**Exhibit 3.2**

 

**EXECUTION COPY**

 

** **

**FIRST AMENDEDAND RESTATEDAGREEMENT OF LIMITED PARTNERSHIP**

 

**OF**

**HILAND PARTNERS, LP**

 

 

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**TABLE OFCONTENTS**

 
| **ARTICLE I**                                                    |
|-----------------------------------------------------------------------|
| **DEFINITIONS**                                                       |
|                                                                  |
| SECTION 1.1                                                      | Definitions |   |
| SECTION 1.2                                                      | Construction |   |
|                                                                  |   |   |
| **ARTICLE II**                                                   |
| **ORGANIZATION**                                                      |
| ** **                                                            |
| SECTION 2.1                                                      | Formation |   |
| SECTION 2.2                                                      | Name |   |
| SECTION 2.3                                                      | Registered Office; Registered Agent;  Principal Office; Other Offices |   |
| SECTION 2.4                                                      | Purpose and Business |   |
| SECTION 2.5                                                      | Powers |   |
| SECTION 2.6                                                      | Power of Attorney |   |
| SECTION 2.7                                                      | Term |   |
| SECTION 2.8                                                      | Title to Partnership Assets |   |
|                                                                  |   |   |
| **ARTICLE III**                                                  |
| **RIGHTS OF LIMITED PARTNERS**                                        |
|                                                                  | ** ** |   |
| SECTION 3.1                                                      | Limitation of Liability |   |
| SECTION 3.2                                                      | Management of Business |   |
| SECTION 3.3                                                      | Outside Activities of the Limited Partners |   |
| SECTION 3.4                                                      | Rights of Limited Partners |   |
|                                                                  |   |   |
| **ARTICLE IV**                                                   |
| **CERTIFICATES;  RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS;** |
| **REDEMPTION  OF PARTNERSHIP INTERESTS**                              |
| ** **                                                            |
| SECTION 4.1                                                      | Certificates |   |
| SECTION 4.2                                                      | Mutilated, Destroyed, Lost or Stolen  Certificates |   |
| SECTION 4.3                                                      | Record Holders |   |
| SECTION 4.4                                                      | Transfer Generally |   |
| SECTION 4.5                                                      | Registration and Transfer of Limited  Partner Interests |   |
| SECTION 4.6                                                      | Transfer of the General Partner’s General  Partner Interest |   |
| SECTION 4.7                                                      | Transfer of Incentive Distribution Rights |   |
| SECTION 4.8                                                      | Restrictions on Transfers |   |
| SECTION 4.9                                                      | Citizenship Certificates; Non-citizen  Assignees |   |
| SECTION 4.10                                                     | Redemption of Partnership Interests of  Non-citizen Assignees. |   |
|                                                                  |   |   |
| **ARTICLE V**                                                    |
| **CAPITAL  CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS**      |
| ** **                                                            |
| SECTION 5.1                                                      | Organizational Contributions |   |
| SECTION 5.2                                                      | Contributions by the General Partner and  its Affiliates |   |
| SECTION 5.3                                                      | Contributions by Initial Limited Partners |   |
| SECTION 5.4                                                      | Interest and Withdrawal |   |

 

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| SECTION 5.5                            | Capital Accounts                                                                               |   |
|---------------------------------------------|------------------------------------------------------------------------------------------------|--------|
| SECTION 5.6                            | Issuances of Additional Partnership  Securities                                                |   |
| SECTION 5.7                            | Limitations on Issuance of Additional  Partnership Securities                                  |   |
| SECTION 5.8                            | Conversion of Subordinated Unit                                                                |   |
| SECTION 5.9                            | Limited Preemptive Right                                                                       |   |
| SECTION 5.10                           | Splits and Combinations                                                                        |   |
| SECTION 5.11                           | Fully Paid and Non-Assessable Nature of  Limited Partner Interests                             |   |
|                                        |                                                                                           |   |
| **ARTICLE VI**                         |
| **ALLOCATIONS  AND DISTRIBUTIONS**          |
| ** **                                  |
| SECTION 6.1                            | Allocations for Capital Account Purposes                                                       |   |
| SECTION 6.2                            | Allocations for Tax Purposes                                                                   |   |
| SECTION 6.3                            | Requirement and Characterization of  Distributions; Distributions to Record Holders            |   |
| SECTION 6.4                            | Distributions of Available Cash from  Operating Surplus                                        |   |
| SECTION 6.5                            | Distributions of Available Cash from  Capital Surplus                                          |   |
| SECTION 6.6                            | Adjustment of Minimum Quarterly  Distribution and Target Distribution Levels                   |   |
| SECTION 6.7                            | Special Provisions Relating to the Holders  of Subordinated Units                              |   |
| SECTION 6.8                            | Special Provisions Relating to the Holders  of Incentive Distribution Rights                   |   |
| SECTION 6.9                            | Entity Level Taxation                                                                          |   |
|                                        |                                                                                           |   |
| **ARTICLE VII**                        |
| **MANAGEMENT  AND OPERATION OF BUSINESS**   |
|                                        | ** **                                                                                     |   |
| SECTION 7.1                            | Management                                                                                     |   |
| SECTION 7.2                            | Certificate of Limited Partnership                                                             |   |
| SECTION 7.3                            | Restrictions on the General Partner’s  Authority                                          |   |
| SECTION 7.4                            | Reimbursement of the General Partner                                                           |   |
| SECTION 7.5                            | Outside Activities                                                                             |   |
| SECTION 7.6                            | Loans from the General Partner; Loans or  Contributions from the Partnership or Group Members. |   |
| SECTION 7.7                            | Indemnification                                                                                |   |
| SECTION 7.8                            | Liability of Indemnitees                                                                       |   |
| SECTION 7.9                            | Resolution of Conflicts of Interest;  Standards of Conduct and Modification of Duties          |   |
| SECTION 7.10                           | Other Matters Concerning the General  Partner                                                  |   |
| SECTION 7.11                           | Purchase or Sale of Partnership Securities                                                     |   |
| SECTION 7.12                           | Registration Rights of the General Partner  and its Affiliates                                 |   |
| SECTION 7.13                           | Reliance by Third Parties                                                                      |   |
|                                        |                                                                                           |   |
| **ARTICLE VIII**                       |
| **BOOKS,  RECORDS, ACCOUNTING AND REPORTS** |
|                                        | ** **                                                                                     |   |
| SECTION 8.1                            | Records and Accounting                                                                         |   |
| SECTION 8.2                            | Fiscal Year                                                                                    |   |
| SECTION 8.3                            | Reports                                                                                        |   |

 

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| **ARTICLE IX**                                            |
|----------------------------------------------------------------|
| **TAX  MATTERS**                                               |
|                                                           | ** ** |   |
| SECTION 9.1                                               | Tax Returns and Information |   |
| SECTION 9.2                                               | Tax Elections |   |
| SECTION 9.3                                               | Tax Controversies |   |
| SECTION 9.4                                               | Withholding |   |
|                                                           |   |   |
| **ARTICLE X**                                             |
| **ADMISSION  OF PARTNERS**                                     |
| ** **                                                     |
| SECTION 10.1                                              | Admission of Limited Partners |   |
| SECTION 10.2                                              | Admission of Successor General Partner |   |
| SECTION 10.3                                              | Amendment of Agreement and Certificate of  Limited Partnership |   |
|                                                           |   |   |
| **ARTICLE XI**                                            |
| **WITHDRAWAL  OR REMOVAL OF PARTNERS**                         |
|                                                           | ** ** |   |
| SECTION 11.1                                              | Withdrawal of the General Partner |   |
| SECTION 11.2                                              | Removal of the General Partner |   |
| SECTION 11.3                                              | Interest of Departing Partner and Successor  General Partner |   |
| SECTION 11.4                                              | Termination of Subordination Period,  Conversion of Subordinated Units and Extinguishment of Cumulative Common Unit  Arrearages |   |
| SECTION 11.5                                              | Withdrawal of Limited Partners |   |
|                                                           |   |   |
| **ARTICLE XII**                                           |
| **DISSOLUTION  AND LIQUIDATION**                               |
|                                                           | ** ** |   |
| SECTION 12.1                                              | Dissolution |   |
| SECTION 12.2                                              | Continuation of the Business of the  Partnership After Dissolution |   |
| SECTION 12.3                                              | Liquidator |   |
| SECTION 12.4                                              | Liquidation |   |
| SECTION 12.5                                              | Cancellation of Certificate of Limited  Partnership |   |
| SECTION 12.6                                              | Return of Contributions |   |
| SECTION 12.7                                              | Waiver of Partition |   |
| SECTION 12.8                                              | Capital Account Restoration |   |
|                                                           |   |   |
| **ARTICLE XIII**                                          |
| **AMENDMENT  OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE** |
|                                                           | ** ** |   |
| SECTION 13.1                                              | Amendments to be Adopted Solely by the  General Partner |   |
| SECTION 13.2                                              | Amendment Procedures |   |
| SECTION 13.3                                              | Amendment Requirements |   |
| SECTION 13.4                                              | Special Meetings |   |
| SECTION 13.5                                              | Notice of a Meeting |   |
| SECTION 13.6                                              | Record Date |   |
| SECTION 13.7                                              | Adjournment |   |
| SECTION 13.8                                              | Waiver of Notice; Approval of Meeting;  Approval of Minutes |   |
| SECTION 13.9                                              | Quorum and Voting |   |
| SECTION 13.10                                             | Conduct  of a Meeting |   |
| SECTION 13.11                                             | Action  Without a Meeting |   |
| SECTION 13.12                                             | Right  to Vote and Related Matters |   |

 

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| **ARTICLE XIV**                            |
|-------------------------------------------------|
| **MERGER**                                      |
| ** **                                      |
| SECTION 14.1                               | Authority |   |
| SECTION 14.2                               | Procedure for Merger or Consolidation |   |
| SECTION 14.3                               | Approval by Limited Partners of Merger or  Consolidation |   |
| SECTION 14.4                               | Certificate of Merger |   |
| SECTION 14.5                               | Effect of Merger |   |
|                                            |   |   |
| **ARTICLE XV**                             |
| **RIGHT TO  ACQUIRE LIMITED PARTNER INTERESTS** |
|                                            | ** ** |   |
| SECTION 15.1                               | Right to Acquire Limited Partner Interests |   |
|                                            |   |   |
| **ARTICLE XVI**                            |
| **GENERAL  PROVISIONS**                         |
|                                            | ** ** |   |
| SECTION 16.1                               | Addresses and Notices |   |
| SECTION 16.2                               | Further Action |   |
| SECTION 16.3                               | Binding Effect |   |
| SECTION 16.4                               | Integration |   |
| SECTION 16.5                               | Creditors |   |
| SECTION 16.6                               | Waiver |   |
| SECTION 16.7                               | Counterparts |   |
| SECTION 16.8                               | Applicable Law |   |
| SECTION 16.9                               | Invalidity of Provisions |   |
| SECTION 16.10                              | Consent  of Partners |   |

 

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**FIRST AMENDEDAND RESTATED AGREEMENT OF LIMITEDPARTNERSHIP OF HILAND PARTNERS, LP**

 

THIS FIRST AMENDED ANDRESTATED AGREEMENT OF LIMITED PARTNERSHIP OF HILAND PARTNERS, LP dated as of February 15,2005, is entered into by and between Hiland Partners GP, LLC, a Delawarelimited liability company, as the General Partner, Continental Gas, Inc.,an Oklahoma corporation, as the Organizational Limited Partner, Continental GasHoldings, Inc., a Delaware corporation, Equity Financial Services, Inc.,an Oklahoma corporation, Harold Hamm HJ Trust and Harold Hamm DST Trust,together with any other Persons who become Partners in the Partnership orparties hereto as provided herein. In consideration of the covenants,conditions and agreements contained herein, the parties hereto hereby agree asfollows:

 

**ARTICLE I**DEFINITIONS

 

*SECTION 1.1*                                   Definitions.  The followingdefinitions shall be for all purposes, unless otherwise clearly indicated tothe contrary, applied to the terms used in this Agreement.

 

“Accretion Test” has themeaning assigned to such term in Section 5.7(g).

 

“Acquisition” means anytransaction in which any Group Member acquires (through an asset acquisition,merger, stock acquisition or other form of investment) control over all or aportion of the assets, properties or business of another Person for the purposeof increasing the operating capacity or revenues of the Partnership Group fromthe operating capacity or revenues of the Partnership Group existingimmediately prior to such transaction.

 

“Additional Book Basis”means the portion of any remaining Carrying Value of an Adjusted Property thatis attributable to positive adjustments made to such Carrying Value as a resultof Book-Up Events. For purposes of determining the extent that Carrying Valueconstitutes Additional Book Basis:

 

(i)                                     Anynegative adjustment made to the Carrying Value of an Adjusted Property as aresult of either a Book-Down Event or a Book-Up Event shall first be deemed tooffset or decrease that portion of the Carrying Value of such Adjusted Propertythat is attributable to any prior positive adjustments made thereto pursuant toa Book-Up Event or Book-Down Event.

 

(ii)                                  IfCarrying Value that constitutes Additional Book Basis is reduced as a result ofa Book-Down Event and the Carrying Value of other property is increased as aresult of such Book-Down Event, an allocable portion of any such increase inCarrying Value shall be treated as Additional Book Basis; provided, that theamount treated as Additional Book Basis pursuant hereto as a result of suchBook-Down Event shall not exceed the amount by which the Aggregate RemainingNet Positive Adjustments after such Book-Down Event exceeds the remainingAdditional Book Basis attributable to all of the Partnership’s AdjustedProperty after such Book-Down Event (determined without regard to theapplication of this clause (ii) to such Book-Down Event).

 

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“Additional Book BasisDerivative Items” means any Book Basis Derivative Items that are computed withreference to Additional Book Basis. To the extent that the Additional BookBasis attributable to all of the Partnership’s Adjusted Property as of thebeginning of any taxable period exceeds the Aggregate Remaining Net PositiveAdjustments as of the beginning of such period (the “Excess Additional BookBasis”), the Additional Book Basis Derivative Items for such period shall bereduced by the amount that bears the same ratio to the amount of AdditionalBook Basis Derivative Items determined without regard to this sentence as theExcess Additional Book Basis bears to the Additional Book Basis as of thebeginning of such period.

 

“Adjusted Capital Account”means the Capital Account maintained for each Partner as of the end of eachfiscal year of the Partnership, (a) increased by any amounts that such Partneris 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 anddeductions that, as of the end of such fiscal year, are reasonably expected tobe allocated to such Partner in subsequent years under Sections 704(e)(2) and706(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 inaccordance with the terms of this Agreement or otherwise to the extent theyexceed offsetting increases to such Partner’s Capital Account that arereasonably expected to occur during (or prior to) the year in which suchdistributions are reasonably expected to be made (other than increases as aresult of a minimum gain chargeback pursuant to Section 6.1(d)(i) or6.1(d)(ii)). The foregoing definition of Adjusted Capital Account is intendedto 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, aSubordinated Unit or an Incentive Distribution Right or any other PartnershipInterest shall be the amount that such Adjusted Capital Account would be ifsuch General Partner Unit, Common Unit, Subordinated Unit, IncentiveDistribution Right or other Partnership Interest were the only interest in thePartnership held by such Partner from and after the date on which such GeneralPartner Unit, Common Unit, Subordinated Unit, Incentive Distribution Right orother Partnership Interest was first issued.

 

“Adjusted OperatingSurplus” means, with respect to any period, Operating Surplus generated withrespect to such period (a) less (i) any net increase in Working CapitalBorrowings with respect to such period and (ii) any net decrease in cashreserves for Operating Expenditures with respect to such period not relating toan Operating Expenditure made with respect to such period, and (b) plus (i) anynet decrease in Working Capital Borrowings with respect to such period, and(ii) any net increase in cash reserves for Operating Expenditures with respectto such period required by any debt instrument for the repayment of principal,interest or premium. Adjusted Operating Surplus does not include that portionof Operating Surplus included in clauses (a)(i) and (a)(ii) of the definitionof Operating Surplus.

 

“Adjusted Property” meansany property the Carrying Value of which has been adjusted pursuant to Section 5.5(d)(i)or 5.5(d)(ii).

 

“Affiliate” means, withrespect to any Person, any other Person that directly or indirectly through oneor more intermediaries controls, is controlled by or is under common controlwith,

 

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the Person inquestion. As used herein, the term “control” means the possession, direct orindirect, of the power to direct or cause the direction of the management andpolicies of a Person, whether through ownership of voting securities, bycontract or otherwise.

 

“Aggregate Remaining NetPositive Adjustments” means, as of the end of any taxable period, the sum ofthe Remaining Net Positive Adjustments of all the Partners.

 

“Agreed Allocation” meansany 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 inwhich the term “Agreed Allocation” is used).

 

“Agreed Value” of anyContributed Property means the fair market value of such property or otherconsideration at the time of contribution as determined by the General Partner.The General Partner shall use such method as it determines to be appropriate toallocate the aggregate Agreed Value of Contributed Properties contributed tothe Partnership in a single or integrated transaction among each separateproperty on a basis proportional to the fair market value of each ContributedProperty.

 

“Agreement” means thisFirst Amended and Restated Agreement of Limited Partnership of Hiland Partners,LP, as it may be amended, supplemented or restated from time to time.

 

“Associate” means, whenused to indicate a relationship with any Person, (a) any corporation ororganization 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 stockor other voting interest; (b) any trust or other estate in which such Personhas at least a 20% beneficial interest or as to which such Person serves astrustee or in a similar fiduciary capacity; and (c) any relative or spouse ofsuch Person, or any relative of such spouse, who has the same principalresidence as such Person.

 

“Available Cash” means,with respect to any Quarter ending prior to the Liquidation Date:

 

(a)                                  thesum of (i) all cash and cash equivalents of the Partnership Group on hand atthe end of such Quarter, and (ii) all additional cash and cash equivalents ofthe Partnership Group on hand on the date of determination of Available Cashwith respect to such Quarter resulting from Working Capital Borrowings madesubsequent to the end of such Quarter, less

 

(b)                                 theamount of any cash reserves established by the General Partner to (i) providefor the proper conduct of the business of the Partnership Group (includingreserves for future capital expenditures and for anticipated future creditneeds of the Partnership Group) subsequent to such Quarter, (ii) comply withapplicable law or any loan agreement, security agreement, mortgage, debtinstrument or other agreement or obligation to which any Group Member is aparty or by which it is bound or its assets are subject or (iii) provide fundsfor distributions under Section 6.4 or 6.5 in respect of any one or moreof the next four Quarters; provided, however, that the General Partner may notestablish cash reserves pursuant to (iii) above if the effect of such reserveswould be that the Partnership is unable to distribute the Minimum QuarterlyDistribution on all

 

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Common Units, plusany Cumulative Common Unit Arrearage on all Common Units, with respect to suchQuarter; and, provided further, that disbursements made by a Group Member orcash reserves established, increased or reduced after the end of such Quarterbut on or before the date of determination of Available Cash with respect tosuch Quarter shall be deemed to have been made, established, increased or reduced,for purposes of determining Available Cash, within such Quarter if the GeneralPartner so determines.

 

Notwithstanding theforegoing, “Available Cash” with respect to the Quarter in which theLiquidation 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 boardof directors or managers, as applicable, if a corporation or limited liabilitycompany, or if a limited partnership, the board of directors or board ofmanagers of the general partner of the General Partner.

 

“Book Basis DerivativeItems” means any item of income, deduction, gain or loss included in thedetermination of Net Income or Net Loss that is computed with reference to theCarrying Value of an Adjusted Property (e.g., depreciation, depletion, or gainor loss with respect to an Adjusted Property).

 

“Book-Down Event” meansan event that triggers a negative adjustment to the Capital Accounts of thePartners pursuant to Section 5.5(d).

 

“Book-Tax Disparity”means with respect to any item of Contributed Property or Adjusted Property, asof the date of any determination, the difference between the Carrying Value ofsuch Contributed Property or Adjusted Property and the adjusted basis thereof forfederal income tax purposes as of such date. A Partner’s share of thePartnership’s Book-Tax Disparities in all of its Contributed Property andAdjusted Property will be reflected by the difference between such Partner’sCapital Account balance as maintained pursuant to Section 5.5 and thehypothetical balance of such Partner’s Capital Account computed as if it hadbeen maintained strictly in accordance with federal income tax accountingprinciples.

 

“Book-Up Event” means anevent that triggers a positive adjustment to the Capital Accounts of thePartners pursuant to Section 5.5(d).

 

“Business Day” meansMonday through Friday of each week, except that a legal holiday recognized assuch by the government of the United States of America or the State of Oklahomashall not be regarded as a Business Day.

 

“Capital Account” meansthe capital account maintained for a Partner pursuant to Section 5.5. The “CapitalAccount” of a Partner in respect of a General Partner Unit, a Common Unit, aSubordinated Unit, an Incentive Distribution Right or any Partnership Interestshall be the amount that such Capital Account would be if such General PartnerUnit, Common Unit, Subordinated Unit, Incentive Distribution Right or otherPartnership Interest were the only interest in the Partnership held by suchPartner from and after the date on which such General Partner Unit, CommonUnit, Subordinated Unit, Incentive Distribution Right or other PartnershipInterest was first issued.

 

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“Capital Contribution”means any cash, cash equivalents or the Net Agreed Value of ContributedProperty that a Partner contributes to the Partnership.

 

“Capital Improvement”means any (a) addition or improvement to the capital assets owned by any GroupMember or (b) acquisition of existing, or the construction of new, capitalassets (including, without limitation, natural gas gathering and processingsystems and natural gas liquids fractionation facilities and related assets),in each case if such addition, improvement, acquisition or construction is madeto increase the operating capacity or revenues of the Partnership Group fromthe operating capacity or revenues of the Partnership Group existingimmediately prior to such addition, improvement, acquisition or construction.

 

“Capital Surplus” has themeaning assigned to such term in Section 6.3(a).

 

“Carrying Value” means(a) with respect to a Contributed Property, the Agreed Value of such propertyreduced (but not below zero) by all depreciation, amortization and costrecovery deductions charged to the Partners’ Capital Accounts in respect ofsuch Contributed Property, and (b) with respect to any other Partnershipproperty, the adjusted basis of such property for federal income tax purposes,all as of the time of determination. The Carrying Value of any property shallbe adjusted from time to time in accordance with Sections 5.5(d)(i) and5.5(d)(ii) and to reflect changes, additions or other adjustments to theCarrying Value for dispositions and acquisitions of Partnership properties, asdeemed appropriate by the General Partner.

 

“Cause” means a court ofcompetent jurisdiction has entered a final, non-appealable judgment finding theGeneral Partner liable for actual fraud, gross negligence or willful or wantonmisconduct in its capacity as a general partner of the Partnership.

 

“Certificate” means acertificate (i) substantially in the form of Exhibit A to this Agreement,(ii) issued in global form in accordance with the rules and regulations ofthe Depositary or (iii) in such other form as may be adopted by the GeneralPartner, issued by the Partnership evidencing ownership of one or more CommonUnits or a certificate, in such form as may be adopted by the General Partner,issued by the Partnership evidencing ownership of one or more other PartnershipSecurities.

 

“Certificate of LimitedPartnership” means the Certificate of Limited Partnership of the Partnershipfiled 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 orrestated from time to time.

 

“CitizenshipCertification” means a properly completed certificate in such form as may bespecified by the General Partner by which a Limited Partner certifies that he(and if he is a nominee holding for the account of another Person, that to thebest of his knowledge such other Person) is an Eligible Citizen.

 

“Claim” (as used in Section 7.12(c))has the meaning assigned to such term in Section 7.12(c).

 

“Closing Date” means thefirst date on which Common Units are sold by the Partnership to theUnderwriters pursuant to the provisions of the Underwriting Agreement.

 

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“Closing Price” has themeaning assigned to such term in Section 15.1(a).

 

“Code” means the InternalRevenue Code of 1986, as amended and in effect from time to time. Any referenceherein to a specific section or sections of the Code shall be deemed toinclude a reference to any corresponding provision of any successor law.

 

“Combined Interest” hasthe meaning assigned to such term in Section 11.3(a).

 

“Commenced CommercialService” and “Commencement of Commercial Service” shall mean the date a CapitalImprovement is first put into service following completion of construction andtesting.

 

“Commission” means theUnited States Securities and Exchange Commission.

 

“Common Unit” means aUnit representing a fractional part of the Partnership Interests of all LimitedPartners, and having the rights and obligations specified with respect toCommon Units in this Agreement. The term “Common Unit” does not refer to aSubordinated Unit prior to its conversion into a Common Unit pursuant to theterms hereof.

 

“Common Unit Arrearage”means, with respect to any Common Unit, whenever issued, as to any Quarterwithin the Subordination Period, the excess, if any, of (a) the MinimumQuarterly Distribution with respect to a Common Unit in respect of such Quarterover (b) the sum of all Available Cash distributed with respect to a CommonUnit in respect of such Quarter pursuant to Section 6.4(a)(i).

 

“Conflicts Committee”means a committee of the Board of Directors of the General Partner composedentirely of two or more directors who are not (a) security holders, officers oremployees of the General Partner, (b) officers, directors or employees of anyAffiliate of the General Partner or (c) holders of any ownership interest inthe Partnership Group other than Common Units and who also meet theindependence standards required of directors who serve on an audit committee ofa board of directors established by the Securities Exchange Act of 1934, asamended, and the rules and regulations of the Commission thereunder and bythe National Securities Exchange on which the Common Units are listed.

 

“Continental LP” meansContinental Gas Operating, LP, an Oklahoma limited partnership and anysuccessor thereto. Continental Gas, Inc. is the predecessor to ContinentalLP prior to its conversion to a limited partnership.

 

“Contributed Property”means each property or other asset, in such form as may be permitted by theDelaware Act, but excluding cash, contributed to the Partnership. Once theCarrying Value of a Contributed Property is adjusted pursuant to Section 5.5(d),such property shall no longer constitute a Contributed Property, but shall bedeemed an Adjusted Property.

 

“Contribution Agreement”means that certain Contribution, Conveyance and Assumption Agreement, dated asof the Closing Date, among the General Partner, the Partnership, the OperatingCompany and Hiland and certain other parties, together with the additionalconveyance documents and instruments contemplated or referenced thereunder.

 

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“Cumulative Common UnitArrearage” means, with respect to any Common Unit, whenever issued, and as ofthe end of any Quarter, the excess, if any, of (a) the sum resulting fromadding together the Common Unit Arrearage as to an Initial Common Unit for eachof the Quarters within the Subordination Period ending on or before the lastday of such Quarter over (b) the sum of any distributions theretofore madepursuant to Section 6.4(a)(ii) and the second sentence of Section 6.5with respect to an Initial Common Unit (including any distributions to be madein respect of the last of such Quarters).

 

“Curative Allocation”means any allocation of an item of income, gain, deduction, loss or creditpursuant 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 theDelaware Revised Uniform Limited Partnership Act, 6 Del C. Section 17-101,et seq., as amended, supplemented or restated from time to time, and anysuccessor to such statute.

 

“Departing Partner” meansa former General Partner from and after the effective date of any withdrawal orremoval of such former General Partner pursuant to Section 11.1 or 11.2.

 

“Depositary” means, withrespect to any Units issued in global form, The Depository Trust Company andits successors and permitted assigns.

 

“Economic Risk of Loss”has the meaning set forth in Treasury Regulation Section 1.752-2(a).

 

“Eligible Citizen” meansa Person qualified to own interests in real property in jurisdictions in whichany Group Member does business or proposes to do business from time to time,and whose status as a Limited Partner does not or would not subject such GroupMember to a significant risk of cancellation or forfeiture of any of itsproperties or any interest therein.

 

“Equity Financial” meansEquity Financial Services, Inc., an Oklahoma corporation and any successorthereto.

 

“Estimated IncrementalQuarterly Tax Amount” has the meaning assigned to such term in Section 6.9.

 

“Event of Withdrawal” hasthe meaning assigned to such term in Section 11.1(a).

 

“Final Subordinated Units”has the meaning assigned to such term in Section 6.1(d)(x).

 

“First Liquidation TargetAmount” has the meaning assigned to such term in Section 6.1(c)(i)(D).

 

“First TargetDistribution” means $0.495 per Unit per Quarter (or, with respect to the periodcommencing on the Closing Date and ending on March 31, 2005, it means theproduct of $0.495 multiplied by a fraction of which the numerator is the numberof days in such period, and of which the denominator is 90), subject toadjustment in accordance with Sections 6.6 and 6.9.

 

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“Fully Diluted Basis”means, when calculating the number of Outstanding Units for any period, a basisthat includes, in addition to the Outstanding Units, all Partnership Securitiesand options, rights, warrants and appreciation rights relating to an equityinterest in the Partnership (a) that are convertible into or exercisable orexchangeable for Units that are senior to or pari passu with the SubordinatedUnits, (b) whose conversion, exercise or exchange price is less than theCurrent Market Price on the date of such calculation, (c) that may be convertedinto or exercised or exchanged for such Units prior to or during the Quarterimmediately following the end of the period for which the calculation is beingmade without the satisfaction of any contingency beyond the control of theholder other than the payment of consideration and the compliance withadministrative mechanics applicable to such conversion, exercise or exchangeand (d) that were not converted into or exercised or exchanged for such Unitsduring the period for which the calculation is being made; provided, however,that for purposes of determining the number of Outstanding Units on a FullyDiluted Basis when calculating whether the Subordination Period has ended orSubordinated Units are entitled to convert into Common Units pursuant to Section 5.8,such Partnership Securities, options, rights, warrants and appreciation rightsshall be deemed to have been Outstanding Units only for the four Quarters thatcomprise the last four Quarters of the measurement period; provided, further,that if consideration will be paid to any Group Member in connection with suchconversion, exercise or exchange, the number of Units to be included in suchcalculation shall be that number equal to the difference between (i) the numberof Units issuable upon such conversion, exercise or exchange and (ii) thenumber of Units that such consideration would purchase at the Current MarketPrice.

 

“General Partner” meansHiland Partners GP, LLC, a Delaware limited liability company, and itssuccessors and permitted assigns as general partner of the Partnership.

 

“General Partner Interest”means the ownership interest of the General Partner in the Partnership (in itscapacity as a general partner without reference to any Limited Partner Interestheld by it), which is evidenced by General Partner Units and includes any andall benefits to which the General Partner is entitled as provided in thisAgreement, together with all obligations of the General Partner to comply withthe terms and provisions of this Agreement.

 

“General Partner Unit”means a fractional part of the General Partner Interest having the rights andobligations specified with respect to the General Partner Interest.  A General Partner Unit is not a Unit.

 

“Group” means a Personthat 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 inresponse to a proxy or consent solicitation made to 10 or more Persons) ordisposing of any Partnership Interests with any other Person that beneficiallyowns, or whose Affiliates or Associates beneficially own, directly orindirectly, Partnership Interests.

 

“Group Member” means amember of the Partnership Group.

 

“Group Member Agreement”means the partnership agreement of any Group Member, other than thePartnership, that is a limited or general partnership, the limited liabilitycompany

 

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agreement of anyGroup Member that is a limited liability company, the certificate ofincorporation and bylaws or similar organizational documents of any GroupMember that is a corporation, the joint venture agreement or similar governingdocument of any Group Member that is a joint venture and the governing ororganizational or similar documents of any other Group Member that is a Personother than a limited or general partnership, limited liability company,corporation or joint venture, as such may be amended, supplemented or restatedfrom time to time.

 

“Hamm Trusts” refers tothe Harold Hamm DST Trust and the Harold Hamm HJ Trust, collectively.

 

“Hiland” means HilandPartners, LLC, an Oklahoma limited liability company and any successor thereto.

 

“Hiland GP LLC” meansHiland GP, LLC, a Delaware limited liability company and any successor thereto.

 

“Hiland LP LLC” meansHiland LP, LLC, a Delaware limited liability company and any successor thereto.

 

“Holder” as used in Section 7.12,has the meaning assigned to such term in Section 7.12(a).

 

“Incentive DistributionRight” means a non-voting Limited Partner Interest issued to the GeneralPartner in connection with the transfer of all of its interests in New HilandLLC and Hiland LP LLC to the Partnership pursuant to the ContributionAgreement, which Partnership Interest will confer upon the holder thereof onlythe rights and obligations specifically provided in this Agreement with respectto Incentive Distribution Rights (and no other rights otherwise available to orother obligations of a holder of a Partnership Interest). Notwithstandinganything in this Agreement to the contrary, the holder of an IncentiveDistribution Right shall not be entitled to vote such Incentive DistributionRight 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 IncentiveDistribution Rights pursuant to Sections 6.4(a)(v), (vi) and (vii) and6.4(b)(iii), (iv) and (v).

 

“Indemnified Persons” hasthe meaning assigned to such term in Section 7.12(c).

 

“Indemnitee” means (a)the General Partner, (b) any Departing Partner, (c) any Person who is or was anAffiliate of the General Partner or any Departing Partner, (d) any Person whois or was a member, partner, director, officer, fiduciary or trustee of anyGroup Member, the General Partner or any Departing Partner or any Affiliate ofany Group Member, the General Partner or any Departing Partner, (e) any Personwho is or was serving at the request of the General Partner or any DepartingPartner or any Affiliate of the General Partner or any Departing Partner as anofficer, director, member, partner, fiduciary or trustee of another Person;provided, that a Person shall not be an Indemnitee by reason of providing, on afee-for-services

 

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basis, trustee,fiduciary, or custodial services, and (f) any Person the General Partnerdesignates as an “Indemnitee” for purposes of this Agreement.

 

“Initial Common Units”means the Common Units sold in the Initial Offering.

 

“Initial Limited Partners”means Equity Financial, the Hamm Trusts, New Continental, the General Partner(with respect to the Common Units, Subordinated Units and IncentiveDistribution Rights received by it pursuant to Section 5.2), and theUnderwriters upon the issuance by the Partnership of Common Units as describedin Section 5.2 in connection with the Initial Offering.

 

“Initial Offering” meansthe initial offering and sale of Common Units to the public, as described inthe Registration Statement.

 

“Initial Unit Price”means (a) with respect to the Common Units and the Subordinated Units, theinitial public offering price per Common Unit at which the Underwriters offeredthe Common Units to the public for sale as set forth on the cover page ofthe prospectus included as part of the Registration Statement and first issuedat 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 whichsuch class or series of Units is initially sold by the Partnership, asdetermined by the General Partner, in each case adjusted as the General Partnerdetermines to be appropriate to give effect to any distribution, subdivision orcombination of Units.

 

“Interim CapitalTransactions” means the following transactions if they occur prior to theLiquidation Date: (a) borrowings, refinancings or refundings of indebtedness(other than Working Capital Borrowings and other than for items purchased onopen account in the ordinary course of business) by any Group Member and sales ofdebt securities of any Group Member; (b) sales of equity interests of any GroupMember (including the Common Units sold to the Underwriters pursuant to theexercise of the Over-Allotment Option); and (c) sales or other voluntary orinvoluntary dispositions of any assets of any Group Member other than (i) salesor other dispositions of inventory, accounts receivable and other assets in theordinary course of business, and (ii) sales or other dispositions of assets aspart of normal retirements or replacements.

 

“Issue Price” means theprice at which a Unit is purchased from the Partnership, after taking intoaccount any sales commission or underwriting discount charged to thePartnership.

 

“Limited Partner” means,unless the context otherwise requires, the Organizational Limited Partner priorto its withdrawal from the Partnership, each Initial Limited Partner, eachadditional Person that becomes a Limited Partner pursuant to the terms of thisAgreement and any Departing Partner upon the change of its status from GeneralPartner to Limited Partner pursuant to Section 11.3; provided, however,that when the term “Limited Partner” is used herein in the context of any voteor other approval, including without limitation Articles XIII and XIV, suchterm shall not, solely for such purpose, include any holder of an IncentiveDistribution Right except as may otherwise be required by law.

 

“Limited Partner Interest”means the ownership interest of a Limited Partner in the Partnership, which maybe evidenced by Common Units, Subordinated Units, Incentive

 

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DistributionRights or other Partnership Securities or a combination thereof or interesttherein, and includes any and all benefits to which such Limited Partner is entitledas provided in this Agreement, together with all obligations of such LimitedPartner to comply with the terms and provisions of this Agreement; provided,however, that when the term “Limited Partner Interest” is used herein in thecontext of any vote or other approval, including without limitationArticles XIII and XIV, such term shall not, solely for such purpose,include any holder of an Incentive Distribution Right except as may otherwisebe required by law.

 

“Liquidation Date” means(a) in the case of an event giving rise to the dissolution of the Partnershipof 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 ofOutstanding Units have the right to elect to reconstitute the Partnership andcontinue its business has expired without such an election being made, and (b)in the case of any other event giving rise to the dissolution of thePartnership, the date on which such event occurs.

 

“Liquidator” means one ormore Persons selected by the General Partner to perform the functions describedin Section 12.4 as liquidating trustee of the Partnership within themeaning of the Delaware Act.

 

“Merger Agreement” hasthe meaning assigned to such term in Section 14.1.

 

“Minimum QuarterlyDistribution” means $0.45 per Unit per Quarter (or with respect to the periodcommencing on the Closing Date and ending on March 31, 2005, it means theproduct of $0.45 multiplied by a fraction of which the numerator is the numberof days in such period and of which the denominator is 90), subject toadjustment in accordance with Sections 6.6 and 6.9.

 

“National SecuritiesExchange” means an exchange registered with the Commission under Section 6(a)of the Securities Exchange Act of 1934, as amended, supplemented or restatedfrom time to time, and any successor to such statute, or the NASDAQ NationalMarket or any successor thereto.

 

“Net Agreed Value” means,(a) in the case of any Contributed Property, the Agreed Value of such propertyreduced by any liabilities either assumed by the Partnership upon suchcontribution or to which such property is subject when contributed, and (b) inthe case of any property distributed to a Partner by the Partnership, thePartnership’s Carrying Value of such property (as adjusted pursuant to Section 5.5(d)(ii))at the time such property is distributed, reduced by any indebtedness eitherassumed by such Partner upon such distribution or to which such property issubject at the time of distribution, in either case, as determined under Section 752of the Code.

 

“Net Income” means, forany taxable year, the excess, if any, of the Partnership’s items of income andgain (other than those items taken into account in the computation of NetTermination Gain or Net Termination Loss) for such taxable year over thePartnership’s items of loss and deduction (other than those items taken intoaccount in the computation of Net Termination Gain or Net Termination Loss) forsuch taxable year. The items included in the calculation of Net Income shall bedetermined in accordance with Section 5.5(b) and shall not

 

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include any itemsspecially allocated under Section 6.1(d); provided, that the determinationof the items that have been specially allocated under Section 6.1(d) shallbe made as if Section 6.1(d)(xii) were not in this Agreement.

 

“Net Loss” means, for anytaxable year, the excess, if any, of the Partnership’s items of loss anddeduction (other than those items taken into account in the computation of NetTermination Gain or Net Termination Loss) for such taxable year over thePartnership’s items of income and gain (other than those items taken intoaccount in the computation of Net Termination Gain or Net Termination Loss) forsuch taxable year. The items included in the calculation of Net Loss shall bedetermined in accordance with Section 5.5(b) and shall not include anyitems specially allocated under Section 6.1(d); provided, that thedetermination 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 positiveadjustments over the total negative adjustments made to the Capital Account ofsuch 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 LiquidationDate. The items included in the determination of Net Termination Gain shall bedetermined in accordance with Section 5.5(b) and shall not include anyitems 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 LiquidationDate. The items included in the determination of Net Termination Loss shall bedetermined in accordance with Section 5.5(b) and shall not include anyitems of income, gain or loss specially allocated under Section 6.1(d).

 

“New Continental” meansContinental Gas Holdings, Inc. a Delaware corporation and any successorthereto.

 

“New Hiland” means HilandEnergy Partners LLC, a Delaware limited liability company and any successorthereto.

 

“Non-citizen Assignee”means a Person whom the General Partner has determined does not constitute anEligible Citizen and as to whose Partnership Interest the General Partner hasbecome the Limited Partner, pursuant to Section 4.9.

 

“Nonrecourse Built-inGain” means with respect to any Contributed Properties or Adjusted Propertiesthat are subject to a mortgage or pledge securing a Nonrecourse Liability, theamount of any taxable gain that would be allocated to the Partners pursuant toSections 6.2(b)(i)(A), 6.2(b)(ii)(A) and 6.2(b)(iii) if such propertieswere disposed of in a taxable transaction in full satisfaction of suchliabilities and for no other consideration.

 

“Nonrecourse Deductions”means any and all items of loss, deduction or expenditure (including, withoutlimitation, any expenditure described in Section 705(a)(2)(B) of the Code)

 

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that, inaccordance 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 toPurchase” has the meaning assigned to such term in Section 15.1(b).

 

“Omnibus Agreement” meansthat certain Omnibus Agreement, dated as of the Closing Date, among ContinentalResources, Inc., Hiland, Harold Hamm, the General Partner, New Continentaland the Partnership.

 

“Operating Company” meansHiland Operating, LLC, a Delaware limited liability company, and any successorsthereto.

 

“Operating Expenditures”means all Partnership Group expenditures, including, but not limited to, taxes,reimbursements of the General Partner, repayment of Working Capital Borrowings,debt service payments and capital expenditures, subject to the following:

 

(a)                                  payments(including prepayments) of principal of and premium on indebtedness other thanWorking Capital Borrowings shall not constitute Operating Expenditures; and

 

(b)                                 OperatingExpenditures shall not include (i) capital expenditures made for Acquisitionsor for Capital Improvements, (ii) payment of transaction expenses relating toInterim Capital Transactions or (iii) distributions to Partners. Where capitalexpenditures are made in part for Acquisitions or for Capital Improvements andin part for other purposes, the General Partner, with the concurrence of theConflicts Committee, shall determine the allocation between the amounts paidfor each and, with respect to the part of such capital expenditures made forother purposes, the period over which the capital expenditures made for otherpurposes will be deducted as an Operating Expenditure in calculating OperatingSurplus.

 

“Operating Surplus”means, with respect to any period ending prior to the Liquidation Date, on acumulative basis and without duplication,

 

(a)                                  thesum of (i) $7.7 million, (ii) all cash and cash equivalents of the PartnershipGroup on hand as of the close of business on the Closing Date, (iii) all cashreceipts of the Partnership Group for the period beginning on the Closing Dateand ending on the last day of such period, but excluding cash receipts fromInterim Capital Transactions (except to the extent specified in Section 6.5)and (iv) all cash receipts of the Partnership Group after the end of suchperiod but on or before the date of determination of Operating Surplus withrespect to such period resulting from Working Capital Borrowings, less

 

(b)                                 thesum of (i) Operating Expenditures for the period beginning on the Closing Dateand ending on the last day of such period and (ii) the amount of cash reservesestablished by the General Partner to provide funds for future OperatingExpenditures; provided, however, that disbursements made (includingcontributions to a Group Member or disbursements on behalf of a Group Member)or cash reserves established, increased or reduced after the end of such

 

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period but on orbefore the date of determination of Available Cash with respect to such periodshall be deemed to have been made, established, increased or reduced, forpurposes of determining Operating Surplus, within such period if the GeneralPartner so determines.

 

Notwithstanding theforegoing, “Operating Surplus” with respect to the Quarter in which theLiquidation 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 Partnershipor the General Partner or any of its Affiliates) acceptable to the GeneralPartner.

 

“Option Closing Date”means the date or dates on which any Common Units are sold by the Partnershipto the Underwriters upon exercise of the Over-Allotment Option.

 

“Organizational LimitedPartner” means Continental Gas, Inc. in its capacity as the organizationallimited partner of the Partnership pursuant to this Agreement.

 

“Outstanding” means, withrespect to Partnership Securities, all Partnership Securities that are issuedby the Partnership and reflected as outstanding on the Partnership’s books andrecords as of the date of determination; provided, however, that if at any timeany Person or Group (other than the General Partner or its Affiliates)beneficially owns 20% or more of any Outstanding Partnership Securities of anyclass then Outstanding, all Partnership Securities owned by such Person orGroup shall not be voted on any matter and shall not be considered to beOutstanding when sending notices of a meeting of Limited Partners to vote onany matter (unless otherwise required by law), calculating required votes,determining the presence of a quorum or for other similar purposes under thisAgreement, except that Common Units so owned shall be considered to beOutstanding for purposes of Section 11.1(b)(iv) (such Common Units shallnot, however, be treated as a separate class of Partnership Securities forpurposes of this Agreement); provided, further, that the foregoing limitationshall not apply (i) to any Person or Group who acquired 20% or more of anyOutstanding Partnership Securities of any class then Outstanding directly fromthe General Partner or its Affiliates, (ii) to any Person or Group who acquired20% or more of any Outstanding Partnership Securities of any class thenOutstanding directly or indirectly from a Person or Group described in clause(i) provided that the General Partner shall have notified such Person or Groupin writing that such limitation shall not apply, or (iii) to any Person or Groupwho acquired 20% or more of any Partnership Securities issued by thePartnership with the prior approval of the board of directors of the GeneralPartner.

 

“Over-Allotment Option”means the over-allotment option granted to the Underwriters by the Partnershippursuant to the Underwriting Agreement.

 

“Parity Units” meansCommon Units and all other Units of any other class or series that have theright (i) to receive distributions of Available Cash from Operating Surpluspursuant to each of subclauses (a)(i) and (a)(ii) of Section 6.4 in thesame order of priority with respect to the participation of Common Units insuch distributions or (ii) to participate in allocations of Net TerminationGain pursuant to Section 6.1(c)(i)(B) in the same order of priority withthe Common Units, in each case regardless of whether the amounts or value sodistributed or allocated on each Parity Unit equals the amount or value sodistributed or allocated on each Common Unit. Units whose participation in such(i) distributions of Available Cash from Operating Surplus and

 

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(ii) allocationsof Net Termination Gain are subordinate in order of priority to suchdistributions and allocations on Common Units shall not constitute Parity Unitseven if such Units are convertible under certain circumstances into CommonUnits or Parity Units.

 

“Partner Nonrecourse Debt”has the meaning set forth in Treasury Regulation Section 1.704-2(b)(4).

 

“Partner Nonrecourse DebtMinimum Gain” has the meaning set forth in Treasury Regulation Section 1.704-2(i)(2).

 

“Partner NonrecourseDeductions” 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 theGeneral Partner and the Limited Partners.

 

“Partnership” meansHiland Partners, LP, a Delaware limited partnership, and any successorsthereto.

 

“Partnership Group” meansthe Partnership and its Subsidiaries treated as a single consolidated entity.

 

“Partnership Interest”means an interest in the Partnership, which shall include the General PartnerInterest and Limited Partner Interests.

 

“Partnership Minimum Gain”means that amount determined in accordance with the principles of TreasuryRegulation Section 1.704-2(d).

 

“Partnership Security”means any class or series of equity interest in the Partnership (but excludingany options, rights, warrants and appreciation rights relating to an equityinterest in the Partnership), including without limitation, Common Units,Subordinated Units and Incentive Distribution Rights.

 

“Percentage Interest”means as of any date of determination (a) as to the General Partner withrespect to General Partner Units and as to any Unitholder with respect toUnits, the product obtained by multiplying (i) 100% less the percentageapplicable to clause (b) by (ii) the quotient obtained by dividing (A) thenumber of Units held by such Unitholder or the number of General Partner Unitsheld by the General Partner, as the case may be, by (B) the total number of allOutstanding Units and all General Partner Units, and (b) as to the holders of otherPartnership Securities issued by the Partnership in accordance with Section 5.6,the percentage established as a part of such issuance. The Percentage Interestwith respect to an Incentive Distribution Right shall at all times be zero.

 

“Person” means anindividual or a corporation, limited liability company, partnership, jointventure, trust, unincorporated organization, association, government agency orpolitical subdivision thereof or other entity.

 

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“Per Unit Capital Amount”means, as of any date of determination, the Capital Account, stated on a perUnit basis, underlying any Unit held by a Person other than the General Partneror any Affiliate of the General Partner who holds Units.

 

“Pro Rata” means (a) whenused with respect to Units or any class thereof, apportioned equally among alldesignated Units in accordance with their relative Percentage Interests, (b)when used with respect to Partners or Record Holders, apportioned among allPartners or Record Holders, as the case may be, in accordance with theirrelative Percentage Interests and (c) when used with respect to holders ofIncentive Distribution Rights, apportioned equally among all holders ofIncentive Distribution Rights in accordance with the relative number orpercentage of Incentive Distribution Rights held by each such holder.

 

“Purchase Date” means thedate determined by the General Partner as the date for purchase of allOutstanding Units of a certain class (other than Units owned by the GeneralPartner and its Affiliates) pursuant to Article XV.

 

“Quarter” means, unlessthe context requires otherwise, a fiscal quarter, or, with respect to the firstfiscal quarter after the Closing Date, the portion of such fiscal quarter afterthe Closing Date, of the Partnership.

 

“Recapture Income” meansany gain recognized by the Partnership (computed without regard to anyadjustment required by Section 734 or Section 743 of the Code) uponthe disposition of any property or asset of the Partnership, which gain ischaracterized as ordinary income because it represents the recapture ofdeductions previously taken with respect to such property or asset.

 

“Record Date” means thedate established by the General Partner for determining (a) the identity of theRecord Holders entitled to notice of, or to vote at, any meeting of LimitedPartners or entitled to vote by ballot or give approval of Partnership actionin writing without a meeting or entitled to exercise rights in respect of anylawful action of Limited Partners or (b) the identity of Record Holdersentitled to receive any report or distribution or to participate in any offer.

 

“Record Holder” means thePerson in whose name a Common Unit is registered on the books of the TransferAgent as of the opening of business on a particular Business Day, or withrespect to other Partnership Interests, the Person in whose name any such otherPartnership Interests is registered on the books that the General Partner hascaused to be kept as of the opening of business on such Business Day.

 

“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. 333-119908)as it has been or as it may be amended or supplemented from time to time, filedby the Partnership with the Commission under the Securities Act to register theoffering and sale of the Common Units in the Initial Offering.

 

“Remaining Basket Amount”has the meaning assigned to such term in Section 5.7(g).

 

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“Remaining Net PositiveAdjustments” means as of the end of any taxable period, (i) with respect to theUnitholders holding Common Units or Subordinated Units, the excess of (a) theNet Positive Adjustments of the Unitholders holding Common Units orSubordinated Units as of the end of such period over (b) the sum of thosePartners’ Share of Additional Book Basis Derivative Items for each priortaxable period, (ii) with respect to the General Partner (as holder of theGeneral Partner Units), the excess of (a) the Net Positive Adjustments of theGeneral Partner as of the end of such period over (b) the sum of the GeneralPartner’s Share of Additional Book Basis Derivative Items with respect to theGeneral Partner Units for each prior taxable period, and (iii) with respect tothe holders of Incentive Distribution Rights, the excess of (a) the NetPositive Adjustments of the holders of Incentive Distribution Rights as of theend of such period over (b) the sum of the Share of Additional Book BasisDerivative Items of the holders of the Incentive Distribution Rights for eachprior taxable period.

 

“Required Allocations”means (a) any limitation imposed on any allocation of Net Losses or NetTermination Losses under Section 6.1(b) or 6.1(c)(ii) and (b) anyallocation of an item of income, gain, loss or deduction pursuant to Section 6.1(d)(i),6.1(d)(ii), 6.1(d)(iv), 6.1(d)(vii) or 6.1(d)(ix).

 

“Residual Gain” or “ResidualLoss” means any item of gain or loss, as the case may be, of the Partnershiprecognized for federal income tax purposes resulting from a sale, exchange orother disposition of a Contributed Property or Adjusted Property, to the extentsuch item of gain or loss is not allocated pursuant to Section 6.2(b)(i)(A)or 6.2(b)(ii)(A), respectively, to eliminate Book-Tax Disparities.

 

“Restricted Business” hasthe meaning assigned to such term in the Omnibus Agreement.

 

“Retained ConvertedSubordinated Unit” has the meaning assigned to such term in Section 5.5(c)(ii).

 

“Second LiquidationTarget Amount” has the meaning assigned to such term in Section 6.1(c)(i)(E).

 

“Second TargetDistribution” means $0.5625 per Unit per Quarter (or, with respect to theperiod commencing on the Closing Date and ending on March 31, 2005, itmeans the product of $0.5625 multiplied by a fraction of which the numerator isequal to the number of days in such period and of which the denominator is 90),subject to adjustment in accordance with Sections 6.6 and 6.9.

 

“Securities Act” meansthe Securities Act of 1933, as amended, supplemented or restated from time totime and any successor to such statute.

 

“Share of Additional BookBasis Derivative Items” means in connection with any allocation of AdditionalBook Basis Derivative Items for any taxable period, (i) with respect to theUnitholders holding Common Units or Subordinated Units, the amount that bearsthe same ratio to such Additional Book Basis Derivative Items as theUnitholders’ Remaining Net Positive Adjustments as of the end of such periodbears 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

 

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Items as theGeneral Partner’s Remaining Net Positive Adjustments as of the end of suchperiod bears to the Aggregate Remaining Net Positive Adjustment as of thattime, and (iii) with respect to the Partners holding Incentive DistributionRights, the amount that bears the same ratio to such Additional Book BasisDerivative Items as the Remaining Net Positive Adjustments of the Partnersholding the Incentive Distribution Rights as of the end of such period bears tothe Aggregate Remaining Net Positive Adjustments as of that time.

 

“Special Approval” meansapproval by a majority of the members of the Conflicts Committee.

 

“Subordinated Unit” meansa Unit representing a fractional part of the Partnership Interests of allLimited Partners and having the rights and obligations specified with respectto Subordinated Units in this Agreement. The term “Subordinated Unit” as usedherein does not include a Common Unit or Parity Unit. A Subordinated Unit thatis convertible into a Common Unit or a Parity Unit shall not constitute aCommon Unit or Parity Unit until such conversion occurs.

 

“Subordination Period”means the period commencing on the Closing Date and ending on the first tooccur of the following dates:

 

(a)                                  thefirst day of any Quarter beginning after March 31, 2010 in respect ofwhich (i) (A) distributions of Available Cash from Operating Surplus on each ofthe Outstanding Common Units and Subordinated Units and any other OutstandingUnits that are senior or equal in right of distribution to the SubordinatedUnits with respect to each of the three consecutive, non-overlappingfour-Quarter periods immediately preceding such date equaled or exceeded thesum of the Minimum Quarterly Distribution on all Outstanding Common Units andSubordinated Units and any other Outstanding Units that are senior or equal inright of distribution to the Subordinated Units during such periods and (B) theAdjusted Operating Surplus for each of the three consecutive, non-overlappingfour-Quarter periods immediately preceding such date equaled or exceeded thesum of the Minimum Quarterly Distribution on all of the Common Units andSubordinated Units and any other Units that are senior or equal in right ofdistribution to the Subordinated Units that were Outstanding during suchperiods on a Fully Diluted Basis, plus the related distribution on the GeneralPartner Units, with respect to such periods and (ii) there are no CumulativeCommon Unit Arrearages; and

 

(b)                                 thedate on which the General Partner is removed as general partner of thePartnership upon the requisite vote by holders of Outstanding Units undercircumstances where Cause does not exist and Units held by the General Partnerand its Affiliates are not voted in favor of such removal.

 

“Subsidiary” means, withrespect to any Person, (a) a corporation of which more than 50% of the votingpower of shares entitled (without regard to the occurrence of any contingency)to vote in the election of directors or other governing body of suchcorporation is owned, directly or indirectly, at the date of determination, bysuch Person, by one or more Subsidiaries of such Person or a combinationthereof, (b) a partnership (whether general or limited) in which such Person ora Subsidiary of such Person is, at the date of determination, a general orlimited partner of such partnership, but only if more than 50% of thepartnership interests of such partnership

 

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(considering allof 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 ormore Subsidiaries of such Person, or a combination thereof, or (c) any otherPerson (other than a corporation or a partnership) in which such Person, one ormore Subsidiaries of such Person, or a combination thereof, directly orindirectly, at the date of determination, has (i) at least a majority ownershipinterest or (ii) the power to elect or direct the election of a majority of thedirectors or other governing body of such Person.

 

“Surviving BusinessEntity” has the meaning assigned to such term in Section 14.2(b).

 

“Third Liquidation TargetAmount” has the meaning assigned to such term in Section 6.1(c)(i)(F).

 

“Third TargetDistribution” means $0.675 per Unit per Quarter (or, with respect to the periodcommencing on the Closing Date and ending on March 31, 2005, it means theproduct of $0.675 multiplied by a fraction of which the numerator is equal tothe number of days in such period and of which the denominator is 90), subjectto adjustment in accordance with Sections 6.6 and 6.9.

 

“Trading Day” has themeaning assigned to such term in Section 15.1(a).

 

“Transfer” has themeaning assigned to such term in Section 4.4(a).

 

“Transfer Agent” meanssuch bank, trust company or other Person (including the General Partner or oneof its Affiliates) as shall be appointed from time to time by the Partnershipto act as registrar and transfer agent for the Common Units; provided that ifno Transfer Agent is specifically designated for any other PartnershipSecurities, the General Partner shall act in such capacity.

 

“Underwriter” means eachPerson named as an underwriter in Schedule I to the Underwriting Agreementwho purchases Common Units pursuant thereto.

 

“Underwriting Agreement”means that certain Underwriting Agreement dated February 9, 2005 among theUnderwriters, the Partnership, the General Partner,  the Operating Company and other partiesthereto, providing for the purchase of Common Units by the Underwriters.

 

“Unit” means aPartnership Security that is designated as a “Unit” and shall include CommonUnits and Subordinated Units but shall not include (i) General Partner Units(or the General Partner Interest represented thereby) or (ii) IncentiveDistribution Rights.

 

“Unitholders” means theholders of Units.

 

“Unit Majority” means,during the Subordination Period, at least a majority of the Outstanding CommonUnits (excluding Common Units owned by the General Partner and its Affiliates)voting as a class and at least a majority of the Outstanding Subordinated Unitsvoting as a class, and after the end of the Subordination Period, at least amajority of the Outstanding Common Units.

 

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“Unpaid MQD” has themeaning 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 ofdetermination, the excess, if any, of (a) the fair market value of suchproperty as of such date (as determined under Section 5.5(d)) over (b) theCarrying Value of such property as of such date (prior to any adjustment to bemade pursuant to Section 5.5(d) as of such date).

 

“Unrealized Loss”attributable to any item of Partnership property means, as of any date ofdetermination, the excess, if any, of (a) the Carrying Value of such propertyas 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 suchdate (as determined under Section 5.5(d)).

 

“Unrecovered Initial UnitPrice” means at any time, with respect to a Unit, the Initial Unit Price lessthe sum of all distributions constituting Capital Surplus theretofore made inrespect of an Initial Common Unit and any distributions of cash (or the NetAgreed Value of any distributions in kind) in connection with the dissolutionand liquidation of the Partnership theretofore made in respect of an InitialCommon Unit, adjusted as the General Partner determines to be appropriate togive effect to any distribution, subdivision or combination of such Units.

 

“U.S. GAAP” means UnitedStates generally accepted accounting principles consistently applied.

 

“Withdrawal Opinion ofCounsel” has the meaning assigned to such term in Section 11.1(b).

 

“Working CapitalBorrowings” means borrowings used solely for working capital purposes or to paydistributions to Partners made pursuant to a credit facility or otherarrangement to the extent such borrowings are required to be reduced to arelatively small amount each year (or for the year in which the InitialOffering is consummated, the 12-month period beginning on the Closing Date) foran economically meaningful period of time.

 

SECTION 1.2                          *Construction*.  Unlessthe context requires otherwise: (a) any pronoun used in this Agreement shallinclude the corresponding masculine, feminine or neuter forms, and the singularform of nouns, pronouns and verbs shall include the plural and vice versa; (b)references to Articles and Sections refer to Articles and Sections of thisAgreement; and (c) the term “include” or “includes” means includes, withoutlimitation, and “including” means including, without limitation.

 

**ARTICLE II**ORGANIZATION

 

SECTION 2.1                          Formation.  The General Partner and the OrganizationalLimited Partner have previously formed the Partnership as a limited partnershippursuant to the provisions of the Delaware Act and hereby amend and restate theoriginal Agreement of Limited Partnership of Hiland Partners, LP in itsentirety. This amendment and restatement shall become effective on the date ofthis Agreement. Except as expressly provided to the contrary in this Agreement,the rights, duties (including fiduciary duties), liabilities and obligations ofthe Partners and the

 

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administration, dissolution and termination of the Partnership shall begoverned by the Delaware Act. All Partnership Interests shall constitutepersonal property of the owner thereof for all purposes and a Partner has nointerest in specific Partnership property.

 

SECTION 2.2                          *Name*.  The name of thePartnership shall be “Hiland Partners, LP”. The Partnership’s business may beconducted under any other name or names as determined by the General Partner,including the name of the General Partner. The words “Limited Partnership,” “LP,”“Ltd.” or similar words or letters shall be included in the Partnership’s namewhere necessary for the purpose of complying with the laws of any jurisdictionthat so requires. The General Partner may change the name of the Partnership atany time and from time to time and shall notify the Limited Partners of suchchange in the next regular communication to the Limited Partners.

 

SECTION 2.3                          *Registered Office; Registered Agent; Principal Office*; OtherOffices.  Unless and until changed by theGeneral Partner, the registered office of the Partnership in the State ofDelaware shall be located at 1209 Orange Street, Wilmington, Delaware 19801,and the registered agent for service of process on the Partnership in the Stateof Delaware at such registered office shall be The Corporation Trust Company.The principal office of the Partnership shall be located at 205 West Maple, Suite 1100,Enid, Oklahoma 73701 or such other place as the General Partner may from timeto time designate by notice to the Limited Partners. The Partnership maymaintain offices at such other place or places within or outside the State ofDelaware as the General Partner shall determine necessary or appropriate. Theaddress of the General Partner shall be 205 West Maple, Suite 1100, Enid,Oklahoma 73701 or such other place as the General Partner may from time to timedesignate by notice to the Limited Partners.

 

SECTION 2.4                          *Purpose and Business*. The purpose and nature of the business to be conducted by the Partnershipshall be to engage directly in, or enter into or form any corporation,partnership, joint venture, limited liability company or other arrangement toengage indirectly in, any business activity that is approved by the GeneralPartner and that lawfully may be conducted by a limited partnership organizedpursuant to the Delaware Act and, in connection therewith, to exercise all ofthe rights and powers conferred upon the Partnership pursuant to the agreementsrelating to such business activity, and do anything necessary or appropriate tothe foregoing, including the making of capital contributions or loans to aGroup Member; provided, however, that the General Partner shall not cause thePartnership to engage, directly or indirectly, in any business activity thatthe General Partner determines would cause the Partnership to be treated as anassociation taxable as a corporation or otherwise taxable as an entity forfederal income tax purposes. The General Partner shall have no duty orobligation to propose or approve, and may decline to propose or approve, theconduct by the Partnership of any business free of any fiduciary duty orobligation whatsoever to the Partnership, any Limited Partner and, in decliningto so propose or approve, shall not be required to act in good faith orpursuant to any other standard imposed by this Agreement, any Group MemberAgreement, any other agreement contemplated hereby or under the Delaware Act orany other law, rule or regulation.

 

SECTION 2.5                          *Powers*.  ThePartnership shall be empowered to do any and all acts and things necessary orappropriate for the furtherance and accomplishment of the purposes and businessdescribed in Section 2.4 and for the protection and benefit of thePartnership.

 

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SECTION 2.6                          *Power of Attorney*.

 

(a)                                  EachLimited Partner hereby constitutes and appoints the General Partner and, if aLiquidator shall have been selected pursuant to Section 12.3, theLiquidator (and any successor to the Liquidator by merger, transfer,assignment, election or otherwise) and each of their authorized officers andattorneys-in-fact, as the case may be, with full power of substitution, as histrue and lawful agent and attorney-in-fact, with full power and authority inhis name, place and stead, to:

 

(i)                                     execute,swear to, acknowledge, deliver, file and record in the appropriate publicoffices (A) all certificates, documents and other instruments (including thisAgreement and the Certificate of Limited Partnership and all amendments orrestatements hereof or thereof) that the General Partner or the Liquidatordetermines to be necessary or appropriate to form, qualify or continue theexistence or qualification of the Partnership as a limited partnership (or apartnership in which the limited partners have limited liability) in the Stateof Delaware and in all other jurisdictions in which the Partnership may conductbusiness or own property; (B) all certificates, documents and other instrumentsthat the General Partner or the Liquidator determines to be necessary orappropriate to reflect, in accordance with its terms, any amendment, change,modification or restatement of this Agreement; (C) all certificates, documentsand other instruments (including conveyances and a certificate of cancellation)that the General Partner or the Liquidator determines to be necessary orappropriate to reflect the dissolution and liquidation of the Partnershippursuant to the terms of this Agreement; (D) all certificates, documents andother instruments relating to the admission, withdrawal, removal orsubstitution of any Partner pursuant to, or other events described in, Article IV,X, XI or XII; (E) all certificates, documents and other instruments relating tothe determination of the rights, preferences and privileges of any class orseries of Partnership Securities issued pursuant to Section 5.6; and (F)all certificates, documents and other instruments (including agreements and acertificate of merger) relating to a merger, consolidation or conversion of thePartnership pursuant to Article XIV; and

 

(ii)                                  execute,swear to, acknowledge, deliver, file and record all ballots, consents,approvals, waivers, certificates, documents and other instruments that theGeneral 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 isconsistent with the terms of this Agreement or (B) effectuate the terms orintent of this Agreement; provided, that when required by Section 13.3 orany other provision of this Agreement that establishes a percentage of theLimited Partners or of the Limited Partners of any class or series required totake any action, the General Partner and the Liquidator may exercise the powerof 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 suchclass or series, as applicable.

 

Nothing contained in this Section 2.6(a) shall be construed asauthorizing the General Partner to amend this Agreement except in accordancewith Article XIII or as may be otherwise expressly provided for in thisAgreement.

 

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(b)                                 Theforegoing power of attorney is hereby declared to be irrevocable and a powercoupled with an interest, and it shall survive and, to the maximum extentpermitted by law, not be affected by the subsequent death, incompetency,disability, incapacity, dissolution, bankruptcy or termination of any LimitedPartner and the transfer of all or any portion of such Limited Partner’sPartnership Interest and shall extend to such Limited Partner’s heirs,successors, assigns and personal representatives. Each such Limited Partnerhereby agrees to be bound by any representation made by the General Partner orthe Liquidator acting in good faith pursuant to such power of attorney; andeach such Limited Partner, to the maximum extent permitted by law, herebywaives any and all defenses that may be available to contest, negate ordisaffirm the action of the General Partner or the Liquidator taken in goodfaith under such power of attorney. Each Limited Partner shall execute anddeliver to the General Partner or the Liquidator, within 15 days after receiptof the request therefor, such further designation, powers of attorney and otherinstruments as the General Partner or the Liquidator may request in order toeffectuate this Agreement and the purposes of the Partnership.

 

SECTION 2.7                          *Term*.  The term of thePartnership commenced upon the filing of the Certificate of Limited Partnershipin accordance with the Delaware Act and shall continue in existence until thedissolution of the Partnership in accordance with the provisions of Article XII.The existence of the Partnership as a separate legal entity shall continueuntil the cancellation of the Certificate of Limited Partnership as provided inthe Delaware Act.

 

SECTION 2.8                          *Title to Partnership Assets*. Title to Partnership assets, whether real, personal or mixed and whethertangible or intangible, shall be deemed to be owned by the Partnership as anentity, and no Partner, individually or collectively, shall have any ownershipinterest in such Partnership assets or any portion thereof. Title to any or allof the Partnership assets may be held in the name of the Partnership, theGeneral Partner, one or more of its Affiliates or one or more nominees, as theGeneral Partner may determine. The General Partner hereby declares and warrantsthat any Partnership assets for which record title is held in the name of theGeneral Partner or one or more of its Affiliates or one or more nominees shallbe held by the General Partner or such Affiliate or nominee for the use and benefitof the Partnership in accordance with the provisions of this Agreement;provided, however, that the General Partner shall use reasonable efforts tocause record title to such assets (other than those assets in respect of whichthe General Partner determines that the expense and difficulty of conveyancingmakes transfer of record title to the Partnership impracticable) to be vestedin the Partnership as soon as reasonably practicable; provided, further, that,prior to the withdrawal or removal of the General Partner or as soon thereafteras practicable, the General Partner shall use reasonable efforts to effect thetransfer 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 GeneralPartner. All Partnership assets shall be recorded as the property of thePartnership in its books and records, irrespective of the name in which recordtitle 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 exceptas expressly provided in this Agreement or the Delaware Act.

 

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SECTION 3.2                          *Management of Business*.  No Limited Partner, in its capacity as such,shall participate in the operation, management or control (within the meaningof the Delaware Act) of the Partnership’s business, transact any business inthe Partnership’s name or have the power to sign documents for or otherwisebind the Partnership. Any action taken by any Affiliate of the General Partneror any officer, director, employee, manager, member, general partner, agent ortrustee 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 controlof 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 shallnot affect, impair or eliminate the limitations on the liability of the LimitedPartners under this Agreement.

 

SECTION 3.3                          *Outside Activities of the Limited Partners*.  Subject to the provisions of Section 7.5and the Omnibus Agreement, which shall continue to be applicable to the Personsreferred to therein, regardless of whether such Persons shall also be LimitedPartners, any Limited Partner shall be entitled to and may have businessinterests and engage in business activities in addition to those relating tothe Partnership, including business interests and activities in directcompetition with the Partnership Group. Neither the Partnership nor any of theother Partners shall have any rights by virtue of this Agreement in anybusiness ventures of any Limited Partner.

 

SECTION 3.4                          *Rights of Limited Partners*.

 

(a)                                  Inaddition to other rights provided by this Agreement or by applicable law, andexcept as limited by Section 3.4(b), each Limited Partner shall have theright, for a purpose reasonably related to such Limited Partner’s interest as aLimited Partner in the Partnership, upon reasonable written demand and at suchLimited Partner’s own expense:

 

(i)                                     toobtain true and full information regarding the status of the business andfinancial condition of the Partnership;

 

(ii)                                  promptlyafter becoming available, to obtain a copy of the Partnership’s federal, stateand local income tax returns for each year;

 

(iii)                               tohave furnished to him a current list of the name and last known business,residence or mailing address of each Partner;

 

(iv)                              tohave furnished to him a copy of this Agreement and the Certificate of LimitedPartnership and all amendments thereto, together with copies of the executedcopies of all powers of attorney pursuant to which this Agreement, theCertificate of Limited Partnership and all amendments thereto have beenexecuted;

 

(v)                                 toobtain true and full information regarding the amount of cash and a descriptionand statement of the Net Agreed Value of any other Capital Contribution by eachPartner and that each Partner has agreed to contribute in the future, and thedate on which each became a Partner; and

 

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(vi)                              toobtain such other information regarding the affairs of the Partnership as isjust and reasonable.

 

(b)                                 TheGeneral Partner may keep confidential from the Limited Partners, for suchperiod of time as the General Partner deems reasonable, (i) any informationthat the General Partner reasonably believes to be in the nature of tradesecrets or (ii) other information the disclosure of which the General Partnerin good faith believes (A) is not in the best interests of the PartnershipGroup, (B) could damage the Partnership Group or (C) that any Group Member isrequired by law or by agreement with any third party to keep confidential(other than agreements with Affiliates of the Partnership the primary purposeof which is to circumvent the obligations set forth in this Section 3.4).

 

**ARTICLE IV**CERTIFICATES; RECORD HOLDERS; TRANSFER OFPARTNERSHIP INTERESTS;REDEMPTION OF PARTNERSHIP INTERESTS

 

SECTION 4.1                          *Certificates*.  Uponthe Partnership’s issuance of Common Units or Subordinated Units to any Person,the Partnership shall issue, upon the request of such Person, one or moreCertificates in the name of such Person evidencing the number of such Unitsbeing so issued. In addition, (a) upon the General Partner’s request, thePartnership shall issue to it one or more Certificates in the name of theGeneral Partner evidencing its General Partner Units and (b) upon the requestof any Person owning Incentive Distribution Rights or any other PartnershipSecurities other than Common Units or Subordinated Units, the Partnership shallissue to such Person one or more certificates evidencing such IncentiveDistribution Rights or other Partnership Securities other than Common Units orSubordinated Units. Certificates shall be executed on behalf of the Partnershipby the Chairman of the Board, President or any Executive Vice President or VicePresident and the Secretary or any Assistant Secretary of the General Partner.No Common Unit Certificate shall be valid for any purpose until it has beencountersigned by the Transfer Agent; provided, however, that if the GeneralPartner elects to issue Common Units in global form, the Common UnitCertificates shall be valid upon receipt of a certificate from the TransferAgent certifying that the Common Units have been duly registered in accordancewith the directions of the Partnership. Subject to the requirements of Section 6.7(b),the Partners holding Certificates evidencing Subordinated Units may exchangesuch Certificates for Certificates evidencing Common Units on or after the dateon which such Subordinated Units are converted into Common Units pursuant tothe terms of Section 5.8.

 

SECTION 4.2                          *Mutilated, Destroyed, Lost or Stolen Certificates*.

 

(a)                                  Ifany mutilated Certificate is surrendered to the Transfer Agent, the appropriateofficers of the General Partner on behalf of the Partnership shall execute, andthe Transfer Agent shall countersign and deliver in exchange therefor, a newCertificate evidencing the same number and type of Partnership Securities asthe Certificate so surrendered.

 

(b)                                 Theappropriate officers of the General Partner on behalf of the Partnership shallexecute and deliver, and the Transfer Agent shall countersign, a newCertificate in place of any Certificate previously issued if the Record Holderof the Certificate:

 

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(i)                                     makesproof by affidavit, in form and substance satisfactory to the General Partner,that a previously issued Certificate has been lost, destroyed or stolen;

 

(ii)                                  requeststhe issuance of a new Certificate before the General Partner has notice thatthe Certificate has been acquired by a purchaser for value in good faith andwithout notice of an adverse claim;

 

(iii)                               ifrequested by the General Partner, delivers to the General Partner a bond, inform and substance satisfactory to the General Partner, with surety or suretiesand with fixed or open penalty as the General Partner may direct, to indemnifythe Partnership, the Partners, the General Partner and the Transfer Agentagainst any claim that may be made on account of the alleged loss, destructionor theft of the Certificate; and

 

(iv)                              satisfiesany other reasonable requirements imposed by the General Partner.

 

If a Limited Partnerfails to notify the General Partner within a reasonable time after he hasnotice of the loss, destruction or theft of a Certificate, and a transfer ofthe Limited Partner Interests represented by the Certificate is registeredbefore the Partnership, the General Partner or the Transfer Agent receives suchnotification, the Limited Partner shall be precluded from making any claimagainst the Partnership, the General Partner or the Transfer Agent for suchtransfer or for a new Certificate.

 

(c)                                  Asa 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 anytax or other governmental charge that may be imposed in relation thereto andany other expenses (including the fees and expenses of the Transfer Agent)reasonably connected therewith.

 

SECTION 4.3                          *Record Holders*.  ThePartnership shall be entitled to recognize the Record Holder as the Partnerwith respect to any Partnership Interest and, accordingly, shall not be boundto recognize any equitable or other claim to, or interest in, such PartnershipInterest on the part of any other Person, regardless of whether the Partnershipshall have actual or other notice thereof, except as otherwise provided by lawor any applicable rule, regulation, guideline or requirement of any NationalSecurities Exchange on which such Partnership Interests are listed. Withoutlimiting the foregoing, when a Person (such as a broker, dealer, bank, trustcompany or clearing corporation or an agent of any of the foregoing) is actingas nominee, agent or in some other representative capacity for another Personin acquiring and/or holding Partnership Interests, as between the Partnershipon the one hand, and such other Persons on the other, such representativePerson shall be the Record Holder of such Partnership Interest.

 

SECTION 4.4                          *Transfer Generally*.

 

(a)                                  Theterm “transfer,” when used in this Agreement with respect to a PartnershipInterest, shall be deemed to refer to a transaction (i) by which the GeneralPartner assigns its General Partner Interest to another Person or by which aholder of Incentive Distribution Rights assigns its Incentive DistributionRights to another Person, and includes a sale, assignment, gift, pledge,encumbrance, hypothecation, mortgage, exchange or any other disposition by lawor otherwise or (ii) by which the holder of a Limited Partner Interest (otherthan an Incentive

 

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DistributionRight) assigns such Limited Partner Interest to another Person who is orbecomes a Limited Partner, and includes a sale, assignment, gift, exchange orany other disposition by law or otherwise, including any transfer uponforeclosure of any pledge, encumbrance, hypothecation or mortgage.

 

(b)                                 NoPartnership Interest shall be transferred, in whole or in part, except in accordancewith the terms and conditions set forth in this Article IV. Any transferor purported transfer of a Partnership Interest not made in accordance withthis Article IV shall be null and void.

 

(c)                                  Nothingcontained in this Agreement shall be construed to prevent a disposition by anystockholder, member, partner or other owner of the General Partner of any orall of the shares of stock, membership interests, partnership interests orother ownership interests in the General Partner.

 

SECTION 4.5                          *Registration and Transfer of Limited Partner Interests*.

 

(a)                                  TheGeneral Partner shall keep or cause to be kept on behalf of the Partnership aregister in which, subject to such reasonable regulations as it may prescribeand subject to the provisions of Section 4.5(b), the Partnership willprovide for the registration and transfer of Limited Partner Interests. TheTransfer Agent is hereby appointed registrar and transfer agent for the purposeof registering Common Units and transfers of such Common Units as herein provided.The Partnership shall not recognize transfers of Certificates evidencingLimited Partner Interests unless such transfers are effected in the mannerdescribed in this Section 4.5. Upon surrender of a Certificate forregistration of transfer of any Limited Partner Interests evidenced by aCertificate, and subject to the provisions of Section 4.5(b), theappropriate officers of the General Partner on behalf of the Partnership shallexecute and deliver, and in the case of Common Units, the Transfer Agent shallcountersign and deliver, in the name of the holder or the designated transfereeor transferees, as required pursuant to the holder’s instructions, one or morenew Certificates evidencing the same aggregate number and type of LimitedPartner Interests as was evidenced by the Certificate so surrendered.

 

(b)                                 Exceptas otherwise provided in Section 4.9, the General Partner shall notrecognize any transfer of Limited Partner Interests until the Certificatesevidencing such Limited Partner Interests are surrendered for registration oftransfer. 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 thisSection 4.5, the General Partner may require the payment of a sumsufficient to cover any tax or other governmental charge that may be imposedwith respect thereto.

 

(c)                                  Byacceptance of the transfer of any Limited Partner Interests in accordance withthis Section 4.5 and except as provided in Section 4.9, each transfereeof a Limited Partner Interest (including any nominee holder or an agent orrepresentative acquiring such Limited Partner Interests for the account ofanother Person) (i) shall be admitted to the Partnership as a Limited Partnerwith respect to the Limited Partner Interests so transferred to such Personwhen any such transfer or admission is reflected in the books and records ofthe Partnership and such Limited Partner becomes the Record Holder of theLimited Partner Interests so transferred, with

 

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or withoutexecution of this Agreement, (ii) shall become bound by the terms of thisAgreement, (iii) represents that the transferee has the capacity, power andauthority to enter into this Agreement, (iv) grants the powers of attorney setforth in this Agreement and (v) makes the consents and waivers contained inthis Agreement. The transfer of any Limited Partner Interests and the admissionof any new Limited Partner shall not constitute and amendment to thisAgreement.

 

(d)                                 Subjectto (i) the foregoing provisions of this Section 4.5, (ii) Section 4.3,(iii) Section 4.8, (iv) with respect to any series of Limited PartnerInterests, the provisions of any statement of designations establishing suchseries, (v) any contractual provisions binding on any Limited Partner and (vi)provisions of applicable law including the Securities Act, Limited PartnerInterests (other than the Incentive Distribution Rights) shall be freelytransferable.

 

(e)                                  TheGeneral Partner and its Affiliates shall have the right at any time to transfertheir Subordinated Units and Common Units (whether issued upon conversion ofthe Subordinated Units or otherwise) to one or more Persons.

 

SECTION 4.6                          *Transfer of the General Partner’s General Partner Interest*.

 

(a)                                  Subjectto Section 4.6(c) below, prior to March 31, 2015, the General Partnershall not transfer all or any part of its General Partner Interest (representedby General Partner Units) to a Person unless such transfer (i) has been approvedby the prior written consent or vote of the holders of at least a majority ofthe Outstanding Common Units (excluding Common Units held by the GeneralPartner and its Affiliates) or (ii) is of all, but not less than all, of itsGeneral Partner Interest to (A) an Affiliate of the General Partner (other thanan individual) or (B) another Person (other than an individual) in connectionwith the merger or consolidation of the General Partner with or into such otherPerson or the transfer by the General Partner of all or substantially all ofits assets to such other Person.

 

(b)                                 Subjectto Section 4.6(c) below, on or after March 31, 2015, the GeneralPartner may transfer all or any of its General Partner Interest withoutUnitholder approval.

 

(c)                                  Notwithstandinganything herein to the contrary, no transfer by the General Partner of all orany part of its General Partner Interest to another Person shall be permittedunless (i) the transferee agrees to assume the rights and duties of the GeneralPartner under this Agreement and to be bound by the provisions of thisAgreement, (ii) the Partnership receives an Opinion of Counsel that suchtransfer would not result in the loss of limited liability of any LimitedPartner or cause the Partnership to be treated as an association taxable as acorporation or otherwise to be taxed as an entity for federal income taxpurposes (to the extent not already so treated or taxed) and (iii) suchtransferee also agrees to purchase all (or the appropriate portion thereof, ifapplicable) of the partnership or membership interest of the General Partner asthe general partner or managing member, if any, of each other Group Member. Inthe 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 compliancewith the terms of Section 10.2, be admitted to the Partnership as theGeneral Partner immediately prior to the transfer of the General PartnerInterest, and the business of the Partnership shall continue withoutdissolution.

 

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SECTION 4.7                          *Transfer of Incentive Distribution Rights*.  Prior to March 31, 2015, a holder ofIncentive Distribution Rights may transfer any or all of the IncentiveDistribution Rights held by such holder without any consent of the Unitholdersto (a) an Affiliate of such holder (other than an individual) or (b) anotherPerson (other than an individual) in connection with (i) the merger orconsolidation of such holder of Incentive Distribution Rights with or into suchother Person, (ii) the transfer by such holder of all or substantially all ofits assets to such other Person or (iii) the sale of all the ownershipinterests in such holder. Any other transfer of the Incentive Distribution Rightsprior to March 31, 2015, shall require the prior approval of holders of atleast a majority of the Outstanding Common Units (excluding Common Units heldby the General Partner and its Affiliates). On or after March 31, 2015,the General Partner or any other holder of Incentive Distribution Rights maytransfer any or all of its Incentive Distribution Rights without Unitholderapproval. Notwithstanding anything herein to the contrary, no transfer ofIncentive Distribution Rights to another Person shall be permitted unless thetransferee agrees to be bound by the provisions of this Agreement.

 

SECTION 4.8                          *Restrictions on Transfers*.

 

(a)                                  Exceptas provided in Section 4.8(d) below, but notwithstanding the otherprovisions of this Article IV, no transfer of any Partnership Interestsshall be made if such transfer would (i) violate the then applicable federal orstate securities laws or rules and regulations of the Commission, anystate securities commission or any other governmental authority withjurisdiction over such transfer, (ii) terminate the existence or qualificationof the Partnership under the laws of the jurisdiction of its formation, or(iii) cause the Partnership to be treated as an association taxable as acorporation or otherwise to be taxed as an entity for federal income taxpurposes (to the extent not already so treated or taxed).

 

(b)                                 TheGeneral Partner may impose restrictions on the transfer of PartnershipInterests if it receives an Opinion of Counsel that such restrictions arenecessary to avoid a significant risk of the Partnership becoming taxable as acorporation or otherwise becoming taxable as an entity for federal income taxpurposes. The General Partner may impose such restrictions by amending thisAgreement; provided, however, that any amendment that would result in thedelisting or suspension of trading of any class of Limited Partner Interests onthe principal National Securities Exchange on which such class of LimitedPartner Interests is then listed must be approved, prior to such amendmentbeing effected, by the holders of at least a majority of the OutstandingLimited Partner Interests of such class.

 

(c)                                  Thetransfer of a Subordinated Unit that has converted into a Common Unit shall besubject to the restrictions imposed by Section 6.7(b).

 

(d)                                 Nothingcontained in this Article IV, or elsewhere in this Agreement, shallpreclude the settlement of any transactions involving Partnership Interestsentered into through the facilities of any National Securities Exchange onwhich such Partnership Interests are listed for trading.

 

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SECTION 4.9                          *Citizenship Certificates; Non-citizen Assignees*.

 

(a)                                  Ifany Group Member is or becomes subject to any federal, state or local law orregulation that the General Partner determines would create a substantial riskof cancellation or forfeiture of any property in which the Group Member has aninterest based on the nationality, citizenship or other related status of aLimited Partner, the General Partner may request any Limited Partner to furnishto the General Partner, within 30 days after receipt of such request, anexecuted Citizenship Certification or such other information concerning hisnationality, citizenship or other related status (or, if the Limited Partner isa nominee holding for the account of another Person, the nationality,citizenship or other related status of such Person) as the General Partner mayrequest. If a Limited Partner fails to furnish to the General Partner withinthe aforementioned 30-day period such Citizenship Certification or otherrequested information or if upon receipt of such Citizenship Certification orother requested information the General Partner determines that a LimitedPartner is not an Eligible Citizen, the Limited Partner Interests owned by suchLimited Partner shall be subject to redemption in accordance with theprovisions of Section 4.10. In addition, the General Partner may requirethat the status of any such Limited Partner be changed to that of a Non-citizenAssignee and, thereupon, the General Partner shall be substituted for suchNon-citizen Assignee as the Limited Partner in respect of the Non-CitizenAssignee’s Limited Partner Interests.

 

(b)                                 TheGeneral Partner shall, in exercising voting rights in respect of LimitedPartner Interests held by it on behalf of Non-citizen Assignees, distribute thevotes in the same ratios as the votes of Partners (including without limitationthe General Partner) in respect of Limited Partner Interests other than thoseof Non-citizen Assignees are cast, either for, against or abstaining as to thematter.

 

(c)                                  Upondissolution of the Partnership, a Non-citizen Assignee shall have no right toreceive a distribution in kind pursuant to Section 12.4 but shall beentitled to the cash equivalent thereof, and the Partnership shall provide cashin exchange for an assignment of the Non-citizen Assignee’s share of anydistribution in kind. Such payment and assignment shall be treated forPartnership purposes as a purchase by the Partnership from the Non-citizenAssignee of his Limited Partner Interest (representing his right to receive hisshare of such distribution in kind).

 

(d)                                 Atany 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, requestthat with respect to any Limited Partner Interests of such Non-citizen Assigneenot redeemed pursuant to Section 4.10, such Non citizen Assignee beadmitted as a Limited Partner, and upon approval of the general partner, suchNon citizen Assignee shall be admitted as a Limited Partner and shall no longerconstitute a Non citizen Assignee and the General Partner shall cease to bedeemed to be the Limited Partner in respect of the Non-citizen Assignee’sLimited Partner Interests.

 

SECTION 4.10*                    Redemption ofPartnership Interests of Non-citizen Assignees.*

 

(a)                                  Ifat any time a Limited Partner fails to furnish a Citizenship Certification orother information requested within the 30-day period specified in Section 4.9(a),or if upon receipt of such Citizenship Certification or other information theGeneral Partner determines, with the advice of counsel, that a Limited Partneris not an Eligible Citizen, the Partnership may, unless the Limited Partnerestablishes to the satisfaction of the General Partner that such LimitedPartner is an Eligible Citizen or has transferred his Partnership Interests toa Person who is an

 

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EligibleCitizen and who furnishes a Citizenship Certification to the General Partnerprior to the date fixed for redemption as provided below, redeem the LimitedPartner Interest of such Limited Partner as follows:

 

(i)                                     TheGeneral Partner shall, not later than the 30th day before the date fixed forredemption, give notice of redemption to the Limited Partner, at his lastaddress designated on the records of the Partnership or the Transfer Agent, byregistered or certified mail, postage prepaid. The notice shall be deemed tohave been given when so mailed. The notice shall specify the RedeemableInterests, the date fixed for redemption, the place of payment, that payment ofthe redemption price will be made upon surrender of the Certificate evidencingthe Redeemable Interests and that on and after the date fixed for redemption nofurther allocations or distributions to which the Limited Partner wouldotherwise be entitled in respect of the Redeemable Interests will accrue or bemade.

 

(ii)                                  Theaggregate redemption price for Redeemable Interests shall be an amount equal tothe Current Market Price (the date of determination of which shall be the datefixed for redemption) of Limited Partner Interests of the class to be soredeemed multiplied by the number of Limited Partner Interests of each such classincluded among the Redeemable Interests. The redemption price shall be paid, asdetermined by the General Partner, in cash or by delivery of a promissory noteof the Partnership in the principal amount of the redemption price, bearinginterest at the rate of 10% annually and payable in three equal annualinstallments of principal together with accrued interest, commencing one yearafter the redemption date.

 

(iii)                               Uponsurrender by or on behalf of the Limited Partner, at the place specified in thenotice 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 toreceive the payment therefor.

 

(iv)                              Afterthe redemption date, Redeemable Interests shall no longer constitute issued andOutstanding Limited Partner Interests.

 

(b)                                 Theprovisions of this Section 4.10 shall also be applicable to LimitedPartner Interests held by a Limited Partner as nominee of a Person determinedto be other than an Eligible Citizen.

 

(c)                                  Nothingin this Section 4.10 shall prevent the recipient of a notice of redemptionfrom transferring his Limited Partner Interest before the redemption date ifsuch transfer is otherwise permitted under this Agreement. Upon receipt ofnotice of such a transfer, the General Partner shall withdraw the notice ofredemption, provided the transferee of such Limited Partner Interest certifiesto the satisfaction of the General Partner that he is an Eligible Citizen. Ifthe transferee fails to make such certification, such redemption shall beeffected from the transferee on the original redemption date.

 

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**ARTICLE V**CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIPINTERESTS

 

SECTION 5.1                          *Organizational Contributions*.  In connection with the formation of thePartnership under the Delaware Act, the General Partner made an initial CapitalContribution to the Partnership in the amount of $20.00, for a 2% GeneralPartner Interest in the Partnership and has been admitted as the GeneralPartner of the Partnership, and the Organizational Limited Partner made aninitial Capital Contribution to the Partnership in the amount of $980.00 for a98% Limited Partner interest in the Partnership and has been admitted as aLimited Partner of the Partnership. As of the Closing Date, the interest of theOrganizational Limited Partner shall be redeemed as provided in theContribution Agreement; and the initial Capital Contribution of theOrganizational Limited Partner shall thereupon be refunded. Ninety eightpercent of any interest or other profit that may have resulted from theinvestment or other use of such initial Capital Contributions shall beallocated and distributed to the Organizational Limited Partner, and thebalance thereof shall be allocated and distributed to the General Partner.

 

SECTION 5.2                          *Contributions by the General Partner and its Affiliates*

 

(a)                                  Onthe Closing Date and pursuant to the Contribution Agreement: (i) the GeneralPartner shall contribute to the Partnership, as a Capital Contribution, all ofits ownership interests in New Hiland and Hiland LP LLC in exchange for(A) 138,776 General Partner Units representing the 2% General Partner Interest,subject to all of the rights, privileges and duties of the General Partnerunder this Agreement, and (B) the Incentive Distribution Rights; (ii) theHarold Hamm DST Trust shall contribute to the Partnership, as a CapitalContribution, all of its ownership interest in New Hiland in exchange for(A) 148,721 Common Units, and (B) 842,752 Subordinated Units and (C)the right to receive reimbursement of certain capitalized expenditures; (iii)the Harold Hamm HJ Trust shall contribute to the Partnership, as a CapitalContribution, all of its ownership interest in New Hiland in exchange for (A)99,147 Common Units, (B) 561,834 Subordinated Units and (C) the right toreceive reimbursement of certain capitalized expenditures; (iv) EquityFinancial shall contribute to the Partnership, as a Capital Contribution, allof its ownership interest in New Hiland in exchange for (A) 5,059 Common Units,(B) 28,665 Subordinated Units and (C) the right to receive reimbursement ofcertain capitalized expenditures; (v) New Continental shall contribute to thePartnership, as a Capital Contribution, all of its interests in Hiland GP LLCand the remaining interest in Hiland LP LLC in exchange for (A) 467,073Common Units, (B) 2,646,749 Subordinated Units and (C) the right to receivereimbursement of certain capitalized expenditures; and (vi) the Partnershipshall make a cash contribution to New Hiland and a cash contribution toContinental LP, in each case to repay outstanding indebtedness and a cashcontribution to Operating Company to replenish working capital.

 

(b)                                 Uponthe issuance of any additional Limited Partner Interests by the Partnership(other than the Common Units issued in the Initial Offering, the Common Unitsissued pursuant to the Over-Allotment Option and the Common Units andSubordinated Units issued pursuant to Section 5.2(a)), the General Partnermay, in exchange for a proportionate number of General Partner Units, makeadditional Capital Contributions in an amount equal to the product obtained bymultiplying (i) the quotient determined by dividing (A) the General Partner’sPercentage Interest by (B) 100 less the General Partner’s Percentage Interesttimes (ii) the amount

 

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contributed to the Partnership by the LimitedPartners in exchange for such additional Limited Partner Interests. Except asset forth in Article XII, the General Partner shall not be obligated tomake any additional Capital Contributions to the Partnership.

 

SECTION 5.3                          *Contributions by Initial Limited Partners*.

 

(a)                                  Onthe Closing Date and pursuant to the Underwriting Agreement, each Underwritershall contribute to the Partnership cash in an amount equal to the Issue Priceper Initial Common Unit, multiplied by the number of Common Units specified inthe Underwriting Agreement to be purchased by such Underwriter at the ClosingDate. In exchange for such Capital Contributions by the Underwriters, thePartnership shall issue Common Units to each Underwriter on whose behalf suchCapital Contribution is made in an amount equal to the quotient obtained bydividing (i) the cash contribution to the Partnership by or on behalf of suchUnderwriter by (ii) the Issue Price per Initial Common Unit.

 

(b)                                 Uponthe exercise of the Over-Allotment Option, each Underwriter shall contribute tothe Partnership cash in an amount equal to the Issue Price per Initial CommonUnit, multiplied by the number of Common Units specified in the UnderwritingAgreement to be purchased by such Underwriter at the Option Closing Date. Inexchange for such Capital Contributions by the Underwriters, the Partnershipshall issue Common Units to each Underwriter on whose behalf such CapitalContribution is made in an amount equal to the quotient obtained by dividing(i) the cash contributions to the Partnership by or on behalf of suchUnderwriter by (ii) the Issue Price per Initial Common Unit. Upon receipt bythe Partnership of the Capital Contributions from the Underwriters as providedin this Section 5.3(b), the Partnership shall use such cash to redeem on aPro Rata basis from the Hamm Trusts and New Continental that number of CommonUnits equal to the number of Common Units issued to the Underwriters asprovided in this Section 5.3(b).

 

(c)                                  NoLimited Partner Interests will be issued or issuable as of or at the ClosingDate other than (i) the Common Units issuable pursuant to subparagraph (a)hereof in aggregate number equal to 2,000,000, (ii) the “Option Units” as suchterm is used in the Underwriting Agreement in an aggregate number up to 300,000issuable upon exercise of the Over-Allotment Option pursuant to subparagraph(c) hereof, (iii) the 4,080,000 Subordinated Units issuable pursuant to Section 5.2hereof, (iv) the 720,000 Common Units issuable pursuant to Section 5.2hereof, and (v) the Incentive Distribution Rights.

 

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 CapitalContribution, except to the extent, if any, that distributions made pursuant tothis Agreement or upon termination of the Partnership may be considered as suchby law and then only to the extent provided for in this Agreement. Except tothe extent expressly provided in this Agreement, no Partner shall have priorityover any other Partner either as to the return of Capital Contributions or asto profits, losses or distributions. Any such return shall be a compromise towhich all Partners agree within the meaning of Section 17-502(b) of the DelawareAct.

 

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SECTION 5.5                          *Capital Accounts*.

 

(a)                                  ThePartnership shall maintain for each Partner (or a beneficial owner ofPartnership Interests held by a nominee in any case in which the nominee hasfurnished 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 aPartnership Interest a separate Capital Account with respect to suchPartnership 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 CapitalContributions made to the Partnership with respect to such Partnership Interestand (ii) all items of Partnership income and gain (including, withoutlimitation, 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 anddeemed distributions of cash or property made with respect to such PartnershipInterest and (y) all items of Partnership deduction and loss computed inaccordance with Section 5.5(b) and allocated with respect to such PartnershipInterest pursuant to Section 6.1.

 

(b)                                 Forpurposes of computing the amount of any item of income, gain, loss or deductionwhich is to be allocated pursuant to Article VI and is to be reflected inthe Partners’ Capital Accounts, the determination, recognition andclassification of any such item shall be the same as its determination,recognition and classification for federal income tax purposes (including,without limitation, any method of depreciation, cost recovery or amortizationused for that purpose), provided, that:

 

(i)                                     Solelyfor purposes of this Section 5.5, the Partnership shall be treated asowning directly its proportionate share (as determined by the General Partnerbased upon the provisions of the applicable Group Member Agreement) of allproperty owned by any other Group Member that is classified as a partnershipfor federal income tax purposes.

 

(ii)                                  Allfees and other expenses incurred by the Partnership to promote the sale of (orto sell) a Partnership Interest that can neither be deducted nor amortizedunder Section 709 of the Code, if any, shall, for purposes of CapitalAccount maintenance, be treated as an item of deduction at the time such feesand other expenses are incurred and shall be allocated among the Partnerspursuant to Section 6.1.

 

(iii)                               Exceptas 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 madewithout regard to any election under Section 754 of the Code which may bemade 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 notincludable in gross income or are neither currently deductible nor capitalizedfor federal income tax purposes. To the extent an adjustment to the adjustedtax basis of any Partnership asset pursuant to Section 734(b) or 743(b) ofthe 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 suchadjustment in the Capital Accounts shall be treated as an item of gain or loss.

 

(iv)                              Anyincome, gain or loss attributable to the taxable disposition of any Partnershipproperty shall be determined as if the adjusted basis of such property as of

 

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such date of disposition were equal in amountto the Partnership’s Carrying Value with respect to such property as of suchdate.

 

(v)                                 Inaccordance with the requirements of Section 704(b) of the Code, anydeductions for depreciation, cost recovery or amortization attributable to anyContributed Property shall be determined as if the adjusted basis of suchproperty on the date it was acquired by the Partnership were equal to theAgreed Value of such property. Upon an adjustment pursuant to Section 5.5(d)to the Carrying Value of any Partnership property subject to depreciation, costrecovery or amortization, any further deductions for such depreciation, costrecovery or amortization attributable to such property shall be determined (A)as if the adjusted basis of such property were equal to the Carrying Value ofsuch property immediately following such adjustment and (B) using a rate ofdepreciation, cost recovery or amortization derived from the same method anduseful life (or, if applicable, the remaining useful life) as is applied forfederal income tax purposes; provided, however, that, if the asset has a zeroadjusted basis for federal income tax purposes, depreciation, cost recovery oramortization deductions shall be determined using any method that the GeneralPartner may adopt.

 

(vi)                              Ifthe Partnership’s adjusted basis in a depreciable or cost recovery property isreduced for federal income tax purposes pursuant to Section 48(q)(1) or48(q)(3) of the Code, the amount of such reduction shall, solely for purposeshereof, be deemed to be an additional depreciation or cost recovery deductionin the year such property is placed in service and shall be allocated among thePartners pursuant to Section 6.1. Any restoration of such basis pursuantto Section 48(q)(2) of the Code shall, to the extent possible, beallocated in the same manner to the Partners to whom such deemed deduction wasallocated.

 

(c)                                  (i)A transferee of a Partnership Interest shall succeed to a pro rata portion ofthe Capital Account of the transferor relating to the Partnership Interest sotransferred.

 

                                                (ii)                                  Subjectto Section 6.7(c), immediately prior to the transfer of a SubordinatedUnit or of a Subordinated Unit that has converted into a Common Unit pursuantto Section 5.8 by a holder thereof (other than a transfer to an Affiliateunless the General Partner elects to have this subparagraph 5.5(c)(ii) apply),the Capital Account maintained for such Person with respect to its SubordinatedUnits or converted Subordinated Units will (A) first, be allocated to theSubordinated Units or converted Subordinated Units to be transferred in anamount equal to the product of (x) the number of such Subordinated Units or convertedSubordinated Units to be transferred and (y) the Per Unit Capital Amount for aCommon Unit, and (B) second, any remaining balance in such Capital Account willbe retained by the transferor, regardless of whether it has retained anySubordinated Units or converted Subordinated Units (“Retained ConvertedSubordinated Units”). Following any such allocation, the transferor’s CapitalAccount, if any, maintained with respect to the retained Subordinated Units orRetained Converted Subordinated Units, if any, will have a balance equal to theamount allocated under clause (B) hereinabove, and the transferee’s CapitalAccount established with respect to the transferred Subordinated Units orconverted Subordinated Units will have a balance equal to the amount allocatedunder clause (A) hereinabove.

 

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(d)                                 (i)In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), on anissuance of additional Partnership Interests for cash or Contributed Property,the issuance of Partnership Interests as consideration for the provision ofservices or the conversion of the General Partner’s Combined Interest to CommonUnits pursuant to Section 11.3(b), the Capital Account of all Partners andthe Carrying Value of each Partnership property immediately prior to suchissuance shall be adjusted upward or downward to reflect any Unrealized Gain orUnrealized Loss attributable to such Partnership property, as if suchUnrealized Gain or Unrealized Loss had been recognized on an actual sale ofeach such property immediately prior to such issuance and had been allocated tothe Partners at such time pursuant to Section 6.1 in the same manner asany item of gain or loss actually recognized during such period would have beenallocated. In determining such Unrealized Gain or Unrealized Loss, theaggregate cash amount and fair market value of all Partnership assets(including, without limitation, cash or cash equivalents) immediately prior tothe issuance of additional Partnership Interests shall be determined by theGeneral Partner using such method of valuation as it may adopt; provided,however, that the General Partner, in arriving at such valuation, must takefully into account the fair market value of the Partnership Interests of allPartners at such time. The General Partner shall allocate such aggregate valueamong the assets of the Partnership (in such manner as it determines) to arriveat a fair market value for individual properties.

 

(ii)                                  Inaccordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f),immediately prior to any actual or deemed distribution to a Partner of anyPartnership property (other than a distribution of cash that is not inredemption or retirement of a Partnership Interest), the Capital Accounts ofall Partners and the Carrying Value of all Partnership property shall beadjusted upward or downward to reflect any Unrealized Gain or Unrealized Lossattributable to such Partnership property, as if such Unrealized Gain orUnrealized Loss had been recognized in a sale of such property immediatelyprior to such distribution for an amount equal to its fair market value, andhad been allocated to the Partners, at such time, pursuant to Section 6.1in the same manner as any item of gain or loss actually recognized during suchperiod would have been allocated. In determining such Unrealized Gain orUnrealized Loss the aggregate cash amount and fair market value of allPartnership assets (including, without limitation, cash or cash equivalents)immediately prior to a distribution shall (A) in the case of an actualdistribution that is not made pursuant to Section 12.4 or in the case of adeemed distribution, be determined and allocated in the same manner as thatprovided in Section 5.5(d)(i) or (B) in the case of a liquidatingdistribution pursuant to Section 12.4, be determined and allocated by theLiquidator using such method of valuation as it may adopt.

 

*SECTION 5.6**                       Issuancesof Additional Partnership Securities.*

 

(a)                                  Subjectto Section 5.7, the Partnership may issue additional PartnershipSecurities and options, rights, warrants and appreciation rights relating tothe Partnership Securities for any Partnership purpose at any time and fromtime to time to such Persons for such consideration and on such terms andconditions as the General Partner shall determine, all without the approval ofany Limited Partners.

 

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(b)                                 Eachadditional Partnership Security, authorized to be issued by the Partnershippursuant to Section 5.6(a) may be issued in one or more classes, or one ormore series of any such classes, with such designations, preferences, rights,powers and duties (which may be senior to existing classes and series ofPartnership Securities), as shall be fixed by the General Partner, including(i) the right to share Partnership profits and losses or items thereof; (ii)the right to share in Partnership distributions; (iii) the rights upondissolution and liquidation of the Partnership; (iv) whether, and the terms andconditions upon which, the Partnership may redeem the Partnership Security; (v)whether such Partnership Security is issued with the privilege of conversion orexchange and, if so, the terms and conditions of such conversion or exchange;(vi) the terms and conditions upon which each Partnership Security will beissued, evidenced by certificates and assigned or transferred; (vii) the methodfor determining the Percentage Interest as to such Partnership Security; and(viii) the right, if any, of each such Partnership Security to vote onPartnership matters, including matters relating to the relative rights,preferences and privileges of such Partnership Security.

 

(c)                                  TheGeneral Partner shall take all actions that it determines to be necessary orappropriate in connection with (i) each issuance of Partnership Securities andoptions, rights, warrants and appreciation rights relating to PartnershipSecurities pursuant to this Section 5.6, (ii) the conversion of theGeneral Partner Interest (represented by General Partner Units) or anyIncentive Distribution Rights into Units pursuant to the terms of thisAgreement, (iii) reflecting the admission of such additional Limited Partnersin the books and records of the Partnership as the Record Holder of such LimitedPartner Interest, and (iv) all additional issuances of Partnership Securities.The General Partner shall determine the relative rights, powers and duties ofthe holders of the Units or other Partnership Securities being so issued. TheGeneral Partner shall do all things necessary to comply with the Delaware Actand is authorized and directed to do all things that it determines to benecessary or appropriate in connection with any future issuance of PartnershipSecurities or in connection with the conversion of the General Partner Interestor any Incentive Distribution Rights into Units pursuant to the terms of thisAgreement, including compliance with any statute, rule, regulation or guidelineof any federal, state or other governmental agency or any National SecuritiesExchange on which the Units or other Partnership Securities are listed.

 

SECTION 5.7*                          Limitationson Issuance of Additional Partnership Securities*.  Except as otherwise specified in this Section 5.7,the issuance of Partnership Securities pursuant to Section 5.6 shall besubject to the following restrictions and limitations:

 

(a)                                  Unlessapproved by the holders of a Unit Majority, during the Subordination Period,the Partnership shall not issue (and shall not issue any options, rights,warrants or appreciation rights relating to) an aggregate of more than1,360,000 additional Parity Units. In applying this limitation, there shall beexcluded Common Units and other Parity Units issued (i) pursuant to Sections5.2(a) and 5.3, (ii) in accordance with Sections 5.7(c), (d), (e), (f) or (g),(iii) upon conversion of Subordinated Units pursuant to Section 5.8, (iv)upon conversion of the General Partner Interest or any Incentive DistributionRights pursuant to Section 11.3(b), (v) in order to satisfy theobligations of the Partnership or any of its Affiliates under the employeebenefit plans of the General Partner, the Partnership or any other GroupMember, (vi) upon a conversion or exchange of Parity Units issued after thedate hereof into Common Units or other Parity Units; provided that the totalamount of Available Cash required to pay the aggregate

 

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Minimum Quarterly Distribution on all CommonUnits and all Parity Units does not increase as a result of this conversion orexchange, and (vii) in the event of a combination or subdivision of CommonUnits.

 

(b)                                 Unlessapproved by the holders of a Unit Majority, during the Subordination Period thePartnership shall not issue any additional Partnership Securities (or options,rights, warrants or appreciation rights related thereto) (i) that are entitledin any Quarter to receive in respect of the Subordination Period anydistribution of Available Cash from Operating Surplus before the Common Unitsand any Parity Units have received (or amounts have been set aside for paymentof) the Minimum Quarterly Distribution and any Cumulative Common Unit Arrearagefor such Quarter or (ii) that are entitled to allocations in respect of theSubordination Period of Net Termination Gain before the Common Units and anyParity Units have been allocated Net Termination Gain pursuant to Section 6.1(c)(i)(B).

 

(c)                                  Withoutthe prior approval of the Limited Partners, during the Subordination Period thePartnership may issue an unlimited number of Parity Units if such issuanceoccurs (i) in connection with an Acquisition or Capital Improvement or (ii)within 365 days of, and the net proceeds from such issuance are used to repaydebt incurred in connection with, or to replenish cash reserves to the extentdrawn down in connection with, an Acquisition or Capital Improvement, in eachcase where such Acquisition or Capital Improvement involves assets that, ifacquired (or in the case of a Capital Improvement, put into commercial service)by the Partnership as of the date that is one year prior to the first day ofthe Quarter in which such Acquisition was consummated or such CapitalImprovement was put into commercial service (“One Year Test Period”), wouldhave resulted, in the General Partner’s determination, in an increase in:

 

(A)                              theamount of Adjusted Operating Surplus generated by the Partnership on a per-Unitbasis (for all Outstanding Units) with respect to the One Year Test Period, onan estimated pro forma basis (as described below), as compared to

 

(B)                                theactual amount of Adjusted Operating Surplus generated by the Partnership on aper-Unit basis (for all Outstanding Units) with respect to the One Year TestPeriod, as adjusted as provided below.

 

The General Partner shall determine the amount in clause (A) aboveusing such assumptions as it believes are reasonable. There shall be excludedfrom the amount in clause (B) above any Operating Surplus attributable to suchAcquisition or Capital Improvement (regardless of whether such OperatingSurplus is positive or negative). The number of Units deemed to be Outstandingfor the purpose of calculating the amount in clause (B) above shall be theweighted average number of Units Outstanding during the One Year Test Periodand shall exclude the Units issued or to be issued in connection with suchAcquisition or Capital Improvement or within 365 days of such Acquisition orCapital Improvement where the net proceeds from such issuance are used to repaydebt incurred, or to replenish cash reserves to the extent drawn down, inconnection with such Acquisition or Capital Improvement. For the purposes ofthis Section 5.7(c), the term “debt” shall be deemed to include theindebtedness used to extend, refinance, renew, replace or defease debt originallyincurred in connection with an Acquisition or Capital Improvement; provided,that, the amount of such indebtedness does not exceed the principal sum

 

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of, plus accrued interest on and any prepayment penalty with respectto, the indebtedness so extended, refinanced, renewed, replaced or defeased.

 

(d)                                 Withoutthe prior approval of the Limited Partners, during the Subordination Period thePartnership may issue additional Partnership Securities (or options, rights,warrants or appreciation rights related thereto) (i) that are not entitled inany Quarter during the Subordination Period to receive any distributions ofAvailable Cash from Operating Surplus until after the Common Units and anyParity Units have received (or amounts have been set aside for payment of) theMinimum Quarterly Distribution and any Cumulative Common Unit Arrearage forsuch Quarter and (ii) that are not entitled to allocations in respect of theSubordination Period of Net Termination Gain until after the Common Units andParity Units have been allocated Net Termination Gain pursuant to Section 6.1(c)(i)(B),even if (A) the amount of Available Cash from Operating Surplus to which eachsuch Partnership Security is entitled to receive after the Minimum QuarterlyDistribution and any Cumulative Common Unit Arrearage have been paid or setaside for payment on the Common Units exceeds the Minimum QuarterlyDistribution or (B) the amount of Net Termination Gain to be allocated to suchPartnership Security after Net Termination Gain has been allocated to anyCommon Units and Parity Units pursuant to Section 6.1(c)(i)(B) exceeds theamount of such Net Termination Gain to be allocated to each Common Unit orParity Unit.

 

(e)                                  Withoutthe prior approval of the Limited Partners, during the Subordination Period thePartnership may issue an unlimited number of Parity Units if the proceeds fromsuch issuance are used exclusively to repay indebtedness of a Group Memberwhere the aggregate amount of distributions that would have been paid withrespect to such newly issued Parity Units, plus the related distributions onthe General Partner Units in respect of the four-Quarter period ending prior tothe first day of the Quarter in which the issuance is to be consummated(assuming such newly issued Parity Units had been Outstanding throughout suchperiod and that distributions equal to the distributions that were actuallypaid on the Outstanding Units during the period were paid on such newly issuedParity Units) would not have exceeded the interest costs actually incurredduring such period on the indebtedness that is to be repaid (or, if suchindebtedness was not outstanding throughout the entire period, would have beenincurred had such indebtedness been outstanding for the entire period). In theevent that the Partnership is required to pay a prepayment penalty inconnection with the repayment of such indebtedness, for purposes of theforegoing test, the number of Parity Units issued to repay such indebtednessshall be deemed increased by the number of Parity Units that would need to beissued to pay such penalty.

 

(f)                                    Withoutthe prior approval of the Limited Partners, during the Subordination Period thePartnership may issue an unlimited number of Parity Units if the net proceedsof such issuance are used to redeem an equal number of Parity Units at a priceper unit equal to the net proceeds per unit, before expenses, that thePartnership receives from such issuance.

 

(g)                                 Withoutthe prior approval of the Limited Partners, during the Subordination Period thePartnership may issue, in connection with Acquisitions that have not beencompleted or Capital Improvements that have not Commenced Commercial Service,or both, an amount of Parity Units not to exceed the number of Parity Unitsthen available for issuance without

 

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Unitholderapproval pursuant to Section 5.7(a) (such number of Parity Units thenavailable for issuance, the “Remaining Basket Amount”).

 

The following shall applywith respect to issuances of Parity Units pursuant to this Section 5.7(g):

 

(i)                                     Withrespect to such issuance, the aggregate number of Parity Units to be issued(including Parity Units to be issued upon the exercise of an underwriters’ over-allotmentor other similar option) shall be deemed to have been issued from, and chargedagainst, the Remaining Basket Amount; provided, however, that in consideringthe Parity Units to be issued upon the exercise of an underwriters’over-allotment or other similar option, only the number of Parity Unitsactually issued pursuant to such option on or prior to the expiration of suchoption will be deemed to have been issued from, and charged against, theRemaining Basket Amount.

 

(ii)                                  Withrespect to Parity Units to be issued (including Parity Units to be issued uponthe exercise of an underwriters’ over-allotment or other similar option) inconnection with an Acquisition that has not been completed:

 

(1)                                  SuchAcquisition shall have been specifically identified in the prospectus orprospectus supplement filed, or other offering document used, in connectionwith the offer and sale of such Parity Units as a proposed Acquisition forwhich the net proceeds from the sale of such Parity Units will be used if suchAcquisition is completed.

 

(2)                                  Uponcompletion of such Acquisition and application of the net proceeds receivedfrom the sale of such Parity Units to finance such Acquisition, the provisionsof clause (i) above shall not apply and the Parity Units issued (includingParity Units issued upon the exercise of an underwriters’ over-allotment orother similar option) in connection with such Acquisition shall not be deemedto have been issued from, and charged against, the Remaining Basket Amount;provided, however, that such Acquisition would have resulted, on an estimatedpro forma basis, in an increase in the amount of Adjusted Operating Surplus perUnit (such amount shall be calculated as set forth in Section 5.7(c) andsuch calculation is referred to in this Section 5.7(g) as the “AccretionTest”); and

 

(3)                                  TheAccretion Test in subclause (2) of this clause (ii) shall be performedimmediately following completion of such Acquisition and in accordance with Section 5.7(c).

 

(iii)                               Withrespect to Parity Units to be issued (including Parity Units to be issued uponthe exercise of an underwriters’ over-allotment or other similar option) inconnection with a Capital Improvement that has not Commenced CommercialService:

 

(1)                                  SuchCapital Improvement shall have been specifically identified in the prospectusor prospectus supplement filed, or other offering document used, in connectionwith the offer and sale of such Parity Units as a Capital

 

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Improvement for which thenet proceeds from the sale of such Parity Units will be used to finance suchCapital Improvement;

 

(2)                                  Uponsuch Capital Improvement having Commenced Commercial Service and provided thenet proceeds from the sale of such Parity Units have been used to finance suchCapital Improvement, the provisions of clause (i) above shall not apply and theParity Units issued (including Parity Units issued upon the exercise of anunderwriters’ over-allotment or other similar option) in connection with suchCapital Improvement shall not be deemed to have been issued from, and chargedagainst, the Remaining Basket Amount; provided, however, that such CapitalImprovement meets the Accretion Test; and

 

(3)                                  TheAccretion Test in subclause (2) of this clause (iii) shall be performedimmediately following Commencement of Commercial Service and in accordance withSection 5.7(c).

 

(h)                                 Nofractional Units shall be issued by the Partnership.

 

SECTION 5.8                          *Conversion of Subordinated Unit*.

 

(a)                                  Atotal of 25% of the Outstanding Subordinated Units will convert into CommonUnits on a one-for-one basis on the second Business Day following thedistribution of Available Cash to Partners pursuant to Section 6.3(a) inrespect of any Quarter ending on or after March 31, 2008, in respect ofwhich:

 

(i)                                     distributionsunder Section 6.4 in respect of all Outstanding Common Units andSubordinated Units and any other Outstanding Units that are senior or equal inright of distribution to the Subordinated Units with respect to each of thethree consecutive, non-overlapping four-Quarter periods immediately precedingsuch date equaled or exceeded the sum of the Minimum Quarterly Distribution onall of the Outstanding Common Units and Subordinated Units and any otherOutstanding Units that are senior or equal in right of distribution to theSubordinated Units during such periods;

 

(ii)                                  theAdjusted Operating Surplus for each of the three consecutive, non-overlappingfour-Quarter periods immediately preceding such date equaled or exceeded thesum of the Minimum Quarterly Distribution on all of the Common Units,Subordinated Units and any other Units that are senior or equal in right ofdistribution to the Subordinated Units that were Outstanding during suchperiods on a Fully Diluted Basis, plus the related distribution on the GeneralPartner Units, with respect to such periods; and

 

(iii)                               theCumulative Common Unit Arrearage on all of the Common Units is zero.

 

(b)                                 Anadditional 25% of the Outstanding Subordinated Units will convert into CommonUnits on a one-for-one basis on the second Business Day following thedistribution of Available Cash to Partners pursuant to Section 6.3(a) inrespect of any Quarter ending on or after March 31, 2009, in respect ofwhich:

 

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(i)                                     distributionsunder Section 6.4 in respect of all Outstanding Common Units andSubordinated Units and any other Outstanding Units that are senior or equal inright of distribution to the Subordinated Units with respect to each of thethree consecutive, non-overlapping four-Quarter periods immediately precedingsuch date equaled or exceeded the sum of the Minimum Quarterly Distribution onall of the Outstanding Common Units and Subordinated Units and any otherOutstanding Units that are senior or equal in right of distribution to theSubordinated Units during such periods;

 

(ii)                                  theAdjusted Operating Surplus for each of the three consecutive, non-overlappingfour-Quarter periods immediately preceding such date equaled or exceeded thesum of the Minimum Quarterly Distribution on all of the Common Units,Subordinated Units and any other Units that are senior or equal in right ofdistribution to the Subordinated Units that were Outstanding during suchperiods on a Fully Diluted Basis, plus the related distribution on the GeneralPartner Units with respect to such periods; and

 

(iii)                               theCumulative Common Unit Arrearage on all of the Common Units is zero;

 

provided, however, that the conversion of Subordinated Units pursuantto this Section 5.8(b) may not occur until at least one year following theend of the last four-Quarter period in respect of which conversion ofSubordinated Units pursuant to Section 5.8(a) occurred.

 

(c)                                  Inthe event that less than all of the Outstanding Subordinated Units shall convertinto Common Units pursuant to Section 5.8(a) or (b) at a time when thereshall be more than one holder of Subordinated Units, then, unless all of theholders of Subordinated Units shall agree to a different allocation, theSubordinated Units that are to be converted into Common Units shall beallocated among the holders of Subordinated Units pro rata based on the numberof Subordinated Units held by each such holder.

 

(d)                                 AnySubordinated Units that are not converted into Common Units pursuant to Section 5.8(a)or (b) shall convert into Common Units on a one-for-one basis on the secondBusiness Day following the distribution of Available Cash to Partners pursuantto Section 6.3(a) in respect of the final Quarter of the SubordinationPeriod.

 

(e)                                  Notwithstandingany other provision of this Agreement, all the then Outstanding SubordinatedUnits will automatically convert into Common Units on a one-for-one basis asset forth in, and pursuant to the terms of, Section 11.4.

 

(f)                                    ASubordinated Unit that has converted into a Common Unit shall be subject to theprovisions of Section 6.7(b).

 

SECTION 5.9*                          LimitedPreemptive Right*.  Except as providedin this Section 5.9 and in Section 5.2, no Person shall have anypreemptive, preferential or other similar right with respect to the issuance ofany Partnership Security, whether unissued, held in the treasury or hereaftercreated. The General Partner shall have the right, which it may from time totime assign in whole or in part to any of its Affiliates, to purchase PartnershipSecurities from the Partnership whenever, and on the same terms that, thePartnership issues Partnership Securities to Persons

 

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other than the General Partner and its Affiliates, to the extent necessaryto maintain the Percentage Interests of the General Partner and its Affiliatesequal to that which existed immediately prior to the issuance of suchPartnership Securities.

 

SECTION 5.10                    *Splits and Combinations*.

 

(a)                                  Subjectto Sections 5.10(d), 6.6 and 6.9 (dealing with adjustments of distributionlevels), the Partnership may make a Pro Rata distribution of PartnershipSecurities to all Record Holders or may effect a subdivision or combination ofPartnership Securities so long as, after any such event, each Partner shallhave the same Percentage Interest in the Partnership as before such event, andany amounts calculated on a per Unit basis (including any Common Unit Arrearageor Cumulative Common Unit Arrearage) or stated as a number of Units (includingthe number of Subordinated Units that may convert prior to the end of theSubordination Period and the number of additional Parity Units remaining to beissued pursuant to Section 5.7 without a Unitholder vote) areproportionately adjusted.

 

(b)                                 Wheneversuch a distribution, subdivision or combination of Partnership Securities isdeclared, the General Partner shall select a Record Date as of which thedistribution, subdivision or combination shall be effective and shall sendnotice thereof at least 20 days prior to such Record Date to each Record Holderas of a date not less than 10 days prior to the date of such notice. TheGeneral Partner also may cause a firm of independent public accountantsselected by it to calculate the number of Partnership Securities to be held byeach Record Holder after giving effect to such distribution, subdivision orcombination. The General Partner shall be entitled to rely on any certificateprovided by such firm as conclusive evidence of the accuracy of such calculation.

 

(c)                                  Promptlyfollowing any such distribution, subdivision or combination, the Partnershipmay issue Certificates to the Record Holders of Partnership Securities as ofthe applicable Record Date representing the new number of PartnershipSecurities held by such Record Holders, or the General Partner may adopt suchother procedures that it determines to be necessary or appropriate to reflectsuch changes. If any such combination results in a smaller total number ofPartnership Securities Outstanding, the Partnership shall require, as acondition to the delivery to a Record Holder of such new Certificate, thesurrender of any Certificate held by such Record Holder immediately prior tosuch Record Date.

 

(d)                                 ThePartnership shall not issue fractional Units upon any distribution, subdivisionor combination of Units. If a distribution, subdivision or combination of Unitswould result in the issuance of fractional Units but for the provisions of Section 5.7(c)and this Section 5.10(d), each fractional Unit shall be rounded to thenearest whole Unit (and a 0.5 Unit shall be rounded to the next higher Unit).

 

SECTION 5.11*                    Fully Paid andNon-Assessable Nature of Limited Partner Interests*.  All Limited Partner Interests issued pursuantto, and in accordance with the requirements of, this Article V shall befully paid and non-assessable Limited Partner Interests in the Partnership,except as such non-assessability may be affected by Section 17-607 of theDelaware Act.

 

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**ARTICLE VI**ALLOCATIONS AND DISTRIBUTIONS

 

SECTION 6.1*                          Allocationsfor Capital Account Purposes*.  Forpurposes of maintaining the Capital Accounts and in determining the rights ofthe Partners among themselves, the Partnership’s items of income, gain, lossand deduction (computed in accordance with Section 5.5(b)) shall beallocated among the Partners in each taxable year (or portion thereof) asprovided herein below.

 

(a)                                  NetIncome. 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 anddeduction taken into account in computing Net Income for such taxable yearshall be allocated as follows:

 

(i)                                     First,100% to the General Partner, in an amount equal to the aggregate Net Lossesallocated to the General Partner pursuant to Section 6.1(b)(iii) for allprevious taxable years until the aggregate Net Income allocated to the GeneralPartner pursuant to this Section 6.1(a)(i) for the current taxable yearand all previous taxable years is equal to the aggregate Net Losses allocatedto the General Partner pursuant to Section 6.1(b)(iii) for all previoustaxable years;

 

(ii)                                  Second,100% to the General Partner and the Unitholders, in accordance with theirrespective Percentage Interests, until the aggregate Net Income allocated tosuch Partners pursuant to this Section 6.1(a)(ii) for the current taxableyear and all previous taxable years is equal to the aggregate Net Lossesallocated to such Partners pursuant to Section 6.1(b)(ii) for all previoustaxable years; and

 

(iii)                               Third,the balance, if any, 100% to the General Partner and the Unitholders, inaccordance with their respective Percentage Interests.

 

(b)                                 NetLosses. 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 anddeduction taken into account in computing Net Losses for such taxable periodshall be allocated as follows:

 

(i)                                     First,100% to the General Partner and the Unitholders, in accordance with theirrespective Percentage Interests, until the aggregate Net Losses allocatedpursuant to this Section 6.1(b)(i) for the current taxable year and allprevious taxable years is equal to the aggregate Net Income allocated to suchPartners 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 deficitbalance in its Adjusted Capital Account at the end of such taxable year (orincrease any existing deficit balance in its Adjusted Capital Account);

 

(ii)                                  Second,100% to the General Partner and the Unitholders, in accordance with theirrespective Percentage Interests; provided, that Net Losses shall not beallocated pursuant to this Section 6.1(b)(ii) to the extent that suchallocation would cause any Unitholder to have a deficit balance in its AdjustedCapital Account at the end of such

 

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taxable year (or increase any existingdeficit balance in its Adjusted Capital Account); and

 

(iii)                               Third,the balance, if any, 100% to the General Partner.

 

(c)                                  NetTermination Gains and Losses. After giving effect to the special allocationsset forth in Section 6.1(d), all items of income, gain, loss and deductiontaken into account in computing Net Termination Gain or Net Termination Lossfor such taxable period shall be allocated in the same manner as such NetTermination Gain or Net Termination Loss is allocated hereunder. Allallocations under this Section 6.1(c) shall be made after Capital Accountbalances have been adjusted by all other allocations provided under this Section 6.1and after all distributions of Available Cash provided under Sections 6.4 and6.5 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.

 

(i)                                     Ifa 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 thefollowing manner (and the Capital Accounts of the Partners shall be increasedby the amount so allocated in each of the following subclauses, in the orderlisted, before an allocation is made pursuant to the next succeedingsubclause):

 

(A)                              First,to each Partner having a deficit balance in its Capital Account, in theproportion that such deficit balance bears to the total deficit balances in theCapital Accounts of all Partners, until each such Partner has been allocatedNet 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 theCapital Account in respect of each Common Unit then Outstanding is equal to thesum of (1) its Unrecovered Initial Unit Price, (2) the Minimum QuarterlyDistribution for the Quarter during which the Liquidation Date occurs, reducedby any distribution pursuant to Section 6.4(a)(i) or (b)(i) with respectto such Common Unit for such Quarter (the amount determined pursuant to thisclause (2) is hereinafter defined as the “Unpaid MQD”) and (3) any thenexisting 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 theGeneral Partner in accordance with its Percentage Interest and (y) allUnitholders holding Subordinated Units, Pro Rata, a percentage equal to 100%less the percentage applicable to subclause (x) of this clause (c), until theCapital Account in respect of each Subordinated Unit then Outstanding equalsthe sum of (1) its Unrecovered Initial Unit Price, determined for the taxableyear (or portion thereof) to which this allocation of gain relates, and (2) theMinimum Quarterly Distribution for the Quarter during which the LiquidationDate occurs, reduced by

 

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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 theirrespective Percentage Interests, until the Capital Account in respect of eachCommon Unit then Outstanding is equal to the sum of (1) its Unrecovered InitialUnit Price, (2) the Unpaid MQD, (3) any then existing Cumulative Common UnitArrearage, and (4) the excess of (aa) the First Target Distribution less theMinimum Quarterly Distribution for each Quarter of the Partnership’s existenceover (bb) the cumulative per Unit amount of any distributions of Available Cashthat is deemed to be Operating Surplus made pursuant to Sections 6.4(a)(iv) and6.4(b)(ii) (the sum of (1), (2), (3) and (4) is hereinafter defined as the “FirstLiquidation 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 allUnitholders, Pro Rata, a percentage equal to 100% less the sum of thepercentages applicable to subclause (x) and (y) of this clause (E), until theCapital Account in respect of each Common Unit then Outstanding is equal to thesum of (1) the First Liquidation Target Amount, and (2) the excess of (aa) theSecond Target Distribution less the First Target Distribution for each Quarterof the Partnership’s existence over (bb) the cumulative per Unit amount of anydistributions of Available Cash that is deemed to be Operating Surplus madepursuant to Sections 6.4(a)(v) and 6.4(b)(iii) (the sum of (1) and (2) ishereinafter 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 allUnitholders, Pro Rata, a percentage equal to 100% less the sum of thepercentages applicable to subclause (x) and (y) of this clause (F), until theCapital Account in respect of each Common Unit then Outstanding is equal to thesum of (1) the Second Liquidation Target Amount, and (2) the excess of (aa) theThird Target Distribution less the Second Target Distribution for each Quarterof the Partnership’s existence over (bb) the cumulative per Unit amount of anydistributions of Available Cash that is deemed to be Operating Surplus madepursuant to Sections 6.4(a)(vi)and 6.4(b)(iv) (the sum of (1) and (2) ishereinafter 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) toall Unitholders, Pro Rata, a percentage equal to 100% less the sum of thepercentages applicable to subclause (x) and (y) of this clause (G).

 

(ii)                                  Ifa 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 thefollowing manner:

 

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(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 theGeneral Partner in accordance with its Percentage Interest and (y) to allUnitholders holding Subordinated Units, Pro Rata, a percentage equal to 100%less the percentage applicable to subclause (x) of this clause (A), until theCapital Account in respect of each Subordinated Unit then Outstanding has beenreduced to zero;

 

(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 theCapital Account in respect of each Common Unit then Outstanding has beenreduced to zero; and

 

(C)                                Third,the balance, if any, 100% to the General Partner.

 

(d)                                 SpecialAllocations. Notwithstanding any other provision of this Section 6.1, thefollowing special allocations shall be made for such taxable period:

 

(i)                                     PartnershipMinimum Gain Chargeback. Notwithstanding any other provision of this Section 6.1,if there is a net decrease in Partnership Minimum Gain during any Partnershiptaxable period, each Partner shall be allocated items of Partnership income andgain for such period (and, if necessary, subsequent periods) in the manner andamounts 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 Partner’s Adjusted Capital Account balance shall be determined, and theallocation of income or gain required hereunder shall be effected, prior to theapplication of any other allocations pursuant to this Section 6.1(d) withrespect to such taxable period (other than an allocation pursuant to Sections6.1(d)(vi) and 6.1(d)(vii)). This Section 6.1(d)(i) is intended to complywith the Partnership Minimum Gain chargeback requirement in Treasury RegulationSection 1.704-2(f) and shall be interpreted consistently therewith.

 

(ii)                                  Chargebackof Partner Nonrecourse Debt Minimum Gain. Notwithstanding the other provisionsof this Section 6.1 (other than Section 6.1(d)(i)), except asprovided in Treasury Regulation Section 1.704-2(i)(4), if there is a netdecrease in Partner Nonrecourse Debt Minimum Gain during any Partnershiptaxable period, any Partner with a share of Partner Nonrecourse Debt MinimumGain at the beginning of such taxable period shall be allocated items ofPartnership income and gain for such period (and, if necessary, subsequentperiods) in the manner and amounts provided in Treasury Regulation Sections1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any successor provisions. For purposesof this Section 6.1(d), each Partner’s Adjusted Capital Account balanceshall be determined, and the allocation of income or gain required hereundershall be effected, prior to the application of any other allocations pursuantto this Section 6.1(d), other than Section 6.1(d)(i) and other thanan allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vii), withrespect to such taxable period. This Section 6.1(d)(ii) is intended tocomply with the chargeback of items of income and gain

 

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requirement in Treasury Regulation Section 1.704-2(i)(4)and shall be interpreted consistently therewith.

 

(iii)                               PriorityAllocations.

 

(A)                              Ifthe amount of cash or the Net Agreed Value of any property distributed (exceptcash or property distributed pursuant to Section 12.4) to any Unitholderwith 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 theother Unitholders with respect to their Units (on a per Unit basis), then (1)each Unitholder receiving such greater cash or property distribution shall beallocated gross income in an amount equal to the product of (aa) the amount bywhich the distribution (on a per Unit basis) to such Unitholder exceeds thedistribution (on a per Unit basis) to the Unitholders receiving the smallestdistribution and (bb) the number of Units owned by the Unitholder receiving thegreater distribution; and (2) the General Partner shall be allocated grossincome in an aggregate amount equal to the product obtained by multiplying (aa)the quotient determined by dividing (x) the General Partner’s PercentageInterest at the time in which the greater cash or property distribution occursby (y) the sum of 100 less the General Partner’s Percentage Interest at thetime in which the greater cash or property distribution occurs times (bb) thesum of the amounts allocated in clause (1) above.

 

(B)                                Afterthe application of Section 6.1(d)(iii)(A), all or any portion of theremaining items of Partnership gross income or gain for the taxable period, ifany, shall be allocated (1) to the holders of Incentive Distribution Rights,Pro Rata, until the aggregate amount of such items allocated to the holders ofIncentive Distribution Rights pursuant to this paragraph 6.1(d)(iii)(B) for thecurrent taxable year and all previous taxable years is equal to the cumulativeamount of all Incentive Distributions made to the holders of IncentiveDistribution Rights from the Closing Date to a date 45 days after the end ofthe current taxable year; and (2) to the General Partner an amount equal to theproduct of (aa) an amount equal to the quotient determined by dividing (x) theGeneral Partner’s Percentage Interest by (y) the sum of 100 less the GeneralPartner’s Percentage Interest times (bb) the sum of the amounts allocated inclause (1) above.

 

(iv)                              QualifiedIncome 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 Partnershipincome and gain shall be specially allocated to such Partner in an amount andmanner sufficient to eliminate, to the extent required by the TreasuryRegulations promulgated under Section 704(b) of the Code, the deficitbalance, if any, in its Adjusted Capital Account created by such adjustments,allocations or distributions as quickly as possible unless such deficit balanceis otherwise eliminated pursuant to Section 6.1(d)(i) or (ii).

 

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(v)                                 GrossIncome Allocations. In the event any Partner has a deficit balance in itsCapital Account at the end of any Partnership taxable period in excess of thesum of (A) the amount such Partner is required to restore pursuant to theprovisions of this Agreement and (B) the amount such Partner is deemedobligated to restore pursuant to Treasury Regulation Sections 1.704-2(g) and1.704-2(i)(5), such Partner shall be specially allocated items of Partnershipgross 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 bemade only if and to the extent that such Partner would have a deficit balancein its Capital Account as adjusted after all other allocations provided for inthis Section 6.1 have been tentatively made as if this Section 6.1(d)(v)were not in this Agreement.

 

(vi)                              NonrecourseDeductions. Nonrecourse Deductions for any taxable period shall be allocated tothe Partners in accordance with their respective Percentage Interests. If theGeneral Partner determines that the Partnership’s Nonrecourse Deductions shouldbe allocated in a different ratio to satisfy the safe harbor requirements ofthe Treasury Regulations promulgated under Section 704(b) of the Code, theGeneral Partner is authorized, upon notice to the other Partners, to revise theprescribed ratio to the numerically closest ratio that does satisfy suchrequirements.

 

(vii)                           PartnerNonrecourse Deductions. Partner Nonrecourse Deductions for any taxable periodshall be allocated 100% to the Partner that bears the Economic Risk of Losswith respect to the Partner Nonrecourse Debt to which such Partner NonrecourseDeductions 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 aPartner Nonrecourse Debt, such Partner Nonrecourse Deductions attributablethereto shall be allocated between or among such Partners in accordance withthe ratios in which they share such Economic Risk of Loss.

 

(viii)                        NonrecourseLiabilities. For purposes of Treasury Regulation Section 1.752-3(a)(3),the Partners agree that Nonrecourse Liabilities of the Partnership in excess ofthe sum of (A) the amount of Partnership Minimum Gain and (B) the total amountof Nonrecourse Built-in Gain shall be allocated among the Partners inaccordance with their respective Percentage Interests.

 

(ix)                                CodeSection 754 Adjustments. To the extent an adjustment to the adjusted taxbasis of any Partnership asset pursuant to Section 734(b) or 743(b) of theCode 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 suchadjustment to the Capital Accounts shall be treated as an item of gain (if theadjustment increases the basis of the asset) or loss (if the adjustmentdecreases such basis), and such item of gain or loss shall be specially allocatedto the Partners in a manner consistent with the manner in which their CapitalAccounts are required to be adjusted pursuant to such Section of theTreasury Regulations.

 

(x)                                   EconomicUniformity. At the election of the General Partner with respect to any taxableperiod ending upon, or after, the termination of the Subordination Period,

 

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all or a portion of the remaining items ofPartnership gross income or gain for such taxable period, after taking intoaccount allocations pursuant to Section 6.1(d)(iii), shall be allocated100% to each Partner holding Subordinated Units that are Outstanding as of thetermination of the Subordination Period (“Final Subordinated Units”) in theproportion of the number of Final Subordinated Units held by such Partner tothe total number of Final Subordinated Units then Outstanding, until each suchPartner has been allocated an amount of gross income or gain that increases theCapital Account maintained with respect to such Final Subordinated Units to anamount equal to the product of (A) the number of Final Subordinated Units heldby such Partner and (B) the Per Unit Capital Amount for a Common Unit. Thepurpose of this allocation is to establish uniformity between the CapitalAccounts underlying Final Subordinated Units and the Capital Accountsunderlying Common Units held by Persons other than the General Partner and itsAffiliates immediately prior to the conversion of such Final Subordinated Unitsinto Common Units. This allocation method for establishing such economicuniformity will be available to the General Partner only if the method forallocating the Capital Account maintained with respect to the SubordinatedUnits between the transferred and retained Subordinated Units pursuant to Section 5.5(c)(ii)does not otherwise provide such economic uniformity to the Final SubordinatedUnits.

 

(xi)                                CurativeAllocation.

 

(A)                              Notwithstandingany other provision of this Section 6.1, other than the RequiredAllocations, the Required Allocations shall be taken into account in making theAgreed Allocations so that, to the extent possible, the net amount of items ofincome, gain, loss and deduction allocated to each Partner pursuant to theRequired Allocations and the Agreed Allocations, together, shall be equal tothe net amount of such items that would have been allocated to each suchPartner under the Agreed Allocations had the Required Allocations and therelated 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 extentthat there has been a decrease in Partnership Minimum Gain and (2) PartnerNonrecourse Deductions shall not be taken into account except to the extentthat 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 withrespect to Required Allocations to the extent the General Partner determinesthat such allocations will otherwise be inconsistent with the economicagreement 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 arelikely to be offset by subsequent Required Allocations.

 

(B)                                TheGeneral Partner shall, with respect to each taxable period, (1) apply theprovisions of Section 6.1(d)(xi)(A) in whatever order is most likely tominimize the economic distortions that might otherwise result from the RequiredAllocations, 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 economicdistortions.

 

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(xii)                             CorrectiveAllocations. In the event of any allocation of Additional Book Basis DerivativeItems or any Book-Down Event or any recognition of a Net Termination Loss, thefollowing rules shall apply:

 

(A)                              Inthe case of any allocation of Additional Book Basis Derivative Items (otherthan an allocation of Unrealized Gain or Unrealized Loss under Section 5.5(d)hereof), the General Partner shall allocate additional items of gross incomeand gain away from the holders of Incentive Distribution Rights to theUnitholders and the General Partner, or additional items of deduction and lossaway from the Unitholders and the General Partner to the holders of IncentiveDistribution Rights, to the extent that the Additional Book Basis DerivativeItems allocated to the Unitholders or the General Partner exceed their Share ofAdditional Book Basis Derivative Items. For this purpose, the Unitholders andthe General Partner shall be treated as being allocated Additional Book BasisDerivative Items to the extent that such Additional Book Basis Derivative Itemshave reduced the amount of income that would otherwise have been allocated tothe Unitholders or the General Partner under the Partnership Agreement (e.g.,Additional Book Basis Derivative Items taken into account in computing cost ofgoods sold would reduce the amount of book income otherwise available forallocation 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 ifthis Section 6.1(d)(xii) were not in this Agreement and, to the extentnecessary, shall require the reallocation of items that have been allocatedpursuant to such other Agreed Allocations.

 

(B)                                Inthe case of any negative adjustments to the Capital Accounts of the Partnersresulting from a Book-Down Event or from the recognition of a Net TerminationLoss, such negative adjustment (1) shall first be allocated, to the extent ofthe Aggregate Remaining Net Positive Adjustments, in such a manner, asdetermined by the General Partner, that to the extent possible the aggregateCapital Accounts of the Partners will equal the amount that would have been theCapital Account balance of the Partners if no prior Book-Up Events hadoccurred, and (2) any negative adjustment in excess of the Aggregate RemainingNet Positive Adjustments shall be allocated pursuant to Section 6.1(c)hereof.

 

(C)                                Inmaking the allocations required under this Section 6.1(d)(xii), theGeneral Partner may apply whatever conventions or other methodology itdetermines will satisfy the purpose of this Section 6.1(d)(xii).

 

SECTION 6.2                          *Allocations for Tax Purposes*.

 

(a)                                  Exceptas otherwise provided herein, for federal income tax purposes, each item ofincome, gain, loss and deduction shall be allocated among the Partners in thesame manner as its correlative item of “book” income, gain, loss or deductionis allocated pursuant to Section 6.1.

 

(b)                                 Inan attempt to eliminate Book-Tax Disparities attributable to a ContributedProperty or Adjusted Property, items of income, gain, loss, depreciation,amortization and cost

 

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recoverydeductions shall be allocated for federal income tax purposes among thePartners as follows:

 

(i)                                     (A)In the case of a Contributed Property, such items attributable thereto shall beallocated among the Partners in the manner provided under Section 704(c)of the Code that takes into account the variation between the Agreed Value ofsuch property and its adjusted basis at the time of contribution; and (B) anyitem of Residual Gain or Residual Loss attributable to a Contributed Propertyshall be allocated among the Partners in the same manner as its correlativeitem 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 allocatedamong 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 Lossattributable to such property and the allocations thereof pursuant to Section 5.5(d)(i)or 5.5(d)(ii), and (2) second, in the event such property was originally aContributed Property, be allocated among the Partners in a manner consistentwith Section 6.2(b)(i)(A); and (B) any item of Residual Gain or ResidualLoss attributable to an Adjusted Property shall be allocated among the Partnersin the same manner as its correlative item of “book” gain or loss is allocatedpursuant to Section 6.1.

 

(iii)                               TheGeneral Partner shall apply the principles of Treasury Regulation Section 1.704-3(d)to eliminate Book-Tax Disparities.

 

(c)                                  Forthe proper administration of the Partnership and for the preservation ofuniformity of the Limited Partner Interests (or any class or classes thereof),the General Partner shall (i) adopt such conventions as it deems appropriate indetermining the amount of depreciation, amortization and cost recoverydeductions; (ii) make special allocations for federal income tax purposes ofincome (including, without limitation, gross income) or deductions; and (iii)amend the provisions of this Agreement as appropriate (x) to reflect theproposal or promulgation of Treasury Regulations under Section 704(b) or Section 704(c)of the Code or (y) otherwise to preserve or achieve uniformity of the LimitedPartner Interests (or any class or classes thereof). The General Partner mayadopt such conventions, make such allocations and make such amendments to thisAgreement as provided in this Section 6.2(c) only if such conventions,allocations or amendments would not have a material adverse effect on thePartners, the holders of any class or classes of Limited Partner Interestsissued and Outstanding or the Partnership, and if such allocations areconsistent with the principles of Section 704 of the Code.

 

(d)                                 TheGeneral Partner may determine to depreciate or amortize the portion of anadjustment under Section 743(b) of the Code attributable to unrealizedappreciation in any Adjusted Property (to the extent of the unamortizedBook-Tax Disparity) using a predetermined rate derived from the depreciation oramortization method and useful life applied to the Partnership’s common basisof such property, despite any inconsistency of such approach with TreasuryRegulation Section 1.167(c)-l(a)(6) or any successor regulations thereto.If the General Partner determines that such reporting position cannotreasonably be taken, the General Partner may adopt depreciation andamortization conventions under which all purchasers acquiring

 

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LimitedPartner Interests in the same month would receive depreciation and amortizationdeductions, based upon the same applicable rate as if they had purchased adirect interest in the Partnership’s property. If the General Partner choosesnot to utilize such aggregate method, the General Partner may use any otherdepreciation and amortization conventions to preserve the uniformity of theintrinsic tax characteristics of any Limited Partner Interests, so long as suchconventions would not have a material adverse effect on the Limited Partners orthe Record Holders of any class or classes of Limited Partner Interests.

 

(e)                                  Anygain allocated to the Partners upon the sale or other taxable disposition ofany Partnership asset shall, to the extent possible, after taking into accountother required allocations of gain pursuant to this Section 6.2, becharacterized as Recapture Income in the same proportions and to the sameextent as such Partners (or their predecessors in interest) have been allocatedany deductions directly or indirectly giving rise to the treatment of suchgains as Recapture Income.

 

(f)                                    Allitems of income, gain, loss, deduction and credit recognized by the Partnershipfor federal income tax purposes and allocated to the Partners in accordancewith the provisions hereof shall be determined without regard to any electionunder Section 754 of the Code that may be made by the Partnership;provided, however, that such allocations, once made, shall be adjusted (in themanner determined by the General Partner) to take into account thoseadjustments permitted or required by Sections 734 and 743 of the Code.

 

(g)                                 Eachitem of Partnership income, gain, loss and deduction shall for federal incometax purposes, be determined on an annual basis and prorated on a monthly basisand shall be allocated to the Partners as of the opening of the New York StockExchange on the first Business Day of each month; provided, however, such itemsfor the period beginning on the Closing Date and ending on the last day of themonth in which the Option Closing Date or the expiration of the Over-AllotmentOption occurs shall be allocated to the Partners as of the opening of the NewYork Stock Exchange on the first Business Day of the next succeeding month; andprovided, further, that gain or loss on a sale or other disposition of anyassets of the Partnership or any other extraordinary item of income or lossrealized and recognized other than in the ordinary course of business, asdetermined by the General Partner, shall be allocated to the Partners as of theopening of the New York Stock Exchange on the first Business Day of the monthin which such gain or loss is recognized for federal income tax purposes. TheGeneral Partner may revise, alter or otherwise modify such methods ofallocation to the extent permitted or required by Section 706 of the Codeand the regulations or rulings promulgated thereunder.

 

(h)                                 Allocationsthat would otherwise be made to a Limited Partner under the provisions of this Article VIshall instead be made to the beneficial owner of Limited Partner Interests heldby a nominee in any case in which the nominee has furnished the identity ofsuch owner to the Partnership in accordance with Section 6031(c) of theCode or any other method determined by the General Partner.

 

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SECTION 6.3                          *Requirement and Characterization of Distributions; Distributions toRecord Holders*.

 

(a)                                  Within45 days following the end of each Quarter commencing with the Quarter ending onMarch 31, 2005, an amount equal to 100% of Available Cash with respect tosuch Quarter shall, subject to Section 17-607 of the Delaware Act, bedistributed in accordance with this Article VI by the Partnership to thePartners as of the Record Date selected by the General Partner. All amounts ofAvailable Cash distributed by the Partnership on any date from any source shallbe deemed to be Operating Surplus until the sum of all amounts of AvailableCash theretofore distributed by the Partnership to the Partners pursuant to Section 6.4equals the Operating Surplus from the Closing Date through the close of theimmediately preceding Quarter. Any remaining amounts of Available Cashdistributed by the Partnership on such date shall, except as otherwise providedin Section 6.5, be deemed to be “Capital Surplus.” All distributionsrequired to be made under this Agreement shall be made subject to Section 17-607of the Delaware Act.

 

(b)                                 NotwithstandingSection 6.3(a), in the event of the dissolution and liquidation of thePartnership, all receipts received during or after the Quarter in which theLiquidation Date occurs, other than from borrowings described in (a)(ii) of thedefinition of Available Cash, shall be applied and distributed solely inaccordance with, and subject to the terms and conditions of, Section 12.4.

 

(c)                                  TheGeneral Partner may treat taxes paid by the Partnership on behalf of, oramounts withheld with respect to, all or less than all of the Partners, as adistribution of Available Cash to such Partners.

 

(d)                                 Eachdistribution in respect of a Partnership Interest shall be paid by thePartnership, directly or through the Transfer Agent or through any other Personor agent, only to the Record Holder of such Partnership Interest as of theRecord Date set for such distribution. Such payment shall constitute fullpayment and satisfaction of the Partnership’s liability in respect of suchpayment, regardless of any claim of any Person who may have an interest in suchpayment by reason of an assignment or otherwise.

 

SECTION 6.4                          *Distributions of Available Cash from Operating Surplus*.

 

(a)                                  DuringSubordination Period. Available Cash with respect to any Quarter within theSubordination Period that is deemed to be Operating Surplus pursuant to theprovisions of Section 6.3 or 6.5 shall, subject to Section 17-607 ofthe 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 the Unitholders holding Common Units, in accordancewith their respective Percentage Interests, until there has been distributed inrespect of each Common Unit then Outstanding an amount equal to the MinimumQuarterly Distribution for such Quarter;

 

(ii)                                  Second,to the General Partner and the Unitholders holding Common Units, in accordancewith their respective Percentage Interests, until there has been distributed inrespect of each Common Unit then Outstanding an amount equal to the CumulativeCommon Unit Arrearage existing with respect to such Quarter;

 

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(iii)                               Third,to the General Partner and the Unitholders holding Subordinated Units, inaccordance with their respective Percentage Interests, until there has beendistributed in respect of each Subordinated Unit then Outstanding an amountequal to the Minimum Quarterly Distribution for such Quarter;

 

(iv)                              Fourth,to the General Partner and all Unitholders, in accordance with their respectivePercentage Interests, until there has been distributed in respect of each Unitthen Outstanding an amount equal to the excess of the First Target Distributionover 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 allUnitholders, Pro Rata, a percentage equal to 100% less the sum of thepercentages applicable to subclauses (A) and (B) of this clause (v) until therehas been distributed in respect of each Unit then Outstanding an amount equalto the excess of the Second Target Distribution over the First TargetDistribution 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 allUnitholders, Pro Rata, a percentage equal to 100% less the sum of thepercentages applicable to subclause (A) and (B) of this subclause (vi), untilthere has been distributed in respect of each Unit then Outstanding an amountequal to the excess of the Third Target Distribution over the Second TargetDistribution 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 allUnitholders, Pro Rata, a percentage equal to 100% less the sum of thepercentages applicable to subclauses (A) and (B) of this clause (vii);provided, however, if the Minimum Quarterly Distribution, the First TargetDistribution, the Second Target Distribution and the Third Target Distributionhave 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 withrespect to any Quarter will be made solely in accordance with Section 6.4(a)(vii).

 

(b)                                 AfterSubordination Period. Available Cash with respect to any Quarter after theSubordination Period that is deemed to be Operating Surplus pursuant to theprovisions of Section 6.3 or 6.5, subject to Section 17-607 of theDelaware 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 theirrespective Percentage Interests, until there has been distributed in respect ofeach Unit then Outstanding an amount equal to the Minimum QuarterlyDistribution for such Quarter;

 

(ii)                                  Second,100% to the General Partner and the Unitholders in accordance with theirrespective Percentage Interests, until there has been distributed in respect of

 

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each Unit then Outstanding an amount equal tothe excess of the First Target Distribution over the Minimum QuarterlyDistribution 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 allUnitholders, Pro Rata, a percentage equal to 100% less the sum of thepercentages applicable to subclauses (A) and (B) of this clause (iii), untilthere has been distributed in respect of each Unit then Outstanding an amountequal to the excess of the Second Target Distribution over the First TargetDistribution 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 allUnitholders, Pro Rata, a percentage equal to 100% less the sum of thepercentages applicable to subclause (A) and (B) of this clause (iv), untilthere has been distributed in respect of each Unit then Outstanding an amountequal to the excess of the Third Target Distribution over the Second TargetDistribution for such Quarter; and

 

(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 allUnitholders, Pro Rata, a percentage equal to 100% less the sum of thepercentages applicable to subclauses (A) and (B) of this clause (v);

 

provided, however, if the Minimum Quarterly Distribution, the FirstTarget Distribution, the Second Target Distribution and the Third TargetDistribution 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 withrespect to any Quarter will be made solely in accordance with Section 6.4(b)(v).

 

SECTION 6.5*                          Distributionsof Available Cash from Capital Surplus*. Available Cash that is deemed to be Capital Surplus pursuant to theprovisions of Section 6.3(a) shall, subject to Section 17-607 of theDelaware Act, be distributed, unless the provisions of Section 6.3 requireotherwise, 100% to the General Partner and the Unitholders in accordance withtheir respective Percentage Interests, until a hypothetical holder of a CommonUnit acquired on the Closing Date has received with respect to such CommonUnit, during the period since the Closing Date through such date, distributionsof Available Cash that are deemed to be Capital Surplus in an aggregate amountequal to the Initial Unit Price. Available Cash that is deemed to be CapitalSurplus shall then be distributed to the General Partner and all Unitholdersholding Common Units in accordance with their respective Percentage Interests,until there has been distributed in respect of each Common Unit thenOutstanding an amount equal to the Cumulative Common Unit Arrearage.Thereafter, all Available Cash shall be distributed as if it were OperatingSurplus and shall be distributed in accordance with Section 6.4.

 

SECTION 6.6                          *Adjustment of Minimum Quarterly Distribution and Target DistributionLevels*.

 

(a)                                  TheMinimum Quarterly Distribution, First Target Distribution, Second TargetDistribution, Third Target Distribution, Common Unit Arrearages and CumulativeCommon Unit

 

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Arrearagesshall be proportionately adjusted in the event of any distribution, combinationor subdivision (whether effected by a distribution payable in Units orotherwise) of Units or other Partnership Securities in accordance with Section 5.10.In the event of a distribution of Available Cash that is deemed to be fromCapital Surplus, the then applicable Minimum Quarterly Distribution, FirstTarget Distribution, Second Target Distribution and Third Target Distribution,shall be adjusted proportionately downward to equal the product obtained bymultiplying the otherwise applicable Minimum Quarterly Distribution, FirstTarget Distribution, Second Target Distribution and Third Target Distribution,as the case may be, by a fraction of which the numerator is the UnrecoveredInitial Unit Price of the Common Units immediately after giving effect to suchdistribution and of which the denominator is the Unrecovered Initial Unit Priceof the Common Units immediately prior to giving effect to such distribution.

 

(b)                                 TheMinimum Quarterly Distribution, First Target Distribution, Second TargetDistribution and Third Target Distribution, shall also be subject to adjustmentpursuant to Section 6.9.

 

SECTION 6.7                          *Special Provisions Relating to the Holders of Subordinated Units*.

 

(a)                                  Exceptwith respect to the right to vote on or approve matters requiring the vote orapproval of a percentage of the holders of Outstanding Common Units and theright to participate in allocations of income, gain, loss and deduction anddistributions made with respect to Common Units, the holder of a SubordinatedUnit shall have all of the rights and obligations of a Unitholder holdingCommon Units hereunder; provided, however, that immediately upon the conversionof Subordinated Units into Common Units pursuant to Section 5.8, theUnitholder holding a Subordinated Unit shall possess all of the rights andobligations of a Unitholder holding Common Units hereunder, including the rightto vote as a Common Unitholder and the right to participate in allocations ofincome, gain, loss and deduction and distributions made with respect to CommonUnits; provided, however, that such converted Subordinated Units shall remainsubject to the provisions of Sections 5.5(c)(ii), 6.1(d)(x) and 6.7(b).

 

(b)                                 AUnitholder shall not be permitted to transfer a Subordinated Unit or aSubordinated 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 thetransferring Unitholder’s Capital Account with respect to the retainedSubordinated Units or Retained Converted Subordinated Units would be negativeafter giving effect to the allocation under Section 5.5(c)(ii)(B).

 

(c)                                  TheUnitholder holding a Subordinated Unit that has converted into a Common Unitpursuant to Section 5.8 shall not be issued a Common Unit Certificatepursuant to Section 4.1, and shall not be permitted to transfer itsconverted Subordinated Units to a Person that is not an Affiliate of the holderuntil such time as the General Partner determines, based on advice of counsel,that a converted Subordinated Unit should have, as a substantive matter, likeintrinsic economic and federal income tax characteristics, in all materialrespects, to the intrinsic economic and federal income tax characteristics ofan Initial Common Unit. In connection with the condition imposed by this Section 6.7(c),the General Partner may take whatever steps are required to provide economicuniformity to the converted Subordinated Units in preparation for a transfer ofsuch converted Subordinated Units, including the application of Sections5.5(c)(ii), 6.1(d)(x) and 6.7(b); provided, however, that no such steps may betaken that would have a

 

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materialadverse effect on the Unitholders holding Common Units represented by CommonUnit Certificates.

 

SECTION 6.8*                          SpecialProvisions Relating to the Holders of Incentive Distribution Rights*.  Notwithstanding anything to the contrary setforth in this Agreement, the holders of the Incentive Distribution Rights (a)shall (i) possess the rights and obligations provided in this Agreement withrespect to a Limited Partner pursuant to Articles III and VII and (ii) have aCapital Account as a Partner pursuant to Section 5.5 and all otherprovisions related thereto and (b) shall not (i) be entitled to vote on anymatters requiring the approval or vote of the holders of Outstanding Units,(ii) be entitled to any distributions other than as provided in Sections6.4(a)(v), (vi) and (vii), 6.4(b)(iii), (iv) and (v), and 12.4 or (iii) beallocated items of income, gain, loss or deduction other than as specified inthis Article VI.

 

SECTION 6.9*                          EntityLevel Taxation*.  If legislation isenacted or the interpretation of existing language is modified by agovernmental taxing authority so that a Group Member is treated as anassociation taxable as a corporation or is otherwise subject to an entity leveltax for federal, state or local income tax purposes, then the General Partnershall estimate for each Quarter the Partnership Group’s aggregate liability(the “Estimated Incremental Quarterly Tax Amount”) for all such income taxesthat are payable by reason of any such new legislation or interpretation;provided that any difference between such estimate and the actual tax liabilityfor such Quarter that is owed by reason of any such new legislation or interpretationshall be taken into account in determining the Estimated Incremental QuarterlyTax Amount with respect to each Quarter in which any such difference can bedetermined. For each such Quarter, the Minimum Quarterly Distribution, FirstTarget Distribution, Second Target Distribution and Third Target Distribution,shall be the product obtained by multiplying (a) the amounts therefor that areset out herein prior to the application of this Section 6.9 times (b) thequotient obtained by dividing (i) Available Cash with respect to such Quarterby (ii) the sum of Available Cash with respect to such Quarter and theEstimated Incremental Quarterly Tax Amount for such Quarter, as determined bythe General Partner. For purposes of the foregoing, Available Cash with respectto a Quarter will be deemed reduced by the Estimated Incremental Quarterly TaxAmount for that Quarter.

 

**ARTICLE VII**MANAGEMENT AND OPERATION OF BUSINESS

 

SECTION 7.1                          *Management*.

 

(a)                                  TheGeneral Partner shall conduct, direct and manage all activities of thePartnership. Except as otherwise expressly provided in this Agreement, allmanagement powers over the business and affairs of the Partnership shall beexclusively vested in the General Partner, and no Limited Partner shall haveany management power over the business and affairs of the Partnership. Inaddition to the powers now or hereafter granted a general partner of a limitedpartnership under applicable law or that are granted to the General Partnerunder 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 itdetermines to be necessary or appropriate to conduct the business of thePartnership, to exercise all powers set forth in Section 2.5 and toeffectuate the purposes set forth in Section 2.4, including the following:

 

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(i)                                     themaking of any expenditures, the lending or borrowing of money, the assumptionor guarantee of, or other contracting for, indebtedness and other liabilities,the issuance of evidences of indebtedness, including indebtedness that isconvertible into Partnership Securities, and the incurring of any otherobligations;

 

(ii)                                  themaking of tax, regulatory and other filings, or rendering of periodic or otherreports to governmental or other agencies having jurisdiction over the businessor assets of the Partnership;

 

(iii)                               theacquisition, disposition, mortgage, pledge, encumbrance, hypothecation orexchange of any or all of the assets of the Partnership or the merger or othercombination of the Partnership with or into another Person (the mattersdescribed in this clause (iii) being subject, however, to any prior approvalthat may be required by Section 7.3);

 

(iv)                              theuse of the assets of the Partnership (including cash on hand) for any purposeconsistent with the terms of this Agreement, including the financing of theconduct of the operations of the Partnership Group; subject to Section 7.6(a),the lending of funds to other Persons (including other Group Members); therepayment or guarantee of obligations of any Group Member; and the making ofcapital contributions to any Group Member;

 

(v)                                 thenegotiation, execution and performance of any contracts, conveyances or other instruments(including instruments that limit the liability of the Partnership undercontractual arrangements to all or particular assets of the Partnership, withthe other party to the contract to have no recourse against the General Partneror its assets other than its interest in the Partnership, even if same resultsin the terms of the transaction being less favorable to the Partnership thanwould otherwise be the case);

 

(vi)                              thedistribution of Partnership cash;

 

(vii)                           theselection and dismissal of employees (including employees having titles such as“president,” “vice president,” “secretary” and “treasurer”) and agents, outsideattorneys, accountants, consultants and contractors and the determination oftheir compensation and other terms of employment or hiring;

 

(viii)                        themaintenance of insurance for the benefit of the Partnership Group and thePartners;

 

(ix)                                theformation of, or acquisition of an interest in, and the contribution ofproperty and the making of loans to, any further limited or generalpartnerships, joint ventures, corporations, limited liability companies orother relationships (including the acquisition of interests in, and thecontributions of property to, any Group Member from time to time) subject tothe restrictions set forth in Section 2.4;

 

(x)                                   thecontrol of any matters affecting the rights and obligations of the Partnership,including the bringing and defending of actions at law or in equity and

 

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otherwise engaging in the conduct oflitigation, arbitration or mediation and the incurring of legal expense and thesettlement of claims and litigation;

 

(xi)                                theindemnification of any Person against liabilities and contingencies to theextent permitted by law;

 

(xii)                             theentering into of listing agreements with any National Securities Exchange andthe delisting of some or all of the Limited Partner Interests from, orrequesting that trading be suspended on, any such exchange (subject to anyprior approval that may be required under Section 4.8);

 

(xiii)                          unlessrestricted or prohibited by Section 5.7, the purchase, sale or otheracquisition or disposition of Partnership Securities, or the issuance ofadditional options, rights, warrants and appreciation rights relating toPartnership Securities;

 

(xiv)                         theundertaking of any action in connection with the Partnership’s participation inany Group Member; and

 

(xv)                            theentering into of agreements with any of its Affiliates to render services to aGroup Member or to itself in the discharge of its duties as General Partner ofthe Partnership.

 

(b)                                 Notwithstandingany other provision of this Agreement, any Group Member Agreement, the DelawareAct or any applicable law, rule or regulation, each of the Partners andeach other Person who may acquire an interest in Partnership Securities hereby(i) approves, ratifies and confirms the execution, delivery and performance bythe parties thereto of this Agreement and the Group Member Agreement of eachother Group Member, the Underwriting Agreement, the Omnibus Agreement, theContribution Agreement and the other agreements described in or filed asexhibits to the Registration Statement that are related to the transactionscontemplated by the Registration Statement; (ii) agrees that the General Partner(on its own or through any officer of the Partnership) is authorized toexecute, deliver and perform the agreements referred to in clause (i) of thissentence and the other agreements, acts, transactions and matters described inor contemplated by the Registration Statement on behalf of the Partnershipwithout any further act, approval or vote of the Partners or the other Personswho may acquire an interest in Partnership Securities; and (iii) agrees thatthe execution, delivery or performance by the General Partner, any Group Memberor any Affiliate of any of them, of this Agreement or any agreement authorizedor permitted under this Agreement (including the exercise by the GeneralPartner or any Affiliate of the General Partner of the rights accorded pursuantto Article XV), shall not constitute a breach by the General Partner ofany duty that the General Partner may owe the Partnership or the LimitedPartners or any other Persons under this Agreement (or any other agreements) orof any duty stated or implied by law or equity.

 

SECTION 7.2*                          Certificateof Limited Partnership*.  The GeneralPartner has caused the Certificate of Limited Partnership to be filed with theSecretary 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 suchother certificates or documents that the General Partner determines to benecessary or appropriate for the formation, continuation, qualification andoperation of a limited

 

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partnership (or a partnership in which the limited partners havelimited liability) in the State of Delaware or any other state in which thePartnership may elect to do business or own property. To the extent the GeneralPartner determines such action to be necessary or appropriate, the GeneralPartner shall file amendments to and restatements of the Certificate of LimitedPartnership and do all things to maintain the Partnership as a limitedpartnership (or a partnership or other entity in which the limited partnershave limited liability) under the laws of the State of Delaware or of any otherstate 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 berequired, before or after filing, to deliver or mail a copy of the Certificateof Limited Partnership, any qualification document or any amendment thereto toany Limited Partner.

 

SECTION 7.3                          *Restrictions on the General Partner’s Authority*.

 

(a)                                  Exceptas otherwise provided in this Agreement, the General Partner may not, withoutwritten approval of the specific act by holders of all of the OutstandingLimited Partner Interests or by other written instrument executed and deliveredby holders of all of the Outstanding Limited Partner Interests subsequent tothe date of this Agreement, take any action in contravention of this Agreement,including, (i) committing any act that would make it impossible to carry on theordinary business of the Partnership; (ii) possessing Partnership property, orassigning any rights in specific Partnership property, for other than aPartnership purpose; (iii) admitting a Person as a Partner; (iv) amending thisAgreement in any manner; or (v) transferring its interest as a general partnerof the Partnership.

 

(b)                                 Exceptas provided in Articles XII and XIV, the General Partner may not sell, exchangeor otherwise dispose of all or substantially all of the assets of thePartnership Group, taken as a whole, in a single transaction or a series ofrelated transactions (including by way of merger, consolidation, othercombination or sale of ownership interests of the Partnership’s Subsidiaries)without the approval of holders of a Unit Majority; provided, however, thatthis provision shall not preclude or limit the General Partner’s ability tomortgage, pledge, hypothecate or grant a security interest in all orsubstantially all of the assets of the Partnership Group and shall not apply toany forced sale of any or all of the assets of the Partnership Group pursuantto the foreclosure of, or other realization upon, any such encumbrance. Withoutthe approval of holders of a Unit Majority, the General Partner shall not, onbehalf of the Partnership, except as permitted under Sections 4.6, 11.1 and11.2, elect or cause the Partnership to elect a successor general partner ofthe Partnership.

 

SECTION 7.4                          *Reimbursement of the General Partner*.

 

(a)                                  Exceptas provided in this Section 7.4 and elsewhere in this Agreement, theGeneral Partner shall not be compensated for its services as a general partneror managing member of any Group Member.

 

(b)                                 TheGeneral Partner shall be reimbursed on a monthly basis, or such other basis asthe General Partner may determine, for (i) all direct and indirect expenses itincurs or payments it makes on behalf of the Partnership (including salary,bonus, incentive compensation and other amounts paid to any Person includingAffiliates of the General Partner to perform services for the Partnership orfor the General Partner in the discharge of its duties to the

 

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Partnership),and (ii) all other expenses allocable to the Partnership or otherwise incurredby the General Partner in connection with operating the Partnership’s business(including expenses allocated to the General Partner by its Affiliates). TheGeneral Partner shall determine the expenses that are allocable to thePartnership. Reimbursements pursuant to this Section 7.4 shall be inaddition to any reimbursement to the General Partner as a result ofindemnification pursuant to Section 7.7.

 

(c)                                  Subjectto Section 5.7, the General Partner, without the approval of the LimitedPartners (who shall have no right to vote in respect thereof), may propose and adopton behalf of the Partnership employee benefit plans, employee programs andemployee practices (including plans, programs and practices involving theissuance of Partnership Securities or options to purchase or rights, warrantsor appreciation rights relating to Partnership Securities), or cause thePartnership to issue Partnership Securities in connection with, or pursuant to,any employee benefit plan, employee program or employee practice maintained orsponsored by the General Partner or any of its Affiliates, in each case for thebenefit of employees of the General Partner, any Group Member or any Affiliate,or any of them, in respect of services performed, directly or indirectly, forthe benefit of the Partnership Group. The Partnership agrees to issue and sellto the General Partner or any of its Affiliates any Partnership Securities thatthe General Partner or such Affiliates are obligated to provide to anyemployees pursuant to any such employee benefit plans, employee programs oremployee practices. Expenses incurred by the General Partner in connection withany such plans, programs and practices (including the net cost to the GeneralPartner or such Affiliates of Partnership Securities purchased by the GeneralPartner or such Affiliates from the Partnership to fulfill options or awardsunder such plans, programs and practices) shall be reimbursed in accordancewith Section 7.4(b). Any and all obligations of the General Partner underany employee benefit plans, employee programs or employee practices adopted bythe General Partner as permitted by this Section 7.4(c) shall constituteobligations of the General Partner hereunder and shall be assumed by anysuccessor General Partner approved pursuant to Section 11.1 or 11.2 or thetransferee of or successor to all of the General Partner’s General PartnerInterest (represented by General Partner Units) pursuant to Section 4.6.

 

SECTION 7.5                          *Outside Activities*.

 

(a)                                  Afterthe Closing Date, the General Partner, for so long as it is the General Partnerof the Partnership (i) agrees that its sole business will be to act as ageneral partner or managing member, as the case may be, of the Partnership andany other partnership or limited liability company of which the Partnership is,directly or indirectly, a partner or member and to undertake activities thatare ancillary or related thereto (including being a limited partner in thePartnership), and (ii) shall not engage in any business or activity or incurany debts or liabilities except in connection with or incidental to (A) itsperformance as general partner or managing member, if any, of one or more GroupMembers or as described in or contemplated by the Registration Statement or (B)the acquiring, owning or disposing of debt or equity securities in any GroupMember. Notwithstanding the foregoing, the General Partner may (1) enterinto and fulfill its obligations under the Secondment Agreement, dated theClosing Date, between the General Partner and Hiland (the “Secondment Agreement”)and (2) enter into one or more secondment agreements in respect of the GeneralPartner’s employees with Affiliates of the General Partner having a similarscope and nature as the existing Secondment Agreement, or otherwise second theGeneral Partner’s employees to Affiliates of the General Partner.

 

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(b)                                 HaroldHamm and certain of his Affiliates have entered into the Omnibus Agreement,which agreement sets forth certain restrictions on the ability of Harold Hammand his Affiliates to engage in Restricted Businesses.

 

(c)                                  Exceptas specifically restricted by Section 7.5(a) and the Omnibus Agreement,each Indemnitee (other than the General Partner) shall have the right to engagein businesses of every type and description and other activities for profit andto engage in and possess an interest in other business ventures of any andevery type or description, whether in businesses engaged in or anticipated tobe engaged in by any Group Member, independently or with others, including businessinterests and activities in direct competition with the business and activitiesof any Group Member, and none of the same shall constitute a breach of thisAgreement or any duty expressed or implied by law to any Group Member or anyPartner. None of any Group Member, any Limited Partner or any other Personshall have any rights by virtue of this Agreement, any Group Member Agreement,or the partnership relationship established hereby in any business ventures ofany Indemnitee.

 

(d)                                 Subjectto the terms of Section 7.5(a), Section 7.5(b), Section 7.5(c)and the Omnibus Agreement, but otherwise notwithstanding anything to thecontrary in this Agreement, (i) the engaging in competitive activities by anyIndemnitees (other than the General Partner) in accordance with the provisionsof this Section 7.5 is hereby approved by the Partnership and allPartners, (ii) it shall be deemed not to be a breach of any fiduciary duty orany other obligation of any type whatsoever of the General Partner or of anyIndemnitee for the Indemnitees (other than the General Partner) to engage insuch business interests and activities in preference to or to the exclusion ofthe Partnership and (iii) except as set forth in the Omnibus Agreement, theIndemnitees shall have no obligation hereunder or as a result of any dutyexpressed or implied by law to present business opportunities to thePartnership.

 

(e)                                  TheGeneral Partner and each of its Affiliates may acquire Units or otherPartnership 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 PartnershipSecurities acquired by them.

 

(f)                                    Theterm “Affiliates” when used in Section 7.5(a) and Section 7.5(e) withrespect to the General Partner shall not include any Group Member.

 

(g)                                 Notwithstandinganything to the contrary in this Agreement, to the extent that any provision ofthis Agreement purports or is interpreted to have the effect of restricting thefiduciary duties that might otherwise, as a result of Delaware or otherapplicable law, be owed by the General Partner to the Partnership and itsLimited Partners, or to constitute a waiver or consent by the Limited Partnersto any such restriction, such provisions shall be inapplicable and have noeffect in determining whether the General Partner has complied with itsfiduciary duties in connection with determinations made by it under this Section 7.5.

 

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*SECTION 7.6**                       Loans fromthe General Partner; Loans or Contributions from the Partnership or GroupMembers.*

 

(a)                                  TheGeneral Partner or any of its Affiliates may lend to any Group Member, and anyGroup 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 insuch amounts as the General Partner may determine; provided, however, that inany such case the lending party may not charge the borrowing party interest ata rate greater than the rate that would be charged the borrowing party orimpose terms less favorable to the borrowing party than would be charged orimposed on the borrowing party by unrelated lenders on comparable loans made onan arm’s length basis (without reference to the lending party’s financialabilities or guarantees), all as determined by the General Partner. Theborrowing party shall reimburse the lending party for any costs (other than anyadditional interest costs) incurred by the lending party in connection with theborrowing of such funds. For purposes of this Section 7.6(a) and Section 7.6(b),the term “Group Member” shall include any Affiliate of a Group Member that iscontrolled by the Group Member.

 

(b)                                 ThePartnership may lend or contribute to any Group Member, and any Group Membermay borrow from the Partnership, funds on terms and conditions determined bythe General Partner. No Group Member may lend funds to the General Partner orany of its Affiliates (other than another Group Member).

 

(c)                                  Noborrowing by any Group Member or the approval thereof by the General Partnershall be deemed to constitute a breach of any duty, expressed or implied, ofthe General Partner or its Affiliates to the Partnership or the LimitedPartners by reason of the fact that the purpose or effect of such borrowing isdirectly or indirectly to (i) enable distributions to the General Partner orits Affiliates (including in their capacities as Limited Partners) to exceedthe General Partner’s Percentage Interest of the total amount distributed toall partners or (ii) hasten the expiration of the Subordination Period or theconversion of any Subordinated Units into Common Units.

 

SECTION 7.7                          *Indemnification*.

 

(a)                                  Tothe fullest extent permitted by law but subject to the limitations expresslyprovided in this Agreement, all Indemnitees shall be indemnified and heldharmless 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 arisingfrom any and all claims, demands, actions, suits or proceedings, whether civil,criminal, administrative or investigative, in which any Indemnitee may beinvolved, or is threatened to be involved, as a party or otherwise, by reasonof its status as an Indemnitee; provided, that the Indemnitee shall not beindemnified and held harmless if there has been a final and non-appealablejudgment entered by a court of competent jurisdiction determining that, inrespect of the matter for which the Indemnitee is seeking indemnificationpursuant to this Section 7.7, the Indemnitee acted in bad faith or engagedin fraud, willful misconduct or, in the case of a criminal matter, acted withknowledge that the Indemnitee’s conduct was unlawful; provided, further, noindemnification pursuant to this Section 7.7 shall be available to theGeneral Partner or its Affiliates (other than a Group Member) with respect toits or their obligations incurred pursuant to the Underwriting Agreement, theOmnibus Agreement or the Contribution Agreement (other than obligationsincurred by the General Partner on behalf of the Partnership). Anyindemnification pursuant to this Section 7.7 shall be made only out of theassets of the

 

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Partnership,it being agreed that the General Partner shall not be personally liable forsuch indemnification and shall have no obligation to contribute or loan anymonies or property to the Partnership to enable it to effectuate suchindemnification.

 

(b)                                 Tothe fullest extent permitted by law, expenses (including legal fees andexpenses) 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 totime, be advanced by the Partnership prior to a determination that theIndemnitee is not entitled to be indemnified upon receipt by the Partnership ofany undertaking by or on behalf of the Indemnitee to repay such amount if itshall be determined that the Indemnitee is not entitled to be indemnified asauthorized in this Section 7.7.

 

(c)                                  Theindemnification provided by this Section 7.7 shall be in addition to anyother 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 Indemnitee’scapacity as an Indemnitee and as to actions in any other capacity (includingany capacity under the Underwriting Agreement), and shall continue as to anIndemnitee who has ceased to serve in such capacity and shall inure to thebenefit of the heirs, successors, assigns and administrators of the Indemnitee.

 

(d)                                 ThePartnership may purchase and maintain (or reimburse the General Partner or itsAffiliates for the cost of) insurance, on behalf of the General Partner, itsAffiliates and such other Persons as the General Partner shall determine,against any liability that may be asserted against, or expense that may beincurred by, such Person in connection with the Partnership’s activities orsuch Person’s activities on behalf of the Partnership, regardless of whetherthe Partnership would have the power to indemnify such Person against suchliability under the provisions of this Agreement.

 

(e)                                  Forpurposes of this Section 7.7, the Partnership shall be deemed to haverequested an Indemnitee to serve as fiduciary of an employee benefit planwhenever the performance by it of its duties to the Partnership also imposesduties on, or otherwise involves services by, it to the plan or participants orbeneficiaries of the plan; excise taxes assessed on an Indemnitee with respectto 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 itwith respect to any employee benefit plan in the performance of its duties fora purpose reasonably believed by it to be in the best interest of theparticipants and beneficiaries of the plan shall be deemed to be for a purposethat is in the best interests of the Partnership.

 

(f)                                    Inno event may an Indemnitee subject the Limited Partners to personal liabilityby reason of the indemnification provisions set forth in this Agreement.

 

(g)                                 AnIndemnitee shall not be denied indemnification in whole or in part under this Section 7.7because the Indemnitee had an interest in the transaction with respect to whichthe indemnification applies if the transaction was otherwise permitted by theterms of this Agreement.

 

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(h)                                 Theprovisions of this Section 7.7 are for the benefit of the Indemnitees,their heirs, successors, assigns and administrators and shall not be deemed tocreate any rights for the benefit of any other Persons.

 

(i)                                     Noamendment, modification or repeal of this Section 7.7 or any provisionhereof shall in any manner terminate, reduce or impair the right of any past,present or future Indemnitee to be indemnified by the Partnership, nor theobligations of the Partnership to indemnify any such Indemnitee under and inaccordance with the provisions of this Section 7.7 as in effectimmediately prior to such amendment, modification or repeal with respect toclaims arising from or relating to matters occurring, in whole or in part,prior to such amendment, modification or repeal, regardless of when such claimsmay arise or be asserted.

 

SECTION 7.8                          *Liability of Indemnitees*.

 

(a)                                  Notwithstandinganything to the contrary set forth in this Agreement, no Indemnitee shall beliable for monetary damages to the Partnership, the Limited Partners or anyother Persons who have acquired interests in the Partnership Securities, forlosses sustained or liabilities incurred as a result of any act or omission ofan Indemnitee unless there has been a final and non-appealable judgment enteredby a court of competent jurisdiction determining that, in respect of the matterin question, the Indemnitee acted in bad faith or engaged in fraud, willfulmisconduct or, in the case of a criminal matter, acted with knowledge that theIndemnitee’s conduct was criminal.

 

(b)                                 Subjectto 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 thisAgreement and perform any of the duties imposed upon it hereunder eitherdirectly or by or through its agents, and the General Partner shall not beresponsible for any misconduct or negligence on the part of any such agent appointedby the General Partner in good faith.

 

(c)                                  Tothe extent that, at law or in equity, an Indemnitee has duties (includingfiduciary duties) and liabilities relating thereto to the Partnership or to thePartners, the General Partner and any other Indemnitee acting in connectionwith the Partnership’s business or affairs shall not be liable to thePartnership or to any Partner for its good faith reliance on the provisions ofthis Agreement.

 

(d)                                 Anyamendment, modification or repeal of this Section 7.8 or any provisionhereof shall be prospective only and shall not in any way affect thelimitations on the liability of the Indemnitees under this Section 7.8 asin effect immediately prior to such amendment, modification or repeal withrespect to claims arising from or relating to matters occurring, in whole or inpart, prior to such amendment, modification or repeal, regardless of when suchclaims may arise or be asserted.

 

SECTION 7.9                          *Resolution of Conflicts of Interest; Standards of Conduct andModification of Duties*.

 

(a)                                  Unlessotherwise expressly provided in this Agreement or any Group Member Agreement,whenever a potential conflict of interest exists or arises between the GeneralPartner or any of its Affiliates, on the one hand, and the Partnership, any GroupMember or any Partner,

 

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on the other,any resolution or course of action by the General Partner or its Affiliates inrespect of such conflict of interest shall be permitted and deemed approved byall Partners, and shall not constitute a breach of this Agreement, of any GroupMember Agreement, of any agreement contemplated herein or therein, or of anyduty stated or implied by law or equity, if the resolution or course of actionin respect of such conflict of interest is (i) approved by Special Approval,(ii) approved by the vote of a majority of the Common Units (excluding CommonUnits owned by the General Partner and its Affiliates), (iii) on terms no lessfavorable to the Partnership than those generally being provided to oravailable from unrelated third parties or (iv) fair and reasonable to thePartnership, taking into account the totality of the relationships between theparties involved (including other transactions that may be particularly favorableor advantageous to the Partnership). The General Partner shall be authorizedbut not required in connection with its resolution of such conflict of interestto seek Special Approval of such resolution, and the General Partner may alsoadopt a resolution or course of action that has not received Special Approval.If Special Approval is not sought and the Board of Directors of the GeneralPartner determines that the resolution or course of action taken with respectto a conflict of interest satisfies either of the standards set forth inclauses (iii) or (iv) above, then it shall be presumed that, in making itsdecision, the Board of Directors acted in good faith, and in any proceedingbrought by any Limited Partner or by or on behalf of such Limited Partner orany other Limited Partner or the Partnership challenging such approval, thePerson bringing or prosecuting such proceeding shall have the burden ofovercoming such presumption. Notwithstanding anything to the contrary in thisAgreement, the existence of the conflicts of interest described in theRegistration Statement are hereby approved by all Partners.

 

(b)                                 Wheneverthe General Partner makes a determination or takes or declines to take anyother action, or any of its Affiliates causes it to do so, in its capacity asthe general partner of the Partnership as opposed to in its individualcapacity, whether under this Agreement, any Group Member Agreement or any otheragreement contemplated hereby or otherwise, then, unless another expressstandard is provided for in this Agreement, the General Partner, or suchAffiliates causing it to do so, shall make such determination or take ordecline to take such other action in good faith and shall not be subject to anyother or different standards imposed by this Agreement, any Group MemberAgreement, any other agreement contemplated hereby or under the Delaware Act orany other law, rule or regulation. In order for a determination or otheraction to be in “good faith” for purposes of this Agreement, the Person orPersons making such determination or taking or declining to take such otheraction must reasonably believe that the determination or other action is in thebest interests of the Partnership, unless the context otherwise requires.

 

(c)                                  Wheneverthe General Partner makes a determination or takes or declines to take anyother action, or any of its Affiliates causes it to do so, in its individualcapacity as opposed to in its capacity as the general partner of thePartnership, whether under this Agreement, any Group Member Agreement or anyother agreement contemplated hereby or otherwise, then the General Partner, orsuch Affiliates causing it to do so, are entitled to make such determination orto take or decline to take such other action free of any fiduciary duty orobligation whatsoever to the Partnership, any Limited Partner, and the GeneralPartner, or such Affiliates causing it to do so, shall not be required to actin good faith or pursuant to any other standard imposed by this Agreement, anyGroup Member Agreement, any other agreement contemplated hereby or under theDelaware Act or any other law, rule or regulation. By way of illustrationand not of

 

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limitation,whenever the phrase, “at the option of the General Partner,” or some variationof that phrase, is used in this Agreement, it indicates that the GeneralPartner is acting in its individual capacity.

 

(d)                                 Notwithstandinganything to the contrary in this Agreement, the General Partner and its Affiliatesshall have no duty or obligation, express or implied, to (i) sell or otherwisedispose of any asset of the Partnership Group other than in the ordinary courseof business or (ii) permit any Group Member to use any facilities or assets ofthe General Partner and its Affiliates, except as may be provided in contractsentered into from time to time specifically dealing with such use. Anydetermination by the General Partner or any of its Affiliates to enter intosuch contracts shall be at its option.

 

(e)                                  Exceptas expressly set forth in this Agreement, neither the General Partner nor anyother Indemnitee shall have any duties or liabilities, including fiduciaryduties, to the Partnership or any Limited Partner and the provisions of thisAgreement, to the extent that they restrict or otherwise modify the duties andliabilities, including fiduciary duties, of the General Partner or any otherIndemnitee otherwise existing at law or in equity, are agreed by the Partnersto replace such other duties and liabilities of the General Partner or suchother Indemnitee.

 

(f)                                    TheUnitholders hereby authorize the General Partner, on behalf of the Partnershipas a partner or member of a Group Member, to approve of actions by the generalpartner or managing member of such Group Member similar to those actionspermitted to be taken by the General Partner pursuant to this Section 7.9.

 

SECTION 7.10                    *Other Matters Concerning the General Partner*.

 

(a)                                  TheGeneral Partner may rely and shall be protected in acting or refraining fromacting upon any resolution, certificate, statement, instrument, opinion,report, notice, request, consent, order, bond, debenture or other paper ordocument believed by it to be genuine and to have been signed or presented bythe proper party or parties.

 

(b)                                 TheGeneral Partner may consult with legal counsel, accountants, appraisers,management consultants, investment bankers and other consultants and advisersselected by it, and any act taken or omitted to be taken in reliance upon theopinion (including an Opinion of Counsel) of such Persons as to matters thatthe General Partner reasonably believes to be within such Person’s professionalor expert competence shall be conclusively presumed to have been done oromitted in good faith and in accordance with such opinion.

 

(c)                                  TheGeneral Partner shall have the right, in respect of any of its powers orobligations hereunder, to act through any of its duly authorized officers, aduly appointed attorney or attorneys-in-fact or the duly authorized officers ofthe Partnership.

 

SECTION 7.11*                    Purchase orSale of Partnership Securities*.  TheGeneral Partner may cause the Partnership to purchase or otherwise acquirePartnership Securities; provided that, except as permitted pursuant to Section 4.10,the General Partner may not cause any Group Member to purchase SubordinatedUnits during the Subordination Period. As long as Partnership Securities areheld by any Group Member, such Partnership Securities shall not be consideredOutstanding for any purpose, except as otherwise provided herein. The GeneralPartner or any

 

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Affiliate of the General Partner may also purchase or otherwise acquireand sell or otherwise dispose of Partnership Securities for its own account, subjectto 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 forpurposes of this Section 7.12, any Person that is an Affiliate of theGeneral Partner at the date hereof notwithstanding that it may later cease tobe an Affiliate of the General Partner) holds Partnership Securities that itdesires to sell and (ii) Rule 144 of the Securities Act (or any successor rule orregulation to Rule 144) or another exemption from registration is notavailable to enable such holder of Partnership Securities (the “Holder”) todispose of the number of Partnership Securities it desires to sell at the timeit desires to do so without registration under the Securities Act, then at theoption and upon the request of the Holder, the Partnership shall file with theCommission as promptly as practicable after receiving such request, and use allreasonable efforts to cause to become effective and remain effective for aperiod of not less than six months following its effective date or such shorterperiod as shall terminate when all Partnership Securities covered by suchregistration statement have been sold, a registration statement under theSecurities Act registering the offering and sale of the number of PartnershipSecurities specified by the Holder; provided, however, that the Partnershipshall not be required to effect more than three registrations pursuant to this Section 7.12(a);and provided further, however, that if the Conflicts Committee determines thata postponement of the requested registration for up to six months would be inthe best interests of the Partnership and its Partners due to a pendingtransaction, investigation or other event, the filing of such registrationstatement or the effectiveness thereof may be deferred for up to six months,but not thereafter. In connection with any registration pursuant to theimmediately preceding sentence, the Partnership shall (i) promptly prepare andfile (A) such documents as may be necessary to register or qualify thesecurities subject to such registration under the securities laws of suchstates as the Holder shall reasonably request; provided, however, that no suchqualification shall be required in any jurisdiction where, as a result thereof,the Partnership would become subject to general service of process or totaxation or qualification to do business as a foreign corporation orpartnership doing business in such jurisdiction solely as a result of suchregistration, and (B) such documents as may be necessary to apply for listingor to list the Partnership Securities subject to such registration on suchNational Securities Exchange as the Holder shall reasonably request, and (ii)do any and all other acts and things that may be necessary or appropriate toenable the Holder to consummate a public sale of such Partnership Securities insuch states. Except as set forth in Section 7.12(c), all costs andexpenses of any such registration and offering (other than the underwritingdiscounts and commissions) shall be paid by the Partnership, withoutreimbursement by the Holder.

 

(b)                                 Ifthe Partnership shall at any time propose to file a registration statementunder the Securities Act for an offering of equity securities of thePartnership for cash (other than an offering relating solely to an employeebenefit plan), the Partnership shall use all reasonable efforts to include suchnumber or amount of securities held by the Holder in such registrationstatement as the Holder shall request; provided, that the Partnership is notrequired to make any effort or take an action to so include the securities ofthe Holder once the registration statement is declared effective by theCommission, including any registration statement providing for the

 

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offering fromtime to time of securities pursuant to Rule 415 of the Securities Act. Ifthe proposed offering pursuant to this Section 7.12(b) shall be anunderwritten offering, then, in the event that the managing underwriter ormanaging underwriters of such offering advise the Partnership and the Holder inwriting that in their opinion the inclusion of all or some of the Holder’sPartnership Securities would adversely and materially affect the success of theoffering, the Partnership shall include in such offering only that number oramount, if any, of securities held by the Holder that, in the opinion of themanaging underwriter or managing underwriters, will not so adversely andmaterially affect the offering. Except as set forth in Section 7.12(c),all costs and expenses of any such registration and offering (other than theunderwriting discounts and commissions) shall be paid by the Partnership,without reimbursement by the Holder.

 

(c)                                  Ifunderwriters are engaged in connection with any registration referred to inthis Section 7.12, the Partnership shall provide indemnification,representations, covenants, opinions and other assurance to the underwriters inform and substance reasonably satisfactory to such underwriters. Further, inaddition to and not in limitation of the Partnership’s obligation under Section 7.7,the Partnership shall, to the fullest extent permitted by law, indemnify andhold harmless the Holder, its officers, directors and each Person who controlsthe Holder (within the meaning of the Securities Act) and any agent thereof(collectively, “Indemnified Persons”) against any losses, claims, demands,actions, causes of action, assessments, damages, liabilities (joint orseveral), costs and expenses (including interest, penalties and reasonableattorneys’ fees and disbursements), resulting to, imposed upon, or incurred bythe Indemnified Persons, directly or indirectly, under the Securities Act orotherwise (hereinafter referred to in this Section 7.12(c) as a “claim”and in the plural as “claims”) based upon, arising out of or resulting from anyuntrue statement or alleged untrue statement of any material fact contained inany registration statement under which any Partnership Securities wereregistered under the Securities Act or any state securities or Blue Sky laws,in any preliminary prospectus (if used prior to the effective date of suchregistration statement), or in any summary or final prospectus or in anyamendment or supplement thereto (if used during the period the Partnership isrequired to keep the registration statement current), or arising out of, basedupon or resulting from the omission or alleged omission to state therein a materialfact required to be stated therein or necessary to make the statements madetherein not misleading; provided, however, that the Partnership shall not beliable to any Indemnified Person to the extent that any such claim arises outof, is based upon or results from an untrue statement or alleged untruestatement 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 thePartnership by or on behalf of such Indemnified Person specifically for use inthe preparation thereof.

 

(d)                                 Theprovisions of Section 7.12(a) and 7.12(b) shall continue to be applicablewith respect to the General Partner (and any of the General Partner’sAffiliates) after it ceases to be a general partner of the Partnership, duringa period of two years subsequent to the effective date of such cessation andfor so long thereafter as is required for the Holder to sell all of thePartnership Securities with respect to which it has requested during suchtwo-year period inclusion in a registration statement otherwise filed or that aregistration statement be filed; provided, however, that the Partnership shallnot be required to file successive registration statements covering the samePartnership Securities for which registration was demanded during such two-yearperiod. The provisions of Section 7.12(c) shall continue in effectthereafter.

 

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(e)                                  Anyrequest to register Partnership Securities pursuant to this Section 7.12shall (i) specify the Partnership Securities intended to be offered and sold bythe Person making the request, (ii) express such Person’s present intent tooffer such Partnership Securities for distribution, (iii) describe the natureor method of the proposed offer and sale of Partnership Securities, and (iv)contain the undertaking of such Person to provide all such information andmaterials and take all action as may be required in order to permit thePartnership to comply with all applicable requirements in connection with theregistration of such Partnership Securities.

 

SECTION 7.13*                    Reliance byThird Parties*.  Notwithstandinganything to the contrary in this Agreement, any Person dealing with thePartnership shall be entitled to assume that the General Partner and anyofficer of the General Partner authorized by the General Partner to act onbehalf of and in the name of the Partnership has full power and authority toencumber, sell or otherwise use in any manner any and all assets of thePartnership and to enter into any authorized contracts on behalf of thePartnership, and such Person shall be entitled to deal with the General Partneror any such officer as if it were the Partnership’s sole party in interest,both legally and beneficially. Each Limited Partner hereby waives any and alldefenses or other remedies that may be available against such Person tocontest, negate or disaffirm any action of the General Partner or any suchofficer in connection with any such dealing. In no event shall any Persondealing with the General Partner or any such officer or its representatives beobligated to ascertain that the terms of this Agreement have been complied withor to inquire into the necessity or expedience of any act or action of theGeneral Partner or any such officer or its representatives. Each and everycertificate, document or other instrument executed on behalf of the Partnershipby the General Partner or its representatives shall be conclusive evidence infavor of any and every Person relying thereon or claiming thereunder that (a)at the time of the execution and delivery of such certificate, document orinstrument, this Agreement was in full force and effect, (b) the Personexecuting and delivering such certificate, document or instrument was dulyauthorized and empowered to do so for and on behalf of the Partnership and (c)such certificate, document or instrument was duly executed and delivered inaccordance with the terms and provisions of this Agreement and is binding uponthe Partnership.

 

**ARTICLE VIII**BOOKS, RECORDS, ACCOUNTING AND REPORTS

 

SECTION 8.1*                          Recordsand Accounting*.  The General Partnershall keep or cause to be kept at the principal office of the Partnershipappropriate books and records with respect to the Partnership’s business,including all books and records necessary to provide to the Limited Partnersany information required to be provided pursuant to Section 3.4(a). Anybooks and records maintained by or on behalf of the Partnership in the regularcourse of its business, including the record of the Record Holders of Units orother Partnership Securities, books of account and records of Partnershipproceedings, may be kept on, or be in the form of, computer disks, hard drives,punch cards, magnetic tape, photographs, micrographics or any other informationstorage device; provided, that the books and records so maintained areconvertible into clearly legible written form within a reasonable period of time.The books of the Partnership shall be maintained, for financial reportingpurposes, on an accrual basis in accordance with U.S. GAAP.

 

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SECTION 8.2                          *Fiscal Year*.  Thefiscal year of the Partnership shall be a fiscal year ending December 31.

 

SECTION 8.3                          *Reports*.

 

(a)                                  Assoon as practicable, but in no event later than 120 days after the close ofeach fiscal year of the Partnership, the General Partner shall cause to bemailed or made available to each Record Holder of a Unit as of a date selectedby the General Partner, an annual report containing financial statements of thePartnership for such fiscal year of the Partnership, presented in accordancewith U.S. GAAP, including a balance sheet and statements of operations,Partnership equity and cash flows, such statements to be audited by a firm ofindependent public accountants selected by the General Partner.

 

(b)                                 Assoon as practicable, but in no event later than 90 days after the close of eachQuarter except the last Quarter of each fiscal year, the General Partner shallcause to be mailed or made available to each Record Holder of a Unit, as of adate selected by the General Partner, a report containing unaudited financialstatements of the Partnership and such other information as may be required byapplicable law, regulation or rule of any National Securities Exchange onwhich the Units are listed, or as the General Partner determines to benecessary or appropriate.

 

**ARTICLE IX**TAX MATTERS

 

SECTION 9.1*                          TaxReturns and Information*.  ThePartnership shall timely file all returns of the Partnership that are requiredfor federal, state and local income tax purposes on the basis of the accrualmethod and a taxable year ending on December 31. The tax informationreasonably required by Record Holders for federal and state income taxreporting purposes with respect to a taxable year shall be furnished to themwithin 90 days of the close of the calendar year in which the Partnership’staxable year ends. The classification, realization and recognition of income,gain, losses and deductions and other items shall be on the accrual method ofaccounting for federal income tax purposes.

 

SECTION 9.2                          *Tax Elections*.

 

(a)                                  ThePartnership shall make the election under Section 754 of the Code inaccordance with applicable regulations thereunder, subject to the reservationof the right to seek to revoke any such election upon the General Partner’sdetermination that such revocation is in the best interests of the Limited Partners.Notwithstanding any other provision herein contained, for the purposes ofcomputing the adjustments under Section 743(b) of the Code, the GeneralPartner shall be authorized (but not required) to adopt a convention wherebythe price paid by a transferee of a Limited Partner Interest will be deemed tobe the lowest quoted closing price of the Limited Partner Interests on anyNational Securities Exchange on which such Limited Partner Interests are listedduring the calendar month in which such transfer is deemed to occur pursuant toSection 6.2(g) without regard to the actual price paid by such transferee.

 

(b)                                 Exceptas otherwise provided herein, the General Partner shall determine whether thePartnership should make any other elections permitted by the Code.

 

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SECTION 9.3*                          TaxControversies*.  Subject to theprovisions hereof, the General Partner is designated as the Tax Matters Partner(as defined in the Code) and is authorized and required to represent thePartnership (at the Partnership’s expense) in connection with all examinationsof the Partnership’s affairs by tax authorities, including resultingadministrative and judicial proceedings, and to expend Partnership funds forprofessional services and costs associated therewith. Each Partner agrees tocooperate with the General Partner and to do or refrain from doing any or allthings reasonably required by the General Partner to conduct such proceedings.

 

SECTION 9.4                          *Withholding*. Notwithstanding any other provision of this Agreement, the GeneralPartner is authorized to take any action that may be required to cause thePartnership and other Group Members to comply with any withholding requirementsestablished under the Code or any other federal, state or local law including,without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code.To the extent that the Partnership is required or elects to withhold and payover to any taxing authority any amount resulting from the allocation or distributionof income to any Partner (including, without limitation, by reason of Section 1446of the Code), the General Partner may treat the amount withheld as adistribution of cash pursuant to Section 6.3 in the amount of suchwithholding from such Partner.

 

**ARTICLE X**ADMISSION OF PARTNERS

 

SECTION 10.1                    *Admission of Limited Partners*.

 

(a)                                  APerson shall be admitted as a Limited Partner and shall become bound by theterms of this Agreement if such Person purchases or otherwise lawfully acquiresany Limited Partner Interest and becomes the Record Holder of such LimitedPartner Interests in accordance with the provisions of Article IV or Article Vhereof.  A Person may become a RecordHolder of a Limited Partner Interest without the consent or approval of any ofthe Partners.  A Person may not become aLimited Partner without acquiring a Limited Partner Interest and untilreflected in the books and records of the Partnership as the Record Holder ofsuch Limited Partner Interest.  Therights and obligations of a Person who is a Non citizen Assignee shall bedetermined in accordance with Section 4.9 hereof.

 

(b)                                 Thename and mailing address of each Limited Partner shall be listed on the booksand records of the Partnership maintained for such purpose by the Partnershipor the Transfer Agent.  The GeneralPartner shall update the books and records of the Partnership from time to timeas necessary to reflect accurately the information therein (or shall cause theTransfer Agent to do so, as applicable). A Limited Partner’s Interest shall be represented by a Certificate, asprovided in Section 4.1 hereof.

 

(c)                                  Anytransfer of a Limited Partner Interest shall not entitle the transferee toshare in the profits and losses, to receive distributions, to receive allocationsof income, gain, loss, deduction or credit or any similar item or to any otherrights to which the transferor was entitled until the transferee becomes aLimited Partner pursuant to Section 10.1(a).

 

SECTION 10.2*                    Admission ofSuccessor General Partner*.  Asuccessor General Partner approved pursuant to Section 11.1 or 11.2 or thetransferee of or successor to all of the General

 

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Partner Interest (represented by General Partner Units) pursuant to Section 4.6who is proposed to be admitted as a successor General Partner shall be admittedto the Partnership as the General Partner, effective immediately prior to thewithdrawal or removal of the predecessor or transferring General Partner,pursuant to Section 11.1 or 11.2 or the transfer of the General PartnerInterest (represented by General Partner Units) pursuant to Section 4.6,provided, however, that no such successor shall be admitted to the Partnershipuntil compliance with the terms of Section 4.6 has occurred and suchsuccessor has executed and delivered such other documents or instruments as maybe required to effect such admission. Any such successor shall, subject to theterms hereof, carry on the business of the members of the Partnership Group withoutdissolution.

 

SECTION 10.3*                    Amendment ofAgreement and Certificate of Limited Partnership*.  To effect the admission to the Partnership ofany Partner, the General Partner shall take all steps necessary or appropriateunder the Delaware Act to amend the records of the Partnership to reflect suchadmission and, if necessary, to prepare as soon as practicable an amendment tothis Agreement and, if required by law, the General Partner shall prepare andfile and amendment to the Certificate of Limited Partnership, and the GeneralPartner may for this purpose, among others, exercise the power of attorneygranted pursuant to Section 2.6.

 

**ARTICLE XI**WITHDRAWAL OR REMOVAL OF PARTNERS

 

SECTION 11.1                    *Withdrawal of the General Partner*.

 

(a)                                  TheGeneral Partner shall be deemed to have withdrawn from the Partnership upon theoccurrence of any one of the following events (each such event herein referredto as an “Event of Withdrawal”);

 

(i)                                     TheGeneral Partner voluntarily withdraws from the Partnership by giving written noticeto the other Partners;

 

(ii)                                  TheGeneral Partner transfers all of its rights as General Partner pursuant to Section 4.6;

 

(iii)                               TheGeneral Partner is removed pursuant to Section 11.2;

 

(iv)                              TheGeneral Partner (A) makes a general assignment for the benefit of creditors;(B) files a voluntary bankruptcy petition for relief under Chapter 7 of theUnited States Bankruptcy Code; (C) files a petition or answer seeking foritself a liquidation, dissolution or similar relief (but not a reorganization)under any law; (D) files an answer or other pleading admitting or failing tocontest the material allegations of a petition filed against the GeneralPartner 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 (butnot a debtor-in-possession), receiver or liquidator of the General Partner orof all or any substantial part of its properties;

 

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(v)                                 Afinal and non-appealable order of relief under Chapter 7 of the United StatesBankruptcy Code is entered by a court with appropriate jurisdiction pursuant toa voluntary or involuntary petition by or against the General Partner; or

 

(vi)                              (A)in the event the General Partner is a corporation, a certificate of dissolutionor its equivalent is filed for the General Partner, or 90 days expire after thedate of notice to the General Partner of revocation of its charter without areinstatement of its charter, under the laws of its state of incorporation; (B)in the event the General Partner is a partnership or a limited liabilitycompany, the dissolution and commencement of winding up of the General Partner;(C) in the event the General Partner is acting in such capacity by virtue ofbeing a trustee of a trust, the termination of the trust; (D) in the event theGeneral 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 Withdrawalspecified 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 Partnerswithin 30 days after such occurrence. The Partners hereby agree that only theEvents of Withdrawal described in this Section 11.1 shall result in thewithdrawal of the General Partner from the Partnership.

 

(b)                                 Withdrawalof the General Partner from the Partnership upon the occurrence of an Event ofWithdrawal shall not constitute a breach of this Agreement under the followingcircumstances: (i) at any time during the period beginning on the Closing Dateand ending at 12:00 midnight, Central Standard Time, on March 31, 2015,the General Partner voluntarily withdraws by giving at least 90 days’ advancenotice of its intention to withdraw to the Limited Partners; provided, thatprior to the effective date of such withdrawal, the withdrawal is approved byUnitholders holding at least a majority of the Outstanding Common Units(excluding Common Units held by the General Partner and its Affiliates) and theGeneral Partner delivers to the Partnership an Opinion of Counsel (“WithdrawalOpinion of Counsel”) that such withdrawal (following the selection of thesuccessor General Partner) would not result in the loss of the limitedliability of any Limited Partner or any Group Member or cause any Group Memberto be treated as an association taxable as a corporation or otherwise to betaxed as an entity for federal income tax purposes (to the extent not alreadyso treated or taxed); (ii) at any time after 12:00 midnight, Central StandardTime, on March 31, 2015, the General Partner voluntarily withdraws bygiving at least 90 days’ advance notice to the Unitholders, such withdrawal totake effect on the date specified in such notice; (iii) at any time that theGeneral 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 bygiving at least 90 days’ advance notice of its intention to withdraw to theLimited Partners, such withdrawal to take effect on the date specified in thenotice, if at the time such notice is given one Person and its Affiliates(other than the General Partner and its Affiliates) own beneficially or ofrecord or control at least 50% of the Outstanding Units. The withdrawal of theGeneral Partner from the Partnership upon the occurrence of an Event ofWithdrawal shall also constitute the withdrawal of the General Partner asgeneral partner or managing member, if any, to the extent applicable, of theother Group Members. If the General Partner gives a notice of withdrawalpursuant to Section 11.1(a)(i), the holders of a Unit Majority, may, priorto the effective date of such withdrawal, elect a successor General Partner.The Person so elected as

 

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successorGeneral Partner shall automatically become the successor general partner or managingmember, to the extent applicable, of the other Group Members of which theGeneral Partner is a general partner or a managing member. If, prior to theeffective date of the General Partner’s withdrawal, a successor is not selectedby the Unitholders as provided herein or the Partnership does not receive aWithdrawal Opinion of Counsel, the Partnership shall be dissolved in accordancewith Section 12.1. Any successor General Partner elected in accordancewith the terms of this Section 11.1 shall be subject to the provisions of Section 10.2.

 

SECTION 11.2*                    Removal of theGeneral Partner*.  The General Partnermay be removed if such removal is approved by the Unitholders holding at least662/3 % of the Outstanding Units (including Unitsheld by the General Partner and its Affiliates). Any such action by suchholders for removal of the General Partner must also provide for the electionof a successor General Partner by the Unitholders holding a majority of theoutstanding Common Units voting as a class and a majority of the outstandingSubordinated Units voting as a class (including Units held by the GeneralPartner and its Affiliates). Such removal shall be effective immediatelyfollowing the admission of a successor General Partner pursuant to Section 10.2.The removal of the General Partner shall also automatically constitute theremoval of the General Partner as general partner or managing member, to theextent applicable, of the other Group Members of which the General Partner is ageneral partner or a managing member. If a Person is elected as a successorGeneral Partner in accordance with the terms of this Section 11.2, suchPerson shall, upon admission pursuant to Section 10.2, automaticallybecome a successor general partner or managing member, to the extentapplicable, of the other Group Members of which the General Partner is ageneral partner or a managing member. The right of the holders of OutstandingUnits to remove the General Partner shall not exist or be exercised unless thePartnership has received an opinion opining as to the matters covered by aWithdrawal Opinion of Counsel. Any successor General Partner elected inaccordance with the terms of this Section 11.2 shall be subject to theprovisions of Section 10.2.

 

SECTION 11.3                    *Interest of Departing Partner and Successor General Partner*.

 

(a)                                  Inthe event of (i) withdrawal of the General Partner under circumstances wheresuch withdrawal does not violate this Agreement or (ii) removal of the GeneralPartner by the holders of Outstanding Units under circumstances where Causedoes not exist, if the successor General Partner is elected in accordance withthe terms of Section 11.1 or 11.2, the Departing Partner shall have theoption, exercisable prior to the effective date of the departure of such DepartingPartner, to require its successor to purchase its General Partner Interest(represented by General Partner Units) and its general partner interest (orequivalent interest), if any, in the other Group Members and all of itsIncentive Distribution Rights (collectively, the “Combined Interest”) inexchange for an amount in cash equal to the fair market value of such CombinedInterest, such amount to be determined and payable as of the effective date ofits departure. If the General Partner is removed by the Unitholders undercircumstances where Cause exists or if the General Partner withdraws undercircumstances where such withdrawal violates this Agreement, and if a successorGeneral Partner is elected in accordance with the terms of Section 11.1 or11.2 (or if the Partnership is reconstituted pursuant to Section 12.2 andthe successor General Partner is not the former General Partner), suchsuccessor shall have the option, exercisable prior to the effective date of thedeparture of such Departing Partner (or, in the event of a reconstitutedPartnership, prior to the effective date of the reconstitution of thePartnership), to purchase the

 

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CombinedInterest for such fair market value of such Combined Interest of the DepartingPartner. In either event, the Departing Partner shall be entitled to receiveall reimbursements due such Departing 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 theDeparting Partner for the benefit of the Partnership or the other GroupMembers.

 

For purposes of this Section 11.3(a),the fair market value of the Departing Partner’s Combined Interest shall bedetermined by agreement between the Departing Partner and its successor or,failing agreement within 30 days after the effective date of such DepartingPartner’s departure, by an independent investment banking firm or otherindependent expert selected by the Departing Partner and its successor, which,in turn, may rely on other experts, and the determination of which shall beconclusive as to such matter. If such parties cannot agree upon one independentinvestment banking firm or other independent expert within 45 days after theeffective date of such departure, then the Departing Partner shall designate anindependent investment banking firm or other independent expert, the DepartingPartner’s successor shall designate an independent investment banking firm orother independent expert, and such firms or experts shall mutually select athird independent investment banking firm or independent expert, which thirdindependent investment banking firm or other independent expert shall determinethe fair market value of the Combined Interest of the Departing Partner. Inmaking its determination, such third independent investment banking firm orother independent expert may consider the then current trading price of Unitson any National Securities Exchange on which Units are then listed, the valueof the Partnership’s assets, the rights and obligations of the DepartingPartner and other factors it may deem relevant.

 

(b)                                 Ifthe Combined Interest is not purchased in the manner set forth in Section 11.3(a),the Departing Partner (or its transferee) shall become a Limited Partner andits Combined Interest shall be converted into Common Units pursuant to avaluation made by an investment banking firm or other independent expertselected pursuant to Section 11.3(a), without reduction in suchPartnership Interest (but subject to proportionate dilution by reason of theadmission of its successor). Any successor General Partner shall indemnify theDeparting Partner (or its transferee) as to all debts and liabilities of thePartnership arising on or after the date on which the Departing Partner (or itstransferee) becomes a Limited Partner. For purposes of this Agreement,conversion of the Combined Interest of the Departing Partner to Common Unitswill be characterized as if the Departing Partner (or its transferee)contributed its Combined Interest to the Partnership in exchange for the newlyissued Common Units.

 

(c)                                  Ifa successor General Partner is elected in accordance with the terms of Section 11.1or 11.2 (or if the Partnership is reconstituted pursuant to Section 12.2and the successor General Partner is not the former General Partner) and theoption described in Section 11.3(a) is not exercised by the party entitledto do so, the successor General Partner shall, at the effective date of itsadmission to the Partnership, contribute to the Partnership cash in the amountequal to the product of the Percentage Interest of the Departing GeneralPartner and the Net Agreed Value of the Partnership’s assets on such date. Insuch event, such successor General Partner shall, subject to the followingsentence, be entitled to its Percentage Interest of all Partnership allocationsand distributions to which the Departing Partner was entitled. In addition, thesuccessor General Partner shall cause this Agreement to be amended to reflectthat, from and

 

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after the dateof such successor General Partner’s admission, the successor General Partner’sinterest in all Partnership distributions and allocations shall be itsPercentage Interest.

 

SECTION 11.4*                    Termination ofSubordination Period, Conversion of Subordinated Units and Extinguishment ofCumulative Common Unit Arrearages*. Notwithstanding any provision of this Agreement, if the General Partneris removed as general partner of the Partnership under circumstances whereCause does not exist and Units held by the General Partner and its Affiliatesare not voted in favor of such removal, (i) the Subordination Period will endand all Outstanding Subordinated Units will immediately and automaticallyconvert into Common Units on a one-for-one basis, (ii) all Cumulative CommonUnit Arrearages on the Common Units will be extinguished and (iii) the GeneralPartner will have the right to convert its General Partner Interest(represented by General Partner Units) and its Incentive Distribution Rightsinto Common Units or to receive cash in exchange therefor.

 

SECTION 11.5*                    Withdrawal ofLimited Partners*.  No Limited Partnershall have any right to withdraw from the Partnership; provided, however, thatwhen a transferee of a Limited Partner’s Limited Partner Interest becomes aRecord Holder of the Limited Partner Interest so transferred, such transferringLimited Partner shall cease to be a Limited Partner with respect to the LimitedPartner Interest so transferred.

 

**ARTICLE XII**DISSOLUTION AND LIQUIDATION

 

SECTION 12.1                    *Dissolution*.  ThePartnership shall not be dissolved by the admission of additional LimitedPartners or by the admission of a successor General Partner in accordance withthe terms of this Agreement. Upon the removal or withdrawal of the GeneralPartner, if a successor General Partner is elected pursuant to Section 11.1or 11.2, the Partnership shall not be dissolved and such successor GeneralPartner shall continue the business of the Partnership. The Partnership shalldissolve, and (subject to Section 12.2) its affairs shall be wound up,upon:

 

(a)                                  anEvent 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 anOpinion of Counsel is received as provided in Section 11.1(b) or 11.2 andsuch successor is admitted to the Partnership pursuant to Section 10.2.

 

(b)                                 anelection to dissolve the Partnership by the General Partner that is approved bythe holders of a Unit Majority;

 

(c)                                  theentry of a decree of judicial dissolution of the Partnership pursuant to theprovisions of the Delaware Act; or

 

(d)                                 thesale, exchange or other disposition of all or substantially all of the assetsand properties of the Partnership Group;

 

SECTION 12.2*                    Continuationof the Business of the Partnership After Dissolution*.  Upon (a) dissolution of the Partnershipfollowing an Event of Withdrawal caused by the withdrawal or removal of theGeneral Partner as provided in Section 11.1(a)(i) or (iii) and the failureof the Partners to select a successor to such Departing Partner pursuant to Section 11.1or 11.2, then

 

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within 90 days thereafter, or (b) dissolution of the Partnership uponan 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 daysthereafter, the holders of a Unit Majority may elect to reconstitute thePartnership and continue its business on the same terms and conditions setforth in this Agreement by forming a new limited partnership on terms identicalto those set forth in this Agreement and having as the successor GeneralPartner a Person approved by the holders of a Unit Majority. Unless such anelection is made within the applicable time period as set forth above, thePartnership shall conduct only activities necessary to wind up its affairs. Ifsuch an election is so made, then:

 

(i)                                     thereconstituted Partnership shall continue unless earlier dissolved in accordancewith this Article XII;

 

(ii)                                  ifthe successor General Partner is not the former General Partner, then theinterest of the former General Partner shall be treated in the manner providedin Section 11.3; and

 

(iii)                               allnecessary steps shall be taken to cancel this Agreement and the Certificate ofLimited Partnership and to enter into and, as necessary, to file a newpartnership agreement and certificate of limited partnership, and the successorGeneral Partner may for this purpose exercise the powers of attorney grantedthe General Partner pursuant to Section 2.6; provided, that the right ofthe holders of a Unit Majority to approve a successor General Partner and toreconstitute and to continue the business of the Partnership shall not existand may not be exercised unless the Partnership has received an Opinion ofCounsel that (x) the exercise of the right would not result in the loss oflimited liability of any Limited Partner and (y) neither the Partnership, thereconstituted limited partnership nor any Group Member would be treated as anassociation taxable as a corporation or otherwise be taxable as an entity forfederal income tax purposes upon the exercise of such right to continue (to theextent not already so treated or taxed).

 

SECTION 12.3                    *Liquidator*.  Upondissolution of the Partnership, unless the Partnership is continued under anelection to reconstitute and continue the Partnership pursuant to Section 12.2,the General Partner shall select one or more Persons to act as Liquidator. TheLiquidator (if other than the General Partner) shall be entitled to receivesuch compensation for its services as may be approved by holders of at least amajority of the Outstanding Common Units and Subordinated Units voting as asingle class. The Liquidator (if other than the General Partner) shall agreenot to resign at any time without 15 days’ prior notice and may be removed atany time, with or without cause, by notice of removal approved by holders of atleast a majority of the Outstanding Common Units and Subordinated Units votingas a single class. Upon dissolution, removal or resignation of the Liquidator,a successor and substitute Liquidator (who shall have and succeed to allrights, powers and duties of the original Liquidator) shall within 30 daysthereafter be approved by holders of at least a majority of the OutstandingCommon Units and Subordinated Units voting as a single class. The right toapprove a successor or substitute Liquidator in the manner provided hereinshall be deemed to refer also to any such successor or substitute Liquidatorapproved 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

 

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exercise, without further authorization or consent of any of theparties hereto, all of the powers conferred upon the General Partner under theterms of this Agreement (but subject to all of the applicable limitations,contractual and otherwise, upon the exercise of such powers, other than thelimitation on sale set forth in Section 7.3(b)) necessary or appropriateto carry out the duties and functions of the Liquidator hereunder for andduring the period of time required to complete the winding up and liquidationof the Partnership as provided for herein.

 

SECTION 12.4                    *Liquidation*.  TheLiquidator shall proceed to dispose of the assets of the Partnership, dischargeits liabilities, and otherwise wind up its affairs in such manner and over suchperiod as determined by the Liquidator, subject to Section 17-804 of theDelaware Act and the following:

 

(a)                                  Theassets may be disposed of by public or private sale or by distribution in kindto one or more Partners on such terms as the Liquidator and such Partner orPartners may agree. If any property is distributed in kind, the Partnerreceiving the property shall be deemed for purposes of Section 12.4(c) tohave received cash equal to its fair market value; and contemporaneouslytherewith, appropriate cash distributions must be made to the other Partners.The Liquidator may defer liquidation or distribution of the Partnership’sassets for a reasonable time if it determines that an immediate sale ordistribution of all or some of the Partnership’s assets would be impractical orwould cause undue loss to the Partners. The Liquidator may distribute thePartnership’s assets, in whole or in part, in kind if it determines that a salewould be impractical or would cause undue loss to the Partners.

 

(b)                                 Liabilitiesof the Partnership include amounts owed to the Liquidator as compensation forserving in such capacity (subject to the terms of Section 12.3) andamounts to Partners otherwise than in respect of their distribution rightsunder Article VI. With respect to any liability that is contingent,conditional or unmatured or is otherwise not yet due and payable, theLiquidator shall either settle such claim for such amount as it thinksappropriate or establish a reserve of cash or other assets to provide for itspayment. When paid, any unused portion of the reserve shall be distributed asadditional liquidation proceeds.

 

(c)                                  Allproperty and all cash in excess of that required to discharge liabilities asprovided in Section 12.4(b) shall be distributed to the Partners inaccordance with, and to the extent of, the positive balances in theirrespective Capital Accounts, as determined after taking into account allCapital Account adjustments (other than those made by reason of distributionspursuant to this Section 12.4(c)) for the taxable year of the Partnershipduring which the liquidation of the Partnership occurs (with such date ofoccurrence 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, iflater, within 90 days after said date of such occurrence).

 

SECTION 12.5*                    Cancellationof Certificate of Limited Partnership*. Upon the completion of the distribution of Partnership cash and propertyas provided in Section 12.4 in connection with the liquidation of thePartnership, the Partnership shall be terminated and the Certificate of LimitedPartnership and all qualifications of the Partnership as a foreign limitedpartnership in jurisdictions other than the State of Delaware shall be canceledand such other actions as may be necessary to terminate the Partnership shallbe taken.

 

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SECTION 12.6*                    Return ofContributions*.  The General Partnershall not be personally liable for, and shall have no obligation to contributeor 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 returnshall be made solely from Partnership assets.

 

SECTION 12.7*                    Waiver ofPartition*.  To the maximum extentpermitted by law, each Partner hereby waives any right to partition of thePartnership property.

 

SECTION 12.8*                    CapitalAccount Restoration*.  No LimitedPartner shall have any obligation to restore any negative balance in itsCapital Account upon liquidation of the Partnership. The General Partner shallbe obligated to restore any negative balance in its Capital Account uponliquidation of its interest in the Partnership by the end of the taxable yearof the Partnership during which such liquidation occurs, or, if later, within90 days after the date of such liquidation.

 

**ARTICLE XIII**AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS;RECORD DATE

 

SECTION 13.1*                    Amendments tobe Adopted Solely by the General Partner*. Each Partner agrees that the General Partner, without the approval ofany Partner, may amend any provision of this Agreement and execute, swear to,acknowledge, deliver, file and record whatever documents may be required inconnection therewith, to reflect:

 

(a)                                  achange in the name of the Partnership, the location of the principal place ofbusiness of the Partnership, the registered agent of the Partnership or theregistered office of the Partnership;

 

(b)                                 admission,substitution, withdrawal or removal of Partners in accordance with thisAgreement;

 

(c)                                  achange that the General Partner determines to be necessary or appropriate toqualify or continue the qualification of the Partnership as a limitedpartnership or a partnership in which the Limited Partners have limitedliability under the laws of any state or to ensure that the Group Members willnot be treated as associations taxable as corporations or otherwise taxed asentities for federal income tax purposes;

 

(d)                                 achange that the General Partner, determines (i) does not adversely affect theLimited Partners (including any particular class of Partnership Interests ascompared to other classes of Partnership Interests) in any material respect,(ii) to be necessary or appropriate to (A) satisfy any requirements, conditionsor guidelines contained in any opinion, directive, order, ruling or regulationof any federal or state agency or judicial authority or contained in anyfederal or state statute (including the Delaware Act) or (B) facilitate thetrading of the Units (including the division of any class or classes ofOutstanding Units into different classes to facilitate uniformity of taxconsequences within such classes of Units) or comply with any rule, regulation,guideline or requirement of any National Securities Exchange on which the Unitsare or will be listed, (iii) to be necessary or appropriate in connection withaction taken by the General Partner pursuant to Section 5.10 or (iv) isrequired to effect the intent expressed in the Registration

 

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Statement orthe intent of the provisions of this Agreement or is otherwise contemplated bythis Agreement;

 

(e)                                  achange in the fiscal year or taxable year of the Partnership and any otherchanges that the General Partner determines to be necessary or appropriate as aresult of a change in the fiscal year or taxable year of the Partnershipincluding, if the General Partner shall so determine, a change in thedefinition of “Quarter” and the dates on which distributions are to be made bythe Partnership;

 

(f)                                    anamendment that is necessary, in the Opinion of Counsel, to prevent thePartnership, or the General Partner or its directors, officers, trustees oragents from in any manner being subjected to the provisions of the InvestmentCompany Act of 1940, as amended, the Investment Advisers Act of 1940, asamended, or “plan asset” regulations adopted under the Employee RetirementIncome Security Act of 1974, as amended, regardless of whether such aresubstantially similar to plan asset regulations currently applied or proposedby the United States Department of Labor;

 

(g)                                 subjectto the terms of Section 5.7, an amendment that the General Partnerdetermines to be necessary or appropriate in connection with the authorizationof issuance of any class or series of Partnership Securities pursuant to Section 5.6;

 

(h)                                 anyamendment expressly permitted in this Agreement to be made by the GeneralPartner acting alone;

 

(i)                                     anamendment effected, necessitated or contemplated by a Merger Agreement approvedin accordance with Section 14.3;

 

(j)                                     anamendment that the General Partner determines to be necessary or appropriate toreflect and account for the formation by the Partnership of, or investment bythe Partnership in, any corporation, partnership, joint venture, limitedliability company or other entity, in connection with the conduct by thePartnership of activities permitted by the terms of Section 2.4;

 

(k)                                  amerger or conveyance pursuant to Section 14.3(d); or

 

(l)                                     anyother amendments substantially similar to the foregoing.

 

SECTION 13.2*                    AmendmentProcedures*.  Except as provided inSections 13.1 and 13.3, all amendments to this Agreement shall be made inaccordance with the following requirements. Amendments to this Agreement may beproposed only by the General Partner; provided, however that the General Partnershall have no duty or obligation to propose any amendment to this Agreement andmay decline to do so free of any fiduciary duty or obligation whatsoever to thePartnership or any Limited Partner and, in declining to propose an amendment,shall not be required to act in good faith or pursuant to any other standardimposed by this Agreement, any Group Member Agreement, any other agreementcontemplated hereby or under the Delaware Act or any other law, rule orregulation. A proposed amendment shall be effective upon its approval by theGeneral Partner and the holders of a Unit Majority, unless a greater ordifferent percentage is required under this Agreement or by Delaware law. Eachproposed amendment that

 

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requires the approval of the holders of a specified percentage ofOutstanding Units shall be set forth in a writing that contains the text of theproposed amendment. If such an amendment is proposed, the General Partner shallseek the written approval of the requisite percentage of Outstanding Units orcall a meeting of the Unitholders to consider and vote on such proposedamendment. The General Partner shall notify all Record Holders upon finaladoption of any such proposed amendments.

 

SECTION 13.3                    *Amendment Requirements*.

 

(a)                                  Notwithstandingthe provisions of Sections 13.1 and 13.2, no provision of this Agreement thatestablishes a percentage of Outstanding Units (including Units deemed owned bythe General Partner) required to take any action shall be amended, altered,changed, repealed or rescinded in any respect that would have the effect ofreducing such voting percentage unless such amendment is approved by thewritten consent or the affirmative vote of holders of Outstanding Units whoseaggregate Outstanding Units constitute not less than the voting requirementsought to be reduced.

 

(b)                                 Notwithstandingthe provisions of Sections 13.1 and 13.2, no amendment to this Agreement may(i) enlarge the obligations of any Limited Partner without its consent, unlesssuch shall be deemed to have occurred as a result of an amendment approvedpursuant to Section 13.3(c), (ii) enlarge the obligations of, restrict inany way any action by or rights of, or reduce in any way the amountsdistributable, reimbursable or otherwise payable to, the General Partner or anyof its Affiliates without its consent, which consent may be given or withheldat its option, (iii) change Section 12.1(b), or (iv) change the term ofthe Partnership or, except as set forth in Section 12.1(b), give anyPerson the right to dissolve the Partnership.

 

(c)                                  Exceptas provided in Section 14.3, and without limitation of the General Partner’sauthority to adopt amendments to this Agreement without the approval of anyPartners as contemplated in Section 13.1, any amendment that would have amaterial adverse effect on the rights or preferences of any class ofPartnership Interests in relation to other classes of Partnership Interestsmust be approved by the holders of not less than a majority of the OutstandingPartnership Interests of the class affected.

 

(d)                                 Notwithstandingany other provision of this Agreement, except for amendments pursuant to Section 13.1and except as otherwise provided by Section 14.3(b), no amendments shallbecome effective without the approval of the holders of at least 90% of theOutstanding Units voting as a single class unless the Partnership obtains anOpinion of Counsel to the effect that such amendment will not affect thelimited liability of any Limited Partner under applicable law.

 

(e)                                  Exceptas provided in Section 13.1, this Section 13.3 shall only be amendedwith the approval of the holders of at least 90% of the Outstanding Units.

 

SECTION 13.4*                    SpecialMeetings*.  All acts of LimitedPartners to be taken pursuant to this Agreement shall be taken in the mannerprovided in this Article XIII. Special meetings of the Limited Partnersmay be called by the General Partner or by Limited Partners owning 20% or moreof the Outstanding Units of the class or classes for which a meeting isproposed. Limited

 

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Partners shall call a special meeting by delivering to the GeneralPartner one or more requests in writing stating that the signing LimitedPartners wish to call a special meeting and indicating the general or specificpurposes for which the special meeting is to be called. Within 60 days afterreceipt of such a call from Limited Partners or within such greater time as maybe reasonably necessary for the Partnership to comply with any statutes, rules,regulations, listing agreements or similar requirements governing the holdingof a meeting or the solicitation of proxies for use at such a meeting, theGeneral Partner shall send a notice of the meeting to the Limited Partners eitherdirectly or indirectly through the Transfer Agent. A meeting shall be held at atime and place determined by the General Partner on a date not less than 10days nor more than 60 days after the mailing of notice of the meeting. LimitedPartners shall not vote on matters that would cause the Limited Partners to bedeemed to be taking part in the management and control of the business andaffairs of the Partnership so as to jeopardize the Limited Partners’ limitedliability under the Delaware Act or the law of any other state in which thePartnership is qualified to do business.

 

SECTION 13.5*                    Notice of aMeeting*.  Notice of a meeting calledpursuant to Section 13.4 shall be given to the Record Holders of the classor classes of Units for which a meeting is proposed in writing by mail or othermeans of written communication in accordance with Section 16.1. The noticeshall be deemed to have been given at the time when deposited in the mail orsent by other means of written communication.

 

SECTION 13.6                    *Record Date*.  Forpurposes of determining the Limited Partners entitled to notice of or to voteat a meeting of the Limited Partners or to give approvals without a meeting asprovided in Section 13.11 the General Partner may set a Record Date, whichshall not be less than 10 nor more than 60 days before (a) the date of themeeting (unless such requirement conflicts with any rule, regulation, guidelineor requirement of any National Securities Exchange on which the Units arelisted for trading, in which case the rule, regulation, guideline orrequirement of such exchange shall govern) or (b) in the event that approvalsare sought without a meeting, the date by which Limited Partners are requestedin writing by the General Partner to give such approvals.

 

SECTION 13.7                    *Adjournment*.  When ameeting is adjourned to another time or place, notice need not be given of theadjourned meeting and a new Record Date need not be fixed, if the time andplace thereof are announced at the meeting at which the adjournment is taken,unless such adjournment shall be for more than 45 days. At the adjournedmeeting, the Partnership may transact any business which might have beentransacted at the original meeting. If the adjournment is for more than 45 daysor if a new Record Date is fixed for the adjourned meeting, a notice of theadjourned meeting shall be given in accordance with this Article XIII.

 

SECTION 13.8*                    Waiver ofNotice; Approval of Meeting; Approval of Minutes*.  The transactions of any meeting of LimitedPartners, however called and noticed, and whenever held, shall be as valid asif it had occurred at a meeting duly held after regular call and notice, if aquorum is present either in person or by proxy, and if, either before or afterthe meeting, Limited Partners representing such quorum who were present inperson or by proxy and entitled to vote, sign a written waiver of notice or anapproval of the holding of the meeting or an approval of the minutes thereof.All waivers and approvals shall be filed with the Partnership records or made apart of the minutes of the meeting. Attendance of a Limited Partner at ameeting shall constitute

 

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a waiver of notice of the meeting, except when the Limited Partnerattends the meeting for the express purpose of objecting, at the beginning ofthe meeting, to the transaction of any business because the meeting is notlawfully called or convened; and except that attendance at a meeting is not awaiver of any right to disapprove the consideration of matters required to beincluded in the notice of the meeting, but not so included, if the disapprovalis expressly made at the meeting.

 

SECTION 13.9*                    Quorum andVoting*.  The holders of a majority ofthe Outstanding Units of the class or classes for which a meeting has beencalled (including Outstanding Units deemed owned by the General Partner)represented in person or by proxy shall constitute a quorum at a meeting ofLimited Partners of such class or classes unless any such action by the LimitedPartners requires approval by holders of a greater percentage of such Units, inwhich case the quorum shall be such greater percentage. At any meeting of theLimited Partners duly called and held in accordance with this Agreement atwhich a quorum is present, the act of Limited Partners holding OutstandingUnits that in the aggregate represent a majority of the Outstanding Unitsentitled to vote and be present in person or by proxy at such meeting shall bedeemed to constitute the act of all Limited Partners, unless a greater ordifferent percentage is required with respect to such action under theprovisions of this Agreement, in which case the act of the Limited Partnersholding Outstanding Units that in the aggregate represent at least such greateror different percentage shall be required. The Limited Partners present at aduly called or held meeting at which a quorum is present may continue totransact business until adjournment, notwithstanding the withdrawal of enoughLimited Partners to leave less than a quorum, if any action taken (other thanadjournment) is approved by the required percentage of Outstanding Unitsspecified in this Agreement (including Outstanding Units deemed owned by theGeneral Partner). In the absence of a quorum any meeting of Limited Partnersmay be adjourned from time to time by the affirmative vote of holders of atleast a majority of the Outstanding Units entitled to vote at such meeting(including Outstanding Units deemed owned by the General Partner) representedeither in person or by proxy, but no other business may be transacted, exceptas provided in Section 13.7.

 

SECTION 13.10*              Conduct of a Meeting*.  The General Partner shall have full power andauthority concerning the manner of conducting any meeting of the LimitedPartners or solicitation of approvals in writing, including the determinationof Persons entitled to vote, the existence of a quorum, the satisfaction of therequirements of Section 13.4, the conduct of voting, the validity andeffect of any proxies and the determination of any controversies, votes orchallenges arising in connection with or during the meeting or voting. TheGeneral Partner shall designate a Person to serve as chairman of any meetingand shall further designate a Person to take the minutes of any meeting. Allminutes shall be kept with the records of the Partnership maintained by theGeneral Partner. The General Partner may make such other regulations consistentwith applicable law and this Agreement as it may deem advisable concerning theconduct of any meeting of the Limited Partners or solicitation of approvals inwriting, including regulations in regard to the appointment of proxies, theappointment and duties of inspectors of votes and approvals, the submission andexamination of proxies and other evidence of the right to vote, and therevocation of approvals in writing.

 

SECTION 13.11*              Action Without aMeeting*.  If authorized by theGeneral Partner, any action that may be taken at a meeting of the LimitedPartners may be taken without a meeting if

 

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an approval in writing setting forth the action so taken is signed byLimited Partners owning not less than the minimum percentage of the OutstandingUnits (including Units deemed owned by the General Partner) that would benecessary to authorize or take such action at a meeting at which all theLimited Partners were present and voted (unless such provision conflicts withany rule, regulation, guideline or requirement of any National SecuritiesExchange on which the Units are listed, in which case the rule, regulation,guideline or requirement of such exchange shall govern). Prompt notice of thetaking of action without a meeting shall be given to the Limited Partners whohave not approved in writing. The General Partner may specify that any writtenballot submitted to Limited Partners for the purpose of taking any actionwithout 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 aballot returned to the Partnership does not vote all of the Units held by theLimited Partners, the Partnership shall be deemed to have failed to receive aballot for the Units that were not voted. If approval of the taking of any actionby the Limited Partners is solicited by any Person other than by or on behalfof the General Partner, the written approvals shall have no force and effectunless and until (a) they are deposited with the Partnership in care of theGeneral Partner, (b) approvals sufficient to take the action proposed are datedas of a date not more than 90 days prior to the date sufficient approvals aredeposited with the Partnership and (c) an Opinion of Counsel is delivered tothe General Partner to the effect that the exercise of such right and theaction proposed to be taken with respect to any particular matter (i) will notcause the Limited Partners to be deemed to be taking part in the management andcontrol of the business and affairs of the Partnership so as to jeopardize theLimited Partners’ limited liability, and (ii) is otherwise permissible underthe state statutes then governing the rights, duties and liabilities of thePartnership and the Partners.

 

SECTION 13.12              *Right toVote and Related Matters*.

 

(a)                                  Onlythose 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 Partnersor to act with respect to matters as to which the holders of the OutstandingUnits have the right to vote or to act. All references in this Agreement tovotes of, or other acts that may be taken by, the Outstanding Units shall bedeemed to be references to the votes or acts of the Record Holders of suchOutstanding Units.

 

(b)                                 Withrespect to Units that are held for a Person’s account by another Person (suchas a broker, dealer, bank, trust company or clearing corporation, or an agentof any of the foregoing), in whose name such Units are registered, such otherPerson shall, in exercising the voting rights in respect of such Units on anymatter, and unless the arrangement between such Persons provides otherwise,vote such Units in favor of, and at the direction of, the Person who is thebeneficial owner, and the Partnership shall be entitled to assume it is soacting without further inquiry. The provisions of this Section 13.12(b)(as well as all other provisions of this Agreement) are subject to theprovisions of Section 4.3.

 

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**ARTICLE XIV**MERGER

 

SECTION 14.1                    *Authority*.  ThePartnership may merge or consolidate with one or more corporations, limitedliability companies, business trusts or associations, real estate investmenttrusts, common law trusts or unincorporated businesses, including a generalpartnership or limited partnership, formed under the laws of the State ofDelaware or any other state of the United States of America, pursuant to awritten agreement of merger or consolidation (“Merger Agreement”) in accordancewith this Article XIV.

 

SECTION 14.2*                    Procedure forMerger or Consolidation*.  Merger orconsolidation of the Partnership pursuant to this Article XIV requires theprior consent of the General Partner, provided, however, that the GeneralPartner shall have no duty or obligation to consent to any merger orconsolidation of the Partnership and may decline to do so free of any fiduciaryduty or obligation whatsoever to the Partnership, any Limited Partner or Assigneeand, in declining to consent to a merger or consolidation, shall not berequired to act in good faith or pursuant to any other standard imposed by thisAgreement, any Group Member Agreement, any other agreement contemplated herebyor under the Delaware Act or any other law, rule or regulation. If theGeneral Partner shall determine to consent to the merger or consolidation, theGeneral Partner shall approve the Merger Agreement, which shall set forth:

 

(a)                                  thenames and jurisdictions of formation or organization of each of the businessentities proposing to merge or consolidate;

 

(b)                                 thename and jurisdiction of formation or organization of the business entity thatis to survive the proposed merger or consolidation (the “Surviving BusinessEntity”);

 

(c)                                  theterms and conditions of the proposed merger or consolidation;

 

(d)                                 themanner and basis of exchanging or converting the equity securities of eachconstituent business entity for, or into, cash, property or general or limitedpartner interests, rights, securities or obligations of the Surviving BusinessEntity; and (i) if any general or limited partner interests, securities orrights of any constituent business entity are not to be exchanged or convertedsolely for, or into, cash, property or general or limited partner interests,rights, securities or obligations of the Surviving Business Entity, the cash,property or general or limited partner interests, rights, securities orobligations of any limited partnership, corporation, trust or other entity(other than the Surviving Business Entity) which the holders of such general orlimited partner interests, securities or rights are to receive in exchange for,or upon conversion of their general or limited partner interests, securities orrights, and (ii) in the case of securities represented by certificates, uponthe surrender of such certificates, which cash, property or general or limitedpartner interests, rights, securities or obligations of the Surviving BusinessEntity or any general or limited partnership, corporation, trust or otherentity (other than the Surviving Business Entity), or evidences thereof, are tobe delivered;

 

(e)                                  astatement of any changes in the constituent documents or the adoption of newconstituent documents (the articles or certificate of incorporation, articlesof trust, declaration of

 

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trust,certificate or agreement of limited partnership or other similar charter orgoverning document) of the Surviving Business Entity to be effected by suchmerger or consolidation;

 

(f)                                    theeffective time of the merger, which may be the date of the filing of thecertificate of merger pursuant to Section 14.4 or a later date specifiedin or determinable in accordance with the Merger Agreement (provided, that ifthe effective time of the merger is to be later than the date of the filing ofthe certificate of merger, the effective time shall be fixed no later than thetime of the filing of the certificate of merger and stated therein); and

 

(g)                                 suchother provisions with respect to the proposed merger or consolidation that theGeneral Partner determines to be necessary or appropriate.

 

SECTION 14.3                    *Approval by Limited Partners of Merger or Consolidation*.

 

(a)                                  Exceptas provided in Section 14.3(d), the General Partner, upon its approval ofthe Merger Agreement, shall direct that the Merger Agreement be submitted to avote of Limited Partners, whether at a special meeting or by written consent,in either case in accordance with the requirements of Article XIII. A copyor a summary of the Merger Agreement shall be included in or enclosed with thenotice of a special meeting or the written consent.

 

(b)                                 Exceptas provided in Section 14.3(d), the Merger Agreement shall be approvedupon receiving the affirmative vote or consent of the holders of a UnitMajority unless the Merger Agreement contains any provision that, if containedin an amendment to this Agreement, the provisions of this Agreement or theDelaware Act would require for its approval the vote or consent of a greaterpercentage of the Outstanding Units or of any class of Limited Partners, inwhich case such greater percentage vote or consent shall be required forapproval of the Merger Agreement.

 

(c)                                  Exceptas provided in Section 14.3(d), after such approval by vote or consent ofthe Limited Partners, and at any time prior to the filing of the certificate ofmerger pursuant to Section 14.4, the merger or consolidation may beabandoned pursuant to provisions therefor, if any, set forth in the MergerAgreement.

 

(d)                                 Notwithstandinganything else contained in this Article XIV or in this Agreement, theGeneral Partner is permitted, without Limited Partner approval, to convert thePartnership or any Group Member into a new limited liability entity, to mergethe Partnership or any Group Member into, or convey all of the Partnership’sassets to, another limited liability entity which shall be newly formed andshall have no assets, liabilities or operations at the time of such conversion,merger or conveyance other than those it receives from the Partnership or otherGroup Member if (i) the General Partner has received an Opinion of Counsel thatthe conversion, merger or conveyance, as the case may be, would not result inthe loss of the limited liability of any Limited Partner or any Group Member orcause the Partnership or any Group Member to be treated as an associationtaxable as a corporation or otherwise to be taxed as an entity for federalincome tax purposes (to the extent not previously treated as such), (ii) thesole purpose of such conversion, merger or conveyance is to effect a merechange in the legal form of the Partnership into another limited liabilityentity and (iii) the governing instruments of the new entity provide

 

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the LimitedPartners and the General Partner with the same rights and obligations as areherein contained.

 

SECTION 14.4*                    Certificate ofMerger*.  Upon the required approvalby the General Partner and the Unitholders of a Merger Agreement, a certificateof merger shall be executed and filed with the Secretary of State of the Stateof Delaware in conformity with the requirements of the Delaware Act.

 

SECTION 14.5                    *Effect of Merger*.

 

(a)                                  Atthe effective time of the certificate of merger:

 

(i)                                                             allof the rights, privileges and powers of each of the business entities that hasmerged or consolidated, and all property, real, personal and mixed, and alldebts due to any of those business entities and all other things and causes ofaction belonging to each of those business entities, shall be vested in theSurviving Business Entity and after the merger or consolidation shall be theproperty of the Surviving Business Entity to the extent they were of eachconstituent business entity;

 

(ii)                                                          thetitle to any real property vested by deed or otherwise in any of thoseconstituent business entities shall not revert and is not in any way impairedbecause of the merger or consolidation;

 

(iii)                                                       allrights of creditors and all liens on or security interests in property of anyof those constituent business entities shall be preserved unimpaired; and

 

(iv)                                                      alldebts, liabilities and duties of those constituent business entities shallattach to the Surviving Business Entity and may be enforced against it to thesame extent as if the debts, liabilities and duties had been incurred orcontracted by it.

 

(b)                                 Amerger or consolidation effected pursuant to this Article shall not bedeemed to result in a transfer or assignment of assets or liabilities from oneentity to another.

 

**ARTICLE XV**RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS

 

SECTION 15.1                    *Right to Acquire Limited Partner Interests*.

 

(a)                                  Notwithstandingany other provision of this Agreement, if at any time the General Partner andits Affiliates hold more than 80% of the total Limited Partner Interests of anyclass then

 

Outstanding, the GeneralPartner shall then have the right, which right it may assign and transfer inwhole 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 suchLimited Partner Interests of such class then Outstanding held by Persons otherthan the General Partner and its Affiliates, at the greater of (x) the CurrentMarket Price as of the date three days prior to the date that the noticedescribed in Section 15.1(b) is mailed and (y) the highest price paid bythe General Partner or any of its

 

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Affiliates for anysuch Limited Partner Interest of such class purchased during the 90-day periodpreceding 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 anyclass of Limited Partner Interests means the average of the daily ClosingPrices (as hereinafter defined) per Limited Partner Interest of such class forthe 20 consecutive Trading Days (as hereinafter defined) immediately prior tosuch date; (ii) “Closing Price” for any day means the last sale price on suchday, regular way, or in case no such sale takes place on such day, the averageof the closing bid and asked prices on such day, regular way, as reported inthe principal consolidated transaction reporting system with respect tosecurities listed on the principal National Securities Exchange (other than theNASDAQ National Market) on which such Limited Partner Interests are listed or,if such Limited Partner Interests are not listed on any National SecuritiesExchange (other than the NASDAQ National Market), the last quoted price on suchday or, if not so quoted, the average of the high bid and low asked prices onsuch day in the over-the-counter market, as reported by the NASDAQ NationalMarket or such other system then in use, or, if on any such day such Limited PartnerInterests of such class are not quoted by any such organization, the average ofthe closing bid and asked prices on such day as furnished by a professionalmarket maker making a market in such Limited Partner Interests of such classselected by the General Partner, or if on any such day no market maker ismaking a market in such Limited Partner Interests of such class, the fair valueof such Limited Partner Interests on such day as determined by the GeneralPartner; and (iii) “Trading Day” means a day on which the principal NationalSecurities Exchange on which such Limited Partner Interests of any class arelisted is open for the transaction of business or, if Limited Partner Interestsof a class are not listed on any National Securities Exchange, a day on whichbanking institutions in New York City generally are open.

 

(b)                                 Ifthe General Partner, any Affiliate of the General Partner or the Partnershipelects to exercise the right to purchase Limited Partner Interests grantedpursuant to Section 15.1(a), the General Partner shall deliver to theTransfer Agent notice of such election to purchase (the “Notice of Election toPurchase”) and shall cause the Transfer Agent to mail a copy of such Notice ofElection to Purchase to the Record Holders of Limited Partner Interests of suchclass (as of a Record Date selected by the General Partner) at least 10, butnot more than 60, days prior to the Purchase Date. Such Notice of Election toPurchase shall also be published for a period of at least three consecutivedays in at least two daily newspapers of general circulation printed in theEnglish language and published in the Borough of Manhattan, New York. TheNotice of Election to Purchase shall specify the Purchase Date and the price(determined in accordance with Section 15.1(a)) at which Limited PartnerInterests will be purchased and state that the General Partner, its Affiliateor the Partnership, as the case may be, elects to purchase such Limited PartnerInterests, upon surrender of Certificates representing such Limited PartnerInterests in exchange for payment, at such office or offices of the TransferAgent as the Transfer Agent may specify, or as may be required by any NationalSecurities Exchange on which such Limited Partner Interests are listed. Any suchNotice of Election to Purchase mailed to a Record Holder of Limited PartnerInterests at his address as reflected in the records of the Transfer Agentshall be conclusively presumed to have been given regardless of whether theowner receives such notice. On or prior to the Purchase Date, the GeneralPartner, its Affiliate or the Partnership, as the case may be, shall depositwith the Transfer Agent cash in an amount sufficient to pay the aggregatepurchase price of all of such Limited Partner Interests to be purchased inaccordance with this Section 15.1. If the Notice of Election to Purchaseshall have been duly given as aforesaid at least 10 days prior to the PurchaseDate, and if on or prior to the

 

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Purchase Datethe deposit described in the preceding sentence has been made for the benefitof the holders of Limited Partner Interests subject to purchase as providedherein, then from and after the Purchase Date, notwithstanding that anyCertificate shall not have been surrendered for purchase, all rights of theholders of such Limited Partner Interests (including any rights pursuant toArticles IV, V, VI, and XII) shall thereupon cease, except the right to receivethe purchase price (determined in accordance with Section 15.1(a)) forLimited Partner Interests therefor, without interest, upon surrender to theTransfer Agent of the Certificates representing such Limited Partner Interests,and such Limited Partner Interests shall thereupon be deemed to be transferredto 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 GeneralPartner or any Affiliate of the General Partner, or the Partnership, as thecase may be, shall be deemed to be the owner of all such Limited PartnerInterests from and after the Purchase Date and shall have all rights as theowner of such Limited Partner Interests (including all rights as owner of suchLimited Partner Interests pursuant to Articles IV, V, VI and XII).

 

(c)                                  Atany time from and after the Purchase Date, a holder of an Outstanding LimitedPartner Interest subject to purchase as provided in this Section 15.1 maysurrender his Certificate evidencing such Limited Partner Interest to theTransfer 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 andNotices*.  Any notice, demand,request, report or proxy materials required or permitted to be given or made toa Partner under this Agreement shall be in writing and shall be deemed given ormade when delivered in person or when sent by first class United States mail orby other means of written communication to the Partner at the address describedbelow. Any notice, payment or report to be given or made to a Partner hereundershall be deemed conclusively to have been given or made, and the obligation togive such notice or report or to make such payment shall be deemed conclusivelyto have been fully satisfied, upon sending of such notice, payment or report tothe Record Holder of such Partnership Securities at his address as shown on therecords of the Transfer Agent or as otherwise shown on the records of thePartnership, regardless of any claim of any Person who may have an interest insuch Partnership Securities by reason of any assignment or otherwise. Anaffidavit or certificate of making of any notice, payment or report inaccordance with the provisions of this Section 16.1 executed by theGeneral Partner, the Transfer Agent or the mailing organization shall be primafacie evidence of the giving or making of such notice, payment or report. Ifany notice, payment or report addressed to a Record Holder at the address ofsuch Record Holder appearing on the books and records of the Transfer Agent orthe Partnership is returned by the United States Postal Service marked toindicate that the United States Postal Service is unable to deliver it, suchnotice, payment or report and any subsequent notices, payments and reportsshall be deemed to have been duly given or made without further mailing (untilsuch time as such Record Holder or another Person notifies the Transfer Agentor the Partnership of a change in his address) if they are available for thePartner at the principal office of the Partnership for a period of one yearfrom the date of the giving or making of such notice, payment or report to theother Partners. Any notice to the Partnership shall be deemed given if receivedby the General Partner at the principal office of the Partnership designatedpursuant to Section 2.3. The General Partner

 

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may rely and shall be protected in relying on any notice or otherdocument from a Partner or other Person if believed by it to be genuine.

 

SECTION 16.2*                    Further Action*.  The parties shall execute and deliver alldocuments, provide all information and take or refrain from taking action asmay be necessary or appropriate to achieve the purposes of this Agreement.

 

SECTION 16.3*                    Binding Effect*.  This Agreement shall be binding upon andinure to the benefit of the parties hereto and their heirs, executors,administrators, successors, legal representatives and permitted assigns.

 

SECTION 16.4                    *Integration*.  ThisAgreement constitutes the entire agreement among the parties hereto pertainingto the subject matter hereof and supersedes all prior agreements andunderstandings pertaining thereto.

 

SECTION 16.5                    *Creditors*.  None ofthe provisions of this Agreement shall be for the benefit of, or shall beenforceable by, any creditor of the Partnership.

 

SECTION 16.6                    *Waiver*.  No failure byany party to insist upon the strict performance of any covenant, duty,agreement or condition of this Agreement or to exercise any right or remedyconsequent upon a breach thereof shall constitute waiver of any such breach ofany other covenant, duty, agreement or condition.

 

SECTION 16.7                    *Counterparts*.  ThisAgreement may be executed in counterparts, all of which together shallconstitute an agreement binding on all the parties hereto, notwithstanding thatall such parties are not signatories to the original or the same counterpart.Each party shall become bound by this Agreement immediately upon affixing itssignature hereto or, in the case of a Person acquiring a Unit, upon acceptingthe certificate evidencing such Unit as herein described, independently of thesignature of any other party.

 

SECTION 16.8*                    Applicable Law*.  This Agreement shall be construed inaccordance with and governed by the laws of the State of Delaware, withoutregard to the principles of conflicts of law.

 

SECTION 16.9*                    Invalidity ofProvisions*.  If any provision of thisAgreement is or becomes invalid, illegal or unenforceable in any respect, thevalidity, legality and enforceability of the remaining provisions containedherein shall not be affected thereby.

 

SECTION 16.10*              Consent of Partners*.  Each Partner hereby expressly consents andagrees that, whenever in this Agreement it is specified that an action may betaken 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 thePartners and each Partner shall be bound by the results of such action.

 

[REMAINDER OFTHIS PAGE INTENTIONALLY LEFT BLANK.]

 

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IN WITNESS WHEREOF, theparties hereto have executed this Agreement as of the date first written above.

 
|   | GENERAL  PARTNER:                                                                                                                                                                                                   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | HILAND  PARTNERS GP, LLC                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                |
|   | By:                                                                                                                                                                                                                 | /s/  RANDY MOEDER |
|   | Name:                                                                                                                                                                                                               | Randy  Moeder |
|   | Title:                                                                                                                                                                                                              | Chief  Executive Officer and President |
|   |                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                |
|   | ORGANIZATIONAL  LIMITED PARTNER: CONTINENTAL GAS, INC.                                                                                                                                                              |
|   |                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                |
|   | By:                                                                                                                                                                                                                 | /s/  RANDY MOEDER |
|   | Name:                                                                                                                                                                                                               | Randy  Moeder |
|   | Title:                                                                                                                                                                                                              | President |
|   |                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                |
|   | LIMITED  PARTNERS:                                                                                                                                                                                                  |
|   | 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. |
|   |                                                                                                                                                                                                                |
|   | HILAND  PARTNERS GP, LLC                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                |
|   | By:                                                                                                                                                                                                                 | /s/  RANDY MOEDER |
|   | Name:                                                                                                                                                                                                               | Randy  Moeder |
|   | Title:                                                                                                                                                                                                              | Chief  Executive Officer and President |
|   |                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                |
|   | CONTINENTAL  GAS HOLDINGS, INC.                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                |
|   | By:                                                                                                                                                                                                                 | /s/  HAROLD HAMM |
|   | Name:                                                                                                                                                                                                               | Harold  Hamm |
|   | Title:                                                                                                                                                                                                              | President |
|   |                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                |
|   | EQUITY  FINANCIAL SERVICES, INC.                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                |
|   | By:                                                                                                                                                                                                                 | /s/  RANDY MOEDER |
|   | Name:                                                                                                                                                                                                               | Randy  Moeder |
|   | Title:                                                                                                                                                                                                              | President |
|        |                                                                                                                                                                                                                     |  |  |

 

*[Signature Page toHiland Partners, LP Partnership Agreement]*

 

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|   | HAROLD  HAMM HJ TRUST  |
|--------|------------------------|
|   |                   |
|   |                   |
|   | By:                    | /s/  BERT MACKIE |
|   | Name:                  | Bert  Mackie |
|   | Title:                 | Trustee |
|   |                   |
|   |                   |
|   | HAROLD  HAMM DST TRUST |
|   |                   |
|   |                   |
|   | By:                    | /s/  BERT MACKIE |
|   | Name:                  | Bert  Mackie |
|   | Title:                 | Trustee |
|        |                        |  |  |

 

 

*[Signature Page toHiland Partners, LP Partnership Agreement]*

 

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EXHIBIT Ato the First Amended and RestatedAgreement of Limited Partnership ofHiland Partners, LPCertificate Evidencing Common UnitsRepresenting Limited Partner Interests inHiland Partners, LP

 

No. CommonUnits

 

In accordance with Section 4.1of the First Amended and Restated Agreement of Limited Partnership of HilandPartners, LP, as amended, supplemented or restated from time to time (the “PartnershipAgreement”), Hiland Partners, LP, a Delaware limited partnership (the “Partnership”),hereby certifies that (the “Holder”) is the registered owner of Common Unitsrepresenting limited partner interests in the Partnership (the “Common Units”)transferable on the books of the Partnership, in person or by duly authorizedattorney, upon surrender of this Certificate properly endorsed. The rights,preferences and limitations of the Common Units are set forth in, and thisCertificate and the Common Units represented hereby are issued and shall in allrespects be subject to the terms and provisions of, the Partnership Agreement.Copies of the Partnership Agreement are on file at, and will be furnishedwithout charge on delivery of written request to the Partnership at, theprincipal office of the Partnership located at 205 West Maple, Suite 1100,Enid, Oklahoma 73701. Capitalized terms used herein but not defined shall havethe meanings given them in the Partnership Agreement.

 

The Holder, by acceptingthis Certificate, is deemed to have (i) requested admission as, and agreed tobecome, a Limited Partner and to have agreed to comply with and be bound by andto have executed the Partnership Agreement, (ii) represented and warranted thatthe Holder has all right, power and authority and, if an individual, thecapacity necessary to enter into the Partnership Agreement, (iii) granted thepowers of attorney provided for in the Partnership Agreement and (iv) made thewaivers and given the consents and approvals contained in the Partnership Agreement.

 

This Certificate shallnot be valid for any purpose unless it has been countersigned and registered bythe Transfer Agent and Registrar.

 
| Dated:                            | Hiland  Partners, LP |
|-----------------------------------|----------------------|
|                              |                 |
| Countersigned  and Registered by: | By:                  | Hiland  Partners GP, LLC, its General Partner |
| as  Transfer Agent and Registrar  |                 |
|                              |                 |
| By:                               | By:                  |
|                              |                 |
|                              | Name:                |
|                              |                 |
| Authorized  Signature             | By:                  |
|                              | Secretary            |

[Reverse of Certificate]

 

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**ABBREVIATIONS**

 

The followingabbreviations, 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                                            | (Cust)                                                  | (Minor) |
|                                                                                    |                                                    |
| JT  TEN — as joint tenants with right of survivorship and not as tenants in common | under  Uniform gifts/Transfers to CD Minors Act (State) |
|                                                                                    |                                                    |
| Additional  abbreviations, though not in the above list, may also be used.              |
|                                                                                    |

ASSIGNMENT OFCOMMON UNITSinHILAND PARTNERS, LP

 

| 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 Hiland Partners, LP. |
|                                                                                                                                                                                                                                                                                              |
| 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. |
|                                                                                                                                                                                                                                                                                              |   |                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                              |   |                                                                                                                                                                                        |
| THE  SIGNATURE(S) MUST BEGUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,  STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP  IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C.  RULE17A(d)-15                                         |   | (Signature)  (Signature)                                                                                                                                                                    |   |   |

 

No transfer of the CommonUnits evidenced hereby will be registered on the books of the Partnership,unless the Certificate evidencing the Common Units to be transferred issurrendered for registration or transfer.

 

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