EXHIBIT 3.38
LIMITED PARTNERSHIP AGREEMENT
OF
BUILDERS FIRSTSOURCE - SOUTH TEXAS, L.P.
This Limited Partnership Agreement ("Agreement") of Builders
FirstSource - South Texas, L.P. is made and entered into effective as of the
15th day of December, 2000 (the "Effective Date"), by and between BFS Texas,
LLC, a Delaware limited liability company ("BFS Texas"), as the general partner,
and Builders FirstSource - Texas Group, L.P., a Texas limited partnership
("Texas Group"), as the limited partner. The general partner and the limited
partner are sometimes referred to herein individually as a "Partner" and
collectively as the "Partners".
WITNESSETH:
For and in consideration of the mutual covenants set forth herein
and for other good and valuable consideration, the adequacy, receipt, and
sufficiency of which are hereby acknowledged the Partners hereby agree as
follows:
ARTICLE I
ORGANIZATION AND PURPOSE
Section 1.01. Formation of Limited Partnership. The Partners hereby
agree to become partners and to form a limited partnership (the "Partnership")
pursuant to Article 6132a-1 Tex. Rev. Civ. Stat. ▇▇▇., known as the Texas
Revised Limited Partnership Act (the "Act"), which shall be governed by, and
operated pursuant to, the terms and provisions of this Agreement. BFS Texas
shall be the general partner of the Partnership and is hereinafter sometimes
referred to as the "General Partner". Texas Group shall be the limited partner
and is hereinafter sometimes referred to individually as the "Limited Partner".
Section 1.02. Name. The name of the Partnership shall be Builders
FirstSource - South Texas, L.P. All business and affairs of the Partnership
shall be conducted solely under, and all Partnership Assets (as that term is
defined in Section 1.04) shall be held solely in, such name unless otherwise
determined by the General Partner.
Section 1.03. Effective Date and Term. The Partnership shall be in
effect for a term beginning on the Effective Date and shall continue under this
Agreement (as amended from time to time) until dissolved upon the occurrence of
an event that causes the dissolution of the Partnership in accordance with the
provisions of this Agreement (unless continued as provided herein), and
thereafter to the extent provided by applicable law, until wound up and
terminated as provided herein.
Section 1.04. Purposes and Scope of Business. The business and
purposes of the Partnership shall be to engage in any and all lawful business
activities in which limited partnerships formed in the State of Texas may engage
or participate under the Act. Subject to the terms and conditions of this
Agreement, the Partnership shall have the power and authority to do all such
other acts and things as may be necessary, desirable, expedient, convenient for,
or incidental to, the furtherance and accomplishment of the foregoing objectives
and purposes and for the protection
and benefit of the Partnership. The assets of the Partnership, whether now or
hereafter owned, are sometimes referred to as the "Partnership Assets".
Section 1.05. Documents. The General Partner, or anyone designated
by the General Partner, is hereby authorized to execute a certificate of limited
partnership of the Partnership ("Certificate of Limited Partnership") in
accordance with the Act and cause the same to be filed in the office of the
Secretary of State of the State of Texas in accordance with the provisions of
the Act. The Partnership shall promptly execute and duly file with the proper
offices in each state in which the Partnership may conduct the activities
hereinafter authorized, one or more certificates as required by the laws of each
such state in order that the Partnership may lawfully conduct the business,
purposes, and activities herein authorized in each such state, and the
Partnership shall take any other action or measures necessary in such state or
states for the Partnership to conduct such activities.
Section 1.06. Principal Place of Business. The principal place of
business of the Partnership shall be ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
or at such other place or places as may be approved by the General Partner. The
General Partner shall be responsible for maintaining at the Partnership's
principal place of business those records required by the Act to be maintained
there.
Section 1.07. Registered Agent and Office. The Registered Agent (as
defined in the Act) for the Partnership shall be ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. The
Registered Office (as defined in the Act) of the Partnership shall be ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
Section 1.08. Certain Definitions.
(a) "Accounting Date" shall mean the close of business on (i)
the date any Additional Capital Contributions are made by the Partners in a
manner other than in accordance with their then existing Percentage Interests
and (ii) the last day of each fiscal year of the Partnership.
(b) "Accounting Period" shall mean the period at the opening
of business on the day following any Accounting Date (or the Effective Date of
this Agreement, in the case of the first Accounting Period) and continuing until
the close of business on the next succeeding Accounting Date.
(c) "Certificate" shall mean a certificate issued by the
Partnership to the Partners evidencing ownership of one or more Partnership
Units.
(d) "Partnership Interest" shall mean the ownership interest
of a Partner in the Partnership, represented by the Partnership Units held by
such Partner.
(e) "Partnership Unit" shall mean a unit of ownership,
representing the ownership of the economic rights in the Partnership.
(f) "Percentage Interest" shall mean, with respect to a
partner, the fraction, expressed as a percentage, the numerator of which is
equal to the Partnership Units held by such
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Partner and the denominator of which is equal to the aggregate Partnership Units
held by all Partners.
ARTICLE II
OPERATIONS
Section 2.01. Management of Partnership. The right to manage,
control, and conduct the business and affairs of the Partnership shall be vested
solely in the General Partner. The Limited Partners shall not take part in the
management of the affairs of the Partnership and under no circumstances may any
Limited Partner control the Partnership business or sign for or bind the
Partnership. The General Partner may, from time to time, appoint and delegate to
one or more "Officers" of the Partnership (as hereinafter defined) or other
persons such authority and duties of the General Partner as the General Partner
deems advisable. Any delegation of authority pursuant to this Section 2.01 may
be revoked at any time and with or without cause by the General Partner. Without
limiting the generality of the foregoing, and notwithstanding anything to the
contrary contained in this Agreement, the General Partner shall have the
exclusive authority to act for and on behalf of the Partnership, and no third
party shall ever be required to inquire into the authority of the General
Partner to take such action on behalf of the Partnership.
Section 2.02. Officers.
(a) The General Partner may, from time to time, appoint and
designate, as it deems advisable, one or more persons who are individuals to be
officers of the Partnership ("Officers" or an "Officer"). Unless the General
Partner decides otherwise, any Officer so designated shall have such authority
and perform such duties as the General Partner may delegate such Officer and
that are normally associated with that office in the context of a Texas
corporation as provided under the Texas Business Corporation Act, subject to any
specific delegation of authority and duties made to such Officer by the General
Partner pursuant to this Section 2.02. The Officers will include a President
("President"), Secretary ("Secretary"), one or more Vice Presidents ("Vice
President"), and any other Officers as the General Partner may appoint
including, but not limited to, a Treasurer ("Treasurer"), and one or more
assistant Secretaries or Treasurers ("Assistant Secretary" or "Assistant
Treasurer").
(b) Each Officer shall hold office for the term designated and
until his successor shall be duly designated and shall qualify, or until his
death, resignation, or removal as provided in this Agreement. Any person may
hold any number of offices.
(c) No Officer need be a Partner, Texas resident, or United
States citizen. Designation of a person as an Officer shall not of itself create
any contract rights.
(d) Officers will have the authority and perform duties in the
management of the Partnership as provided in this Section 2.02 of the Agreement.
(e) The Chief Executive Officer will have those powers and
duties delegated by the General Partner.
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(f) Subject to the direction of the General Partner, the
President will have general management and control of the business and property
of the Partnership in its ordinary course of business with all such powers in
respect to general management and control as are reasonably incident to such
responsibilities.
(g) The Vice President will have those powers and duties
delegated by the General Partner or the President. If more than one, the Vice
Presidents, in the order designated by the General Partner, or if in the absence
of such designation, as determined by the length of term each has held the
office of the Vice President, will exercise the powers of the President during
the President's absence or incapacitation.
(h) The Treasurer will have the care and custody of all of the
Partnership funds and shall deposit them in such banks or other depositories as
the General Partner directs and approves. The Treasurer shall keep a complete
and accurate account of all monies received and paid on account of the
Partnership and must render a statement of the Partnership accounts whenever the
General Partner so requires. Except as otherwise provided by the General
Partner, the Treasurer shall perform all other necessary acts and duties in
connection with the administration of the Partnership's financial affairs and
generally perform all the duties ordinarily appertaining to the office of the
Treasurer. In the absence of the Treasurer, the person designated by the General
Partner, if any, will perform the Treasurer's duties.
(i) Each assistant Treasurer will have those powers and duties
delegated by the General Partner or President. If more than one, the Assistant
Treasurers, in the order designated by the General Partner or, if in the absence
of any designation, as determined by the length of term that each has held the
office of Assistant Treasurer, will exercise the powers of the Treasurer during
the Treasurer's absence or incapacitation.
(j) Except as otherwise provided in this Agreement, the
Secretary shall keep the minutes of all meetings of the General Partner or
consents in lieu of such meetings in the Partnership's minute books, and shall
cause notice of the meetings to be given when requested by any person authorized
to call a meeting. The Secretary may sign with the President in the name of the
Partnership, all contracts of the Partnership. The Secretary shall, in general,
perform such other duties incident to the office of the Secretary, or as
delegated by the General Partner or the President.
(k) Each assistant Secretary will have those powers and duties
delegated by the General Partner or the President. If more than one, the
Assistant Secretaries, in the order designated by the General Partner or, if in
the absence of such designation, as determined by the length of term each has
held the office of the Assistant Secretary, will exercise the powers of the
Secretary during the Secretary's absence or incapacitation.
(l) Any Officer appointed by the General Partner may be
removed as such, with or without cause and at any time, by the General Partner
whenever in its judgment the best interests of the Partnership will be served
thereby; provided, however, that such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Any Officer of the
Partnership may resign as such at any time upon written notice to the
Partnership. Such resignation shall be made in writing arid shall take effect at
the time specified therein or, if no time is specified
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therein, at the time of its receipt by the General Partner. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly
provided in the resignation.
(m) The General Partner may fill any vacancy occurring at any
time and in any office of the Partnership.
(n) The compensation, if any, of the Officers shall be fixed
from time to time by the General Partner; provided, however, that the General
Partner may delegate to one or more Officers the authority to fix the
compensation of other Officers.
Section 2.03. Expenses. The Partnership shall pay or reimburse the
General Partner and the Tax Matters Partner (as defined in Section 2.05) for all
direct, out-of-pocket expenses incurred by it with respect to its duties under
Sections 2.01 and 2.05 to the Partnership, including, without limitation,
accounting expenses, insurance premiums attributable directly to the
Partnership, legal fees, and other direct costs associated with the formation
and operation of the Partnership.
Section 2.04. Exculpations; Indemnities.
(a) Neither the Partners, the Tax Matters Partner, their
affiliates nor any of their respective shareholders, officers, directors,
partners, members, managers, employees or agents (individually a "Covered
Person") shall be liable to the Partnership, any Partner, or any other person
for any act or omission taken or suffered by such Covered Person in good faith
and in the belief that such act or omission was in or was not opposed to the
best interests of the Partnership, provided, that such act or omission was not
fraud, willful misconduct, or a knowing material violation of this Agreement by
such Covered Person. No Covered Person shall be liable to the Partnership, any
Partner, or any other person for any action taken by any other Partner, nor
shall any Covered Person be liable to the Partnership, any other Partner, or any
other person for any action of any employee or agent of the Covered Person,
provided, such action is within the scope of the purposes of the Partnership and
the Covered Person seeking exculpation satisfies the parameters of the preceding
sentence.
(b) To the fullest extent allowed or permitted under any
provision of applicable law, including, without limitation, the Act, the
Partnership shall indemnify, defend, and hold harmless each Partner, its
affiliates and their respective shareholders, officers, directors, partners,
members, managers, employees or agents (individually an "Indemnitee") to the
extent of the Partnership Assets, from and against any losses, expenses,
judgments, fines, settlements, and damages incurred by the Partnership or such
Indemnitee arising out of any claim based upon acts (including, without
limitation, negligent acts) performed or omitted to be performed by the
Partnership or such Indemnitee in connection with the business of the
Partnership, including, without limitation, costs, expenses, and attorneys' fees
expended in the settlement or defense of any such claim. All decisions of the
Partnership concerning any action allowed or permitted under applicable law
concerning the indemnity of any person or entity by the Partnership shall be
made as determined by the General Partner.
Section 2.05. Tax Matters Partner. The General Partner shall act as
the "Tax Matters Partner" for accounting and state (if any) income tax purposes.
The Tax Matters Partner
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shall mean the Partner (a) designated as the "tax matters partner" within the
meaning of Section 6231(a)(7) of the Internal Revenue Code of 1986, as amended
from time to time (or any corresponding provisions of succeeding law,
collectively the "Code") and (b) whose responsibilities as Tax Matters Partner
include, where appropriate, commencing on behalf of the Partnership certain
judicial proceedings regarding Partnership income tax items and informing all
Partners of any administrative or judicial proceeding involving income taxes. In
exercising its responsibilities as Tax Matters Partner, the General Partner
shall have the final decision making authority with respect to all income tax
matters involving the Partnership. Any direct out-of-pocket expense incurred by
the Tax Matters Partner in carrying out its responsibilities and duties under
this Agreement shall be allocated to and charged to the Partnership as an
expense of the Partnership for which the Tax Matters Partner shall be
reimbursed.
Section 2.06. Certificated Partnership Units. The Partnership hereby
irrevocably elects that all Partnership Units in the Partnership shall be
securities governed by Article 8 of the Uniform Commercial Code. Each
certificate evidencing Partnership Units in the Partnership shall bear the
following legend: "This certificate evidences Partnership Units in Builders
FirstSource - South Texas, L.P. and shall be a security for purposes of Article
8 of the Uniform Commercial Code." This provision shall not be amended, and no
such purported amendment to this provision shall be effective, until all
outstanding certificates have been surrendered for cancellation. Certificates
for certificated units of the Partnership will be in the form approved by the
General Partner. The Certificates must be signed by the General Partner. The
Partners hereby agree that the Partnership issue to each Partner a Certificate
in the number of Partnership Units set forth on such Partner's signature page
attached hereto.
ARTICLE III
FINANCING
Section 3.01. Capital Contributions.
(a) On the Effective Date, each Partner agrees to contribute
(the "Initial Capital Contributions") to the capital of the Partnership the
amount in cash set forth on such Partner's signature page attached hereto.
(b) The Partners may make additional capital contributions to
the Partnership at such time and in such amounts as they unanimously agree.
Section 3.02. Capital Accounts. For accounting and state (if any)
income tax purposes, the amount of a Partner's capital account ("Capital
Account") in the Partnership shall be determined in accordance with Regulations
Section 1.704-1(b)(2)(iv), including by:
(a) crediting to such account (i) all contributions to the
Partnership made by or on behalf of such Partner or his or its predecessor in
interest at their fair market value and (ii) all gains and income of the
Partnership allocated to such Partner or his or its predecessor in interest; and
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(b) debiting to such account (i) all distributions from the
Partnership made to or on behalf of such Partner or his or its predecessor in
interest, including the fair market value of any property distributed (less any
liabilities assumed by the Partner or to which any property may be subject) and
(ii) all losses and deductions of the Partnership allocated to such Partner or
his or its predecessor in interest.
Section 3.03. Limited Liability of Limited Partners. Notwithstanding
anything contained in this Agreement to the contrary, the liability of each
Limited Partner for any of the debts, losses, or obligations of the Partnership
shall be limited to the amount of such Limited Partner's capital contributions
pursuant to Section 3.01 hereof. Accordingly, no Limited Partner shall be
obligated to provide additional capital to the Partnership or its creditors by
way of contribution, loan, or otherwise beyond the amount of the capital
contributions required of such Limited Partner pursuant to Section 3.01 hereof.
Except as provided in the Act, no Limited Partner shall have any personal
liability whatsoever, whether to the Partnership or any third party, for the
debts of the Partnership or any of its losses beyond the amount of the Limited
Partner's capital contributions.
Section 3.04. Treatment of Capital Contributions. Except as provided
in this Agreement to the contrary, no Partner shall be entitled to interest on
his or its contributions to the capital of the Partnership nor shall any Partner
be entitled to demand the return of all or any part of such contributions to the
capital of the Partnership.
Section 3.05. Benefits of Agreement. Nothing in this Agreement, and,
without limiting the generality of the foregoing, in this Article III, expressed
or implied, is intended or shall be construed to give to any creditor of the
Partnership or to any creditor of any Partner or any other person or entity
whatsoever, other than the Partners and the Partnership, any legal or equitable
right, remedy, or claim under or in respect of this Agreement or any covenant,
condition, or provision herein contained, and such provisions are and shall be
held to be for the sole and exclusive benefit of the Partners and the
Partnership.
ARTICLE IV
ACCOUNTING, ALLOCATIONS, AND CURRENT DISTRIBUTIONS
Section 4.01. Percentage Interests. For purposes of allocating
profits and losses in accordance with Section 4.02, and for purposes of
distributions under Section 4.06, each Partner shall initially have the
Percentage Interest in the Partnership set forth on such Partner's signature
page attached hereto.
Section 4.02. Tax Status, Reports, and Allocations.
(a) The Partnership shall elect to be classified as an
association taxable as a corporation for federal income tax purposes. The
General Partner is hereby authorized to promptly execute and file on behalf of
the Partnership an IRS Form 8832, Entity Classification Election, with the
Internal Revenue Service (the "Service"). Notwithstanding any provision
contained in this Agreement to the contrary, each of the Partners hereby
recognizes that the
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Partnership will not be classified as a partnership for federal income tax
purposes and, therefore, will not be subject to the provisions of Subchapter K
of the Code.
(b) The General Partner or, at its discretion, an accountant
("Accountant") selected by the General Partner shall prepare or cause to be
prepared all tax returns and statements, if any, that must be filed on behalf of
the Partnership with any taxing authority and shall timely file such returns or
statements.
(c) For accounting and state (if any) income tax purposes, all
income, gains, losses, deductions, and credits of the Partnership for each
Accounting Period shall be allocated among the Partners pro rata in accordance
with their respective Percentage Interests.
(d) If applicable for accounting and state (if any) income tax
purposes, the tax allocations made in accordance with Sections 4.02(e), 4.03(b),
and 4.03(c) (collectively, the "Regulatory Allocations") shall be taken into
account in allocating, for tax purposes, items of income, gain, loss, deduction,
and credit among the Partners so that, to the extent possible, the net amount,
when taken together, of such allocations of income, gain, loss, deduction, and
credit and the Regulatory Allocations made to each Partner shall be equal to the
amount that would have been allocated to each such Partner if the Regulatory
Allocations had not occurred.
(e) If applicable for accounting and state (if any) income tax
purposes, any loss or deductions attributable to any Partnership recourse
liability (as defined in Regulations Section 1.752-1(a)(i)) ("Recourse Debt")
must be specially allocated to any Partner who bears the economic risk of loss
with respect to the Recourse Debt to which such loss or deductions are
attributable. If any allocations are made to any Partner pursuant to the
foregoing sentence, then after any allocations required by Section 4.03 hereof
have been made but prior to allocations pursuant to Section 4.02(b), income
shall be allocated to such Partner until on a cumulative basis an aggregate
amount of income equal to such cumulative deductions and losses has been
allocated to each such Partner.
Section 4.03. Minimum Gain and Income Offsets.
(a) Definitions.
(i) "Partner Minimum Gain" shall be "partner nonrecourse
debt minimum gain," as defined in Regulations Section 1.704-2(i)(2) and
determined in accordance with Regulations Sections 1.704-2(i)(3) and
1.704-2(k).
(ii) "Partner Nonrecourse Debt" has the meaning set
forth in Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
(iii) "Partner Nonrecourse Deduction" has the meaning
set forth in Regulations Section 1.704-2(i).
(iv) "Partnership Minimum Gain" has the meaning set
forth in Regulations Section 1.704-2(d) and shall be determined in
accordance with the provisions of Regulations Section 1.704-2(k).
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(v) "Regulations" means the temporary and permanent
Income Tax Regulations promulgated under the Code, as such regulations may
be amended from time to time (including corresponding provisions of
succeeding Regulations).
(b) Minimum Gain.
(i) Notwithstanding any other provision of this
Agreement to the contrary, if the Partnership Minimum Gain on the last day
of any fiscal year is less than the Partnership Minimum Gain on the last
day of the immediately preceding fiscal year, then (before any other
allocation of Partnership items for such year under this Agreement, other
than as provided in paragraph (ii) below) there shall be specially
allocated to each Partner items of Partnership income and gain for such
year (and, if necessary, subsequent fiscal years) in an amount equal to
such Partner's share of the net decrease in Partnership Minimum Gain
(determined in accordance with Regulations Section 1.704-2(g)). The items
to be so allocated shall be determined in accordance with Regulations
Sections 1.704-2(f)(6) and 1.704-2(j)(2)(i) and (iii). This Section
4.03(b)(i) is intended to comply with the minimum gain chargeback
requirement in Regulations Section 1.704-2(f) and shall be interpreted
consistently therewith.
(ii) Subsequent to any allocations under Section
4.03(b)(i) above, other than allocations of gain from the disposition of
property subject to Partner Nonrecourse Debt, if Partner Minimum Gain on
the last day of any fiscal year is less than the Partner Minimum Gain on
the last day of the immediately preceding fiscal year, then, except as
provided herein, each Partner shall be specially allocated items of
Partnership income and gain for such year (and, if necessary, subsequent
fiscal years) in an amount equal to that Partner's share, if any,
(determined in accordance with Regulations Section 1.704-2(i)(4)) of the
net decrease in Partner Minimum Gain (such net decrease to be determined
in a manner consistent with the provisions of Regulations Sections
1.704-2(d) and 1.704-2(g)(3)). The items to be so allocated shall be
determined in accordance with the provisions of Regulations Sections
1.704-2(i)(4) and 1.704-2(j)(2)(ii) and (iii). Notwithstanding the
foregoing, no such special allocations of income and gain shall be made to
the extent that the net decrease in Partner Minimum Gain described above
arises because the liability ceases to be Partner Nonrecourse Debt due to
a conversion, refinancing, or other change in the debt instrument that
causes it to become partially or wholly a nonrecourse liability within the
meaning of Regulations Section 1.752-1(a)(2). This Section 4.03(b)(ii) is
intended to comply with the chargeback and other provisions of Regulations
Section 1.704-2(i) and shall be interpreted consistently therewith.
(c) Qualified Income Offset. Notwithstanding any other
provision of this Agreement, if during any fiscal year any Partner (i) is
allocated pursuant to Code Section 706(d) or Regulations Section
1.751-1(b)(2)(ii) any Net Loss, loss, items of loss, deductions, or Code Section
705(a)(2)(B) expenditures, (ii) is distributed any cash or property from the
Partnership and such distributions exceed offsetting increases to such Partner's
Capital Account that are reasonably
9
expected to occur during such year, or (iii) receives any other adjustment,
allocation, or distribution described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5), or (6) and, as a result of such adjustment,
allocation, or distribution, such Partner has a Qualified Income Offset Amount
(as hereinafter defined), then items of income and gain (including gross income)
for such fiscal year or other period (and, if necessary, subsequent fiscal
years) shall (prior to any allocation pursuant to Section 4.02 hereof) be
allocated to such Partner in an amount equal to his Qualified Income Offset
Amount; provided, however, that any allocation of income or gain shall be
required under this sentence only if and to the extent that such Partner would
have a Qualified Income Offset Amount after all other allocations provided for
in this Agreement have been tentatively made as if Sections 4.03(b) and (c) were
not contained herein. As used herein, the term "Qualified Income Offset Amount"
for a Partner means the excess, if any, of (x) the negative balance a Partner
has in its Capital Account following the adjustment, allocation, or distribution
described in the preceding sentence, over (y) the maximum amount that it is
obligated (or is deemed to be obligated) to restore to the Partnership upon
liquidation as determined in accordance with Regulations Sections 1.704-2(f),
(g), and (i). This Section 4.03(c) is intended to satisfy the provisions of
Regulations Section 1.704-1(b)(2)(ii)(d') and shall be interpreted consistently
therewith.
(d) All elections, decisions, and other matters concerning the
allocation of profits, gains, and losses among the Partners as well as other
accounting procedures not specifically and expressly provided for by the terms
of this Agreement, shall be determined, in good faith, by the General Partner.
Section 4.04. Accounting.
(a) The fiscal year of the Partnership shall end on the last
day of December of each year.
(b) The books of account of the Partnership shall be kept and
maintained at all times at the principal place of business of the Partnership or
at such other place or places approved by the General Partner. The books of
account shall be maintained according to federal income tax principles using the
method of accounting chosen by the General Partner, consistently applied, and
shall show all items of income and expense.
(c) The General Partner shall cause a balance sheet of the
Partnership dated as of the end of the fiscal year and a related statement of
income or loss for the Partnership for such fiscal year to be prepared by the
Accountant and furnished, at the expense of the Partnership, to each of the
Partners on an annual basis, within ninety (90) days after the close of each
fiscal year.
(d) Each Partner shall have the right at reasonable times and
upon reasonable advance notice during usual business hours to audit, examine,
and make copies of or extracts from the books of account of the Partnership.
Such right may be exercised through any agent or employee of such Partner
designated by him or it or by an independent certified public accountant
designated by such Partner. Each Partner shall bear all expenses incurred in any
examination made on behalf of such Partner.
Section 4.05. Bank Accounts. Funds of the Partnership shall be
deposited in a Partnership account or accounts in the bank or banks as selected
by the General Partner.
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Withdrawals from bank accounts shall only be made by the General Partner or such
other parties as may be approved by the General Partner.
Section 4.06. Current Distributions to Partners. Except as provided
in Section 6.05 in connection with the termination and liquidation of the
Partnership, the General Partner may distribute cash funds to the Partners at
such times and in such amounts as the General Partner determines, in its sole
discretion, except that such funds shall be distributed by the General Partner
to the Partners pro rata in accordance with their respective Percentage
Interests at the time of the distribution. In determining the amount of funds to
distribute pursuant to this Section 4.06, the General Partner may consider such
factors as the need to allocate funds to any reserves for Partnership
contingencies or any other Partnership purposes that the General Partner deems
necessary or appropriate.
Section 4.07. Changes in Percentage Interests. If applicable for
accounting and state (if any) income tax purposes, if a Partner's Percentage
Interest changes during any fiscal year, the allocations to be made pursuant to
this Agreement shall be made in accordance with Section 706 of the Code, using
any convention permitted by Section 706 of the Code and the Regulations
promulgated thereunder and selected by the General Partner so as to equitably
effectuate the allocations of this Article IV.
ARTICLE V
ASSIGNMENT
Section 5.01. Prohibited and Permitted Transfers. Except as
specifically provided in this Article V, no Limited Partner may sell, transfer,
assign, mortgage, hypothecate, or otherwise encumber or permit or suffer any
encumbrance of all or any part of his or its interest in the Partnership without
the approval of the General Partner and the General Partner may not sell,
transfer, assign, mortgage, hypothecate, or otherwise encumber or permit or
suffer any encumbrance of all or any part of its interest in the Partnership.
Any attempt so to transfer or encumber any such interest shall be null and void,
ab initio. The Partners will be excused from accepting the performance of and
rendering performance to any person other than the Limited Partner hereunder
(including any trustee or assignee of or for such Partner) as to whom such
requisite approval of the General Partner has not been rendered.
Section 5.02. Further Restrictions on Transfer.
(a) In the event of any assignment or transfer permitted under
this Article, the interest so assigned or transferred shall remain subject to
all terms and provisions of this Agreement; the assignee or transferee shall be
deemed, by accepting the interest so assigned or transferred, to have assumed
all the obligations hereunder relating to the interests or rights so assigned or
transferred and shall agree in writing to the foregoing if requested by the
General Partner. Any transferee or assignee of the interest of a Partner shall
be entitled only to receive distributions hereunder until such transferee or
assignee has been admitted as a Substituted Partner (as defined in Section
5.03). Until such transferee or assignee (other than an existing Partner) is
admitted to the Partnership as a Substituted Partner, the Partner transferring
all or any portion of his
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or its interest to such assignee or transferee shall remain primarily and
directly liable for the performance of all his or its obligations under this
Agreement. After the admission of such assignee or transferee as a Substituted
Partner, such transferor Partner shall only be primarily and directly liable
under this Agreement or otherwise for any obligations or liabilities accruing
prior to the effective time of the admission of such Substituted Partner, unless
such transferor Partner is released in writing from such obligations or
liabilities by the General Partner.
(b) Any Partner making or offering to make a transfer of all
or any part of his or its interest in the Partnership shall indemnify and hold
harmless the Partnership and all other Partners from and against any costs,
damages, claims, suits, or fees suffered or incurred by the Partnership or any
such other Partner arising out of or resulting from any claims by the transferee
of such Partnership interest or any offerees of such Partnership interest in
connection with such transfer or offer.
Section 5.03. Substituted Partner. An assignee or transferee (other
than an existing Partner) of the interest of a Partner may be admitted as a
substitute partner ("Substituted Partner") only with the approval of the General
Partner. Unless the assignee is already a General Partner, any assignee of a
Partnership interest to whose admission such consent is given shall become and
shall have only the rights and duties of a Limited Partner and the assigned
Partnership interest shall thereafter be a Limited Partner's interest. Upon the
receipt by the General Partner of an appropriate supplement to this Agreement
pursuant to which such Substituted Partner agrees to be bound by all the terms
and provisions of this Agreement, the General Partner shall reflect the
admission of a Substituted Partner and the withdrawal of the transferring
Partner, if appropriate, by preparing a supplemental exhibit, dated as of the
date of such admission and withdrawal, and by filing it with the records of the
Partnership. Any Substituted Partner shall, if required by the General Partner,
prior to such admission, also execute any other documents requested by the
General Partner, including, without limitation, an irrevocable power of attorney
in form satisfactory to the General Partner appointing the General Partner as
such person's attorney-in-fact with full power to execute, swear to,
acknowledge, and file all certificates and other instruments necessary to carry
out the provisions of this Agreement, including, without limitation, such
undertakings as the General Partner may require for the payment of all fees and
costs necessary to effect any such transfer and admission. The transferor and
transferee of the transferred interest shall be responsible for the costs
associated with the transfer of the interest, including, without limitation,
reasonable attorney's fees. Upon admission, such Substituted Partner shall be
subject to all provisions of this Agreement in the place and stead of his
assignor as if the Substituted Partner originally was a party to this Agreement.
Section 5.04. Basis Adjustment. If applicable for accounting and
state (if any) income tax purposes, the Tax Matters Partner may cause, in its
sole and absolute discretion, the Partnership to elect pursuant to Section 754
of the Code and the Regulations thereunder to adjust the basis of the
Partnership Assets as provided by Sections 743 or 734 of the Code and the
Regulations thereunder.
Section 5.05. Other Restricted Transfers. If applicable for
accounting and state (if any) income tax purposes, notwithstanding any other
provision herein to the contrary, unless prior written consent is given by the
General Partner, no transfer of any interest in the Partnership may
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be made to any person who is related (within the meaning of Regulations Section
1.752-4(b)) to any lender of the Partnership whose loan constitutes a
nonrecourse liability of the Partnership,
ARTICLE VI
WITHDRAWAL, DISSOLUTION, TERMINATION, AND LIQUIDATION
Section 6.01. Withdrawal. No Limited Partner shall at any time
retire or withdraw from the Partnership without obtaining the approval of the
General Partner, and the General Partner shall not retire or withdraw from the
Partnership at any time. Retirement or withdrawal by any Partner in
contravention of this Section 6.01 shall subject such Partner to liability for
all damages caused any other Partner (other than a Partner who is, at the time
of such withdrawal, in default under this Agreement) by such retirement or
withdrawal and the consequential dissolution of the Partnership. Any notice of
withdrawal must be in writing.
Section 6.02. Dissolution of the Partnership. The Partnership shall
be dissolved upon the occurrence of any of the following:
(a) The withdrawal, as defined in the Act, of a General
Partner, unless:
(i) the remaining General Partner, if any, elects in
writing within ninety (90) days after such event to continue the business
of the Partnership as the General Partner, or
(ii) there is no remaining General Partner, then within
ninety (90) days after such event, all of the Limited Partners agree to
continue the business of the Partnership and appoint in writing a
successor General Partner, as of the date of the withdrawal of the General
Partner, and such successor General Partner agrees in writing to accept
such appointment; or
(b) The sale or other disposition, not including an exchange,
of substantially all of the assets of the Partnership (except under
circumstances where all or a portion of the purchase price is payable after the
closing of the sale or other disposition); or
(c) December 31, 2050, unless extended by the consent of all
Partners; or
(d) Subject to any obligations of the Partnership, when
approved by the General Partner.
Nothing contained in this Section 6.02 is intended to grant to any Partner the
right to dissolve the Partnership at will (by retirement, resignation,
withdrawal, or otherwise) or to exonerate any Partner from liability to the
Partnership and the remaining Partners if he or it dissolves the Partnership at
will.
Section 6.03. Continuation of Partnership. If the Partnership is
continued as provided in Section 6.02(a)(i) or (ii), then, as of the date of
withdrawal, the General Partner with respect to which an event of withdrawal
under Section 6.02 has occurred (or his or its estate or
13
successor in interest) (the "Withdrawing General Partner") shall have none of
the powers of a General Partner under this Agreement or applicable law and shall
have only the rights and powers of an assignee of a Partner hereunder to share
in any Partnership profits, losses, gains, and distributions in accordance with
his or its Percentage Interest and shall have no other rights or powers of a
Partner hereunder.
Section 6.04. Withdrawal, etc. of a Limited Partner. The withdrawal,
termination (in the case of a Limited Partner that is a trust), dissolution and
termination (in the case of a Limited Partner that is a partnership),
dissolution (in the case of a Limited Partner that is a corporation or limited
liability company), retirement, or adjudication as a bankrupt of a Limited
Partner (the "Withdrawing Limited Partner") shall not dissolve the Partnership,
but the rights of such Withdrawing Limited Partner to share in the profits and
losses of the Partnership and to receive distributions of Partnership funds
shall, upon the happening of such an event, pass to the Withdrawing Limited
Partner's successors in interest subject to this Agreement, and the Partnership
shall continue as a limited partnership.
Section 6.05. Termination and Liquidation of the Partnership.
(a) Upon dissolution of the Partnership unless continued
pursuant to Section 6.03, the Partnership shall be terminated as rapidly as
business circumstances will permit. At the direction of the General Partner, or
a Partner approved by the Limited Partners if the dissolution of the Partnership
is caused by the withdrawal of the General Partner (the General Partner or the
other Partner, as the case may be, being herein called the "Terminating
Partner"), a full accounting of the assets and liabilities of the Partnership
shall be taken and a statement of the Partnership Assets and a statement of each
Partner's Capital Account shall be furnished to all Partners as soon as is
reasonably practicable. The Terminating Partner shall take such action as is
necessary so that the Partnership's business shall be terminated, its
liabilities discharged, and its assets distributed as hereinafter described. The
Terminating Partner may, in his or its sole discretion, either sell all or a
part of the Partnership Assets, distribute all or a part of the Partnership
Assets in kind to the Partners, or sell part and distribute part of the
Partnership Assets in kind to the Partners (i.e., a combination of the two
approaches); provided, however, that the Terminating Partner shall ascertain the
fair market value of the Partnership Assets by appraisal or other reasonable
means of all Partnership Assets remaining unsold and each Partner's Capital
Account shall be charged or credited, as the case may be, as if such Partnership
Assets had been sold at their fair market value and the income, gains, losses,
deductions, and credits realized thereby had been allocated to the Partners in
accordance with Article IV hereof. A reasonable period of time shall be allowed
for the orderly termination of the Partnership to minimize the normal losses of
a liquidation process.
(b) After the payment of all expenses of liquidation and of
all debts and liabilities of the Partnership in such order or priority as
provided by law (including any debts or liabilities to Partners, who shall be
treated as secured or unsecured creditors, as may be the case, to the extent
permitted by law, for sums loaned to the Partnership, if any, as distinguished
from capital contributions) and after all resulting items of Partnership income,
gain, credit, loss, or deduction are credited or debited to the Capital Accounts
of the Partners in accordance with Articles III and IV hereof, all remaining
Partnership Assets shall then be distributed among the Partners in accordance
with their relative positive Capital Account balances. Upon termination, a
Partner may
14
not demand and receive cash in return for such Partner's capital contributions
and no Partner shall have any obligation to restore any deficit that may then
exist in that Partner's Capital Account. Distribution on termination may be made
by the distribution to each Partner of an undivided interest in any asset of the
Partnership that has not been sold at the time of termination of the
Partnership.
Section 6.06. General Partner Not Personally Liable. No General
Partner nor any affiliate of any General Partner shall be personally liable for
the return of the Capital Contributions of any Partner, and such return shall be
made solely from available Partnership Assets, if any, and each Limited Partner
hereby waives any and all claims it may have against any General Partner or any
such affiliate in this regard.
Section 6.07. Provisions Cumulative. All provisions of this
Agreement relating to the dissolution, liquidation, and termination of the
Partnership shall be cumulative to the extent not inconsistent with other
provisions herein; that is, the exercise or use of one of the provisions hereof
shall not preclude the exercise or use of any other provision of this Agreement
to the extent not inconsistent therewith.
ARTICLE VII
GENERAL
Section 7.01. Competing Business. Notwithstanding anything to the
contrary contained in or inferable from this Agreement, the Act, or any other
statute or principle of law, neither the Partners nor any of their shareholders,
directors, officers, employees, partners, agents, family members, or affiliates
(each a "Partner Affiliate") shall be prohibited or restricted in any way from
investing in or conducting, either directly or indirectly, and may invest in
and/or conduct, either directly or indirectly, businesses of any nature
whatsoever, including the ownership and operation of businesses or properties
similar to or in the same geographical area as those held by the Partnership.
Any investment in or conduct of any such businesses by a Partner or any Partner
Affiliate shall not give rise to any claim for an accounting by the other
Partners or the Partnership or any right to claim any interest therein or the
profits therefrom.
Section 7.02. LIMITED PARTNER REPRESENTATIONS. NOTWITHSTANDING
ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, EACH LIMITED PARTNER
HEREBY REPRESENTS AND WARRANTS TO THE PARTNERSHIP, THE GENERAL PARTNER, AND TO
EACH OFFICER, DIRECTOR, SHAREHOLDER, MEMBER, PARTNER, CONTROLLING PERSON, AND
AGENT OF THE GENERAL PARTNER THAT: (a) THE INTEREST IN THE PARTNERSHIP OF SUCH
LIMITED PARTNER IS ACQUIRED FOR INVESTMENT PURPOSES ONLY FOR HIS OR ITS OWN
ACCOUNT AND NOT WITH A VIEW TO OR IN CONNECTION WITH ANY DISTRIBUTION, REOFFER,
RESALE, OR OTHER DISPOSITION NOT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER (THE "1933 ACT") AND
APPLICABLE STATE SECURITIES LAWS; (b) SUCH LIMITED PARTNER, ALONE OR TOGETHER
WITH HIS OR ITS REPRESENTATIVES, POSSESSES SUCH EXPERTISE, KNOWLEDGE, AND
15
SOPHISTICATION IN FINANCIAL AND BUSINESS MATTERS GENERALLY, AND IN THE TYPE OF
TRANSACTIONS IN WHICH THE PARTNERSHIP PROPOSES TO ENGAGE IN PARTICULAR, THAT HE
OR IT IS CAPABLE OF EVALUATING THE MERITS AND ECONOMIC RISKS OF ACQUIRING AND
HOLDING HIS OR ITS PARTNERSHIP INTEREST, AND THAT HE OR IT IS ABLE TO BEAR ALL
SUCH ECONOMIC RISKS NOW AND IN THE FUTURE; (c) SUCH LIMITED PARTNER HAS HAD
ACCESS TO ALL OF THE INFORMATION WITH RESPECT TO THE INTEREST ACQUIRED BY HIM OR
IT UNDER THIS AGREEMENT THAT HE OR IT DEEMS NECESSARY TO MAKE A COMPLETE
EVALUATION THEREOF AND HAS HAD THE OPPORTUNITY TO QUESTION THE GENERAL PARTNER
CONCERNING SUCH INTEREST; (d) SUCH LIMITED PARTNER'S DECISION TO ACQUIRE HIS OR
ITS INTEREST FOR INVESTMENT HAS BEEN BASED SOLELY UPON THE EVALUATION MADE BY
HIM OR IT; (e) SUCH LIMITED PARTNER IS AWARE THAT HE OR IT MUST BEAR THE
ECONOMIC RISK OF HIS OR ITS INVESTMENT IN THE PARTNERSHIP FOR AN INDEFINITE
PERIOD OF TIME BECAUSE INTERESTS IN THE PARTNERSHIP HAVE NOT BEEN REGISTERED
UNDER THE 1933 ACT OR UNDER THE SECURITIES LAWS OF ANY STATES, AND, THEREFORE,
CANNOT BE SOLD UNLESS SUCH INTERESTS ARE SUBSEQUENTLY REGISTERED UNDER THE 1933
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE; (f) SUCH LIMITED PARTNER IS AWARE THAT ONLY THE PARTNERSHIP CAN
TAKE ACTION TO REGISTER SUCH INTEREST IN THE PARTNERSHIP AND THE PARTNERSHIP IS
UNDER NO SUCH OBLIGATION AND DOES NOT PROPOSE TO ATTEMPT TO DO SO; AND (g) SUCH
LIMITED PARTNER IS AWARE THAT THIS AGREEMENT PROVIDES RESTRICTIONS ON THE
ABILITY OF A LIMITED PARTNER TO SELL, TRANSFER, ASSIGN, MORTGAGE, HYPOTHECATE,
OR OTHERWISE ENCUMBER HIS OR ITS INTEREST IN THE PARTNERSHIP.
Section 7.03. Notice.
(a) All notices, demands, or requests provided for or
permitted to be given pursuant to this Agreement must be in writing.
(b) All notices, demands, and requests to be sent to a
Partner, any Distributee(s) (or their Agent) of the interest of a Partner, or
any Substituted Partner pursuant to this Agreement shall be deemed to have been
properly given or served if: (i) personally delivered, (ii) deposited prepaid
for next day delivery by Federal Express, or other similar overnight courier
services, addressed to such Partner, (iii) deposited in the United States mail,
addressed to such Partner, prepaid and registered or certified with return
receipt requested, or (iv) transmitted via telecopier or other similar device to
the attention of such Partner, all at the address or telecopy number for such
Partner set forth on such Partner's signature page attached hereto (as may be
changed in accordance with subsection (d) below).
(c) All notices, demands, and requests so given shall be
deemed received: (i) when personally delivered, (ii) twenty-four (24) hours
after being deposited for next day delivery with an overnight courier, (iii)
forty-eight (48) hours after being deposited in the United States mail, or (iv)
twelve (12) hours after being telecopied or otherwise transmitted and receipt
has been confirmed.
16
(d) The Partners, any Substituted Partners, and their
respective Distributee(s)(or their Agent) shall have the right from time to
time, and at any time during the term of this Agreement, to change their
respective addresses and each shall have the right to specify as his or its
address any other address within the United States of America by giving to the
other parties at least thirty (30) days written notice thereof, in the manner
prescribed in Section 7.03(b); provided however, that to be effective, any such
notice must be actually received (as evidenced by a return receipt).
(e) All distributions to any Partner shall be made at the
address to which notices are to be sent unless otherwise specified in writing by
such Partner.
Section 7.04. Amendments. Amendments and supplements may be made to
or restatements made of this Agreement or the Certificate of Limited Partnership
(or any exhibits or schedules attached to any of them), from time to time by the
General Partner, without the consent of any of the other Partners, to effect any
amendments which amend this Agreement to admit Substituted Partners, to reflect
any transfers, assignments, admissions, withdrawals, or conversions authorized
by this Agreement, or to effect any non-material amendments to this Agreement or
the Certificate of Limited Partnership. All other amendments to this Agreement
and the Certificate of Limited Partnership shall require the unanimous approval
of the Partners.
Section 7.05. GOVERNING LAW. THE RIGHTS AND OBLIGATIONS OF THE
PARTNERS HEREUNDER SHALL BE INTERPRETED, CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS.
Section 7.06. Rule of Construction. The general rule of construction
for interpreting a contract, which provides that the provisions of a contract
should be construed against the party preparing the contract, is waived by the
parties. Each party acknowledges that he or it was represented by separate legal
counsel in this matter who participated in the preparation of this Agreement or
he or it had the opportunity to retain counsel to participate in the preparation
of this Agreement but chose not to do so.
Section 7.07. Entire Agreement. This Agreement, including all
exhibits to this Agreement and, if any, exhibits to such exhibits, contains the
entire agreement among the parties relative to the matters contained in this
Agreement.
Section 7.08. Waiver. No consent or waiver, express or implied, by
any Partner to or for any breach or default by any other Partner in the
performance by such other Partner of his or its obligations under this Agreement
shall be deemed or construed to be a consent or waiver to or of any other breach
or default in the performance by such other Partner of the same or any other
obligations of such other Partner under this Agreement. Failure on the part of
any Partner to complain of any act or failure to act of any of the other
Partners or to declare any of the other Partners in default, regardless of how
long such failure continues, shall not constitute a waiver by such Partner of
his or its rights hereunder.
Section 7.09. Severability. If any provision of this Agreement or
the application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall
17
not be affected thereby, and the intent of this Agreement shall be enforced to
the greatest extent permitted by law.
Section 7.10. Binding Agreement. Subject to the restrictions on
transfers and encumbrances set forth in this Agreement, this Agreement shall
inure to the benefit of and be binding upon the undersigned Partners and their
respective legal representatives, successors, and assigns. Whenever, in this
Agreement, a reference to any party or Partner is made, such reference shall be
deemed to include a reference to the legal representatives, successors, and
assigns of such party or Partner.
Section 7.11. Tense and Gender. Unless the context clearly indicates
otherwise, the singular shall include the plural and vice versa. Whenever the
masculine, feminine, or neuter gender is used inappropriately in this Agreement,
this Agreement shall be read as if the appropriate gender was used.
Section 7.12. Captions. Captions are included solely for convenience
of reference and if there is any conflict between captions and the text of this
Agreement, the text shall control.
Section 7.13. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original for all
purposes and all of which when taken together shall constitute a single
counterpart instrument. Executed signature pages to any counterpart instrument
may be detached and affixed to a single counterpart, which single counterpart
with multiple executed signature pages affixed thereto constitutes the original
counterpart instrument. All of these counterpart pages shall be read as though
one and they shall have the same force and effect as if all of the parties had
executed a single signature page.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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The undersigned has executed and delivered this Limited Partnership
Agreement of Builders FirstSource - South Texas, L.P., to be effective as of the
Effective Date.
GENERAL PARTNER
BFS TEXAS, LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Senior Vice President
Initial Capital Contribution: $100.00
Issued Partnership Units: One Hundred (100)
Percentage Interest: 1.00%
19
The undersigned has executed and delivered this Limited Partnership
Agreement of Builders FirstSource - South Texas, L.P., to be effective as of the
Effective Date.
LIMITED PARTNER
BUILDERS FIRSTSOURCE - TEXAS GROUP,
L.P., a Texas limited partnership
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Senior Vice President
Initial Capital Contribution: $9,900.00
Issued Partnership Units: Nine Thousand, Nine Hundred (9,900)
Percentage Interest: 99.00%
20
