OLY STRATUS ABC WEST I JOINT VENTURE
(A Texas Joint Venture)
JOINT VENTURE AGREEMENT
__________________________________
Dated as of September 30, 1998
__________________________________
TABLE OF CONTENTS
Page
ARTICLE 1
Definitions
1.1 Definitions 1
ARTICLE 2
Organization
2.1 Formation of Joint Venture 6
2.2 Name 6
2.3 Character of Business 6
2.4 Registered Office and Agent 7
2.5 Fiscal Year 7
ARTICLE 3
Capital Contributions
3.1 Capital Contributions to the Partnership 7
3.2 Additional Capital Contributions 7
3.3 No Return of Capital Contributions 9
3.4 Interest 10
ARTICLE 4
Rights and Obligations of Partners
4.1 Management of Partnership 10
4.2 Management Committee 10
4.3 Major Decisions 12
4.4 Budgets and Reports 12
4.5 Powers of the Operating Partner 12
4.6 Liability of Partners 13
4.7 Other Activities of Partners 13
ARTICLE 5
Exculpation and Indemnity
5.1 Exculpation 13
5.2 Indemnity 13
ARTICLE 6
Distributions and Allocations
6.1 Distributions 14
6.2 Tax Allocations 14
ARTICLE 7
Admissions, Transfers and Withdrawals
7.1 Admission of New Partners 14
7.2 Transfer of Partnership Interests 15
7.3 Buy/Sell 15
7.4 No Substituted Partners 17
7.5 Withdrawal of Partners 18
ARTICLE 8
General Accounting Provisions and Books
8.1 Books of Account; Tax Returns 18
8.2 Place Kept; Inspection 18
8.3 Tax Matters Partner 18
ARTICLE 9
Amendments and Waivers
9.1 Amendments and Waivers 18
9.2 Certain Other Amendments 19
ARTICLE 10
Dissolution and Termination
10.1 Dissolution 19
10.2 Accounting on Dissolution 20
10.3 Termination 20
10.4 No Negative Capital Account Obligation 20
10.5 No Other Cause of Dissolution 21
10.6 Merger 21
ARTICLE 11
Miscellaneous
11.1 Waiver of Partition 21
11.2 Entire Agreement 21
11.3 Severability 21
11.4 Notices 21
11.5 Governing Laws 22
11.6 Successors and Assigns 22
11.7 Counterparts 22
11.8 Headings 22
11.9 Other Terms 22
11.10 Power of Attorney 22
11.11 Transfer and Other Restrictions 23
OLY STRATUS ABC WEST I JOINT VENTURE
JOINT VENTURE AGREEMENT
This Joint Venture Agreement (this "Agreement") of OLY
STRATUS ABC WEST I JOINT VENTURE, a Texas joint venture (the "
Partnership"), is made effective as of September 30, 1998 (the
"Effective Date"), by and between Oly ABC West I, L.P., a Texas
limited partnership, as the financial partner (the "Financial
Partner") and Stratus ABC West I, L.P., a Texas limited
partnership, as the operating partner (the "Operating Partner").
(The Financial Partner and the Operating Partner are collectively
referred to herein as the "Partners").
RECITALS
A. The parties hereto desire to form a joint venture under
the Act (as defined below).
B. The Partnership is being formed for the purpose of
acquiring, owning, developing and reselling that certain property
located in ▇▇▇▇▇▇ County, Texas and known as Lots 1 through 26
and Lots 137 through 185, inclusive, Block A, ▇▇▇▇▇▇ Creek ABC
West Phase I (the "Property").
C. The initial Partners hereto desire to enter into this
Agreement to establish their respective rights and obligations
with respect to the Partnership and to provide for the orderly
management of the affairs of the Partnership.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Partners hereby agree as follows:
ARTICLE 1
Definitions
1.1 Definitions. As used in this Agreement, the
follow-ing terms shall have the following meanings:
"Act" shall have the meaning set forth in Section 2.1.
"Affiliate" shall mean, when used with reference to a
specified Person, any other Person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the
specified Person. As used in this definition of Affiliate,
the term "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of a Person, whether through
ownership of voting securities, by contract, or otherwise.
"Business" shall mean all tangible and intangible
property of the Partnership as of the date of the Buy/Sell
offer and any proceeds therefrom subject to all obligations
or liabilities associated therewith.
"Business Day" shall mean any day other than a
Saturday, Sun-day, or holiday on which national banking
associations in the State of Texas are authorized or
required to be closed.
"Business Plan" shall mean the business plan attached
hereto as Exhibit A and incorporated herein, and as may be
amended from time to time in accordance with the provisions
hereof or as may attached hereto within sixty (60) days of
the execution of this Agreement upon approval of the
Management Committee.
"Buy-Sell" shall have the meaning set forth in Section
7.3.
"Buy/Sell Closing Date" shall have the meaning set
forth in Section 7.3.
"Buy/Sell Election Period" shall have the meaning set
forth in Section 7.3.
"Buy/Sell Offer" shall have the meaning set forth in
Section 7.3.
"Buy/Sell Purchaser" shall have the meaning set forth
in Section 7.3 .
"Buy/Sell Seller" shall have the meaning set forth in
Section 7.3.
"Capital Account" shall mean a separate account
maintained for each Partner in accordance with the
provisions of Regulation section 1.704-1(b)(2)(iv). Each
Partner shall have only one Capital Account, regardless of
the number of classes of units or other interests in the
Partnership owned by such Partner. Initially, the Capital
Account of each Partner shall have a positive balance equal
to its initial Capital Contribution. Such Capital Account
shall thereafter be adjusted in accordance with the
following provisions:
(a) Additions. The Capital Account shall be
increased by the sum of (i) except as otherwise
provided in paragraph (f) below in the case of a
contribution of a promissory note, the amount of cash
and the fair market value (determined as of the date of
contribution, without regard to section 7701(g) of the
Code, including a constructive contribution resulting
from a termination and reconstitution of the
Partnership under section 708(b)(1)(B) of the Code) of
property contributed, or deemed to have been
contributed, to the capital of the Partnership by the
Partner, net of any liabilities assumed by the
Partnership in connection with such contribution or to
which the contributed property is subject under section
752 of the Code, plus (ii) the amount of any net income
or other item of income or gain allocated to the
Partner pursuant to Article 6 hereof.
(b) Subtractions. The Capital Account shall be
reduced by the sum of (i) the amount of any net loss or
other item of expense, loss or deduction allocated to
the Partner pursuant to Article 6 hereof, plus (ii) the
Distribution Value (determined without regard to
section 7701(g) of the Code) of any cash or other
property distributed, or deemed to have been
distributed, by the Partnership to the Partner, net of
any liabilities assumed by the distributee in
connection with the distribution or to which the cash
or other distributed property is subject under section
752 of the Code.
(c) Other Adjustments. The Capital Account shall
otherwise be adjusted by the Financial Partner in
accordance with the other capital account maintenance
rules of Regulation section 1.704-1(b)(2)(iv). In
connection with the foregoing:
(d) Determination of Fair Market Value. In
determining the balance of each Partner's Capital
Account, and for all other purposes of this Agreement,
the fair market value of an asset contributed to or
distributed by the Partnership shall be determined in
good faith by the Partners (which shall use their
reasonable efforts not to overstate or understate the
fair market value of any such asset). Notwithstanding
the preceding sentence, it is understood that no
Partner shall have any obligation to contribute any
real property asset to the Partnership unless all
Partners have agreed to the fair market value of the
asset.
(e) Capital Account of Transferee. A transferee of
all or part of an interest in the capital and profits
of the Partnership shall succeed to the Capital Account
of the transferor to the extent that such Capital
Account relates to the transferred interest.
(f) Contribution of Note. Notwithstanding any other
provision of this definition of Capital Account, if a
Partner has contributed his promissory note to the
capital of the Partnership and such note is not readily
traded on an established securities market, then the
principal of such note shall not be credited to the
Partner's Capital Account until and to the extent that
either (i) the Partnership makes a taxable disposition
of the note or (ii) principal payments are made on the
note, all in accordance with Regulation section
1.704-1(b)(2)(iv)(d)(2).
"Capital Contribution" shall mean the gross amount of
cash or the fair market value of other property contributed
or caused to be contributed to the capital of the
Partnership by a Partner with respect to such Partner's
capital account.
"Cash Flow" of the Partnership for any period shall
mean any and all cash revenues generated from the ownership,
sale of lots, sale of undeveloped parcels, lease and other
operation of the Partnership assets and any and all capital
transaction proceeds minus the sum of (i) any operating and
capital expenses incurred in the operation of the business
of the Partnership, including without limitation any
payments of interest and principal (other than payments of
principal that are refinanced by the Partnership) on
Partnership indebtedness required by the lender of such
indebtedness during the quarterly period in question, and
(ii) a reasonable reserve for necessary or desirable
operating and capital expenses of the Partnership that are
anticipated to be incurred or to become due and payable
within six (6) months as the Management Committee, in the
exercise of its reasonable discretion and as is consistent
with the Operating Budget and the Business Plan, shall
determine.
"Code" shall mean the Internal Revenue Code of 1986 and
any successor statute, as amended from time to time.
"Contribution Percentage" of a Partner shall be based
on the actual equity capital contributions of such Partner
in relation to the total equity capital contributions of all
Partners.
"Deadlock" shall mean the failure of the Partners to
agree with respect to any Major Decision or other issue with
respect to the Partnership which could have a material
adverse effect or impact to the Partnership if such issue
remains unresolved between the Partners.
"Deemed Recipient" shall have the meaning set forth in
Section 3.2.
"Default Amount" shall have the meaning set forth in
Section 3.2.
"Default Date" shall have the meaning set forth in
Section 3.2.
"Defaulting Partner" shall have the meaning set forth
in Section 3.2.
"Distribution Period" shall mean (i) the period
beginning on the Effective Date and ending on December 31,
1998 and (ii) each calendar quarter thereafter.
"Distribution Value" shall mean the dollar amount of
any cash distribution and the fair market value, as jointly
determined in good faith by the Partners (each of which
shall use its reasonable efforts not to overstate or
understate fair market value), of any non-cash property
distribution at the time of the distribution, net of the
distributee's share of any liabilities to which the
distributed property is subject and net of any liabilities
assumed by the distributee.
"Effective Date" shall have the meaning set forth in
the preamble to this Agreement.
"Escrow Agent" shall have the meaning set forth in
Section 7.3.
"Financial Partner" shall mean Oly ABC West I, L.P.,
together with its successors and assigns.
"Indemnified Parties" shall have the meaning set forth
in Section 7.3 .
"Loan" shall have the meaning set forth in Section 3.1.
"Lender" shall have the meaning set forth in Section
3.1.
"Major Decision" means any decision with respect to (1)
approval of the Business Plan, including the decision to
make additional Capital Contributions except as provided in
Section 3.2(a), (2) approval of the Operating Budget, (3)
approval of the plans and specifications for the Property,
and the subsequent approval of all material change orders or
amendments given in substitution for such approved plans and
specifications, (4) approval of any financing or
refinancing, whether secured or unsecured, unless previously
approved in the Business Plan or annual Operating Budget,
(5) approval of acquisition of any additional property, (6)
approval of admission or withdrawal of any Partners to the
Partnership, (7) approval of any sale, exchange or other
disposition of the Property unless pursuant to governance
deadlock provision in Section 7.3 below or in the Business
Plan or annual Operating Budget, (8) approval of any
amendments to the Agreement, (9) approval of any termination
or dissolution of the Partnership and (10) appointment of a
successor property manager pursuant to Section 4.1.
"Management Agreement" shall have the meaning set forth
in Section 4.1.
"Management Committee" shall have the meaning set forth
in Section 4.2.
"Mandatory Additional Contribution " shall have the
meaning set forth in Section 3.2.
"Non-Defaulting Partners" shall have the meaning set
forth in Section 3.2.
"Offer Amount" shall have the meaning set forth in
Section 7.3.
"Offer Deposit" shall mean the sum of Five Hundred
Thousand and No/100 Dollars ($500,000.00) in cash.
"Offeree" shall have the meaning set forth in Section
7.3.
"Offeror" shall have the meaning set forth in Section
7.3.
"Olympus" shall have the meaning set forth in the
preamble of this Agreement.
"Olympus Representative" shall have the meaning set
forth in Section 4.2.
"Operating Budget" shall mean the budget attached
hereto as Exhibit B and incorporated herein, as may be
amended from time to time in accordance with the provisions
hereof, or to be attached hereto within sixty (60) days of
the execution of this Agreement upon approval by the
Management Committee in accordance with this Agreement.
"Operating Partner" shall mean Stratus ABC West I,
L.P., together with its successors or assigns.
"Partner" shall mean any Person executing this
Agreement as of the Effective Date as a partner or hereafter
admitted to the Partnership as a partner as provided in this
Agreement, but does not include any Person who has ceased to
be a Partner of the Partnership.
"Partnership" shall have the meaning set forth in the
preamble to this Agreement.
"Partnership Interest" shall have the meaning set forth
in Section 7.3 .
"Person" shall mean an individual, partnership, joint
venture, limited part-nership, limited liability company,
foreign limited liability company, trust, business trust,
estate, corporation, custodian, trustee, exec-utor,
administrator, nominee, association, cooperative or entity
in a representative capacity.
"Property " shall have the meaning set forth in the
preamble of this Agreement.
"Receipt Amount" shall have the meaning set forth in
Section 7.3.
"Regulation" shall mean Treasury Regulations
promulgated under Title 26 of the United States Code.
"Replacement Loan" shall have the meaning set forth in
Section 3.2.
"Representative" shall have the meaning set forth in
Section 4.2.
"Required Capital Contributions" shall have the meaning
set forth in Section 3.1.
"Required Interest" shall mean both of the Partners.
"Sharing Ratio" shall have the meaning set forth on
Schedule I attached hereto.
"Stratus" shall have the meaning set forth in the
preamble of this Agreement.
"Stratus Representative" shall have the meaning set
forth in Section 4.2.
ARTICLE 2
Organization
2.1 Formation of Joint Venture. The Partners have
formed a joint venture pursuant to and in accordance with the
provisions of the Texas Revised Partnership Act, as amended from
time to time (the "Act").
2.2 Name. The name of the Partnership is Oly Stratus
ABC West I Joint Venture. The Management Committee may change
the name of the Partnership from time to time and shall give
prompt written notice thereof to the Operating Partner; provided,
however, that such name may not contain any portion of the name
or ▇▇▇▇ of the Operating Partner without the Operating Partner's
consent.
2.3 Character of Business. The purpose of the
Partnership shall be (i) to acquire, hold, develop, sell,
encumber, or otherwise act with respect to investments, direct or
indirect, in the Property, and (ii) to engage in such other
business as may be conducted by a joint venture organized under
the laws of the State of Texas.
2.4 Registered Office and Agent. The name and address
of the Partnership's initial registered agent are Olympus Real
Estate Corporation, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇. The Partnership's initial principal place of business
shall be ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
The Financial Partner may change such registered agent,
registered office, or principal place of business from time to
time. The Financial Partner shall give prompt written notice of
any such change to the Operating Partner. The Partnership may
from time to time have such other place or places of business
within or without the State of Texas as may be determined by the
Financial Partner.
2.5 Fiscal Year. The fiscal year of the Partnership
shall end on December 31 of each calendar year unless, for United
States federal income tax purposes, another fiscal year is
required. The Partnership shall have the same fiscal year for
United States federal income tax purposes and for accounting
purposes.
ARTICLE 3
Capital Contributions
3.1 Capital Contributions to the Partnership. The
Partners shall contribute or be deemed to have contributed
capital to the Partnership in the amounts respectively set forth
opposite their names on Schedule I to this Agreement on the
Effective Date (collectively, the "Required Capital
Contributions"). Also, in addition to the Required Capital
Contributions, the Partners acknowledge that in order to purchase
and develop the Property, the Partnership will need to secure
from a third party lender (the "Lender") a term loan, which shall
be in the amount set forth in the Business Plan and on terms and
conditions satisfactory to the Management Committee and approved
in accordance with this Agreement (the "Loan").
3.2 Additional Capital Contributions.
(a) After the funding of the Required Capital
Contribution set forth above (including any amounts deemed
to have been contributed), and to the extent not available
from proceeds of the Loan, either (i) the Partners may agree
to make additional Capital Contributions to the Partnership
as are deemed advisable by the Partners (each exercising
their independent discretion) and by amendment to the
Business Plan, or (ii) if either (A) there has been a
default or an event of default under the Loan or (B)
additional capital is necessary to complete any capital
improvement program approved in the Business Plan, or
(C) funds are necessary for continued operation of the
Property consistent with the Business, then the Financial
Partner may elect to call or not call for additional Capital
Contributions (in each case, the "Mandatory Additional
Contribution") to be made to the Partnership to cure any
default or event of default under the Loan or to complete
such capital improvement program or fund operations. The
Mandatory Additional Contribution in question shall be made
by the Partners pro rata, based on the Contribution
Percentages of the Partners. This Section 3.2 is solely for
the benefit of the Partners, and shall not, nor shall it be
deemed to, create any rights in, or provide any benefit to,
any other person or entity, and the decision to make
additional contributions to the Partnership shall be made in
the sole and absolute discretion of the Financial Partner,
except as may be provided in the Business Plan.
(b) Each Partner shall be required to make its
Mandatory Additional Contribution to the Partnership on or
before twenty-one (21) days after written notice to such
Partner ("Default Date"). In the event any Partner fails to
make a Mandatory Additional Contribution as required by this
Section 3.2 within the time period set forth herein (such
Partner, being herein referred to as the "Defaulting
Partner"), then, the "Non-Defaulting Partners" (herein so
called) shall be entitled, as their sole and exclusive
remedy for such failure, by giving written notice to the
Defaulting Partner to make a loan (the "Replacement Loan")
to the Defaulting Partner in the amount of such Mandatory
Additional Contribution, which Replacement Loan (i) shall be
applied solely to fund the delinquent Mandatory Additional
Contribution, (ii) shall have a term of one hundred twenty
(120) days from the date of such loan and (iii) shall bear
interest at the lesser of (A) eighteen percent (18%) per
annum and (B) the maximum rate of interest which may be
charged, collected or contracted for under applicable law,
with accrued interest due at the maturity of such loan (each
such Replacement Loan together with all accrued interest
thereon from time to time, the "Default Amount"). Anything
contained in this Agreement to the contrary notwithstanding,
any Partner who becomes a Defaulting Partner shall
immediately and without any further demand, notice or cure
period (time being of the essence herein) automatically
cease to have a right to vote on all Partnership decisions
from and after the Default Date for any purposes hereunder
for the remainder of the life of the Partnership (unless
reinstated as described below); provided, however, if a
Defaulting Partner shall pay the Default Amount in full to
the Non-Defaulting Partners who elected to make such loan,
on or before the expiration of the 120-day term of the
Replacement Loan to such Defaulting Partner, such Defaulting
Partner's voting rights hereunder shall be automatically re-
instated (effective as of the date such Default Amount is
paid in full) for all purposes including voting rights. If
the Default Amount is not paid in full on or before the
expiration of the 120-day period, the Defaulting Partner's
voting rights shall not be reinstated upon the subsequent
payment of the Default Amount.
(c) The Partners further agree that if the
Default Amount is not repaid to the Non-Defaulting Partners
within the 120-day term, then, without demand, notice or
cure period (time being of the essence herein), such Default
Amount shall for all purposes hereunder be deemed to be a
Capital Contribution by the Non-Defaulting Partners to the
Partnership effective as of the expiration of such 120-day
term of such Replacement Loan, which deemed Capital
Contribution shall be credited as an amount equal to the
product of 200% times the Default Amount, and the Capital
Account of the Defaulting Partner shall for all purposes be
appropriately reduced to reflect such treatment; provided,
however, with respect to any Default Amount attributable to
a Replacement Loan made more than one hundred twenty (120)
days after the initial Replacement Loan (which is not repaid
during its 120-day term) is made by one or more Non-
Defaulting Partner, the deemed Capital Contribution shall be
credited as an amount equal to the product of 300% times the
Default Amount, and in each case the distribution
percentages of the Defaulting Partner (i.e., the pro rata
share of the particular distribution which such Partner
would otherwise receive under such sections) shall be
reduced by, and the distribution percentages of each Non-
Defaulting Partner who makes its pro rata share of such loan
shall be increased by an amount equal to the quotient of (i)
200% (or 300%, as the case may be) times the Default Amount,
divided by (ii) the aggregate Capital Contributions made by
the Partners to the Partnership prior to the date of
calculation (including the Mandatory Additional
Contributions of all Non-Defaulting Partners but excluding
the Default Amount then in question).
(d) The new distribution percentages computed in
accordance with this Section 3.2 shall remain in effect
under this Agreement unless and until there is a subsequent
adjustment to the distribution percentages. Notwithstanding
the foregoing, no Partner's distribution percentage shall be
reduced under any circumstance to less than zero, nor shall
any Partner's distribution percentage be increased under any
circumstance to more than 100%. Mandatory Additional
Contributions shall be made pro rata, based on the relative
Contribution Percentages of the Partners.
(e) Each Partner which becomes a Defaulting
Partner hereby irrevocably grants to the other Partners a
continuing, first priority, perfected security interest in
the Partnership Interest of such Defaulting Partner to
secure the prompt payment of each Replacement Loan made to
such Defaulting Partner until such time, if ever, as the
Default Amount with respect to the Replacement Loan under
consideration has been converted to a deemed Capital
Contribution pursuant to Section 3.2(c). On or before
fifteen (15) days after any written request of any Non-
Defaulting Partner, the Defaulting Partner shall execute and
deliver a UCC-1 financing statement in form and substance
acceptable to such Non-Defaulting Partner to evidence such
security interest, the failure of which shall constitute a
default under the Replacement Loan. Prior to a default or
maturity of a Replacement Loan, and without limiting the
remedies of the Non-Defaulting Partners, at the election of
the Non-Defaulting Partners, all distributions payable to
any Defaulting Partner under this Agreement shall be payable
directly to the Non-Defaulting Partners (pro rata based on
the relative amount of the Replacement Loan made by such
Non-Defaulting Partner) until the Replacement Loan(s) of
such Defaulting Partner are paid in full (or converted to a
deemed Capital Contribution), shall be paid directly to the
Non-Defaulting Partners until the entire amount of the
Replacement Loan is paid in full. Any amounts paid directly
to a Non-Defaulting Partner pursuant to the terms of the
preceding sentence shall be treated as paid to the person
(the "Deemed Recipient") entitled to receive the amount of
the distribution in the absence of the requirements of the
preceding sentence (thereby discharging the Partnership's
obligation to make the payment in question to the Deemed
Recipient) and then as applied by the Deemed Recipient on
behalf of the Defaulting Partner to the repayment of the
Defaulting Partner's loan.
(f) EXCEPT AS SET FORTH IN SECTION 3.1 OR THIS
SECTION 3.2, NO ADDITIONAL CAPITAL CONTRIBUTIONS SHALL BE
REQUIRED BY ANY PARTNER UNLESS AN EXPRESS WRITTEN CALL FOR A
CAPITAL CONTRIBUTION IS MADE BY THE MANAGEMENT COMMITTEE TO
EACH OF THE PARTNERS.
3.3 No Return of Capital Contributions. No Partner is
entitled to a return of its Capital Contribution, but shall look
solely to distributions from the Partnership as provided for in
Article 6 of this Agreement.
3.4 Interest. No Partner shall be entitled to
interest on its Capital Contribution or its Capital Account,
provided that each Partner's Capital Contribution shall accrue
the Preferred Return (which shall not be deemed to be interest)
as set forth herein. Any interest actually received by reason of
temporary investment of any part of the Partnership's funds shall
be included in the Partnership's funds.
ARTICLE 4
Rights and Obligations of Partners
4.1 Management of Partnership. The management,
control and direction of the Partnership and its operations,
business and affairs shall be vested exclusively in the
Management Committee, which shall have the right, power and
authority, acting solely by itself and without the necessity of
approval by any Partner or any other person, to carry out any and
all of the purposes of the Partnership and to perform or refrain
from performing any and all acts that the Management Committee
may deem necessary, desirable, appropriate or incidental thereto,
except as otherwise provided in this Agreement; provided,
however, that the Operating Partner shall manage the Partnership
and its operations, business and affairs solely as described in
Section 4.5. The Management Committee may assume the management
duties and responsibilities of the Operating Partner as set forth
in Section 4.5 at any time in the event the Management Committee
determines in its good faith discretion that either (i) the
Operating Partner has acted negligently or with willful
misconduct in performing its duties or (ii) the monthly financial
reports of the Partnership reveal a material adverse deviation
from the Business Plan more than three (3) times within any
twelve (12) month period. The Management Committee agrees that
prior to its exercise of its right to assume the management
duties and responsibilities of the Operating Partner as result of
either default by the Operating Partner, the Management Committee
shall first deliver written notice of said default to the
Operating Partner and give the Operating Partner ten (10) days
thereafter in which to cure said default, the Operating Partner
so elects. Notwithstanding anything to the contrary provided
herein, the Property shall be managed in accordance with the
terms and conditions of that certain Management Agreement (the
"Management Agreement") dated of even date herewith by and
between the Partnership and Stratus Management L.L.C.
4.2 Management Committee.
(a) The "Management Committee" (herein so called)
shall consist of four (4) representatives, two (2) of which
shall be designated by Stratus (jointly, the "Stratus
Representative") and two (2) of which shall be designated by
Olympus (jointly, the "Olympus Representative")
(individually, a "Representative and collectively, the
"Representatives"). The initial Representatives designated
by Stratus and Olympus are set forth opposite such Partner's
name below:
Partner Initial Representative
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
Stratus ▇.▇. ▇▇▇▇▇
Olympus ▇▇▇ ▇. ▇▇▇▇
Olympus ▇▇▇▇ ▇▇▇▇▇
Olympus and Stratus may appoint alternates for the
Representatives appointed by it, which alternates shall have
all the powers of the Representatives in their absence or
inability to serve. Olympus hereby appoints ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇ as an alternate Representative. Olympus and Stratus
may change its designated Representatives effective upon
written notice from Olympus or Stratus designating such
Representative to the other Partners. One of the Olympus
Representatives shall serve as Chairman of the Management
Committee and shall set the agenda for such meetings.
(b) The Representatives shall meet quarterly (or
more often as the Management Committee may reasonably
determine) in the offices of the Partnership or by telephone
conference, unless the Representatives jointly agree that
the meeting is unnecessary or that a different schedule or
location for the meeting is appropriate, to discuss current
material management issues (but not day-to-day operations
matters which are in accordance with the operation
parameters set forth in the Business Plan, Operating Budget
or otherwise set forth in writing) or Major Decisions. At
each meeting the Representatives shall each receive one (1)
vote. All action taken by the Management Committee shall
require the approval or consent of at least three (3)
Representatives except Major Decisions which require
unanimous consent as described in Section 4.3 below.
Representatives may bring to any meeting such employees,
agents, professionals and advisors as they deem necessary or
appropriate to assist them at such meeting. A quorum shall
consist of at least one Stratus Representative and one
Olympus Representative unless both Olympus Representatives
have declined to attend two (2) consecutive meetings, which
are scheduled with at least seventy-two (72) hours prior
notice for each meeting at the offices of the Partnership,
in which event the quorum may be two (2) Stratus
Representatives, and vice versa.
(c) The Financial Partner, at the direction of
the Management Committee, shall be authorized and empowered
to (i) make all day-to-day management decisions (provided
that such decisions are consistent with the operation
parameters set forth in the Business Plan, Operating Budget
or otherwise in writing) except for Major Decisions, (ii)
direct the Operating Partner, (iii) perform all acts and
enter into and perform all contracts and other undertakings
that the Financial Partner may, in the exercise of its
reasonable discretion, deem necessary, advisable,
appropriate or incidental thereto and (provided that the
performance of such acts are consistent with the operation
parameters set forth in the Business Plan, Operating Budget
or otherwise in writing), (iv) terminate the property
manager in the event of a default in the Management Standard
(as that term is defined in the Management Agreement),
provided, if the property manager is terminated, then the
Partnership (as a Major Decision) shall designate a
successor property manager.
4.3 Major Decisions. All Major Decisions shall be made by
both the Stratus Representative and the Olympus Representative.
Accordingly, neither Stratus nor Olympus, on behalf of the
Management Committee, shall have the right or the power to make
any binding commitment on behalf of the Partnership in respect of
a Major Decision unless and until all of the Representatives have
authorized the same in writing.
4.4 Budgets and Reports.
(a) By January 31st of each calendar year
hereafter during the term hereof, the Operating Partner
shall prepare a revised Operating Budget and the Business
Plan for the operation of the Partnership. The Management
Committee shall have thirty (30) days after receipt thereof
to either approve the submitted Business Plan and Operating
Budget or respond with required changes to same.
(b) The Operating Partner agrees to use diligence
and to employ all reasonable efforts to ensure that the
actual costs of operating the Partnership shall not exceed
the Operating Budget, either in total or for any one
accounting category. The Operating Partner shall secure the
written approval of the Management Committee for any
expenditure that (i) exceeds fifteen percent (15%) of the
annual budgeted amount for the Partnership in any one
accounting category on such Operating Budget or (ii) exceeds
ten percent (10%) of the annual budgeted amount for the
Partnership in all accounting categories of the Operating
Budget. During each applicable calendar year, the Operating
Partner agrees to promptly inform the Management Committee
of any major increases in costs and expenses or any major
decreases in revenue that were not foreseen during the
budget preparation period and thus were not reflected in the
Operating Budget.
(c) The Operating Partner shall also submit any
additional financial or operational reports as the Financial
Partner may from time to time reasonably request.
4.5 Powers of the Operating Partner. Subject to
Section 4.3, the Operating Partner shall have the duties, rights
and obligations to implement the operations of the Partnership as
described in the Business Plan, Operating Budget or approved in
writing by the Management Committee. Without limiting the
generality of Section 4.1, but subject to Section 4.3 , the
Operating Partner, acting on behalf of the Partnership, shall
oversee the activities of property manager, or, if the Management
Agreement is terminated, until a successor property manager is
appointed, perform the duties, rights and obligations of the
property manager; provided, however, neither the Operating
Partner nor the property manager shall take any action that has a
material economic affect on the Partnership without the prior
approval of the Management Committee, including, without
limitation, approving the form and substance of all contracts,
loan documents or other documents necessary to operate the
business of the Partnership.
4.6 Liability of Partners. The Partners shall be
personally liable for the debts and obligations of the
Partnership if (but solely to the extent) required by applicable
law; provided, however, that all such debts and obligations shall
be paid or discharged first with the property of the Partnership
(including insurance proceeds) before the Partners shall be
obligated to pay or discharge any such debt or obligation with
its personal assets. Notwithstanding the preceding sentence, the
Partners shall not be personally liable for any debts or
obligations which are nonrecourse or which, under the terms
thereof, do not create or impose such liability.
4.7 Other Activities of Partners. Except as otherwise
agreed in writing, each Partner (i) may carry on and conduct in
any way or in any capacity, including, but not limited to, for
such Partner's own right and for such Partner's own personal
account, as a partner in any other partnership, as a venturer in
any joint venture, as a member or manager in any limited
liability company, as an employee, officer, director or
stockbroker of any corporation, or as a participant in any
syndicate, pool, trust, association or other business
organization, a business that competes, directly or indirectly,
with the business of the Partnership, (ii) will be free in any
capacity to conduct business activities the same or similar as
conducted by the Partnership and (iii) may make investments in
any kind of property. The Partnership will have absolutely no
claim or right to any such business or assets thereof. Further,
the Partnership will have claim to and will own only those assets
contributed to the Partnership or acquired with Partnership funds
or credit. Neither this Agreement nor any principle of law or
equity shall preclude or limit, in any respect, the right of any
Partner or any affiliate thereof to engage in or derive profit or
compensation from any activities or investments, nor give any
other Partner any right to participate or share in such
activities or investments or any profit or compensation derived
therefrom.
ARTICLE 5
Exculpation and Indemnity
5.1 Exculpation. Neither the Partners nor any
affiliate of the Partners, nor any officer, director, manager,
member, employee, agent, stockholder, or partner of the Partners
or any of its affiliates, shall be liable, responsible, or
accountable in damages or otherwise to the Partnership or any
Partner by reason of, or arising from or relating to the
operations, business, or affairs of, or any action taken or
failure to act on behalf of, the Partnership, except to the
extent that any of the foregoing is determined, by a final,
nonappealable order of a court of competent jurisdiction, to have
been primarily caused by the gross negligence, willful
misconduct, or bad faith of the person claiming exculpation.
5.2 Indemnity. The Partnership shall indemnify the
Partners, each affiliate of the Partners, and each officer,
director, stockholder, manager, member, and partner of the
Partners or any of its affiliates, and if so determined by the
Partners, each employee or agent of the Partners or any of its
affiliates, against any claim, loss, damage, liability, or
expense (including reasonable attorneys' fees, court costs, and
costs of investigation and appeal) suffered or incurred by any
such indemnitee by reason of, or arising from or relating to the
operations, business, or affairs of, or any action taken or
failure to act on behalf of, the Partnership, except to the
extent any of the foregoing (i) is determined by final,
nonappealable order of a court of competent jurisdiction to have
been primarily caused by the gross negligence, willful
misconduct, or bad faith of the person claiming indemnification
or (ii) is suffered or incurred as a result of any claim (other
than a claim for indemnification under this Agreement) asserted
by the indemnitee as plaintiff against the Partnership. Unless a
determination has been made (by final, nonappealable order of a
court of competent jurisdiction) that indemnification is not
required, the Partnership shall, upon the request of any
indemnitee, advance or promptly reimburse such indemnitee's
reasonable costs of investigation, litigation, or appeal,
including reasonable attorneys' fees; provided, however, that the
affected indemnitee shall, as a condition of such indemnitee's
right to receive such advances and reimbursements, undertake in
writing to repay promptly the Partnership for all such
advancements or reimbursements if a court of competent
jurisdiction determines that such indemnitee is not then entitled
to indemnification under this Section 5.2. No Partner shall be
required to contribute capital in respect of any indemnification
claim under this Section 5.2 unless otherwise provided in any
other written agreement to which such Partner is a party.
ARTICLE 6
Distributions and Allocations
6.1 Distributions. No later than thirty (30) days
after the end of each Distribution Period during which the
Partnership has Cash Flow, such Cash Flow shall be distributed,
after the payment of all third party obligations, to each Partner
in proportion to the Sharing Ratios.
6.2 Tax Allocations. For United States federal income
tax purposes, allocations of items of income, gain, loss,
deduction, expense, and credit for each fiscal year of the
Partnership shall be in accordance with each Partner's economic
interest in the respective item, as determined by the Management
Committee pursuant to Section 704(b) of the Code, and the
regulations promulgated thereunder and subject to the
requirements of Section 704(c) of the Code and the regulations
promulgated thereunder. Unless the Management Committee
determines otherwise, allocations shall be made to each Partner
in the same manner as such Partner (i) would be required to
contribute to the Partnership or (ii) would receive as
distributions if the Partnership were to liquidate the assets of
the Partnership at their book value and distribute the proceeds
in accordance with Section 6.1; provided, however, that if any
such allocation is not permitted by applicable law, the
Partnership's subsequent income, gain, loss, deduction, expense
and credit shall be allocated among the Partners so as to reflect
as nearly as possible the allocation used in computing capital
accounts.
ARTICLE 7
Admissions, Transfers and Withdrawals
7.1 Admission of New Partners. After the Effective
Date, new Partners may be admitted to the Partnership only with
the written consent of, and upon such terms and conditions as are
approved by the unanimous approval of the Management Committee.
No admission of any new Partner shall cause the Partner's
interest in Partnership allocations, distributions and capital to
be less than one percent (1%), and no Partner's Sharing Ratio in
the Partnership shall be reduced or diluted unless approved in
writing by such Partner or unless otherwise provided in any other
written agreement to which such Partner is a party.
7.2 Transfer of Partnership Interests. No Partner may
transfer or encumber all or any portion of such Partner's
interest in the Partnership without the prior written consent of
the Management Committee; provided, however, that Olympus may
transfer all or any portion of its interest in the Partnership to
an Affiliate of Olympus Real Estate Corporation without the
consent of Stratus, and provided, further, that Stratus may
transfer all or any portion of its interest in the Partnership to
a wholly owned subsidiary of Stratus Properties Inc. without the
consent of Olympus. Additionally, any interest in the
Partnership held by Olympus or its Affiliates may be transferred
in the exercise of rights of the limited partners of Olympus Real
Estate Fund II, L.P. ("Fund II") to remove the general partner
under the limited partnership agreement of Fund II.
7.3 Buy/Sell Option.
(a) In the event of a Deadlock at any time during
the term of the Partnership, either Partner may exercise a
"buy-sell" right (the "Buy-Sell") as follows: either
Partner (the "Offeror") exercising such Buy-Sell (A) shall
deliver to the other Partner (the "Offeree") a written
notice (the "Buy/Sell Offer") stating the Offeror's exercise
of such right and setting forth the Buy/Sell Offer and a
description of any negotiations or discussions with third
parties that Offeror may have had with respect to the sale
of the Partnership Interest and the Business, which Buy/Sell
Offer shall represent the dollar amount (without reduction
for any deemed or imputed expenses of sale) that the Offeror
would be willing to pay to the Partnership in cash for the
Business (the "Offer Amount") and (B) simultaneously with
the delivery of the Buy/Sell Offer, shall deliver into
escrow with a title insurance company located in Dallas,
Texas selected by the Offeror (the "Escrow Agent"), a good
faith deposit in the amount of the Offer Deposit. The
Offeror hereby instructs the Escrow Agent that the Escrow
Agent shall either (i) in the event the Offeree elects to
sell its interest in the Partnership (the "Partnership
Interest") in accordance with the terms hereof, apply such
Offer Deposit to the purchase price as of the Buy/Sell
Closing Date (as hereinafter defined) or if the Offeror
fails to timely purchase the Offeree's Partnership Interest
in accordance with the terms hereof, disburse such Offer
Deposit in accordance with Section 7.3(g), or (ii) in the
event the Offeree elects to purchase the Offeror's
Partnership Interest, disburse such Offer Deposit in
accordance with Section 7.3(e).
(b) The notice transmitting the Buy/Sell Offer
shall be deemed to constitute an offer by the Offeror to
purchase the Offeree's Partnership Interest for a price
equal to the Receipt Amount. "Receipt Amount" shall mean
the aggregate amount which the Partner whose Partnership
Interest is to be transferred, whether Offeror or Offeree,
would receive as a Partnership distribution if (i) the
Business were sold for cash for the Offer Amount, (ii) all
debts and liabilities of the Partnership but without taking
into account any deemed or imputed expenses which would
occur for the sale to third parties (e.g. imputed brokerage
fees, etc.) were paid in full from such proceeds and
(iii) prorations were made with respect to all current
assets and current liabilities of the Partnership.
(c) The Offeree shall have forty-five (45) days
from the date of the Buy/Sell Offer to elect, by written
notice to the Offeror signed by the Partner constituting the
Offeree, whether to sell such Offeree's Partnership Interest
to the Offeror or whether to purchase (or cause its designee
to purchase) the Offeror's Partnership Interest in the
Partnership (the "Buy/Sell Election Period").
(d) If the Offeree fails to make an election
within such forty-five (45) day period, or fails to comply
with subsection (e) below, such Offeree shall be
conclusively deemed to have elected to sell its Partnership
Interest in the Partnership to the Offeror according to the
terms of this Section 7.3.
(e) If the Offeree makes an election to purchase
within such forty-five (45) day period by sending written
notice to the Offeror as required by subsection (c), and by
delivering into escrow with the Escrow Agent a good faith
deposit in the amount of the Offer Deposit, then , the
original Offeror shall be conclusively deemed to have
elected to sell its Partnership Interest in the Partnership
to the Offeree for a price equal to the applicable Receipt
Amount. In the event the Offeree timely makes an election
to purchase, the Offeree hereby instructs the Escrow Agent
that the Escrow Agent shall (i) return the Offeror's Offer
Deposit to the Offeror and (ii) hold the Offeree's Offer
Deposit and shall either apply such Offeree's Offer Deposit
to the purchase price or disburse such Offeree's Offer
Deposit in accordance with Section 7.3(g).
(f) The Partner (the "Buy/Sell Purchaser") that
is obligated to purchase the Partnership Interest in the
Partnership of the other Partner (the "Buy/Sell Seller")
pursuant to this Section 7.3 shall fix a closing date (the "
Buy/Sell Closing Date") for such purchase that is not a
Business Day that is not later than forty-five (45) days
after the expiration of the Buy/Sell Election Period, by
written notice to the Buy/Sell Seller at least fifteen (15)
days in advance of Buy/Sell Closing Date. The closing of
such purchase shall take place on the Buy/Sell Closing Date
at the address of the Escrow Agent. At such closing, the
Partner constituting the Buy/Sell Seller shall execute and
deliver to the Buy/Sell Purchaser (or its designee) such
instruments of assignment, bills of sale, amendments to this
Agreement and other instruments and documents as the
Buy/Sell Purchaser and the Buy/Sell Seller (or such
designee) may reasonably require for the conveyance to such
Buy/Sell Purchaser (or such designee) of all of the Buy/Sell
Seller's right, title and interest in and to the Buy/Sell
Seller's Partnership Interest in the Partnership against
receipt by the Buy/Sell Seller of a wire transfer of
immediately available funds in an amount equal to the
applicable Receipt Amount; and the Buy/Sell Seller hereby
irrevocably constitutes and appoints the Buy/Sell Purchaser
as its attorney-in-fact to execute, acknowledge and deliver
any of such instruments or documents. Each of the Buy/Sell
Seller and Buy/Sell Purchaser shall each bear their
respective closing costs and expenses (including, but not
limited to, all attorney's fees and costs and all applicable
transfer and income taxes) incurred in the purchase or sale
of the Buy/Sell Seller's Partnership Interest in the
Partnership hereunder. Such sale of such Partnership
Interest shall be made without representation, warranty or
recourse, except for representations and warranties in form
and substance reasonably acceptable to the Buy/Sell
Purchaser and the Buy/Sell Seller with respect to existence,
good standing, title, no encumbrance, authority,
authorization, no conflicts, and such other customary
matters as may be reasonably requested by the Buy/Sell
Purchaser. If the Buy/Sell Offer or the closing of the
purchase contemplated thereby causes the maturity of any
Partnership indebtedness to be accelerated, the Buy/Sell
Seller shall be released from liability resulting from such
accelerated indebtedness and the Buy/Sell Purchaser shall
pay such indebtedness in full (including without limitation,
any accrued but unpaid interest and any prepayment premiums
or penalties) at Buy/Sell Purchaser's sole cost and expense
and shall indemnify and hold Buy/Sell Seller harmless from
and against any losses, damages, costs or expenses
(including attorneys' fees) incurred by Buy/Sell Seller, or
the Buy/Sell Seller's Affiliates, employees, agents,
representatives, consultants, attorneys, fiduciaries,
servants, officers, directors, partners, predecessors,
successors and assigns and Affiliates of the foregoing (the
"Indemnified Parties"), as a direct or indirect result
thereof, other than any losses, damages, costs or expenses
(including attorneys' fees) incurred by any of the
Indemnified Parties as a direct result of such Indemnified
Party's bad conduct. As a precondition to the closing of
the Buy/Sell transaction, the Buy/Sell Seller shall be
released from liability from any indebtedness of the
Partnership, including, without limitation, the release of
any guaranty and collateral pledged to secure any guaranty
debt. Anything contained in this Agreement to the contrary
notwithstanding, in the event the sale of the Partnership
Interest is not consummated because of a default on the part
of Buy/Sell Seller or if a condition precedent cannot be
fulfilled because Buy/Sell Seller frustrated such
fulfillment, Buy/Sell Purchaser may, at its election, pursue
an action for specific performance and/or costs and
expenses.
(g) In the event that the Buy/Sell Purchaser
defaults in its obligation to purchase the Partnership
Interest of the Buy/Sell Seller in the Partnership on the
Buy/Sell Closing Date, the Buy/Sell Seller shall have the
right to (i) solicit third party offers on behalf of the
Partnership for the purchase of the Business, to accept the
best such offer, as determined by the Buy/Sell Seller in its
sole and absolute discretion, and to consummate the sale of
the Business to such third party pursuant to such offer,
(ii) purchase the Partnership Interest of the Buy/Sell
Purchaser for a purchase price equal to ninety percent (90%)
of the aggregate Partnership distributions that the Buy/Sell
Purchaser would be entitled to receive under this Agreement
if the Business were sold for cash for the Offer Amount and
all debts and liabilities of the Partnership (excluding
imputed sale expenses) were paid in full from such proceeds
and proration were made with respect to all current assets
and current liabilities of the Partnership, (iii)
specifically enforce the Buy/Sell Purchaser's obligation to
purchase the Partnership interest of the Buy/Sell Seller,
and (iv) notify the Escrow Agent holding the Offer Deposit
of the Buy/Sell Purchaser immediately to deliver such Offer
Deposit to the Buy/Sell Seller as liquidated damages for the
breach by such Buy/Sell Purchaser (and the Buy/Sell
Purchaser covenants and agrees to cause, and hereby
instructs, the Escrow Agent to deliver such Offer Deposit to
the Buy/Sell Seller). The delivery of the Offer Deposit to
the Buy/Sell Seller shall not constitute a return of
capital. The Buy/Sell Purchaser hereby constitutes and
appoints the Buy/Sell Seller as its attorney-in-fact to
execute and deliver on behalf of the Buy/Sell Purchaser all
documents as may be reasonably required in connection with
the delivery by the Escrow Agent of the Offer Deposit to the
Buy/Sell Seller.
7.4 No Substituted Partners. Except as permitted by
Section 7.1, no transferee of any partnership interest in the
Partnership may become a substituted Partner. Rather, any
transferee of any Partnership interest of a Partner shall be
entitled solely to rights as assignee of the rights to receive
all or part of the share of the income, gains, losses,
deductions, expenses, credits, distributions, or returns of
capital to which his or its transferor would otherwise be
entitled with respect to the Partnership interest so transferred.
7.5 Withdrawal of Partners. Except as permitted by
Section 7.2 hereof, no Partner shall have any right to withdraw
or resign from the Partnership without the unanimous consent of
the Management Committee.
ARTICLE 8
General Accounting Provisions and Books
8.1 Books of Account; Tax Returns. The Financial
Partner shall prepare and file, or shall cause to be prepared and
filed, all United States federal, state, and local income and
other tax returns required to be filed by the Partnership and
shall keep or cause to be kept complete and appropriate records
and books of account in which shall be entered all such
transactions and other matters relative to the Partnership's
operations, business and affairs as are usually entered into
records and books of account that are maintained by persons
engaged in business of like character or are required by the Act.
Except as otherwise expressly provided herein, such books and
records shall be maintained in accordance with the basis utilized
in preparing the Partnership's United States federal income tax
returns, which returns, if allowed by applicable law, may upon
the approval of the Management Committee be prepared on an
accrual basis.
8.2 Place Kept; Inspection. The books and records
shall be maintained at the principal place of business of the
Partnership, and all such books and records shall be available
for inspection and copying at the reasonable request, and at the
expense, of any Partner during the ordinary business hours of the
Partnership.
8.3 Tax Matters Partner. The Financial Partner shall
be the tax matters partner of the Partnership and, in such
capacity, shall exercise all rights conferred, and perform all
duties imposed, upon a tax matters partner under Sections 6221
through 6233 of the Code and the regulations promulgated
thereunder; provided, however, that the Operating Partner shall
have the right to review and approve any actions taken by the
Financial Partner in its capacity as the tax matters partner.
Notwithstanding the foregoing, the Financial Partner shall have
the right to select the methodology to be used pursuant to
Section 704(c) of the Code subject to the Operating Partner's
consent, which consent shall not be unreasonably withheld.
ARTICLE 9
Amendments and Waivers
9.1 Amendments and Waivers. Except as expressly
provided in Section 9.3 of this Agreement, the Management
Committee may amend or waive any provision of this Agreement
which merely (i) corrects an error or clarifies an ambiguity in
this Agreement, (ii) does not adversely affect the Financial
Partner or the Operating Partner in any material respect or
(iii) changes Schedule I to this Agreement to reflect the Sharing
Ratios or Partnership Interests of the Partners as from time to
time amended in accordance with this Agreement. The Management
Committee shall amend Schedule I to this Agreement to reflect any
additional Capital Contributions. The Partners agree to look to
the books and records of the Partnership for determination of the
actual amount of Capital Contributions made to the Partnership,
as provided in Section 3.1 of this Agreement.
9.2 Certain Other Amendments. Notwithstanding any
provision to the contrary contained herein, no amendment to or
waiver of any provision of this Agreement shall be effective
against a given Partner without the consent or vote of such
Partner if such amendment or waiver would (i) cause the
Partnership to fail to be treated as a joint venture under the
Act, (ii) change Section 3.1 of this Agreement to increase a
Partner's obligation to contribute to the capital of the
Partnership, (iii) change Section 5.1 or 5.2 of this Agreement to
affect adversely any Partner's rights to exculpation or
indemnification, (iv) change Section 6.1 or 6.2 of this Agreement
to affect adversely the participation of such Partner in the
income, gains, losses, deductions, expenses, credits, capital or
distributions of the Partnership (including any amendments to
admit one or more new Partner or Partners), (v) change Section
7.1 of this Agreement to affect adversely the anti-dilution
rights of such Partner, (vi) change the percentage of Partners
necessary for any consent or vote required hereunder to the
taking of any action or (vii) amend Section 9.2 of this
Agreement.
ARTICLE 10
Dissolution and Termination
10.1 Dissolution. The Partnership shall be dissolved
upon the first to occur of the following events:
(i) the election of the both Partners to
dissolve the Partnership;
(ii) the election of the Financial Partner
to dissolve the Partnership if all or substantially all
Partnership assets shall have been sold or disposed of
or shall consist of cash;
(iii) both the Partners shall have
withdrawn from the Partnership within the meaning of
the Act, or any other dissolution event specified in
the Act shall have occurred;
(iv) the Financial Partner shall have
(A) made a general assignment for the benefit of
creditors, (B) filed a voluntary petition in
bankruptcy, (C) filed a petition or answer seeking for
itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar
relief under any bankruptcy or debtor relief law,
(D) filed an answer or other pleading admitting or
failing to contest the material allegations of a
petition filed against it in any bankruptcy or
insolvency proceeding brought against it or (E) sought,
consented to, or acquiesced in the appointment of a
trustee, receiver or liquidator of the Financial
Partner or of all or any substantial part of its
property;
(v) if within sixty (60) days after the
commencement of any proceeding against the Financial
Partner seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or
similar relief under any bankruptcy or debtor relief
law, the proceeding shall not have been dismissed; or
(vi) if within sixty (60) days after the
appointment (without the Financial Partner's consent or
acquiescence) of a trustee, receiver or liquidator of
the Financial Partner or of all or any substantial part
of its property, the appointment shall not have been
vacated or stayed if within sixty (60) days after the
expiration of any such stay, the appointment shall not
have been vacated.
Notwithstanding the foregoing, the Partnership shall not be
dissolved upon the occurrence of an event specified in (iii)
through (vi) of this Section 10.1 if within ninety (90) days
after such occurrence a majority in interest (under applicable
federal income tax principles) of the remaining Partners agree in
writing to continue the business of the Partnership and to the
appointment, effective as of the date of withdrawal, of a
successor Financial Partner.
10.2 Accounting on Dissolution. Following the
dissolution of the Partnership pursuant to Section 10.1 of this
Agreement, the books of the Partnership shall be closed, and a
proper accounting of the Partnership's assets, liabilities and
operations shall be made by the Financial Partner, all as of the
most recent practicable date. The Financial Partner shall serve
as the liquidator of the Partnership unless it has been removed
or unless it otherwise fails or refuses to serve. If the
Financial Partner does not serve as the liquidator, one or more
other persons or entities may be selected to serve by the
Operating Partner. The expenses incurred by the liquidator in
connection with the dissolution, liquidation and termination of
the Partnership shall be borne by the Partnership.
10.3 Termination. As expeditiously as practicable, but
in no event later than one year (except as may be necessary to
realize upon any material amount of property that may be
illiquid), after the dissolution of the Partnership pursuant to
Section 10.1 of this Agreement, the liquidator shall cause the
Partnership to pay the current liabilities of the Partnership and
(i) establish a reserve fund (which may be in the form of cash or
other property, as the liquidator shall determine) for any and
all other liabilities, including contingent liabilities, of the
Partnership in a reasonable amount determined by the liquidator
to be appropriate for such purposes or (ii) otherwise make
adequate provision for such other liabilities. To the extent
that cash required for the foregoing purposes is not otherwise
available, the liquidator may sell property, if any, of the
Partnership for cash. Thereafter, all remaining cash or other
property, if any, of the Partnership shall be distributed to the
Partners in accordance with the provisions of Section 6.1 of this
Agreement. The Partners must agree on the value and distributee
for all in-kind distributions or else all property must be sold
and the proceeds distributed in accordance herewith. At the time
final distributions are made in accordance with Section 6.1 of
this Agreement, a certificate of cancellation shall be filed in
accordance with the Act, and the legal existence of the
Partnership shall terminate, but if at any time thereafter any
reserved cash or property is released because in the judgment of
the liquidator the need for such reserve has ended, then such
cash or property shall be distributed in accordance with Section
6.1 of this Agreement.
10.4 No Negative Capital Account Obligation.
Notwithstanding any other provision of this Agreement to the
contrary, in no event shall any Partner who has a negative
capital account upon final distribution of all cash and other
property of the Partnership be required to restore such negative
account to zero.
10.5 No Other Cause of Dissolution. The Partnership
shall not be dissolved, or its legal existence terminated, for
any reason whatsoever except as expressly provided in this
Article 10.
10.6 Merger. Subject to the rights of the Partners
pursuant to Section 9.2, the Partnership may, with the written
consent of the Financial Partner acting with the unanimous
approval of the Management Committee, adopt a plan of merger and
engage in any merger permitted by applicable law.
ARTICLE 11
Miscellaneous
11.1 Waiver of Partition. Each Partner hereby
irrevocably waives any and all rights that he or it may have to
maintain an action for partition of any of the Partnership's
property.
11.2 Entire Agreement. This Agreement constitutes the
entire agreement among the Partners with respect to the subject
matter hereof and supersedes any prior agreement or understanding
among them with respect to such subject matter.
11.3 Severability. If any provision of this Agreement,
or the application of such provision to any person or
circumstance, shall be held invalid under the applicable law of
any jurisdiction, the remainder of this Agreement or the
application of such provision to other persons or circumstances
or in other jurisdictions shall not be affected thereby. Also,
if any provision of this Agreement is invalid or unenforceable
under any applicable law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such law. Any provision
hereof that may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other
provision hereof.
11.4 Notices. All notices, requests, demands, and
other communications hereunder shall be in writing and shall be
deemed to have been duly given if sent by overnight courier, hand
delivered, mailed (first class registered mail or certified mail,
postage prepaid), or sent by telex or telecopy if to the
Partners, at the addresses or telex or facsimile numbers set
forth on Schedule I hereto, and if to the Partnership, at the
address of its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (fax 214/▇▇▇-▇▇▇▇), or to such
other address as the Partnership or any Partner shall have last
designated by notice to the Partnership and all other parties
hereto in accordance with this Section 11.4. Notices sent by
hand delivery shall be deemed to have been given when received;
notices mailed in accordance with the foregoing shall be deemed
to have been given three days following the date so mailed;
notices sent by telex or telecopy shall be deemed to have been
given when electronically confirmed; and notices sent by
overnight courier shall be deemed to have been given on the next
business day following the date so sent.
11.5 Governing Laws. This Agreement shall be governed
by and construed and enforced in accordance with the laws of the
State of Texas (without regard to principles of conflicts of
laws).
11.6 Successors and Assigns. Except as otherwise
specifically provided, this Agreement shall be binding upon and
inure to the benefit of the Partners and their respective
successors and permitted assigns.
11.7 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall constitute one and
the same instrument.
11.8 Headings. The section and article headings in
this Agreement are for convenience of reference only and shall
not be deemed to alter or affect the meaning or interpretation of
any provision hereof.
11.9 Other Terms. All references to "Articles" and
"Sections" contained in this Agreement are, unless specifically
indicated otherwise, references to articles, sections,
subsections, and paragraphs of this Agreement. Whenever in this
Agreement the singular number is used, the same shall include the
plural where appropriate (and vice versa), and words of any
gender shall include each other gender where appropriate. As
used in this Agreement, the following words or phrases shall have
the meanings indicated: (i) "or" shall mean "and/or", (ii) "day"
shall mean a calendar day, (iii) "including" or "include" shall
mean "including without limitation", and (iv) "law" or "laws"
shall mean statutes, regulations, rules, judicial orders, and
other legal pronouncements having the effect of law. Whenever
any provision of this Agreement requires or permits a Partner to
take or omit to take any action, or make or omit to make any
decision, unless the context clearly requires otherwise, such
provision shall be interpreted to authorize an action taken or
omitted, or a decision made or omitted, by the Partner acting
alone and in good faith.
11.10 Power of Attorney. By execution of this
Agreement, the Operating Partner hereby makes, constitutes and
appoints the Financial Partner, with full power of substitution
and re-substitution in the Financial Partner (in its sole
discretion), such Partner's true and lawful attorney-in-fact (the
"Attorney") for and in the Operating Partner's name, place and
stead and for its use and benefit, to prepare, execute, certify,
acknowledge, swear to, file, deliver or record any or all of the
following, authorized pursuant to the terms of this Agreement:
(i) any agreement, certificate, report,
consent, instrument, filing or writing made by or
relating to the Partnership that the Attorney deems
necessary, desirable, or appropriate for the lawful
purpose of (A) organizing the Partnership under the
Act, (B) admitting Partners with respect to the
Partnership, (C) pursuing or effecting any rights or
remedies available under this Agreement or otherwise
with respect to a defaulting Partner, (D) qualifying
the Partnership to do business in any jurisdiction and
(E) complying with any law, agreement or obligation
applicable to the Partnership;
(ii) any agreement, certificate, report,
consent, instrument, filing or writing made by or
relating to the Partnership necessary, desirable or
appropriate to effectuate the business purposes of, or
the dissolution, termination or liquidation of, the
Partnership pursuant to applicable law or the
respective terms of this Agreement; and
(iii) any amendment to or modification
or restatement of this Agreement or any other
agreement, certificate, report, consent, instrument,
filing or writing of any type described in subsection
(i) or (ii) of this Section 11.10, provided that any
amendment of or modification to this Agreement shall
first have been adopted in accordance with Article 9 of
this Agreement.
11.11 Transfer and Other Restrictions. INTERESTS
IN THE PARTNERSHIP HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD UNLESS
SUCH INTERESTS HAVE BEEN REGISTERED UNDER SUCH ACT OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. INTERESTS IN THE
PARTNERSHIP ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER,
VOTING AND OTHER TERMS AND CONDITIONS SET FORTH IN (1) ARTICLE 7
AND (2) VARIOUS INVESTMENT AGREEMENTS BETWEEN OR AMONG CERTAIN
PARTNERS. COPIES OF SUCH AGREEMENTS MAY BE OBTAINED FROM THE
PARTNERSHIP OR THE FINANCIAL PARTNER AT THEIR PRINCIPAL EXECUTIVE
OFFICES.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have executed this
instrument effective as of the Effective Date.
FINANCIAL PARTNER:
OLY ABC WEST I, L.P.,
a Texas limited partnership
By: Oly Texas ▇▇ ▇▇, LLC,
a Texas limited liability company,
its sole general partner
By:/S/ ▇▇▇ ▇. ▇▇▇▇
---------------
Name: ▇▇▇ ▇. ▇▇▇▇
Title:Vice President
OPERATING PARTNER:
STRATUS ABC WEST I, L.P.,
a Texas limited partnership
By: STRS L.L.C.,
a Delaware limited liability company,
General Partner
By: Stratus Properties Inc.,
a Delaware corporation,
its sole member
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ III
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III,
President & CEO
EXHIBIT A
Business Plan
[ATTACHED]
EXHIBIT B
Operating Budget
[To be attached within sixty (60) days of the Effective Date
and to encompass the 1999 Operating Budget]
SCHEDULE I
Partnership Capital Contributions and Sharing Ratios
Initial Capital Sharing
Partner and Address Contribution Ratios
Financial Partner:
Oly ABC West I, L.P. $494,250.00 50.01%
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Operating partner:
Stratus ABC West I, L.P. $494,250.00 49.99%
▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
------------ --------
Total All Partners $988,500.00 100.00%
