquidation of the Company occurs (or, if later, 90
Days after the date of the liquidation);
provided
,
however
, that notwithstanding the foregoing provisions of clauses (A), (B) and (C)
immediately above, if the obligation to maintain Capital Accounts has been suspended under Section
13.12 of this Agreement, no allocations shall be made and all Company property shall be distributed
to the sole Member.
(b) The distribution of cash or property to a Member in accordance with the provisions of this
Section 12.2 constitutes a complete return to the Member of its Capital Contributions and a
complete distribution to the Member of its Membership Interest and all the Companys property and
constitutes a compromise to which all Members have consented pursuant to Section 18-502(b) of the
Act. To the extent that a Member returns funds to the Company, it has no claim against any other
Member for those funds.
Section 12.3
Deficit Capital Accounts.
No Member will be required to pay to the Company, to any other Member or to any third party
any deficit balance that may exist from time to time in the Members Capital Account.
Section 12.4
Certificate of Cancellation.
On completion of the distribution of Company assets as provided herein, the Members (or such
other Person or Persons as the Act may require or permit) shall file a certificate of cancellation
with the Secretary of State of Delaware, cancel any other filings made pursuant to Section 2.5, and
take such other actions as may be necessary to terminate the existence of the Company. Upon the
filing of such certificate of cancellation, the existence of the Company shall terminate (and the
Term shall end), except as may be otherwise provided by the Act or by Applicable Law.
ARTICLE XIII
GENERAL PROVISIONS
Section 13.1
Off
s
et.
Whenever the Company is to pay any sum to any Member, any amounts that Member owes the Company
may be deducted from that sum before payment.
32
Section 13.2
Notices.
All notices, demands, requests, consents, approvals or other communications (collectively,
Notices
) required or permitted to be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be personally served, delivered by reputable air courier
service with charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have specified most
recently by written notice. Notice shall be deemed given on the date of service or transmission if
personally served or transmitted by telegram, telex or facsimile. Notice otherwise sent as provided
herein shall be deemed given upon delivery of such notice:
To the Company:
UCO GP, LLC
4444 Brittmoore Road
Houston, Texas 77041
Attn:Ernie L. Danner, Executive Vice President
Telephone: (713) 335-7000
Fax: (713) 466-6720
To UCI:
Universal Compression, Inc.
4444 Brittmoore Road
Houston, Texas 77041
Attn: Ernie L. Danner, Executive Vice President and Chief Operating Officer
Telephone:(713) 335-7000
Fax: (713) 466-6720
Section 13.3
Entire A
g
reement; Superseding Effect.
This Agreement constitutes the entire agreement of the Members relating to the Company and the
transactions contemplated hereby, and supersedes all provisions and concepts contained in all prior
contracts or agreements between the Members with respect to the Company, whether oral or written.
Section 13.4
Effect of Waiver or Consent.
Except as otherwise provided in this Agreement, a waiver or consent, express or implied, to or
of any breach or default by any Member in the performance by that Member of its obligations with
respect to the Company is not a consent or waiver to or of any other breach or default in the
performance by that Member of the same or any other obligations of that Member with respect to the
Company. Except as otherwise provided in this Agreement, failure on the part of a Member to
complain of any act of any Member or to declare any Member in default with respect to the Company,
irrespective of how long that failure continues, does not constitute
33
a waiver by that Member of its rights with respect to that default until the applicable
statute-of-limitations period has run.
Section 13.5
Amendment or Restatement.
Subject to the provision of Section 7.9(d), this Agreement or the Delaware Certificate may be
amended or restated only by a written instrument executed (or, in the case of the Delaware
Certificate, approved) by the Members;
provided
,
however
, that, subject to the provision of Section
7.9(d), any amendment to the provisions of Article VII shall be approved by the Board;
provided
further
, that, Section 7.1 may be amended or restated only by approval of the Board and the
Members.
Section 13.6
Binding Effect.
Subject to the restrictions on Dispositions set forth in this Agreement, this Agreement is
binding on and shall inure to the benefit of the Members and their respective successors and
permitted assigns.
Section 13.7
Governing Law; Severability.
THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
OF DELAWARE, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR
THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the event of a direct
conflict between the provisions of this Agreement and any mandatory, non-waivable provision of the
Act, such provision of the Act shall control. If any provision of the Act may be varied or
superseded in a limited liability company agreement (or otherwise by agreement of the members or
managers of a limited liability company), such provision shall be deemed superseded and waived in
its entirety if this Agreement contains a provision addressing the same issue or subject matter.
If any provision of this Agreement or the application thereof to any Member or circumstance is held
invalid or unenforceable to any extent, (a) the remainder of this Agreement and the application of
that provision to other Members or circumstances is not affected thereby, and (b) the Members shall
negotiate in good faith to replace that provision with a new provision that is valid and
enforceable and that puts the Members in substantially the same economic, business and legal
position as they would have been in if the original provision had been valid and enforceable.
Section 13.8
Further Assurances.
In connection with this Agreement and the transactions contemplated hereby, each Member shall
execute and deliver any additional documents and instruments and perform any additional acts that
may be necessary or appropriate to effectuate and perform the provisions of this Agreement and
those transactions.
34
Section 13.9
Waiver of Certain Rights.
Each Member irrevocably waives any right it may have to maintain any action for dissolution of
the Company or for partition of the property of the Company.
Section 13.10
Counterparts.
This Agreement may be executed in any number of counterparts with the same effect as if all
signing parties had signed the same document. All counterparts shall be construed together and
constitute the same instrument.
Section 13.11
Jurisdiction.
Any and all Claims arising out of, in connection with or in relation to (i) the
interpretation, performance or breach of this Agreement, or (ii) any relationship before, at the
time of entering into, during the term of, or upon or after expiration or termination of this
Agreement, between the parties hereto, shall be brought in any court of competent jurisdiction in
the State of Texas. Each party hereto unconditionally and irrevocably consents to the jurisdiction
of any such court over any Claims and waives any objection that such party may have to the laying
of venue of any Claims in any such court.
Section 13.12
Suspension of Certain Provisions If Only One Member.
(a) The following definitions in Article I of this Agreement shall be suspended and shall have
no force or effect at any time that there is only one Member of the Company:
(i) Adjusted Capital Account Deficit,
(ii) Capital Account,
(iii) Depreciation,
(iv) Gross Asset Value,
(v) Profits and Losses,
(vi) Target Capital Account Amount, and
(vii) Treasury Regulations.
(b) The following provision of this Agreement shall be suspended and shall have no force or
effect at any time that there is only one Member of the Company:
(i) Section 5.4 (Capital Accounts);
(ii) Section 6.3 (Allocations);
(iii) Section 6.4 (Varying Interests);
(iv) Section 6.5 (Tax Distributions);
35
(v) Section 6.6 (Withheld Taxes);
(vi) Section 10.1 (Tax Returns);
(vii) Section 10.2 (Tax Elections); and
(viii) Section 12.3 (Deficit Capital Accounts).
36
IN WITNESS WHEREOF, the Member has executed this Agreement as of the date first set
forth above.
|
|
|
|
|
|
|
|
|
MEMBER:
|
|
|
|
|
|
|
|
|
|
|
|
UNIVERSAL COMPRESSION, INC.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ J. Michael Anderson
Name: J. Michael Anderson
|
|
|
|
|
|
|
Title: Senior Vice President
|
|
|
[Signature
Page to UCO GP, LLC LLC Agreement]
EXHIBIT A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Capital
|
Member
|
|
Sharing Ratio
|
|
Contribution
|
Universal Compression, Inc.
|
|
|
100
|
%
|
|
$
|
1,000.00
|
|
Exhibit A
EXHIBIT B
DIRECTORS
|
|
|
Name
|
|
Title
|
Stephen A. Snider
|
|
Chairman of the Board and Director
|
Ernie L. Danner
|
|
Director
|
Daniel K. Schlanger
|
|
Director
|
J. Michael Anderson
|
|
Director
|
Kirk E. Townsend
|
|
Director
|
James G. Crump
|
|
Director
|
Mark A. McCollum
|
|
Director
|
Exhibit B
EXHIBIT C
OFFICERS
|
|
|
Name
|
|
Title
|
Stephen A. Snider
|
|
President, Chief Executive Officer and Chairman of the
Board
|
Ernie L. Danner
|
|
Executive Vice President
|
Daniel K. Schlanger
|
|
Senior Vice President and Chief Financial Officer
|
J. Michael Anderson
|
|
Senior Vice President
|
Kirk E. Townsend
|
|
Senior Vice President
|
D. Bradley Childers
|
|
Senior Vice President
|
Richard Leong
|
|
Senior Vice President
|
Donald Wayne
|
|
Vice President, General Counsel and Secretary
|
Kenneth R. Bickett
|
|
Vice President and Controller
|
Exhibit C
Exhibit 10.1
SENIOR SECURED CREDIT AGREEMENT
Dated as of October 20, 2006
Among
UC OPERATING PARTNERSHIP, L.P.,
as Borrower,
UNIVERSAL COMPRESSION PARTNERS, L.P.
as Guarantor,
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent,
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Syndication Agent,
FORTIS CAPITAL CORP. AND WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Co-Documentation Agents
AND
THE LENDERS SIGNATORY HERETO
Arranged by:
WACHOVIA CAPITAL MARKETS, LLC AND DEUTSCHE BANK SECURITIES INC.
as Joint Lead Arrangers and Joint Book Runners
$225,000,000 Senior Secured Credit Facilities
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
ARTICLE I
|
|
|
|
|
|
|
DEFINITIONS AND ACCOUNTING MATTERS
|
|
|
|
|
|
|
|
|
|
|
|
Section 1.01
|
|
Terms Defined Above
|
|
|
1
|
|
Section 1.02
|
|
Certain Defined Terms
|
|
|
1
|
|
Section 1.03
|
|
Types of Loans and Borrowings
|
|
|
22
|
|
Section 1.04
|
|
Terms Generally; Rules of Construction
|
|
|
22
|
|
Section 1.05
|
|
Accounting Terms and Determinations; GAAP
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
ARTICLE II
|
|
|
|
|
|
|
THE CREDITS
|
|
|
|
|
|
|
|
|
|
|
|
Section 2.01
|
|
Commitments
|
|
|
23
|
|
Section 2.02
|
|
Loans and Borrowings
|
|
|
23
|
|
Section 2.03
|
|
Requests for Borrowings
|
|
|
25
|
|
Section 2.04
|
|
Interest Elections
|
|
|
26
|
|
Section 2.05
|
|
Funding of Borrowings
|
|
|
27
|
|
Section 2.06
|
|
Termination, Reduction and Increase of Aggregate Commitments
|
|
|
28
|
|
Section 2.07
|
|
Letters of Credit
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
ARTICLE III
|
|
|
|
|
|
|
PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
|
|
|
|
|
|
|
|
|
|
|
|
Section 3.01
|
|
Repayment of Loans
|
|
|
35
|
|
Section 3.02
|
|
Interest
|
|
|
35
|
|
Section 3.03
|
|
Alternate Rate of Interest
|
|
|
36
|
|
Section 3.04
|
|
Prepayments
|
|
|
37
|
|
Section 3.05
|
|
Fees
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
ARTICLE IV
|
|
|
|
|
|
|
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS
|
|
|
|
|
|
|
|
|
|
|
|
Section 4.01
|
|
Payments Generally; Pro Rata Treatment; Sharing of Set-offs
|
|
|
39
|
|
Section 4.02
|
|
Presumption of Payment by the Borrower
|
|
|
40
|
|
Section 4.03
|
|
Certain Deductions by the Administrative Agent
|
|
|
40
|
|
Section 4.04
|
|
Disposition of Proceeds
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
ARTICLE V
|
|
|
|
|
|
|
INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY
|
|
|
|
|
|
|
|
|
|
|
|
Section 5.01
|
|
Increased Costs
|
|
|
41
|
|
Section 5.02
|
|
Break Funding Payments
|
|
|
42
|
|
Section 5.03
|
|
Taxes
|
|
|
42
|
|
Section 5.04
|
|
Mitigation Obligations; Replacement of Lenders
|
|
|
44
|
|
Section 5.05
|
|
Illegality
|
|
|
44
|
|
i
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
ARTICLE VI
|
|
|
|
|
|
|
CONDITIONS PRECEDENT
|
|
|
|
|
|
|
|
|
|
|
|
Section 6.01
|
|
Effective Date
|
|
|
45
|
|
Section 6.02
|
|
Each Credit Event
|
|
|
47
|
|
Section 6.03
|
|
Conditions Precedent to the Term Loans and Commitment Increases
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
ARTICLE VII
|
|
|
|
|
|
|
REPRESENTATIONS AND WARRANTIES
|
|
|
|
|
|
|
|
|
|
|
|
Section 7.01
|
|
Legal Existence
|
|
|
49
|
|
Section 7.02
|
|
Financial Condition
|
|
|
49
|
|
Section 7.03
|
|
Litigation
|
|
|
49
|
|
Section 7.04
|
|
No Breach
|
|
|
49
|
|
Section 7.05
|
|
Authority
|
|
|
49
|
|
Section 7.06
|
|
Approvals
|
|
|
50
|
|
Section 7.07
|
|
Use of Loans and Letters of Credit
|
|
|
50
|
|
Section 7.08
|
|
ERISA
|
|
|
50
|
|
Section 7.09
|
|
Taxes
|
|
|
50
|
|
Section 7.10
|
|
Titles, Etc.
|
|
|
51
|
|
Section 7.11
|
|
No Material Misstatements
|
|
|
51
|
|
Section 7.12
|
|
Investment Company Act
|
|
|
51
|
|
Section 7.13
|
|
Subsidiaries
|
|
|
51
|
|
Section 7.14
|
|
Location of Business and Offices
|
|
|
51
|
|
Section 7.15
|
|
Defaults
|
|
|
52
|
|
Section 7.16
|
|
Environmental Matters
|
|
|
52
|
|
Section 7.17
|
|
Compliance with the Law
|
|
|
53
|
|
Section 7.18
|
|
Insurance
|
|
|
53
|
|
Section 7.19
|
|
Hedging Agreements
|
|
|
53
|
|
Section 7.20
|
|
Restriction on Liens
|
|
|
54
|
|
|
|
|
|
|
|
|
|
|
ARTICLE VIII
|
|
|
|
|
|
|
AFFIRMATIVE COVENANTS
|
|
|
|
|
|
|
|
|
|
|
|
Section 8.01
|
|
Reporting Requirements
|
|
|
54
|
|
Section 8.02
|
|
Litigation
|
|
|
56
|
|
Section 8.03
|
|
Maintenance, Etc.
|
|
|
56
|
|
Section 8.04
|
|
Environmental Matters
|
|
|
57
|
|
Section 8.05
|
|
Further Assurances
|
|
|
57
|
|
Section 8.06
|
|
Performance of Obligations
|
|
|
57
|
|
Section 8.07
|
|
Collateral
|
|
|
58
|
|
Section 8.08
|
|
Notice of an ERISA Event
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
ARTICLE IX
|
|
|
|
|
|
|
NEGATIVE COVENANTS
|
|
|
|
|
|
|
|
|
|
|
|
Section 9.01
|
|
Debt
|
|
|
59
|
|
Section 9.02
|
|
Liens
|
|
|
60
|
|
Section 9.03
|
|
Investments
|
|
|
61
|
|
Section 9.04
|
|
Dividends, Distributions and Redemptions
|
|
|
62
|
|
ii
|
|
|
|
|
|
|
|
|
|
|
Page
|
Section 9.05
|
|
Nature of Business
|
|
|
62
|
|
Section 9.06
|
|
Mergers, Etc.
|
|
|
62
|
|
Section 9.07
|
|
Proceeds of Notes; Letters of Credit
|
|
|
63
|
|
Section 9.08
|
|
Sale or Discount of Receivables
|
|
|
63
|
|
Section 9.09
|
|
Fiscal Year Change
|
|
|
63
|
|
Section 9.10
|
|
Certain Financial Covenants
|
|
|
63
|
|
Section 9.11
|
|
Sale of Properties
|
|
|
63
|
|
Section 9.12
|
|
Environmental Matters
|
|
|
64
|
|
Section 9.13
|
|
Transactions with Affiliates
|
|
|
64
|
|
Section 9.14
|
|
Subsidiaries
|
|
|
64
|
|
Section 9.15
|
|
Negative Pledge Agreements
|
|
|
65
|
|
|
|
|
|
|
|
|
|
|
ARTICLE X
|
|
|
|
|
|
|
EVENTS OF DEFAULT; REMEDIES
|
|
|
|
|
|
|
|
|
|
|
|
Section 10.01
|
|
Events of Default
|
|
|
65
|
|
Section 10.02
|
|
Remedies
|
|
|
67
|
|
|
|
|
|
|
|
|
|
|
ARTICLE XI
|
|
|
|
|
|
|
THE AGENTS
|
|
|
|
|
|
|
|
|
|
|
|
Section 11.01
|
|
Appointment; Powers
|
|
|
68
|
|
Section 11.02
|
|
Duties and Obligations of Administrative Agent
|
|
|
68
|
|
Section 11.03
|
|
Action by Administrative Agent
|
|
|
69
|
|
Section 11.04
|
|
Reliance by Administrative Agent
|
|
|
70
|
|
Section 11.05
|
|
Subagents
|
|
|
70
|
|
Section 11.06
|
|
Resignation or Removal of Administrative Agent
|
|
|
70
|
|
Section 11.07
|
|
Agents as Lenders
|
|
|
71
|
|
Section 11.08
|
|
No Reliance
|
|
|
71
|
|
Section 11.09
|
|
Administrative Agent May File Proofs of Claim
|
|
|
72
|
|
Section 11.10
|
|
Authority of Administrative Agent to Release Collateral and Liens
|
|
|
72
|
|
Section 11.11
|
|
The Joint Lead Arrangers, the Syndication Agent and the Co- Documentation Agents
|
|
|
72
|
|
|
|
|
|
|
|
|
|
|
ARTICLE XII
|
|
|
|
|
|
|
MISCELLANEOUS
|
|
|
|
|
|
|
|
|
|
|
|
Section 12.01
|
|
Notices
|
|
|
73
|
|
Section 12.02
|
|
Waivers; Amendments
|
|
|
73
|
|
Section 12.03
|
|
Expenses, Indemnity; Damage Waiver
|
|
|
74
|
|
Section 12.04
|
|
Successors and Assigns
|
|
|
77
|
|
Section 12.05
|
|
Survival; Revival; Reinstatement
|
|
|
79
|
|
Section 12.06
|
|
Counterparts; Integration; Effectiveness
|
|
|
79
|
|
Section 12.07
|
|
Severability
|
|
|
80
|
|
Section 12.08
|
|
Right of Setoff
|
|
|
80
|
|
Section 12.09
|
|
Governing Law; Jurisdiction; Consent to Service of Process
|
|
|
80
|
|
Section 12.10
|
|
Headings
|
|
|
81
|
|
Section 12.11
|
|
Confidentiality
|
|
|
82
|
|
Section 12.12
|
|
Interest Rate Limitation
|
|
|
83
|
|
Section 12.13
|
|
Exculpation Provisions
|
|
|
84
|
|
iii
|
|
|
|
|
|
|
|
|
|
|
Page
|
Section 12.14
|
|
Collateral Matters; Hedging Agreements
|
|
|
84
|
|
Section 12.15
|
|
No Third Party Beneficiaries
|
|
|
84
|
|
Section 12.16
|
|
USA Patriot Act Notice
|
|
|
84
|
|
Section 12.17
|
|
No General Partners Liability
|
|
|
85
|
|
iv
EXHIBITS AND SCHEDULES
|
|
|
Exhibit A
|
|
Form of Note
|
Exhibit B
|
|
Form of Borrowing Request
|
Exhibit C
|
|
Form of Interest Election Request
|
Exhibit D-1
|
|
Form of Effective Date Compliance Certificate
|
Exhibit D-2
|
|
Form of Ongoing Compliance Certificate
|
Exhibit E
|
|
Form of Assignment and Assumption
|
Exhibit F-1
|
|
Security Instruments
|
Exhibit F-2
|
|
Form of Guaranty Agreement
|
Exhibit G-1
|
|
Form of Commitment Increase Certificate
|
Exhibit G-2
|
|
Form of Additional Lender Certificate
|
Schedule 6.01(m)
|
|
Excepted Property
|
Schedule 7.02
|
|
Liabilities
|
Schedule 7.03
|
|
Litigation
|
Schedule 7.09
|
|
Taxes
|
Schedule 7.10
|
|
Titles, Etc.
|
Schedule 7.13
|
|
Subsidiaries
|
Schedule 7.19
|
|
Hedging Agreements
|
Schedule 7.20
|
|
Restriction on Liens
|
Schedule 8.07
|
|
Excluded Collateral
|
Schedule 9.01
|
|
Debt
|
Schedule 9.02
|
|
Liens
|
Schedule 9.03
|
|
Investments, Loans and Advances
|
Schedule 9.13
|
|
Transactions with Affiliates
|
v
THIS SENIOR SECURED CREDIT AGREEMENT
dated as of October 20, 2006, is among: UC OPERATING
PARTNERSHIP, L.P., a limited partnership formed under the laws of the State of Delaware (the
Borrower
); UNIVERSAL COMPRESSION PARTNERS, L.P., a limited partnership formed under the
laws of the State of Delaware (
UCLP
, and in its capacity as guarantor of the Loans, a
Guarantor
); WACHOVIA BANK, NATIONAL ASSOCIATION, individually and as administrative agent
for the Lenders (herein, together with its successors in such capacity, the
Administrative
Agent
); DEUTSCHE BANK TRUST COMPANY AMERICAS, individually and as syndication agent (herein,
together with its successors in such capacity, the
Syndication Agent
); WACHOVIA CAPITAL
MARKETS, LLC (
Wachovia Securities
) and DEUTSCHE BANK SECURITIES INC. (
DBSI
and
together with Wachovia Securities and their successors in such capacity, the
Joint Lead
Arrangers
and
Joint Book Runners
); FORTIS CAPITAL CORP., (
Fortis
) and
WELLS FARGO BANK, NATIONAL ASSOCIATION (
Wells Fargo
and together with Fortis and their
successors in such capacity, the
Co-Documentation Agents
); and each of the lenders that
is now or which becomes a party hereto (individually, together with its successors and assigns, a
Lender
and, collectively, the
Lenders
).
RECITALS
A. The Borrower has requested that the Lenders provide certain loans to and extensions of
credit on behalf of the Borrower.
B. The Lenders have agreed to make such loans and extensions of credit subject to the terms
and conditions of this Agreement.
C. In consideration of the mutual covenants and agreements herein contained and of the loans,
extensions of credit and commitments hereinafter referred to, the parties hereto agree as follows:
ARTICLE I
Definitions and Accounting Matters
Section 1.01
Terms Defined Above
. As used in this Agreement, each term defined
above has the meaning indicated above.
Section 1.02
Certain Defined Terms
. As used in this Agreement, the following terms
have the meanings specified below:
ABR
, when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to
the Base Rate.
ABS Facility
means an asset backed securitization facility with terms no more
restrictive than those contained in the Holdings ABS Facility, as such documents may be amended,
modified, supplemented, restated, refinanced, or replaced by another non-recourse facility which
facility will be secured by domestic compressor assets and related Property.
-1-
ABS Subsidiary
means any Subsidiary certified by the Borrower to be involved in or
created in connection with or as a requirement of an ABS Facility.
Additional Lender
has the meaning assigned to such term in Section 2.06(c)(i).
Additional Lender Certificate
has the meaning assigned to such term in Section
2.06(c)(ii)(F).
Administrative Questionnaire
means an Administrative Questionnaire in a form
supplied by the Administrative Agent.
Affected Loans
has the meaning assigned such term in Section 5.05.
Affiliate
of any Person means (a) any Person directly or indirectly controlled by,
controlling or under common control with such first Person, (b) any director or officer of such
first Person or of any Person referred to in clause (a) above and (c) if any Person in clause (a)
above is an individual, any member of the immediate family (including parents, spouse and children)
of such individual and any trust whose principal beneficiary is such individual or one or more
members of such immediate family and any Person who is controlled by any such member or trust. For
purposes of this definition, any Person which owns directly or indirectly 10% or more of the
securities having ordinary voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to control (including, with
its correlative meanings, controlled by and under common control with) such corporation or
other Person.
Agents
means, collectively, the Administrative Agent, the Syndication Agent and the
Co-Documentation Agents; and Agent means either the Administrative Agent, the Syndication Agent
or the Co-Documentation Agents, as the context requires.
Aggregate Commitments
shall mean, collectively the Aggregate Revolving Commitments
and the Aggregate Term Commitments.
Aggregate Revolving Commitments
at any time shall equal the sum of the Revolving
Commitments, as the same may be increased, reduced or terminated pursuant to Section 2.06. The
initial Aggregate Revolving Commitments are $225,000,000.
Aggregate Term Commitments
at any time shall equal the sum of the Term Commitments
of all Term Loan Lenders, as the same may be increased pursuant to Section 2.06. The initial
Aggregate Term Commitments are $0.00.
Agreement
means this Credit Agreement, as the same may from time to time be amended,
modified, supplemented or restated.
Alternate Currency
means such foreign currencies which are readily convertible into
dollars and are acceptable to the Administrative Agent.
-2-
Applicable Margin
means:
(a) In respect of the Term Loan Facility, a percentage per annum as set forth in the Term Loan
Assumption Agreement.
(b) In respect of the Revolving Credit Facility, a percentage per annum determined by
reference to the Total Leverage Ratio as in effect from time to time, as set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Applicable Margin
|
Total Leverage Ratio
|
|
Eurodollar Loans
|
|
ABR Loans
|
|
Commitment Fees
|
Greater than 4.75 to 1.0
|
|
|
200
|
|
|
|
100
|
|
|
|
.375
|
%
|
Less than or equal to 4.75 to
1.0 but greater than 4.25 to 1.0
|
|
|
175
|
|
|
|
75
|
|
|
|
.375
|
%
|
Less than or equal to 4.25 to
1.0 but greater than 3.75 to 1.0
|
|
|
150
|
|
|
|
50
|
|
|
|
.30
|
%
|
Less than or equal to 3.75 to
1.0 but greater than 3.25 to 1.0
|
|
|
125
|
|
|
|
25
|
|
|
|
.25
|
%
|
Less than or equal to 3.25 to 1.0
|
|
|
100
|
|
|
|
0
|
|
|
|
.20
|
%
|
For purposes of determining the Applicable Margin for the period commencing on the
Effective Date and through December 31, 2006, the Total Leverage Ratio will be deemed to be less
than or equal to 3.75 to 1.0 but greater than 3.25 to 1.0 resulting in the Applicable Margin for
Eurodollar Loans of 125 basis points. Each change in the Applicable Margin resulting from a change
in the Total Leverage Ratio (which shall be calculated quarterly) shall take effect as of the fifth
Business Day following the receipt of the compliance certificate delivered pursuant to Section
8.01(g).
Applicable Lending Office
shall mean, for each Lender and for each Type of Loan, the
lending office of such Lender designated for such Type of Loan on the signature pages hereof or
such other offices of such Lender as such Lender may from time to time specify to the
Administrative Agent and the Borrower as the office by which its Loans of such Type are to be made
and maintained.
Applicable Percentage
means, with respect to any Revolving Lender, the percentage of
the Aggregate Revolving Commitments represented by such Revolving Lenders Revolving Commitment as
such percentage is set forth on such documentation on file with the Administrative Agent.
-3-
Assignment and Assumption
means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required by Section 12.04),
and accepted by the Administrative Agent, in the form of
Exhibit E
or any other form
reasonably approved by the Administrative Agent.
Availability Period
means the period from and including the Effective Date to but
excluding the Revolving Credit Maturity Date.
Bankruptcy Code
means the Bankruptcy Code in Title 11 of the United States Code, as
amended, modified, succeeded or replaced from time to time.
Base Rate
means, for any day, a rate per annum equal to the greatest of (a) the
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day
plus
1
/
2
of 1%. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective from and including the effective date of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.
Board
means the Board of Governors of the Federal Reserve System of the United
States of America or any successor Governmental Authority.
Borrowing
means Loans of the same Type, made, converted or continued on the same
date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.
Borrowing Request
means a request by the Borrower for a Borrowing in accordance with
Section 2.03.
Business Day
means any day that is not a Saturday, Sunday or other day on which
commercial banks in Charlotte, North Carolina are authorized or required by law to remain closed;
and if such day relates to a Borrowing or continuation of, a payment or prepayment of principal of
or interest on, or a conversion of or into, or the Interest Period for, a Eurodollar Loan or a
notice by the Borrower with respect to any such Borrowing or continuation, payment, prepayment,
conversion or Interest Period, any day which is also a day on which dealings in dollar deposits are
carried out in the London interbank market. With respect to Letters of Credit, Business Day
means any day other than a day on which commercial banks are authorized or required to close in the
domicility of the respective Issuing Bank and confirming bank.
Capital Lease
means a lease of (or other arrangement conveying the right to use)
real and/or personal Property, or a combination thereof, with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the incurrence of a Debt in
accordance with GAAP.
Capital Lease Obligations
means, as to any Person, all obligations of such Person as
lessee under any Capital Lease, which obligations are required to be classified and accounted for
as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.
Change in Control
means the occurrence of one or more of the following events: (a)
UCLP ceases to own, directly or indirectly, 100% of the Equity Interests in the Borrower; (b)
-4-
the adoption of a plan relating to the liquidation or dissolution of the Borrower; (c) the General
Partner ceases to be the sole general partner of UCLP; or (d) Holdings ceases to own, directly or
indirectly, a majority of the legal and beneficial ownership and majority voting control of the
General Partner.
Change in Law
means (a) the adoption of any law, rule or regulation after the date
of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this Agreement or (c)
compliance by any Lender or the Issuing Bank (or, for purposes of Section 5.01(b)), by any lending
office of such Lender or by such Lenders or the Issuing Banks holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement.
Code
means the Internal Revenue Code of 1986, as amended from time to time, and any
successor statute.
Collateral
means all Property of the Borrower and the Guarantors which is secured by
a Lien under the Security Instruments.
Commitment Fee
has the meaning assigned such term in Section 3.05(a).
Commitment Increase Certificate
has the meaning assigned to such term in Section
2.06(c)(ii)(E).
Compression Assets
means all or any portion of any Persons compression services
contracts, compression services customer relationships and compression equipment.
Consolidated Net Income
means for any period, the aggregate of the net income (or
loss) of UCLP and its Consolidated Subsidiaries after allowances for taxes for such period,
determined on a consolidated basis in accordance with GAAP;
provided
that there shall be
excluded from such net income (to the extent otherwise included therein) the following: (a) the
net income of any Person in which UCLP or any Consolidated Subsidiary has an interest (which
interest does not cause the net income of such other Person to be consolidated with the net income
of UCLP and its Consolidated Subsidiaries in accordance with GAAP), except to the extent of the
amount of cash dividends or distributions actually paid in such period by such other Person to UCLP
or to a Consolidated Subsidiary, as the case may be; (b) the net income (but not loss) of any
Consolidated Subsidiary to the extent that the declaration or payment of dividends or similar
distributions or transfers or loans by that Consolidated Subsidiary is not at the time permitted by
operation of the terms of its charter or any agreement, instrument or Governmental Requirement
applicable to such Consolidated Subsidiary, or is otherwise restricted or prohibited in each case
determined in accordance with GAAP;
provided
that upon the removal of such restriction, the
aggregate net income previously excluded within the last four (4) fiscal quarters shall be added to
the net income for the same quarters; (c) any extraordinary gains or losses, including gains or
losses attributable to Property sales not in the ordinary course of business; (d) the cumulative
effect of a change in accounting principles and any gains or losses attributable to writeups or
write downs of assets; (e) gains, losses or other charges as a result of the early retirement of
Debt; and (f) non-cash gains or losses as a result of foreign currency adjustments.
-5-
Consolidated Net Tangible Assets
means, with respect to UCLP as of any date, the sum
of the amounts that would appear on a consolidated balance sheet of UCLP and its Consolidated
Subsidiaries as the total assets of such Person and its Consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP and after deducting therefrom, to the extent
otherwise included, unamortized debt discount and expenses and other unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names, copyrights, licenses,
organization or development expenses and other intangible items.
Consolidated Subsidiaries
shall mean each Subsidiary of UCLP (whether now existing
or hereafter created or acquired) the financial statements of which shall be (or should have been)
consolidated with the financial statements of UCLP in accordance with GAAP.
Credit Exposure
means at any time for any Lender (a) for the Revolving Credit
Facility, such Revolving Lenders Revolving Credit Exposure and (b) for the Term Loan Facility,
such Term Loan Lenders Term Credit Exposure.
DB
means Deutsche Bank Trust Company Americas and its successors.
Debt
means, for any Person the sum of the following (without duplication): (a) all
obligations of such Person (whether created or assumed) for borrowed money or evidenced by bonds,
debentures, notes or other similar instruments; (b) all obligations of such Person (whether
contingent or otherwise) in respect of bankers acceptances, letters of credit, surety or other
bonds and similar instruments; (c) all obligations of such Person to pay the deferred purchase
price of Property or services (other than for borrowed money); (d) all Capital Lease Obligations in
respect of which such Person is liable (whether contingent or otherwise); (e) all Debt (as
described in the other clauses of this definition) and other obligations of others secured by a
Lien on any asset of such Person, whether or not such Debt is assumed by such Person; (f) all Debt
(as described in the other clauses of this definition) and other obligations of others guaranteed
by such Person or in which such Person otherwise assures a creditor against loss of the debtor or
obligations of others; (g) all obligations or undertakings of such Person to maintain or cause to
be maintained the financial position or covenants of others or to purchase the Debt or Property of
others; (h) obligations to deliver goods or services in consideration of payments made more than 60
days in advance of the date such goods and services are due and in excess of the sum of (A)
$15,000,000 outstanding at any time and (B) up to an additional $15,000,000 outstanding at any time
if such amount is approved in writing by the Administrative Agent from time to time; (i)
obligations to pay for goods or services in the form of take-or-pay agreements or similar
arrangements whether or not such goods or services are actually received or utilized by such
Person; (j) any Equity Interests of such Person in which such Person has a mandatory obligation to
redeem such Equity Interests; (k) any Debt (as described in the other clauses of this definition)
of a Special Entity for which such Person is liable either by agreement or because of a
Governmental Requirement; and (l) all net mark-to-market obligations of such Person under Hedging
Agreements.
Default
means any event or condition which constitutes an Event of Default or which
upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
Disclosing Parties
shall have the meaning assigned such term in Section 12.11.
-6-
dollars
or $ refers to lawful money of the United States of America.
Domestic Subsidiary
shall mean each Restricted Subsidiary of UCLP which is not a
Foreign Subsidiary.
EBITDA
means, for any period, the sum of Consolidated Net Income for such period
plus the following consolidated expenses or charges to the extent deducted from Consolidated Net
Income in such period: Total Interest Expense, taxes, depreciation, amortization and non-cash
charges (excluding any Subsidiary EBITDA from the Unrestricted Subsidiaries);
provided
that
any cash actually paid with respect to such non-cash charges shall be deducted from EBITDA when
paid. EBITDA will be adjusted on a pro forma basis (determined by the Borrower and supported by
information in reasonable detail and approved by the Administrative Agent) for individual
acquisitions and divestitures with purchase prices in excess of $25,000,000, including projected
synergies;
provided
that EBITDA will be deemed to be $8,900,000 for each of the fiscal
quarters ending December 31, 2005, March 30, 2006, June 30, 2006 and September 30, 2006. EBITDA
attributable to Compression Assets for the fiscal quarter ending December 31, 2006 shall be
determined pro forma as if UCLP and its Restricted Subsidiaries shall have owned the assets the
entire quarter.
Effective Date
means the date on which the conditions specified in Section 6.01 are
satisfied (or waived in accordance with Section 12.02).
Environmental Laws
means any and all Governmental Requirements pertaining in any way
to health, safety the environment or the preservation or reclamation of natural resources, in
effect in any and all jurisdictions in which the Borrower or any Subsidiary is conducting or at any
time has conducted business, or where any Property of the Borrower or any Subsidiary is located,
including without limitation, the Oil Pollution Act of 1990 (
OPA
), as amended, the Clean
Air Act, as amended, the Comprehensive Environmental, Response, Compensation, and Liability Act of
1980 (
CERCLA
), as amended, the Federal Water Pollution Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, the Resource Conservation and Recovery Act
of 1976 (
RCRA
), as amended, the Safe Drinking Water Act, as amended, the Toxic Substances
Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the
Hazardous Materials Transportation Act, as amended, and other environmental conservation or
Governmental Requirements. The term oil shall have the meaning specified in OPA, the terms
hazardous substance
and
release
(or
threatened release
) have the
meanings specified in CERCLA, the terms
solid waste
and
disposal
(or
disposed
) have the meanings specified in RCRA and the term
oil and gas waste
shall have the meaning specified in Section 91.1011 of the Texas Natural Resources Code
(
Section 91.1011
);
provided
,
however
, that (a) in the event either OPA,
CERCLA, RCRA or Section 91.1011 is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective date of such amendment and
(b) to the extent the laws of the state or other jurisdiction in which any Property of the Borrower
or any Subsidiary is located establish a meaning for
oil
,
hazardous substance
,
release
,
solid waste
,
disposal
or
oil and gas waste
which
is broader than that specified in either OPA, CERCLA, RCRA or Section 91.1011, such broader meaning
shall apply.
-7-
Equity Interests
means shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or other equity ownership
interests in a Person, and any warrants, options or other rights entitling the holder thereof to
purchase or acquire any such Equity Interests.
ERISA
means the Employee Retirement Income Security Act of 1974, as amended from
time to time.
ERISA Affiliate
means any trade or business (whether or not incorporated) that,
together with UCLP or any Subsidiary, is treated as a single employer under Section 414(b) or (c)
of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated
as a single employer under Section 414 of the Code.
ERISA Event
means (a) any reportable event, as defined in Section 4043 of ERISA or
the regulations issued thereunder with respect to a Plan (other than an event for which the 30 day
notice period is waived); (b) the existence with respect to any Plan of an accumulated funding
deficiency (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived;
(c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application
for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by UCLP,
any Subsidiary or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect
to the termination of any Plan; (e) the receipt by UCLP, any Subsidiary or any ERISA Affiliate from
the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by UCLP, any Subsidiary or
any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal
from any Plan or Multiemployer Plan; or (g) the receipt by UCLP, any Subsidiary or any ERISA
Affiliate of any notice, or the receipt by any Multiemployer Plan from UCLP, any Subsidiary or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the
meaning of Title IV of ERISA.
Eurodollar
, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the LIBO Rate.
Event of Default
has the meaning assigned such term in Section 10.01.
Excepted Liens
means: (a) Liens for taxes, assessments or other governmental
charges or levies not yet due or which are being contested in good faith by appropriate action and
for which adequate reserves have been maintained; (b) Liens in connection with workmens
compensation, unemployment insurance or other social security, old age pension or public liability
obligations not yet due or which are being contested in good faith by appropriate action and for
which adequate reserves have been maintained in accordance with GAAP; (c) operators, vendors,
carriers, warehousemens, repairmens, mechanics, workmens, materialmens, construction or other
like Liens arising by operation of law in the ordinary course of business or statutory landlords
liens, each of which is in respect of obligations that have not been outstanding more than 90 days
or which are being contested in good faith by appropriate proceedings and for which adequate
reserves have been maintained in accordance with GAAP;
-8-
(d) any Liens reserved in leases for rent or
royalties and for compliance with the terms of the leases in the case of leasehold estates, to the
extent that any such Lien referred to in this clause does not materially impair the use of the
Property covered by such Lien for the purposes for which such Property is held by UCLP or any
Subsidiary or materially impair the value of such Property subject thereto; (e) encumbrances (other
than to secure the payment of borrowed
money or the deferred purchase price of Property or services), easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations in any rights of way or
other Property of UCLP or any Subsidiary for the purpose of roads, pipelines, transmission lines,
transportation lines, distribution lines for the removal of gas, oil, coal or other minerals or
timber, and other like purposes, or for the joint or common use of real estate, rights of way,
facilities and equipment, and defects, irregularities, zoning restrictions and deficiencies in
title of any rights of way or other Property which in the aggregate do not materially impair the
use of such rights of way or other Property for the purposes of which such rights of way and other
Property are held by UCLP or any Subsidiary or materially impair the value of such Property subject
thereto; (f) deposits of cash or securities to secure the performance of bids, trade contracts,
leases, performance bonds, surety and appeal bonds, statutory obligations and other obligations of
a like nature incurred in the ordinary course of business; (g) Liens permitted by the Security
Instruments; (h) Liens arising out of fully bonded or insured judgments; and (i) Liens for UCLPs
or any Subsidiarys title to Property leased under Capital Leases;
provided
that no
intention to subordinate the first priority Lien granted in favor of the Administrative Agent and
the Lenders is to be hereby implied or expressed by the permitted existence of such Excepted Liens.
Exchange Act
means the Securities Exchange Act of 1934, as amended, or any successor
statute or statutes thereto.
Excluded Taxes
means, with respect to the Administrative Agent, any Lender, any
Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of
the Borrower or any Guarantor hereunder or under any other Loan Document, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of America or such other
jurisdiction under the laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its Applicable Lending Office is located, (b)
any branch profits taxes imposed by the United States of America or any similar tax imposed by any
other jurisdiction in which the Borrower or any Guarantor is located and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section
5.04(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time
such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is
attributable to such Foreign Lenders failure to comply with Section 5.03(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts with respect to such withholding
tax pursuant to Section 5.03(a) or Section 5.03(c).
Federal Funds Effective Rate
means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average (rounded upwards, if
-9-
necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received
by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.
Fee Letter
means that certain letter agreement from Wachovia and DB to the Borrower
dated August 22, 2006, concerning certain fees in connection with this Agreement and any agreements
or instruments executed in connection therewith, as the same may be amended or replaced from time
to time.
Financial Officer
means, for any Person, the chief financial officer, vice president
of financial services, senior vice president, principal accounting officer, treasurer or controller
of such Person. Unless otherwise specified, all references herein to a Financial Officer means a
Financial Officer of the Borrower.
Financial Statements
means the most recent financial statement or statements of UCLP
referred to in Section 7.02 or delivered annually pursuant to Section 8.01(a)(i).
Foreign Credit Facility
shall mean any credit facility of a Foreign Subsidiary that
derives substantially all of its income from jurisdictions other than the United States of America.
Foreign Lender
means any Lender that is organized under the laws of a jurisdiction
other than that in which the Borrower is located. For purposes of this definition, the United
States of America, each State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.
Foreign Subsidiary
shall mean each Restricted Subsidiary of UCLP that is
incorporated under the laws of any jurisdiction other than the United States of America, any State
thereof, or any territory thereof.
GAAP
means generally accepted accounting principles in the United States of America
as in effect from time to time subject to the terms and conditions set forth in Section 1.05.
General Partner
means UCO General Partner, LP, a Delaware limited partnership and
the general partner of UCLP.
GP
means UCLP OLP GP LLC, a Delaware limited liability company and the general
partner of the Borrower.
Governmental Authority
means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government over UCLP, any Subsidiary, any of their Properties, any Agent, any Issuing
Bank or any Lender.
Governmental Requirement
means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise, permit, certificate,
license, authorization or other directive or requirement, whether now or hereinafter in effect,
-10-
including, without limitation, Environmental Laws, energy regulations and occupational, safety and
health standards or controls, of any Governmental Authority.
Guarantors
means UCLP, the GP and each Significant Domestic Subsidiary that
guarantees the Indebtedness pursuant to Section 8.07.
Guaranty Agreement
shall mean that certain Guaranty Agreement in substantially the
form of
Exhibit F-2
that may be executed by the Guarantors in favor of the Administrative
Agent as required by Section 8.07(a), as amended, modified or restated from time to time.
Hedging Agreement
means any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement, whether exchange traded, over-the-counter
or otherwise, involving, or settled by reference to, one or more rates, currencies, commodities,
equity or debt instruments or securities, or economic, financial or pricing indices or measures of
economic, financial or pricing risk or value or any similar transaction or any combination of these
transactions;
provided
that no phantom stock or similar plan providing for payments only on
account of services provided by current or former directors, officers, employees or consultants of
UCLP or the Subsidiaries shall be a Hedging Agreement.
Highest Lawful Rate
means, with respect to each Lender, the maximum nonusurious
interest rate, if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the Notes or on other Indebtedness under laws applicable to such
Lender which are presently in effect or, to the extent allowed by law, under such applicable laws
which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws allow as of the date hereof.
Holdings
means Universal Compression Holdings, Inc., a Delaware corporation.
Holdings ABS Facility
means that certain $225,000,000.00 asset backed securitization
facility evidenced by, among other documents, that certain Indenture dated October 28, 2005 between
UCO Compression 2005 LLC, as Issuer, Wells Fargo Bank, National Association, as Indenture Trustee,
as of the Effective Date.
Indebtedness
means any and all amounts owing or to be owing by the Borrower, any
Restricted Subsidiary or any Guarantor (whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or hereafter arising): (a)
to the Administrative Agent, any Issuing Bank or any Lender under any Loan Document; (b) to any
Lender or any Affiliate of a Lender under any Hedging Agreement between UCLP or any Restricted
Subsidiary and such Lender or Affiliate of a Lender while such Person (or in the case of its
Affiliate, the Person affiliated therewith) is a Lender hereunder and permitted by the terms of
this Agreement, excluding any Hedging Agreements now or hereafter arising in connection with an ABS
Facility and (c) all renewals, extensions and/or rearrangements of any of the above.
Indemnified Taxes
means Taxes other than Excluded Taxes.
Indemnity Matters
shall mean any and all actions, suits, proceedings (including any
investigations, litigation or inquiries), claims, demands and causes of action made or threatened
against a Person and, in connection therewith, all losses, liabilities, damages (including, without
-11-
limitation, consequential damages) or reasonable costs and expenses of any kind or nature
whatsoever incurred by such Person whether caused by the sole or concurrent negligence of such
Person seeking indemnification.
Index Debt
means senior, unsecured, long-term indebtedness for borrowed money of
UCLP or the Borrower that is not guaranteed by any other Person (other than a Guarantor) or subject
to any other credit enhancement.
Information Memorandum
means the Confidential Information Memorandum dated August
2006 relating to the Borrower and the Transactions.
Interest Coverage Ratio
means the ratio of (a) EBITDA for the applicable Testing
Period to (b) Total Interest Expense for the applicable Testing Period.
Interest Election Request
means a request by the Borrower to convert or continue a
Borrowing in accordance with Section 2.04.
Interest Payment Date
means (a) with respect to any ABR Loan, the last day of each
March, June, September and December and (b) with respect to any Eurodollar Loan, the last day of
the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a
Eurodollar Borrowing with an Interest Period of more than three months duration, each day prior to
the last day of such Interest Period that occurs at intervals of three months duration after the
first day of such Interest Period.
Interest Period
means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three or six months (or, with the consent of each Lender, nine or
twelve months) thereafter, as the Borrower may elect;
provided
, that (a) if any Interest
Period would end on a day other than a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next preceding Business Day,
(b) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business
Day of a calendar month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period (c) no Interest Period for a Revolving Borrowing may end
after the Revolving Credit Maturity Date, (d) no Interest Period for a Term Loan Borrowing may end
after the Term Loan Maturity Date, (e) no Interest Period for a Term Loan Borrowing shall be
selected which extends beyond any date upon which an installment of the Term Loan will be due if
such Term Loan Borrowing must be used to make such installment, (f) the first Interest Period
commencing on the Term Loan Funding Date shall be for a period from the Term Loan Funding Date
until the last day of that month and (g) the last Interest Period may be such shorter period as to
end on the Term Loan Maturity Date. For purposes hereof, the date of a Borrowing initially shall
be the date on which such Borrowing is made and thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing.
Investment
means, as applied to any Person, any direct or indirect (a) purchase or
other acquisition by such Person of any Equity Interests, Debt or other securities (including any
option,
-12-
warrant or other right to acquire any of the foregoing) of any other Person, (b) loan or
advance made by such Person to any other Person, (c) guarantee, assumption or other incurrence of
liability by such Person of or for any Debt or other obligation of any other Person, (d) creation
of any Debt owed to such Person by any other Person, (e) capital contribution or other investment
by such Person in any other Person or (f) purchase or other acquisition (in one transaction or
a series of transactions) of any assets of any other Person constituting a business unit. The
amount of any Investment shall be the original cost of such Investment
plus
the cost of all
additions thereto, without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment or interest earned on such Investment.
Investment
shall exclude extensions of trade credit by UCLP and the Subsidiaries on
commercially reasonable terms in accordance with normal trade practices of the UCLP or such
Subsidiary, as the case may be.
IPO
means the public offering described in the S-1.
Issuing Bank
means Wachovia, DB or any other Lender agreed to by the Borrower, the
Administrative Agent and such Lender in its capacity as the issuer of Letters of Credit hereunder,
and its successors in such capacity as provided in Section 2.07(e). The Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term
Issuing Bank
shall include any such Affiliate with respect
to Letters of Credit issued by such Affiliate.
LC Disbursement
means a payment made by the Issuing Bank pursuant to a Letter of
Credit.
LC Exposure
means, at any time, the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements
that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of
any Revolving Lender at any time shall be its Applicable Percentage of the total LC Exposure at
such time.
Lenders
has the meaning assigned such term in the introductory paragraph hereto,
including the Revolving Lenders and the Term Loan Lenders and any Person that shall have become a
party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be
a party hereto pursuant to an Assignment and Assumption, and any Person that shall have become a
party hereto as an Additional Lender pursuant to Section 2.06(c).
Letter of Credit
means any one of the letters of credit issued pursuant to this
Agreement and the reimbursement obligations pertaining thereto, and shall include Offshore Currency
Letters of Credit.
Letter of Credit Agreements
means all letter of credit applications and other
agreements (including any amendments, modifications or supplements thereto) submitted by the
Borrower, or entered into by the Borrower, with the Issuing Bank relating to any Letter of Credit.
LIBO
means the rate of interest determined on the basis of the rate for deposits in
dollars for a period equal to the applicable Interest Period commencing on the first day of such
Interest Period appearing on Bridge Telerate Service (formerly Dow Jones Market Service)
-13-
Page 3750
as of 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable
Interest Period. In the event that such rate does not appear on Bridge Telerate Service (formerly
Dow Jones Market Service) Page 3750, LIBO shall be determined by the Administrative Agent to be
the rate per annum at which deposits in dollars are offered by leading
reference banks in the London interbank market to the Administrative Agent at approximately
11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest
Period for a period equal to such Interest Period and in an amount substantially equal to the
amount of the applicable Loan.
LIBO Rate
means, with respect to any Eurodollar Borrowing for any Interest Period,
an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the
LIBO for such Interest Period multiplied by (b) the Statutory Reserve Rate.
Lien
means any interest in Property securing an obligation owed to, or a claim by, a
Person other than the owner of the Property, whether such interest is based on the common law,
statute or contract, and whether such obligation or claim is fixed or contingent, and including but
not limited to the lien or security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment for security
purposes. The term
Lien
shall include reservations, exceptions, encroachments,
easements, rights of way, covenants, conditions, restrictions, leases and other title exceptions
and encumbrances affecting Property. For the purposes of this Agreement, UCLP or any Subsidiary
shall be deemed to be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement, or leases under a financing lease or other arrangement pursuant to
which title to the Property has been retained by or vested in some other Person in a transaction
intended to create a financing.
Loan Documents
means this Agreement, the Notes, the Letter of Credit Agreements, the
Letters of Credit and the Security Instruments.
Loans
means the loans made by the Lenders to the Borrower pursuant to this
Agreement.
Majority Lenders
means, at any time while no Loans or LC Exposure is outstanding,
Lenders having at least a majority of the Aggregate Commitments; and at any time while any Loans or
LC Exposure is outstanding, Lenders holding at least a majority of the outstanding aggregate
principal amount of the Loans and participation interests in Letters of Credit (without regard to
any sale by a Lender of a participation in any Loan under Section 12.04).
Material Adverse Effect
means any material and adverse effect on (a) the assets,
liabilities, financial condition, business, operations or prospects of UCLP and its Restricted
Subsidiaries taken as a whole as reflected in the Financial Statements after eliminating the
financial condition and results of the Unrestricted Subsidiaries or (b) the ability of UCLP and its
Restricted Subsidiaries taken as a whole to perform their obligations under the Loan Documents on a
timely basis.
-14-
Material Domestic Subsidiary
means any Domestic Subsidiary that generates EBITDA
exceeding five percent (5%) of the EBITDA of the UCLP Group for the most recent Testing Period.
Material Foreign Subsidiary
means any Foreign Subsidiary that generates EBITDA
exceeding five percent (5%) of the EBITDA of the UCLP Group for the most recent Testing Period.
Moodys
means Moodys Investors Service, Inc. and any successor thereto that is a
nationally recognized rating agency.
Multiemployer Plan
means a Plan which is a multiemployer plan as defined in section
3(37) or 4001 (a)(3) of ERISA.
Non-Recourse Debt
means Debt of any Subsidiary:
(a) as to which neither UCLP nor any Restricted Subsidiary (i) provides credit support of any
kind (including any guaranty, undertaking, agreement or instrument that would constitute Debt),
(ii) is directly or indirectly liable as a guarantor or otherwise or (iii) is the lender;
(b) no default with respect to which (including any rights that the holders thereof may have
to take an enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse
of time or both any holder of Debt of UCLP, the Borrower or any Restricted Subsidiary to declare a
default on such Debt or cause the payment thereof to be accelerated or payable prior to its stated
maturity; and
(c) as to which the lenders of such Non-Recourse Debt have been notified in writing that they
will not have any recourse to UCLP, the Borrower, any Restricted Subsidiary or any assets of any of
them.
Non-Recourse Foreign Debt
means Debt of any Foreign Subsidiary:
(a) as to which neither UCLP nor any Domestic Subsidiary (i) provides credit support of any
kind (including any guaranty, undertaking, agreement or instrument that would constitute Debt),
(ii) is directly or indirectly liable as a guarantor or otherwise or (iii) is the lender; and
(b) as to which the lenders of such Non-Recourse Foreign Debt have been notified in writing
that they will not have any recourse to UCLP, the Borrower, any Domestic Subsidiary or any assets
of any of them.
Notes
means the promissory notes of the Borrower described in Section 2.02(d) and
being substantially in the form of
Exhibit A
, together with all amendments, modifications,
replacements, extensions and rearrangements thereof.
Offshore Currency
means any lawful currency (other than dollars) that the relevant
Issuing Bank with respect to any Offshore Currency Letter of Credit, in its sole reasonable
-15-
opinion, at any time determines to be (a) freely traded in the offshore interbank foreign exchange
markets, (b) freely transferable and (c) freely convertible into dollars.
Offshore Currency Letter of Credit
means any Letter of Credit denominated in an
Offshore Currency.
Omnibus Agreement
shall mean that certain Omnibus Agreement dated October 20, 2006
among Holdings, UCI, UCLP and any of its Consolidated Subsidiaries, as amended, modified,
supplemented or restated from time to time and all exhibits and schedules thereto.
OPA
shall have the meaning assigned such term in the definition of Environmental
Laws.
Organization Documents
means, (a) with respect to any corporation, the certificate
or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents
with respect to any non US jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement; and (c) with respect
to any partnership, joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation or organization and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation or organization with
the applicable Governmental Authority in the jurisdiction of its formation or organization and, if
applicable, any certificate or articles of formation or organization of such entity.
Other Taxes
means any and all present or future stamp or documentary taxes or any
other excise or Property taxes, charges or similar levies arising from any payment made hereunder
or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement and
any other Loan Document.
PBGC
means the Pension Benefit Guaranty Corporation, or any successor thereto.
Person
means any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, Governmental Authority or other entity.
Plan
means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA,
and in respect of which UCLP, any Subsidiary or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an employer as defined in Section
3(5) of ERISA.
Post-Default Rate
shall mean, in respect of any principal of any Loan or any other
amount payable by the Borrower under this Agreement or any other Loan Document, a rate per annum
during the period equal to 2% per annum above the LIBO Rate for Loans as in effect from time to
time plus the Applicable Margin (if any), but in no event to exceed the Highest Lawful Rate;
provided
however
, for Eurodollar Loans, the
Post-Default Rate
for such
principal shall be, for the period commencing on the date of occurrence of an Event of Default and
ending on the earlier to occur of the last day of the Interest Period therefor or the date all
Events of
-16-
Default are cured or waived, 2% per annum above the interest rate for such Loan as
provided in Section 3.02(a), but in no event to exceed the Highest Lawful Rate.
Prime Rate
means the rate of interest per annum publicly announced from time to time
by Wachovia
as its prime rate in effect at its principal office in Charlotte, North
Carolina; each change in the Prime Rate shall be effective from and including the date such change
is publicly announced as being effective. Such rate is set by the Administrative Agent as a
general reference rate of interest, taking into account such factors as the Administrative Agent may
deem appropriate; it being understood that many of the Administrative Agents commercial or other
loans are priced in relation to such rate, that it is not necessarily the lowest or best rate
actually charged to any customer and that the Administrative Agent may make various commercial or
other loans at rates of interest having no relationship to such rate.
Property
means any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible, including, without limitation, cash, securities, accounts and
contract rights.
Purchase Money Indebtedness
means debt, the proceeds of which are used to finance
the acquisition, construction or improvement of inventory, equipment or other property in the
ordinary course of business.
RCRA
has the meaning assigned such term in the definition of Environmental Laws.
Register
has the meaning assigned such term in Section 12.04(c).
Regulation D
means Regulation D of the Board, as the same may be amended,
supplemented or replaced from time to time.
Related Fund
means, with respect to any Term Loan Lender that is a fund that invests
in bank loans, any other fund that invests in bank loans and is advised or managed by the same
investment advisor as such Term Loan Lender or by an Affiliate (as defined in clause (a) only of
the definition of Affiliate) of such investment advisor.
Related Parties
means, with respect to any specified Person, such Persons
Affiliates and the respective directors, officers, employees, agents and advisors (including
attorneys, accountants and experts) of such Person and such Persons Affiliates.
Responsible Officer
means, as to any Person, the Chief Executive Officer, the
President, any Financial Officer or any Vice President of such Person. Unless otherwise specified,
all references to a Responsible Officer herein means a Responsible Officer of the Borrower.
Restricted Person
has the meaning assigned such term in Section 12.11.
Restricted Subsidiaries
means all Subsidiaries that are not Unrestricted
Subsidiaries. The Borrower and each ABS Subsidiary will always be Restricted Subsidiaries of UCLP.
Revolving Borrowing
means a Borrowing comprised of Revolving Loans.
-17-
Revolving Commitments
means, as to each Revolving Lender, the amount set forth
opposite such Lenders name under the caption Revolving Commitments on such documentation on file
with the Administrative Agent, as the same may be (a) reduced or terminated from time to time in
connection with a reduction or termination of the Aggregate Revolving Commitments pursuant to
Section 2.06(b), (b) increased from time to time pursuant to
Section 2.06(c) or (c) modified from time to time pursuant to any assignment permitted by
Section 12.04.
Revolving Credit Exposure
means, at any time, the sum of the aggregate principal
amount of the Revolving Loans and LC Exposure outstanding at such time.
Revolving Credit Facility
means the Revolving Commitments, the Revolving Loans and
the LC Exposure.
Revolving Credit Maturity Date
means October 20, 2011.
Revolving Lender
means a Lender with a Revolving Commitment or with outstanding
Revolving Credit Exposure.
Revolving Loans
means each senior secured revolving loan made pursuant to Section
2.01(a).
Revolving Notes
means Notes issued pursuant to Section 2.02(d) evidencing Loans
under the Revolving Credit Facility.
S-1
means that certain Amendment No. 2 to Form S-1 of UCLP as filed with the SEC on
September 20, 2006, as amended.
S&P
means Standard & Poors Ratings Group, a division of The McGraw-Hill Companies,
Inc., and any successor thereto that is a nationally recognized rating agency.
SEC
means the Securities and Exchange Commission or any successor Governmental
Authority.
Security Instruments
means the Fee Letter, the Letters of Credit, the Letter of
Credit Agreements, the Guaranty Agreement, mortgages, deeds of trust and other agreements,
instruments or certificates described or referred to in
Exhibit F-1
, and any and all other
agreements, instruments, consents or certificates now or hereafter executed and delivered by the
Borrower or any other Person (other than Hedging Agreements with the Lenders or any Affiliate of a
Lender or participation or similar agreements between any Lender and any other lender or creditor
with respect to any Indebtedness pursuant to this Agreement) in connection with, or as security for
the payment or performance of the Indebtedness, the Notes, this Agreement, or reimbursement
obligations under the Letters of Credit, as such agreements may be amended, modified, supplemented
or restated from time to time.
Significant Domestic Subsidiary
means each Wholly-Owned Domestic Subsidiary that
generates EBITDA exceeding seven and one-half percent (7
1
/
2
%) of the EBITDA of the UCLP Group. If,
in the aggregate, the EBITDA of the Wholly-Owned Domestic Subsidiaries that are
-18-
not Guarantors
exceeds fifteen percent (15%) of the EBITDA of the UCLP Group, those Wholly-Owned Domestic
Subsidiaries representing a majority of such EBITDA shall each be a Significant Domestic
Subsidiary;
provided
that any Wholly-Owned Domestic Subsidiary that guarantees any Debt
shall be deemed a Significant Domestic Subsidiary. No ABS Subsidiary shall be a Significant
Domestic Subsidiary.
Special Entity
means any joint venture, limited liability company or partnership,
general or limited partnership or any other type of partnership or company other than a corporation
in which UCLP or one or more of its other Subsidiaries is a member, owner, partner or joint
venturer and owns, directly or indirectly, at least a majority of the equity of such entity or
controls such entity, but excluding any tax partnerships that are not classified as partnerships
under state law. For purposes of this definition, any Person which owns directly or indirectly an
equity investment in another Person which allows the first Person to manage or elect managers who
manage the normal activities of such second Person will be deemed to control such second Person
(
e.g.
a sole general partner controls a limited partnership).
Specified Acquisition
means any acquisition of assets (including, but not limited
to, purchase of Compression Assets from Holdings or its Subsidiaries) or entities or operating
lines or divisions for a purchase price of not less than $50,000,000.
Statutory Reserve Rate
means a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the Board to which the Administrative Agent is subject for
eurocurrency funding (currently referred to as Eurocurrency Liabilities in Regulation D of the
Board). Such reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any comparable regulation.
The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
Subsidiary
means: (a) any Person of which at least a majority of the outstanding
Equity Interests having by the terms thereof ordinary voting power to elect a majority of the board
of directors, manager or other governing body of such Person (irrespective of whether or not at the
time Equity Interests of any other class or classes of such Person shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or indirectly owned or
controlled by another Person or one or more of its Subsidiaries or by such other Person and one or
more of its Subsidiaries and (b) any partnership of which such other Person or any of its
Subsidiaries is a general partner. Unless otherwise indicated herein, each reference to the term
Subsidiary
means a Subsidiary of UCLP.
Subsidiary EBITDA
means, for any Unrestricted Subsidiary for any period, (a) EBTIDA
of such Unrestricted Subsidiary or (b) to the extent that Consolidated Net Income for such
Unrestricted Subsidiary is not available, the gross revenues of such Unrestricted Subsidiary for
such period less the cost of sales (excluding depreciation expenses to the extent such expenses
were deducted) associated with such gross revenues.
-19-
Taxes
means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
Term Commitments
means, as to each Term Loan Lender, the amount set forth opposite
such Term Loan Lenders name under the caption Term Commitments on such
documentation on file with the Administrative Agent, as the same may be increased from time to
time pursuant to Section 2.06(c). All Term Commitments shall terminate immediately after the Term
Loan Funding Date.
Term Credit Exposure
means, with respect to any Term Loan Lender at any time, the
principal amount of such Term Loan Lenders Term Loans.
Term Loan
means each senior secured term loan made pursuant to Section 2.01(b).
Term Loan Assumption Agreement
shall mean a Term Loan Assumption Agreement in form
and substance reasonably satisfactory to the Administrative Agent, among the Borrower, the
Guarantors, the Administrative Agent and one or more Term Loan Lenders.
Term Loan Borrowing
means a Borrowing comprised of Term Loans.
Term Loan Facility
means the Term Commitments and the Term Loans.
Term Loan Funding Date
means the date on which the Term Loan Lenders make a senior
secured term loan pursuant to Section 2.01(b).
Term Loan Lender
means a Lender with an outstanding Term Loan.
Term Loan Maturity Date
means the date as defined in the Term Loan Assumption
Agreement;
provided
such date is no sooner than the Revolving Credit Maturity Date.
Term Notes
means Notes issued pursuant to Section 2.02(d) evidencing Loans under the
Term Loan Facility.
Testing Period
means a single period consisting of the four consecutive fiscal
quarters of UCLP then last ended (whether or not such quarters are all within the same fiscal
year);
provided
,
however
, that if a particular provision of this Agreement
indicates that a Testing Period shall be a different specified duration, such Testing Period shall
consist of the particular fiscal quarter or quarters then last ended which are so indicated in such
provision.
Total Debt
means, at any time (without duplication), the sum of (a) 100% of the
long-term debt of UCLP and its Restricted Subsidiaries reflected on the consolidated balance sheet
of UCLP in accordance with GAAP, plus (b) any Debt that is not reflected on the consolidated
balance sheet of UCLP and its Restricted Subsidiaries which has been used to finance assets that
generate income included in EBITDA, plus (c) the current portion of the debt set forth in (a)
above, plus or minus (d) the mark-to-market obligations of UCLP and its Restricted Subsidiaries
under the Hedging Agreements.
-20-
Total Interest Expense
means, for any period, the total consolidated interest
expense net of cash interest income of UCLP and its Restricted Subsidiaries for such period
(including, without limitation, the cash equivalent of the interest expense associated with Capital
Lease Obligations, but excluding (a) upfront fees paid in connection with this Agreement, an ABS
Facility or any debt facility where the fees are paid from the proceeds of such debt, (b) Debt or
lease issuance costs which have to be amortized, (c) lease payments on any office equipment or
real property, (d) any principal components paid on all lease payments and (e) gains, losses
or other charges as a result of the early retirement of Debt). Total Interest Expense will be
deemed to be $2,100,000 for each of the fiscal quarters ending December 31, 2005, March 30, 2006,
June 30, 2006 and September 30, 2006. Total Interest Expense attributable to Debt of UCLP and its
Restricted Subsidiaries for the fiscal quarter ending December 31, 2006 shall be determined pro
forma as if such Debt of UCLP and its Restricted Subsidiaries would have been outstanding the
entire quarter.
Total Leverage Ratio
means the ratio of Total Debt to EBITDA.
Transactions
means, with respect to (a) the Borrower, the execution, delivery and
performance by the Borrower of this Agreement, and each other Loan Document to which it is a party,
the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder, and the grant of Liens by the Borrower on Collateral pursuant to the Security
Instruments and (b) each Guarantor, the execution, delivery and performance by such Guarantor of
each Loan Document to which it is a party, the guaranteeing of the Indebtedness and the other
obligations under the Guaranty Agreement by such Guarantor and such Guarantors grant of the
security interests and provision of collateral under the Security Instruments, and the grant of
Liens by such Guarantor on Collateral pursuant to the Security Instruments.
Type
, when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the
Base Rate or the LIBO Rate.
UCI
means Universal Compression, Inc.
UCLP
shall mean Universal Compression Partners, L.P., a Delaware limited
partnership.
UCLP Group
shall mean UCLP and its Restricted Subsidiaries.
UCLP Partnership Agreement
means that certain Agreement of Limited Partnership of
UCLP dated as of June 16, 2006, as amended, modified, supplemented or restated from time to time.
US Dollar Equivalent
means, at any time of determination thereof, the amount of
dollars involved which could be purchased with the applicable amount of the Alternate Currency
involved computed at the spot rate of exchange as quoted or utilized by the Administrative Agent on
the date of determination thereof.
USA Patriot Act
has the meaning assigned such term in Section 12.16.
-21-
Unrestricted Subsidiary
means any Subsidiary designated as an Unrestricted
Subsidiary in accordance with Section 9.14, and any of its Subsidiaries.
Wachovia
means Wachovia Bank, National Association and its successors.
Weighted Average Life to Maturity
means, when applied to any Debt at any date, the
number of years obtained by dividing (a) the sum of the products obtained by multiplying (i) the
amount of each then remaining installment, sinking fund, serial maturity or other required payments
of principal, including payment at final maturity, in respect thereof, by (ii) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and the making of such
payment, by (b) the then outstanding principal amount of such Debt.
Wholly-Owned Domestic Subsidiary
means any Domestic Subsidiary of which all of the
outstanding Equity Interests (other than any directors qualifying shares mandated by applicable
law), on a fully-diluted basis, are owned by UCLP or one or more of the Wholly-Owned Domestic
Subsidiaries or are owned by UCLP and one or more of the Wholly-Owned Domestic Subsidiaries.
Section 1.03
Types of Loans and Borrowings
. For purposes of this Agreement, Loans
and Borrowings, respectively, may be classified and referred to by Type (e.g., a Eurodollar Loan
or a Eurodollar Borrowing).
Section 1.04
Terms Generally; Rules of Construction
. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The
words include, includes and including shall be deemed to be followed by the phrase without
limitation. The word will shall be construed to have the same meaning and effect as the word
shall. Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications set forth in the Loan
Documents), (b) any reference herein to any law shall be construed as referring to such law as
amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, (c)
any reference herein to any Person shall be construed to include such Persons successors and
assigns (subject to the restrictions contained in the Loan Documents), (d) the words herein,
hereof and hereunder, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (e) with respect to the
determination of any time period, the word from means from and including and the word to
means to and including and (f) any reference herein to Articles, Sections, Annexes, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Annexes, Exhibits and
Schedules to, this Agreement. No provision of this Agreement or any other Loan Document shall be
interpreted or construed against any Person solely because such Person or its legal representative
drafted such provision.
Section 1.05
Accounting Terms and Determinations; GAAP
. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all determinations with respect to
accounting matters hereunder shall be made, and all financial statements and
-22-
certificates and
reports as to financial matters required to be furnished to the Administrative Agents or the
Lenders hereunder shall be prepared, in accordance with GAAP, applied on a basis consistent with
the audited financial statements of UCLP and its Consolidated Subsidiaries referred to in Section
8.01(a) (except for changes concurred with by UCLP and its Consolidated Subsidiaries independent
public accountants); provided that, if UCLP notifies the
Administrative Agent that it requests an amendment to any provision hereof to eliminate the
effect of any change occurring after the date hereof in GAAP (including but not limited to any
Statement of Financial Accounting Standards) affecting the calculation of any financial covenant
(or if the Administrative Agent notifies UCLP that the Majority Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is given before or after
such change in GAAP affecting the calculation of any financial covenant, then such provision shall
be interpreted on the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such provision amended in
accordance herewith.
ARTICLE II
The Credits
Section 2.01
Commitments
.
(a)
Revolving Commitments
. Subject to the terms and conditions set forth herein, each
Revolving Lender agrees to make Revolving Loans to the Borrower during the Availability Period in
an aggregate principal amount that will not result in (i) such Revolving Lenders Revolving Credit
Exposure exceeding such Revolving Lenders Revolving Commitment and (ii) the total Revolving Credit
Exposure exceeding the Aggregate Revolving Commitments. Within the foregoing limits and subject to
the terms and conditions set forth herein, the Borrower may borrow, repay and reborrow the
Revolving Loans.
(b)
Term Commitments
. Subject to the terms and conditions set forth herein and in the
applicable Term Loan Assumption Agreement, each Term Loan Lender agrees to make Term Loans to the
Borrower on the Term Loan Funding Date in an aggregate principal amount that will not result in:
(i) such Term Loan Lenders Term Credit Exposure exceeding such Term Loan Lenders Term Commitment
and (ii) the total Term Credit Exposure exceeding the Aggregate Term Commitments. Once repaid or
prepaid, Term Loans may not be reborrowed.
Section 2.02
Loans and Borrowings
.
(a)
Borrowings; Several Obligations
. Each Loan shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their respective Revolving
Commitments and Term Commitments. The failure of any Lender to make any Loan required to be made
by it shall not relieve any other Lender of its obligations hereunder;
provided
that the
Revolving Commitments and Term Commitments are several and no Lender shall be responsible for any
other Lenders failure to make Loans as required.
(b)
Types of Loans
. Subject to Section 3.03, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request in
-23-
accordance herewith. Each
Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan;
provided
that any
exercise of such option shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement.
(c)
Minimum Amounts; Limitation on Number of Borrowings
. At the commencement of each
Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that
is an integral multiple of $500,000 and not less than $1,000,000. At the time that each ABR
Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of
$100,000 and not less than $100,000;
provided
that an ABR Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the Aggregate Revolving Commitments or that is
required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.07(d).
Borrowings of more than one Type may be outstanding at the same time,
provided
that there
shall not at any time be more than a total of ten (10) Eurodollar Borrowings outstanding.
Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to
request, or to elect to convert or continue, any Borrowing if the Interest Period requested with
respect thereto would end after the Revolving Credit Maturity Date or Term Loan Maturity Date, as
applicable.
(d)
Notes
. The Loans made by each Lender shall be evidenced by a single promissory
note of the Borrower in substantially the form of
Exhibit A
, dated, in the case of (i) any
Lender party hereto as of the date of this Agreement, as of the date of this Agreement, (ii) any
Lender that becomes a party hereto pursuant to an Assignment and Assumption, as of the effective
date of the Assignment and Assumption or (iii) any Lender that becomes a party hereto in connection
with an increase in the Aggregate Revolving Commitments or Aggregate Term Commitments pursuant to
Section 2.06(c), as of the effective date of such increase, payable to the order of such Lender in
a principal amount equal to its Revolving Commitment or Term Commitment as in effect on such date,
and otherwise duly completed. In the event that any Lenders Revolving Commitment or Term
Commitment increases or decreases for any reason (whether pursuant to Section 2.06, Section
12.04(c) or otherwise), the Borrower shall deliver or cause to be delivered on the effective date
of such increase or decrease, a new Note payable to the order of such Lender in a principal amount
equal to its Revolving Commitment or Term Commitment after giving effect to such increase or
decrease, and otherwise duly completed. The date, amount, Type, interest rate and, if applicable,
Interest Period of each Loan made by each Lender and all payments made on account of the principal
thereof, shall be recorded by such Lender on its books for its Note, and, prior to any transfer,
may be endorsed by such Lender on a schedule attached to such Note or any continuation thereof or
on any separate record maintained by such Lender. Failure to make any such notation or to attach a
schedule shall not affect any Lenders or the Borrowers rights or obligations in respect of such
Loans or affect the validity of such transfer by any Lender of its Note.
Section 2.03
Requests for Borrowings
. To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by
telephone (a) in the case of a Eurodollar Borrowing, not later than 12:00 p.m., Eastern time, three
(3) Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing,
not later than 12:00 p.m., Eastern time, on the date of the proposed Borrowing;
provided
that no such notice shall be required for any deemed request of an ABR Borrowing to finance the
reimbursement of an LC Disbursement
-24-
as provided in Section 2.07(d). Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery,
telecopy or email to the Administrative Agent of a written Borrowing Request in substantially the
form of
Exhibit B
and signed by the Borrower. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable
thereto, which shall be a period contemplated by the definition of the term Interest Period;
(v) if a Revolving Borrowing is requested, the amount of the current total Revolving Credit
Exposures (without regard to the requested Revolving Borrowing) and the
pro forma
total Revolving
Credit Exposures (giving effect to the requested Revolving Borrowing); and
(vi) the location and number of the Borrowers account to which funds are to be disbursed,
which shall comply with the requirements of Section 2.05.
If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an
ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar
Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one months
duration. Each Borrowing Request shall constitute a representation that the amount of the
requested Borrowing shall not cause (y) the total Revolving Credit Exposures to exceed the
Aggregate Revolving Commitments or (z) the total Term Credit Exposures to exceed the Aggregate Term
Commitments, as applicable.
Promptly following receipt of a Borrowing Request in accordance with this Section 2.03, the
Administrative Agent shall advise each Lender of the details thereof and of the amount of such
Lenders Loan to be made as part of the requested Borrowing.
Section 2.04
Interest Elections
.
(a)
Conversion and Continuance
. Each Borrowing initially shall be of the Type
specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall
have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower
may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the
case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this
Section 2.04. The Borrower may elect different options with respect to different portions of the
affected Borrowing, in which case each such portion shall be allocated ratably
among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each
such portion shall be considered a separate Borrowing.
-25-
(b)
Interest Election Requests
. To make an election pursuant to this Section 2.04,
the Borrower shall notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing
of the Type resulting from such election to be made on the effective date of such election. Each
such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by
hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in
substantially the form of
Exhibit C
and signed by the Borrower.
(c)
Information in Interest Election Requests
. Each telephonic and written Interest
Election Request shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and, if different options
are being elected with respect to different portions thereof, the portions thereof to be allocated
to each resulting Borrowing (in which case the information to be specified pursuant to Section
2.04(c)(iii) and (iv) shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which
shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be
applicable thereto after giving effect to such election, which shall be a period contemplated by
the definition of the term Interest Period.
If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an
Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one
months duration.
(d)
Notice to Lenders by the Administrative Agent
. Promptly following receipt of an
Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof
and of such Lenders portion of each resulting Borrowing.
(e)
Effect of Failure to Deliver Timely Interest Election Request and Event of
Default
. If the Borrower fails to deliver a timely Interest Election Request with respect to a
Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such
Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing: (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar Borrowing (and any Interest Election Request that requests the conversion
of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be
ineffective) and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.
-26-
Section 2.05
Funding of Borrowings
.
(a)
Funding by Lenders
. Each Lender shall make each Loan to be made by it hereunder
on the proposed date thereof by wire transfer of immediately available funds by 1:00 p.m., Eastern
time, to the account of the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by
promptly crediting the amounts so received, in like funds, to an account of the Borrower designated
by the Borrower in the applicable Borrowing Request;
provided
that ABR Loans made to
finance the reimbursement of an LC Disbursement as provided in Section 2.07(d) shall be remitted by
the Administrative Agent to the Issuing Bank. Nothing herein shall be deemed to obligate any
Lender to obtain the funds for its Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for its Loan in any
particular place or manner.
(b)
Presumption of Funding by the Lenders
. Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lenders share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available on such date in
accordance with Section 2.05(a) and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i)
in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on interbank compensation or
(ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays
such amount to the Administrative Agent, then such amount shall constitute such Lenders Loan
included in such Borrowing.
Section 2.06
Termination, Reduction and Increase of Aggregate Commitments
.
(a)
Scheduled Termination of Commitments
.
(i) Unless previously terminated, the Revolving Commitments shall terminate on the Revolving
Credit Maturity Date. If at any time the Aggregate Revolving Commitments is terminated or reduced
to zero, then the Revolving Commitments shall terminate on the effective date of such termination
or reduction.
(ii) Unless previously terminated, the Term Commitments shall terminate on the Term Loan
Funding Date.
(b)
Optional Termination and Reduction of Aggregate Credit Amounts
.
(i) The Borrower may at any time terminate, or from time to time reduce, the Aggregate
Revolving Commitments;
provided
that (A) each reduction of the Aggregate Revolving
Commitments shall be in an amount that is an integral multiple of $500,000 and not less than
$1,000,000 and (B) the Borrower shall not terminate or reduce the
-27-
Aggregate Revolving Commitments
if, after giving effect to any concurrent prepayment of the Loans in accordance with Section
3.04(c), the total Revolving Credit Exposures would exceed the Aggregate Revolving Commitments.
(ii) The Borrower shall notify the Administrative Agent of any election to terminate or reduce
the Aggregate Revolving Commitments under Section 2.06(b)(i) at least three (3) Business Days prior
to the effective date of such termination or reduction, specifying such election and the effective
date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section
2.06(b)(ii) shall be irrevocable. Any termination or reduction of the Aggregate Revolving
Commitments shall be permanent and may not be reinstated except pursuant to Section 2.06(c). Each
reduction of the Aggregate Revolving Commitments shall be made ratably among the Revolving Lenders
in accordance with each Revolving Lenders Applicable Percentage.
(c)
Optional Increase in Aggregate Commitments
.
(i) Subject to the conditions set forth in Section 2.06(c)(ii), the Borrower may increase the
Aggregate Revolving Commitments and/or the Aggregate Term Commitments then in effect with the prior
consent of the Administrative Agent by increasing the Revolving Commitment and/or Term Commitment
of a Lender or by causing a Person that at such time is not a Lender to become a Lender (an
Additional Lender
).
(ii) Any increase in the Aggregate Revolving Commitments and/or the Aggregate Term Commitments
shall be subject to the following additional conditions:
(A) such increase shall not be less than $25,000,000 and shall be in a whole multiple of
$5,000,000 in excess thereof unless the Administrative Agent otherwise consents, and no such
increase shall be permitted if after giving effect thereto the cumulative increases of the
Aggregate Commitments pursuant to this Section 2.06(c) would exceed $225,000,000;
(B) no Default shall have occurred and be continuing at the effective date of such increase;
(C) on the effective date of such increase, no Eurodollar Borrowings shall be outstanding or
if any Eurodollar Borrowings are outstanding, then the effective date of such increase shall be the
last day of the Interest Period in respect of such Eurodollar Borrowings unless the Borrower pays
compensation required by Section 5.02;
(D) no Lenders Revolving Commitment and/or Term Commitment may be increased without the
consent of such Lender;
(E) if the Borrower elects to increase the Aggregate Revolving Commitments by increasing the
Revolving Commitment of a Revolving Lender, the Borrower and such Lender shall execute and deliver
to the Administrative Agent a certificate substantially in the form of
Exhibit G-1
(a
Commitment Increase Certificate
), and, if requested, the Borrower shall deliver a new
Note payable to the order of such Revolving Lender in a principal
-28-
amount equal to its Revolving
Commitment after giving effect to such increase, and otherwise duly completed; and
(F) If the Borrower elects to increase the Aggregate Revolving Commitments by causing an
Additional Lender to become a party to this Agreement, then the Borrower and such Additional Lender
shall execute and deliver to the Administrative Agent a certificate substantially in the form of
Exhibit G-2
(an
Additional Lender Certificate
), together with an Administrative
Questionnaire, and, if requested, the Borrower shall deliver a Note payable to the order of such
Additional Lender in a principal amount equal to its Revolving Commitment, and otherwise duly
completed.
(G) If the Borrower elects to increase the Aggregate Term Commitments, the Borrower and each
Term Loan Lender shall execute and deliver to the Administrative Agent a Term Loan Assumption
Agreement and such other documentation as the Administrative Agent shall reasonably specify to
evidence the Term Commitment of such Term Loan Lender. Each Term Loan Assumption Agreement shall
specify the Term Commitments, the Applicable Margins, the Term Loan Funding Date, and the Term Loan
Maturity Date and other terms of the Term Loans to be made thereunder;
provided
, that no
Term Loans shall be made unless (y) the conditions set forth in Section 6.03 shall be satisfied and
(z) the other closing certificates and documentation as required by the relevant Term Loan
Assumption Agreement shall be delivered. The Administrative Agent shall promptly notify each Term
Loan Lender as to the effectiveness of each Term Loan Assumption Agreement.
(iii) Subject to acceptance and recording thereof pursuant to Section 2.06(c)(iv), from and
after the effective date specified in the Commitment Increase Certificate or the Additional Lender
Certificate (or if any Eurodollar Borrowings are outstanding, then the last day of the Interest
Period in respect of such Eurodollar Borrowings, unless the Borrower has paid compensation required
by Section 5.02): (A) the amount of the Aggregate Revolving Commitments and/or Aggregate Term
Commitments shall be increased as set forth therein, and (B) in the case of an Additional Lender
Certificate, any Additional Lender party thereto shall be a party to this Agreement and the other
Loan Documents and have the rights and obligations of a Lender under this Agreement and the other
Loan Documents. In addition in connection with an increase of the Aggregate Revolving Commitments,
the Lender or the Additional Lender, as applicable, shall purchase a pro rata portion of the
outstanding Revolving Loans (and participation interests in Letters of Credit) of each of the other
Revolving Lenders (and such Lenders hereby agree to sell and to take all such further action to
effectuate such sale) such that each Revolving Lender (including any Additional Lender, if
applicable) shall hold its Applicable Percentage of the outstanding Revolving Loans (and
participation interests) after giving effect to the increase in the Aggregate Revolving
Commitments.
(iv) Upon its receipt of a duly completed Commitment Increase Certificate or an Additional
Lender Certificate, executed by the Borrower and the Lender or the
Borrower and the Additional Lender party thereto, as applicable, the Administrative
Questionnaire referred to in Section 2.06(c)(ii), if applicable, the written consent of the
Administrative Agent to such increase required by Section 2.06(c)(i), and such documents and
opinions reasonably requested by the Administrative Agent, the Administrative Agent shall accept
such Commitment Increase Certificate or Additional Lender Certificate and record the
-29-
information
contained therein in the Register required to be maintained by the Administrative Agent pursuant to
Section 12.04(c). No increase in the Aggregate Revolving Commitments and/or the Aggregate Term
Commitments shall be effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this Section 2.06(c)(iv).
Section 2.07
Letters of Credit
.
(a) During the period from and including the Effective Date to, but excluding, the 30th day
prior to the Revolving Credit Maturity Date, the Issuing Banks, as issuing bank for the Lenders,
agree to extend credit for the account of the Borrower at any time and from time to time by
issuing, renewing, extending or reissuing Letters of Credit;
provided
however
, the
LC Exposure at any one time outstanding shall not exceed $20,000,000. The Revolving Lenders shall
participate in such Letters of Credit according to their respective Applicable Percentage. Each of
the Letters of Credit shall (1) be issued by the Issuing Banks on a sight basis only, (2) contain
such terms and provisions as are reasonably required by the Issuing Banks, (3) be for the account
of the Borrower and (4) expire not later than (A) 30 days before the Revolving Credit Maturity
Date, with respect to commercial letters of credit, and (B) 10 days before the Revolving Credit
Maturity Date, with respect to standby letters of credit. The Borrower may request that one or
more Letters of Credit be issued in an Offshore Currency denomination as part of the LC Exposure.
The aggregate US Dollar Equivalent of all Offshore Currency Letters of Credit, as of the issuance
date of any such Offshore Currency Letter of Credit, shall not exceed $20,000,000. No Issuing Bank
shall be obligated to issue an Offshore Currency Letter of Credit if such Issuing Bank has
determined, in its sole discretion, that it is unable to fund obligations in the requested Offshore
Currency;
provided
,
however
, the Administrative Agent shall use its best efforts to
locate suitable issuers if no Issuing Banks are able to fund obligations in the requested Offshore
Currency. From and after the Effective Date, the Existing Letters of Credit shall be deemed to be
Letters of Credit issued pursuant to this Section 2.07.
Notwithstanding anything to the contrary contained in this Agreement, including, without
limitation, this Section 2.07, the expiration date of one or more Letters of Credit may extend
beyond the Revolving Credit Maturity Date;
provided
,
however
, it is hereby
expressly agreed and understood that:
(i) the aggregate face amount of all such Letters of Credit shall not at any time exceed
$10,000,000;
(ii) the expiration dates of such Letters of Credit shall not extend more than three (3) years
beyond the Revolving Credit Maturity Date;
(iii) the Borrower shall, not later than five (5) Business Days prior to the Revolving Credit
Maturity Date, deposit in an account with the Administrative Agent, in the name of the
Administrative Agent for the benefit of the Administrative Agent and the Issuing Banks, an amount
in cash equal to the aggregate face amount of all such Letters of Credit as of such date;
provided
that for all Offshore Currency Letters of Credit, the Borrower shall deposit an
amount in cash equal to 110% of the aggregate face amount of all such Offshore Currency Letters of
Credit and will have a continuing obligation to maintain in such account at least an amount in cash
equal to 110% of the aggregate face amount of all such Offshore Currency Letters of Credit
-30-
based on
the then US Dollar Equivalent, and the Administrative Agent shall have exclusive dominion and
control (including the exclusive right of withdrawal) over such account;
(iv) if the Issuing Banks make any disbursement in connection with a Letter of Credit after
the Revolving Credit Maturity Date, such disbursement shall be an advance on behalf of the Borrower
under this Agreement and shall be reimbursed to the Issuing Banks either (A) by the Administrative
Agent applying amounts in the cash collateral account referred to in clause (iii) above until
reimbursed in full, or (B) by the Borrower pursuant to Section 2.07(d) (except that the Borrower
shall not have the right to request that the Lenders make, and the Lenders shall not have any
obligation to make, a Loan under this Agreement after the Revolving Credit Maturity Date to fund
any such disbursement); and
(v) all such disbursements referred to in clause (iv) of this paragraph shall be secured only
by the cash collateral referred to in clause (iii) of this paragraph and the Borrower hereby
grants, and by each deposit of such cash collateral with the Administrative Agent grants, to the
Administrative Agent a first-priority security interest in all such cash collateral, without any
further action on the part of the Issuing Banks, the Borrower, the Administrative Agent, any Lender
or any other Person now or hereafter party hereto (other than any action the Administrative Agent
reasonably deems necessary to perfect such security interest, which action the Borrower hereby
authorizes the Administrative Agent to take), until same are reimbursed in full.
If, on the later of the Revolving Credit Maturity Date or the Term Loan Maturity Date (A) the
Revolving Commitments have been terminated, (B) the Loans, all interest thereon and all other
amounts payable by the Borrower hereunder or in connection herewith (other than the LC Exposure in
connection with any Letter of Credit having an expiration date extending beyond the Revolving
Credit Maturity Date as permitted by Section 2.07(a)) have been paid in full, and (C) the
conditions set forth in clause (iii) above have been fully satisfied, then from and after such date
the following provisions of this Agreement shall not be operative: Sections 8.01 (other than
Section 8.01(a), which shall remain operative), 8.02 (except as the same may affect a Letter of
Credit), 8.03(b), 8.04, 8.05, 8.07, 8.08, 9.01, 9.02 (except for cash collateral securing Letters
of Credit), 9.03, 9.04, 9.05, 9.06, 9.08, 9.09, 9.10, 9.11, 9.12, 9.13, 9.14 and 9.15.
(b) If, after payment in full of all Indebtedness of the Borrower under the Loan Documents
(including without limitation, reimbursement obligations with respect to Letters of Credit) and the
expiration or cancellation of all outstanding Letters of Credit, there remains any amount on
deposit in the cash collateral account referred to in clause (iii) above, the Administrative Agent
shall, within three (3) Business Days after all such Indebtedness is paid in
full and all outstanding Letters of Credit have expired or been cancelled, return such amount
to the Borrower.
(c)
Participations
. In consideration and in furtherance of the foregoing, each
Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent,
for the account of the Issuing Bank, such Revolving Lenders Applicable Percentage of each LC
Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as
provided in Section 2.07(d), or of any reimbursement payment required to be refunded to the
Borrower for any reason. Each Revolving Lender acknowledges and agrees that
-31-
its obligation to
acquire participations pursuant to this Section 2.07(c) in respect of Letters of Credit is absolute
and unconditional and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a
Default, the reduction or termination of the Revolving Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction whatsoever.
(d)
Reimbursement and Prepayment
.
(i) In connection with any Letter of Credit, the Borrower may make funds available for
disbursement by the Issuing Bank in connection with such Letter of Credit. In such cases, the
Issuing Bank shall use such funds which the Borrower has made available to fund such Letter of
Credit. In addition, the Borrower may give written instructions to the Issuing Bank and the
Administrative Agent to make a Loan under this Agreement to fund any Letters of Credit which may be
drawn. In all such cases, the Borrower shall give the appropriate notices required under this
Agreement for an ABR Loan or a Eurodollar Loan. If a disbursement by the Issuing Bank is made
under any Letter of Credit, in cases in which the Borrower has not either provided its own funds to
fund a draw on a Letter of Credit or given the Administrative Agent prior notice for a Loan under
this Agreement, then the Borrower shall pay to the Administrative Agent within two (2) Business
Days after notice of any such disbursement is received by the Borrower, the amount and, in the case
of any Offshore Currency Letters of Credit, the US Dollar Equivalent determined on the date of such
disbursement, of each such disbursement made by the Issuing Bank under the Letter of Credit (if
such payment is not sooner effected as may be required under this Section 2.07(d) or under other
provisions of the Letter of Credit), together with interest on the amount disbursed from and
including the date of disbursement until payment in full of such disbursed amount at a varying rate
per annum equal to (i) the then applicable interest rate for ABR Loans through the second Business
Day after notice of such disbursement is received by the Borrower and (ii) thereafter, the
Post-Default Rate for ABR Loans (but in no event to exceed the Highest Lawful Rate) for the period
from and including the third Business Day following the date of such disbursement to and including
the date of repayment in full of such disbursed amount. The obligations of the Borrower under this
Agreement with respect to each Letter of Credit shall be absolute, unconditional and irrevocable
and shall be paid or performed strictly in accordance with the terms of this Agreement under all
circumstances whatsoever, including, without limitation, but only to the fullest extent permitted
by applicable law, the following circumstances: (A) any lack of validity or enforceability of this
Agreement, any Letter of Credit or any of the Security Instruments; (B) any amendment or waiver of
(including any default), or any consent to departure from this Agreement (except to the extent
permitted by any amendment or waiver), any Letter of Credit or any of the Security Instruments;
(C) the existence of any claim, set-off, defense or other rights which the Borrower may have
at any time against the beneficiary of any Letter of Credit or any transferee of any Letter of
Credit (or any Persons for whom any such beneficiary or any such transferee may be acting), the
Issuing Bank, the Administrative Agent, any Lender or any other Person, whether in connection with
this Agreement, any Letter of Credit, the Security Instruments, the Transactions or any unrelated
transaction; (D) any statement, certificate, draft, notice or any other document presented under
any Letter of Credit proves to have been forged, fraudulent, insufficient or invalid in any respect
or any statement therein proves to have been untrue or inaccurate in any respect whatsoever; (E)
payment by the Issuing Bank under any Letter of Credit against
-32-
presentation of a draft or
certificate which appears on its face to comply, but does not comply, with the terms of such Letter
of Credit; and (F) any other circumstance or happening whatsoever, whether or not similar to any of
the foregoing.
Notwithstanding anything in this Agreement to the contrary, the Borrower will not be liable for
payment or performance that results from the gross negligence or willful misconduct of the Issuing
Bank or its officers, employees, agents or representatives, except where the Borrower or any
Restricted Subsidiary actually recovers the proceeds for itself or the Issuing Bank of any payment
made by the Issuing Bank in connection with such gross negligence or willful misconduct, except for
reasonable costs and expenses associated with such recovery.
(ii) In the event of the occurrence of any Event of Default, a payment or prepayment pursuant
to Section 3.04(c) or the maturity of the Notes, whether by acceleration or otherwise, an amount
equal to the LC Exposure, except for all Offshore Currency Letters of Credit which shall equal an
amount equal to 110% of the aggregate face amount of all such Offshore Currency Letters of Credit
based on the then US Dollar Equivalent, shall be deemed to be forthwith due and owing by the
Borrower to the Issuing Bank, the Administrative Agent and the Lenders as of the date of any such
occurrence; and the Borrowers obligation to pay such amount shall be absolute and unconditional,
without regard to whether any beneficiary of any such Letter of Credit has attempted to draw down
all or a portion of such amount under the terms of a Letter of Credit, and, to the fullest extent
permitted by applicable law, shall not be subject to any defense or be affected by a right of
set-off, counterclaim or recoupment which the Borrower may now or hereafter have against any such
beneficiary, the Issuing Bank, the Administrative Agent, the Lenders or any other Person for any
reason whatsoever. The Borrower will have a continuing obligation to maintain in such account at
least an amount in cash equal to 110% of the aggregate face amount of all such Offshore Currency
Letters of Credit based on the then US Dollar Equivalent. Such payments shall be held by the
Issuing Bank on behalf of the Lenders as cash collateral securing the LC Exposure in an account or
accounts at their principal office; and the Borrower hereby grants to, and by its deposit with the
Administrative Agent grants to, the Administrative Agent a security interest in such cash
collateral. In the event of any such payment by the Borrower of amounts contingently owing under
outstanding Letters of Credit and in the event that thereafter drafts or other demands for payment
complying with the terms of such Letters of Credit are not made prior to the respective expiration
dates thereof, the Administrative Agent agrees, if no Event of Default has occurred and is
continuing or if no other amounts are outstanding under this Agreement, the Notes or the Security
Instruments, to remit to the Borrower (i) amounts for which the contingent obligations evidenced by
the Letters of Credit have ceased and (ii) amounts on deposit as cash collateral for Letters of
Credit.
(iii) Each Revolving Lender severally and unconditionally agrees that it shall promptly
reimburse the Issuing Bank in dollars an amount equal to such Revolving Lenders participation in
any Letter of Credit as provided in Section 2.07(a) of any disbursement made by the Issuing Bank
under any Letter of Credit that is not reimbursed according to this Section 2.07 (other than with
respect to disbursements described in the second paragraph of Section 2.07(d)(i)) and such
obligation to reimburse is absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence
and continuance of a Default or reduction or termination of the Aggregate Revolving Commitments,
and that each such payment shall be made without
-33-
any offset, abatement, withholding or reduction
whatsoever. If the Borrower fails to make such payment when due, the Administrative Agent shall
notify each Revolving Lender of the applicable disbursement, the payment then due from the Borrower
in respect thereof and such Revolving Lenders Applicable Percentage thereof. Promptly following
receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as provided in Section
2.05 with respect to Loans made by such Lender (and Section 2.05 shall apply,
mutatis mutandis
, to
the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the
Issuing Bank the amounts so received by it from the Revolving Lenders. Promptly following receipt
by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the
Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that
Revolving Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then
to such Revolving Lenders and the Issuing Bank as their interests may appear. Any payment made by
a Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank for any disbursement
shall constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such
disbursement.
(iv) If no Event of Default has occurred and is continuing, and subject to availability under
the Revolving Commitments (after reduction for the LC Exposure), to the extent the Borrower has not
reimbursed the Issuing Bank for any drawn upon Letter of Credit within one (1) Business Day after
notice of such disbursement has been received by the Borrower, the amount of such Letter of Credit
reimbursement obligation shall automatically be funded by the Lenders as a Loan hereunder and used
to pay such Letter of Credit reimbursement obligation in the percentages referenced in clause (iii)
above. If an Event of Default has occurred and is continuing, or if the funding of such Letter of
Credit reimbursement obligation as a Loan would cause the aggregate amount of all Loans outstanding
to exceed the Revolving Commitments (after reduction for the LC Exposure), such Letter of Credit
reimbursement obligation shall not be funded as a Loan, but instead shall accrue interest as
provided in Section 2.07(d)(i) and be subject to reimbursement under Section 2.07(d)(iii).
(e)
Replacement of the Issuing Bank
. The Issuing Bank may be replaced at any time by
written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the
successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement
of the Issuing Bank. At the time any such replacement shall become effective, the Borrower shall
pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section
3.05(a). From and after the effective date of any such replacement, (i) the successor Issuing Bank
shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to
Letters of Credit to be issued thereafter and (ii) references herein
to the term Issuing Bank shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require.
After the replacement of the Issuing Bank hereunder, the replaced Issuing Bank shall remain a party
hereto and shall continue to have all the rights and obligations of the Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not
be required to issue additional Letters of Credit.
-34-
ARTICLE III
Payments of Principal and Interest; Prepayments; Fees
Section 3.01
Repayment of Loans
.
(a)
Revolving Loans
. On the Revolving Credit Maturity Date, the Borrower shall pay to
the Administrative Agent, for the account of each Revolving Lender, the outstanding aggregate
principal amount and accrued and unpaid interest under the Revolving Loans.
(b)
Term Loans
. On the Term Loan Maturity Date, the Borrower shall pay to the
Administrative Agent, for the account of each Term Loan Lender, the outstanding aggregate principal
amount and accrued and unpaid interest under the Term Loan.
Section 3.02
Interest
.
(a)
ABR Loans
. The Loans comprising each ABR Borrowing shall bear interest at the
Base Rate plus the Applicable Margin, but in no event to exceed the Highest Lawful Rate.
(b)
Eurodollar Loans
. The Loans comprising each Eurodollar Borrowing shall bear
interest at the LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable
Margin, but in no event to exceed the Highest Lawful Rate.
(c)
Post-Default Rate
. Notwithstanding the foregoing, the Borrower will pay to the
Administrative Agent, for the account of each Lender, interest at the applicable Post-Default Rate
on any principal amount of any Loan made by such Lender, and (to the fullest extent permitted by
law) on any other amount payable by the Borrower hereunder, under any Loan Document or under any
Note held by such Lender to or for account of such Lender, for the period commencing on the date of
an Event of Default until the same is paid in full or all Events of Default are cured or waived.
(d)
Interest Payment Dates
. Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date for such Loan;
provided
that (i) interest accrued pursuant to
Section 3.02(c) shall be payable on demand, (ii) in the event of any repayment or prepayment of any
Loan (other than an optional prepayment of an ABR Loan prior to the Revolving Credit Maturity Date
or Term Loan Maturity Date, as applicable), accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment and
(iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of
such conversion. Any accrued and unpaid interest on the Revolving Loans shall be paid on the
Revolving Credit Maturity Date. Any accrued and unpaid interest on the Term Loans shall be paid on
the Term Loan Maturity Date.
(e)
Interest Rate Computations
. All interest with respect to Eurodollar Loans
hereunder shall be computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the basis of a year of
365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of
days elapsed (including the first day but excluding the last day). All interest with respect to
-35-
ABR Loans hereunder shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). The applicable Base Rate, LIBO Rate or LIBO shall be determined
by the Administrative Agent, and such determination shall be conclusive absent manifest error, and
be binding upon the parties hereto.
Section 3.03
Alternate Rate of Interest
. If prior to the commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining the LIBO Rate or
the LIBO for such Interest Period; or
(b) the Administrative Agent is advised by the Majority Lenders that the LIBO Rate or LIBO, as
applicable, for such Interest Period will not adequately and fairly reflect the cost to such
Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by
telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent
notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer
exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any
Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.
Section 3.04
Prepayments
.
(a)
Optional Prepayments
. The Borrower shall have the right at any time and from time
to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with
Section 3.04(b).
(b)
Notice and Terms of Optional Prepayment
. The Borrower shall notify the
Administrative Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in
the case of prepayment of a Eurodollar Borrowing, not later than 12:00 p.m., Eastern time,
three (3) Business Days before the date of prepayment, or (ii) in the case of prepayment of an ABR
Borrowing, not later than 12:00 p.m., Eastern time, on the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date and the principal amount of each
Borrowing or portion thereof to be prepaid (which shall be in integral multiples of $100,000 for
ABR Borrowings or the remaining aggregate principal balance outstanding on the applicable Notes for
ABR Borrowings and in an amount equal to all of the Eurodollar Borrowings for the Interest Period
prepaid for Eurodollar Borrowings). Promptly following receipt of any such notice relating to a
Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial
prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance
of a Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Borrowing shall
be applied ratably to the Loans included in the
-36-
prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 3.02.
(c)
Mandatory Prepayments
.
(i) If, after giving effect to any termination or reduction of the Aggregate Revolving
Commitments pursuant to Section 2.06(b), the total Revolving Credit Exposure exceeds the Aggregate
Revolving Commitments, then the Borrower shall (A) prepay the Borrowings on the date of such
termination or reduction in an aggregate principal amount equal to such excess, and (B) if any
excess remains after prepaying all of the Borrowings as a result of an LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to such excess to be held as cash
collateral as provided in Section 2.07(d)(ii).
(ii) Each prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied, first,
ratably to any ABR Borrowings then outstanding, and, second, to any Eurodollar Borrowings then
outstanding, and if more than one Eurodollar Borrowing is then outstanding, to each such Eurodollar
Borrowing in order of priority beginning with the Eurodollar Borrowing with the least number of
days remaining in the Interest Period applicable thereto and ending with the Eurodollar Borrowing
with the most number of days remaining in the Interest Period applicable thereto.
(iii) Prepayments pursuant to this Section 3.04(c) shall be accompanied by accrued interest to
the extent required by Section 3.02. Any prepayments on the Term Loans may not be reborrowed.
(d)
No Premium or Penalty
. Prepayments permitted or required under this Section 3.04
shall be without premium or penalty, except as required under Section 5.02.
Section 3.05
Fees
.
(a)
Commitment Fees
. The Borrower agrees to pay to the Administrative Agent for the
account of each Revolving Lender a commitment fee, which shall accrue at the Applicable Margin (the
Commitment Fee
) on the average daily amount of the unused amount (after deducting any LC
Exposure) of the Revolving Commitment of such Lender during the
period from and including the Effective Date to but excluding the Revolving Credit Maturity
Date. Accrued Commitment Fees shall be payable in arrears on the last day of March, June,
September and December of each year and on the Revolving Credit Maturity Date, commencing on the
first such date to occur after the date hereof. All Commitment Fees shall be computed on the basis
of a year of 360 days, unless such computation would exceed the Highest Lawful Rate, in which case
interest shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and
shall be payable for the actual number of days elapsed (including the first day but excluding the
last day).
(b)
Letter of Credit Fees
. The Borrower agrees to pay (i) to the Administrative Agent
for the account of each Lender a participation fee with respect to its participations in Letters of
Credit, which shall accrue at the same Applicable Margin used to determine the interest rate
applicable to Eurodollar Loans on the average daily amount of such Lenders LC Exposure (excluding
any portion thereof attributable to unreimbursed LC
-37-
Disbursements and including the US Dollar
Equivalent of the face amount of the outstanding Offshore Currency Letter of Credit) during the
period from and including the date of this Agreement to but excluding the later of the date on
which such Lenders Revolving Commitment terminates and the date on which such Lender ceases to
have any LC Exposure, (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of
0.125% per annum on the average daily amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and including the date of
this Agreement to but excluding the later of the date of termination of the Aggregate Revolving
Commitments and the date on which there ceases to be any LC Exposure and (iii) to the Issuing Bank,
for its own account, its standard fees with respect to the issuance, amendment, renewal or
extension of any Letter of Credit or processing of drawings thereunder. Participation fees and
fronting fees accrued through and including the last day of March, June, September and December of
each year shall be payable on the third Business Day following such last day, commencing on the
first such date to occur after the date of this Agreement;
provided
that all such fees
shall be payable on the Revolving Credit Maturity Date and any such fees accruing after the
Revolving Credit Maturity Date shall be payable on demand. Any other fees payable to the Issuing
Bank pursuant to this Section 3.05(a) shall be payable within 10 days after demand. All
participation fees and fronting fees shall be computed on the basis of a year of 360 days, unless
such computation would exceed the Highest Lawful Rate, in which case interest shall be computed on
the basis of a year of 365 days (or 366 days in a leap year), and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).
(c)
Administrative Agent Fees
. The Borrower agrees to pay to the Administrative
Agent, for its own account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
(d)
Other Fees
. The Borrower shall pay to the Administrative Agent for its own
account such other fees as are set forth in the Fee Letter on the dates specified therein to the
extent not paid prior to the Effective Date.
ARTICLE IV
Payments; Pro Rata Treatment; Sharing of Set-offs
Section 4.01
Payments Generally; Pro Rata Treatment; Sharing of Set-offs
.
(a)
Payments by the Borrower
. The Borrower shall make each payment required to be
made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 5.01, Section 5.02, Section 5.03 or otherwise) prior to 12:00
p.m., Eastern time, on the date when due, in immediately available funds, without defense,
deduction, recoupment, set-off or counterclaim. Fees, once paid, shall be fully earned and shall
not be refundable under any circumstances. Any amounts received after such time on any date may,
in the discretion of the Administrative Agent, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon. All such payments shall be
made to the Administrative Agent as specified in Section 12.01, except payments to be made directly
to the Issuing Bank as expressly provided herein and except that payments pursuant to Section 5.01,
Section 5.02, Section 5.03 and Section 12.03 shall be made directly to the Persons entitled
thereto. The Administrative Agent shall distribute any such
-38-
payments received by it for the
account of any other Person to the appropriate recipient promptly following receipt thereof. If
any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall
be extended to the next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments hereunder shall
be made in dollars.
(b)
Application of Insufficient Payments
. If at any time insufficient funds are
received by and available to the Administrative Agent to pay fully all amounts of principal,
unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of interest and fees then due to such parties and
(ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements then due to such parties.
(c)
Sharing of Payments by Lenders
. If any Lender shall, by exercising any right of
set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on
any of its Loans or participations in LC Disbursements resulting in such Lender receiving payment
of a greater proportion of the aggregate amount of its Loans and participations in LC Disbursements
and accrued interest thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value) participations in the
Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans and participations
in LC Disbursements;
provided
that (i) if any such participations are purchased and all or
any portion of the payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without interest and (ii) the
provisions of this Section 4.01(c) shall not be construed to apply to
any payment made by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in LC Disbursements to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the
provisions of this Section 4.01(c) shall apply). The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the Borrower rights of
set-off and counterclaim with respect to such participation as fully as if such Lender were a
direct creditor of the Borrower in the amount of such participation.
Section 4.02
Presumption of Payment by the Borrower
. Unless the Administrative Agent shall have received notice from the Borrower prior to the date
on which any payment is due to the Administrative Agent for the account of the Lenders or the
Issuing Bank that the Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may, in reliance upon
such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due.
In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the
Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith
on demand the amount so distributed to such Lender or Issuing Bank with interest
-39-
thereon, for each
day from and including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation.
Section 4.03
Certain Deductions by the Administrative Agent
. If any Lender shall fail to make any payment required to be made by it pursuant to Section
2.05(b), Section 2.07(c), Section 2.07(d) or Section 4.02 then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received
by the Administrative Agent for the account of such Lender to satisfy such Lenders obligations
under such Sections until all such unsatisfied obligations are fully paid.
Section 4.04
Disposition of Proceeds
. The Security Instruments contain an assignment by the Borrower and/or the Guarantors unto and in
favor of the Administrative Agent for the benefit of the Lenders of all of the Borrowers or each
Guarantors interest in and to production and all proceeds attributable thereto which may be
produced from or allocated to the Property. The Security Instruments further provide in general
for the application of such proceeds to the satisfaction of the Indebtedness and other obligations
described therein and secured thereby. Notwithstanding the assignment contained in such Security
Instruments, until the occurrence of an Event of Default, (a) the Administrative Agent and the
Lenders agree that they will neither notify the purchaser or purchasers of such production nor take
any other action to cause such proceeds to be remitted to the Administrative Agent or the Lenders,
but the Lenders will instead permit such proceeds to be paid to the Borrower and its Subsidiaries
and (b) the Lenders hereby authorize the Administrative Agent to
take such actions as may be necessary to cause such proceeds to be paid to the Borrower and/or such
Subsidiaries.
ARTICLE V
Increased Costs; Break Funding Payments; Taxes; Illegality
Section 5.01
Increased Costs
.
(a)
Eurodollar Changes in Law
. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit extended by, any
Lender (except any such reserve requirement reflected in the LIBO Rate); or
(ii) impose on any Lender or the London interbank market any other condition affecting this
Agreement or Eurodollar Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to
reduce the amount of any sum received or receivable by such Lender (whether of principal, interest
or otherwise), then the Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
(b)
Capital Requirements
. If any Lender or the Issuing Bank determines that
any Change in Law regarding capital requirements has or would have the effect of reducing the
-40-
rate of return on such Lenders or the Issuing Banks capital or on the capital of such Lenders or the
Issuing Banks holding company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the
Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lenders or the
Issuing Banks holding company could have achieved but for such Change in Law (taking into
consideration such Lenders or the Issuing Banks policies and the policies of such Lenders or the
Issuing Banks holding company with respect to capital adequacy), then from time to time the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender or the Issuing Bank or such Lenders or the Issuing Banks
holding company for any such reduction suffered.
(c)
Certificates
. A certificate of a Lender or the Issuing Bank setting
forth in reasonable detail the amount or amounts necessary to compensate such Lender or the Issuing
Bank or its holding company, as the case may be, as specified in Section 5.01(a) or (b) shall be
delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such
certificate within thirty (30) days after receipt thereof.
(d)
Effect of Failure or Delay in Requesting Compensation
. Failure or delay on the
part of any Lender or the Issuing Bank to demand compensation pursuant to this Section
5.01 shall not constitute a waiver of such Lenders or the Issuing Banks right to demand such
compensation.
Section 5.02
Break Funding Payments
. In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last
day of an Interest Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan into an ABR Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar
Loan on the date specified in any notice delivered pursuant hereto, or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of
a request by the Borrower pursuant to Section 5.04(b), then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such event. In the case of a
Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the LIBO Rate that
would have been applicable to such Loan, for the period from the date of such event to the last day
of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or
continue, for the period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period at the interest rate
which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits
of a comparable amount and period from other banks in the eurodollar market.
A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section 5.02 shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such
certificate within ten (10) days after receipt thereof.
-41-
Section 5.03
Taxes
.
(a)
Payments Free of Taxes
. Any and all payments by or on account of any
obligation of the Borrower or any Guarantor under any Loan Document shall be made free and clear of
and without deduction for any Indemnified Taxes or Other Taxes;
provided
that if the
Borrower or any Guarantor shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable under this Section
5.03(a)), the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii) the Borrower or such
Guarantor shall make such deductions and (iii) the Borrower or such Guarantor shall pay the full
amount deducted to the relevant Governmental Authority in accordance with applicable law.
(b)
Payment of Other Taxes by the Borrower
. The Borrower shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.
(c)
Indemnification by the Borrower
. The Borrower shall indemnify the
Administrative Agent, each Lender and the Issuing Bank, within ten (10) days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to
any payment by or on account of any obligation of the Borrower hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section
5.03) and any penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate of the Administrative Agent, a
Lender or the Issuing Bank as to the amount of such payment or liability under this Section 5.03
shall be delivered to the Borrower and shall be conclusive absent manifest error.
(d)
Evidence of Payments
. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower or a Guarantor to a Governmental Authority, the
Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt
issued by such Governmental Authority evidencing such payment, a copy of the return reporting such
payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(e)
Foreign Lenders
. Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to payments under this
Agreement or any other Loan Document shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such properly completed
and executed documentation prescribed by applicable law or reasonably requested by the Borrower as
will permit such payments to be made without withholding or at a reduced rate.
(f)
Tax Refunds
. If the Administrative Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been
-42-
indemnified by the Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section 5.03, it shall pay over such refund to the Borrower (but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section
5.03 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent or such Lender and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund);
provided
, that
the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the
amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund to such Governmental
Authority. This Section 5.03 shall not be construed to require the Administrative Agent or any
Lender to make available its tax returns (or any other information relating to its taxes which it
deems confidential) to the Borrower or any other Person.
Section 5.04
Mitigation Obligations; Replacement of Lenders
.
(a)
Designation of Different Lending Office
. If any Lender requests compensation
under Section 5.01, or if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section 5.03, then such Lender
shall use reasonable efforts to designate a different lending office for funding or booking its
Loans hereunder or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i)
would eliminate or reduce amounts payable pursuant to Section 5.01 or Section 5.03, as the case may
be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such designation or
assignment.
(b)
Replacement of Lenders
. If any Lender requests compensation under Section 5.01,
or if the Borrower is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 5.03, or if any Lender defaults in its
obligation to fund Loans hereunder, then the Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained in Section
12.04(c)), all its interests, rights and obligations under this Agreement to an assignee that shall
assume such obligations (which assignee may be another Lender, if a Lender accepts such
assignment);
provided
that (i) the Borrower shall have received the prior written consent
of the Administrative Agent, which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any
such assignment resulting from a claim for compensation under Section 5.01 or payments required to
be made pursuant to Section 5.03, such assignment will result in a reduction in such compensation
or payments. A Lender shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.
-43-
Section 5.05
Illegality
. Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for
any Lender or its Applicable Lending Office to honor its obligation to make or maintain Eurodollar
Loans either generally or having a particular Interest Period hereunder, then (a) such Lender shall
promptly notify the Borrower and the Administrative Agent thereof and such Lenders obligation to
make such Eurodollar Loans shall be suspended (the
Affected Loans
) until such time as
such Lender may again make and maintain such Eurodollar Loans and (b) all Affected Loans which
would otherwise be made by such Lender shall be made instead as ABR Loans (and, if such Lender so
requests by notice to the Borrower and the Administrative Agent, all Affected Loans of such Lender
then outstanding shall be automatically converted into ABR
Loans on the date specified by such Lender in such notice) and, to the extent that Affected Loans
are so made as (or converted into) ABR Loans, all payments of principal which would otherwise be
applied to such Lenders Affected Loans shall be applied instead to its ABR Loans.
ARTICLE VI
Conditions Precedent
Section 6.01
Effective Date
. The effectiveness of this Agreement and the obligation of the Revolving Lenders to make Loans
and of the Issuing Banks to issue Letters of Credit hereunder are subject to the receipt by the
Administrative Agent and the Revolving Lenders of all fees payable pursuant to Section 3.05 on or
before the Effective Date and the receipt by the Administrative Agent of the following documents
and satisfaction of the other conditions provided in this Section 6.01 (or waived in accordance
with Section 12.02), each of which shall be satisfactory to the Administrative Agent in form and
substance:
(a) A certificate of the Secretary or an Assistant Secretary (or its equivalent) of each of
the Borrower, UCLP and each Subsidiary party to a Loan Document, setting forth (i) resolutions of
its board of directors (or its equivalent) with respect to the authorization of such party to
execute and deliver the Loan Documents to which it is a party and to enter into the Transactions
contemplated in those documents, (ii) the officers (or its equivalent) of such party (A) who are
authorized to sign the Loan Documents to which such party is a party and (B) who will, until
replaced by another officer or officers (or its equivalent) duly authorized for that purpose, act
as its representative for the purposes of signing documents and giving notices and other
communications in connection with this Agreement and the Transactions contemplated hereby, (iii)
specimen signatures of the authorized officers (or its equivalent), and (iv) the Organization
Documents, certified as being true and complete. The Administrative Agent and the Lenders may
conclusively rely on such certificate until the Administrative Agent receives notice in writing
from such party to the contrary.
(b) Certificates of the appropriate state agencies with respect to the existence,
qualification and good standing of UCLP, the Borrower and each Subsidiary party to a Loan Document.
(c) A compliance certificate which shall be substantially in the form of
Exhibit D-1
,
duly and properly executed by a Responsible Officer of the Borrower and dated as of the Effective
Date.
-44-
(d) (i) A counterpart of this Agreement signed on behalf of each party hereto or (ii) written
evidence satisfactory to the Administrative Agent (which may include telecopy or electronic
transmission of a signed signature page of this Agreement) that such party has signed a counterpart
of this Agreement.
(e) The Notes duly completed and executed for each Lender that has requested a Note.
(f) The Security Instruments, including those described on
Exhibit F-1
, duly completed
and executed in sufficient number of counterparts for recording, if necessary.
(g) An opinion of Gardere Wynne Sewell LLP, counsel to UCLP, the Borrower and the Subsidiaries
party to a Loan Document, in form and substance satisfactory to the Administrative Agent, as to
such matters incident to the Transactions herein contemplated and as the Administrative Agent may
reasonably request.
(h) A summary of insurance coverage of the Borrower evidencing that the Borrower is carrying
insurance in accordance with Section 7.18.
(i) Copies of Requests for Information or Copies (Form UCC-11) or equivalent commercially
obtained reports, listing all effective financing statements which name any of UCLP, the Borrower
or any Subsidiary party to a Loan Document (under their present names and any previous names) as
debtor and which are filed in all jurisdictions in which such Persons are organized, together with
copies of such financing statements.
(j) A Borrowing Request in the form of
Exhibit B
as applicable duly completed and
executed by the Borrower.
(k) A Letter of Credit Agreement pertaining to each new Letter of Credit to be issued on the
Effective Date, if any, duly completed and executed by the Borrower.
(l) All costs, fees, expenses (including, without limitation, reasonable legal fees and
expenses and recording taxes and fees) and other compensation contemplated by this Agreement and
the other Loan Documents, and for which statements or invoices have been submitted to the Borrower,
payable to the Lenders through the Effective Date shall have been paid.
(m) Except as set forth on
Schedule 6.01(m)
, all Property in which the Administrative
Agent shall, at such time, be entitled to have a Lien pursuant to this Agreement or any other
Security Instrument shall have been physically delivered to the possession of the Administrative
Agent or any bailee accepted by the Administrative Agent to the extent that such possession is
necessary for the purpose of perfecting the Administrative Agents Lien in such Collateral.
(n) Each document (including any Uniform Commercial Code financing statement) required by this
Agreement or under law or reasonably requested by the Administrative Agent to be filed, registered
or recorded in order to create in favor of the Administrative Agent, for the benefit of the
Lenders, a perfected Lien on the Collateral described therein, prior and superior in right to any
other Person (other than Permitted Liens), shall be in proper form for filing, registration or
recordation.
-45-
(o) The closing of the IPO shall have occurred.
(p) Such other documents as the Administrative Agent or any Lender or special counsel to the
Administrative Agent may reasonably request, and in reasonable detail, the basis and amount of its
request for compensation.
The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and
such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the
Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section
12.02) at or prior to 2:00 p.m., Eastern time, on December 31, 2006 (and, in the event such
conditions are not so satisfied or waived, the Aggregate Revolving Commitments shall terminate at
such time).
Section 6.02
Each Credit Event
. The obligation of each Lender to make a Loan on the occasion of any Borrowing (including the
initial funding), and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is
subject to the satisfaction of the following conditions:
(a) At the time of and immediately after giving effect to such Borrowing or the issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have
occurred and be continuing.
(b) At the time of and immediately after giving effect to such Borrowing or the issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, no event, development or
circumstance has occurred or shall then exist that has resulted in, or could reasonably be expected
to have, a Material Adverse Effect.
(c) The representations and warranties of UCLP, the Borrower and the Guarantors set forth in
this Agreement and in the other Loan Documents shall be true and correct on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit,
as applicable, except to the extent any such representations and warranties are expressly limited
to an earlier date, in which case, on and as of the date of such Borrowing or the date of issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, such representations and
warranties shall continue to be true and correct as of such specified earlier date.
(d) The making of such Loan or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, would not conflict with, or cause any Lender or the Issuing Bank to violate
or exceed, any applicable Governmental Requirement, and no Change in Law shall have occurred, and
no litigation shall be pending or threatened, which does or, with respect to any threatened
litigation, seeks to, enjoin, prohibit or restrain, the making or repayment of any Loan, the
issuance, amendment, renewal, extension or repayment of any Letter of Credit or any participations
therein or the consummation of the Transactions contemplated by this Agreement or any other Loan
Document.
-46-
(e) The receipt by the Administrative Agent of a Borrowing Request in accordance with Section
2.03 or a request for a Letter of Credit in accordance with Section 2.07, as applicable.
Each request for a Borrowing and each request for the issuance, amendment, renewal or
extension of any Letter of Credit shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in Section 6.02(a) through (e).
Section 6.03
Conditions Precedent to the Term Loans and Commitment Increases
. The obligation of the Term Loan Lenders to make Term Loans and the Revolving Lenders to
make increases in the Revolving Commitments under this Agreement is subject to the receipt by the
Administrative Agent, the Term Loan Lenders and the Revolving Lenders of all fees payable by
written agreement among the Borrower and the Administrative Agent on or before the applicable Term
Loan Funding Date or the date on which any increase in the Revolving Commitments shall be
effective, as applicable, and the receipt by the Administrative Agent of the following documents
and satisfaction of the other conditions provided in this Section 6.03, each of which shall be
reasonably satisfactory to the Administrative Agent in form and substance:
(a) All reasonable costs, fees, expenses (including, without limitation, legal fees and
expenses and recording taxes and fees) and other compensation contemplated by this Agreement and
the other Loan Documents payable to the Term Loan Lenders through the Term Loan Funding Date and to
the Revolving Lenders through the effective date of any increase in the Revolving Commitments, as
applicable, to the extent invoices and statements have been received, shall have been paid.
(b) The Notes duly completed and executed for each Lender that has requested a Term Note or a
Revolving Note.
(c) Each document (including any Uniform Commercial Code financing statement) required by the
Security Instruments then in effect or under law or reasonably requested by the Administrative
Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent,
for the benefit of the Lenders, a perfected Lien on the Collateral described therein, prior and
superior in right to any other Person (other than Permitted Liens), all of which shall be in proper
form for filing, registration or recordation.
(d) All conditions required by Section 6.01(a), (b), (c), (g), (j) and (l) as they relate to
the new Term Loan and any increases in the Revolving Commitments shall be repeated as if set forth
herein.
(e) Such other documents as the Administrative Agent or any Lender or special counsel to the
Administrative Agent may reasonably request.
ARTICLE VII
Representations and Warranties
Each of UCLP, the Borrower and each Guarantor by its execution of a Guaranty Agreement,
represents and warrants with respect to itself, as applicable, to the Administrative Agent, the
Issuing Bank and the Lenders (each representation and warranty herein is given as of
-47-
the Effective
Date and shall be deemed repeated and reaffirmed on the dates of each Borrowing and issuance,
renewal, extension or reissuance of a Letter of Credit as provided in Section 6.02):
Section 7.01
Legal Existence
. With respect to itself and each of its Material Domestic Subsidiaries: (a) is a legal entity
duly organized, legally existing and in good standing (if applicable) under the laws of the
jurisdiction of its current organization, except as permitted by Section 9.06; (b) has all
requisite power, and has all material governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or as proposed to be conducted;
and (c) is qualified to do business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure so to qualify would result in
a Material Adverse Effect.
Section 7.02
Financial Condition
. There has been no change or event having a Material Adverse Effect from the financial condition
of UCLP and its Consolidated Subsidiaries set forth on the pro forma balance sheet dated as of June
30, 2006 in the S-1.
Section 7.03
Litigation
. Except as disclosed to the Lenders in
Schedule 7.03
hereto, at the Effective Date there
is no litigation, legal, administrative or arbitral proceeding, investigation or other action of
any nature pending or, to its knowledge threatened against or affecting it or any of its
Subsidiaries which involves the possibility of any judgment or liability against it or any of its
Subsidiaries which would reasonably be expected to have a Material Adverse Effect.
Section 7.04
No Breach
. Neither the execution and delivery of the Loan Documents, nor compliance with the terms and
provisions hereof will conflict with or result in a breach of, or require any consent which has not
been obtained as of the Effective Date under, the respective charter or by-laws of it or any of its
Restricted Subsidiaries, or any Governmental Requirement or any agreement or instrument to which it
or any of its Restricted Subsidiaries is a party or by which it is bound or to which it or its
Properties are subject, or constitute a default under any such agreement or instrument, or result
in the creation or imposition of any Lien upon any of the revenues or assets of it or any of its
Restricted Subsidiaries pursuant to the terms of any such agreement or instrument other than the
Liens created by the Loan Documents.
Section 7.05
Authority
. It and each of its Restricted Subsidiaries have all necessary power and authority to execute,
deliver and perform its obligations under the Loan Documents to which it is a party; and the
execution, delivery and performance by it and each Restricted Subsidiary of the Loan Documents to
which it is a party, have been duly authorized by all necessary action on its part; and the Loan
Documents constitute the legal, valid and binding obligations of it and each of its Restricted
Subsidiaries, enforceable in accordance with their terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws generally affecting creditors rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
Section 7.06
Approvals
. No authorizations, approvals or consents of, and no filings or registrations with, any
Governmental Authority are necessary for the execution, delivery or performance by it or any of its
Restricted Subsidiaries of the Loan Documents or for the validity
-48-
or enforceability thereof, except
for the recording and filing of the Security Instruments as required by this Agreement.
Section 7.07
Use of Loans and Letters of Credit
.
(a)
Revolving Loans and Letters of Credit
. The Borrower will use the proceeds of the
Loans and Letters of Credit for acquisitions permitted hereunder, to repay debt which is assumed in
connection with such acquisitions, to pay distributions, for working capital, and other general
corporate purposes not in contravention of any Governmental Requirement or of any Loan Document.
(b)
Term Loans
. The Borrower will use the proceeds of the Term Loans for acquisitions
permitted hereunder, to repay debt which is assumed in connection with such acquisitions, to pay
distributions, for working capital, and other general corporate purposes not in contravention of
any Governmental Requirement or of any Loan Document.
(c)
Margin Stock
. The Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose, whether immediate, incidental or
ultimate, of buying or carrying margin stock (within the meaning of Regulation T, U or X of the
Board of Governors of the Federal Reserve System) and no part of the proceeds of any Loan hereunder
will be used to buy or carry any margin stock.
Section 7.08
ERISA
. No ERISA Event has occurred or is reasonably expected to occur that, when taken together
with all other such ERISA Events for which liability is reasonably expected to occur, could
reasonably be expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed by more than $100,000 the fair market value of
the assets of such Plan, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial statements reflecting such
amounts, exceed by more than $100,000 the fair market value of the assets of all such underfunded
Plans.
Section 7.09
Taxes
. Except as set out in
Schedule 7.09
, it and its Domestic Subsidiaries have filed all
United States Federal income tax returns and all other tax returns which are required to be filed
by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received
by it or any of its Domestic Subsidiaries, except where the failure to file such tax returns and
pay such taxes would not result in a liability in excess of $5,000,000 in the aggregate. The
charges, accruals and reserves on the books of it and its Domestic Subsidiaries in respect of taxes
and other governmental charges are, in the opinion of it, adequate. No tax lien has been filed and, to
the knowledge of it, no claim is being asserted with respect to any such tax, fee or other charge
which would result in a liability in excess of $5,000,000 in the aggregate.
-49-
Section 7.10
Titles, Etc
.
(a) Except as set out in
Schedule 7.10
, it and its Restricted Subsidiaries have good
and marketable title to their material Properties, (i) except in cases where the failure to have
said good and marketable title would not result in a Material Adverse Effect and (ii) free and
clear of all Liens, except Liens permitted by Section 9.02.
(b) All leases and agreements necessary for the conduct of the business of it and its
Restricted Subsidiaries are valid and subsisting, in full force and effect and there exists no
default or event or circumstance which with the giving of notice or the passage of time or both
would give rise to a default under any such lease or agreement and which default, event or
circumstance would result in a Material Adverse Effect.
Section 7.11
No Material Misstatements
. No written information, statement, exhibit, certificate, document or report furnished to the
Administrative Agent and the Lenders (or any of them) by it or any of its Restricted Subsidiaries
in connection with the negotiation of this Agreement, including the Information Memorandum, or
delivered hereunder (as modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state a material fact necessary to make the statements
contained therein not materially misleading in the light of the circumstances in which made and
with respect to it and its Restricted Subsidiaries taken as a whole. To its knowledge, there is no
fact peculiar to it or any of its Restricted Subsidiaries which has a Material Adverse Effect and
which has not been set forth in this Agreement or the other documents, certificates and statements
furnished to the Administrative Agent by or on behalf of it or any of its Restricted Subsidiaries
or otherwise prior to, or on, the Effective Date in connection with the Transactions contemplated
hereby.
Section 7.12
Investment Company Act
. Neither UCLP nor any of its Subsidiaries is an investment company or a company controlled by
an investment company, within the meaning of the Investment Company Act of 1940, as amended.
Section 7.13
Subsidiaries
. Except as set out in Schedule 7.13, as of the Effective Date, UCLP has no Subsidiaries.
Section 7.14
Location of Business and Offices
. The Borrowers principal place of business and chief executive office is located at the
addresses stated on its signature page of this Agreement.
Section 7.15
Defaults
. Neither it nor any of its Restricted Subsidiaries is in material default nor has any event or
circumstance occurred which, but for the expiration of any applicable grace period or the giving of
notice, or both, would constitute a material default under any material agreement or instrument to
which it or any of its Restricted Subsidiaries is a party or by which it or any of its Restricted
Subsidiaries is bound, which default would result in a Material Adverse Effect. No Default
hereunder has occurred and is continuing.
Section 7.16
Environmental Matters
. Except (a) as provided in a notice to all Lenders or (b) as would not have a Material Adverse
Effect:
-50-
(i) Neither any Property of it or any of its Subsidiaries nor the operations conducted thereon
violate any order or requirement of any court or Governmental Authority or any Environmental Laws;
(ii) Without limitation of clause (i) above, no Property of it or any of its Subsidiaries nor
the operations currently conducted thereon or, to the best knowledge of it, by any prior owner or
operator of such Property or operation, are in violation of or subject to any existing, pending or
threatened action, suit, investigation, inquiry or proceeding by or before any court or
Governmental Authority or to any remedial obligations under Environmental Laws;
(iii) All notices, permits, licenses or similar authorizations, if any, required to be
obtained or filed in connection with the operation or use of any and all Property of it and each of
its Subsidiaries, including without limitation, past or present treatment, storage, disposal or
release of a hazardous substance or solid waste into the environment, have been duly obtained or
filed, and it and each of its Subsidiaries are in compliance with the terms and conditions of all
such notices, permits, licenses and similar authorizations;
(iv) All hazardous substances, solid waste, and oil and gas exploration and production wastes,
if any, generated at any and all Property of it or any of its Subsidiaries have in the past been
transported, treated and disposed of in accordance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the environment, and, to the
best knowledge of it, all such transport carriers and treatment and disposal facilities have been
and are operating in compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment, and are not the subject of
any existing, pending or threatened action, investigation or inquiry by any Governmental Authority
in connection with any Environmental Laws;
(v) It has taken all steps reasonably necessary to determine and has determined that no
hazardous substances, solid waste, or oil and gas exploration and production wastes, have been
disposed of or otherwise released and there has been no threatened release of any hazardous
substances on or to any Property of it or any of its Subsidiaries except in compliance with
Environmental Laws and so as not to pose an imminent and substantial endangerment to public health
or welfare or the environment;
(vi) To the extent applicable, all Property of it and each of its Subsidiaries currently
satisfies all design, operation, and equipment requirements imposed by the OPA or scheduled as of
the Effective Date to be imposed by OPA during the term of this Agreement, and it does not have any
reason to believe that such Property, to the extent subject to OPA, will not be able to maintain
compliance with the OPA requirements during the term of this Agreement; and
(vii) Neither it nor any of its Subsidiaries has any known contingent liability in connection
with any release or threatened release of any oil, hazardous substance or solid waste into the
environment.
Section 7.17
Compliance with the Law
. Neither it nor any of its Subsidiaries has violated any Governmental Requirement or failed to
obtain any license, permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the
-51-
conduct of its business, which violation or failure would
(in the event such violation or failure were asserted by any Person through appropriate action)
result in a Material Adverse Effect.
Section 7.18
Insurance
. The notice provided to all Lenders contains an accurate description of all material policies of
fire, liability, workmens compensation and other forms of insurance owned or held by UCLP and each
Material Domestic Subsidiary and Material Foreign Subsidiary. All such policies are in full force
and effect, all premiums with respect thereto covering all periods up to and including the
Effective Date have been paid, and no notice of cancellation or termination has been received with
respect to any such policy. Such policies are sufficient for compliance with all requirements of
law and of all agreements to which UCLP or any Material Domestic Subsidiary is a party; are valid,
outstanding and enforceable policies; provide adequate insurance coverage in at least such amounts
and against at least such risks (but including in any event public liability) as are usually
insured against in the same general area by companies engaged in the same or a similar business for
the assets and operations of UCLP and each Material Domestic Subsidiary; will remain in full force
and effect through the respective dates set forth in the binders for said insurance without the
payment of additional premiums; and will not in any way be affected by, or terminate or lapse by
reason of, the Transactions contemplated by this Agreement. Neither UCLP nor any Material Domestic
Subsidiary has been refused any insurance with respect to its assets or operations, nor has its
coverage been limited below usual and customary policy limits, by an insurance carrier to which it
has applied for any such insurance or with which it has carried insurance during the last three
years.
Section 7.19
Hedging Agreements
.
Schedule 7.19
sets out, as of the Effective Date, a true and complete list of all
Hedging Agreements (including commodity price swap agreements, forward agreements or contracts of
sale which provide for prepayment for deferred shipment or delivery of oil, gas or other
commodities) of it and each of its Restricted Subsidiaries, the material terms thereof (including
the type, term, effective date, termination date and notional amounts or volumes), the net mark-
to-market value thereof, all credit support agreements relating thereto (including any margin
required or supplied), and the counter party to each such agreement.
Section 7.20
Restriction on Liens
. Except as set out in
Schedule 7.20
, neither it nor any of its Restricted Subsidiaries is
a party to any agreement or arrangement (other than this Agreement and the Security Instruments),
or subject to any order, judgment, writ or decree, which either restricts or purports to restrict
its ability to grant Liens pursuant to this Agreement and the Security Instruments to other Persons
on or in respect of its material Properties.
ARTICLE VIII
Affirmative Covenants
Each of UCLP, the Borrower and each Guarantor by its execution of a Guaranty Agreement,
covenants and agrees that, so long as any of the Aggregate Commitments are in effect and until
payment in full of all Loans hereunder, all interest thereon and all other amounts payable by the
Borrower hereunder:
Section 8.01
Reporting Requirements
. The Borrower shall deliver, or shall cause to be delivered, to the Administrative Agent:
-52-
(a)
Financial Statements
. (i) Within 30 days after the same is required to be filed
with the SEC or any successor agency (but in any event within 90 days of the end of each fiscal
year of UCLP), a copy of each annual report and any amendment to a report filed by UCLP with the
SEC or any successor agency pursuant to Section 13 or 15(d) of the Exchange Act (currently Form
10-K), as the same may be amended from time to time, (ii) within 30 days after the same is required
to be filed by UCLP with the SEC or any successor agency (but in any event within 60 days after the
end of each of the first three fiscal quarters of UCLP), a copy of each quarterly report and any
amendment to any quarterly report filed with the SEC or any successor agency pursuant to Section 13
or 15(d) of the Exchange Act (currently Form 10-Q), as the same may be amended, from time to time
and (iii) promptly after the same become available, but in any event within 15 days following the
date the same are required to be filed with the SEC, all other reports, notices, proxy statements
or other documents that are distributed by UCLP to its unitholders and all regular and periodic
final reports (including, without limitation, reports on Form 8-K) filed by UCLP with the SEC,
which are publicly available;
provided
, however, that UCLP shall be deemed to have
furnished the information required by this Section 8.01(a) if UCLP shall have timely made the same
available on EDGAR and/or on its home page on the worldwide web (at the date of this Agreement
located at
http://www.universalcompression.com
);
provided
,
further
,
however
, that if the Administrative Agent is unable to access EDGAR or UCLPs home page on
the worldwide web, UCLP agrees to provide the Administrative Agent with paper copies of the
information required to be furnished pursuant to this Section 8.01(a) promptly following notice
from the Administrative Agent.
(b)
Budget, Projections
. Within 90 days following the end of each fiscal year of
UCLP, a copy of the projections of the operating budget and cash flow budget of UCLP and its
Restricted Subsidiaries prepared on a consolidated basis for the succeeding fiscal year, such
projections to be accompanied by a certificate of a Responsible Officer to the effect that such
projections have been prepared on the basis of reasonable assumptions and that such Responsible
Officer has no reason to believe they are incorrect or misleading in any material respect.
(c)
Notice of Default, Etc
. Promptly after either UCLP or the Borrower knows that any
Default or Material Adverse Effect has occurred, a notice of such Default or Material Adverse
Effect, describing the same in reasonable detail and the action UCLP or the Borrower proposes to
take with respect thereto, and at the Administrative Agents option, a copy of the notice of such
Default or Material Adverse Effect.
(d)
Management Letters
. Promptly after it or any Material Domestic Subsidiarys
receipt thereof, a copy of any management letter addressed to the board of directors of it or
such Material Domestic Subsidiary from its certified public accountants and any internal control
memoranda relating thereto.
(e)
Other Matters
. From time to time such other information regarding the business,
affairs or financial condition of it or any Material Domestic Subsidiary (including, without
limitation, any Plan or Multiemployer Plan and any reports or other information required to be
filed under ERISA) as the Administrative Agent may reasonably request.
-53-
(f)
Labor Disputes
. Promptly upon becoming aware of any labor dispute which would
result in a Material Adverse Effect, a notice of such dispute describing same in detail and the
action the Borrower proposes to take with respect thereto.
(g)
Compliance Certificate
. The Borrower, within ten (10) Business Days of any deemed
delivery of any annual report or quarterly report pursuant to paragraph (a) above, will furnish to
the Administrative Agent (i) a certificate substantially in the form of
Exhibit D-2
executed by a Responsible Officer of it (A) certifying as to the matters set forth therein and
stating that no Default has occurred and is continuing (or, if any Default has occurred and is
continuing, describing the same in reasonable detail) and (B) setting forth in reasonable detail
the computations necessary to determine whether UCLP is in compliance with Section 9.10(a) and (b)
as of the end of the respective fiscal quarter or fiscal year; and (ii) a report, in form and
substance satisfactory to the Administrative Agent, setting forth as of such quarterly date a true
and complete list of all Hedging Agreements (including commodity price swap agreements, forward
agreements or contracts of sale which provide for prepayment for deferred shipment or delivery of
oil, gas or other commodities) of it, each of its Restricted Subsidiaries, the material terms
thereof (including the type, term, effective date, termination date and notional amounts or
volumes), the net mark to market value therefor, any new credit support agreements relating thereto
not listed in
Schedule 7.19
, any margin required or supplied under any credit support
document, and the counter party to each such agreement.
(h)
Consolidating Financials
. With the delivery or deemed delivery of the financial
statements required by Section 8.01(a), UCLP shall deliver consolidating information with respect
to such Unrestricted Subsidiaries, if any.
Section 8.02
Litigation
. It shall promptly give to the Administrative Agent notice of any litigation or governmental
investigation or proceeding pending against it or any of its Subsidiaries which would result in a
Material Adverse Effect.
Section 8.03
Maintenance, Etc
.
(a)
Generally
. Except as otherwise permitted by Section 9.06, it shall and shall
cause each Material Domestic Subsidiary to: preserve and maintain its legal entity existence and
all of its material rights, privileges, franchises, patents, trademarks, copyrights and licenses;
keep books of record and account in which full, true and correct entries will be made of all
dealings or transactions in relation to its business and activities; comply with all Governmental
Requirements if failure to comply with such requirements will have a Material Adverse Effect; pay
and discharge all taxes, assessments and governmental charges or levies imposed on it or on its
income or profits or on any of its Property prior to the date on which penalties attach thereto,
except for any such tax, assessment, charge or levy the payment of which is being contested in good
faith and by proper proceedings and against which adequate reserves are being maintained in
accordance with GAAP; upon reasonable notice, permit representatives of the Administrative Agent,
during normal business hours, to examine, copy and make extracts from its books and records, to
inspect its Properties, and to discuss its business and affairs with its officers, all to the
extent reasonably requested by the Administrative Agent.
-54-
(b)
Proof of Insurance
. UCLP shall and shall cause each Material Domestic Subsidiary
to maintain, with financially sound and reputable insurance companies, insurance policies which (i)
are sufficient for compliance with all requirements of law and of all agreements to which UCLP or
any Material Domestic Subsidiary is a party; (ii) are valid, outstanding and enforceable policies;
and (iii) provide adequate insurance coverage in at least such amounts and against at least such
risks (but including in any event public liability) as are usually insured against in the same
general area by companies engaged in the same or a similar business for the assets and operations
of UCLP and each Material Domestic Subsidiary. Within 90 days of the end of each fiscal year, UCLP
will furnish or cause to be furnished to the Administrative Agent a certificate of insurance
coverage from the insurer in form and substance satisfactory to the Administrative Agent and, if
requested, will furnish the Administrative Agent copies of the applicable policies. The loss
payable clauses or provisions in said insurance policy or policies insuring any of the Collateral
shall be endorsed in favor of and made payable to the Administrative Agent as its interests may
appear and such policies shall name the Administrative Agent and the Lenders as additional
insureds and provide that the insurer will endeavor to give at least 30 days prior notice of any
cancellation to the Administrative Agent.
(c)
Operation of Properties
. It will and will cause each of its Restricted
Subsidiaries to operate its Properties or cause such Properties to be operated in a careful and
efficient manner (i) in compliance with the practices of the industry, (ii) in compliance with all
applicable contracts and agreements and (iii) in compliance in all material respects with all
Governmental Requirements, except where the noncompliance therewith would not result in a Material
Adverse Effect.
Section 8.04
Environmental Matters
.
(a)
Establishment of Procedures
. It will and will cause each of its Subsidiaries to
establish and implement such procedures as may be reasonably necessary to continuously determine
and assure that any failure of the following does not have a Material Adverse Effect: (i) all
Property of it and its Subsidiaries and the operations conducted thereon and other activities of it
and its Subsidiaries are in compliance with and do not violate the requirements of any
Environmental Laws, (ii) no oil, hazardous substances or solid wastes are disposed of or otherwise
released on or to any Property owned by any such party except in compliance with Environmental
Laws, (iii) no hazardous substance will be released on or to any such Property in a quantity equal
to or exceeding that quantity which requires reporting pursuant to Section 103 of CERCLA, and (iv)
no oil, oil and gas exploration and production wastes or hazardous substance is released on or to
any such Property so as to pose an imminent and substantial endangerment to public health or
welfare or the environment.
(b)
Notice of Action
. It will promptly notify the Administrative Agent in writing of
any threatened action, investigation or inquiry by any Governmental Authority of which it has
knowledge in connection with any Environmental Laws, which would result in a Material Adverse
Effect.
Section 8.05
Further Assurances
. It will and will cause each of its Restricted Subsidiaries to cure promptly any defects in the
creation and issuance of the Notes and the execution and delivery of the Security Instruments and
this Agreement. It at its expense will and
-55-
will cause each of its Restricted Subsidiaries to
promptly execute and deliver to the Administrative Agent upon request all such other documents,
agreements and instruments to comply with or accomplish the covenants and agreements of it or any
of its Restricted Subsidiaries, as the case may be, in the Security Instruments and this Agreement,
or to further evidence and more fully describe the collateral intended as security for the Notes,
or to correct any omissions in the Security Instruments, or to state more fully the security
obligations set out herein or in any of the Security Instruments, or to perfect, protect or
preserve any Liens created pursuant to any of the Security Instruments, or to make any recordings,
to file any notices or obtain any consents, all as may be reasonably necessary or appropriate in
connection therewith.
Section 8.06
Performance of Obligations
. The Borrower will pay its Notes according to the reading, tenor and effect thereof; and UCLP
will and will cause each of its Subsidiaries to do and perform every act and discharge all of the
obligations to be performed and discharged by them under the Security Instruments and this
Agreement, at the time or times and in the manner specified.
Section 8.07
Collateral
.
(a)
Guarantees and Collateral
. UCLP shall and it shall cause the Borrower and each
Guarantor to grant a Lien pursuant to the Security Instruments on substantially all of its
Properties located in the United States now owned or at any time hereafter acquired by it, the
Borrower or a Guarantor, including, without limitation, all Equipment, Accounts, Chattel Paper,
Documents, General Intangibles, Instruments, and Inventory;
provided
that the foregoing
shall not require the creation or perfection of pledges of, security interests in or mortgages on,
with respect to (A) any real property that has a value of less than $7,500,000, (B) any Property as
provided on
Schedule 8.07
or (C) any Property that in the judgment of the Administrative
Agent, the cost of creating or perfecting such pledges, security interests or mortgages on such
Property would be excessive in view of the benefits to be obtained by the Lenders therefrom,
provided
further
that UCLP, the Borrower and any Guarantor will have ninety (90)
days to perfect Liens on Property acquired in an acquisition. UCLP shall, and it shall promptly
cause the GP and each Significant Domestic Subsidiary now existing or hereafter formed or acquired
to, guarantee the Indebtedness pursuant to the execution and delivery of the Guaranty Agreement or
a supplement thereto. UCLP shall cause to be pledged by the appropriate Person (i) all of the
Equity Interests of each Domestic Subsidiary (including, without limitation, to the extent
certificated, delivery of original stock certificates or other certificates evidencing the capital
stock of such entity, together with an appropriate undated stock power for each certificate duly
executed in blank by the registered owner thereof), (ii) 65% of the capital stock of each first
tier Foreign Subsidiary (including, without limitation, to the extent certificated, delivery of
original stock certificates or other certificates evidencing the capital stock of such Domestic
Subsidiary or 65% of the capital stock of such Foreign Subsidiary, together with an appropriate
undated stock power for each certificate duly executed in blank by the registered owner thereof)
and (iii) and execute and deliver such other additional documents and certificates as shall
reasonably be requested by the Administrative Agent. If there are no adverse tax consequences to
UCLP, to UCLPs partners or to any of its Restricted Subsidiaries, the Collateral described above
(and subject to the same limitations set forth above) will include Property located in
jurisdictions outside the United States, Foreign Subsidiaries will be included as Guarantors, and
all of the Equity Interest of Foreign Subsidiaries will be pledged.
-56-
(b)
Releases
. The Borrower and the Guarantors are authorized to release any
Collateral that is sold, leased, assigned, conveyed, transferred or otherwise disposed of in
compliance with Sections 9.06, 9.08 and 9.11;
provided
that so long as the lien in favor of
the Administrative Agent continues in the proceeds of such sale, lease, assignment, conveyance,
transfer or other disposal of such Collateral, or to the extent such Collateral is sold, leased,
assigned, conveyed, transferred or otherwise disposed of to the Borrower or any Guarantor, such
lien continues in such Collateral. All Collateral shall be released upon either the Borrowers or
UCLPs Index Debt receiving (i) an investment grade rating from Moodys or S&P and a rating no
lower than one notch below investment grade from the other agency and (ii) a stable outlook or
better from both Moodys and S&P.
Section 8.08
Notice of an ERISA Event
. It will promptly furnish to the Administrative Agent written notice of the occurrence of any
ERISA Event that, alone or together with any other ERISA Events that have occurred, could
reasonably be expected to result in liability of it and its Subsidiaries in an aggregate amount
exceeding $100,000.
ARTICLE IX
Negative Covenants
Each of UCLP, the Borrower and each Guarantor by its execution of a Guaranty Agreement,
covenants and agrees that, so long as any of the Aggregate Commitments are in effect and until
payment in full of Loans hereunder, all interest thereon and all other amounts payable by the
Borrower hereunder, without the prior written consent of the Majority Lenders:
Section 9.01
Debt
. Neither it nor any of its Restricted Subsidiaries will incur, create, assume or permit to exist
any Debt, except:
(a) the Notes or other Indebtedness or any guaranty of or suretyship arrangement for the Notes
or other Indebtedness;
(b) Debt (including unfunded commitments) existing on the Effective Date which is disclosed in
Schedule 9.01
, and any renewals, extensions, refinancings and modifications (but not
increases) thereof with financial covenants no more restrictive than those existing on the
Effective Date;
(c) accounts payable (for the deferred purchase price of Property or services) from time to
time incurred in the ordinary course of business which, if greater than 60 days past due, are being
contested in good faith by appropriate proceedings if reserves adequate under GAAP shall have been
established therefor;
(d) Debt under Hedging Agreements which are for bona fide business purposes and are not
speculative;
(e) Debt with respect to an ABS Facility subject to an intercreditor agreement similar to the
form that currently exists under the Holdings ABS Facility in existence as of the Effective Date;
provided
that (A) at the time of the incurrence of such Debt, all such Debt outstanding
after giving pro forma effect to the incurrence of such Debt shall not exceed two times the EBITDA
for the UCLP Group for the most recent Testing Period, (B) that neither UCLP, the Borrower nor
-57-
any Subsidiary other than any ABS Subsidiary is liable for such Debt and (C) no Default or Event of
Default (both before and after giving pro forma effect to the incurrence of such Debt) exists and
is continuing;
(f) other Debt of UCLP, the Borrower and any Significant Domestic Subsidiaries;
provided
that (A) no Default or Event of Default (both before and after giving pro forma
effect to the incurrence of such Debt) exists and is continuing, (B) the maturity of such Debt is
at least six (6) months after the Revolving Credit Maturity Date and the Term Loan Maturity Date
(C) the Weighted Average Life to Maturity of such Debt is greater than the number of years
(calculated
to the nearest one-twelfth) to the after the Revolving Credit Maturity Date and the Term Loan
Maturity Date and (D) such Debt has terms substantially similar to those customary in high-yield
facilities;
(g) Debt evidenced by Capital Lease Obligations and Purchase Money Indebtedness;
provided
that in no event shall the aggregate principal amount of Capital Lease Obligations
and Purchase Money Indebtedness permitted by this clause (g) exceed an amount equal to five percent
(5%) of the Aggregate Commitments;
(h) Debt with respect to surety bonds, appeal bonds or customs bonds required in the ordinary
course of business or in connection with the enforcement of rights or claims of UCLP, UCI or any of
its Restricted Subsidiaries or in connection with judgments that do not result in a Default or an
Event of Default,
provided
that the aggregate outstanding amount of all cash surety bonds,
appeal bonds and custom bonds permitted by this clause (h) shall not at any time exceed an amount
equal to five percent (5%) of the Aggregate Commitments;
(i) Debt for borrowed money meeting the qualifications set forth in Section 9.01(f) assumed by
UCLP or one of its Restricted Subsidiaries, or of a Restricted Subsidiary of UCLP acquired,
pursuant to an acquisition or merger permitted pursuant to the terms of this Agreement other than
from UCI and its Subsidiaries;
provided
that up to $25,000,000 of such Debt outstanding at
any time does not need to meet the qualifications of Section 9.01(f)(B), (C) and (D);
(j) Debt for borrowed money assumed by UCLP or one of its Restricted Subsidiaries, or of a
Restricted Subsidiary of UCLP acquired, pursuant to an asset acquisition from Holdings or one of
its Subsidiaries (other than UCLP and its Subsidiaries);
(k) other Debt not to exceed $15,000,000 in the aggregate;
(l) Debt of it owed to any Restricted Subsidiary and any Debt owed by a Restricted Subsidiary
to it or to any other Restricted Subsidiary
provided
that such Debt shall be unsecured and
subordinate to the Indebtedness on terms reasonably satisfactory to the Administrative Agent; and
(m) Non-Recourse Foreign Debt used for such Foreign Subsidiarys and/or its Foreign
Subsidiaries working capital and general business purposes.
-58-
Section 9.02
Liens
. Neither it nor any of its Restricted Subsidiaries will create, incur, assume or permit to exist
any Lien on any of its Properties (now owned or hereafter acquired), except (herein referred to as
Permitted Liens
):
(a) Liens arising under the Security Instruments securing the payment of any Indebtedness;
(b) Liens disclosed in
Schedule 9.02
;
(c) Excepted Liens;
(d) Liens on Property held or pledged in connection with an ABS Facility,
provided
that such Liens do not extend to or cover any Property of UCLP or any of its Subsidiaries other
than the Property of ABS Subsidiaries involved in an ABS Facility;
(e) Liens relating to Debt permitted under Sections 9.01(f), (g), (i) or (k),
provided
that the aggregate amount of Debt secured by such Liens shall not exceed in the aggregate ten
percent (10%) of Consolidated Net Tangible Assets;
provided
further
that such Liens
securing Debt permitted under Section 9.01(i) do not extend to or cover any Property other than the
Property that secured such Debt prior to the time it was acquired or assumed;
provided
further
that the Liens securing the Capital Lease Obligations and Purchase Money
Indebtedness must only encumber the Property under lease or purchased;
(f) Liens relating to Debt permitted under Section 9.01(i);
provided
that the
aggregate amount of Debt secured by such Liens may not exceed $25,000,000;
provided
further
that such Liens securing Debt permitted under Section 9.01(i) do not extend to or
cover any Property other than the Property that secured such Debt prior to the time it was acquired
or assumed; and
(g) Liens on assets of Foreign Subsidiaries under Foreign Credit Facilities.
Section 9.03
Investments
. Neither it nor any of its Restricted Subsidiaries will make any Investments in any Person,
except that, so long as no Event of Default has occurred and is continuing, the foregoing
restriction shall not apply to:
(a) Investments in connection with any acquisition of wholly-owned assets, business units or
companies;
provided
,
however
, that (A) such wholly-owned assets, business units or
companies shall not be materially different than the lines of business of Holdings and its
Subsidiaries on the Effective Date, (B) such acquisition shall not be a hostile take over of a
company and (C) both before and after giving pro forma effect to such acquisition and the Debt
incurred to make such acquisition, no Default or Event of Default shall exist and be continuing;
(b) Investments reflected in the financial statements described in Section 7.02 or which are
disclosed to the Lenders in
Schedule 9.03
;
(c) accounts receivable arising in the ordinary course of business;
-59-
(d) direct obligations of the United States, Canada or any agency thereof, or obligations
guaranteed by the United States, Canada or any agency thereof, in each case maturing within one
year from the date of creation thereof;
(e) commercial paper maturing within one year from the date of creation thereof rated no lower
than A2 or P2 as such rating is set forth by S&P or Moodys, respectively;
(f) deposits maturing within one year from the date of creation thereof with, including
certificates of deposit issued by, any Lender or any office located in the United States
of any other bank or trust company which is organized under the laws of the United States or
any state thereof, has capital, surplus and undivided profits aggregating at least $100,000,000.00
(as of the date of such Lenders or bank or trust companys most recent financial reports) and has
a short term deposit rating of no lower than A2 or P2, as such rating is set forth from time to
time, by S&P or Moodys, respectively;
(g) deposits in money market funds which invest 95% or more of its funds in Investments
described in Sections 9.03(d), 9.03(e) or 9.03(f);
(h) Investments by it or by any of its Restricted Subsidiaries in any other Restricted
Subsidiary or in it;
(i) Investments otherwise permitted by Sections 9.01 or 9.11;
(j) other Investments not to exceed in the aggregate an amount equal to two and one-half
percent (2.5%) of Consolidated Net Tangible Assets; and
(k) Investments in Unrestricted Subsidiaries not to exceed in the aggregate an amount equal to
fifteen (15%) of Consolidated Net Tangible Assets.
Section 9.04
Dividends, Distributions and Redemptions
. It will not declare or pay any dividend, purchase, redeem or otherwise acquire for value any of
its Equity Interests now or hereafter outstanding, return any capital to its unitholders or other
holders of its Equity Interests or make any distribution of their assets to its unitholders or such
other holders; except that so long as there shall exist no Default or Event of Default (both before
and after giving effect to the payment thereof), it will be permitted to make distributions as set
forth in the UCLP Partnership Agreement.
Section 9.05
Nature of Business
. Neither it nor any Material Domestic Subsidiary will allow any material change to be made in the
character of its business as compared to Holdings and any of its Subsidiaries as a whole as of the
Effective Date.
Section 9.06
Mergers, Etc.
Neither it nor any of its Restricted Subsidiaries will merge into or with or consolidate with
any other Person, or sell, lease or otherwise dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its Property or Equity Interests of any of its
Restricted Subsidiaries to any other Person except that (a) any Restricted Subsidiary may be merged
into or consolidated with or sell, lease or otherwise dispose of all or substantially all of its
Property to (i) the Borrower or it, so long as the Borrower or it is the surviving business entity,
or (ii) another Restricted Subsidiary, (b) it or the Borrower, as
-60-
applicable may merge into or
consolidate with any Person
provided
, in each case (i) immediately thereafter and giving
effect thereto, no event shall occur and be continuing which constitutes a Default or Event of
Default and (ii) it or the Borrower, as applicable is the surviving business entity and (c) any
Restricted Subsidiary of it
may liquidate, dissolve or sell so long as it determines in good faith that such liquidation,
dissolution or sale is in the best interest of it.
Section 9.07
Proceeds of Notes; Letters of Credit
. The Borrower will not permit the proceeds of the Notes or Letters of Credit to be used for any
purpose other than those permitted by Section 7.07. Neither the Borrower nor any Person acting on
behalf of the Borrower has taken or will take any action which might cause any of the Loan
Documents to violate Regulation T, U or X or any other regulation of the Board of Governors of the
Federal Reserve System or to violate Section 7 of the Exchange Act or any rule or regulation
thereunder, in each case as now in effect or as the same may hereinafter be in effect.
Section 9.08
Sale or Discount of Receivables
. Neither it nor any of its Restricted Subsidiaries will discount or sell (with or without
recourse) any of its notes receivable or accounts receivable, except in the ordinary course of
business.
Section 9.09
Fiscal Year Change
. It will not permit any change in its fiscal year.
Section 9.10
Certain Financial Covenants
.
(a)
Interest Coverage Ratio
. UCLP will not permit its Interest Coverage Ratio as of
the last day of any Testing Period to be less than 2.50 to 1.00.
(b)
Total Leverage Ratio
. UCLP will not permit its Total Leverage Ratio to be greater
than 5.00 to 1.00;
provided
that UCLP may increase its Total Leverage Ratio to be no
greater than 5.50 to 1.0 for up to two (2) fiscal quarters after the fiscal quarter in which a
Specified Acquisition occurs.
Section 9.11
Sale of Properties
. It will not, and will not permit any of its Restricted Subsidiaries to, sell, assign, convey or
otherwise transfer (excluding the granting of a Lien) any Property to any Person other than to it
or to any of its Restricted Subsidiaries, except it and any of its Restricted Subsidiaries:
(a) may sell or otherwise dispose of any Property which, in the reasonable judgment of such
Person, is obsolete, worn out or otherwise no longer useful in the conduct of such Persons
business;
(b) may sell or lease inventory or equipment in the ordinary course of business;
(c) may sell, lease, assign, exchange, convey or otherwise transfer Compression Assets to an
ABS Subsidiary so that it may become collateral for an ABS Facility;
(d) may sell, lease, assign, exchange, convey or otherwise transfer Compression Assets to UCI
or any of UCIs Subsidiaries pursuant to the Omnibus Agreement; and
-61-
(e) so long as no Event of Default has occurred and is continuing, may sell or otherwise
dispose of Property having a value of up to 10% of the book value of the total tangible assets of
it on a consolidated basis in any fiscal year.
provided
that with respect to (c) and (e) above, (i) the fair market value is received, and
(ii) no Default or Event of Default will occur after giving effect to such sale on a pro forma
basis.
Section 9.12
Environmental Matters
. Neither it nor any of its Subsidiaries will cause or permit any of its Property to be in
violation of, or do anything or permit anything to be done which will subject any such Property to
any remedial obligations under any Environmental Laws, assuming disclosure to the applicable
Governmental Authority of all relevant facts, conditions and circumstances, if any, pertaining to
such Property where such violations or remedial obligations would have a Material Adverse Effect.
Section 9.13
Transactions with Affiliates
. Except as set out in
Schedule 9.13
, neither it nor any of its Restricted Subsidiaries
will enter into any transaction, including, without limitation, any purchase, sale, lease or
exchange of Property or the rendering of any service, with any Affiliate unless such transactions
are otherwise permitted under this Agreement, are in the ordinary course of its business and are
upon fair and reasonable terms no less favorable to it than it would obtain in a comparable arms
length transaction with a Person not an Affiliate;
provided
that UCLP may enter into
transactions with Affiliates if such transactions have been approved by UCLPs conflicts committee
pursuant to the procedures set forth in the UCLP Partnership Agreement.
Section 9.14
Subsidiaries
.
(a) It shall not, and shall not permit any of its Restricted Subsidiaries to, create any
additional Subsidiaries except for (i) Restricted Subsidiaries resulting from future mergers or
acquisitions permitted hereunder, (ii) new Subsidiaries created by it in compliance with Section
9.03 and (iii) Restricted Subsidiaries created in connection with the reorganization of it or any
Restricted Subsidiary. Upon the creation of any new Restricted Subsidiaries, the Equity Interests
(to the extent certificated) shall be pledged as Collateral for this Agreement (subject to the 65%
limitation for first-tier Foreign Subsidiaries and excluding any Equity Interests in an ABS
Subsidiary); and
(b) It shall not designate any Subsidiary as an Unrestricted Subsidiary, unless:
(i) neither such Subsidiary nor any of its Subsidiaries has any Debt except Non-Recourse Debt;
(ii) neither such Subsidiary nor any of its Subsidiaries is a party to any agreement,
arrangement, understanding or other transaction with UCLP or any Restricted Subsidiary, except
those agreements and other transactions entered into in writing in the ordinary course of business
at prices and on terms and conditions not less favorable to UCLP and each Restricted Subsidiary
than could be obtained on an arms-length basis from unrelated third parties;
-62-
(iii) neither such Subsidiary nor any of its Subsidiaries is a Guarantor or has any
outstanding Letter of Credit issued for its account;
(iv) at the time of such designation and immediately after giving effect thereto, no Default
shall have occurred and be continuing;
(v) it would have been in compliance with Section 9.10 on the last day of the most recently
ended fiscal quarter of it had such Subsidiary been an Unrestricted Subsidiary on such day;
(vi) neither such Subsidiary nor any of its Subsidiaries owns any Debt (excluding any accounts
payable in the ordinary course of business) or Equity Interest of, or is the beneficiary of any
Lien on any property of, UCLP or any Restricted Subsidiary; and
(vii) at or immediately prior to such designation, it delivers a certificate to the Lenders
certifying (y) the names of such Subsidiary and all of its Subsidiaries, and (z) that all
requirements of this Section 9.14(c) have been met for such designation.
Section 9.15
Negative Pledge Agreements
. Except as permitted by this Agreement, neither it nor any of its Restricted Subsidiaries will
create, incur, assume or permit to exist any contract or agreement (other than this Agreement and
the Security Instruments) which in any way prohibits or restricts the granting, conveying, creation
or imposition of any Lien on any of its Property as may be required in connection with this
Agreement or restricts any of its Restricted Subsidiaries from paying dividends to the Borrower, or
which requires the consent of or notice to other Persons in connection therewith, except for any
such contract or agreement existing as of the Effective Date and any extensions, renewals or
replacements of any contracts or agreements permitted hereunder;
provided
that such
prohibitive terms of such contract or agreement are no more restrictive than the terms reflected in
such contract or agreement existing as of the Effective Date.
ARTICLE X
Events of Default; Remedies
Section 10.01
Events of Default
. One or more of the following events which continue beyond any applicable cure period shall
constitute an
Event of Default
:
(a) the Borrower shall default in the payment or prepayment when due of any principal of or
interest on any Loan, or any reimbursement obligation for a disbursement made
under any Letter of Credit, or any fees or other amount payable by it hereunder or under any
Security Instrument and such default, other than a default of a payment or prepayment of principal
(which shall have no cure period), shall continue unremedied for a period of five (5) Business
Days; or
(b) UCLP or any Restricted Subsidiary shall default in the payment when due of any principal
of or interest on any of its other Debt aggregating $10,000,000 or more, or any event or condition
occurs that results in such Debt becoming due prior to its scheduled maturity or that enables or
permits (with the giving of any notice, the lapse of time or both) the holder or holders
-63-
of such
Debt or any trustee or agent on its or their behalf to cause such Debt to become due prior to its
scheduled maturity; or
(c) any representation, warranty or certification made or deemed made herein or in any
Security Instrument by UCLP or any Subsidiary, or any certificate furnished to any Lender or the
Administrative Agent pursuant to the provisions hereof or any Security Instrument, shall prove to
have been false or misleading as of the time made or furnished in any material respect; or
(d) (i) UCLP, the Borrower or any Guarantor shall default in the performance of any of their
obligations under this Agreement other than under Section 9.14 or ARTICLE VIII; or (ii) UCLP or any
Restricted Subsidiary shall default in the performance of any of its obligations under Section 9.14
or ARTICLE VIII or any Security Instrument (other than the payment of amounts due which are covered
by Section 10.01(a)) and such default shall continue unremedied for a period of thirty (30) days
after the earlier to occur of (A) notice thereof to the Borrower by the Administrative Agent or any
Lender (through the Administrative Agent), or (B) the Borrower otherwise becoming aware of such
default; or
(e) UCLP, any Material Domestic Subsidiary or any Material Foreign Subsidiary shall admit in
writing its inability to, or be generally unable to, pay its debts as such debts become due; or
(f) UCLP, any Material Domestic Subsidiary or any Material Foreign Subsidiary shall (i) apply
for or consent to the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its Property, (ii) make a
general assignment for the benefit of its creditors, (iii) commence a voluntary case under the
Bankruptcy Code, (iv) file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, liquidation or composition or readjustment of
debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under the Bankruptcy Code or (vi) take any
corporate action for the purpose of effecting any of the foregoing; or
(g) a proceeding or case shall be commenced, without the application or consent of UCLP, any
Material Domestic Subsidiary or any Material Foreign Subsidiary, in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian,
liquidator or the like of UCLP, any Material Domestic Subsidiary or any Material Foreign Subsidiary
of all or any substantial part of its assets, or (iii) similar relief in respect of UCLP, any
Material Domestic Subsidiary or any Material Foreign Subsidiary under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of
60 days; or (iv) an order for relief against UCLP, any Material Domestic Subsidiary or any Material
Foreign Subsidiary shall be entered in an involuntary case under the Bankruptcy Code; or
-64-
(h) a judgment or judgments for the payment of money in excess of insurance coverage
aggregating $10,000,000 or more at any one time outstanding shall be rendered by a court against
UCLP or any Restricted Subsidiary and the same shall not be discharged (or provision shall not be
made for such discharge), or a stay of execution thereof shall not be procured, within thirty (30)
days from the date of entry thereof and UCLP or such Restricted Subsidiary shall not, within said
period of 30 days, or such longer period during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during such appeal; or
(i) the Loan Documents after delivery thereof shall for any reason, except to the extent
permitted by the terms thereof, cease to be in full force and effect and valid, binding and
enforceable in accordance with their terms, or, with respect to the Security Instruments, shall
cease to create a valid and perfected Lien of the priority required thereby on any of the
Collateral purported to be covered thereby, except to the extent permitted by the terms of this
Agreement, or UCLP or any Restricted Subsidiary shall so state in writing; or
(j) a Change in Control shall occur; or
(k) an ERISA Event shall have occurred that, in the opinion of the Majority Lenders, when
taken together with all other ERISA Events that have occurred, could reasonably be expected to
result in liability of UCLP and any of its Restricted Subsidiaries in an aggregate amount exceeding
$5,000,000 for all periods.
Section 10.02
Remedies
.
(a) In the case of an Event of Default other than one referred to in clauses (f) or (g) of
Section 10.01, the Administrative Agent, upon request of the Majority Lenders, shall, by notice to
the Borrower, cancel the Aggregate Commitments and/or declare the principal amount then outstanding
of, and the accrued interest on, the Loans and all other amounts payable by the Borrower hereunder
and under the Notes (including without limitation the payment of cash collateral to secure the LC
Exposure as provided in Section 2.07(d)(ii)) to be forthwith due and payable, whereupon such
amounts shall be immediately due and payable without presentment, demand, protest, notice of intent
to accelerate, notice of acceleration or other formalities of any kind, all of which are hereby
expressly waived by the Borrower.
(b) In the case of the occurrence of an Event of Default referred to in clauses (f) or (g) of
Section 10.01, the Aggregate Commitments shall be automatically canceled and the principal amount
then outstanding of, and the accrued interest on, the Loans and all other
amounts payable by the Borrower hereunder and under the Notes (including without limitation,
the payment of cash collateral to secure the LC Exposure as provided in Section 2.07(d)(ii)) shall
become automatically immediately due and payable without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration or other formalities of any kind, all of which are
hereby expressly waived by the Borrower.
(c) Hedging Agreements between UCLP, the Borrower and any of its Subsidiaries and the
Administrative Agent or a Lender and/or any Lender Affiliate are secured by the Security
Instruments
pari passu
with all other Indebtedness. As such, proceeds from Security
-65-
Instruments shall be shared pro rata on all Indebtedness. All proceeds applicable to the Loans and other
obligations under this Agreement and the other Loan Documents shall be applied, first to
reimbursement of expenses and indemnities provided for in this Agreement and the other Loan
Documents; second to accrued interest on the Loans; third to fees; fourth pro rata to principal
outstanding on the Loans and other Indebtedness and to serve as cash collateral to be held by the
Administrative Agent to secure the LC Exposure; and any excess shall be paid to the Borrower or as
otherwise required by any Governmental Requirement.
(d) Acceleration and termination of all Hedging Agreements involving the Administrative Agent
or Lenders or the Lender Affiliates shall be governed by the terms of the Hedging Agreements.
ARTICLE XI
The Agents
Section 11.01
Appointment; Powers
. Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent as
its agent and authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms hereof and the other
Loan Documents, together with such actions and powers as are reasonably incidental thereto.
Section 11.02
Duties and Obligations of Administrative Agent
. The Administrative Agent shall not have any duties or obligations except those expressly set
forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing (the use of the term agent herein and in the
other Loan Documents with reference to the Administrative Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable
law; rather, such term is used merely as a matter of market custom, and is intended to create or
reflect only an administrative relationship between independent contracting parties), (b) the
Administrative Agent shall have no duty to take any discretionary action or exercise any
discretionary powers, except as provided in Section 11.03, and (c) except as expressly set forth
herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable for
the failure to disclose, any information relating to UCLP or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates
in any capacity. The Administrative Agent shall be deemed not to have knowledge of any Default
unless and until written notice thereof is given to the Administrative Agent by the Borrower or a
Lender, and shall not be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this Agreement or any other
Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder
or under any other Loan Document or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set forth herein or in
any other Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or document, (v) the
satisfaction of any condition set forth in ARTICLE VI or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent or as to those
conditions precedent expressly required to be to the Administrative Agents satisfaction, (vi) the
-66-
existence, value, perfection or priority of any collateral security or the financial or other
condition of UCLP and its Subsidiaries or any other obligor or guarantor, or (vii) any failure by
UCLP, the Borrower or any other Person (other than itself) to perform any of its obligations
hereunder or under any other Loan Document or the performance or observance of any covenants,
agreements or other terms or conditions set forth herein or therein. For purposes of determining
compliance with the conditions specified in ARTICLE VI, each Lender shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the
Administrative Agent shall have received written notice from such Lender prior to the proposed
closing date specifying its objection thereto.
Section 11.03
Action by Administrative Agent
. The Administrative Agent shall have no duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby or by
the other Loan Documents that the Administrative Agent is required to exercise in writing as
directed by the Majority Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 12.02) and in all cases the Administrative
Agent shall be fully justified in failing or refusing to act hereunder or under any other Loan
Documents unless it shall (a) receive written instructions from the Majority Lenders or the
Lenders, as applicable, (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 12.02) specifying the action to be taken and (b) be
indemnified to its satisfaction by the Lenders against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such action. The instructions as
aforesaid and any action taken or failure to act pursuant thereto by the Administrative Agent shall
be binding on all of the Lenders. If a Default has occurred and is continuing, then the
Administrative Agent shall take such action with respect to such Default as shall be directed by
the requisite Lenders in the written instructions (with indemnities) described in this Section
11.03,
provided
that, unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem advisable in the
best interests of the Lenders. In no event, however, shall the Administrative Agent be required to
take any action which exposes the Administrative Agent to personal liability or which is contrary
to this Agreement, the Loan Documents or applicable law. If a Default has occurred
and is continuing, neither the Syndication Agent nor the Co-Documentation Agents shall have any
obligation to perform any act in respect thereof. The Administrative Agent shall not be liable for
any action taken or not taken by it with the consent or at the request of the Majority Lenders or
the Lenders (or such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 12.02), and otherwise the Administrative Agent shall not be
liable for any action taken or not taken by it hereunder or under any other Loan Document or under
any other document or instrument referred to or provided for herein or therein or in connection
herewith or therewith INCLUDING ITS OWN ORDINARY NEGLIGENCE, except for its own gross negligence or
willful misconduct.
Section 11.04
Reliance by Administrative Agent
. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely
-67-
upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any liability for relying
thereon and each of UCLP, the Borrower, the Lenders and the Issuing Bank hereby waives the right to
dispute the Administrative Agents record of such statement, except in the case of gross negligence
or willful misconduct by the Administrative Agent. The Administrative Agent may consult with legal
counsel (who may be counsel for UCLP or the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it in accordance with
the advice of any such counsel, accountants or experts. The Administrative Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof permitted hereunder shall have been filed with
the Administrative Agent.
Section 11.05
Subagents
. The Administrative Agent may perform any and all its duties and exercise its rights and powers
by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the preceding Sections of
this ARTICLE XI shall apply to any such sub-agent and to the Related Parties of the Administrative
Agent and any such sub-agent, and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities as Administrative
Agent.
Section 11.06
Resignation or Removal of Administrative Agent
. Subject to the appointment and acceptance of a successor Administrative Agent as provided in
this Section 11.06, the Administrative Agent may resign at any time by notifying the Lenders, the
Issuing Bank and the Borrower, and the Administrative Agent may be removed at any time with or
without cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders
shall have the right, in consultation with the Borrower, to appoint a successor. If no successor
shall have been so appointed by the Majority Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its resignation or
removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders and the
Issuing Bank, appoint a successor Agent. Upon the acceptance of its appointment as Agent hereunder
by a successor, such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. The fees payable by UCLP and the Borrower to a successor Agent
shall be the same as those payable to its predecessor unless otherwise agreed between UCLP or the
Borrower and such successor. After the Agents resignation hereunder, the provisions of this
ARTICLE XI and Section 12.03 shall continue in effect for the benefit of such retiring Agent, its
sub-agents and their respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Agent.
Section 11.07
Agents as Lenders
. Each bank serving as an Agent hereunder shall have the same rights and powers in its capacity as
a Lender as any other Lender and may exercise the same as though it were not an Agent, and such
bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of
business with UCLP or any Subsidiary or other Affiliate thereof as if it were not an Agent
hereunder.
-68-
Section 11.08
No Reliance
. Each Lender acknowledges that it has, independently and without reliance upon the Administrative
Agent, any other Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this Agreement and each
other Loan Document to which it is a party. Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent, any other Agent or any other
Lender and based on such documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document, any related agreement or any document furnished hereunder or
thereunder. The Agents shall not be required to keep themselves informed as to the performance or
observance by UCLP or any of its Subsidiaries of this Agreement, the Loan Documents or any other
document referred to or provided for herein or to inspect the Properties or books of UCLP or its
Subsidiaries. Except for notices, reports and other documents and information expressly required
to be furnished to the Lenders by the Administrative Agent hereunder, no Agent or the Joint Lead
Arrangers shall have any duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of UCLP or the Borrower (or any
of their Affiliates) which may come into the possession of such Agent or any of its Affiliates. In
this regard, each Lender acknowledges that Vinson & Elkins L.L.P. is acting in this transaction as
special counsel to the Administrative Agent only, except to the extent otherwise expressly stated
in any legal opinion or any Loan Document. Each other party hereto will consult with its own legal
counsel to the extent that it deems necessary in connection with the Loan Documents and the matters
contemplated therein.
Section 11.09
Administrative Agent May File Proofs of Claim
. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial proceeding relative to UCLP
or any of its Subsidiaries, the Administrative Agent (irrespective of whether the principal of any
Loan shall then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall
be entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Loans and all other Indebtedness that are owing and unpaid and to file
such other documents as may be necessary or advisable in order to have the claims of the Lenders
and the Administrative Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their respective agents
and counsel and all other amounts due the Lenders and the Administrative Agent under Section 12.03)
allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such
claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make such payments to the
Administrative Agent and, in the event that the Administrative Agent shall consent to the making of
such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the Administrative Agent
-69-
and its agents and counsel, and any other amounts due the Administrative Agent under Section 12.03.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or
consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement,
adjustment or composition affecting the Indebtedness or the rights of any Lender or to authorize
the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.
Section 11.10
Authority of Administrative Agent to Release Collateral and Liens
. Each Lender and the Issuing Bank hereby authorizes the Administrative Agent to release any
collateral that is permitted to be sold or released pursuant to the terms of the Loan Documents.
Each Lender and the Issuing Bank hereby authorizes the Administrative Agent to execute and deliver
to the Borrower, at the Borrowers sole cost and expense, any and all releases of Liens,
termination statements, assignments or other documents reasonably requested by the Borrower in
connection with any sale or other disposition of Property to the extent such sale or other
disposition is permitted by the terms of Section 9.11 or is otherwise authorized by the terms of
the Loan Documents.
Section 11.11
The Joint Lead Arrangers, the Syndication Agent and the Co-Documentation
Agents
. The Joint Lead Arrangers, the Syndication Agent and the Co-Documentation Agents shall have no
duties, responsibilities or liabilities under this Agreement and the other Loan Documents other
than their duties, responsibilities and liabilities in their capacity as Lenders hereunder.
ARTICLE XII
Miscellaneous
Section 12.01
Notices
. All notices and other communications provided for herein and in the other Loan Documents
(including, without limitation, any modifications of, or waivers or consents under, this Agreement
or the other Loan Documents) shall be given or made by telex, telecopy, courier, U.S. Mail or in
writing and telexed, telecopied, mailed or delivered to the intended recipient at the Address for
Notices specified below its name on the signature pages hereof or in the other Loan Documents,
except that for notices and other communications to the Administrative Agent other than payment of
money, the Borrower need only send such notices and communications to the Administrative Agent care
of the Houston address of Wachovia; or, as to any party, at such other address as shall be
designated by such party in a notice to each other party. Except as otherwise provided in this
Agreement or in the other Loan Documents, all such communications shall be deemed to have been duly
given when transmitted, if transmitted before 1:00 p.m. local time on a Business Day (otherwise on
the next succeeding Business Day) by telex or telecopier and evidence or confirmation of receipt is
obtained, or personally delivered or, in the case of a mailed notice, three (3) Business Days after
the date deposited in the mails, postage prepaid, in each case given or addressed as aforesaid.
Section 12.02
Waivers; Amendments
.
(a) No failure on the part of the Administrative Agent, any other Agent, the Issuing Bank or
any Lender to exercise and no delay in exercising, and no course of
dealing with
-70-
respect to, any right, power or privilege, or any abandonment or discontinuance of steps to enforce such right,
power or privilege, under any of the Loan Documents shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege under any of the Loan Documents
preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies of the Administrative Agent, any other Agent, the Issuing Bank
and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive
of any rights or remedies that they would otherwise have. No waiver of any provision of this
Agreement or any other Loan Document or consent to any departure by UCLP or the Borrower therefrom
shall in any event be effective unless the same shall be permitted by Section 12.02(b), and then
such waiver or consent shall be effective only in the specific instance and for the purpose for
which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of
a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any other Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof nor any Security Instrument nor any
provision thereof may be amended, modified or waived except with the Borrowers and the Majority
Lenders prior written consent or by the Borrower and the Administrative Agents consent with the
consent of the Majority Lenders;
provided
that (i) no amendment, modification or waiver
that forgives or reduces the principal amount of any Indebtedness or Letter of Credit reimbursement
obligation outstanding under this Agreement, releases all or substantially all of the Collateral
(excluding sales of Properties permitted hereunder) or the Guarantors, affects Sections 4.01,
10.02(c), 12.02 or 12.04 or permits an Interest Period with a duration in excess of six months or
modifies the definition of
Majority Lenders
shall be effective without consent of all
Lenders; (ii) no amendment, modification or waiver which extends any scheduled payment date or the
final maturity of the Term Loans, reduces the interest rate applicable to the Term Loans or the
fees payable to the Term Loan Lenders or extends the time for payment of such interest or fees
shall be effective without the consent of all the Term Loan Lenders (in lieu of the consent of the
Majority Lenders); (iii) no amendment, modification or waiver which extends any scheduled payment
date or the Revolving Credit Maturity Date, reduces the interest rate applicable to the Revolving
Loans or the fees payable to the Revolving Lenders or extends the time for payment of such interest
or fees shall be effective without the consent of all the Revolving Lenders (in lieu of the consent
of the Majority Lenders); (iv) no amendment, modification or waiver which increases the Revolving
Commitment or the Term Commitment of any Lender shall be effective without the consent of such
Lender; and (v) no amendment, modification or waiver which modifies the rights, duties or
obligations of the Administrative Agent shall be effective without the consent of the
Administrative Agent.
Section 12.03
Expenses, Indemnity; Damage Waiver
.
(a) The Borrower agrees:
(i) whether or not the Transactions hereby contemplated are consummated, to pay all reasonable
expenses of the Administrative Agent in the administration (both before and after the execution
hereof and including advice of counsel as to the rights and duties of the Administrative Agent and
the Lenders with respect thereto) of, and in connection with the negotiation,
-71-
syndication,
investigation, preparation, execution and delivery of, recording or filing of, preservation of
rights under, enforcement of, and refinancing, renegotiation or restructuring of, the Loan
Documents and any amendment, waiver or consent, whether or not effective, relating thereto
(including, without limitation, travel, photocopy, mailing, courier, telephone and other similar
expenses of the Administrative Agent, ongoing Collateral monitoring and protection, Collateral
releases and workout matters, the cost of environmental audits, surveys and appraisals, the
reasonable fees and disbursements of counsel and other outside consultants for the Administrative
Agent and, in the case of enforcement, the reasonable fees and disbursements of counsel for the
Administrative Agent and any of the Lenders); and promptly reimburse the Administrative Agent for
all amounts expended, advanced or incurred by the Administrative Agent or the Lenders to satisfy
any obligation of the Borrower under this Agreement or any Security Instrument, including without
limitation, all costs and expenses of foreclosure;
(ii)
to indemnify the Administrative Agent and each Lender and each Lender
Affiliate and each of their officers, directors, employees, representatives, Administrative Agent,
attorneys, accountants, investment advisors, agents, trustees and experts (
Indemnified
Parties
) from, hold each of them harmless against and promptly upon demand pay or reimburse
each of them for, the Indemnity Matters which may be incurred by or asserted against or involve any
of them (whether or not any of them is designated a party thereto) as a result of, arising out of
or in any way related to (a) any actual or proposed use by the Borrower of the proceeds of any of
the Loans or Letters of Credit, (b) the execution, delivery and performance of the Loan Documents,
(c) the operations of the business of UCLP, the Borrower and its Subsidiaries, (d) the failure of
UCLP, the Borrower or any Subsidiary to comply with the terms of any Security Instrument or this
Agreement, or with any Governmental Requirement, (e) any inaccuracy of any representation or any
breach of any warranty of UCLP or the Borrower set forth in any of the Loan Documents, (f) the
issuance, execution and delivery or transfer of or payment or failure to pay under any Letter of
Credit, (g) the payment of a drawing under any Letter of Credit notwithstanding the non-compliance,
non-delivery or other improper presentation of the manually executed draft(s) and certification(s),
(h) any assertion that the Lenders were not entitled to receive the proceeds received pursuant to
the Security Instruments or (i) any other aspect of the Loan Documents, including, without
limitation, the reasonable fees and disbursements of counsel and all other expenses incurred in
connection with investigating, defending or preparing to defend any such action, suit, proceeding
(including any investigations, litigation or inquiries) or claim and including all Indemnity
Matters arising by reason of the ordinary negligence of any Indemnified Party, but excluding all
Indemnity Matters arising solely by reason of claims between the Lenders or any Lender and the
Administrative Agent or a Lenders shareholders against the Administrative Agent or Lender or by
reason of the gross negligence or willful misconduct on the part of such Indemnified Party;
and
(iii)
to indemnify and hold harmless from time to time the Indemnified Parties
from and against any and all losses, claims, cost recovery actions,
-72-
administrative orders or
proceedings, damages and liabilities to which any such Person may become subject (a) under any
Environmental Law applicable to UCLP, the Borrower or any Subsidiary or any of their Properties,
including without limitation, the treatment or disposal of hazardous substances on any of their
Properties, (b) as a result of the breach or non-compliance by UCLP, the Borrower or any Subsidiary
with any Environmental Law applicable to UCLP, the Borrower or any Subsidiary, (c) due to past
ownership by UCLP, the Borrower or any Subsidiary of any of their Properties or past activity on
any of their Properties which, though lawful and fully permissible at the time, could result in
present liability, (d) the presence, use, release, storage, treatment or disposal of hazardous
substances on or at any of the Properties owned or operated by UCLP, the Borrower or any
Subsidiary, or (e) any other environmental, health or safety condition in connection with the Loan
Documents;
provided
,
however
, no indemnity shall be afforded under this
Section 12.03(
a
)(
iii
) in respect of any Property for any occurrence arising from
the acts or omissions of any Indemnified Party after the date which UCLP, the Borrower or any
Subsidiary is divested of ownership of such Property (whether by foreclosure or deed in lieu of
foreclosure, as mortgagee-in-possession or otherwise).
(b) To the extent that the Borrower fails to pay any amount required to be paid by it to any
Agent, any Joint Lead Arranger or the Issuing Bank under Section 12.03(a), but without affecting
such payment obligations of the Borrower, each Revolving Lender severally agrees to pay to such
Agent, Joint Lead Arranger or the Issuing Bank, as the case may be, such Revolving Lenders
Applicable Percentage (determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount;
provided
that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred
by or asserted against such Agent, Joint Lead Arranger or the Issuing Bank in its capacity as such.
(c) No Indemnified Party may settle any claim to be indemnified without the consent of the
indemnitor, such consent not to be unreasonably withheld;
provided
, that the indemnitor may
not reasonably withhold consent to any settlement that an Indemnified Party proposes, if the
indemnitor does not have the financial ability to pay all its obligations outstanding and asserted
against the indemnitor at that time, including the maximum potential claims against the Indemnified
Party to be indemnified pursuant to this Section 12.03.
(d) In the case of any indemnification hereunder, the Administrative Agent or Lender, as
appropriate shall give notice to the Borrower of any such claim or demand being made against the
Indemnified Party and the Borrower shall have the non-exclusive right to join in the defense
against any such claim or demand
provided
that if the Borrower provides a defense, the
Indemnified Party shall bear its own cost of defense unless there is a conflict between the
Borrower and such Indemnified Party.
(e)
The foregoing indemnities shall extend to the Indemnified Parties
notwithstanding the sole or concurrent negligence of every kind or character whatsoever, whether
active or passive, whether an affirmative act or an
-73-
omission, including without limitation, all
types of negligent conduct identified in the restatement (second) of torts of one or more of the
Indemnified Parties or by reason of strict liability imposed without fault on any one or more of
the Indemnified Parties. To the extent that an Indemnified Party is found to have committed an act
of gross negligence or willful misconduct, this contractual obligation of indemnification shall
continue but shall only extend to the portion of the claim that is deemed to have occurred by
reason of events other than the gross negligence or willful misconduct of the Indemnified
Party.
(f) The Borrowers obligations under this Section 12.03 shall be its joint and several
obligations and shall survive any termination of this Agreement and the payment of the Notes and
shall continue thereafter in full force and effect.
(g) The Borrower shall pay any amounts due under this Section 12.03 within thirty (30) days of
the receipt by the Borrower of notice of the amount due.
Section 12.04
Successors and Assigns
.
(a) This Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
(b) Neither UCLP nor the Borrower may assign its rights or obligations hereunder or under the
Notes or any Letters of Credit without the prior consent of all of the Lenders and the
Administrative Agent.
(c) Any Lender may assign to one or more assignees, all or a portion of its rights and
obligations under this Agreement pursuant to an Assignment and Assumption substantially in the form
of
Exhibit E
upon the written consent (which consent shall not be unreasonably withheld) of
(A) with respect to the Revolving Credit Facility only, the Administrative Agent,
provided
that no such consent shall be required for an assignment to an assignee that is an Affiliate (as
defined in clause (a) of the definition of Affiliate) of such Revolving Lender, or
a Revolving Lender immediately prior to giving effect to such assignment, (B) with respect to the
Term Loan Credit Facility only, the Administrative Agent,
provided
that no such consent
shall be required for an assignment to an assignee that is an Affiliate (as defined in clause (a)
of the definition of Affiliate) of such Revolving Lender
or a Revolving Lender
immediately prior to giving effect to such assignment, (C) the Issuing Banks (with respect to the
Revolving Credit Facility only), (D) with respect to the Revolving Credit Facility only, the
Borrower,
provided
that no such consent shall be required for an assignment to an assignee
that is an Affiliate (as defined in clause (a) of the definition of Affiliate) of such Term Loan
Lender, a Related Fund or a Term Loan Lender immediately prior to giving effect to such assignment,
or if an Event of Default has occurred and is continuing, any other assignee and (E) with respect
to the Term Loan Credit Facility only, the Borrower,
provided
that no such consent shall be
required for an assignment to an assignee that is an Affiliate (as defined in clause (a) of the
definition of Affiliate) of such Term Loan Lender, a Related Fund or a Term Loan Lender
immediately prior to giving effect to such assignment;
provided
,
however
, that (i)
any such assignment shall be in the amount of at least $5,000,000 with respect to the Revolving
Credit Facility and at least $1,000,000 with respect to the Term Loan Facility or such lesser
amount to
-74-
which such Borrower has consented, with Related Funds treated as one assignee for
purposes of determining compliance with such minimum assignment amount; (ii) the assignee or
assignor shall pay to the Administrative Agent a processing and recordation fee of $3,500 for each
assignment;
provided
that only $3,500 shall be payable in connection with simultaneous
assignments to or by two or more Related Funds; (iii) any assignee shall not be a competitor of
UCLP or any of its Subsidiaries in any of the lines of business permitted under Section 9.05; and
(iv) notwithstanding anything to the contrary contained in this Agreement, if such assignment is
made at a time when an Event of Default has occurred and is continuing, the Borrower shall have the
right to withhold all Taxes required by law to be withheld from payments made hereunder, and shall
pay such Taxes to the relevant taxing authority or other Governmental Authority in accordance with
applicable law. Any such assignment will become effective upon the execution
and delivery to the Administrative Agent of the Assignment and Assumption and the consent, if
required above, of the Administrative Agent, the Issuing Banks and, unless an Event of Default has
occurred and is continuing, the Borrower. Promptly after receipt of an executed Assignment and
Assumption, the Administrative Agent shall send to the Borrower a copy of such executed Assignment
and Assumption. Upon receipt of such executed Assignment and Assumption, the Borrower, will, at
its own expense, execute and deliver new Notes to the assignor and/or assignee, as appropriate, in
accordance with their respective interests as they appear. Upon the effectiveness of any
assignment pursuant to this Section 12.04(c), the assignee will become a Lender, if not already a
Lender, for all purposes of this Agreement and the Security Instruments. The assignor shall be
relieved of its obligations hereunder to the extent of such assignment (and if the assigning Lender
no longer holds any rights or obligations under this Agreement, such assigning Lender shall cease
to be a Lender hereunder except that its rights under Sections 5.01, 5.02, 5.03 and 12.03 shall
not be affected). The Administrative Agent, acting as an agent of the Borrower, shall maintain at
one of its offices a copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the principal amount of the Loans and LC
Exposure owing to, each Lender pursuant to the terms hereof from time to time (the
Register
). No assignment shall be effective for purposes of this Agreement unless it has
been recorded in the Register.
(d) Each Lender may transfer, grant or assign participations in all or any part of such
Lenders interests hereunder pursuant to this Section 12.04(d) to any Person that satisfies the
requirements of Section 12.04(c)(iii),
provided
that: (i) such Lender shall remain a
Lender for all purposes of this Agreement and the transferee of such participation shall not
constitute a Lender hereunder; and (ii) no participant under any such participation shall have
rights to approve any amendment to or waiver of any of the Loan Documents;
provided
that
such participation agreement may provide that such Lender will not, without the consent of the
participant, agree to any amendment, modification or waiver described in clauses (i), (ii) or (iii)
of the proviso to Section 12.02(b) that affects such participant, and all amounts payable by the
Borrower hereunder shall be determined as if such Lender had not sold such participation,
provided
that such participant shall be entitled to receive additional amounts under
ARTICLE V on the same basis as if it were a Lender and be indemnified under Section 12.03 as if it
were a Lender. In addition, each agreement creating any participation must include an agreement by
the participant to be bound by the provisions of Section 12.11.
(e) The Lenders may furnish any information concerning the Borrower in the possession of the
Lenders from time to time to assignees and participants (including prospective
-75-
assignees and
participants);
provided
that, such Persons agree to be bound by the provisions of Section
12.11.
(f) Notwithstanding anything in this Section 12.04 to the contrary, any Lender may at any time
pledge or assign a security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including, without limitation, any pledge or assignment to
secure obligations to a Federal Reserve Bank;
provided
that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or assignee for such Lender as a party hereto.
(g) Notwithstanding any other provisions of this Section 12.04, no transfer or assignment of
the interests or obligations of any Lender or any grant of participations therein shall be
permitted if such transfer, assignment or grant would require the Borrower to file a registration
statement with the SEC or to qualify the Loans under the Blue Sky laws of any state.
Section 12.05
Survival; Revival; Reinstatement
.
(a) All covenants, agreements, representations and warranties made by the Borrower herein and
in the certificates or other instruments delivered in connection with or pursuant to this Agreement
or any other Loan Document shall be considered to have been relied upon by the other parties hereto
and shall survive the execution and delivery of this Agreement and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any such other party or
on its behalf and notwithstanding that the Administrative Agent, any other Agent, the Issuing Bank
or any Lender may have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Aggregate Commitments have not expired or terminated. The provisions of ARTICLE V,
ARTICLE XI and Section 12.03 shall survive and remain in full force and effect regardless of the
consummation of the Transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Aggregate Commitments or the termination of this
Agreement, any other Loan Document or any provision hereof or thereof.
(b) To the extent that any payments on the Indebtedness or proceeds of any collateral are
subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be
repaid to a trustee, debtor in possession, receiver or other Person under any bankruptcy law,
common law or equitable cause, then to such extent, the Indebtedness so satisfied shall be revived
and continue as if such payment or proceeds had not been received and the Administrative Agents
and the Lenders Liens, security interests, rights, powers and remedies under this Agreement and
each Loan Document shall continue in full force and effect. In such event, each Loan Document
shall be automatically reinstated and UCLP and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent and the Lenders to effect such reinstatement.
-76-
Section 12.06
Counterparts; Integration; Effectiveness
.
(a) This Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of which when taken
together shall constitute one and the same instrument.
(b)
This Agreement, the other Loan Documents and any separate letter agreements
with respect to fees payable to the Administrative Agent embody the entire agreement and understanding among the parties relating to the subject
matter hereof and thereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof and thereof. This Agreement and the other Loan
Documents represent the final agreement among the parties hereto and thereto and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties.
(c) Except as provided in Section 6.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent shall have
received counterparts hereof which, when taken together, bear the signatures of each of the other
parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart of a signature
page of this Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
Section 12.07
Severability
. Any provision of this Agreement or any other Loan Document held to be invalid, illegal or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof or thereof; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
Section 12.08
Right of Setoff
. The Borrower agrees that, in addition to (and without limitation of) any right of set-off,
bankers lien or counterclaim a Lender may otherwise have, each Lender shall have the right and be
entitled (after consultation with the Administrative Agent), at its option, to offset balances held
by it or by any of its Affiliates for account of the Borrower at any of its offices, in dollars or
in any other currency, against any principal of or interest on any of such Lenders Loans, or any
other amount payable to such Lender hereunder, which is not paid when due (including applicable
grace periods) (regardless of whether such balances are then due to the Borrower), in which case it
shall promptly notify the Borrower and the Administrative Agent thereof,
provided
that such
Lenders failure to give such notice shall not affect the validity thereof. Notwithstanding
anything to the contrary contained in this Agreement, the Lenders hereby agree that they shall not
set off any funds in any lock boxes whatsoever in connection with this Agreement, except for such
lock boxes which may be established in connection with this Agreement.
-77-
Section 12.09
Governing Law; Jurisdiction; Consent to Service of
Process
.
(a)
This Agreement and the Notes shall be governed by, and construed in
accordance with, the laws of the State of Texas except to the extent that United States federal law
permits any Lender to charge interest at the rate allowed by the laws of the state where such Lender is located. Ch. 346 of the Texas
Finance Code (which regulates certain revolving credit loan accounts and revolving tri-party
accounts) shall not apply to this Agreement or the Notes.
(b)
Any legal action or proceeding with respect to the Loan Documents shall be
brought in the courts of the State of Texas or of the United States of America for the Southern
District of Texas, and, by execution and delivery of this Agreement, each of UCLP and the Borrower
hereby accepts for itself and (to the extent permitted by law) in respect of its Property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Each of UCLP and the
Borrower hereby irrevocably waives any objection, including, without limitation, any objection to
the laying of venue or based on the grounds of
forum non conveniens
, which it may now or hereafter
have to the bringing of any such action or proceeding in such respective jurisdictions. This
submission to jurisdiction is non-exclusive and does not preclude the Administrative Agent or any
Lender from obtaining jurisdiction over UCLP or the Borrower in any court otherwise having
jurisdiction.
(c)
Each of UCLP and the Borrower irrevocably consents to the service of process
of any of the aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to UCLP and the Borrower at its address
located on the signature page hereto or as updated from time to time, such service to become
effective thirty (30) days after such mailing.
(d)
Nothing herein shall affect the right of the Administrative Agent or any
Lender or any holder of a Note to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against UCLP or the Borrower in any other jurisdiction.
(e)
Each of UCLP, the Borrower and each Lender hereby (
i
) irrevocably and
unconditionally waive, to the fullest extent permitted by law, trial by jury in any legal action or
proceeding relating to this Agreement or any other Loan Document and for any counterclaim therein;
(
ii
) irrevocably waive, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any such litigation any special, exemplary, punitive or consequential
damages, or damages other than, or in addition to, actual damages; (
iii
) certify that no
party hereto nor any representative of the Administrative Agent or counsel for any party hereto has
represented, expressly or otherwise, or implied that such party would not, in the event of
litigation, seek to enforce the foregoing waivers, and (
iv
) acknowledge that it has been
induced to enter into this
-78-
Agreement, the other Loan Documents and the transactions contemplated
hereby and thereby by, among other things, the mutual waivers and certifications contained in this
Section 12.09.
Section 12.10
Headings
. Article and Section headings and the Table of Contents used herein are for convenience of
reference only, are not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.
Section 12.11
Confidentiality
. For the purposes of this Section 12.11,
Confidential Information
means information
about UCLP or the Borrower furnished by UCLP or the Borrower or their Affiliates (collectively, the
Disclosing Parties
) to the Administrative Agent or any of the Lenders, including, but not
limited to, any actual or pending agreement, business plans, budgets, projections, ecological data
and accounting records, financial statements, or other financial data of any kind, any title
documents, reports or other information relating to matters of title, any projects or plans,
whether actual or prospective, and any other documents or items embodying any such Confidential
Information;
provided
that such term does not include information that (a) was publicly
known or otherwise known prior to the time of such disclosure, (b) subsequently becomes publicly
known through no act or omission by the Administrative Agent or the Lenders or any Person acting on
behalf thereof, (c) otherwise becomes known to the Administrative Agent or Lenders other than
through disclosure by the Disclosing Parties or a party known to be subject to a confidentiality
agreement or (d) constitutes financial statements delivered to the Administrative Agent and the
Lenders under Section 8.01(a) that are otherwise publicly available. The Administrative Agent and
the Lenders will maintain the confidentiality of such Confidential Information delivered to (i)
such Person,
provided
that each such Person (a
Restricted Person
) may deliver or
disclose Confidential Information to such Restricted Persons directors, officers, employees,
agents, attorneys investment advisors, trustees and Affiliates, who agree to hold confidential the
Confidential Information substantially in accordance with the terms of this Section 12.11, (ii)
such Restricted Persons financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the terms of this
Section 12.11, (iii) any other Lender, (iv) any pledgee referred to in Section 12.04, any potential
assignee or any assignee to which such Restricted Person sells or offers to sell its Note or any
part thereof or any participation potential participation therein (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound by the provisions of this
Section 12.11), (v) any Person from which such Restricted Person offers to purchase any security of
the Borrower (if such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 12.11), (vi) any Governmental Authority
having jurisdiction or any self-regulatory body claiming to have authority over such Restricted
Person, (vii) the National Association of Insurance Commissioners or any similar organization, or
any nationally recognized rating agency that requires access to information about such Restricted
Persons investment portfolio, or (viii) any other Person to which such delivery or disclosure may
be necessary or appropriate (A) to effect compliance with any Governmental Requirement applicable
to such Restricted Person, (B) in response to any subpoena or other legal process, (C) in
connection with any litigation to which such Restricted Person is a party or (D) if an Event of
Default has occurred and is continuing, to the extent such Restricted Person may reasonably
determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the
protection of its rights and remedies under the Notes and this Agreement. Each Lender, by
-79-
its acceptance of a Note or a participation agreement, will be deemed to have agreed to be bound by and
to be entitled to the benefits of this Section 12.11 as though it were a party to this Agreement.
On reasonable request by UCLP or
the Borrower in connection with the delivery to any Lender of information required to be delivered
to such Lender under this Agreement or requested by such Lender (other than a Lender that is a
party to this Agreement or its nominee), such Lender will enter into an agreement with UCLP or the
Borrower embodying the provisions of this Section 12.11. UCLP and the Borrower waive (on their own
behalf and on behalf of their Subsidiaries) any and all other rights they (or their Subsidiaries)
may have to confidentiality as against the Administrative Agent and the Lenders arising by or under
any contract, agreement, statute or law except as expressly stated in this Section 12.11.
Section 12.12
Interest Rate Limitation
. It is the intention of the parties hereto that each Lender shall conform strictly to usury laws
applicable to it. Accordingly, if the Transactions contemplated hereby would be usurious as to any
Lender under laws applicable to it (including the laws of the United States of America and the
State of Texas or any other jurisdiction whose laws may be mandatorily applicable to such Lender
notwithstanding the other provisions of this Agreement), then, in that event, notwithstanding
anything to the contrary in any of the Loan Documents or any agreement entered into in connection
with or as security for the Notes, it is agreed as follows: (i) the aggregate of all consideration
which constitutes interest under law applicable to any Lender that is contracted for, taken,
reserved, charged or received by such Lender under any of the Loan Documents or agreements or
otherwise in connection with the Notes shall under no circumstances exceed the maximum amount
allowed by such applicable law, and any excess shall be canceled automatically and if theretofore
paid shall be credited by such Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would thereby be paid in
full, refunded by such Lender to the Borrower); and (ii) in the event that the maturity of the
Notes is accelerated by reason of an election of the holder thereof resulting from any Event of
Default under this Agreement or otherwise, or in the event of any required or permitted prepayment,
then such consideration that constitutes interest under law applicable to any Lender may never
include more than the maximum amount allowed by such applicable law, and excess interest, if any,
provided for in this Agreement or otherwise shall be canceled automatically by such Lender as of
the date of such acceleration or prepayment and, if theretofore paid, shall be credited by such
Lender on the principal amount of the Indebtedness (or, to the extent that the principal amount of
the Indebtedness shall have been or would thereby be paid in full, refunded by such Lender to the
Borrower). All sums paid or agreed to be paid to any Lender for the use, forbearance or detention
of sums due hereunder shall, to the extent permitted by law applicable to such Lender, be
amortized, prorated, allocated and spread throughout the stated term of the Loans evidenced by the
Notes until payment in full so that the rate or amount of interest on account of any Loans
hereunder does not exceed the maximum amount allowed by such applicable law. If at any time and
from time to time (i) the amount of interest payable to any Lender on any date shall be computed at
the Highest Lawful Rate applicable to such Lender pursuant to this Section 12.12 and (ii) in
respect of any subsequent interest computation period the amount of interest otherwise payable to
such Lender would be less than the amount of interest payable to such Lender computed at the
Highest Lawful Rate applicable to such Lender, then the amount of interest payable to such Lender
in respect of such subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to such Lender until the total amount of interest payable to such
Lender shall equal the total amount of interest which would have been
-80-
payable to such Lender if the total amount of interest had been computed without giving effect to
this Section 12.12. To the extent that Chapter 303 of the Texas Finance Code is relevant for the
purpose of determining the Highest Lawful Rate applicable to a Lender, such Lender elects to
determine the applicable rate ceiling under such Chapter by the weekly ceiling from time to time in
effect. Chapter 346 of the Texas Finance Code does not apply to the Borrowers obligations
hereunder.
Section 12.13
Exculpation Provisions
. Each of the parties hereto specifically agrees that it has a duty to read this Agreement and
the other Loan Documents and agrees that it is charged with notice and knowledge of the terms of
this Agreement and the other Loan Documents; that it has in fact read this Agreement and is fully
informed and has full notice and knowledge of the terms, conditions and effects of this Agreement;
that it has been represented by independent legal counsel of its choice throughout the negotiations
preceding its execution of this Agreement and the other Loan Documents; and has received the advice
of its attorney in entering into this Agreement and the other Loan Documents; and that it
recognizes that certain of the terms of this Agreement and the other Loan Documents result in one
party assuming the liability inherent in some aspects of the transaction and relieving the other
party of its responsibility for such liability. Each party hereto agrees and covenants that it
will not contest the validity or enforceability of any exculpatory provision of this Agreement and
the other Loan Documents on the basis that the party had no notice or knowledge of such provision
or that the provision is not conspicuous.
Section 12.14
Collateral Matters; Hedging Agreements
. Notwithstanding anything to the contrary contained herein, the terms and provisions of this
Agreement shall not apply to any Hedging Agreements, except to the extent necessary for all Hedging
Agreements with Lenders and/or their Lender Affiliate to be secured by the Security Instruments on
a
pari passu
basis with other Indebtedness and for the proceeds from the Security Instruments to be
applied as set forth in Section 10.02(c) hereof. No Lender or any Lender Affiliate shall have any
voting rights under any Loan Document as a result of the existence of obligations owed to it under
any such Hedging Agreements.
Section 12.15
No Third Party Beneficiaries
. This Agreement, the other Loan Documents, and the agreement of the Lenders to make Loans and the
Issuing Bank to issue, amend, renew or extend Letters of Credit hereunder are solely for the
benefit of the Borrower, and no other Person (including, without limitation, any Subsidiary of the
Borrower, any obligor, contractor, subcontractor, supplier or materialsman) shall have any rights,
claims, remedies or privileges hereunder or under any other Loan Document against the
Administrative Agent, any other Agent, the Issuing Bank or any Lender for any reason whatsoever.
There are no third party beneficiaries.
Section 12.16
USA Patriot Act Notice
. Each Lender hereby notifies UCLP and the Borrower that pursuant to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the
USA Patriot
Act
), it is required to obtain, verify and record information that identifies UCLP and its
Subsidiaries, which information includes the
-81-
name and address of UCLP and such Subsidiaries and
other information that will allow such Lender to identify UCLP and such Subsidiaries in accordance
with the USA Patriot Act.
Section 12.17
No General Partners Liability
. The Lenders agree that no claim arising against either UCLP, the Borrower or any Restricted
Subsidiary under any Loan Document shall be asserted against the General Partner (in its individual
capacity) and no judgment, order or execution entered in any suit, action or proceeding, whether
legal or equitable, on this Agreement or any of the other Loan Documents shall be obtained or
enforced against the General Partner (in its individual capacity) or its assets for the purpose of
obtaining satisfaction and payment of the Indebtedness or any claims arising under this Agreement
or any other Loan Document, any right to proceed against the General Partner individually or its
respective assets being hereby expressly waived by the Lenders. Nothing in this Section 12.17,
however, shall be construed so as to prevent the Administrative Agent or any Lender from commencing
any action, suit or proceeding with respect to or causing legal papers to be served upon the
General Partner for the purpose of (i) obtaining jurisdiction over UCLP, the Borrower or any
Restricted Subsidiary or (ii) obtaining judgment, order or execution against the General Partner
arising out of any fraud or intentional misrepresentation by the General Partner in connection with
the Loan Documents or of recovery of moneys received by the General Partner in violation of the
terms of this Agreement.
[SIGNATURES BEGIN NEXT PAGE]
-82-
The parties hereto have caused this Agreement to be duly executed as of the day and year first
above written.
|
|
|
|
|
|
|
BORROWER:
|
|
UC OPERATING PARTNERSHIP, L.P.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
UCLP OLP GP LLC
,
|
|
|
|
|
|
|
its general partner
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
Daniel Schlanger
|
|
|
|
|
Title:
|
|
Senior Vice President and Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
Address for Notices:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4444 Brittmoore Road
|
|
|
|
|
Houston, Texas 77041
|
|
|
|
|
|
|
|
|
|
|
|
Telecopier No.: (713) 466-6720
|
|
|
|
|
Telephone No.: (713) 335-7295
|
|
|
|
|
Attention: President
|
|
|
|
|
|
|
|
|
|
|
|
Copy to: General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
Copy to:
|
|
|
|
|
|
|
|
|
|
|
|
Carol M. Burke
|
|
|
|
|
Gardere Wynne Sewell LLP
|
|
|
|
|
1000 Louisiana, Suite 3400
|
|
|
|
|
Houston, Texas 77002
|
|
|
|
|
Telecopier No.: (713) 276-6561
|
|
|
|
|
Telephone No.: (713) 276-5561
|
|
|
|
|
|
|
|
|
|
GUARANTORS:
|
|
UNIVERSAL COMPRESSION PARTNERS, L.P.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
UCO GENERAL PARTNER, LP
,
|
|
|
|
|
|
|
its general partner
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
UCO GP, LLC,
|
|
|
|
|
|
|
its general partner
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
Daniel Schlanger
|
|
|
|
|
Title:
|
|
Senior Vice President and Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
Address for Notices:
|
|
|
|
|
|
|
|
|
|
|
|
4444 Brittmoore Road
|
|
|
|
|
Houston, Texas 77041
|
|
|
|
|
|
|
|
|
|
|
|
Telecopier No.: (713) 466-6720
|
|
|
|
|
Telephone No.: (713) 335-7295
|
|
|
|
|
Attention: President
|
|
|
|
|
|
|
|
|
|
|
|
Copy to: General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
Copy to:
|
|
|
|
|
|
|
|
|
|
|
|
Carol M. Burke
|
|
|
|
|
Gardere Wynne Sewell LLP
|
|
|
|
|
1000 Louisiana, Suite 3400
|
|
|
|
|
Houston, Texas 77002
|
|
|
|
|
Telecopier No.: (713) 276-6561
|
|
|
|
|
Telephone No.: (713) 276-5561
|
|
|
|
|
|
|
|
|
|
ADMINISTRATIVE AGENT
AND LENDER:
|
|
WACHOVIA BANK, NATIONAL
ASSOCIATION
, Individually and as
Administrative Agent
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
Todd Schanzlin
|
|
|
|
|
Title:
|
|
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
Lending Office for ABR Loans and Eurodollar
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
301 South College Street
|
|
|
|
|
23rd Floor NC 0680
|
|
|
|
|
Charlotte, North Carolina 28288
|
|
|
|
|
Telecopier No.: (704) 383-0288
|
|
|
|
|
|
|
|
|
|
|
|
Address for Notices:
|
|
|
|
|
|
|
|
|
|
|
|
301 South College Street
|
|
|
|
|
23rd Floor NC 0680
|
|
|
|
|
Charlotte, North Carolina 28288
|
|
|
|
|
Attention: Syndication Agency Services
|
|
|
|
|
Telecopier No.: (704) 383-0288
|
|
|
|
|
|
|
|
|
|
|
|
With copy to:
|
|
|
|
|
|
|
|
|
|
|
|
Wachovia Capital Markets, LLC
|
|
|
|
|
1001 Fannin, Suite 2255
|
|
|
|
|
Houston, Texas 77002
|
|
|
|
|
Attention: David Humphreys
|
|
|
|
|
Telecopier No.: 713-605-6354
|
|
|
|
|
|
|
|
|
|
SYNDICATION AGENT AND LENDER:
|
|
DEUTSCHE BANK TRUST COMPANY
AMERICAS,
|
|
|
|
|
Individually
|
|
and as Syndication Agent
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
Lending Office for ABR Rate Loans and
Eurodollar Loans:
|
|
|
|
|
|
|
|
|
|
|
|
Address for Notices:
|
|
|
|
|
|
|
|
|
|
|
|
Attention:
|
|
|
|
|
Telecopier No.:
|
|
|
|
|
|
|
|
|
|
|
|
With copy to:
|
|
|
|
|
|
|
|
|
|
|
|
Attention:
|
|
|
|
|
Telecopier No.:
|
|
|
|
|
|
|
|
|
|
CO-DOCUMENTATION AGENT
AND LENDER:
|
|
FORTIS CAPITAL, CORP.
,
as Co-Documentation Agent and Lender
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
Lending Office for ABR Rate Loans and
Eurodollar Loans:
|
|
|
|
|
|
|
|
|
|
|
|
Address for Notices:
|
|
|
|
|
|
|
|
|
|
|
|
Attention:
|
|
|
|
|
Telecopier No.:
|
|
|
|
|
|
|
|
|
|
|
|
With copy to:
|
|
|
|
|
|
|
|
|
|
|
|
Attention:
|
|
|
|
|
Telecopier No.:
|
|
|
|
|
|
|
|
|
|
CO-DOCUMENTATION AGENT
AND LENDER:
|
|
WELLS FARGO BANK,
NATIONAL ASSOCIATION,
as Co-Documentation Agent and Lender
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
Lending Office for ABR Rate Loans and
Eurodollar Loans:
|
|
|
|
|
|
|
|
|
|
|
|
Address for Notices:
|
|
|
|
|
|
|
|
|
|
|
|
Attention:
|
|
|
|
|
Telecopier No.:
|
|
|
|
|
|
|
|
|
|
|
|
With copy to:
|
|
|
|
|
|
|
|
|
|
|
|
Attention:
|
|
|
|
|
Telecopier No.:
|
|
|
EXHIBIT A
FORM OF NOTE
FOR VALUE RECEIVED, UC OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the
Borrower
), hereby promises to pay to
(the
Lender
) or registered assigns, at the principal office of WACHOVIA BANK, NATIONAL
ASSOCIATION, as the Administrative Agent (the
Administrative Agent
), at 301 South College
Street, Charlotte, North Carolina 28288-0608, the principal sum of
US
Dollars ($
) (or such lesser amount as shall equal the aggregate unpaid principal amount
of the [Revolving/Term] Loans made by the Lender to the Borrower under the Credit Agreement, as
hereinafter defined), in lawful money of the United States of America and in immediately available
funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such [Revolving/Term] Loan, at such office, in like
money and funds, for the period commencing on the date of such [Revolving/Term] Loan until such
[Revolving/Term] Loan shall be paid in full, at the rates per annum and on the dates provided in
the Credit Agreement.
The date, amount, Type, interest rate, Interest Period and maturity of each [Revolving/Term]
Loan made by the Lender to the Borrower, and each payment made on account of the principal thereof,
shall be recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by
the Lender on the schedules attached hereto or any continuation thereof.
This Note is one of the Notes referred to in the Senior Secured Credit Agreement dated as of
October 20, 2006, among the Borrower, Universal Compression Partners, L.P., a Delaware limited
partnership, the Administrative Agent and the other Agents and Lenders which are or become parties
thereto (including the Lender) (as the same may be amended or supplemented from time to time, the
Credit Agreement
), and evidences [Revolving/Term] Loans made by the Lender thereunder.
Capitalized terms used in this Note and not defined herein have the respective meanings assigned to
them in the Credit Agreement.
This Note is issued pursuant to the Credit Agreement and is entitled to the benefits provided
for in the Credit Agreement and the Security Instruments. The Credit Agreement provides for the
acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments
of [Revolving/Term] Loans upon the terms and conditions specified therein and other provisions
relevant to this Note.
Exhibit A
1
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS.
|
|
|
|
|
|
|
|
|
|
|
UC OPERATING PARTNERSHIP, L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
UCLP OLP GP LLC, its general partner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit A
2
EXHIBIT B
FORM OF BORROWING REQUEST
, 20___
UC OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the
Borrower
),
pursuant to the Senior Secured Credit Agreement dated as of October 20, 2006, among the Borrower,
Universal Compression Partners, L.P., a Delaware limited partnership, the Administrative Agent and
the other Agents and Lenders which are or become parties thereto (as the same may be amended or
supplemented from time to time, the
Credit Agreement
), hereby make the requests indicated
below (unless otherwise defined herein, capitalized terms are defined in the Credit Agreement):
|
1.
|
|
[Revolving/Term] Loans:
|
(a) Aggregate amount of new [Revolving/Term] Loans to be borrowed is
$
;
(b) Requested funding date is
,
;
(c) $
of such [Revolving/Term Loan] Borrowings are to be ABR
Loans;
(d) $
of such [Revolving/Term Loan] Borrowings are to be
Eurodollar Loans; and
(i) Length of Interest Period for Eurodollar Loans is:
.
(e) The
location and number of the account is:
.
|
2.
|
|
Eurodollar Loan Continuation/Conversion for Eurodollar Loans maturing on
:
|
(a) Aggregate amount to be continued as Eurodollar Loans is $
;
and
(i) Length of Interest Period for continued Eurodollar Loans is
.
(b) Aggregate amount to be converted to ABR Loans is $
.
Exhibit B
1
|
3.
|
|
Conversion of outstanding ABR Loans to Eurodollar Loans:
|
(a) Convert $
of the outstanding ABR Loans to Eurodollar Loans on
with an Interest Period of
.
The undersigned certifies that he is the
of
, and that
as such he is authorized to execute this certificate on behalf of
. The
undersigned further certifies, represents and warrants on behalf of
that
is entitled to receive the requested Borrowing, continuation or conversion under
the terms and conditions of the Credit Agreement.
|
|
|
|
|
|
|
|
|
|
|
UC OPERATING PARTNERSHIP, L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
UCLP OLP GP LLC, its general partner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit B
2
EXHIBIT C
FORM OF INTEREST ELECTION REQUEST
[ ], 200[ ]
UC OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the
Borrower
),
pursuant to Section 2.04 of the Senior Secured Credit Agreement dated as of October 20, 2006, among
the Borrower, Universal Compression Partners, L.P., a Delaware limited partnership, the
Administrative Agent and the other Agents and Lenders which are or become parties thereto (as the
same may be amended or supplemented from time to time, the
Credit Agreement
), (unless
otherwise defined herein, each capitalized term used herein is defined in the Credit Agreement),
hereby makes an Interest Election Request as follows:
|
(i)
|
|
The Borrowing to which this Interest Election Request applies,
and if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing (in
which case the information specified pursuant to (iii) and (iv) below shall be
specified for each resulting Borrowing) is [ ];
|
|
|
(ii)
|
|
The effective date of the election made pursuant to this
Interest Election Request is [ ], 200[ ];[and]
|
|
|
(iii)
|
|
The resulting Borrowing is to be [an ABR Borrowing] [a
Eurodollar Borrowing][; and]
|
|
|
|
|
[(iv) [If the resulting Borrowing is a Eurodollar Borrowing] The
Interest Period applicable to the resulting Borrowing after giving effect to
such election is [ ]].
|
The undersigned certifies that he/she is the [ ] of the [ ], and that as such
he/she is authorized to execute this certificate on behalf of the Borrower. The undersigned
further certifies, represents and warrants on behalf of the Borrower that the Borrower is entitled
to receive the requested continuation or conversion under the terms and conditions of the Credit
Agreement.
|
|
|
|
|
|
|
|
|
|
|
UC OPERATING PARTNERSHIP, L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
UCLP OLP GP LLC, its general partner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit C
1
EXHIBIT D-1
FORM OF EFFECTIVE DATE COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he is the
of
and that as
such he is authorized to execute this certificate on behalf of UC Operating Partnership, L.P., a
Delaware limited partnership (the
Borrower
). With reference to the Senior Secured Credit
Agreement dated as of October 20, 2006, among the Borrower, Universal Compression Partners, L.P., a
Delaware limited partnership, the Administrative Agent and the other Agents and Lenders which are
or become parties thereto (as the same may be amended or supplemented from time to time, the
Credit Agreement
), the undersigned represents and warrants as follows (each capitalized
term used herein having the same meaning given to it in the Credit Agreement unless otherwise
specified):
|
(a)
|
|
The representations and warranties of the Borrower contained in ARTICLE VII of
the Credit Agreement and in the Security Instruments were true and correct when made,
and are repeated at and as of the time of delivery hereof and are true and correct at
and as of the time of delivery hereof, except as such representations and warranties
are expressly limited to an earlier date or are modified to give effect to the
transactions expressly permitted by the Credit Agreement.
|
|
|
(b)
|
|
The Borrower has performed and complied with all agreements and conditions
contained in the Credit Agreement and in the Security Instruments required to be
performed or complied with by it prior to or at the time of delivery hereof.
|
|
|
(c)
|
|
Since December 31, 2005, there has been no change or event having a Material
Adverse Effect.
|
|
|
(d)
|
|
No Default has occurred and is continuing under the Credit Agreement.
|
EXECUTED AND DELIVERED this ___day of
.
|
|
|
|
|
|
|
|
|
|
|
UC OPERATING PARTNERSHIP, L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
UCLP OLP GP LLC, its general partner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit D
-1 1
EXHIBIT D-2
FORM OF ONGOING COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he is the
of
and that as
such he is authorized to execute this certificate on behalf of UC Operating Partnership, L.P., a
Delaware limited partnership (the
Borrower
). With reference to the Senior Secured Credit
Agreement dated as of October 20, 2006, among the Borrower, Universal Compression Partners, L.P., a
Delaware limited partnership, the Administrative Agent and the other Agents and Lenders which are
or become parties thereto (as the same may be amended or supplemented from time to time, the
Credit Agreement
), the undersigned represents and warrants as follows (each capitalized
term used herein having the same meaning given to it in the Credit Agreement unless otherwise
specified):
|
(a)
|
|
The representations and warranties of the Borrower contained in ARTICLE VII of
the Credit Agreement and in the Security Instruments were true and correct when made,
and are repeated at and as of the time of delivery hereof and are true and correct at
and as of the time of delivery hereof, except as such representations and warranties
are expressly limited to an earlier date or are modified to give effect to the
transactions expressly permitted by the Credit Agreement.
|
|
|
(b)
|
|
The Borrower has performed and complied with all agreements and conditions
contained in the Credit Agreement and in the Security Instruments required to be
performed or complied with by it prior to or at the time of delivery hereof.
|
|
|
(c)
|
|
Since December 31, 2005, there has been no change or event having a Material
Adverse Effect.
|
|
|
(d)
|
|
No Default has occurred and is continuing under the Credit Agreement.
|
|
|
(e)
|
|
Attached hereto are the detailed computations necessary to determine whether
the Borrower is in compliance with section 8.07 and Section 9.10(a) and (b) as of the
end of the [fiscal quarter][fiscal year] ending [ ].
|
EXECUTED AND DELIVERED this ___day of
.
|
|
|
|
|
|
|
|
|
|
|
UC OPERATING PARTNERSHIP, L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
UCLP OLP GP LLC, its general partner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit D
-2 1
EXHIBIT E
FORM OF ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the
Assignment and Assumption
) is dated as of the
Effective Date set forth below and is entered into by and between [
Insert name of Assignor
] (the
Assignor
) and [
Insert name of Assignee
] (the
Assignee
). Capitalized terms used
but not defined herein shall have the meanings given to them in the Credit Agreement identified
below (as amended, the
Credit Agreement
), receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment
and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the
Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignors
rights and obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and obligations of the
Assignor under the respective facilities identified below (including any letters of credit and
guarantees included in such facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the Assignor (in its
capacity as a Lender) against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and all other claims
at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the
Assigned Interest
). Such sale and assignment is
without recourse to the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.
|
|
|
|
|
|
|
1.
|
|
Assignor:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.
|
|
Assignee:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[and is an Affiliate/Approved Fund of [
identify Lender
]
1
]
|
|
|
|
|
|
|
|
3.
|
|
Borrower:
|
|
UC Operating Partnership, L.P., a Delaware limited partnership
|
|
|
|
|
|
|
|
4.
|
|
Administrative Agent:
|
|
Wachovia Bank, National Association, as the administrative agent under the Credit Agreement
|
|
|
|
|
|
|
|
5.
|
|
Credit Agreement:
|
|
The Credit Agreement dated as of October 20, 2006 among the Borrower, Universal Compression
Partners, L.P., a Delaware limited partnership, the Administrative Agent and the other Agents
|
Exhibit E
1
|
|
|
|
|
|
|
|
|
|
|
and Lenders which are or become parties thereto (as the same may be
amended or supplemented from time to time)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Amount of
|
|
|
Amount of
|
|
|
Percentage Assigned
|
|
|
|
Commitment
|
|
|
Commitment/Loans
|
|
|
Commitment/Loans
|
|
|
of
|
|
|
|
Assigned
|
|
|
for all Lenders
|
|
|
Assigned
|
|
|
Commitment/Loans
2
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
%
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
%
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
%
|
|
Effective Date:
___, 20___[TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL
BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
The terms set forth in this Assignment and Assumption are hereby agreed to:
|
|
|
|
|
|
|
|
|
ASSIGNOR
|
|
|
|
|
|
|
|
|
|
|
|
[NAME OF ASSIGNOR]
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
ASSIGNEE
|
|
|
|
|
|
|
|
|
|
|
|
[NAME OF ASSIGNEE]
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
2
|
|
Set forth, to at least 9 decimals, as a
percentage of the Commitment/Loans of all Lenders thereunder.
|
Exhibit E
2
|
|
|
|
|
[Consented to and]
3
Accepted:
|
|
|
|
|
|
|
|
WACHOVIA BANK, NATIONAL ASSOCIATION, as
|
Administrative Agent
|
|
|
|
|
|
By
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
[Consented to:]
4
|
|
|
|
|
|
[NAME OF RELEVANT PARTY]
|
|
|
|
|
|
By
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
3
|
|
To be added only if the consent of the
Administrative Agent is required by the terms of the Credit Agreement.
|
|
4
|
|
To be added only if the consent of the
Borrower and/or other parties (e.g. Issuing Bank) is required by the terms of
the Credit Agreement.
|
Exhibit E
3
ANNEX 1
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1.
Representations and Warranties
.
1.1
Assignor
. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any
lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken
all action necessary, to execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the Credit Agreement or any
other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective obligations under any
Loan Document.
1.2.
Assignee
. The Assignee (a) represents and warrants that (i) it has full power
and authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement
that are required to be satisfied by it in order to acquire the Assigned Interest and become a
Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together
with copies of the most recent financial statements and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter into this Assignment
and Assumption and to purchase the Assigned Interest on the basis of which it has made such
analysis and decision independently and without reliance on the Administrative Agent or any other
Lender, and (v) if it is a Foreign Lender, attached to the Assignment and Assumption is any
documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly
completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without
reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.
2.
Payments
. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned Interest (including payments of principal, interest,
fees and other amounts) to the Assignor for amounts which have accrued to but excluding the
Effective Date and to the Assignee for amounts which have accrued from and after the Effective
Date.
Exhibit E
4
3.
General Provisions
. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which together shall
constitute one instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of Texas.
Exhibit E
5
EXHIBIT F-1
SENIOR SECURITY INSTRUMENTS
1. Collateral Agreement dated as of October 20, 2006 among the Borrower, the Guarantor, UCLP OLP GP
LLC, UCLP Leasing, L.P. and the Administrative Agent, as amended, modified or restated from time to
time (the
Collateral Agreement
), covering:
a. Borrowers pledge of 100% of the membership interests and partnership interests of the
following Domestic Subsidiaries:
|
(i)
|
|
UCLP Leasing GP LLC
|
|
|
(ii)
|
|
UCLP Leasing, L.P.
|
b. Guarantors pledge of 100% of the membership interests and partnership interests of the
following Domestic Subsidiaries:
|
(i)
|
|
UCLP OLP GP LLC
|
|
|
(ii)
|
|
UC Operating Partnership, L.P.
|
c. Guarantors and each Subsidiaries accounts, chattel paper, documents, equipment, general
intangibles, instruments and inventory, all books and records pertaining to the foregoing
and proceeds.
2. UCC Financing Statements for the Borrower, the Guarantor, UCLP OLP GP LLC and UCLP Leasing, L.P.
relating to Item 1.
3. Stock Powers relating to stock pledged in Items 1(a)(i) and 1(b)(i).
4. Original certificates representing stock pledged in Item 1:
a. Certificate No. 1, one share of UCLP OLP GP LLC owned by UCLP
b. Certificate No. 1, one share of UCLP Leasing GP LLC owned by the Borrower
5. Stock Powers
6. Guaranty Agreement dated as of October 20, 2006 among Universal Compression Partners, L.P., UCLP
Leasing, L.P. and UCLP OLP GP LLC and the Administrative Agent, as amended, modified or restated
from time to time
EXHIBIT F-2
FORM OF GUARANTY AGREEMENT
This GUARANTY AGREEMENT is dated as of
October 20, 2006 made by [
],
a [
]
[
]
and each of the signatories
hereto (each of the signatories hereto and the Guarantors that becomes a party hereto from time to
time after the date hereof, the
Guarantors
), in favor of Wachovia Bank, National
Association, as the administrative agent (in such capacity, together with its successors in such
capacity, the
Administrative Agent
), for the banks and other financial institutions (the
Lenders
) from time to time parties to the Credit Agreement dated October 20, 2006 (as
amended, supplemented or otherwise modified from time to time, the
Credit Agreement
),
among UC Operating Partnership, L.P., a Delaware limited partnership (the
Borrower
),
Universal Compression Partners L.P., the Lenders, the Administrative Agent, and the other Agents
party thereto.
R E C I T A L S
A. The Borrower has requested that the Lenders provide certain loans to and extensions of
credit on behalf of the Borrower.
B. The Lenders have agreed to make such loans and extensions of credit subject to the terms
and conditions of the Credit Agreement.
C. It is a condition precedent to the obligation of the Lenders to make their respective extensions
of credit to the Borrower under the Credit Agreement that the Guarantors shall have executed and
delivered this Agreement to the Administrative Agent for the ratable benefit of the Lenders.
D. NOW, THEREFORE, in consideration of the premises herein and to induce the Administrative Agent
and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their
respective extensions of credit to the Borrower thereunder, each Guarantor hereby agrees with the
Administrative Agent, for the ratable benefit of the Lenders, as follows:
ARTICLE I
Definitions
Section 1.01
Definitions
.
(a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein
have the meanings given to them in the Credit Agreement, and all uncapitalized terms which are
defined in the UCC on the date hereof are used herein as so defined.
(b) The following terms have the following meanings:
Agreement
means this Guaranty Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.
Exhibit F
-2 1
Bankruptcy Code
means Title 11, United States Code, as amended from time to time.
Borrower Obligations
means the collective reference to the payment and performance when
due of all indebtedness, liabilities, obligations and undertakings of the Borrower (including,
without limitation, all Indebtedness) of every kind or description arising out of or outstanding
under, advanced or issued pursuant, or evidenced by, the Guaranteed Documents, including, without
limitation, the unpaid principal of and interest on the Loans and the LC Exposure and all other
obligations and liabilities of the Borrower (including, without limitation, interest accruing at
the then applicable rate provided in the Credit Agreement after the maturity of the Loans and LC
Exposure and interest accruing after the filing of any petition in bankruptcy, or the commencement
of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding) to the Guaranteed
Creditors, whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, arising out of or outstanding under, advanced or issued pursuant,
or evidenced by, the Guaranteed Documents, whether on account of principal, interest, premium,
reimbursement obligations, payments in respect of an early termination date, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all reasonable costs, fees and
disbursements that are required to be paid by the Borrower pursuant to the terms of any Guaranteed
Documents).
Collateral Agreement
means that certain Collateral Agreement, dated October 20, 2006 by
UCLP, GP, UCLP Leasing and the Borrower, collectively, as Grantors in favor of Wachovia Bank,
National Association, as Administrative Agent for the Lenders.
Guaranteed Creditors
means the collective reference to the Administrative Agent, the
Lenders and the Lenders and Affiliates of Lenders that are parties to Guaranteed Hedging
Agreements.
Guaranteed Documents
means the collective reference to the Credit Agreement, the other
Loan Documents, each Guaranteed Hedging Agreement and any other document made, delivered or given
in connection with any of the foregoing.
Guaranteed Hedging Agreement
means any Hedging Agreement between the Borrower or any
Restricted Subsidiary and any Lender or any Affiliate of any Lender while such Person (or, in the
case of an Affiliate of a Lender, the Person affiliated therewith) is a Lender, including any
Hedging Agreement between such Persons in existence prior to the date hereof, but excluding any
Hedging Agreement now existing or hereafter arising in connection with an ABS Facility. For the
avoidance of doubt, a Hedging Agreement ceases to be a Guaranteed Hedging Agreement if the Person
that is the counterparty to the Borrower or any Restricted Subsidiary under a Hedging Agreement
ceases to be a Lender under the Credit Agreement (or, in the case of an Affiliate of a Lender, the
Person affiliated therewith ceases to be a Lender under the Credit Agreement).
Guarantor Obligations
means with respect to any Guarantor, the collective reference to
(a) the Borrower Obligations and (b) the payment and performance when due of all indebtedness,
liabilities, obligations and undertakings of such Guarantor of every kind or description, whether
direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter
incurred, arising out of or outstanding under, advanced or issued pursuant, or evidenced by, any
Exhibit F
-2
2
Guaranteed Document to which such Guarantor is a party, in each case, whether on account of
principal, interest, guarantee obligations, reimbursement obligations, payments in respect of an
early termination date, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all reasonable fees and disbursements that are required to be paid pursuant to the
terms of any Guaranteed Document).
Guarantors
means the collective reference to each Guarantor.
Obligations
means: (a) in the case of each Borrower, the Borrower Obligations and (b) in
the case of each Guarantor, its Guarantor Obligations.
Guarantor Claims
has the meaning assigned to such term in Section 6.01.
Section 1.02
Rules of Interpretation
. Section 1.04 of the Credit Agreement is hereby
incorporated herein by reference and shall apply to this Agreement,
mutatis mutandis
.
ARTICLE II
Guarantee
Section 2.01
Guarantee
.
(a) Each of the Guarantors hereby jointly and severally, unconditionally and irrevocably,
guarantees to the Guaranteed Creditors and each of their respective permitted successors,
indorsees, transferees and assigns, the prompt and complete payment in cash and performance by the
Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the Borrower
Obligations. This is a guarantee of payment and not collection and the liability of each Guarantor
is primary and not secondary.
(b) Anything herein or in any other Guaranteed Document to the contrary notwithstanding, the
maximum liability of each Guarantor hereunder and under the other Guaranteed Documents shall in no
event exceed the amount which can be guaranteed by such Guarantor under applicable federal and
state laws relating to the insolvency of debtors (after giving effect to the right of contribution
established in Section 2.02).
(c) Each Guarantor agrees that the Borrower Obligations may at any time and from time to time
exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee
contained in this ARTICLE II or affecting the rights and remedies of any Guaranteed Creditor
hereunder.
(d) Each Guarantor agrees that if the maturity of the Borrower Obligations is accelerated by
bankruptcy or otherwise, such maturity shall also be deemed accelerated for the purpose of this
guarantee without demand or notice to such Guarantor. The guarantee contained in this ARTICLE II
shall remain in full force and effect until all the Borrower Obligations shall have been satisfied
by payment in full in cash, no Letter of Credit shall be outstanding (except for Letters of Credit
secured by cash collateral as permitted in Section 2.07(a)(iii) of the Credit Agreement) and all of
the Aggregate Commitments are terminated, notwithstanding that from time to time during the term of
the Credit Agreement, no Borrower Obligations may be outstanding.
Exhibit F
-2
3
(e) No payment made by any Guarantor, any other guarantor or any other Person or received or
collected by any Guaranteed Creditor from any Guarantor, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or application at any time or
from time to time in reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall,
notwithstanding any such payment (other than any payment made by such Guarantor in respect of the
Borrower Obligations or any payment received or collected from such Guarantor in respect of the
Borrower Obligations), remain liable for the Borrower Obligations up to the maximum liability of
such Guarantor hereunder until the Borrower Obligations are paid in full in cash, no Letter of
Credit is outstanding (except for Letters of Credit secured by cash collateral as permitted in
Section 2.07(a)(iii) of the Credit Agreement) and all of the Aggregate Commitments are terminated.
Section 2.02
Right of Contribution
. Each Guarantor hereby agrees that to the extent
that a Guarantor shall have paid more than its proportionate share of any payment made hereunder,
such Guarantor shall be entitled to seek and receive contribution from and against any other
Guarantor hereunder which has not paid its proportionate share of such payment. Each Guarantors
right of contribution shall be subject to the terms and conditions of Section 2.03. The provisions
of this Section 2.02 shall in no respect limit the obligations and liabilities of any Guarantor to
the Guaranteed Creditors, and each Guarantor shall remain liable to the Guaranteed Creditors for
the full amount guaranteed by such Guarantor hereunder.
Section 2.03
No Subrogation
. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by any Guaranteed Creditor, no
Guarantor shall be entitled to be subrogated to any of the rights of any Guaranteed Creditor
against the Borrower or any other Guarantor or any collateral security or guarantee or right of
offset held by any Guaranteed Creditor for the payment of the Borrower Obligations, nor shall any
Guarantor seek or be entitled to seek any indemnity, exoneration, participation, contribution or
reimbursement from the Borrower or any other Guarantor in respect of payments made by such
Guarantor hereunder, until all amounts owing to the Guaranteed Creditors on account of the Borrower
Obligations are irrevocably and indefeasibly paid in full in cash, no Letter of Credit is
outstanding (except for Letters of Credit secured by cash collateral as permitted in Section
2.07(a)(iii) of the Credit Agreement) and all of the Aggregate Commitments are terminated. If any
amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of
the Borrower Obligations shall not have been irrevocably and indefeasibly paid in full in cash, any
Letter of Credit is outstanding (except for Letters of Credit secured by cash collateral as
permitted in Section 2.07(a)(iii) of the Credit Agreement) or any of the Aggregate Commitments are
in effect, such amount shall be held by such Guarantor in trust for the Guaranteed Creditors, and
shall, forthwith upon receipt by such Guarantor, be turned over to the Administrative Agent in the
exact form received by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent,
if required), to be applied against the Borrower Obligations, whether matured or unmatured, in
accordance with Section 10.02(c) of the Credit Agreement.
Section 2.04
Amendments, Etc. with respect to the Borrower Obligations
. Each
Guarantor shall remain obligated hereunder, and such Guarantors obligations hereunder shall not be
released, discharged or otherwise affected, notwithstanding that, without any reservation
Exhibit F
-2
4
of rights against any Guarantor and without notice to, demand upon or further assent by any
Guarantor (which notice, demand and assent requirements are hereby expressly waived by such
Guarantor), (a) any demand for payment of any of the Borrower Obligations made by any Guaranteed
Creditor may be rescinded by such Guaranteed Creditor or otherwise and any of the Borrower
Obligations continued; (b) the Borrower Obligations, the liability of any other Person upon or for
any part thereof or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by, or any indulgence or forbearance in
respect thereof granted by, any Guaranteed Creditor; (c) any Guaranteed Document may be amended,
modified, supplemented or terminated, in whole or in part, as the Guaranteed Creditors may deem
advisable from time to time; (d) any collateral security, guarantee or right of offset at any time
held by any Guaranteed Creditor for the payment of the Borrower Obligations may be sold, exchanged,
waived, surrendered or released; (e) any additional guarantors, makers or endorsers of the Borrower
Obligations may from time to time be obligated on the Borrower Obligations or any additional
security or collateral for the payment and performance of the Borrower Obligations may from time to
time secure the Borrower Obligations; and (f) any other event shall occur which constitutes a
defense or release of sureties generally. No Guaranteed Creditor shall have any obligation to
protect, secure, perfect or insure any Lien at any time held by it as security for the Borrower
Obligations or for the guarantee contained in this ARTICLE II or any Property subject thereto.
Section 2.05
Waivers
. Each Guarantor hereby waives any and all notice of the
creation, renewal, extension or accrual of any of the Borrower Obligations and notice of or proof
of reliance by any Guaranteed Creditor upon the guarantee contained in this ARTICLE II or
acceptance of the guarantee contained in this ARTICLE II; the Borrower Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon the guarantee contained in this ARTICLE II and no
notice of creation of the Borrower Obligations or any extension of credit already or hereafter
contracted by or extended to the Borrower needs to be given to any Guarantor; and all dealings
between the Borrower and any of the Guarantors, on the one hand, and the Guaranteed Creditors, on
the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance
upon the guarantee contained in this ARTICLE II. Each Guarantor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the Borrower or any of
the Guarantors with respect to the Borrower Obligations.
Section 2.06 Guaranty Absolute and Unconditional.
(a) Each Guarantor understands and agrees that the guarantee contained in this ARTICLE II is,
and shall be construed as, a continuing, completed, absolute and unconditional guarantee of
payment, and each Guarantor hereby waives any defense of a surety or guarantor or any other obligor
on any obligations arising in connection with or in respect of any of the following and hereby
agrees that its obligations hereunder shall not be discharged or otherwise affected as a result of,
any of the following:
(i) the invalidity or unenforceability of any Guaranteed Document, any of the Borrower
Obligations or any other collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by any Guaranteed Creditor;
Exhibit F
-2
5
(ii) any defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the Borrower or any
other Person against any Guaranteed Creditor;
(iii) the insolvency, bankruptcy arrangement, reorganization, adjustment, composition,
liquidation, disability, dissolution or lack of power of the Borrower or any other Guarantor
or any other Person at any time liable for the payment of all or part of the Obligations,
including any discharge of, or bar or stay against collecting, any Obligation (or any part
of them or interest therein) in or as a result of such proceeding;
(iv) any sale, lease or transfer of any or all of the assets of the Borrower or any
other Guarantor, or any changes in the shareholders of the Borrower or the Guarantor;
provided that upon any such sale, lease or transfer, such assets shall be released in
accordance with Section 8.12 of the Collateral Agreement.
(v) any change in the corporate existence (including its constitution, laws, rules,
regulations or power), structure or ownership of any Guarantor;
(vi) the fact that any Collateral or Lien contemplated or intended to be given, created
or granted as security for the repayment of the Obligations shall not be properly perfected
or created, or shall prove to be unenforceable or subordinate to any other Lien, it being
recognized and agreed by each of the Guarantors that it is not entering into this Agreement
in reliance on, or in contemplation of the benefits of, the validity, enforceability,
collectability or value of any of the Collateral for the Obligations;
(vii) the absence of any attempt to collect the Obligations or any part of them from
any Guarantor;
(viii) (A) any Guaranteed Creditors election, in any proceeding instituted under
chapter 11 of the Bankruptcy Code, of the application of Section 1111(b)(2) of the
Bankruptcy Code; (B) any borrowing or grant of a Lien by the Borrower, as
debtor-in-possession, or extension of credit, under Section 364 of the Bankruptcy Code; (C)
the disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of any
Guaranteed Creditors claim (or claims) for repayment of the Obligations; (D) any use of
cash collateral under Section 363 of the Bankruptcy Code; (E) any agreement or stipulation
as to the provision of adequate protection in any bankruptcy proceeding; (F) the avoidance
of any Lien in favor of the Guaranteed Creditors or any of them for any reason; or (G)
failure by any Guaranteed Creditor to file or enforce a claim against the Borrower or the
Borrowers estate in any bankruptcy or insolvency case or proceeding; or
(ix) any other circumstance or act whatsoever, including any action or omission of the
type described in Section 2.04 (with or without notice to or knowledge of the Borrower or
such Guarantor), which constitutes, or might be construed to constitute, an equitable or
legal discharge of the Borrower for the Borrower Obligations, or of such
Guarantor under the guarantee contained in this ARTICLE II, in bankruptcy or in any
other instance.
Exhibit F
-2
6
(b) When making any demand hereunder or otherwise pursuing its rights and remedies hereunder
against any Guarantor, any Guaranteed Creditor may, but shall be under no obligation to, join or
make a similar demand on or otherwise pursue or exhaust such rights and remedies as it may have
against the Borrower, any other Guarantor or any other Person or against any collateral security or
guarantee for the Borrower Obligations or any right of offset with respect thereto, and any failure
by any Guaranteed Creditor to make any such demand, to pursue such other rights or remedies or to
collect any payments from the Borrower, any other Guarantor or any other Person or to realize upon
any such collateral security or guarantee or to exercise any such right of offset, or any release
of the Borrower, any other Guarantor or any other Person or any such collateral security, guarantee
or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and
shall not impair or affect the rights and remedies, whether express, implied or available as a
matter of law, of any Guaranteed Creditor against any Guarantor. For the purposes hereof demand
shall include the commencement and continuance of any legal proceedings.
Section 2.07
Reinstatement
. The guarantee contained in this ARTICLE II shall continue
to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof,
of any of the Borrower Obligations is rescinded or must otherwise be restored or returned by any
Guaranteed Creditor upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any
substantial part of its Property, or otherwise, all as though such payments had not been made.
Section 2.08
Payments
. Each Guarantor hereby guarantees that payments hereunder will
be paid to the Administrative Agent, for the ratable benefit of the Guaranteed Creditors, without
set-off, deduction or counterclaim in dollars, in immediately available funds, at its US Principal
Office.
ARTICLE III
Representations and Warranties
To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower thereunder and to
induce the Lenders (and their Affiliates) to enter into Hedging Agreements with the Borrower and
its Restricted Subsidiaries, each Guarantor hereby represents and warrants to the Administrative
Agent and each Lender that:
Section 3.01
Representations in Credit Agreement
. In the case of each Guarantor, the
representations and warranties set forth in Article VII of the Credit Agreement as they relate to
such Guarantor or to the Loan Documents to which such Guarantor is a party are true and correct in
all material respects, provided that each reference in each such representation and warranty to
each Borrowers knowledge, as applicable, shall, for the purposes of this Section 3.01, be deemed
to be a reference to such Guarantors knowledge.
Exhibit F
-2
7
Section 3.02
Benefit to the Guarantor
. Each Borrower is a member of an affiliated
group of companies that includes each Guarantor and each Borrower and the other Guarantors are
engaged in related businesses. Each Guarantor (other than UCLP) is a Restricted Subsidiary of UCLP
and its guaranty and surety obligations pursuant to this Agreement reasonably may be expected to
benefit, directly or indirectly, it; and it has determined that this Agreement is necessary and
convenient to the conduct, promotion and attainment of the business of such Guarantor and each
Borrower.
Section 3.03
Solvency
. Each Guarantor (a) is not insolvent as of the date hereof and
will not be rendered insolvent as a result of this Agreement (after giving effect to Section 2.02),
(b) is not engaged in business or a transaction, or about to engage in a business or a transaction,
for which any Property remaining with it constitute unreasonably small capital, and (c) does not
intend to incur, or believe it will incur, Debt that will be beyond its ability to pay as such Debt
matures.
ARTICLE IV
Covenants
Each Guarantor covenants and agrees with the Administrative Agent and the Lenders that, from
and after the date of this Agreement until the Borrower Obligations shall have been paid in full in
cash, no Letter of Credit shall be outstanding (except for Letters of Credit secured by cash
collateral as permitted in Section 2.07(a)(iii) of the Credit Agreement) and all of the Aggregate
Commitments shall have terminated:
Section 4.01
Covenants in Credit Agreement
. In the case of each Guarantor, such
Guarantor shall take, or shall refrain from taking, as the case may be, each action that is
necessary to be taken or not taken, as the case may be, so that no Default is caused by the failure
to take such action or to refrain from taking such action by such Guarantor or any of its
Restricted Subsidiaries.
ARTICLE V
The Administrative Agent
Section 5.01
Authority of Administrative Agent
. Each Guarantor acknowledges that the
rights and responsibilities of the Administrative Agent under this Agreement with respect to any
action taken by the Administrative Agent or the exercise or non-exercise by the Administrative
Agent of any option, voting right, request, judgment or other right or remedy provided for herein
or resulting or arising out of this Agreement shall, as between the Administrative Agent and the
Guaranteed Creditors, be governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the Administrative Agent and the
Guarantors, the Administrative Agent shall be conclusively presumed to be acting as agent for the
Guaranteed Creditors with full and valid authority so to act or refrain from acting, and no
Guarantor shall be under any obligation, or entitlement, to make any inquiry respecting such
authority.
Exhibit F
-2
8
ARTICLE VI
Subordination of Indebtedness
Section 6.01
Subordination of All Guarantor Claims
. As used herein, the term
Guarantor Claims
shall mean all debts and obligations of the Borrower or any other
Guarantor to any other Guarantor, whether such debts and obligations now exist or are hereafter
incurred or arise, or whether the obligation of the debtor thereon be direct, contingent, primary,
secondary, several, joint and several, or otherwise, and irrespective of whether such debts or
obligations be evidenced by note, contract, open account, or otherwise, and irrespective of the
Person or Persons in whose favor such debts or obligations may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter be acquired by.
After and during the continuation of an Event of Default, no Guarantor shall receive or collect,
directly or indirectly, from any obligor in respect thereof any amount upon the Guarantor Claims.
Section 6.02
Claims in Bankruptcy
. In the event of receivership, bankruptcy,
reorganization, arrangement, debtors relief, or other insolvency proceedings involving any
Guarantor, the Administrative Agent on behalf of the Administrative Agent and the Guaranteed
Creditors shall have the right to prove their claim in any proceeding, so as to establish their
rights hereunder and receive directly from the receiver, trustee or other court custodian,
dividends and payments which would otherwise be payable upon Guarantor Claims. Each Guarantor
hereby assigns such dividends and payments to the Administrative Agent for the benefit of the
Administrative Agent and the Guaranteed Creditors for application against the Borrower Obligations
as provided under Section 10.02(b) of the Credit Agreement. Should any Agent or Guaranteed
Creditor receive, for application upon the Obligations, any such dividend or payment which is
otherwise payable to any Guarantor, and which, as between such Guarantors, shall constitute a
credit upon the Guarantor Claims, then upon payment in full in cash of the Borrower Obligations,
the expiration of all Letters of Credit (except for Letters of Credit secured by cash collateral as
permitted in Section 2.07(a)(iii) of the Credit Agreement) and the termination of all of the
Aggregate Commitments, the intended recipient shall become subrogated to the rights of the
Administrative Agent and the Guaranteed Creditors to the extent that such payments to the
Administrative Agent and the Lenders on the Guarantor Claims have contributed toward the
liquidation of the Obligations, and such subrogation shall be with respect to that proportion of
the Obligations which would have been unpaid if the Administrative Agent and the Guaranteed
Creditors had not received dividends or payments upon the Guarantor Claims.
Section 6.03
Payments Held in Trust
. In the event that notwithstanding Section 6.01
and Section 6.02, any Guarantor should receive any funds, payments, claims or distributions which
is prohibited by such Sections, then it agrees: (a) to hold in trust for the Administrative Agent
and the Guaranteed Creditors an amount equal to the amount of all funds, payments, claims or
distributions so received, and (b) that it shall have absolutely no dominion over the amount of
such funds, payments, claims or distributions except to pay them promptly to the Administrative
Agent, for the benefit of the Guaranteed Creditors; and each Guarantor covenants promptly to pay
the same to the Administrative Agent.
Section 6.04
Liens Subordinate
. Each Guarantor agrees that, until the Borrower
Obligations are paid in full in cash, the expiration of all Letters of Credit (except for Letters
of Credit secured by cash collateral as permitted in Section 2.07(a)(iii) of the Credit Agreement)
Exhibit F
-2
9
and the termination of all of the Aggregate Commitments, any Liens securing payment of the
Guarantor Claims shall be and remain inferior and subordinate to any Liens securing payment of the
Obligations, regardless of whether such encumbrances in favor of such Guarantor, the Administrative
Agent or any Guaranteed Creditor presently exist or are hereafter created or attach. Without the
prior written consent of the Administrative Agent, no Guarantor, during the period in which any of
the Borrower Obligations are outstanding or the Aggregate Commitments are in effect, shall (a)
exercise or enforce any creditors right it may have against any debtor in respect of the Guarantor
Claims, or (b) foreclose, repossess, sequester or otherwise take steps or institute any action or
proceeding (judicial or otherwise, including without limitation the commencement of or joinder in
any liquidation, bankruptcy, rearrangement, debtors relief or insolvency proceeding) to enforce
any Lien held by it.
Section 6.05
Notation of Records
. Upon the request of the Administrative Agent, all
promissory notes and all accounts receivable ledgers or other evidence of the Guarantor Claims
accepted by or held by any Guarantor shall contain a specific written notice thereon that the
indebtedness evidenced thereby is subordinated under the terms of this Agreement.
ARTICLE VII
Miscellaneous
Section 7.01
Waiver
. No failure on the part of the Administrative Agent or any
Guaranteed Creditor to exercise and no delay in exercising, and no course of dealing with respect
to, any right, power, privilege or remedy or any abandonment or discontinuance of steps to enforce
such right, power, privilege or remedy under this Agreement or any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any right, power,
privilege or remedy under this Agreement or any other Loan Document preclude or be construed as a
waiver of any other or further exercise thereof or the exercise of any other right, power,
privilege or remedy. The remedies provided herein are cumulative and not exclusive of any remedies
provided by law or equity.
Section 7.02
Notices
. All notices and other communications provided for herein shall
be given in the manner and subject to the terms of Section 12.01 of the Credit Agreement; provided
that any such notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on
Schedule 1
.
Section 7.03
Amendments in Writing
. None of the terms or provisions of this Agreement
may be waived, amended, supplemented or otherwise modified except in accordance with Section 12.02
of the Credit Agreement.
Section 7.04
Successors and Assigns
. The provisions of this Agreement shall be
binding upon the Guarantors and their successors and assigns and shall inure to the benefit of the
Administrative Agent and the Guaranteed Creditors and their respective successors and assigns;
provided that except as set forth in Section 12.04 of the Credit Agreement, no Guarantor may
assign, transfer or delegate any of its rights or obligations under this Agreement without the
prior written consent of the Administrative Agent and the Lenders, and any such purported
assignment, transfer or delegation shall be null and void.
Exhibit F
-2
10
Section 7.05
Survival; Revival; Reinstatement
.
(a) All covenants, agreements, representations and warranties made by any Guarantor herein and
in the certificates or other instruments delivered in connection with or pursuant to this Agreement
or any other Loan Document to which it is a party shall be considered to have been relied upon by
the Administrative Agent, the other Agents, the Issuing Bank and the Lenders and shall survive the
execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of
Credit, regardless of any investigation made by any such other party or on its behalf and
notwithstanding that the Administrative Agent, the other Agents, the Issuing Bank or any Lender may
have had notice or knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable under the Credit
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the
Aggregate Commitments have not expired or terminated.
(b) To the extent that any payments on the Guarantor Obligations are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor
in possession, receiver or other Person under any bankruptcy law, common law or equitable cause,
then to such extent, the Guarantor Obligations so satisfied shall be revived and continue as if
such payment or proceeds had not been received and the Administrative Agents and the Guaranteed
Creditors Liens, security interests, rights, powers and remedies under this Agreement and each
other Loan Document shall continue in full force and effect. In such event, each Loan Document
shall be automatically reinstated and the Borrower shall take such action as may be reasonably
requested by the Administrative Agent and the Guaranteed Creditors to effect such reinstatement.
Section 7.06
Counterparts; Integration; Effectiveness
.
(a) This Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of which when taken
together shall constitute a single contract.
(b) This Agreement and the other Loan Documents embody the entire agreement and understanding
between the parties and supersede all other agreements and understandings between such parties
relating to the subject matter hereof and thereof. This Agreement and the Loan Documents represent
the final agreement between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral
agreements between the parties.
(c) This Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties hereto, and thereafter
shall be binding upon and inure to the benefit of the parties hereto, the Lenders and their
respective successors and assigns. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this
Agreement.
Exhibit F
-2
11
Section 7.07
Severability
. Any provision of this Agreement or any other Loan Document
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability without affecting the
validity, legality and enforceability of the remaining provisions hereof or thereof; and the
invalidity of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
Section 7.08
Set-Off
. If an Event of Default shall have occurred and be continuing,
each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other obligations (of whatsoever kind,
including, without limitations obligations under Hedging Agreements) at any time owing by such
Lender or Affiliate to or for the credit or the account of any Guarantor against any of and all the
obligations of the Guarantor owed to such Lender now or hereafter existing under this Agreement or
any other Loan Document, irrespective of whether or not such Lender shall have made any demand
under this Agreement or any other Loan Document and although such obligations may be unmatured.
The rights of each Lender under this Section 7.08 are in addition to other rights and remedies
(including other rights of setoff) which such Lender or its Affiliates may have. Notwithstanding
anything to the contrary contained in this Agreement, the Lenders hereby agree that they shall not
set off any funds in any lock boxes whatsoever in connection with this Agreement, except for such
lock boxes which may be established in connection with this Agreement.
Section 7.09
Governing Law; Submission to Jurisdiction
.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF TEXAS.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
SHALL BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES
HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO
JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER
ANOTHER PARTY IN ANY COURT OTHERWISE HAVING JURISDICTION.
(c) EACH GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO SUCH GUARANTOR AT ITS ADDRESS
Exhibit F
-2
12
SET FORTH ON
SCHEDULE 1
HERETO OR AS UPDATED FROM TIME TO TIME, SUCH SERVICE TO BECOME
EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.
(d) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER OR ANY
HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE GUARANTOR IN ANY OTHER JURISDICTION.
(e) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY
SECURITY INSTRUMENT AND FOR ANY COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OF THE ADMINISTRATIVE
AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE SECURITY INSTRUMENTS AND
THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION 7.10.
Section 7.10
Headings
. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and shall not affect
the construction of, or be taken into consideration in interpreting, this Agreement.
Section 7.11
Acknowledgments
. Each Guarantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents to which it is a party;
(b) neither the Administrative Agent nor any Guaranteed Creditor has any fiduciary
relationship with or duty to any Guarantor arising out of or in connection with this Agreement or
any of the other Loan Documents, and the relationship between the Guarantors, on the one hand, and
the Administrative Agent and Guaranteed Creditors, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by
virtue of the transactions contemplated hereby among the Guaranteed Creditors or among the
Guarantors and the Guaranteed Creditors.
(d) Each of the parties hereto specifically agrees that it has a duty to read this Agreement,
the Security Instruments and the other Loan Documents and agrees that it is charged with notice and
knowledge of the terms of this Agreement, the Security Instruments and the
Exhibit F
-2
13
other Loan Documents; that it has in fact read this Agreement, the Security Instruments and
the other Loan Documents and is fully informed and has full notice and knowledge of the terms,
conditions and effects thereof; that it has been represented by independent legal counsel of its
choice throughout the negotiations preceding its execution of this Agreement and the Security
Instruments; and has received the advice of its attorney in entering into this Agreement and the
Security Instruments; and that it recognizes that certain of the terms of this Agreement and the
Security Instruments result in one party assuming the liability inherent in some aspects of the
transaction and relieving the other party of its responsibility for such liability.
EACH PARTY
HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY
EXCULPATORY PROVISION OF THIS AGREEMENT AND THE SECURITY INSTRUMENTS ON THE BASIS THAT THE PARTY
HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT CONSPICUOUS.
Section 7.12
Additional Guarantors
. Each Significant Domestic Subsidiary of UCLP that
is required to become a party to this Agreement pursuant to Section 8.07 of the Credit Agreement
shall become an Guarantor for all purposes of this Agreement upon execution and delivery by such
Subsidiary of an Assumption Agreement in the form of
Annex I
hereto and shall thereafter
have the same rights, benefits and obligations as an Guarantor party hereto on the date hereof.
Section 7.13
Acceptance
. Each Guarantor hereby expressly waives notice of acceptance
of this Agreement, acceptance on the part of the Administrative Agent and the Guaranteed Creditors
being conclusively presumed by their request for this Agreement and delivery of the same to the
Administrative Agent
Section 7.14
No General Partners Liability
. The Lenders agree that no claim arising
against either the Borrower, UCLP or any Guarantor under this Agreement shall be asserted against
the General Partner (in its individual capacity) and no judgment, order or execution entered in any
suit, action or proceeding, whether legal or equitable, on this Agreement or any of the other Loan
Documents shall be obtained or enforced against the General Partner (in its individual capacity) or
its assets for the purpose of obtaining satisfaction and payment of the Indebtedness or any claims
arising under this Agreement or any other Loan Document, any right to proceed against the General
Partner individually or its respective assets being hereby expressly waived by the Lenders.
Nothing in this Section 7.14, however, shall be construed so as to prevent the Administrative Agent
or any Lender from commencing any action, suit or proceeding with respect to or causing legal
papers to be served upon the General Partner for the purpose of (i) obtaining jurisdiction over the
Borrower, UCLP or any other Guarantor or (ii) obtaining judgment, order or execution against the
General Partner arising out of any fraud or intentional misrepresentation by the General Partner in
connection with the Loan Documents or of recovery of moneys received by the General Partner in
violation of the terms of this Agreement.
Exhibit F
-2
14
IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty Agreement to be duly executed
and delivered as of the date first above written.
|
|
|
|
|
BORROWER:
|
UC OPERATING PARTNERSHIP, L.P.
|
|
|
By:
|
UCLP OLP GP LLC
,
|
|
|
|
its general partner
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
GUARANTORS:
|
[ ]
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
Exhibit F
-2
15
Acknowledged and Agreed to as
of the date hereof by:
|
|
|
|
|
ADMINISTRATIVE AGENT:
|
WACHOVIA BANK, NATIONAL ASSOCATION
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
Exhibit F
-2
16
Annex I
Assumption Agreement
ASSUMPTION AGREEMENT, dated as of [
],
200[
], made by [
],
a [
]
(the
Additional Guarantor
), in favor of Wachovia Bank, National
Association, as administrative agent (in such capacity, the
Administrative Agent
) for the
financial institutions (the
Lenders
) parties to the Credit Agreement referred to below.
All capitalized terms not defined herein shall have the meaning ascribed to them in such Credit
Agreement.
W I T N E S S E T H:
WHEREAS, UC Operating Partnership, L.P., a Delaware limited partnership (the
Borrower
),
Universal Compression Partners, L.P., a Delaware limited partnership (the
Guarantor
),
the Administrative Agent, Deutsche Bank Trust Company Americas, as Syndication Agent, Wachovia
Capital Markets, LLC and Deutsche Bank Securities Inc., as the Joint Lead Arrangers and Joint Lead
Book Runners, and each of the other Agents and Lenders party thereto have entered into a Credit
Agreement, dated as of October 20, 2006 (as amended, supplemented or otherwise modified from time
to time, the
Credit Agreement
);
WHEREAS, in connection with the Credit Agreement, the Borrower and certain of its Affiliates (other
than the Additional Guarantor) have entered into the Guaranty Agreement, dated as of October 20,
2006 (as amended, supplemented or otherwise modified from time to time, the
Guaranty
Agreement
) in favor of the Administrative Agent for the benefit of the Guaranteed Creditors;
WHEREAS, the Credit Agreement requires the Additional Guarantor to become a party to the Guaranty
Agreement; and
WHEREAS, the Additional Guarantor has agreed to execute and deliver this Assumption Agreement in
order to become a party to the Guaranty Agreement;
NOW, THEREFORE, IT IS AGREED:
1.
Guaranty Agreement
. By executing and delivering this Assumption Agreement, the
Additional Guarantor, as provided in Section 7.13 of the Guaranty Agreement, hereby becomes a party
to the Guaranty Agreement as an Guarantor thereunder with the same force and effect as if
originally named therein as an Guarantor and, without limiting the generality of the foregoing,
hereby expressly assumes all obligations and liabilities of an Guarantor thereunder. The
information set forth in Annex 1-A hereto is hereby added to the information set forth in Schedule
1 to the Guaranty Agreement. The Additional Guarantor hereby represents and warrants that each of
the representations and warranties contained in Article III of the Guaranty Agreement is true and
correct on and as the date hereof (after giving effect to this Assumption Agreement) as if made on
and as of such date.
Exhibit F
-2
17
2.
Governing Law
. This Assumption Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas.
IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed and
delivered as of the date first above written.
|
|
|
|
|
|
[ADDITIONAL GUARANTOR]
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
Exhibit F
-2
18
Schedule 1
NOTICE ADDRESSES OF GUARANTORS
[Name of Guarantor]
[Address]
[Name of Guarantor]
[Address]
Exhibit F
-2
19
EXHIBIT G-1
FORM OF COMMITMENT INCREASE CERTIFICATE
[ ], 200[ ]
|
|
|
To:
|
|
Wachovia Bank, National Association,
as Administrative Agent
|
The Borrower, Universal Compression Partners, L.P., a Delaware limited partnership, the
Administrative Agent and the other Agents and certain Lenders have heretofore entered into a Senior
Secured Credit Agreement dated as of October 20, 2006 (as the same may be amended or supplemented
from time to time, the
Credit Agreement
). Capitalized terms not otherwise defined herein
shall have the meaning given to such terms in the Credit Agreement.
This Maximum Credit Amount Increase Certificate is being delivered pursuant to Section 2.06(b)
of the Credit Agreement.
Please be advised that the undersigned has agreed (a) to increase its Revolving Commitment
under the Credit Agreement effective [ ], 200[ ] from $[ ] to $[ ]
and (b) that it shall continue to be a party in all respect to the Credit Agreement and the other
Loan Documents.
|
|
|
|
|
|
|
|
|
|
|
Very truly yours,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UC OPERATING PARTNERSHIP, L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
UCLP OLP GP LLC, its general partner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit G
-1 1
|
|
|
|
|
Accepted and Agreed:
|
|
|
|
|
|
|
|
Wachovia Bank, National Association,
|
as Administrative Agent
|
By:
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accepted and Agreed:
|
|
|
|
|
|
[LENDER]
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
Exhibit G
-1 2
EXHIBIT G-2
FORM OF ADDITIONAL LENDER CERTIFICATE
[ ], 200[ ]
|
|
|
To:
|
|
Wachovia Bank, National Association,
as Administrative Agent
|
The Borrower, Universal Compression Partners, L.P., a Delaware limited partnership, the
Administrative Agent and the other Agents and certain Lenders have heretofore entered into a Senior
Secured Credit Agreement dated as of October 20, 2006 (as the same may be amended or supplemented
from time to time, the
Credit Agreement
). Capitalized terms not otherwise defined herein
shall have the meaning given to such terms in the Credit Agreement.
This Additional Lender Certificate is being delivered pursuant to Section 2.06(b) of the
Credit Agreement.
Please be advised that the undersigned has agreed (a) to become a Lender under the Credit
Agreement effective [ ], 200[ ] with a Revolving Commitment of $[ ] and (b)
that it shall be a party in all respect to the Credit Agreement and the other Loan Documents.
This Additional Lender Certificate is being delivered to the Administrative Agent together
with (i) if the Additional Lender is a Foreign Lender, any documentation required to be delivered
by such Additional Lender pursuant to Section 2.06(b) of the Credit Agreement, duly completed and
executed by the Additional Lender, and (ii) an Administrative Questionnaire in the form supplied by
the Administrative Agent, duly completed by the Additional Lender.
|
|
|
|
|
|
|
|
|
|
|
Very truly yours,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UC OPERATING PARTNERSHIP, L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
UCLP OLP GP LLC, its general partner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit G
-2 1
|
|
|
|
|
Accepted and Agreed:
|
|
|
|
|
|
|
|
Wachovia Bank, National Association,
|
as Administrative Agent
|
|
By:
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accepted and Agreed:
|
|
|
|
|
|
[ADDITIONAL LENDER]
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
Exhibit G
-2 2
Exhibit 10.3
OMNIBUS AGREEMENT
AMONG
UNIVERSAL COMPRESSION HOLDINGS, INC.
UNIVERSAL COMPRESSION, INC.
UCO GP, LLC
UCO GENERAL PARTNER, LP
UNIVERSAL COMPRESSION PARTNERS, L.P.
UCLP OLP GP LLC
AND
UC OPERATING PARTNERSHIP, L.P.
TABLE OF CONTENTS
|
|
|
|
|
ARTICLE I DEFINITIONS
|
|
|
1
|
|
1.1 Definitions
|
|
|
1
|
|
ARTICLE II NON-COMPETITION AND BUSINESS OPPORTUNITIES
|
|
|
9
|
|
2.1 UCH Restricted Business
|
|
|
9
|
|
2.2 Partnership Restricted Business
|
|
|
9
|
|
2.3 Permitted Exceptions
|
|
|
9
|
|
2.4 Restricted Business Procedures
|
|
|
11
|
|
2.5 Scope of the Prohibition
|
|
|
13
|
|
2.6 New Customers
|
|
|
13
|
|
2.7 Enforcement
|
|
|
14
|
|
2.8 Termination
|
|
|
14
|
|
ARTICLE III SERVICES
|
|
|
14
|
|
3.1 Provision, Allocation and Reimbursement for Services
|
|
|
14
|
|
3.2 Limitations on Reimbursement
|
|
|
15
|
|
ARTICLE IV COMPRESSION EQUIPMENT TRANSFERS
|
|
|
16
|
|
4.1 Transfer Mechanics
|
|
|
16
|
|
4.2 Settlement; Appraised Value
|
|
|
18
|
|
4.3 Appraisal
|
|
|
20
|
|
4.4 Like-Kind Exchange Treatment
|
|
|
20
|
|
4.5 Other Sales Permitted
|
|
|
20
|
|
4.6 Termination
|
|
|
20
|
|
4.7 Proration of Ad Valorem Taxes
|
|
|
20
|
|
ARTICLE V NEWLY FABRICATED COMPRESSION EQUIPMENT PURCHASES
|
|
|
20
|
|
ARTICLE VI LICENSE
|
|
|
21
|
|
6.1 Grant of License
|
|
|
21
|
|
6.2 Restrictions on Marks
|
|
|
21
|
|
6.3 Ownership
|
|
|
21
|
|
6.4 Confidentiality
|
|
|
21
|
|
6.5 Estoppel
|
|
|
22
|
|
6.6 Warranties; Disclaimers
|
|
|
22
|
|
6.7 In the Event of Termination
|
|
|
22
|
|
ARTICLE VII INDEMNIFICATION
|
|
|
22
|
|
7.1 Environmental Indemnification
|
|
|
22
|
|
7.2 Additional Indemnification
|
|
|
23
|
|
7.3 Limitations Regarding Indemnification
|
|
|
24
|
|
7.4 Indemnification Procedures
|
|
|
24
|
|
ARTICLE VIII MISCELLANEOUS
|
|
|
26
|
|
8.1 Choice of Law; Submission to Jurisdiction
|
|
|
26
|
|
8.2 Notice
|
|
|
26
|
|
8.3 Entire Agreement
|
|
|
26
|
|
8.4 Termination
|
|
|
27
|
|
8.5 Effect of Waiver or Consent
|
|
|
27
|
|
8.6 Amendment or Modification
|
|
|
27
|
|
8.7 Assignment; Third Party Beneficiaries
|
|
|
27
|
|
8.8 Counterparts
|
|
|
27
|
|
|
|
|
|
|
8.9 Severability
|
|
|
27
|
|
8.10 Gender, Parts, Articles and Sections
|
|
|
27
|
|
8.11 Further Assurances
|
|
|
28
|
|
8.12 Withholding or Granting of Consent
|
|
|
28
|
|
8.13 Laws and Regulations
|
|
|
28
|
|
8.14 Negation of Rights of Limited Partners, Assignees and Third Parties
|
|
|
28
|
|
8.15 No Recourse Against Officers or Directors
|
|
|
28
|
|
|
|
|
|
|
EXHIBITS AND SCHEDULES
|
|
|
|
|
|
|
|
|
|
Exhibit A Form Bill of Sale
|
|
|
|
|
Exhibit B Form Compression Equipment Lease Agreement
|
|
|
|
|
|
|
|
|
|
Schedule 1.1 Fixed Margin Percentage
Schedule 3.1(a) Services
|
|
|
|
|
Schedule 3.1(b) Excluded Services
|
|
|
|
|
Schedule 6.1 Marks
|
|
|
|
|
OMNIBUS AGREEMENT
THIS OMNIBUS AGREEMENT is entered into on, and effective as of, the Closing Date (as defined
herein), and is by and among Universal Compression Holdings, Inc., a Delaware corporation (
UCH
),
Universal Compression, Inc., a Texas corporation (
UCI
), UCO GP, LLC, a Delaware limited liability
company (
UCO LLC
), UCO General Partner, L.P., a Delaware limited partnership (the
General
Partner
), Universal Compression Partners, L.P., a Delaware limited partnership (the
Partnership
), UCLP OLP GP LLC, a Delaware limited liability company (
OLP GP
)
, and UC Operating
Partnership, L.P. (the
OLP
). The above-named entities are sometimes referred to in this
Agreement each as a
Party
and collectively as the
Parties
.
RECITALS:
The Parties desire by their execution of this Agreement to evidence their understanding, (i)
as more fully set forth in Article II, with respect to (a) those business opportunities that the
UCH Entities (as defined herein) will not pursue and (b) those business opportunities that the
Partnership Group (as defined herein) will not pursue, (ii) as more fully set forth in Article III,
with respect to certain reimbursement obligations of the Partnership Group, (iii) as more fully set
forth in Articles IV and V, with respect to certain opportunities for the Parties to purchase,
sell, transfer and lease Compression Equipment (as defined herein) among the Parties, and (iv) as
more fully set forth in Article VI, with respect to grants of intellectual property from the
Licensor (as defined herein) to the Licensees (as defined herein).
In consideration of the premises and the covenants, conditions, and agreements contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1
Definitions
(a) Capitalized terms used herein but not defined shall have the meanings given them in the
Partnership Agreement.
(b) As used in this Agreement, the following terms shall have the respective meanings set
forth below:
Acquired Partnership Restricted Business
has the meaning given such term in Section
2.3(g).
Acquired UCH Restricted Business
has the meaning given such term in Section 2.3(h).
Acquiring Party
has the meaning given such term in Section 2.4(a).
Affiliate
has the meaning given to such term in the Partnership Agreement.
Agreement
means this Omnibus Agreement, as it may be amended, modified or
supplemented from time to time in accordance with the terms hereof.
Appraiser
means any of Standard & Poors Corporate Value Consulting, Valuation
Research Corporation and Marshall and Stevens as selected by UCH, with the consent of the
General Partner, which consent shall not be unreasonably withheld, or any other appraiser
that is independent with respect to the UCH Entities and the Partnership Entities and their
respective affiliates within the meaning of the code of professional ethics of the American
Society of Appraisers as selected by mutual consent of UCH and the General Partner.
Appraisal
means an appraisal of Compression Equipment prepared by an Appraiser in
conformity with, and subject to, the requirements of the code of professional ethics and
standards of professional conduct of the American Society of Appraisers. The Appraisal
shall specify value based upon the cost or income approach or a combination thereof for the
Compression Equipment appraised.
Appraised Value
means an amount equal to (A) either (i) the most recent Appraisal
with respect to a particular piece of Compression Equipment owned by the DCCSB or the
Partnership Group at the time of the Appraisal or (ii) with respect to a particular piece
of Compression Equipment for which an Appraisal has not been conducted, the Appraised Value
of substantially similar Compression Equipment, plus (B) any costs incurred by the
Transferor pursuant to Section 4.1(a)(iv) to the extent such costs include overhauls,
modifications or retrofittings that are not reflected in the value assigned to the
Compression Equipment pursuant to clause (A) above.
Average Horsepower
means, with respect to a particular fiscal quarter, the quotient
of (i) the sum of the aggregate amount of Compression Equipment horsepower owned or leased
by the Partnership Group that was working and not idle on the last day of the month
immediately preceding such quarter and on the last day of each of the three months during
such quarter, divided by (ii) four.
Billed Party
has the meaning set forth in Section 4.7.
Business Day
means any day other than a Saturday, a Sunday or a day on which banking
institutions in Houston, Texas are authorized or are obligated by law, executive order or
governmental decree to be closed.
CCSB
means the DCCSB and the international contract compression services business of
the UCH Entities, collectively.
Change of Control
means, with respect to any Person (the
Applicable Person
), any of
the following events: (i) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the Applicable Persons
assets to any other Person, unless immediately following such sale, lease, exchange or other
transfer such assets are owned, directly or indirectly, by the Applicable Person; (ii) the
dissolution or liquidation of the Applicable Person; (iii) the
2
consolidation or merger of the Applicable Person with or into another Person, other
than any such transaction where (a) the outstanding Voting Securities of the Applicable
Person are changed into or exchanged for Voting Securities of the surviving Person or its
parent and (b) the holders of the Voting Securities of the Applicable Person immediately
prior to such transaction own, directly or indirectly, not less than a majority of the
outstanding Voting Securities of the surviving Person or its parent immediately after such
transaction; and (iv) a person or group (within the meaning of Sections 13(d) or
14(d)(2) of the Exchange Act) being or becoming the beneficial owner (as defined in Rules
13d-3 and 13d-5 under the Exchange Act) of more than 50% of all of the then outstanding
Voting Securities of the Applicable Person, except in a merger or consolidation which would
not constitute a Change of Control under clause (iii) above.
Closing Date
means the date of the closing of the initial public offering of Common
Units.
Code
means the Internal Revenue Code of 1986, as amended.
Common Unit
has the meaning given such term in the Partnership Agreement.
Compression Equipment
means natural gas compressor units, together with any tangible
components thereof, all related appliances, parts, accessories, appurtenances, accessions,
additions, improvements and replacements thereto, all other equipment or components of any
nature from time to time incorporated or installed therein and all substitutions for any of
the foregoing.
Competitive Services
means the provision by a Person of natural gas contract
compression services to a third-party customer whether pursuant to the Form Compression
Services Agreement or any other compression services agreement, a lease arrangement pursuant
to which such Person leases Compression Equipment to a third-party customer and is required
to provide other compression services to such customer (whether as part of one agreement or
pursuant to a lease agreement and related services agreement) or otherwise;
provided
,
however
, that, for the avoidance of doubt, Competitive Services do not include the
fabrication of Compression Equipment by such Person, the sale by such Person of Compression
Equipment to a third-party customer, the sale by such Person of materials, parts or
equipment that are components of or used in the operation of Compression Equipment, the
leasing by such Person of Compression Equipment without the provision of any related
services or the operation, maintenance, service, repair or overhaul by such Person of
Compression Equipment owned by a third party customer.
Conflicts Committee
has the meaning given such term in the Partnership Agreement.
Contribution Agreement
means that certain Contribution, Conveyance and Assumption
Agreement, dated as of the Closing Date, among UCI, UCO LLC, the General Partner, the
Partnership and the other parties named thereto, together with the
3
additional conveyance documents and instruments contemplated or referenced thereunder,
as such may be amended, supplemented or restated from time to time.
Conversion Condition
has the meaning given such term in Section 2.4(b).
Cost of Sales
means any costs incurred of the type included in the Cost of sales
(excluding depreciation expense) line item in the consolidated statement of operations of
the Partnership prepared in accordance with GAAP, as presently applied.
Cost of Sales Limit
has the meaning given such term in Section 3.2(a).
Covered Environmental Losses
is defined in Section 7.1.
DCCSB
means the domestic contract compression services business of the UCH Entities
conducted through UCHs Domestic Contract Compression Segment, excluding the business of the
Partnership Entities.
DCCSB Horsepower
means, with respect to a particular fiscal quarter, the quotient of
(i) the sum of the aggregate amount of Compression Equipment horsepower owned by DCCSB
(excluding units designated for sale only by UCH), regardless of whether such Compression
Equipment is working or idle, on the last day of the month immediately preceding such
quarter and on the last day of each of the three months during such quarter, divided by (ii)
four.
Direct Compression Equipment Costs and Expenses
means those costs and expenses
directly attributable to the transportation, operation, maintenance or repair of any
Compression Equipment owned by the Partnership Group.
Effective Time
has the meaning given such term in Section 4.1(b).
Environmental Laws
means all federal, state, and local laws, statutes, rules,
regulations, orders and ordinances, legally enforceable requirements and rules of common law
relating to protection of the environment including, without limitation, the federal
Comprehensive Environmental Response, Compensation, and Liability Act, the Superfund
Amendments Reauthorization Act, the Resource Conservation and Recovery Act, the Clean Air
Act, the Federal Water Pollution Control Act, the Toxic Substances Control Act, the Oil
Pollution Act, the Safe Drinking Water Act, the Hazardous Materials Transportation Act and
other environmental conservation and protection laws, each as amended through the Closing
Date.
Exchange Act
means the Securities Exchange Act of 1934, as amended.
Fabricated Cost
means the total costs (other than any allocations of general and
administrative expenses) incurred in fabricating a particular item of Compression Equipment,
as determined by the books and records of UCH, prepared in accordance with GAAP
.
4
Fixed Margin Amount
means the amount resulting from the product of (i) the Fabricated
Cost and (ii) the percentage, expressed as a decimal, set forth on
Schedule 1.1
to
this Agreement, which Schedule may be amended from time to time with the approval of the
Conflicts Committee.
Form Bill of Sale
means the form of Bill of Sale attached hereto as Exhibit A.
Form Compression Services Agreement
means the standard form of agreement pursuant to
which members of the Partnership Group provide Competitive Services to Partnership Customers
as of the Closing Date.
Form Lease Agreement
means the form of Compression Equipment Lease Agreement attached
hereto as Exhibit B, which Exhibit may be amended or replaced with a new form of Compression
Equipment Lease Agreement from time to time with the approval of UCH and the Conflicts
Committee.
GAAP
means generally accepted accounting principles in the United States,
consistently applied
General Partner
has the meaning given such term in the introduction to this
Agreement.
Hazardous Substance
means (a) any substance that is designated, defined or classified
as a hazardous waste, hazardous material, pollutant, contaminant or toxic or hazardous
substance, or that is otherwise regulated under any Environmental Law, including, without
limitation, any hazardous substance as such term is defined under the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended, and (b) petroleum,
petroleum products, crude oil, gasoline, fuel oil, motor oil, waste oil, diesel fuel, jet
fuel and other petroleum hydrocarbons whether refined or unrefined and (c) asbestos, whether
in a friable or a non-friable condition, and polychlorinated biphenyls.
Indemnified Party
means either the Partnership Group or UCH, as the case may be, each
in its capacity as a party entitled to indemnification in accordance with Article VII.
Indemnifying Party
means either the Partnership Group or UCH, as the case may be,
each in its capacity as a party from whom indemnification may be required in accordance with
Article VII.
Licensees
means, for purposes of Article VI hereof, the Partnership Entities.
Licensor
means, for purposes of Article VI hereof, UCH or UCI, as applicable.
Liens
means any mortgages, pledges, security interests, liens, charges, claims,
restrictions, easements or other encumbrances of any nature.
5
Limit Period
means the period commencing on the Closing Date and ending on the last
day of the fiscal quarter in which the second anniversary of the Closing Date occurs.
Marks
means all trademarks, trade names, logos and/or service marks identified on
Schedule 6.1
attached hereto, which Schedule may be amended from time to time with
the approval of UCH and the Conflicts Committee.
New Customer
means any Person that is not a UCH Customer or a Partnership Customer
and that informs any of the Parties hereto of a need for Competitive Services.
Non-Qualifying Business
has the meaning given to such term in Section 2.4(b).
Offer
has the meaning given such term in Section 2.4(a).
Offer Period
has the meaning given such term in Section 2.4(b)(ii)(A).
Offered Assets
has the meaning given such term in Section 2.4(a).
Offeree
has the meaning given such term in Section 2.4(a).
OLP
has the meaning given such term in the introduction to this Agreement.
OLP GP
has the meaning given such term in the introduction to this Agreement.
Organizational Documents
means certificates or articles of incorporation, by-laws,
certificates of formation, limited liability company operating agreements, certificates of
limited partnership or limited partnership agreements or other formation or governing
documents of a particular entity.
Other Losses
is defined in 7.2(a).
Partnership
has the meaning given such term in the introduction to this Agreement.
Partnership Agreement
means the First Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as of the Closing Date, as such agreement is in effect
on the Closing Date, to which reference is hereby made for all purposes of this Agreement.
An amendment or modification to the Partnership Agreement subsequent to the Closing Date
shall be given effect for the purposes of this Agreement only if it has received the
approval of the Conflicts Committee that would be required, if any, pursuant to Section 8.6
hereof if such amendment or modification were an amendment or modification of this
Agreement.
Partnership Assets
means the compression services contracts, compression services
customer relationships and Compression Equipment, directly or indirectly
6
conveyed, contributed or otherwise transferred to the Partnership Group as of the
Closing Date pursuant to the Contribution Agreement.
Partnership Customers
means the customers of the Partnership Group as of the Closing
Date, together with any New Customer that enters into an agreement with a member of the
Partnership Group pursuant to which such member of the Partnership Group agrees to provide
Competitive Services to such New Customer. Partnership Customers shall not include any
Released Partnership Customers.
Partnership Entities
means UCO LLC, the General Partner and each member of the
Partnership Group; and
Partnership Entity
means any of the Partnership Entities.
Partnership Group
means the Partnership, the OLP and any Subsidiary of the
Partnership or the OLP.
Partnership Horsepower
means, with respect to a particular fiscal quarter, the
quotient of (i) the sum of the aggregate amount of Compression Equipment horsepower owned or
leased by the Partnership Group, regardless of whether such Compression Equipment is working
or idle, on the last day of the month immediately preceding such quarter and on the last day
of each of the three months during such quarter, divided by (ii) four.
Partnership Restricted Business
has the meaning given such term in Section 2.2.
Party
or
Parties
have the meaning given such terms in the introduction to this
Agreement.
Percentage Interest
means, with respect to a particular fiscal quarter, the value
(expressed as a percentage) obtained by multiplying (i) 100 by (ii) the quotient of (x) the
Partnership Horsepower divided by (y) the Total Domestic Horsepower.
Person
has the meaning given such term in the Partnership Agreement.
Purchase Agreement
has the meaning given such term in Section 2.4(a).
Qualifying Business
has the meaning given such term in Section 2.4(b).
Released Partnership Customers
means those customers of the Partnership Group that
are designated as Released Partnership Customers pursuant to Section 2.3(g).
Released UCH
Customers means those customers of the UCH Entities that are designated
as Released UCH Customers pursuant to Section 2.3(h).
Retained Assets
means the assets and investments owned by UCH and any of its
Affiliates that were not conveyed, contributed or otherwise transferred to the Partnership
Group pursuant to the Contribution Agreement.
7
Services
has the meaning given such term in Section 3.1(a).
Site
means the specific geographic site at which a particular item of Compression
Equipment engaged in Competitive Services is fixed, as further specified by the customer
contract, or any schedule thereto, pursuant to which such Competitive Services are being
provided.
Subsidiary
has the meaning given such term in the Partnership Agreement.
Total Domestic Horsepower
means, with respect to a particular fiscal quarter, the sum
of the DCCSB Horsepower and the Partnership Horsepower.
Transferee
means a transferee of Compression Equipment pursuant to Article IV.
Transferor
means a transferor of Compression Equipment pursuant to Article IV.
UCH
has the meaning given such term in the introduction to this Agreement.
UCH Customers
means the customers of the UCH Entities as of the Closing Date,
together with any New Customer that enters into an agreement with a UCH Entity pursuant to
which such UCH Entity agrees to provide Competitive Services to such New Customer. UCH
Customers shall not include any Released UCH Customers.
UCH Entities
means UCH and any Person (other than the Partnership Entities)
controlled, directly or indirectly, by UCH; and
UCH Entity
means any of the UCH Entities.
UCH Restricted Business
has the meaning given such term in Section 2.1.
UCI
has the meaning given such term in the introduction to this Agreement.
UCO LLC
has the meaning given such term in the introduction to this Agreement.
Voluntary Cleanup Program
means a program of the United States or a state of the
United States enacted pursuant to Environmental Laws which provides for a mechanism for the
written approval of, or authorization to conduct, voluntary remedial action for the
clean-up, removal or remediation of contamination that exceeds actionable levels established
pursuant to Environmental Laws.
Voting Securities
of a Person means securities of any class of such Person entitling
the holders thereof to vote in the election of, or to appoint, members of the board of
directors or other similar governing body of the Person;
provided
, that if such Person is a
limited partnership, Voting Securities of such Person shall be the general partner interest
in such Person.
8
ARTICLE II
NON-COMPETITION AND BUSINESS OPPORTUNITIES
2.1
UCH Restricted Business
. Subject to Section 2.8 and except as permitted by Section 2.3,
each of the UCH Entities shall be prohibited from providing (whether directly or through the
acquisition of or investment in equity or debt securities in any Person) Competitive Services to
any Partnership Customer, in any state or territory of the United States (other than on behalf of a
member of the Partnership Group) (the
UCH Restricted Business
).
2.2
Partnership Restricted Business
. Subject to Section 2.8 and except as permitted by
Section 2.3, each of the Partnership Entities shall be prohibited from providing (whether directly
or through the acquisition of or investment in equity or debt securities in any Person) Competitive
Services to any UCH Customer, in any state or territory of the United States (the
Partnership
Restricted Business
).
2.3
Permitted Exceptions
. Notwithstanding any provision of Sections 2.1 or 2.2 to the
contrary, the Parties may engage in any of the following activities to the extent permitted below:
(a) The UCH Entities may engage in any UCH Restricted Business with the prior written
approval of the Conflicts Committee.
(b) The UCH Entities may own securities of any class of any member of the Partnership
Group.
(c) The Partnership Entities may engage in any Partnership Restricted Business with the
prior written approval of UCH.
(d) The UCH Entities may purchase and own in the aggregate not more than five percent
of any class of securities of any entity engaged in any UCH Restricted Business (but without
otherwise participating in, managing or directing the activities of such entity).
(e) The Partnership Entities may purchase and own in the aggregate not more than five
percent of any class of securities of any entity engaged in any Partnership Restricted
Business (but without otherwise participating, managing or directing the activities of such
entity).
(f) If a Partnership Customer (or that customers applicable business), on the one
hand, and a UCH Customer (or that customers applicable business), on the other hand, merge,
consolidate, amalgamate or are otherwise combined, each of the Partnership Entities and the
UCH Entities may continue to provide Competitive Services to the applicable combined entity
or business. Upon such an occurrence, UCH and the Conflicts Committee shall negotiate in
good faith, if and to the extent determined in the
good faith of UCH and the Conflicts Committee to be necessary, to implement procedures
or such other arrangements to protect the value to each of the Partnership Entities, on the
one hand, and the UCH Entities, on the other hand, of their respective
9
businesses of
providing Competitive Services to each such customer or its applicable business, as
applicable.
(g) The UCH Entities may purchase and own (i) any class of securities in any entity
engaged (in whole or in part) in any UCH Restricted Business or (ii) any business or assets
otherwise engaged or deployed in any UCH Restricted Business;
provided
, (x) in the good
faith judgment of the Board of Directors of UCH, the aggregate value of the UCH Restricted
Business owned by such entity or otherwise to be acquired by the UCH Entities shall be less
than 50% of the aggregate value of the business and assets owned by such entity or otherwise
to be acquired by the UCH Entities and (y) the Partnership Group is offered the opportunity
to acquire the UCH Restricted Business owned by such entity or otherwise acquired by the UCH
Entities (in each case, the
Acquired UCH Restricted Business
) in accordance with Section
2.4. During the pendency of the procedures described in Section 2.4, the UCH Entities shall
be entitled to own and operate the Acquired UCH Restricted Business. In the event that the
General Partner (with the approval of the Conflicts Committee) elects not to purchase such
Acquired UCH Restricted Business whether pursuant to Section 2.4(b)(i) or Section
2.4(b)(ii)(B)(2), the UCH Entities shall be entitled to continue to own and operate the
Acquired UCH Restricted Business and the Competitive Services customers of the Acquired UCH
Restricted Business at the time of the consummation of such acquisition shall no longer be
Partnership Customers for purposes of this Agreement, but rather shall be designated
Released Partnership Customers. Without the prior written approval of the Conflicts
Committee, subject to Section 2.8, the UCH Entities shall be prohibited from providing
(whether directly or through the acquisition of or investment in equity or debt securities
of any Person) Competitive Services to a particular Released Partnership Customer at the
particular Site at which the Partnership Group was providing Competitive Services to such
Released Partnership Customer on the date of the acquisition by the UCH Entities of the
applicable UCH Restricted Business pursuant to which such customer was designated a Released
Partnership Customer.
(h) The Partnership Entities may purchase and own (i) any class of securities in any
entity engaged (in whole or in part) in any Partnership Restricted Business or (ii) any
business or assets otherwise engaged or deployed in any Partnership Restricted Business;
provided
, (i) in the good faith judgment of the Conflicts Committee, the aggregate value of
the Partnership Restricted Business owned by such entity or otherwise to be acquired by the
Partnership Entities shall be less than 50% of the aggregate value of the business and
assets owned by such entity or otherwise to be acquired by the Partnership Entities and (ii)
UCH is offered the opportunity to acquire the Partnership Restricted Business owned by such
entity or otherwise acquired by the Partnership Entities (in each case, the
Acquired
Partnership Restricted Business
) in accordance with Section 2.4. During the pendency of
the procedures described in Section 2.4, the Partnership Entities shall be entitled to own
and operate the Acquired Partnership Restricted Business. In the event that UCH elects not
to purchase such Acquired Partnership Restricted Businesses whether pursuant to Section
2.4(b)(i) or Section 2.4(b)(ii)(B)(2), the Partnership Entities shall be entitled to continue to own and
operate the Acquired Partnership Restricted Business and the Competitive Services customers
of the Acquired Partnership Restricted Business at the time of the consummation of such
10
acquisition shall no longer be UCH Customers for purposes of this Agreement, but rather
shall be designated Released UCH Customers. Without the prior written approval of UCH,
subject to Section 2.8, the members of the Partnership Group shall be prohibited from
providing (whether directly or through the acquisition of or investment in equity or debt
securities of any Person) Competitive Services to a particular Released UCH Customer at the
particular Site at which UCH Entities were providing Competitive Services to such Released
UCH Customer on the date of the acquisition by the Partnership Group of the applicable
Partnership Restricted Business pursuant to which such customer was designated a Released
UCH Customer.
2.4
Restricted Business Procedures.
(a) Within 30 days following the consummation of the acquisition of an Acquired UCH
Restricted Business or an Acquired Partnership Restricted Business by a UCH Entity or a
Partnership Entity, as the case may be (in each such case such Person shall be referred to
as, an
Acquiring Party
), the Acquiring Party shall notify in writing (x) the Partnership,
if the Acquiring Party is a UCH Entity or (y) UCH, if the Acquiring Party is a Partnership
Entity, of such acquisition. The Person that is so notified shall be referred to herein as
the
Offeree
. Such notice shall include an offer (the
Offer
) by the Acquiring Party to
sell the Acquired UCH Restricted Business or the Acquired Partnership Restricted Business,
as the case may be (the
Offered Assets
), to the Offeree, together with a proposed
definitive agreement to effectuate the purchase and sale of the Offered Assets (the
Purchase Agreement
). The Offer shall set forth the Acquiring Partys proposed terms
relating to the sale of the Offered Assets to the Offeree, including the purchase price, any
liabilities to be assumed by the Offeree as part of the Offer and the other terms of the
Offer;
provided
, that the representations and warranties regarding the Offered Assets and
the indemnification provision contained in the Purchase Agreement shall be substantially
consistent with the terms contained in the definitive purchase agreement pursuant to which
the Acquiring Party acquired the Offered Assets or the entity that owned the Offered Assets,
subject to such adjustments that the Acquiring Party reasonably determines are necessary to
reflect the differences in the transaction.
(b) As soon as practicable after the Offer is made, the Acquiring Party will deliver to
the Offeree all information prepared by or on behalf of or in the possession of such
Acquiring Party relating to the Offered Assets and reasonably requested by the Offeree. As
soon as practicable, but in any event, within 60 days after receipt of the notification
called for in Section 2.4(a), the Offeree shall notify the Acquiring Party in writing that
either:
(i) the Offeree (with the concurrence of the Conflicts Committee if the Offeree
is the Partnership) has elected not to purchase (or not to cause any of its
Subsidiaries to purchase) any of such Offered Assets; or
(ii) the Offeree (with the concurrence of the Conflicts Committee if the
Offeree is the Partnership) has elected to purchase (or to cause any of its
Subsidiaries to purchase) all of such Offered Assets;
provided
, that if the Offeree
is the Partnership, and in the opinion of outside counsel to the Partnership
11
Entities, less than 90% of the gross income from the operations of such Offered
Assets consists of qualifying income under Section 7704 of the Code (such portion
of such Offered Assets that does not so qualify being referred to herein as the
Non-Qualifying Business
), then the Partnership (with the concurrence of the
Conflicts Committee) may condition its obligation to purchase the Non-Qualifying
Business (but not the portion of the Offered Assets that do not constitute the
Non-Qualifying Business (the
Qualifying Business
)) on the conversion of the
agreements pursuant to which the Non-Qualifying Business provides Competitive
Services to its customers to agreements substantively similar to the Form
Compression Services Agreement from a federal income tax treatment perspective (from
the Partnerships perspective) and otherwise having substantially the same economic
terms as the agreements being converted (the
Conversion Condition
);
provided
further
, that in such event, each of the UCH Entities and the Partnership Entities
shall use commercially reasonable efforts to satisfy the Conversion Condition as
soon as commercially practicable. If the Offeree elects to purchase the Offered
Assets, the following procedures shall be followed:
A. After the receipt of the Offer by the Offeree, the Acquiring Party
and the Offeree shall negotiate in good faith the fair market value of the
Offered Assets that are subject to the Offer (including the specific fair
market value of any Offered Assets that constitute a Non-Qualifying
Business) and the other terms of the Offer on which the Offered Assets will
be sold to the Offeree. If the Acquiring Party and the Offeree agree (with
the concurrence of the Conflicts Committee) on the fair market value of the
Offered Assets that are subject to the Offer and the other terms of the
Offer during the 30-day period (the
Offer Period
) after receipt by the
Acquiring Party of the Offerees election to purchase (or to cause any
Subsidiary of the Offeree to purchase) the Offered Assets, the Offeree shall
purchase (or cause any of its Subsidiaries to purchase) and the Acquiring
Party shall sell the Offered Assets on such terms as soon as commercially
practicable after such agreement has been reached, which obligation may
require such parties to consummate the purchase and sale of the Qualifying
Business prior to satisfaction of the Conversion Condition.
B. If the Acquiring Party and the Offeree are unable to agree on the
fair market value of the Offered Assets that are subject to the Offer or on
any other terms of the Offer during the Offer Period, the Acquiring Party
and the Offeree will engage an independent investment banking firm prior to
the end of the Offer Period to determine the fair market value of the
Offered Assets (including the specific fair market value of any Offered
Assets that constitute a Non-Qualifying Business) and/or the other terms
on which the Acquiring Party and the Offeree are unable to agree. In
determining the fair market value and other terms on which the Offered
Assets are to be sold, the investment banking firm will have access to the
proposed sale and purchase values and terms for the Offer submitted by
12
the Acquiring Party and the Offeree, respectively, and to all information
prepared by or on behalf of the Acquiring Party relating to the Offered
Assets and reasonably requested by the investment banking firm. In
determining the terms on which the Offered Assets are to be sold (other than
the fair market value of the Offered Assets), the investment banking firm
shall give substantial weight to the terms contained in the definitive
purchase agreement pursuant to which the Acquiring Party acquired the
Offered Assets or the entity that owned the Offered Assets. Such investment
banking firm will determine the fair market value of the Offered Assets
and/or the other terms on which the Acquiring Party and the Offeree are
unable to agree within 60 days of its engagement and furnish the Acquiring
Party and the Offeree its determination. The fees and expenses of the
investment banking firm will be divided equally between the Acquiring Party
and the Offeree. Upon receipt of such determination, the Offeree will have
the option, but not the obligation, to (with the concurrence of the
Conflicts Committee if the Offeree is the Partnership):
1. purchase the Offered Assets on such terms as determined
above; or
2. elect not to purchase such Offered Assets.
If the Offeree elects to so purchase the Offered Assets, the Offeree shall
purchase (or cause any of its Subsidiaries to purchase) and the Acquiring
Party shall sell the Offered Assets on such terms as soon as commercially
practicable after such agreement has been reached, which obligation may
require such parties to consummate the purchase and sale of the Qualifying
Business prior to satisfaction of the Conversion Condition.
2.5
Scope of the Prohibition
. Except as provided in this Article II, each of the Parties
shall be free to engage (whether directly or through the acquisition of or investment in equity or
debt interests in any Person) in any business activity whatsoever, including those that may be in
direct competition with any of the other Parties.
2.6
New Customers
. The Parties agree that any offer by any of the Parties hereto to provide
Competitive Services to New Customers in any state or territory of the United States shall be first
made on behalf of the Partnership Entities and shall include an offer to provide such Competitive
Services under an agreement substantially in the form of the Form Compression Services Agreement.
If the New Customer is unwilling to enter into an agreement with a Partnership Entity that is substantively similar to the
Form Compression Services Agreement from a federal income tax treatment perspective (from the Partnerships perspective), a UCH
Entity may enter into an agreement to provide Competitive Services to such New Customer for its own account provided that any
agreement between such UCH Entity and such New Customer is not substantively similar to the Form Compression Services Agreement
from a federal income tax treatment perspective (from the Partnerships perspective). If a New Customer enters into an agreement
with a member of the Partnership Group for Competitive Services, then such New
13
Customer will then constitute a
Partnership Customer for the purposes of this Agreement and if, in accordance with this Section
2.6, a New Customer enters into an agreement with a UCH Entity for Competitive Services, then such
New Customer will then constitute a UCH Customer for the purposes of this Agreement.
2.7
Enforcement
. Each Party agrees and acknowledges that the other Parties hereto do not have
an adequate remedy at law for the breach by such Party of the covenants and agreements set forth in
this Article II, and that any breach by such Party of the covenants and agreements set forth in
this Article II would result in irreparable harm to the other Parties hereto. Each Party further
agrees and acknowledges that the other Parties hereto may, in addition to the other remedies that
may be available to the other Parties hereto, file a suit in equity to enjoin such Party from such
breach, and consents to the issuance of injunctive relief under this Agreement.
2.8
Termination
. Unless this Agreement has otherwise terminated pursuant to Section 8.4, this
Article II shall terminate on the third anniversary of the Closing Date. In addition, unless this
Agreement has otherwise been terminated pursuant to Section 8.4 or this Article II has otherwise
been terminated pursuant to the first sentence of this Section 2.8, Sections 2.1, 2.2, 2.3, 2.4 and
2.6 shall terminate upon a Change of Control of UCH. Unless this Agreement has otherwise
terminated pursuant to Section 8.4 or this Article II has terminated pursuant to the first sentence
of this Section 2.8, and in the event that Sections 2.1, 2.2, 2.3, 2.4 and 2.6 terminate pursuant
to the immediately preceding sentence, without the prior written approval of the Conflicts
Committee, the UCH Entities shall be prohibited from providing (whether directly or through the
acquisition of or investment in equity or debt securities of any Person) Competitive Services to a
particular Partnership Customer at the particular Site at which the Partnership Group was providing
Competitive Services to such Partnership Customer on the date of the Change of Control of UCH.
ARTICLE III
SERVICES
3.1
Provision, Allocation and Reimbursement for Services
(a) Subject to Article V, the UCH Entities shall, upon the reasonable request of the
General Partner, provide the Partnership Group with all personnel and services
reasonably necessary to run the business of the Partnership Group, which services may
include, without limitation, those services set forth on
Schedule 3.1(a)
(collectively, the
Services
). For the avoidance of doubt, the Services shall not include
the services described on
Schedule 3.1(b)
. These Services shall be substantially
similar in nature to the services of such type previously provided by UCH in connection with
its management and operation of the Partnership Assets during the twelve (12) month period
prior to the Closing Date.
(b) The UCH Entities shall provide the Services to the Partnership Group in a manner
that is in the good faith judgment of UCH commercially reasonable;
provided
,
14
that for so long as the UCH Entities exercise at least the same degree of care, skill and prudence in
providing the Services as customarily exercised by it for its own operation of the DCCSB,
then UCH will be deemed to have provided such Services in a commercially reasonable manner.
EXCEPT AS SET FORTH IN THE PRECEDING SENTENCE, THE UCH ENTITIES MAKE NO (AND HEREBY DISCLAIM
AND NEGATE ANY AND ALL) WARRANTIES OR REPRESENTATIONS WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE SERVICES. IN NO EVENT SHALL ANY UCH ENTITY OR ANY OF THEIR AFFILIATES BE
LIABLE TO ANY MEMBER OF THE PARTNERSHIP GROUP OR TO ANY OTHER PERSON FOR ANY EXEMPLARY,
PUNITIVE, INDIRECT, INCIDENTAL, CONSEQUENTIAL, OR SPECIAL DAMAGES RESULTING FROM ANY ERROR
IN THE PERFORMANCE OF THE SERVICES, REGARDLESS OF WHETHER THE PERSON PROVIDING SUCH
SERVICES, ITS AFFILIATES, OR OTHERS MAY BE WHOLLY, CONCURRENTLY, PARTIALLY, OR SOLELY
NEGLIGENT OR OTHERWISE AT FAULT.
(c) Any Direct Compression Equipment Costs and Expenses that are incurred by any UCH
Entity in connection with providing the Services shall be allocated to the Partnership at
the actual cost to the applicable UCH Entity providing such Services.
(d) The General Partner shall be entitled to allocate to the Partnership any costs and
expenses (other than Direct Compression Equipment Costs and Expenses) incurred by any UCH
Entity in connection with providing the Services on any reasonable basis determined by the
General Partner. In the event that such Services are associated with UCHs operation of
both of the businesses of the DCCSB and the Partnership Group, including, without
limitation, general and administrative functions, such reasonable basis may include, at the
election of the General Partner, allocating a portion of such costs and expenses incurred
during a particular period to the Partnership on a pro rata basis based on the Partnership
Groups Percentage Interest.
(e) Subject to Section 3.2, the Partnership Group hereby agrees to reimburse the UCH
Entities for all costs and expenses allocated to the Partnership Group in accordance with
the manners set forth in Sections 3.1(c) and (d).
3.2
Limitations on Reimbursement.
(a) Notwithstanding Section 3.1, the amount that the UCH Entities are entitled to
receive from the Partnership Group pursuant to Section 3.1 for selling, general and
administrative costs during any particular quarter during the Limit Period shall not exceed
$2.5 million (the
SG&A Limit
);
provided
, that with respect to the period commencing on the
Closing Date and ending on December 31, 2006, it means the product of $2.5 million
multiplied by a fraction of which the numerator is the number of days in such period and of
which the denominator is 92. The SG&A Limit shall be reduced by any selling, general and
administrative costs incurred directly by the Partnership Group during the applicable
period. In the event that during the Limit Period the Partnership Group makes any
acquisitions of assets or businesses or the business of the Partnership Group otherwise
expands after the Closing Date, then the Parties shall
15
negotiate in good faith any
appropriate increase in the SG&A Limit in order to account for any adjustments in the nature
and extent of the selling, general and administrative services provided by the UCH Entities
to the Partnership Group, with any such increase in the SG&A Limit subject to the approval
of the Conflicts Committee.
(b) Notwithstanding Section 3.1, the amount that the UCH Entities are entitled to
receive from the Partnership Group pursuant to Section 3.1 for Cost of Sales during any
particular quarter during the Limit Period shall not exceed $16.95 times the Average
Horsepower of the Partnership Group during such quarter (the
Cost of Sales Limit
). The
Cost of Sales Limit shall be reduced by any Cost of Sales incurred directly by the
Partnership Group during the applicable period. In the event that during the Limit Period
the Partnership Group makes any acquisitions of assets or businesses or the business of the
Partnership Group otherwise expands after the Closing Date, then the Parties shall negotiate
in good faith any appropriate increase in the Cost of Sales Limit in order to account for
any adjustments in the Cost of Sales of the Partnership Group (on a per horsepower basis) as
a result of such acquisition or expansion, with any such increase in the Cost of Sales Limit
subject to the approval of the Conflicts Committee.
ARTICLE IV
COMPRESSION EQUIPMENT TRANSFERS
4.1
Transfer Mechanics
(a) In the event that UCH determines in good faith that there exists a need on the part
of the CCSB or on the part of the Partnership Group to transfer Compression Equipment
between the UCH Entities, on the one hand, and the Partnership Group, on the other hand, to
meet the compression services obligations of either of the CCSB or the Partnership Group,
such Compression Equipment shall be so transferred (or, to the extent provided in Section
4.2, leased), at the election of UCH, from a member of the UCH Entities to a member of the
Partnership Group, or from a member of the Partnership Group to a member of the UCH
Entities, as the case may be;
provided
, that all of the following conditions are satisfied
with respect to such transfer or lease (each such transfer or lease for the purposes of this
Article IV, unless set forth otherwise, a
transfer
) at the Effective Time (as defined
below) of such transfer:
(i) Except as provided in Section 4.2 in respect of Compression Equipment that
is leased, such transfer will constitute a valid and absolute transfer (each such
transfer, as the case may be, constituting a true sale for bankruptcy law
purposes) of all right, title and interest of the Transferor in, to and under the
transferred Compression Equipment, free and clear of any Liens except for any Liens
created by the Transferee;
(ii) Such transfer will not conflict with any of the terms and provisions of,
result in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, the organizational
documents of the Transferor or the Transferee, or any material term of any
indenture, agreement, mortgage, deed of trust, derivative instrument or other
16
instrument to which the Transferor or Transferee or any of their respective
subsidiaries is a party or by which either of them is bound, or result in the
creation or imposition of any Lien upon any of their respective properties pursuant
to the terms of any such indenture, agreement, mortgage, deed of trust, derivative
instrument or other instrument, or violate any law or any order, rule, or regulation
applicable to the Transferor or Transferee or any of their respective subsidiaries
of any court or of any federal or state regulatory body, administrative agency, or
other governmental authority having jurisdiction over either of them or any of their
respective properties;
(iii) Except as otherwise provided in this Article IV, such transfer will not
cause any member of the Partnership Group to suffer a loss of revenue under any
existing customer contract for Competitive Services or to incur any material
liabilities not reimbursed by the UCH Entities; and
(iv) The Compression Equipment will be transferred in a condition appropriate
for the Transferees anticipated commercial use of such Compression Equipment;
provided
, that such anticipated commercial use shall be consistent with such
equipments historical use;
provided further
, that (A) any repairs or modifications,
or any costs associated therewith, required to make such Compression Equipment
appropriate for the Transferees anticipated commercial use of such Compression
Equipment shall be the obligation of the Transferor and (B) the Transferee shall
have communicated its anticipated commercial use of such Compression Equipment to
the Transferor at least ten (10) Business Days prior to the anticipated date of such
transfer, failing which, the Transferor may transfer the Compression Equipment in
its then current condition.
In connection with each proposed transfer, each of the Transferee and the Transferor will
use their respective commercially reasonable efforts to cause the conditions set forth above
to be satisfied as of the Effective Time (as defined below).
(b) All transfers of Compression Equipment pursuant to this Section 4.1 shall be deemed
to take place at 12:01 a.m. on the date of transfer (the
Effective Time
) and shall include
all of the following assets, rights and properties of the Transferor with respect to such
transferred Compression Equipment;
provided
, that with respect to
transfers that are effected under a lease pursuant to Section 4.2, the following
assets, rights and properties shall be so transferred to the extent provided for in, and not
inconsistent with, the relevant lease agreement, and except as provided below:
(i) All Transferor-owned appliances, parts, instruments, machinery, accessories
and other equipment attached or installed thereto;
(ii) The rights of the Transferor under all permits relating exclusively to
such Compression Equipment, to the extent that such permits are transferable and the
transfer of which is authorized or consented to by any third parties required to
make such transfer effective as to third parties;
17
(iii) Except in the case of a lease, all warranties and guarantees, if any,
express or implied, existing for the benefit of the Transferor in connection with
such Compression Equipment to the extent assignable;
(iv) Except in the case of a lease, any fuels, lubricants and maintenance
supplies exclusively related to such Compression Equipment;
(v) Except in the case of a lease, all vendor information, catalogs, technical
information, specifications, designs, drawings and maintenance records related to
such Compression Equipment and to which the Transferor has ready access without
undue effort; and
(vi) Except in the case of a lease, all rights, claims or choses in action of
the Transferor against any Person relating exclusively to such Compression
Equipment.
(c) Except as provided in Section 4.2 in respect of Compression Equipment that is
leased, on the date of any transfer of Compression Equipment, the Transferor shall deliver
or cause to be delivered to the Transferee the following:
(i) A general conveyance or bill of sale in the form of the Form Bill of Sale
transferring to Transferee, as of the Effective Time, good, marketable and
indefeasible title to all of the tangible personal property contemplated by Section
4.2(b) and included in the transferred Compression Equipment, free and clear of any
Liens, except for any Liens created by the Transferee;
(ii) All appropriate documents for the assignment as of the Effective Time of
the Transferors rights under the permits referred to in Section 4.1(b)(ii),
together with all consents of third parties required to make such assignments
effective as to such third parties; and
(iii) Such other instruments of transfer and assignment in respect of the
transferred Compression Equipment as the Transferee shall reasonably require and as
shall be consistent with the terms and provisions of this Agreement.
4.2
Settlement; Appraised Value
(a) Prior to the Effective Time of any transfer pursuant to Section 4.1, the
Partnership Group and UCH will determine the aggregate Appraised Value of the Compression
Equipment to be so transferred.
(b) In consideration for such transfer, the Transferee, at its discretion (subject to
the
provisos
of Sections 4.2(b)(ii) and (ii) and subject to Sections 4.2(b) and (c)), shall
take any one or more of the following actions prior to or contemporaneously with the
Effective Time of such transfer:
(i) Transfer Compression Equipment to the Transferor of equal or greater
Appraised Value than the Appraised Value of the Compression Equipment
18
to be transferred to the Transferee pursuant to Section 4.1 (
provided
, that if such
Compression Equipment is of greater Appraised Value than the Appraised Value of the
Compression Equipment to be transferred to the Transferee pursuant to Section 4.1,
such excess Appraised Value shall be deemed to be a transfer of Compression
Equipment with a value equal to such excess Appraised Value and Transferor shall be
required to take one or more of the actions contemplated by this Section 4.2(b) in
consideration for such excess Appraised Value) in accordance with this Article IV;
(ii) Execute and deliver a lease agreement substantially in the form of the
Form Lease Agreement pursuant to which the Transferee agrees to lease from the
Transferor the Compression Equipment to be transferred to the Transferee pursuant to
Section 4.1, which lease agreement shall be counter-signed by the Transferor
(
provided
,
however
, that the ability of the Transferee to execute and deliver such a
lease may be limited in the sole discretion of UCH, to the extent that a UCH Entity
is the Transferor, or in the sole discretion of the Conflicts Committee, to the
extent that a member of the Partnership Group is the Transferor); or
(iii) Deliver to the Transferor cash (or an obligation to make payment in cash
no later than the end of the fiscal quarter in which the transfer is effected) in
the amount of the aggregate Appraised Value of the Compression Equipment to be
transferred to the Transferee pursuant to Section 4.1 (
provided
,
however
, that the
ability of the Transferee to make such a payment may be limited in the sole
discretion of UCH, to the extent that a UCH Entity is the Transferor, or in the sole
discretion of the Conflicts Committee, to the extent that a member of the
Partnership Group is the Transferor).
(c) In the event that the Transferee cannot through the use of its commercially
reasonable efforts provide adequate consideration to the Transferor for Compression
Equipment to be transferred in any of the manners set forth in Section 4.2(b), then no such
transfer pursuant to the terms of this Article IV shall occur.
(d) Notwithstanding Section 4.2(b), if the Transferor is a member of the Partnership
Group, the Transferee shall not be entitled to take the actions contemplated by Section
4.2(b)(ii) if such action would cause the Partnership to be treated as an association
taxable as a corporation or otherwise to be taxed as an entity for federal income tax
purposes. In such event, if compliance by UCH with Sections 4.2(i) or (iii) is not
commercially practicable, the Partnership and UCH shall negotiate in good faith to reach
agreement on another manner in which to reimburse the Partnership for such Compression
Equipment;
provided
, that the final terms of such reimbursement shall be approved by the
Conflicts Committee.
19
4.3
Appraisal
. UCH shall, at its sole cost and expense, cause an Appraisal of all Compression
Equipment then owned by the CCSB and the Partnership Group to be conducted and prepared (i) no
later than the end of the fiscal quarter in which the second anniversary of the Closing Date occurs
and (ii) no less frequently than every two years thereafter.
4.4
Like-Kind Exchange Treatment
. Each Party agrees to cooperate to the extent reasonably
necessary to allow the other, if the other so desires, to treat the transactions contemplated by
Section 4.1(b) as a like-kind exchange under Section 1031 of the Code, and relevant Treasury
regulations and/or under relevant state law provisions, if any. Any Party seeking such treatment
acknowledges that it has consulted or will consult with independent tax counsel regarding the
applicability and benefits/detriments of such treatment and in no way has relied upon any
representations of the other party regarding the same.
4.5
Other Sales Permitted
. Nothing otherwise set forth in this Article IV shall be deemed to
preclude any of the UCH Entities and any member of the Partnership Group from negotiating or
consummating at any time the purchase and sale of newly fabricated Compression Equipment, existing
Compression Equipment or all or any part of the DCCSB;
provided
,
however
, that such negotiations or
purchase and sale shall be conducted pursuant to the terms and procedures then mutually agreed upon
by UCH and the General Partner or the Conflicts Committee, as applicable.
4.6
Termination
. Unless this Agreement has otherwise terminated pursuant to Section 8.4, this
Article IV shall terminate on the first to occur of the following: (i) the third anniversary of
the Closing Date and (iii) a Change of Control of UCH.
4.7
Proration of Ad Valorem Taxes
. Ad valorem taxes relating to the ownership of Compression
Equipment transferred pursuant to Section 4.1 shall be prorated on a daily basis between the UCH
Entities and the Partnership Group with the UCH Entities and the Partnership Group responsible for
the prorated
portion of such taxes for the period of their respective ownership of such transferred
Compression Equipment. As between the UCH Entities and the Partnership Group, the party that
receives the ad valorem tax billing (the
Billed Party
) shall provide a copy of such billing to
the other party together with a calculation of the prorated ad valorem taxes owed by each party.
The party that did not receive the ad valorem tax billing shall pay its prorated portion of the ad
valorem taxes to the Billed Party prior to the due date of such taxes and the Billed Party shall be
responsible for the timely payment of the ad valorem taxes to the taxing authorities.
ARTICLE V
NEWLY FABRICATED COMPRESSION EQUIPMENT PURCHASES
The Parties hereby acknowledge that none of the UCH Entities is under any obligation to offer
or sell to any member of the Partnership Group newly fabricated Compression Equipment and no member
of the Partnership Group is under any obligation to purchase from any of the UCH Entities newly
fabricated Compression Equipment;
provided
, that in the event that the General Partner and UCH
mutually agree to enter into, or cause their respective Affiliates to
20
enter into, a purchase and
sale agreement for the purchase and sale of newly fabricated Compression Equipment, (i) such
purchase and sale shall be subject to the standard terms and conditions then utilized by the UCH
Entities for purchases and sales of newly fabricated Compression Equipment and (ii) any member of
the Partnership Group shall be permitted to purchase such Compression Equipment for a price that is
not more than the Fabricated Cost of such Compression Equipment plus the Fixed Margin Amount.
ARTICLE VI
LICENSE
6.1
Grant of License
. Subject to the terms and conditions herein, Licensor hereby grants to
Licensees the right and license to use the Marks solely in connection with the Licensees
businesses and the services performed therewith within the United States during the term of this
Agreement.
6.2
Restrictions on Marks
. In order to ensure the quality of uses under the Marks, and to
protect the goodwill of the Marks, Licensees agree as follows:
(a) Licensees will only use the Marks in formats approved by Licensor and only in
strict association with Licensees businesses and the services performed therewith;
(b) Prior to publishing any new format or appearance of the Marks or any new
advertising or promotional materials that incorporate the Marks, Licensees shall first
provide such format, appearance or materials to Licensor for its approval. If Licensor
does not inform Licensees in writing within fourteen (14) days from the date of the
receipt of such new format, appearance, or materials that such new format, appearance, or
materials is unacceptable, then such new format, appearance or materials shall be deemed to
be acceptable and approved by Licensor. Licensor may withhold approval of any proposed
changes to the format, appearance or materials which Licensees propose to use in Licensors
sole discretion; and
(c) Licensees shall not use any other trademarks, service marks, trade names or logos
in connection with the Marks.
6.3
Ownership.
Licensor shall own all right, title and interest, including all goodwill
relating thereto, in and to the Marks, and all trademark rights embodied therein shall at all times
be solely vested in Licensor. Licensees have no right, title, interest or claim of ownership in the
Marks, except for the licenses granted in this Agreement. All use of the Marks shall inure to the
benefit of Licensor. Licensees agree that they will not attack the title of Licensor in and to the
Marks.
6.4
Confidentiality
. The Licensees shall maintain in strictest confidence all confidential or
nonpublic information or material disclosed by Licensor and in the materials supplied hereunder in
connection with the license of the Marks, whether in writing or orally and whether or not marked as
confidential. Such confidential information includes, but is not limited to, algorithms,
inventions, ideas, processes, computer system architecture and design, operator interfaces,
operational systems, technical information, technical specifications, training and
21
instruction
manuals, and the like. In furtherance of the foregoing confidentiality obligation, Licensees shall
limit disclosure of such confidential information to those of their employees, contractors or
agents having a need to access the confidential information for the purpose of exercising rights
granted hereunder.
6.5
Estoppel
. Nothing in this Agreement shall be construed as conferring by implication,
estoppel, or otherwise upon Licensees (a) any license or other right under the intellectual
property rights of Licensor other than the license granted herein to the Marks as set forth
expressly herein or (b) any license rights other than those expressly granted herein.
6.6
Warranties; Disclaimers.
(a) The Licensor represents and warrants that (i) it owns and has the right to license
the Marks licensed under this Agreement and (ii) the Marks do not infringe upon the rights
of any third parties.
(b) EXCEPT FOR THE WARRANTIES AND REPRESENTATIONS DESCRIBED IN SECTION 6.6(a), LICENSOR
DISCLAIMS ANY AND ALL WARRANTIES, CONDITIONS OR REPRESENTATIONS (EXPRESS OR IMPLIED, ORAL OR
WRITTEN) WITH RESPECT TO THE SUBJECT MATTER HEREOF, OR
ANY PART THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES OF NON-INFRINGEMENT,
MERCHANTABILITY OR FITNESS OR SUITABILITY FOR ANY PURPOSE (WHETHER ANY LICENSEE KNOWS, HAS
REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE) WHETHER
ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE OR BY COURSE OF DEALING.
6.7
In the Event of Termination
. In the event of termination of this Agreement pursuant to
Section 8.4 or otherwise, the Licensees right to utilize or possess the Marks licensed under this
Agreement shall automatically cease, and concurrently with such termination of this Agreement, the
Licensees shall (i) cease all use of the Marks and shall adopt new trademarks, service marks, and
trade names that are not confusingly similar to the Marks and (ii) no later than ninety (90) days
following the termination of this Agreement, the General Partner shall have caused each of the
Partnership Entities to change its legal name so that there is no longer any reference therein to
the name Universal Compression, any name or d/b/a then used by any UCH Entity or any variation,
derivation or abbreviation thereof, and in connection therewith, the General Partner shall cause
each such Partnership Entity to make all necessary filings of certificates with the Secretary of
State of the State of Delaware and to otherwise amend its Organizational Documents by such date.
ARTICLE VII
INDEMNIFICATION
7.1
Environmental Indemnification.
(a) Subject to Section 7.3, UCH shall indemnify, defend and hold harmless the
Partnership Group from and against any environmental claims, losses and expenses (including,
without limitation, court costs and reasonable attorneys and experts fees) of
22
any and
every kind or character, known or unknown, fixed or contingent, suffered or incurred by the
Partnership Group by reason of or arising out of:
(i) any violation of Environmental Laws associated with the ownership or
operation of the Partnership Assets; or
(ii) any event or condition associated with ownership or operation of the
Partnership Assets (including, without limitation, the presence of Hazardous
Substances on, under, about or migrating to or from the Partnership Assets or the
disposal or release of Hazardous Substances generated by operation of the
Partnership Assets) including, without limitation, (A) the cost and expense of any
investigation, assessment, evaluation, monitoring, containment, cleanup, repair,
restoration, remediation, or other corrective action required or necessary under
Environmental Laws or to satisfy any applicable Voluntary Cleanup Program, (B) the
cost or expense of the preparation and implementation of any closure, remedial,
corrective action or other plans required or necessary under Environmental Laws or
to satisfy any applicable Voluntary Cleanup Program and (C) the cost and expense for any environmental pre-trial, trial, or appellate
legal or litigation support work;
provided
, in the case of clauses (A) and (B) such
cost and expense shall not included the costs of and associated with project
management and soil and ground water monitoring;
but only to the extent that such violation complained of under Section 7.1(a)(i) or such
events or conditions included under Section 7.1(a)(ii) occurred before the Closing Date
(collectively,
Covered Environmental Losses
).
(b) The Partnership Group shall indemnify, defend and hold harmless UCH and its
Affiliates from and against any Covered Environmental Losses suffered or incurred by UCH and
its Affiliates relating to the Partnership Assets occurring on or after the Closing Date,
except to the extent that the Partnership Group is indemnified with respect to any of such
Covered Environmental Losses under Section 7.1(a), and unless such indemnification would not
be permitted under the Partnership Agreement by reason of one of the
provisos
contained in
Section 7.7(a) of the Partnership Agreement.
(c) Except for claims for Covered Environmental Losses made before the third
anniversary of the Closing Date, which shall not terminate, all indemnification obligations
in this Section 7.1 shall terminate on the third anniversary of the Closing Date.
7.2
Additional Indemnification.
(a) In addition to and not in limitation of the indemnification provided under Section
7.1(a), subject to Section 7.3 and except as otherwise set forth in any Exhibit hereto, UCH
shall indemnify, defend and hold harmless the Partnership Group from and against any claims,
losses and expenses (including, without limitation, court costs and reasonable attorneys
and experts fees) of any and every kind or character, known or
23
unknown, fixed or
contingent, suffered or incurred by the Partnership Group (
Other Losses
) by reason of or
arising out of:
(i) failure to convey good and defensible title to the Partnership Assets to
one or more members of the Partnership Group, and such failure render the
Partnership Group unable to use or operate the Partnership Assets in substantially
the same manner as they were operated by the UCH Entities immediately prior to the
Closing Date;
(ii) events and conditions associated with the Retained Assets whether
occurring before or after the Closing Date; and
(iii) all federal, state and local income tax liabilities attributable to the
operation of the Partnership Assets prior to the Closing Date, including any such
income tax liabilities of UCH that may result from the consummation of the formation
transactions for the Partnership Entities;
provided
,
however
, that in the case of clauses (i) and (ii) above, such indemnification
obligations shall terminate on the third anniversary of the Closing Date; and that in the
case of clause (iii) above, such indemnification obligations shall survive until sixty (60)
days after the termination of any applicable statute of limitations.
(b) In addition to and not in limitation of the indemnification provided under Section
7.1(b) and the Partnership Agreement and except as otherwise set forth in any Exhibit
hereto, the Partnership Group shall indemnify, defend and hold harmless UCH and its
Affiliates from and against any claims, losses and expenses (including, without limitation,
court costs and reasonable attorneys and experts fees) of any and every kind or character,
known or unknown, fixed or contingent, suffered or incurred by UCH and its Affiliates by
reason of or arising out of events and conditions associated with the operation of the
Partnership Assets and occurring on or after the Closing Date unless such indemnification
would not be permitted under the Partnership Agreement by reason of one of the
provisos
contained in Section 7.7(a) of the Partnership Agreement.
7.3
Limitations Regarding Indemnification.
The aggregate liability of UCH under
Section 7.1(a) shall not exceed $5.0 million.
(b) No claims may be made against UCH for indemnification pursuant to Sections 7.1(a)
or 7.2(a) unless the aggregate dollar amount of the Losses suffered or incurred by the
Partnership Group or the Partnership Indemnitees exceed $250,000, after such time UCH shall
be liable for the full amount of such claims, subject to the limitations of Section 7.3(a).
(c) Notwithstanding anything herein to the contrary, in no event shall UCH have any
indemnification obligations under Section 7.1(a) for claims made as a result of additions to
or modifications of Environmental Laws promulgated after the Closing Date.
7.4
Indemnification Procedures
24
(a) The Indemnified Party agrees that promptly after it becomes aware of facts giving
rise to a claim for indemnification under this Article VII, it will provide notice thereof
in writing to the Indemnifying Party, specifying the nature of and specific basis for such
claim;
provided
,
however
, that the Indemnified Party shall not submit claims more frequently
than once a calendar quarter (or twice in the case of the last calendar quarter prior to the
expiration of the applicable indemnity coverage under this Agreement).
(b) The Indemnifying Party shall have the right to control all aspects of the defense
of (and any counterclaims with respect to) any claims brought against the Indemnified Party
that are covered by the indemnification under this Article VII, including, without
limitation, the selection of counsel, determination of whether to appeal any decision of any
court and the settling of any such matter or any issues relating thereto;
provided, however,
that no such settlement shall be entered into without the consent of the Indemnified Party
(with the concurrence of the Conflicts Committee in the case of the Partnership Group)
unless it includes a full release of the Indemnified Party
from such matter or issues, as the case may be, and does not include the admission of
fault, culpability or a failure to act, by or on behalf of such Indemnified Party.
(c) The Indemnified Party agrees to cooperate fully with the Indemnifying Party, with
respect to all aspects of the defense of any claims covered by the indemnification under
this Article VII, including, without limitation, the prompt furnishing to the Indemnifying
Party of any correspondence or other notice relating thereto that the Indemnified Party may
receive, permitting the name of the Indemnified Party to be utilized in connection with such
defense, the making available to the Indemnifying Party of any files, records or other
information of the Indemnified Party that the Indemnifying Party considers relevant to such
defense and the making available to the Indemnifying Party, at no cost to the Indemnifying
Party, of any employees of the Indemnified Party;
provided, however,
that in connection
therewith the Indemnifying Party agrees to use reasonable efforts to minimize the impact
thereof on the operations of the Indemnified Party and further agrees to endeavor to
maintain the confidentiality of all files, records and other information furnished by the
Indemnified Party pursuant to this Section 7.4. In no event shall the obligation of the
Indemnified Party to cooperate with the Indemnifying Party as set forth in the immediately
preceding sentence be construed as imposing upon the Indemnified Party an obligation to hire
and pay for counsel in connection with the defense of any claims covered by the
indemnification set forth in this Article VII;
provided, however
, that the Indemnified Party
may, at its own option, cost and expense, hire and pay for counsel in connection with any
such defense. The Indemnifying Party agrees to keep any such counsel hired by the
Indemnified Party informed as to the status of any such defense, but the Indemnifying Party
shall have the right to retain sole control over such defense.
(d) In determining the amount of any loss, cost, damage or expense for which the
Indemnified Party is entitled to indemnification under this Agreement, the gross amount of
the indemnification will be reduced by (i) any insurance proceeds realized by the
Indemnified Party and (ii) all amounts recovered by the Indemnified Party under contractual
indemnities from third Persons. The Partnership hereby agrees to use
25
commercially
reasonable efforts to realize any applicable insurance proceeds or amounts recoverable under
such contractual indemnities.
(e) The date on which the Indemnifying Party receives notification of a claim for
indemnification shall determine whether such claim is timely made.
ARTICLE VIII
MISCELLANEOUS
8.1
Choice of Law; Submission to Jurisdiction
. This Agreement shall be subject to and governed
by the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might
refer the construction or interpretation of this Agreement to the laws of another state. Each Party
hereby submits to the jurisdiction of the state and federal courts in the State of Texas and to
venue in Texas.
8.2
Notice
. All notices, requests or consents provided for or permitted to be given pursuant
to this Agreement must be in writing and must be given by depositing same in the United States
mail, addressed to the Person to be notified, postpaid, and registered or certified with return
receipt requested or by delivering such notice in person or by telecopier or telegram to such
Party. Notice given by personal delivery or mail shall be effective upon actual receipt. Notice
given by telegram or telecopier shall be effective upon actual receipt if received during the
recipients normal business hours, or at the beginning of the recipients next business day after
receipt if not received during the recipients normal business hours. All notices to be sent to a
Party pursuant to this Agreement shall be sent to or made at the address set forth below or at such
other address as such Party may stipulate to the other Parties in the manner provided in this
Section 8.2.
For notices to any of the UCH Entities:
4444 Brittmoore Road
Houston, Texas 77041-8004
Phone: (713) 335-7000
Fax: 713-466-6720
Attention: Executive Vice President and Chief Operating Officer
For notices to any of the Partnership Entities:
4444 Brittmoore Road
Houston, Texas 77041-8004
Phone: (713) 335-7000
Fax: 713-466-6720
Attention: Executive Vice President
8.3
Entire Agreement
. This Agreement constitutes the entire agreement of the Parties relating
to the matters contained herein, superseding all prior contracts or agreements, whether oral or
written, relating to the matters contained herein.
26
8.4
Termination
. This Agreement, other than the provisions set forth in Articles VII and VIII
hereof, shall terminate upon a Change of Control of UCO LLC, the General Partner or the
Partnership, other than any Change of Control of UCO LLC, the General Partner or the Partnership
deemed to have occurred pursuant to clause (iv) of the definition of Change of Control solely as a
result of a Change of Control of UCH.
8.5
Effect of Waiver or Consent
. No waiver or consent, express or implied, by any Party to or
of any breach or default by any Person in the performance by such Person of its obligations
hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or
default in the performance by such Person of the same or any other obligations of such Person
hereunder. Failure on the part of a Party to complain of any act of any Person or to declare any
Person in default, irrespective of how long such failure continues, shall not constitute a waiver
by such Party of its rights hereunder until the applicable statute of limitations period has run.
8.6
Amendment or Modification
. This Agreement may be amended or modified from time to time
only by the written agreement of all the Parties;
provided
,
however
, that the Partnership and the
OLP may not, without the prior approval of the Conflicts Committee, agree to any amendment or
modification of this Agreement that the General Partner determines will adversely affect the
holders of Common Units. Each such instrument shall be reduced to writing and shall be designated
on its face an Amendment or an Addendum to this Agreement.
8.7
Assignment; Third Party Beneficiaries
. Any Party shall have the right to assign its
rights under this Agreement without the consent of any other Party, but no Party shall have the
right to assign its obligations under this Agreement without the consent of the other Parties.
Subject to the limitations set forth in Section 8.14, each of the Parties hereto specifically
intends that each entity comprising the UCH Entities and each entity comprising the Partnership
Entities, as applicable, whether or not a Party to this Agreement, shall be entitled to assert
rights and remedies hereunder as third-party beneficiaries hereto with respect to those provisions
of this Agreement affording a right, benefit or privilege to any such entity.
8.8
Counterparts
. This Agreement may be executed in any number of counterparts (including
facsimile counterparts) with the same effect as if all signatory Parties had signed the same
document. All counterparts shall be construed together and shall constitute one and the same
instrument.
8.9
Severability
. If any provision of this Agreement or the application thereof to any Person
or circumstance shall be held invalid or unenforceable to any extent, the remainder of this
Agreement and the application of such provision to other Persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
8.10
Gender, Parts, Articles and Sections
. Whenever the context requires, the gender of all
words used in this Agreement shall include the masculine, feminine and neuter, and the number of
all words shall include the singular and plural. All references to Article numbers and Section
numbers refer to Articles and Sections of this Agreement.
27
8.11
Further Assurances
. In connection with this Agreement and all transactions contemplated
by this Agreement, each Party agrees to execute and deliver such additional documents and
instruments and to perform such additional acts as may be necessary or appropriate to effectuate,
carry out and perform all of the terms, provisions and conditions of this Agreement and all such
transactions.
8.12
Withholding or Granting of Consent
. Except as otherwise expressly provided in this
Agreement, each Party may, with respect to any consent or approval that it is entitled to grant
pursuant to this Agreement, grant or withhold such consent or approval in its sole and uncontrolled
discretion, with or without cause, and subject to such conditions as it shall deem appropriate.
8.13
Laws and Regulations
. Notwithstanding any provision of this Agreement to the contrary, no
Party shall be required to take any act, or fail to take any act, under this Agreement if the
effect thereof would be to cause such Party to be in violation of any applicable law, statute, rule
or regulation.
8.14
Negation of Rights of Limited Partners, Assignees and Third Parties
. The provisions of
this Agreement are enforceable solely by the Parties, and no shareholder, limited partner, member,
or assignee of UCH, UCI, UCO LLC, the General Partner, the Partnership, the OLP GP or the OLP or
other Person shall have the right, separate and apart from UCH, UCI, UCO LLC, the General Partner,
the Partnership, the OLP GP or the OLP, to enforce any provision of this Agreement or to compel any
Party to comply with the terms of this Agreement.
8.15
No Recourse Against Officers or Directors
. For the avoidance of doubt, the provisions of
this Agreement shall not give rise to any right of recourse against any officer or director of UCH
or any Partnership Entity.
[
Signature pages follow.
]
28
IN WITNESS WHEREOF, the Parties have executed this Agreement on, and effective as of, the
Closing Date.
|
|
|
|
|
|
|
|
|
UNIVERSAL COMPRESSION HOLDINGS,
INC.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ J. Michael Anderson
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
J. Michael Anderson
|
|
|
|
|
Title:
|
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
UNIVERSAL COMPRESSION, INC.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ J. Michael Anderson
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
J. Michael Anderson
|
|
|
|
|
Title:
|
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
UCO GP, LLC
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ J. Michael Anderson
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
J. Michael Anderson
|
|
|
|
|
Title:
|
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
UCO GENERAL PARTNER, LP
|
|
|
|
|
|
By:
|
|
UCO GP, LLC, its general partner
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ J. Michael Anderson
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
J. Michael Anderson
|
|
|
|
|
Title:
|
|
Senior Vice President
|
|
|
Signature Page Omnibus Agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNIVERSAL COMPRESSION PARTNERS,
L.P.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
UCO GENERAL PARTNER, LP, its general partner
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
UCO GP, LLC, its general partner
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ J. Michael Anderson
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
J. Michael Anderson
|
|
|
|
|
Title:
|
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
UCLP OLP GP LLC
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ J. Michael Anderson
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
J. Michael Anderson
|
|
|
|
|
Title:
|
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
UC OPERATING PARTNERSHIP, L.P.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
UCLP OLP GP LLC, its general partner
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ J. Michael Anderson
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
J. Michael Anderson
|
|
|
|
|
Title:
|
|
Senior Vice President
|
|
|
Signature Page Omnibus Agreement
Schedule 1.1
[Fixed Margin Percentage]
11.1%
Schedule 3.1(a)
[Services]
|
|
|
1)
|
|
operations,
|
|
|
|
2)
|
|
marketing,
|
|
|
|
3)
|
|
maintenance and repair of Compression Equipment,
|
|
|
|
4)
|
|
periodic overhauls of Compression Equipment,
|
|
|
|
5)
|
|
inventory management,
|
|
|
|
6)
|
|
legal,
|
|
|
|
7)
|
|
accounting,
|
|
|
|
8)
|
|
treasury,
|
|
|
|
9)
|
|
insurance administration and claims processing,
|
|
|
|
10)
|
|
risk management,
|
|
|
|
11)
|
|
health, safety and environmental,
|
|
|
|
12)
|
|
information technology,
|
|
|
|
13)
|
|
human resources,
|
|
|
|
14)
|
|
credit,
|
|
|
|
15)
|
|
payroll,
|
|
|
|
16)
|
|
internal audit,
|
|
|
|
17)
|
|
taxes, and
|
|
|
|
18)
|
|
engineering
|
|
|
|
19)
|
|
facilities management,
|
|
|
|
20)
|
|
investor relations,
|
|
|
|
21)
|
|
ERP,
|
|
|
|
22)
|
|
training,
|
|
|
|
23)
|
|
executive,
|
|
|
|
24)
|
|
sales, and
|
|
|
|
25)
|
|
business development.
|
Schedule 3.1(b)
[Excluded Services]
1. Fabrication and sale of new Compression Equipment.
Exhibit A
FORM ASSIGNMENT AND BILL OF SALE
For valuable consideration, the receipt of which is hereby acknowledged,
, a [place of formation] [entity type] (
Seller
) hereby SELLS, GRANTS,
ASSIGNS and TRANSFERS to
, a [place of formation] [entity type]
(
Purchaser
), effective as of
, 200___, good, marketable and indefeasible title to
all of Sellers right, title and interest in, to and under the Compression Equipment described on
Exhibit A
attached hereto and made a part hereof for all purposes, together with all
assets, rights and properties related to such Compression Equipment of the sort described in
Section 4.2(b) of the Omnibus Agreement (as defined below) (collectively, the
Assets
):
The Seller, in its name and in the name of its successors and assigns, hereby represents that
it has the power and authority to sell or otherwise transfer the Assets in the manner provided in
this Assignment and Bill of Sale and that the Assets are free and clear of all Liens, except for
any Liens created by Purchaser.
THE ASSETS ARE BEING SOLD WITHOUT ANY WARRANTIES, WHETHER EXPRESS
OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF FITNESS FOR USE OR MERCHANTIBILITY.
Seller does hereby bind itself, its successors and assigns, to forever warrant and defend the
title to the Assets unto Purchaser, its successors and assigns against the lawful claim or claims
of any person whomsoever claiming an interest in the Assets. Purchaser hereby assumes and agrees to
indemnify, protect, defend and hold Seller harmless from and against all of the liabilities and
obligations of every kind and nature, arising out of, in connection with or related to, the
ownership, operation, use, repair, transfer, transportation or any other activity whatsoever in
respect of the Assets on and after the date hereof.
Seller covenants and agrees to execute and deliver to Purchaser all such other additional
instruments and other documents and will do all such other acts and things as may be necessary to
fully assign to Purchaser, or its successors and assigns, all of the Assets.
All of the provisions hereof shall inure to the benefit of and be binding upon the respective
heirs, successors and assigns of Seller and Purchaser.
Terms used herein but not defined herein shall have the meanings assigned to such terms in the
Omnibus Agreement dated as of October 20, 2006 by and among Universal Compression Holdings, Inc.,
Universal Compression, Inc., UCI Leasing Holding GP LLC, UCI Compressor Holding, L.P., UCO GP, LLC,
UCO General Partner, LP, Universal Compression Partners, L.P., UCLP OLP GP LLC, UC Operating
Partnership, L.P., UCLP Leasing GP LLC and UCLP Leasing, L.P (the
Omnibus Agreement
).
A - 1
IN WITNESS WHEREOF, Seller has caused this Assignment and Bill of Sale to be executed on
, ___200___.
|
|
|
|
|
|
|
|
|
SELLER
[ ]
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BUYER
[ ]
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
A - 2
Exhibit B
GAS COMPRESSOR EQUIPMENT MASTER RENTAL AGREEMENT
This Gas Compressor Equipment Master Rental Agreement with all Schedule(s),
hereinafter referred to as the (Agreement), is made between
(Lessor) and
(Lessee).
Lessor and Lessee Agree as follows:
1.
Lease.
Subject to and on the terms and conditions herein set forth in Article IV of the Omnibus
Agreement among Universal Compression Holdings, Inc., Universal Compression, Inc., UCO GP, LLC, UCO
General Partner, LP, Universal Compression Partners, L.P., UCLP OLP GP LLC and UC Operating
Partnership (the Omnibus Agreement) and herein, Lessor hereby agrees to lease to Lessee, and
Lessee hereby agrees to lease from Lessor, the personal property described as the Equipment on
the respective Equipment Lease schedule(s) executed by Lessee and Lessor from time to time
hereunder upon agreement of Lessor and Lessee. Each Schedule shall, upon execution, be deemed to
incorporate all of the provisions of this Agreement except as otherwise set forth therein.
2.
Term and Rent.
Except as otherwise provided herein, this Agreement shall terminate on the later
to occur of (i) termination of the Omnibus Agreement and (ii) termination of the last existing
Schedule issued hereunder. Each Schedule shall set forth the term of the lease (Minimum Term)
and the number and amount of rental payments for the Equipment listed thereon, which Lessee shall
pay as set forth. If Lessee fails to pay any rental or other sum when due, Lessee also shall pay
to Lessor interest thereon from the due date thereof to the date of payment at a rate equal to the
lesser of 18% per annum or the maximum rate permitted by applicable law (Applicable Rate). All
payments by Lessee hereunder shall be payable at the office of Lessor set forth below, or at such
other place as Lessor from time to time may designate in writing. It is the intent of the parties
that each Schedule shall have a Minimum Term that is no greater than a whole or fractional month
less than 75% of the useful life of the Equipment subject to said Schedule. Notwithstanding
anything in this Agreement to the contrary, a Schedule may be terminated prior to the expiration of
its Minimum Term upon the purchase and sale or exchange between Lessor and Lessee of the Equipment
subject to said Schedule in accordance with the term of the Omnibus Agreement.
3.
Taxes.
Lessee agrees to reimburse, promptly when due, all license fees and assessments and all
sales, use, property, excise and other taxes or charges (including any interest and penalties), now
or hereafter imposed by any governmental body or agency upon the Equipment or the purchase,
ownership, possession, leasing, operation, use, or disposition thereof hereunder, or the rentals or
other payments hereunder (excluding taxes on or measured by the net income of Lessor) and prepare
and file promptly with the appropriate offices any and all tax and other similar returns required
to be filed with respect thereto (sending copies thereof to Lessor) or, if requested by Lessor,
notify Lessor of such requirement and furnish Lessor with all information required by Lessor so
that it may effect such filing.
4.
Inspection and Acceptance.
Within 48 hours after delivery of the Equipment to be leased to
Lessee under each Schedule, Lessee shall inspect the Equipment. Unless within said 48 hour period
Lessee notifies Lessor in writing to the contrary stating the details of any defects, Lessee shall
be conclusively presumed to have accepted the Equipment in its then condition. If within said 48
hour period Lessee notifies Lessor in writing of the unacceptability of the Equipment, Lessors
obligations to lease the Equipment shall cease forthwith. Upon acceptance of delivery, Lessee
assumes the care, custody, supervision and control of the Equipment and of any and all persons or
property in the vicinity of the Equipment during the time of delivery, operation and return.
Lessee acknowledges that all Equipment rented hereunder and specified in the Schedule(s) is of the
size, design and capacity selected for the operating conditions furnished to Lessor by Lessee and
is suitable for Lessees purposes. Lessee acknowledges that that Lessor is not the manufacturer or
supplier of the Equipment and any quotations or recommendations made by Lessor are based on
information supplied by Lessee and the manufacturer or supplier of the Equipment.
5.
Freight.
Lessee agrees to bear all of the cost of connecting the Equipment and of disconnecting
the Equipment prior to returning the Equipment to Lessor. Except as otherwise provided in the
Schedule, all costs of transporting the Equipment from Lessors yard to Lessees Site described on
the Schedule and of transporting the Equipment from such Site back to Lessors yard will be at the
expense of Lessee.
Houston 3001865v.3
6.
Insurance.
Lessee shall, at Lessees sole cost and expense, maintain insurance or
Lessor-approved self-insurance in such amounts, against such risks (including, without limitation,
all risk and public liability insurance with respect to the Equipment), with such carriers and in
such form as shall be satisfactory to Lessor naming Lessee as an insured and Lessor as an
additional insured. Lessee shall provide Lessor with evidence of such insurance. The policies for
such insurance shall provide that Lessor receive thirty (30) days notice of any termination,
cancellation or alteration of the terms of such insurance, shall provide that the coverage afforded
to Lessor shall not be rescinded, impaired or invalidated by any act or neglect of lessee and shall
provide for waiver of subrogation and contribution by Lessee and Lessees insured against Lessor
and Lessors employees and agents.
Page 1 of 9
Exhibit B
GAS COMPRESSOR EQUIPMENT MASTER RENTAL AGREEMENT
7.
Use / Lessees Responsibilities.
Lessee agrees to use the Equipment in a careful and prudent
manner with competent agents, employees or subcontractors only for the compression of gas in
accordance with the specifications of the manufacturer of the Equipment. Lessee agrees to pay for
damages to the Equipment resulting from free water, excessive condensate or foreign solids, or
impurities contained in the gas stream. Lessee further agrees to pay for all damages to the
Equipment resulting from abusive use, failure to maintain the Equipment in accordance with this
agreement or from any negligence on the part of Lessee, its agents, employees or subcontractors.
In addition to any Lessee obligations contained elsewhere in this Agreement and within any
Schedules hereto, Lessee agrees to and shall:
a. Provide Lessor with authorized ingress and egress to and from the site designated in the
Schedule for installation of the Equipment (the Site). Should Lessor be denied access to the
Site for any reason not reasonably within Lessors control, any time lost by Lessor shall be paid
for by Lessee at the applicable rate. Recognizing that Lessee has superior knowledge of the Site
and access routes to the Site, Lessee must advise Lessor of any conditions or obstructions which
Lessor might encounter while en route to the Site. Lessee agrees to maintain the road and Site in
such a condition that will allow free access and movement to and from the Site in an ordinarily
equipped highway type vehicle. If because of an attribute of Lessees operations, Lessor is
required to use any specialized transportation equipment, cranes or other services and supplies,
Lessee shall furnish the same at its expense and without cost to Lessor;
b. Prepare a sound location at the Site adequate in size and capable of properly supporting
the Equipment; and
c. Immediately mitigate and repair any stoppage, malfunction or leaks of oil or coolant from
the Equipment.
8.
No Maintenance / Bare Rental.
Lessee acknowledges that Lessor is providing the Equipment as a
bare rental and, therefore, Lessor will have no maintenance or inspection obligations with
respect to the Equipment.
9.
Inspection.
Lessor shall have the right at all reasonable times to enter upon the premises
where the Equipment may be located for the purpose of inspecting it or observing its use.
10.
Title; Personal Property; Encumbrances; Location.
Lessee covenants that:
a. The Equipment is and shall remain personal property and shall not be attached to or become
part of any realty;
b. The Equipment will be installed and used at the location specified in the Schedule
pertaining thereto and that it shall not be removed therefrom without the permission of Lessor;
c. That Lessee will not, except as expressly authorized in this Agreement, sell, secrete,
mortgage, assign, transfer, lease, sublet, loan part with possession of, or encumber the Equipment
or permit any liens or charges to become effective thereon or permit or attempt to do any of the
acts aforesaid. Lessee agrees, at Lessees own expense, to take such action as may be necessary to
remove any such encumbrance, lien or charge and to prevent any third party from acquiring any other
interest in the Equipment (including, without limitation, by reason of such Equipment being deemed
to be a fixture or a part of any realty); and
d. Lessee will not change or remove any insignia, serial number or lettering of the Equipment.
11.
Licenses, Permits and Compliance.
Lessee, at its sole expense, shall;
a. Comply with all applicable rules and regulations of any Federal, Provincial, State, County,
City, local, municipal or regulatory agency (hereinafter referred to as Governing Bodies)
relating to the construction or operation of the Equipment in the Location, or environmental
requirements associated therewith (including but not limited to air emission, noise and
environmental discharges); and
b. Obtain and maintain throughout the Minimum Term, or any extension thereof, any and all
licenses and/or permit fees assessed as a result of this Agreement or against said Equipment.
Lessee further agrees to defend, protect, indemnify and hold harmless Lessor from any and all
liability associated with its failure to comply with the foregoing provision.
12.
Waste Disposal.
Lessee bears responsibility for disposal of liquids, solid, and hazardous waste
discharged by the Equipment at the location in accordance with federal, state and local
environmental rules and regulations.
13.
Events of Default; Remedies; Expenses.
In the event that:
a. Lessee shall default in the payment of any installment of rent or other sum payable under
this Agreement or default in the observance or performance of any other covenant or agreement in
this Agreement and the failure to cure said default within ten (10) days after notice by Lessor; or
b. Lessee shall dissolve, or become insolvent (however evidenced) or bankrupt, commit any
act of bankruptcy, make an assignment for the benefit of creditors, suspend the transaction of its
usual business or consent to the appointment of a trustee or receiver, or a trustee or a receiver
shall be appointed for Lessee or for a
Page 2 of 9
Exhibit B
GAS COMPRESSOR EQUIPMENT MASTER RENTAL AGREEMENT
substantial part of its property, or bankruptcy, reorganization, insolvency, or similar
proceedings shall be instituted by or against Lessee; or
c. an order, judgment, or decree shall be entered against Lessee by a court of competent
jurisdiction and such order, judgment or decree shall continue unpaid or unsatisfied and in effect
for any period of sixty (60) consecutive days without a stay of execution, or any execution or writ
or process shall be issues in connection with any action or proceeding against Lessee or its
property whereby the Equipment or any substantial part of Lessees property may be taken or
restrained; or
d. any indebtedness of Lessee for borrowed money shall become due and payable by acceleration
of maturity thereof;
e. Lessor shall in good faith believe that the prospect of payment or performance by Lessee is
impaired, then and in any such event, Lessor may, by written notice to Lessee:
(1) Immediately terminate this Agreement as to any or all Schedules, at its option, and
Lessees rights thereunder; and/or
(2) Declare immediately due, and payable all rental installments and other sums hereunder
forthwith due and payable whereupon the same shall forthwith become due and payable as liquidated
damages and not as a penalty; and/or
(3) Proceed by appropriate court action or actions either at law or in equity, to enforce
performance by Lessee of the applicable covenants of this Agreement or to recover damages for the
breach thereof; and/or
(4) Without necessity of process or other legal action, enter onto the premises of Lessee or
such other premises as the Equipment may then be located and stop the operation of the Equipment
and/or take possession of the Equipment, disconnecting and separating the Equipment from any other
property and using all force necessary or permitted by applicable law, without Lessor incurring any
liability to Lessee or any other person arising out of the taking of any such action. Lessee
agrees to and shall indemnify and hold harmless Lessor from any and all claims, losses, damages,
causes of action, suits and liabilities of any kind arising in favor of Lessee, or any interest
owner that Lessee represents or serves as operator and arising out of or in connection with the
stopping of the operation of the Equipment and/or the removal of the Equipment as aforesaid,
whether same result from the forfeiture of any oil, gas or mineral lease, damage to a producing
reservoir or lease operations, lost production or other event or condition. In addition, Lessee
shall continue to be liable for all other indemnities under this Agreement and for all legal fees
and other costs and expenses resulting from the foregoing defaults or the exercise of Lessors
remedies. Lessor shall be entitled to take or retain, by way of offset against any or all amounts
due and owing under this Agreement, any assets, tangible or intangible, of Lessee which may then be
in the possession of Lessor, its correspondents or agents, wheresoever situated.
14.
Holding Over.
Unless a party gives the other party thirty (30) days advance written notice of
termination prior to the expiration of the Minimum Term specified in a Schedule, that Schedule will
continue to bind the parties on a month-to-month basis as to the Equipment, subject thereafter to
termination by either party with thirty (30) days advance written notice.. Notwithstanding the
foregoing, after the expiration of the Minimum Term, Lessor may modify the rental fees and other
charges assessed under this Agreement.
15.
Indemnity of Lessor.
a. Lessee is responsible and liable for loss of or damage to Equipment arising between the
time of delivery and redelivery of the Equipment and Lessee shall protect, defend, indemnify and
hold Lessor harmless from and against any such loss or damage, however arising, including but not
limited to, improper operation, improper maintenance (unless Lessor performs maintenance),
negligent acts of Lessee, compression of dirty or wet gas, fire, freezing, theft, windstorm,
hailstorm, flood, riot, insurrection or explosion, except to the extent such loss or damage arises
directly as a result of the negligence of Lessor.
b. Lessee shall protect, defend, indemnify and hold Lessor harmless from and against any loss,
damage, liability, suit, expense, cost or claim, however occurring as the result of loss of or
damage to property (other than the Equipment), arising between the time of delivery and redelivery
of the Equipment, whether such property is owned by Lessee or third party, and for injury to or
death of persons, whether Lessee or its employees or third parties.
16.
Savings Clause.
The parties agree that the indemnities in this Agreement are limited to the
extent necessary to comply with applicable state or federal law and that this Agreement shall be
deemed to be amended to comply with those laws to the extent their requirements are at variance
with any indemnification provisions set forth in this Agreement.
17.
Limitation of Liability.
In no event shall Lessor, its agents and employees (for purposes of
this Paragraph 17, such persons shall collectively be referred to as Lessor) be liable to Lessee,
for any general, compensatory, special indirect, incidental or consequential damages related to or
in connection with the use and
Page 3 of 9
Exhibit B
GAS COMPRESSOR EQUIPMENT MASTER RENTAL AGREEMENT
operation of the Equipment and/or the performance of this Agreement, including but not limited to
any injury, loss or damage to any property, any loss of profits or business opportunity, and any
loss of use of the Equipment, irrespective of the reason or cause of such damages, whether any of
such damages occur during or after the period of this Agreement, or that the claim for such damages
is based on warranty, contract, tort or other theory of any nature whatsoever.
18.
Assignment By Lessor.
Lessor may assign its rights and delegate its duties under this
Agreement. Lessor covenants to Lessee that Lessor is empowered to execute this Agreement.
Conditioned upon Lessees performing the conditions hereof, Lessee shall peaceably and quietly
hold, possess and use the Equipment during the Minimum Term and any extensions thereof without
hindrance. If Lessor assigns the rents reserved herein or all or any of Lessors rights hereunder,
such assignees rights shall be independent of any claim of Lessee against Lessor. Lessee on
receiving notice of any such assignment shall abide thereby and make payment as may therein be
directed. Following such assignment, the term Lessor shall be deemed to include or refer to
Lessors assignee, except such assignees rights shall be independent of any claim of Lessee
against Lessor as hereinabove provided.
19.
Assignment and Subleasing by Lessee.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS PARAGRAPH
19, LESSEE SHALL NOT, WITHOUT THE PRIOR CONSENT OF LESSOR, ASSIGN, TRANSFER OR ENCUMBER ITS RIGHTS,
INTERESTS OR OBLIGATIONS UNDER THIS AGREEMENT. ANY ATTEMPTED ASSIGNMENT, TRANSFER OR ENCUMBRANCE
BY LESSEE OF ITS RIGHTS, INTERESTS OR OBLIGATIONS UNDER THIS AGREEMENT SHALL BE NULL AND VOID. So
long as no material event of default shall have occurred and be continuing, Lessee may, without the
consent of Lessor, sublease one or more of the Equipment to any third party (each third part a
User and each such lease a User Lease), provided that all of the following requirements shall
be satisfied with respect to each such User Lease entered into pursuant to this Paragraph 19:
a. the Equipment is and will remain physically located within the United States;
b. such User Lease shall be in writing, shall identify the Equipment by unit number, engine,
frame and number of cylinders and shall expressly prohibit any further sublease or transfer by User
of any rights or interests in the Equipment without Lessees permission;
c. such User Lease shall prohibit the User from making any alterations or modifications to the
Compressors that would violate the provisions of Paragraph 23 of this Agreement; and
d. such User Lease shall require the User (and/or Lessee) (i) to maintain the Equipment in
accordance with Paragraph 7 and the relevant Schedule and (ii) to engage in activities with the
Equipment in a manner consistent with the Equipments intended purpose and in accordance with the
Equipments specifications.
No such subleasing by Lessee will reduce or affect any of the obligations of Lessee hereunder
or the rights of Lessor under this Agreement, and all of the obligations of Lessee hereunder shall
be and remain primary and shall continue in full force and effect as the obligations of a principal
and not of a guarantor or surety.
20.
No Lessor Equipment Warranties.
LESSOR LEASES THE EQUIPMENT TO LESSEE AS-IS AND EXPRESSLY
DISCLAIMS AND MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO THE CONDITION, DESIGN, QUALITY,
CAPACITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF, OR ANY OTHER MATTER, CONCERNING
THE EQUIPMENT. LESSEE HEREBY WAIVES ANY CLAIM (INCLUDING ANY CLAIM BASED ON STRICT OR ABSOLUTE
LIABILITY IN TORT) IT MAY HAVE AGAINST LESSOR FOR ANY LOSS, DAMAGE (INCLUDING INCIDENTAL OR
CONSEQUENTIAL DAMAGE) OR EXPENSES CAUSED BY OR RELATING TO THE EQUIPMENT.
21.
Enforceability.
If any part hereof is contrary to, prohibited by or deemed invalid under
applicable laws or regulations of any jurisdiction, such provision shall be inapplicable and deemed
omitted but shall not invalidate the remaining provisions hereof.
22.
No Conditional Sale.
It is the intention of the parties hereto to hereby create a lease on the
Equipment described herein, and not a conditional sale. To provide solely for the eventuality that
a court might hold this to be a conditional sale, Lessor hereby retains a purchase money security
interest to secure payment of the sales price of the Equipment as determined by such court, and
Lessee grants to Lessor all rights given to a secured party under the Uniform Commercial Code in
addition to Lessors other rights hereunder. It is the intention of the parties that the Equipment
shall be deemed personal property and that it not be deemed a fixture, even though it may be
attached in some manner to realty. To provide solely for the eventuality that a court might also
hold the Equipment to be a fixture, the parties state for the purpose of complying with the legal
requirements for a financing statement that collateral is or includes fixtures and the Equipment is
affixed or is to be affixed to the lands described in the Schedule(s).
23.
Alterations.
a. Except as required or permitted by this Agreement, and subject to this Paragraph 23, Lessee
shall not modify or alter the Equipment without the prior approval of Lessor.
Page 4 of 9
Exhibit B
GAS COMPRESSOR EQUIPMENT MASTER RENTAL AGREEMENT
b. Lessee may make any optional renovation, improvement, addition, or alteration to the
Equipment (Optional Alteration) provided that such Optional Alteration does not impair the value,
use or remaining useful life of such Equipment. In the event an Optional Alteration is readily
removable without impairing the value, use or remaining useful life of the Equipment, and is not a
part or appliance which replaces any part or appliance originally incorporated or installed in or
attached to such Equipment on the effective date of the relevant Schedule, Lessee may (or, if
requested by Lessor shall) remove such Optional Alteration whereupon such Optional Alteration will
remain the property of Lessee. To the extent such Optional Alteration is not readily removable
without impairing the value, use or remaining useful life of the Equipment to which such Optional
Alteration has been made, or is a part or appliance which replaces any part or appliance originally
incorporated or installed in or attached to such Equipment on the effective date of the relevant
Schedule, such Optional Alteration shall, without further act, immediately be and become the
property of, and title shall vest in, Lessor, free and clear of all liens and shall be subject to
the terms of this Agreement. Any parts installed or replacements made by Lessee upon the Equipment
pursuant to its obligation to maintain and keep the Equipments in the condition required pursuant
to the terms of this Agreement shall be considered accessions to such Equipment and ownership
thereof shall be immediately vested in Lessor.
24.
Miscellaneous.
a. No covenant or condition of this Agreement can be waived or changed except by the written
consent of both parties. Forbearance or indulgence by Lessor in any regard whatsoever shall not
constitute a waiver or change of the covenant or condition to be performed by Lessee to which the
same may apply, and until complete performance by Lessee of said covenant or condition, Lessor
shall be entitled to invoke any remedy available to Lessor under this Agreement or by law or equity
despite said forbearance or indulgence. Waiver of any defaults shall not waive any other default.
b. Service of all notices under this Agreement shall be sufficient if mailed to the party
involved at its respective address set forth below, or at such address as such party may provide in
writing. Any such notices mailed to such address shall be effective when deposited in the United
States mail, duly addressed and with postage prepaid.
c. Lessor and Lessee as used in this Agreement shall include the heirs, executors,
administrators, successors, sub-lessees and/or assigns of such parties.
d. If more than one Lessee executes this Agreement, their obligations under this Agreement
shall be joint and several.
e. Lessee will, if requested by Lessor, join with Lessor in executing one or more financing
statements, as may be desired by Lessor, in form satisfactory to Lessor.
f. In case of conflict between provisions found in this Agreement and those listed in the
Schedule(s) hereto, the provisions on the Schedule(s) shall prevail.
g. The law governing this Agreement shall be that of the State of Texas in force at the date
of this Agreement, excepting any conflict of laws provisions that provide for the application of
the laws of another jurisdiction.
h. Lessor and Lessee agree that venue of any lawsuit arising from or in connection with the
terms of this Agreement shall be in Houston, Harris County, Texas.
i. This Agreement contains the full agreement between the parties. No representation or
promise has been made by either party to the other as an inducement to enter into this Agreement.
Lessor does not in any way or for any purpose become partner of Lessee, or a joint venture, or a
member of a joint enterprise with Lessee.
j. Lessee hereby waives its right to receive a copy of any financing statement or financing
change statement registered by Lessor in connection with this Agreement.
k. Lessor and Lessee hereby agree that no rights or remedies referred to in Article
2A of the Uniform Commercial Code shall be conferred upon either Lessor or Lessee unless expressly
granted in this Agreement..
l. If Lessee at any time shall fail to pay any sum which Lessee is required by this Agreement
to pay or shall fail to do or perform any other act Lessee is required by this Agreement to do or
perform, Lessor at its option may pay such sum or do or perform such act (or have it performed by a
third party), and Lessee shall reimburse Lessor on demand for the amount of such payment and for
the cost and expenses which may be incurred by Lessor for such acts or performance, together with
interest thereon at the Applicable Rate from the date of demand until paid.
m. This Agreement is based on the applicable laws existing at the time of its execution. Any
changes, including changes in governmental enforcement practices, revisions or new applicable laws,
including without limitation those related to taxes, permits, fees and duties, that have the effect
of increasing Lessors burden, including but not limited to cost, time-consumption and risk
exposure, shall entitle Lessor to fair and equitable Agreement modifications, which modifications
the parties agree to work toward in good faith and in a timely
Page 5 of 9
Exhibit B
GAS COMPRESSOR EQUIPMENT MASTER RENTAL AGREEMENT
fashion, failing which Lessor may terminate this Agreement or any Schedule(s) hereunder
immediately upon written notice to Lessee.
Executed
this day of ,
200 .
LESSOR
:
Please Print Name and Title
LESSEE
:
|
|
Please Print Name and Title
|
|
|
Street Address or Post Office Box
|
|
|
City, State/Province and Zip Code
|
|
|
Phone Number
|
|
|
Fax Number
|
Page 6 of 9
Exhibit B
GAS COMPRESSOR EQUIPMENT MASTER RENTAL AGREEMENT
SCHEDULE A TO GAS COMPRESSOR EQUIPMENT MASTER RENTAL AGREEMENT
(
BARE RENTAL
)
|
|
|
|
|
|
|
Lessee:
|
|
|
|
Date:
|
|
|
|
|
|
|
|
|
|
Attention:
|
|
|
|
Quote #
|
|
|
In accordance with your request, we are pleased to offer the herein described compression equipment
for your application on the
lease in
(detail, to the extent
available, section, township, range, county/parish, state and country) (Site). This unit is
capable of the following estimated performance.
Actual field operating conditions can cause actual
compressor capacities to vary.
|
|
|
|
|
|
|
Unit #
|
|
|
|
Engine
|
|
|
Frame
|
|
|
|
Cylinders
|
|
|
|
|
|
|
|
|
|
|
|
SUCTION PRESSURE
|
|
PSIG
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCHARGE PRESSURE
|
|
PSIG
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPRESSOR
|
|
BHP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
|
|
RPM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTAKE TEMPERATURE
|
|
°
F
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPECIFIC
|
|
GRAVITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALTITUDE
|
|
FT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H
2
S
|
|
Process Gas
|
|
(PPM)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
H
2
S
|
|
Fuel Gas
|
|
(PPM)
|
|
**
|
|
|
|
|
|
|
|
|
|
|
|
AMBIENT
|
|
TEMP.
|
|
°
F
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
H
2
S process gas content equal to or greater than 100 PPM triggers the
applicability of Lessors High H
2
S Process Gas Content Schedule.
|
|
**
|
|
H
2
S fuel gas content limits are addressed on Page 2 of this Schedule.
|
Delivery can be made to Site in weeks from date of execution of
this Schedule but is subject to prior sale or rental and credit approval.
RENTAL RATE
is
[The Rental Rate will be $6.91 per leased horsepower per
month]
per month, plus taxes, for a minimum of months guaranteed
(Minimum Term). (This quote is valid for a period of 30 days. Please check
with Lessor prior to ordering after 30 days has expired.)
[The Minimum Term
will match the term of the underlying customer contract under which the
Equipment will be employed.]
The rental rate shall be payable monthly in
advance at
___s (Lessor)
Houston office
,
commencing from the date of shipment or 15 days after unit is
ready, whichever occurs first. Upon expiration of the Minimum Term, the rental
shall continue from month to month. Either party may terminate this agreement
at the expiration of the Minimum Term or thereafter upon thirty (30) days
advanced
written notice
. Lessors obligation to provide the Equipment shall
cease upon the effective date of termination, but the Rental Rate shall
continue to be assessed until the later of expiration of such thirty (30) days
or return of the Equipment to designated terminal, in good condition, normal
wear and tear excepted.
When executed by Lessor and Lessee, this Schedule A shall apply to the GAS COMPRESSOR EQUIPMENT
MASTER RENTAL AGREEMENT (or equivalent master agreement) executed by Lessee and Lessor (or their
respective predecessors or affiliates) and dated as shown below (the Master Agreement) whether or
not attached hereto, and shall be deemed an individual agreement between the parties hereto for the
Equipment described herein, upon the terms and conditions stated herein and in the Master
Agreement. Unless otherwise defined herein, terms have the meanings set forth in the Master
Agreement.
Master Agreement Date:
Exceptions or adders to the terms and conditions in this agreement are as follows:
|
|
|
|
|
|
|
Freight Charges To Site From
|
|
|
|
Paid for by
|
|
|
|
|
|
|
|
|
|
Freight Charges From Site To
|
|
|
|
Paid for by
|
|
|
|
|
|
|
|
|
|
Page 7 of 9
Exhibit B
GAS COMPRESSOR EQUIPMENT MASTER RENTAL AGREEMENT
Quote #:
LESSORS AND LESSEES RESPONSIBILITIES
Lessor
In addition to the responsibilities detailed in the Master Agreement, Lessor shall furnish the
following:
|
|
|
|
|
|
|
|
|
Equipment described on Page 1 of this Schedule A.
|
|
|
|
|
Periodic preventative maintenance and major repairs to all engines, compressors and
accessory parts forming the Equipment (both labor and necessary parts), including without
limitation:
|
|
|
|
|
o
Major overhauls of the engine, including without limitation the cylinder heads;
and
|
|
|
|
|
o
Major overhauls on the compressor, including without limitation repair or
replacement of major castings on the compressor frame and cylinders.
|
Lessee
In addition to the responsibilities detailed in the Master Agreement, Lessee shall furnish the
following:
|
|
|
|
|
|
|
|
|
Daily maintenance and inspections of all engines, compressors and accessory parts forming the Equipment (both
labor and necessary parts), including without limitation:
|
|
|
|
|
o
Monthly adjustments on the engine and compressor per Lessors guidelines;
|
|
|
|
|
o
Anti-freeze in accordance with Lessors requirements;
|
|
|
|
|
o
Lubricants and related filters in accordance with Lessors requirements; and
|
|
|
|
|
o
Daily inspections/monitoring.
|
|
|
|
|
Competent and prudent Equipment operator for normal operations.
|
|
|
|
|
All fees, assessments and taxes (including ad valorem, which will not be prorated) applicable to Equipment.
|
|
|
|
|
Provide an inlet separator for the Equipment to remove solids (such as sand) and all entrained liquids from the gas
stream; Lessee hereby acknowledging that the scrubber provided by Lessor with the Equipment is only an emergency
scrubber.
|
|
|
|
|
Site preparation, including suitable sand or gravel pad or concrete base as required.
|
|
|
|
|
Valves and piping to suction and discharge flanges, and fuel gas inlet(s) of compressor(s).
|
|
|
|
|
Suction to discharge bypass piping and suction pressure control valve (if required).
|
|
|
|
|
All installation expenses.
|
|
|
|
|
Suitable, sweet, dry natural gas fuel for engine use with 900 to 1100 BTU/ft3 and no more than 10 ppm H
2
S.
|
|
|
|
|
Air/gas pressure of with sufficient pressure and volume for engine starting.
|
|
|
|
|
Provide, connect and maintain a properly functioning waste discharge system downstream of the Equipment, including
an outlet connection from the skid drain and all pipes, connections, the blow casing and tank downstream of the skid
drain; and remove and dispose of all fluids discharged by the discharge tank, the blow casing and any pipes or
connections to the skid plus collection and disposal of such liquids from the Equipments skid and any other liquids
incidental to Equipment operations.
|
|
|
|
|
Equipment Site with ingress and egress satisfactory to Lessor.
|
|
|
|
|
Disconnection of Equipment and Site restoration expenses.
|
|
|
|
|
Site fencing, if requested by Lessor.
|
|
|
|
|
Any and all necessary equipment, supplies and services not specifically listed as Lessors responsibility, above.
|
|
|
|
|
The following responsibilities apply when Site is offshore or in inland waterways:
|
|
|
|
|
Suitable platform or barge capable of supporting the Equipment.
|
|
|
|
|
All transportation (including air and water) and cranes necessary for delivery, installation, maintenance, repair and
removal of the Equipment.
|
|
|
|
|
All transportation (including air and water) for Lessor personnel, parts, tools and supplies.
|
|
|
|
|
Cost for any standby time in excess of 4 hours that is beyond the direct control of Lessor (including due to
inclement weather that, in the sole but reasonable discretion of Lessor impedes safe travel).
|
Quote #:
Third party services or materials not listed above as Lessors responsibility that are
furnished by Lessor at Lessees request will be charged to Lessee at Lessors actual cost plus 20%.
Page 8 of 9
Exhibit B
GAS COMPRESSOR EQUIPMENT MASTER RENTAL AGREEMENT
Lessors services or materials not listed above as Lessors responsibility that are furnished
by Lessor at Lessees request will be charged to Lessee at Lessors then-prevailing standard rates.
ACKNOWLEDGED and ACCEPTED
by the undersigned, duly-authorized representatives of the parties
as of the date first shown above.
LESSOR
:
|
|
|
|
|
Return original and all correspondence to
|
|
|
|
LESSEE
:
Page 9 of 9