THE PARTNERSHIP AGREEMENT
The following is a summary of the material provisions of NuStar Energys partnership agreement and is qualified by reference to NuStar Energys partnership agreement, which is included as an exhibit to the registration statement of which this prospectus constitutes a part.
Organization and Duration
NuStar Energy was organized in December 1999 and will continue in existence until dissolved in accordance with the partnership agreement.
The purpose of NuStar Energy is: (1) to serve as a partner of NuStar Logistics, one of NuStar Energys primary operating subsidiaries, and its other subsidiaries established for conducting the business of NuStar Energy (collectively, the Operating Partnership); (2) to engage in any business activities that may be engaged in by the Operating Partnership or that are approved by NuStar Energys general partner, provided that NuStar Energys general partner must reasonably determine that such activity generates or enhances the operations of any activity that generates qualifying income, as this term is defined in Section 7704 of the Internal Revenue Code of 1986, as amended; (3) to serve as a member of NuStar GP Holdings, LLC and to exercise all the rights and powers held by NuStar Energy as a member of NuStar GP Holdings, LLC as the member of NuStar GP, LLC; and (4) to do anything necessary or appropriate to the foregoing, including the making of capital contributions or loans to NuStar Energys subsidiaries. NuStar Energys general partner has no obligation or duty to NuStar Energy, its limited partners or assignees of partnership interests to propose or approve, and in its discretion may decline to propose or approve, the conduct by NuStar Energy of any business.
Power of Attorney
Each limited partner, and each person who acquires a limited partner interest and executes and delivers a transfer application, grants to NuStar Energys general partner and, if appointed, a liquidator, a power of attorney to, among other things, execute and file documents required for the qualification, continuance or dissolution of NuStar Energy. The power of attorney also grants NuStar Energys general partner and the liquidator the authority to amend the partnership agreement, and to make consents and waivers under the partnership agreement.
NuStar Energys unitholders are not obligated to make additional capital contributions, except as described below under —Limited Liability.
Assuming that a limited partner does not participate in the control of NuStar Energys business within the meaning of Delaware law, and that it otherwise acts in conformity with the provisions of NuStar Energys partnership agreement, the limited partners liability under the Delaware law will be limited, subject to possible exceptions, to the amount of capital the limited partner is obligated to contribute to NuStar Energy for such partners units plus the partners share of any undistributed profits and assets and any funds wrongfully distributed to it, as described below. If it were determined, however, that the right or exercise of the right, by the limited partners as a group:
| ||•||to remove or replace NuStar Energy’s general partner;|
| ||•||to approve some amendments to the partnership agreement; or|
| ||•||to take other action under the partnership agreement|
constituted participation in the control of NuStar Energys business for the purposes of the Delaware law, then the limited partners could be held personally liable for NuStar Energys obligations under the laws of Delaware, to the same extent as its general partner. This liability would extend to persons who transact business with NuStar Energy who reasonably believe that a limited partner is a general partner based on the limited partners conduct.
Neither NuStar Energys partnership agreement nor the Delaware law specifically provides for legal recourse against NuStar Energys general partner if a limited partner were to lose limited liability through any fault of NuStar Energys general partner. While this does not mean that a limited partner could not seek legal recourse, we know of no precedent for this type of a claim in Delaware case law.