ARTICLES OF GENERAL PARTNERSHIP
OF
SAND HILLS GENERAL PARTNERS
(the "Partnership")
THIS PARTNERSHIP AGREEMENT is executed as of the 1st day of January,
2006, between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual residing in Sand Diego
California, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual residing in Tomball, Texas, Sand
Hills Partners, L.L.C. a Delaware Limited Liability Company ("SHP") and ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, an individual residing in Houston, Texas ("DMK").
1. Formation. The Partners hereby form a General Partnership which
shall be governed and construed in accordance with laws of the State of Texas.
2. Name. The Partnership shall operate under the name of "Sand Hills
General Partners."
3. Principal Place of Business. The Partnership's principal place of
business shall designated by the unanimous consent of the Partners.
4. Purpose. The purpose for which the Partnership is formed and the
business it anticipates conducting is to acquire, hold and dispose of certain
shares of companies that (i) may be contributed by the Partners, from time to
time and (ii) that may be acquired through the to assumption of certain debt
obligations in exchange for the transfer of shares of certain companies
identified and approved by the Partners.
5. Term. The Partnership shall commence as of the date hereof and
shall continue until December 31, 2026, unless sooner terminated pursuant to
the terms of this Agreement; provided, however, that the Partners by unanimous
consent, may, in writing, extend the term of the Partnership. The Partnership
shall be terminated and dissolved prior to the termination date set forth
herein, or any extended term, upon the happening of any one of the following
events:
(a) A disposition by the Partnership of all of the assets of the
Partnership, including any debt instrument, securities, or
other instruments which may be acquired by the Partnership
upon a transfer of the assets of the Partnership.
(b) Bankruptcy, receivership, or dissolution of the Partnership.
(c) The decision of the Partners holding not less than 75% of
the interests in Partnership profits and losses to terminate
the Partnership.
(d) The withdrawal of a Partner or the attempted transfer of a
Partnership interest to a person who is not unanimously
approved by all other Partners.
(e) The bankruptcy, receivership, or dissolution of any Partner.
6. Accounting.
(a) The Partnership shall keep its accounting records on the
cash basis. The fiscal year of the Partnership shall begin
on January 1 and end on December 31, except that the first
fiscal year of the Partnership shall begin as of the date
hereof and end on December 31, 2006.
(b) The Partnership shall maintain full, accurate and complete
books at its principal place of business or such place of
business as shall be designated for such purpose by the
Partners, and the Partners shall have the right to inspect
and examine such books at reasonable times. The books shall
be closed and balanced at the end of each fiscal quarter of
the Partnership and quarterly unaudited statements setting
forth the Partnership's profits and losses for the quarter,
identifying the share of profit or loss of each Partner,
shall be prepared by the Managing Partner and shall be
distributed to each Partner within a reasonable time after
the close of the fiscal quarter. Annual audited statements
setting forth the Partnership's profits and losses for the
year, identifying the share of profit or loss of each
Partner, shall be prepared by accountants selected by the
Partners and shall be distributed to each Partner within a
reasonable time after the close of the fiscal year.
7. Original Capital Contributions. Contemporaneously with the
execution of this Agreement, each of the Partners or their representatives,
shall, directly, or on their behalf, make the contributions to the Partnership
set forth in Schedule A hereto.
8. Additional Capital Contributions.
(a) If all of the Partners concur that additional capital is
required for the conduct of the business of the Partnership,
such capital shall be advanced by the Partners in the
percentages set forth in Schedule A hereto.
Should any Partner fail or refuse for any reason whatsoever
to pay his share of the additional capital contribution
("Defaulting Partner"), then and in such event, the Partners
who have paid their share of the additional capital
contribution ("Complying Partners") may upon written notice
to the Defaulting Partner, at their option, make the
contribution required of the Defaulting Partner each in an
amount equal to their respective profit interest in the
Partnership, without taking into consideration the
Defaulting Partner's profit interest and the amount so
contributed shall be deemed to bear interest commencing the
date of such contribution and continuing until repaid at an
annual rate equivalent to twelve percent (12%) in excess of
the prime commercial rate in effect at the time of the
contribution at Citibank, New York City, New York. If the
Defaulting Partner fails or refuses to repay the Complying
Partners the amount so paid by the Complying Partners on
behalf of the Defaulting Partner, together with interest
thereon as aforesaid, within ninety (90) days from the date
on which the contribution was made by the Complying
Partners, the amount paid by the Complying Partners plus
accrued interest shall be deemed a capital contribution by
the Complying Partners and each Partner's capital account
and percentage share in profits and losses shall be
permanently adjusted to reflect such additional
contribution. In addition, and notwithstanding any term,
condition or covenant contained in this Partnership
Agreement to the contrary, upon contribution of the
additional contribution by the Complying Partners on behalf
of the Defaulting Partner and continuing until either the
repayment by the Defaulting Partner or adjustment of capital
accounts as provided hereinabove, any contribution
heretofore made to the Partnership by the Defaulting Partner
shall, without further act of any Partner, be deemed
subordinate to the money advanced plus interest as
aforesaid, by the Complying Partners, for and on behalf of
the Defaulting Partner. In addition, it is agreed that the
Complying Partners shall be entitled to be repaid the amount
of their advance plus interest as aforesaid out of the first
net cash receipts otherwise distributable to the Defaulting
Partner.
(b) No interest shall be paid on any contributions of capital to
the Partnership or the balance in the Partner's capital
accounts.
(c) Should the Partnership for any reason be unable to obtain
sufficient funds to satisfy the Partnership's obligations as
they mature and to continue the business and affairs of the
Partnership, and should the Partners fail or refuse to agree
to contribute funds to the Partnership, the Partnership may,
at the option of the Partners, be dissolved, terminated and
liquidated in accordance with the terms of this Agreement.
9. Compensation. No Partner shall be entitled to any compensation for
services rendered to the Partnership, unless the Partners unanimously adopt a
resolution providing for such compensation.
10. Partner's Accounts. There shall be maintained for each Partner a
capital account. Each Partner's distributive share of profits and losses,
withdrawals, and capital contributions shall be credited and debited,
respectively, to the Partner's account.
11. Profits/Losses. Except as herein before set forth, the percentage
interest of the Partners in capital, profit or loss and net cash receipts, for
accounting, income tax and cash flow purposes, shall be as follows:
Partner Percentage
DMK 37%
SHP 63%
TOTAL 100%
If, in any taxable year, the Partnership operates at a taxable profit or
has taxable gain, the net cash receipts distributed to the Partner, viewed in
the context of the relevant income tax treatment, attributable to said
receipts, are composed of varying classifications of income and gains or
return of capital items, each Partner participating in the distribution of net
cash receipts shall be deemed to participate in each class of character of
income or gain or return of capital according to the ratio which the net cash
receipts distributed to him and attributable to such item bears to the total
of all net cash receipts distributed, and attributable to such item. The net
profits or losses of the Partnership shall be credited or charged to the
Partners on December 31 each year.
(a) "Profit" shall mean and include all receipts, in cash or in
property derived operation of the Partnerships business
("Gross Cash Proceeds"), net of the operating costs of the
Partnership. "Loss" shall mean the Partnership's loss
arising from the excess of operating costs over receipts of
cash and property derived from operations of the
Partnership's business, however, that in the event the
profits and losses of the Partnership are later adjusted in
any manner, as a result of an audit by the any taxing
authority or otherwise, then the profits and losses of the
Partnership shall be adjusted to the same extent.
(b) "Net cash receipts" shall mean and include all receipts to
the Partnership ("Gross Cash Receipts") net of the items
listed in Section 21(a)(i), (ii) and (iii) and as
distributed to the Partners.
12. Management. The day to day affairs of the Partnership including,
but not limited to the preparation of reports and overseeing the management of
the affairs of the Partnership shall be managed by a Managing Partner who
shall be elected by the Partners on or before the 15th of December of each
year. All transactions and all expenditures in excess of $250.00 per
transaction or per expenditure (up to an aggregate of $1,250 of such
transactions and/or expenditures and thereafter, all transactions and
expenditures) and all decisions, other than day-to-day management decisions,
shall be made only with the approval and consent of all of the Partners. In
the event the Partners cannot agree upon the management or conduct of
Partnership affairs, the decision of the Partners at the time owning the
greatest percentage of profits in the Partnership shall be controlling.
The Managing Partner, on or before January 31 or each year shall prepare
and deliver to each Partner an operating budget for such year which shall be
reviewed, revised and adopted by a unanimous consent of the Partners (the
"Approved Budget"). Such Budget shall be prepared according to guidelines
adopted by unanimous consent of the Partners.
13. Bank Account. All funds of the Partnership shall be deposited with
such institution or institutions as the Partners shall from time to time
determine by unanimous consent. All withdrawals therefrom are to be made upon
checks, signed by the Managing Partner.
14. Prohibition Against Assignment, Transfer or Encumbrance of
Partnership Interests. No Partners shall, without the prior written consent of
all other Partners, sell or transfer his interest in the Partnership or the
Partnership's capital assets or property, except as provided in this
Agreement. No Partner shall assign, mortgage, encumber or grant a security
interest in his or its interest in the Partnership or the Partnership's
capital assets or property, or do any act detrimental to the best interests of
the Partnership or which would make it impossible to carry on the ordinary
business of the Partnership. Any attempted transfer of a Partnership interest,
without the prior written consent of all other Partners, shall for purposes
hereof be deemed to be a withdrawal by such Partner attempting to transfer his
interest and, therefore, a Termination Event as provided under Paragraph 15
herein below, entitling the Partnership and the other Partners to the rights
specified in Paragraph 15 herein below.
15. Withdrawal or Bankruptcy of a Partner. Upon the withdrawal or
bankruptcy of a Partner (hereinafter referred to as "Termination Event"), the
Partnership and the other Partners shall have the option to purchase from the
Partner incurring a Termination Event (hereinafter sometimes referred to as
"Terminated Partner") all Partnership interests which such Terminated Partner
shall then own, for the purchase price and upon the terms and conditions
provided for in Section 16 hereinbelow. A Partner shall be deemed to be
bankrupt, for purposes of this Agreement, only if a court of competent
jurisdiction, after adjudication of the matter, has found such Partner to be
bankrupt.
16. Exercise of Option upon Termination Event. The option provided to
the Partnership and the other Partners in Section 15 hereinabove, upon the
occurrence of a Termination Event, shall be exercised within sixty (60) days
after said Termination Event or the same shall lapse. The option to the
Partnership shall remain open for fifty (50) days after said Termination
Event, and upon the Partnership's failure to accept such offer within said
fifty (50) day period, then the other Partners shall have ten (10) days
thereafter to exercise such option. Notice of exercise of said option shall be
sufficiently given if, before midnight on the fiftieth (50th) day in the case
of the Partnership or the sixtieth (60th) day in the case of the other
Partners, it is delivered in person to the Terminated Partner or mailed to its
address by certified mail as the same is reflected on the records of the
Partnership. The Terminated Partner shall not be required to sell any portion
of its Partnership interest to the Partnership or the other Partners unless
the Partnership and the other Partners, individually or collectively, offer to
purchase its entire interest in the Partnership.
17. Payment of Purchase Price upon Termination Event.
(a) The purchase price for any Partnership interest purchased by
the Partnership or the other Partners pursuant to Paragraph
15 hereinabove shall be an amount equal to the then existing
fair market value of the Terminated Partner's interest
taking into consideration a value for good will, as
determined by appraisal.
(b) The purchaser shall have the option to pay the purchase
price in cash or by cashier's check within thirty (30) days
after acceptance of such offer or by payment of twenty-five
percent (25%) down at the time of closing, with the balance
payable in five (5) equal consecutive annual installments
commencing one (1) year after close of sale together with
the interest from the date of close of sale at the rate of
two percent (2%) in excess of the prime rate at Citibank New
York, existing at the time of closing.
18. Effect of Transfer to New Partner. In the event the Partnership
and the other Partners do not exercise the right of first purchase on said
Partnership interest the Partnership shall be deemed to have terminated, upon
the date of the expiration of such option and the Partnership shall thereafter
be liquidated pursuant to Paragraph 22 herein below.
19. Transfer of Partnership Interest. Upon the sale or transfer of any
Partnership interest, as provided in Paragraph 16 herein, and the delivery, to
the selling Partner or legal representative, of the purchase price in cash,
and/or by the delivery of a promissory note of the purchaser together with the
security agreement the selling Partner or his estate or legal representative
shall execute and deliver to the purchaser a ▇▇▇▇ of sale for said selling
Partner's interest in the Partnership, a waiver of any right of accounting on
the part of the Partnership or the remaining Partners, and all other documents
reasonably required to evidence the purchase of the selling Partner's interest
in the Partnership. All rights of the selling Partner or its estate in the
Partnership, and in its business and assets, shall thereafter belong to the
purchaser, and the selling Partner or his estate shall have not further claim
against the Partnership, the other Partner, nor in the Partnership business
and its assets, except for the recovery of the purchase price. The
Partnership shall no be liable to the selling Partner for any income taxes
resulting from said purchase and sale.
20. Indemnification. In the event any Partner transfers all of its
interest to the Partnership or to the other Partners pursuant to Section 16
herein, the Partnership or the purchasing Partner(s) (the purchasing party or
parties) shall, as a condition to such purchase, jointly and severally (if
more than one) enter into an agreement with the selling Partner, in a form to
be agreed upon by the parties, to indemnify and hold harmless the selling
Partner or its estate against and in respect to any action, suit, proceeding,
demand, assessment, judgment, loss, cost, liability, damage, or expense
including attorneys' fees and court costs, relating to any matters arising
from the activities of the Partnership, including but not limited to, and
liability of the selling Partner arising under any guaranty of the debts or
liabilities of the Partnership. Notwithstanding anything hereinabove to the
contrary, the remaining Partners shall not be required to enter into an
indemnification agreement provided for hereinabove unless they are purchasing
from the selling Partner.
21. Distributions.
(a) Gross Cash Receipts as that term is defined in Paragraph 11
hereinabove shall be distributed in the following order of
priority:
(i) First, for the payment of all current operating
expenses;
(ii) Second, for the payment of interest and principal due
and payable on debts secured by property of the Partnership,
EXCLUSIVE, HOWEVER, of debts to the Partners;
(iii) Third, to the payment in full of all interest and
principal of any loan made to the Partnership by any
Partner, and to satisfy any other obligation of the
Partnership to any Partner;
(iv) Fourth to the deposit for deposit of an operating
reserve to be determined by unanimous consent of the
Partners;
(v) Fifth to the deposit of a contingent reserve to be
determined by unanimous consent of the Partners; and
(iv) Sixth, the balance remaining ("net cash receipts"),
shall be disbursed to the Partners, such distributions to be
made to the Partners as they share profits and losses
pursuant to Paragraph 11 hereinabove;
(v) The amount of the distribution otherwise distributable
to a Partner pursuant to Subparagraph 21(a) may be offset by
the amounts owed a Complying Partner, as provided in
Paragraph 8 hereinabove and/or the Partnership by such
Partner.
(b) No distribution shall be made to satisfy any obligation in a
lessor priority until the obligations having the priority
thereover have been paid in full. Should insufficient funds
be available to satisfy all obligations of the same
priority, payment shall be made, to the extent of available
funds of the Partnership, pari passu as the available funds
bear to the total obligations of the Partnership having the
same priority for payment.
22. Liquidating Distributions.
(a) Upon dissolution or termination as provided in Paragraph 5
hereinabove, all certificates or notices thereof required by
law shall be filed and/or recorded, and the Partnership
business shall be concluded. The Partners shall thereupon
proceed to a liquidation of the Partnership, and the
proceeds thereof shall, to the extent available, be
distributed in cash and/or subject to liabilities kind as
follows:
(i) First, to the payment of debts and liabilities
of the Partnership, including payment of any loan or advance
that may have been made by any Partner to the Partnership in
the order of priority as provided by law;
(ii) Second, to the expenses and liquidation;
(iii) Third, to the setting up of any reserve which
the Partners may deem reasonably necessary for any
contingent or unforeseen liability or obligation of the
Partnership or of the Partners arising out of or in
connection with the Partnership. Should the Partners, in
their sole and absolute discretion so elect, such reserve
shall be paid over to an escrow agent selected by the
Partners to be held by such escrow agent for the purpose of
disbursing such reserve in payment of any of the aforesaid
contingencies, and at the expiration of such period as the
Partners shall deem advisable, the balance to be distributed
thereafter in the manner hereinafter provided.
(iv) Fourth, the remaining property of the Partnership
shall be distributed among the Partners as follows:
(a) In the event the Partnership assets shall have been sold, the
net proceeds of sale shall be distributed to each Partner in
satisfaction of his interest in the Partnership in the same
proportion in which the Partners share profits and losses
pursuant to Paragraph 11 hereinabove.
(b) If the Partnership assets have not been sold, such assets may,
with the consent of all Partners, be distributed in kind,
each Partner accepting in satisfaction of his interest in
the Partnership an undivided interest in the Partnership's
assets, subject to a proportionate share of the
Partnership's liabilities, such undivided interest in assets
and proportionate share of liabilities to be in such
proportion as the Partners share profits and losses pursuant
to Paragraph 11 hereinabove.
(c) The amount of the distribution otherwise distributable to a
Partner pursuant to Subparagraph 22(a)(iv) hereinabove may
be offset by the amounts owed the complying Partners, as
provided in Paragraph 8, hereinabove and/or the Partnership
by such Partner.
(d) No distribution shall be made to satisfy any obligation in a
lessor priority until the obligations having a priority
thereover have been paid in full. Should insufficient funds
be available to satisfy all obligations of the same
priority, payment shall be made, to the extent of available
funds of the Partnership, pari passu as the available funds
bear to the total obligations of the Partnership having the
same priority for payment.
(e) A reasonable time shall be allowed for the orderly
liquidation of the assets of the Partnership and the
discharge of liabilities to its creditors so as to enable
the Partnership to minimize the normal losses attendant upon
a liquidation. The Partnership shall furnish each of the
Partners with a certified statement prepared by the
Partnership's accountant, which shall set forth the assets
and liabilities of the Partnership as of the date of
complete termination and liquidation.
23. Obligations and Other Activities of Partners.
(a) The Partners shall each expend such time as shall reasonably
be required to carry out the business and affairs of the
Partnership, it being agreed that no Partner is required to
devote full time and attention to the Partnership.
(b) Any Partner may engage in or possess an interest in other
business ventures of every nature and description,
independently or with others, including but not limited to,
the ownership, financing, leasing, operation, management,
syndication, brokerage, investment consulting, and neither
the Partnership nor any Partner shall have any right to such
independent ventures or to the income or profits derived
therefrom. The fact that a Partner of any of its members of
their families, are employed by, owns, or hold directly or
indirectly an interest in or connected with any person,
firm, partnership, corporation or other business entity
employed or retained by the Partnership to render or perform
management, contracting, financing, brokerage, leasing or
other services, or from whom the Partnership may buy
merchandise or other property, borrow money, arrange
financing, place securities, or to or from whom the
Partnership shall enter into any form of transaction shall
not prohibit the Partnership from contracting with or
employing the person, firm, partnership, corporation or
other business entity, and neither the Partnership nor any
of the Partners as such shall have any right in or to any
income or profits derived therefrom.
24. Notices. Whenever any notice is required or permitted to be given
under this Agreement, the notice shall be in writing signed by or on behalf of
the person giving the notice, and, unless otherwise specifically stated in
this Agreement, shall be deemed to have been given when delivered in person to
the person or persons to whom notice is to be given or in the alternative when
mailed, prepaid, by registered or certified mail, with or without request for
return receipt, to the person or persons to whom notice is to be given,
addressed to the address set out in the Certificate of Fictitious Name or such
other address as the Partners may, from time to time, specify by notice in
writing to the Partnership.
25. Amendment. The unanimous written approval of all of the Partners
shall be required to amend this Agreement.
26. Titles. Section titles or captions contained in this Agreement are
inserted only as a matter of convenience and for reference, and in no way
define, limit, extend, or describe the scope of this Agreement or the intent
of any of its provisions.
27. Number and Gender. Whenever the singular is used, and the context
requires, it shall include the plural, and the masculine shall include the
feminine, and the word "person" shall include corporation, firm, partnership,
or other form of association.
28. Counterparts. This Agreement may be executed in several
counterparts, and all so executed shall constitute one agreement, binding on
all the parties, notwithstanding that all of the parties are not signatory to
the original or the same counterpart.
29. Binding upon Heirs. This Agreement shall be binding upon the
parties, their heirs, legal representatives, successors, and assigns.
30. Governing Law. This Agreement and all amendments hereto are to be
governed by the laws of the State of Texas.
31. Miscellaneous.
(a) No Partner shall use the name, credit or assets of the
Partnership except for purposes of Partnership business and
in the manner set forth herein.
(b) Should any provision(s) of the Agreement be void or
unenforceable, such shall not affect all other provisions of
this Agreement which shall remain binding and enforceable in
accordance with their terms.
(c) The Partners shall execute such additional documents as
shall be reasonably necessary to carry out the purposes and
intent of this Agreement.
(d) A Partner's interest in the Partnership shall be personal
property for all purposes. All real and other property
owned by the Partnership shall be deemed owned by the
Partnership as an entity, and no Partner individually shall
have any ownership of such property.
Signatures on following page
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
day, month and year first above written.
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Sand Hills Partners, L.L.C., a Delaware
Limited Liability Company
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Voting Member
Schedule A
Original and Additional Capital Contributions
ORIGINAL CAPITAL CONTRIBUTIONS
Partner Contribution
DMK 835,000 shares of the common stock of G/O International, Inc., a
Colorado corporation
DRS 835,000 shares of the common stock of G/O International, Inc., a
Colorado corporation
GJ 1,655,000 Shares of the common stock of G/O International, Inc., a
Colorado corporation
ADDITIONAL CAPITAL CONTRIBUTIONS
In the event the Partnership is required to obtain additional capital
contributions, the Partners shall make such contributions in the same ratio as
their original contributions bears to the total original contributions of all
Partners.