Exhibit 3.23d
AGREEMENT OF LIMITED PARTNERSHIP
OF
▇▇▇▇▇▇ ENTERPRISES, L.P.
AGREEMENT OF LIMITED PARTNERSHIP
OF
▇▇▇▇▇▇ ENTERPRISES, L.P.
TABLE OF CONTENTS
Page
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ARTICLE 1................................................................ 1
1.1 Definitions........................................................ 1
1.2 References......................................................... 7
ARTICLE 2................................................................ 7
2.1 Formation of the Limited Partnership............................... 7
2.2 Partnership Name................................................... 7
2.3 Purpose............................................................ 8
2.4 Principal and Registered Office.................................... 8
2.5 Term of the Partnership............................................ 8
ARTICLE 3................................................................ 8
3.1 Initial Capital Contribution of General Partner.................... 8
3.2 Initial Capital Contribution of Limited Partners................... 8
3.3 Authorization of Partner Loans..................................... 8
3.4 Additional Capital Contributions................................... 9
ARTICLE 4................................................................ 9
4.1 Distribution of Net Cash Flow...................................... 9
4.2 Distribution of Net Proceeds of a Capital Transaction.............. 9
4.3 Return of and Interest on Capital Contributions.................... 9
4.4 Payments........................................................... 9
4.5 In-Kind Distributions.............................................. 9
4.6 Allocations of Net Profit and Net Loss............................. 9
i
4.7 Partnership Minimum Gain Chargeback................................ 11
4.8 Minimum Gain Chargeback for Partner Nonrecourse Debt............... 11
4.9 Qualified Income Offset............................................ 11
4.10 Limit on Loss Allocations.......................................... 11
4.11 Net Loss from Partner Nonrecourse Debt............................. 12
4.12 Nonrecourse Deductions............................................. 12
4.13 Code Section 754 Adjustments....................................... 12
4.14 Reversal of Mandatory Allocations.................................. 12
4.15 Compliance with Code............................................... 12
4.16 Tax Allocations -- Code Section 704(c)............................. 12
4.17 Allocation on Transfer............................................. 13
4.18 Minimum Interest of General Partner................................ 13
ARTICLE 5................................................................ 13
5.1 Capital Accounts................................................... 13
5.2 Adjustment for In-Kind Distributions............................... 13
5.3 Property Revaluation............................................... 14
5.4 Interpretation..................................................... 14
5.5 Obligation to Repay or Restore..................................... 14
5.6 Tax Elections...................................................... 15
ARTICLE 6................................................................ 15
6.1 Operating Expenses and Reimbursements.............................. 15
ARTICLE 7................................................................ 15
7.1 Admission of Additional Partners................................... 15
7.2 Assignment or Transfer of Partnership Interests.................... 15
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ARTICLE 8................................................................ 16
8.1 Powers of General Partner.......................................... 16
8.2 Authority as to Third Persons...................................... 19
8.3 Compensation and Expenses of the General Partner................... 19
8.4 Covenants of the General Partner................................... 19
8.5 Limitations on Authority........................................... 19
8.6 No Withdrawal From Partnership..................................... 19
8.7 Officers........................................................... 19
ARTICLE 9................................................................ 20
9.1 Dissolution........................................................ 20
9.2 Continuation....................................................... 20
9.3 Events Affecting a Limited Partner................................. 20
9.4 Liquidation Procedures............................................. 20
9.5 Termination........................................................ 21
9.6 No Petition for Dissolution........................................ 21
9.7 Compliance with Timing Requirements of Treasury Regulations........ 22
ARTICLE 10............................................................... 22
10.1 Financial and Tax Accounting and Reports........................... 22
10.2 Valuation.......................................................... 22
10.3 Supervision; Inspection of Books................................... 22
10.4 Consent in Lieu of Meeting......................................... 22
10.5 Withholding........................................................ 22
ARTICLE 11............................................................... 23
11.1 Execution and Filing of Documents.................................. 23
11.2 Other Instruments and Acts......................................... 23
11.3 Binding Agreement.................................................. 23
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11.4 Governing Law...................................................... 23
11.5 Notices............................................................ 23
11.6 Power of Attorney.................................................. 23
11.7 Amendment.......................................................... 24
11.8 Entire Agreement................................................... 25
11.9 Titles; Subtitles.................................................. 25
11.10 Exculpation........................................................ 25
11.11 Indemnification of the General Partner............................. 25
11.12 Limitation of Liability of the Limited Partners.................... 25
11.13 Ambiguities........................................................ 25
11.14 No Right to Partition.............................................. 26
iv
AGREEMENT OF LIMITED PARTNERSHIP
OF
▇▇▇▇▇▇ ENTERPRISES, L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP, made and entered into as of this ___
day of April, 1999, by and between ▇▇▇▇▇▇ Enterprises Management, Inc., a Texas
corporation (the "General Partner") and Atlas Investments Inc., a Nevada
corporation (the "Limited Partner").
NOW, THEREFORE, the General Partner and the Limited Partner hereby agree to
the terms and conditions of this Agreement of Limited Partnership as follows:
ARTICLE 1.
DEFINITIONS; REFERENCES
1.1 Definitions. Unless the context requires otherwise, the following
terms shall have the meanings specified in this Section 1.1:
1.1.1 Act: The Texas Revised Limited Partnership Act.
1.1.2 Additional Capital Contributions: The additional capital
contributions described in Section 3.4.
1.1.3 Adjusted Capital Account Deficit: With respect to any Partner,
the deficit balance, if any, in such Partner's Capital Account as
of the end of the relevant taxable year, after giving effect to
the following adjustments:
(a) Credit to such Capital Account any amounts which such
Partner (1) is obligated to restore to the Partnership upon
liquidation of its interest in the Partnership (or which is
so treated pursuant to Regulations Section
1.704-1(b)(2)(ii)(c)) pursuant to the terms of this
Agreement or under state law or (2) is deemed to be
obligated to restore pursuant to the penultimate sentences
of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and
(3) the Partner's share (as determined under Code Section
752) of any recourse indebtedness of the Partnership to the
extent that such indebtedness could not be repaid out of the
Partnership's assets if all of the Partnership's assets were
sold at their respective Book Values as of the end of the
Fiscal Year or other period and the proceeds from the sales
were used to pay the Partnership's liabilities; and
(b) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5),
and 1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section
1.704-1(b)(2)(ii)(d) of the
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Regulations and shall be interpreted consistently therewith. For
purposes of clause (a)(3) above, the amounts computed pursuant to
clause (a)(1) above for each Partner shall be considered to be
proceeds from the sale of the assets of the Partnership to the
extent such amounts would be available to satisfy (directly or
indirectly) the indebtedness specified in clause (a)(3).
1.1.4 Affiliate: With respect to any Person, a Person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with the Person in
question. As used herein, 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 or interests, by
contract, or otherwise.
1.1.5 Agreement: This Agreement of Limited Partnership of ▇▇▇▇▇▇
Enterprises, L.P. and any amendments hereto.
1.1.6 Bankruptcy: A Person shall be deemed bankrupt if:
(a) any proceeding is commenced against such Person as "debtor"
for any relief under bankruptcy or insolvency laws, or laws
relating to the relief of debtors, reorganizations,
arrangements, compositions, or extensions and such
proceeding is not dismissed within sixty (60) days after
such proceeding has commenced, or
(b) such Person commences any proceeding for relief under
bankruptcy or insolvency laws or laws relating to the relief
of debtors, reorganizations, arrangements, compositions, or
extensions.
1.1.7 Book Value: With respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
(a) the initial Book Value of any asset contributed (or deemed
contributed under Regulations Section 1.708-1(b)(1)(iv)) by
a Partner to the Partnership shall be the asset's gross fair
market value at the time of the contribution;
(b) the Book Value of all Partnership assets shall be adjusted
to equal their respective gross fair market values, as
determined by the General Partner in its reasonable
judgment:
(i) if the General Partner reasonably determines an
adjustment is necessary or appropriate to reflect the
relative economic interests of the Partners in the
Partnership as of (1) the acquisition of an additional
interest in the Partnership by any new or existing
Partner in exchange for more than a de
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minimis capital contribution, or (2) the distribution
by the Partnership to a Partner of more than a de
minimis amount of Partnership property as consideration
for an interest in the Partnership; and
(ii) as of the liquidation of the Partnership within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g);
(c) the Book Value of any Partnership asset distributed to any
Partner will be the gross fair market value of the asset on
the date of distribution; and
(d) the Book Values of Partnership assets will be increased or
decreased to reflect any adjustment to the adjusted basis of
the assets under Code Sections 734(b) or 743(b), but only to
the extent that the adjustment is taken into account in
determining Capital Accounts under Regulations Section
1.704-1(b)(2)(iv)(m), provided that Book Values will not be
adjusted hereunder to the extent that the General Partner
determines that an adjustment under clause (b) is necessary
or appropriate in connection with a transaction that would
otherwise result in an adjustment under this clause (d).
After the Book Value of any asset has been adjusted under clause
(a), clause (b) or clause (d) above, Book Value will be adjusted
by the Depreciation taken into account with respect to the asset
for purposes of computing Net Profit and Net Loss.
1.1.8 Capital Account: The capital account of a Partner established
and maintained in accordance with Section 5.1.
1.1.9 Capital Contributions: With respect to any Partner, the amount
of money actually contributed (or deemed contributed pursuant to
Regulations Section 1.704-1(b)(2)(iv)(c)) to the Partnership and
the initial Book Value of any property (other than money)
contributed to the Partnership with respect to the interest in
the Partnership held by that Partner (net of any liabilities
secured by such property that the Partnership is considered to
assume or to take subject to Code Section 752). Any reference in
this Agreement to the Capital Contribution of a Partner will
include a Capital Contribution made by any prior Partner with
respect to the Partnership interest of the Partner.
1.1.10 Capital Transaction: The sale, exchange or other disposition of
all or any portion of the property of the Partnership other than
in the ordinary course of business of the Partnership. Capital
Transactions include the financing or refinancing of Partnership
property which creates excess funds not
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needed for Operations and which funds, in the opinion of the
General Partner, are available for distribution to the Partners.
1.1.11 Code: The United States Internal Revenue Code of 1986, as now
existing or hereafter amended. References to sections of the Code
include successor provisions to those sections.
1.1.12 Depreciation: For each taxable year or other period, an amount
equal to the depreciation, amortization or other cost recovery
deduction allowable with respect to an asset for the year or
other period, except that if the Book Value of an asset differs
from its adjusted basis for federal income tax purposes at the
beginning of the year or other period, Depreciation will be an
amount which bears the same ratio to the beginning Book Value as
the federal income tax depreciation, amortization or other cost
recovery deduction for the year or other period bears to the
beginning adjusted tax basis, provided that if the federal income
tax depreciation, amortization, or other cost recovery deduction
for the year or other period is zero, Depreciation will be
determined with reference to the beginning Book Value using any
reasonable method selected by the General Partner.
1.1.13 Fiscal Year: The period commencing on January 1 of each year
and ending on December 31 of such year.
1.1.14 General Partner: ▇▇▇▇▇▇ Enterprises Management, Inc., a Texas
corporation.
1.1.15 Gross Income: For each Fiscal Year or other period, an amount
equal to the Partnership's gross income as determined for federal
income tax purposes for such Fiscal Year or period but computed
with the adjustments specified in Section 1.1.20(a) and (c).
1.1.16 Initial Capital Contributions: The Capital Contributions of the
General Partner made pursuant to Section 3.1 and the Limited
Partners made pursuant to Sections 3.2 and 3.3.
1.1.17 Limited Partner: Atlas Investments Inc., a Nevada corporation,
and each Person who is admitted to the Partnership as a Limited
Partner and shown as a Limited Partner on the books and records
of the Partnership.
1.1.18 Net Cash Flow: All cash funds from operations of the
Partnership on hand or on deposit from time to time after (i)
payment of all operating expenses payable as of the date in
question, (ii) provision for payment of all outstanding and
unpaid Partnership obligations due and payable as of the date in
question or within sixty (60) days thereafter, and (iii) the
establishment of such reasonable reserves as the General Partner,
in its sole discretion, deems appropriate for the operating needs
of the Partnership. "Net Cash Flow" shall not include or reflect
any proceeds received or expenses incurred in connection with a
Capital Transaction.
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1.1.19 Net Proceeds of a Capital Transaction: The net proceeds
received by the Partnership in connection with a Capital
Transaction after payment of all costs and expenses incurred by
the Partnership in connection with such Capital Transaction,
including, without limitation, brokers' commissions, loan fees,
other closing costs, the cost of any alteration, improvement,
restoration or repair of Partnership assets necessitated by or
incurred in connection with such Capital Transaction, any
reserves that the General Partner believes in good faith should
be established and the payment of any loans owed by the
Partnership to any of the Partners, plus any other loans that
should be appropriately paid, as determined by the General
Partner in its reasonable discretion.
1.1.20 Net Profit and Net Loss: For each Fiscal Year or other period,
an amount equal to the Partnership's taxable income or loss for
such Fiscal Year or period, determined in accordance with Code
Section 703(a) (for this purpose, all items of income, gain, loss
or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss)
with the following adjustments:
(a) any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing
Net Profit or Net Loss shall be added to such taxable income
or loss;
(b) any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures under Regulations Section 1.704-1(b)(2)(iv)(i)
and not otherwise taken into account in computing Net Profit
or Net Loss shall be subtracted from such taxable income or
loss;
(c) gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized
for federal income tax purposes shall be computed by
reference to the Book Value of such property notwithstanding
that the Book Value of such asset differs from its adjusted
tax basis;
(d) gain or loss resulting from any adjustment pursuant to
Section 1.1.7(b) shall be taken into account as gain or loss
from disposition of the asset for purposes of computing Net
Profit or Net Loss hereunder;
(e) gain or loss resulting from any adjustment attributable to
an in-kind distribution of assets to any Partner pursuant to
Sections 5.2 shall be taken into account as gain or loss
from disposition of the asset for purposes of computing Net
Profit or Net Loss hereunder;
(f) in lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing taxable
income or loss,
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there shall be taken into account Depreciation for such
Fiscal Year or other period as determined under Regulations
Section 1.704- 1(b)(2)(iv)(g)(3);
(g) the amount of any Gross Income specially allocated to the
Partners pursuant to Sections 4.7 through 4.9 and 4.14 shall
not be included as income or revenue; and
(h) any amount allocated pursuant to Sections 4.11 through 4.14
shall not be included as a gain, loss or deduction.
1.1.21 Net Profit and Net Loss from Capital Transactions: Net Profit
and Net Loss including only those items of income, gain, loss and
deduction relating to Capital Transactions.
1.1.22 Net Profit and Net Loss from Operations: Net Profit and Net
Loss excluding those items of income, gain, loss and deduction
related solely to Capital Transactions.
1.1.23 Nonrecourse Deductions: Losses, deductions or Code Section
705(a)(2)(B) expenditures attributable to Nonrecourse Liabilities
of the Partnership. The amount of Nonrecourse Deductions for any
Fiscal Year or other period shall be determined in accordance
with the provisions of Regulations Section 1.704-2(c).
1.1.24 Nonrecourse Liability: A nonrecourse liability as defined in
Regulations Section 1.752-1(a)(2).
1.1.25 Operations: All operations and activities of the Partnership
other than those related to or consisting of a Capital
Transaction.
1.1.26 Partner: A Partner of the Partnership, including the General
Partner and the Limited Partner.
1.1.27 Partner Nonrecourse Debt: Any Nonrecourse Liability of the
Partnership for which any Partner or related person bears the
economic risk of loss under Regulations Section 1.752-2.
1.1.28 Partner Nonrecourse Debt Minimum Gain: The minimum gain
attributable to Partner Nonrecourse Debt as determined under
Regulations Section 1.704-2(i)(3).
1.1.29 Partner Nonrecourse Deductions: Partnership losses, deductions
or Code Section 705(a)(2)(B) expenditures attributable to a
particular Partner Nonrecourse Debt. The amount of Partner
Nonrecourse Deductions for any Fiscal Year or other period shall
be determined in accordance with the provisions of Regulations
Section 1.704-2(i)(2).
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1.1.30 Partnership: ▇▇▇▇▇▇ Enterprises, L.P., a Texas limited
partnership.
1.1.31 Partnership Certificate: The certificate of limited partnership
of the Partnership filed in conformance with the Act.
1.1.32 Partnership Minimum Gain: The amount computed under Regulations
Section 1.704-2(d)(1) with respect to the Partnership's
Nonrecourse Liabilities.
1.1.33 Partnership Percentage or Percentages: The percentages of the
Partners as follows:
General Partner .1%
Limited Partner 99.9%
1.1.34 Partnership Term: The period of duration of the Partnership, as
set forth in Section 2.5.
1.1.35 Person: Any individual, partnership, corporation, trust or
other legal entity.
1.1.36 Regulations: The Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
1.1.37 Tax Matters Partner: The General Partner.
1.1.38 Transfer: Any sale, assignment, transfer, lease or other
disposal of property, including without limitation, an interest
in the Partnership.
1.2 References. Unless otherwise specified herein, references in this
Agreement to "Section," "Subsection," "Article," or "Exhibit" refer to
the sections, subsections, articles, or exhibits in this Agreement.
ARTICLE 2.
FORMATION, NAME, PURPOSE, REGISTERED OFFICE,
REGISTERED AGENT AND TERM
2.1 Formation of the Limited Partnership. The General Partner and the
Limited Partner hereby form the Partnership as a limited partnership
pursuant to and in accordance with the provisions of the Act.
2.2 Partnership Name. The business of the Partnership will be conducted
under the name ▇▇▇▇▇▇ Enterprises, L.P. or such other name or names as
the General Partner may determine.
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2.3 Purpose. The purpose of the Partnership is to (i) manufacture and
distribute concrete and related products, (ii) own, manage, operate,
mortgage, sell and otherwise deal with the assets of the Partnership;
and, (iii) engage in such other activities as the General Partner
shall deem appropriate, to the extent such activities may be carried
on under applicable law and are not prohibited by the terms and
provisions of this Agreement.
2.4 Principal and Registered Office. The principal office of the
Partnership is at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇.▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
The General Partner has a business office at the Partnership's
principal office. The registered office of the Partnership is at ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇ ▇▇▇▇▇▇▇ is the registered
agent of the Partnership. The General Partner may change the principal
or registered office or registered agent of the Partnership from time
to time. The General Partner may establish, maintain and abandon one
or more additional places of business for the Partnership.
2.5 Term of the Partnership. The term of the Partnership shall commence
upon the filing and recording of the Partnership Certificate, and
shall continue until December 31, 2050, unless earlier terminated
pursuant to the terms of this Agreement.
ARTICLE 3.
CAPITAL CONTRIBUTIONS; PARTNER LOANS
3.1 Initial Capital Contribution of General Partner. The General Partner
has contributed $1.00 to the Partnership. The General Partner shall
not otherwise be required to make additional contributions to the
Partnership except as provided in Sections 3.4 and 5.5.
3.2 Initial Capital Contribution of Limited Partners. The Limited Partner
has contributed $999.00 to the Partnership hereto. The Limited Partner
shall not be required to make additional contributions to the
Partnership except as specified in Sections 3.4 and 5.5.
3.3 Authorization of Partner Loans. Subject to the limitations herein and
to other agreements of the Partnership, the General Partner from time
to time may cause the Partnership to borrow required amounts from one
or more Partners or their Affiliates. Loans made by Partners or
Affiliates under this Section 3.3 will not be considered a
contribution to the capital of the Partnership, but will constitute
indebtedness of the Partnership to the advancing Partner or Affiliate,
payable from the first available net cash flow of the Partnership
unless otherwise agreed by the lending Partner or Affiliate and, to
the extent still unpaid, upon the termination and liquidation of the
Partnership. Each loan by a Partner or Affiliate will bear simple
interest compounded annually on the unpaid principal balance at the
interest rate approved by the General Partner. The Partners will not
be personally liable for loans made by Partners or Affiliates under
this Section 3.3 or
8
be obligated to make contributions to the capital of the Partnership
to repay those loans. Loans made by Partners or Affiliates under this
Section 3.3 will be payable only from the assets of the Partnership.
3.4 Additional Capital Contributions. The Partners may make Additional
Capital Contributions to the Partnership from time to time as may be
required to meet the demands of the business of the Partnership. The
Partners shall contribute such Additional Capital Contributions in
cash in proportion to the Partners' Partnership Percentages.
ARTICLE 4.
DISTRIBUTIONS AND ALLOCATIONS
4.1 Distribution of Net Cash Flow. Net Cash Flow shall be distributed
among the Partners in accordance with their Partnership Percentages at
such times and in such amounts as shall be determined by the General
Partner.
4.2 Distribution of Net Proceeds of a Capital Transaction. Net Proceeds of
a Capital Transaction shall be distributed among the Partners in
accordance with their Partnership Percentages at such times and in
such total amounts as shall be determined by the General Partner.
4.3 Return of and Interest on Capital Contributions. No Partner is
entitled to the return of his Capital Contributions or his Capital
Account or to be paid interest in respect of either his Capital
Account or any Capital Contribution made by him to the Partnership
except as provided in this Agreement.
4.4 Payments. The amount of any distribution or payment to a Partner
whether pursuant to Article 4 or Article 9 hereof may be made in cash
or in-kind or partially in cash and partially in-kind in the
reasonable discretion of the General Partner or the liquidating
trustees, as the case may be, less reasonable reserves established in
the reasonable discretion of the General Partner or the liquidating
trustees, as the case may be, for known or unknown liabilities of the
Partnership.
4.5 In-Kind Distributions. All distributions of assets in-kind shall be
made at Book Value as determined pursuant to Section 5.3 and shall be
distributed to the Partners in the same manner as a distribution of
Net Proceeds of a Capital Transaction would have been made if such
assets had been sold. The Net Profit or Net Loss resulting from
distribution will be allocated in accordance with Section 4.6.3 or
Section 4.6.4, as the case may be.
4.6 Allocations of Net Profit and Net Loss.
4.6.1 Net Profit From Operations.
(a) If any Net Loss has been allocated to the Partners pursuant
to Section 4.6.2 or Section 4.6.4, then Net Profit from
Operations
9
shall first be allocated to the Partners, in the same
proportions as such Net Loss was allocated, until each
Partner's Capital Account balance equals what it would have
been had there been no such allocation of Net Loss.
(b) After any allocation required pursuant to Section 4.6.1(a),
Net Profit from Operations shall be allocated among the
Partners in accordance with their Partnership Percentages.
4.6.2 Net Loss From Operations.
(a) If any Net Profit has been allocated to the Partners
pursuant to Section 4.6.1 or Section 4.6.3, then Net Loss
from Operations shall first be allocated to the Partners, in
the same proportions as such Net Profit was allocated, until
each Partner's Capital Account balance equals what it would
have been had there been no such allocation of Net Profit.
(b) After any allocation required pursuant to Section 4.6.2(a)
Net Loss from Operations shall be allocated among the
Partners in proportion to their Capital Accounts until such
Capital Account balances equal zero.
(c) After any allocation required pursuant to Section 4.6.2(b),
Net Loss from Operations shall be allocated to the General
Partner.
4.6.3 Net Profit From Capital Transactions.
(a) If any Net Loss has been allocated to the Partners pursuant
to Section 4.6.2 or Section 4.6.4, then Net Profit from
Capital Transactions shall first be allocated to the
Partners, in the same proportions as such Net Loss was
allocated, until each Partner's Capital Account balance
equals what it would have been had there been no such
allocation of Net Loss.
(b) After any allocation required pursuant to Section 4.6.3(a),
Net Profit from Capital Transactions shall be allocated
among the Partners in accordance with their Partnership
Percentages.
4.6.4 Net Loss From Capital Transactions.
(a) If any Net Profit has been allocated to the Partners
pursuant to Section 4.6.1 or Section 4.6.3, then Net Loss
from Capital Transactions shall first be allocated to the
Partners, in the same proportions as such Net Profit was
allocated, until each Partner's Capital Account balance
equals what it would have been had there been no such
allocation of Net Profit.
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(b) After any allocation required pursuant to Section 4.6.4(a)
Net Loss from Capital Transactions shall be allocated among
the Partners in proportion to their Capital Accounts until
such Capital Account balances equal zero.
(c) After any allocation required pursuant to Section 4.6.4(b),
Net Loss from Capital Transactions shall be allocated to the
General Partner.
4.7 Partnership Minimum Gain Chargeback. Notwithstanding any other
provision of this Agreement to the contrary, if in any Fiscal Year or
other period there is a net decrease in the amount of the Partnership
Minimum Gain, then each Partner shall first be allocated items of
Gross Income for such year (and, if necessary, subsequent years) in an
amount equal to such Partner's share of the net decrease in such
Minimum Gain during such year (as determined under Regulations Section
1.7042(g)(2)); provided, however, if there is insufficient Gross
Income in a year to make the allocation specified above for all
Partners for such year, the Gross Income shall be allocated among the
Partners in proportion to the respective amounts they would have been
allocated had there been an unlimited amount of Gross Income for such
year.
4.8 Minimum Gain Chargeback for Partner Nonrecourse Debt. Notwithstanding
any other provision of this Agreement to the contrary other than
Section 4.7, if in any year there is a net decrease in the amount of
the Partner Nonrecourse Debt Minimum Gain, then each Partner shall
first be allocated items of Gross Income for such year (and, if
necessary, subsequent years) in an amount equal to such Partner's
share of the net decrease in such Minimum Gain during such year (as
determined under Regulations Section 1.704-2(i)(4)); provided,
however, if there is insufficient Gross Income in a year to make the
allocation specified above for all Partners for such year, the Gross
Income shall be allocated among the Partners in proportion to the
respective amounts they would have been allocated had there been an
unlimited amount of Gross Income for such year.
4.9 Qualified Income Offset. Notwithstanding any other provision of this
Agreement to the contrary (except Sections 4.7 and 4.8 which shall be
applied first), if in any Fiscal Year or other period a Partner
unexpectedly receives an adjustment, allocation or distribution
described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6),
such Partner will be specially allocated items of Gross Income in an
amount and manner sufficient to eliminate, to the extent required by
the Regulations, the Adjusted Capital Account Deficit of such Partner
as quickly as possible.
4.10 Limit on Loss Allocations. Notwithstanding the provisions of Section
4.6.2, 4.6.4 or any other provision of this Agreement to the contrary,
Net Loss (or items thereof) shall not be allocated to a Partner if
such allocation would cause or increase such Partner's Adjusted
Capital Account Deficit and shall be reallocated to the other
Partners, subject to the limitations of this Section 4.10.
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4.11 Net Loss from Partner Nonrecourse Debt. Any Net Loss or deductions
attributable to Partner Nonrecourse Debt shall be allocated to the
Partner who bears the economic risk of loss with respect to such debt.
4.12 Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year or
other period shall be allocated among the Partners in accordance with
their Partnership Percentages.
4.13 Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset under Code Sections 734(b)
or 743(b) is required to be taken into account in determining Capital
Accounts under Regulations Section 1.704-1(b)(2)(iv)(m), the amount of
the adjustment to the Capital Accounts will be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases the basis), and the gain or loss will be
specially allocated to the Partners in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted
under Regulations Section 1.704-1(b)(2)(iv)(m).
4.14 Reversal of Mandatory Allocations. In the event that any Gross Income
or Net Loss is allocated pursuant to Section 4.7 through 4.10,
subsequent Gross Income, Net Profit or Net Loss (or items thereof)
will first be allocated (subject to Sections 4.7 through 4.10) to the
Partners in a manner which will result in each Partner having a
Capital Account balance equal to that which would have resulted had
the original allocation of Gross Income or Net Loss (or items thereof)
pursuant to Sections 4.7 through 4.10 not occurred.
4.15 Compliance with Code. The foregoing provisions of this Agreement
relating to the allocation of Net Profit and Net Loss are intended to
comply with Regulations under Section 704(b) of the Code and shall be
interpreted and applied in a manner consistent with such Regulations.
4.16 Tax Allocations -- Code Section 704(c). In accordance with Code
Section 704(c) and the related Regulations, income, gain, loss and
deduction with respect to any property contributed to the capital of
the Partnership, solely for tax purposes, will be allocated among the
Partners so as to take account of any variation between the adjusted
basis to the Partnership of the property for federal income tax
purposes and the initial Book Value of the property. If the Book Value
of any Partnership asset is adjusted under Section 1.1.7, subsequent
allocations of income, gain, loss and deduction with respect to that
asset will take account of any variation between the adjusted basis of
the asset for federal income tax purposes and its Book Value in the
same manner as under Code Section 704(c) and the related Regulations.
Any elections or other decisions relating to allocations under this
Section 4.16 will be made in any manner that the General Partner
determines reasonably reflects the purpose and intention of this
Agreement. Allocations under this Section 4.16 are solely for purposes
of federal, state and local taxes and will not affect, or in any way
be taken into account in computing, any Partner's Capital
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Account or share of Net Profit, Net Loss or other items or
distributions under any provision of this Agreement.
4.17 Allocation on Transfer. If any interest in the Partnership is
transferred, or is increased or decreased by reason of the admission
of a new Partner or otherwise, during any Fiscal Year, the Partnership
shall make an interim closing of its books as of the effective date of
such date of transfer or admission and shall allocate Net Income or
Net Loss or items thereof based on such interim closing. All transfers
of interests or admissions or exclusions of Partners occurring at any
time during a month shall be deemed effective as of the opening of
business on the first day of the subsequent month.
4.18 Minimum Interest of General Partner. Notwithstanding any indication to
the contrary, the General Partner's interest in each item of
Partnership income, gain, loss, deduction and credit shall be not less
than .1%, except as otherwise required pursuant to Section 704(b) or
Section 704(c) of the Code.
ARTICLE 5.
CAPITAL ACCOUNTS
5.1 Capital Accounts. A separate capital account ("Capital Account") shall
be maintained for each Partner. There shall be credited to each
Partner's Capital Account the amount of any cash actually contributed
by such Partner to the capital of the Partnership (or deemed
contributed pursuant to Regulations Section 1.704-1(b)(2)(iv)(c)), the
Book Value of any property contributed by such Partner to the capital
of the Partnership (net of any liabilities secured by such property
that the Partnership is considered to assume or to take subject to
under Code Section 752), such Partner's share of the Net Profit (and
all items in the nature of income or gain that are specially allocated
to the Partner under Article 4 hereof) of the Partnership and the
amount of any Partnership liabilities that are assumed by the Partner
or secured by any Partnership property distributed to the Partner.
There shall be charged against each Partner's Capital Account the
amount of all cash distributed to such Partner by the Partnership (or
deemed distributed pursuant to Regulations Section
1.704-1(b)(2)(iv)(c)), the Book Value of any property distributed to
such Partner by the Partnership (net of any liability secured by such
property that the Partner is considered to assume or take subject to
under Code Section 752), such Partner's share of the Net Loss (and all
items in the nature of deduction or loss that are specially allocated
to the Partner under Article 4 hereof) of the Partnership and the
amount of any liabilities of the Partner assumed by the Partnership or
which are secured by any property contributed by the Partner to the
Partnership.
5.2 Adjustment for In-Kind Distributions. If the Partnership at any time
distributes any of its assets in-kind to any Partner, the Capital
Account of each Partner shall be adjusted as contemplated by Section
4.5, as applicable, to account for that Partner's allocable share (as
determined under Article 4 above) of the Net Profit
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or Net Loss that would have been realized by the Partnership had it
sold the assets distributed for their respective fair market values
immediately prior to their distribution.
5.3 Property Revaluation. The Capital Accounts shall be adjusted to
reflect a revaluation of Partnership property to its fair market value
on the date of adjustment upon the occurrence of any of the following
events:
5.3.1 an increase in any new or existing Partner's Partnership
Percentage resulting from the contribution of money or property
by such Partner to the Partnership including a conversion of debt
into Partnership interests,
5.3.2 any reduction in a Partner's Partnership Percentage resulting
from a distribution to such Partner in consideration of all or
part of his Partnership interest, unless such distribution is pro
rata to all Partners in accordance with their respective
Partnership Percentages, and
5.3.3 whenever else allowed under Regulations Section
1.704-1(b)(2)(iv)(f).
The adjustments to Capital Accounts shall reflect the manner in
which the unrealized Net Profit or Net Loss inherent in the
property would be allocated if there were a disposition of the
Partnership's property at its fair market value on the date of
adjustment.
5.4 Interpretation. It is the intention of the Partners that the Capital
Accounts be maintained strictly in accordance with the capital account
maintenance requirements of Regulations under Code Section 704(b). The
foregoing provisions and the other provisions of this Agreement
relating to the maintenance of the Capital Accounts are intended to
comply with such Regulations and shall be interpreted and applied in a
manner consistent with such Regulations and any amendment or successor
provision thereto. The General Partner also shall make any appropriate
modifications if unanticipated events might otherwise cause this
Agreement not to comply with the Regulations, so long as such changes
would not cause a material change in the relative economic benefits of
the Partners under this Agreement.
5.5 Obligation to Repay or Restore. If the Limited Partner has received
distributions of Net Cash Flow or Net Proceeds of a Capital
Transaction, it may be obligated under the Act to repay or restore to
the Partnership all or a portion of the amount received if such
distributions cause the fair market value of the Partnership's assets
to be less than the Partnership's liabilities. Subject to the
foregoing requirement, the Limited Partner shall not be required to
pay to the Partnership or to any other Partner any deficit or negative
balance which may exist from time to time in its Capital Account;
provided, however, in the event the Limited Partner erroneously
receives distributions in excess of his interest in such distributions
as specified in Sections 4.1, 4.2 and 4.3 hereof ("Excess
Distributions"), then, as between the Partners but not for the benefit
of other Persons, such Partner shall be
14
indebted to the Partnership for such Excess Distributions, and such
indebtedness shall be payable on terms or on demand as may be
prescribed by the General Partner. The General Partner shall
contribute, prior to the dissolution and liquidation of the
Partnership, an amount equal to the lesser of (a) an amount which will
cause the total Capital Contributions made by the General Partner
during the Partnership Term to equal one-tenth of one percent (.1%) of
the total Capital Contributions made to the Partnership (including the
Capital Contribution to be made by the General Partner pursuant to
this Section 5.5), or (b) the deficit balance in its Capital Account
as of the date of such dissolution and liquidation.
5.6 Tax Elections. The General Partner is authorized, in its reasonable
discretion, to make all elections permitted or required of the
Partnership under Regulations Section 1.704-1, Code Section 754 and
any other provisions of the Code.
ARTICLE 6.
OPERATING EXPENSES
6.1 Operating Expenses and Reimbursements. The Partnership shall bear (or
reimburse the General Partner for its payment of) all costs and
expenses of every kind and description incurred in connection with the
organization, operation, liquidation and dissolution of the
Partnership including, but not limited to, travel expenses, fees of
consultants, accountants, and attorneys, fees and expenses of the
preparation of quarterly unaudited financial statements, the annual
audit, if any, and tax returns of the Partnership, interest on
indebtedness of the Partnership, and fees and expenses incurred in any
litigation by or against the Partnership.
ARTICLE 7.
ADMISSION OF PARTNERS; ASSIGNMENT OF INTERESTS
7.1 Admission of Additional Partners. Without the written consent of all
Partners, no additional partners shall be admitted to the Partnership.
7.2 Assignment or Transfer of Partnership Interests. Without the written
consent of all Partners, no Partner shall sell, assign, pledge,
mortgage, or otherwise dispose of or Transfer, in whole or in part,
its Partnership interest or its share of the Partnership's capital,
assets or property or enter into any agreement, the result of which
would be for another Person to become directly or indirectly
interested in the Partnership.
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ARTICLE 8.
MANAGEMENT DUTIES AND RESTRICTIONS
8.1 Powers of General Partner.
8.1.1 General Authority of the General Partner. The business and
affairs of the Partnership will be managed exclusively by the
General Partner. Except as otherwise expressly provided in this
Agreement with respect to matters requiring the approval of the
Limited Partner, all determinations relating to the business and
affairs of the Partnership will be made by the General Partner in
its sole discretion and will not give rise to any right or claim
by any Partner or the Partnership unless made in violation of an
express provision of this Agreement. Except as otherwise provided
herein, the General Partner will have complete authority to take,
in its own name or in the name of the Partnership, any action
that the General Partner determines to be appropriate under this
Agreement or for the conduct of the business of the Partnership,
including without limitation the actions specified in Section
8.1.2. All decisions and actions taken by the General Partner
under the authority of this Section 8.1 will be binding upon all
of the Partners and the Partnership.
8.1.2 Specific Authority of General Partner. Except as otherwise
expressly set forth in this Agreement, the General Partner shall
have all rights and powers of a general partner under the Act.
Subject to the limitations contained in Section 8.1.3, the
authority of the General Partner to manage the business and
affairs of the Partnership will include complete authority:
(a) To acquire, dispose of, lease or exchange assets of the
Partnership;
(b) To borrow money or otherwise create or assume indebtedness
for the Partnership;
(c) To create an Encumbrance on all or any part of the
Partnership's assets in order to secure loans or advances to
or assumed by the Partnership or any Person in which the
Partnership has a direct or indirect interest, or any
obligation of the Partnership or any Person in which the
Partnership has a direct or indirect interest, or for any
other Partnership purpose;
(d) To execute and deliver for the Partnership agreements and
other instruments (including, without limitation,
instruments creating an Encumbrance on Partnership assets)
for any purpose authorized by clause (c), including without
limitation agreements and instruments in connection with
loans or the Transfer of assets of the Partnership;
16
(e) To collect all income of the Partnership and to satisfy all
obligations of the Partnership, including without limitation
expenses of the General Partner relating to the Partnership
described in Article 6 and Section 8.4 and the
indemnification obligations arising under Section 11.11;
(f) To prepare or cause to be prepared and file all tax returns
for the Partnership (but not the tax returns or other
reports of the Partners);
(g) To make all tax elections for the Partnership, including
without limitation any special basis adjustments under
Section 754 of the Code, provided that the Partner
requesting any Section 754 election must agree to reimburse
the Partnership for any costs incurred by the Partnership in
making the election or in maintaining or preparing any
additional records or reports in connection with the
election;
(h) To prosecute, defend and settle legal, arbitration or
administrative proceedings on behalf of or against the
Partnership;
(i) To manage and maintain the assets of the Partnership or any
Person in which the Partnership has a direct or indirect
interest;
(j) To establish separate bank accounts for the deposit of
monies received on behalf of the Partnership and to disburse
all funds on deposit on behalf of the Partnership in amounts
and at times as required in connection with the business of
the Partnership;
(k) To procure and maintain insurance against risks and in
amounts determined to be appropriate by the General Partner,
including without limitation insurance under which the
General Partner and its partners, agents and affiliates are
insureds;
(l) To advance funds of the Partnership to any Person in which
the Partnership has a direct or indirect interest;
(m) To do or cause to be done any other act which the General
Partner considers to be appropriate to carry out any of its
powers or in furtherance of the purposes or character of the
Partnership;
(n) To establish such reserves from Partnership funds as the
General Partner, in its sole discretion, may deem necessary
or advisable for Partnership operations and for the payment
of Partnership obligations;
(o) To exercise all rights, powers, privileges and other
incidents of ownership or possession with respect to any
Partnership assets,
17
including, without limitation, voting equity or debt
securities held by the Partnership;
(p) To consult with legal counsel, independent public
accountants, real estate brokers and other consultants
selected by the General Partner on behalf of the
Partnership;
(q) To take all action which may be necessary or appropriate for
the continuation of the Partnership's valid existence as a
limited partnership under the laws of the State of Texas and
of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Limited
Partner or to enable the Partnership to conduct the business
in which it is engaged;
(r) To resolve, in its sole discretion, any ambiguity regarding
the application of any provision of this Agreement in the
manner it deems equitable, practicable and consistent with
this Agreement and applicable law; and,
(s) To do such other acts as the General Partner may deem
necessary or advisable, or as may be incidental to or
necessary for the conduct of the business of the
Partnership.
8.1.3 Actions Requiring Limited Partner Approval. Notwithstanding
Section 8.1.2, the General Partner may not, without the written
consent of the Limited Partner take or commit to take any of the
following actions:
(a) Transfer all or substantially all of the Partnership's
assets, whether in one transaction or a series of related
transactions;
(b) Effect the reorganization, merger or consolidation of the
Partnership with any other entity.
(c) Any act in contravention of this Agreement;
(d) Any act which would make it impossible to carry on the
ordinary business of the Partnership, other than a Transfer
of all or substantially all of the assets of the Partnership
authorized under Section 8.1.3(a) or a reorganization,
merger or consolidation authorized under Sections 8.1.3(b);
(e) Confess a judgment against the Partnership except in
connection with the settlement of an action or proceeding;
or,
(f) Incur any debt, on behalf of the Partnership or otherwise,
for which the Limited Partner shall be directly or
personally liable to any extent.
18
8.2 Authority as to Third Persons. Notwithstanding Section 8.1.3, the
signed statement of the General Partner reciting that it has the
authority or necessary approval of the Limited Partner for any action,
as to any third Person, will be conclusive evidence of the authority
of the General Partner to take that action and of compliance with
Section 8.1.3, if applicable. The Limited Partner will promptly
execute instruments determined by the General Partner to be
appropriate to evidence the authority of the General Partner to
consummate any transaction permitted by this Agreement.
8.3 Compensation and Expenses of the General Partner. The General Partner
will not receive any compensation from the Partnership for serving as
General Partner, but all expenses incurred by the General Partner in
connection with its service as General Partner (including without
limitation charges for legal, accounting, data processing,
administrative, executive, tax and other services rendered) will be
paid or promptly reimbursed by the Partnership. Nothing contained in
this Section 8 is intended to affect the distributions to the General
Partner or the amounts that may be payable to the General Partner by
reason of its interest in the Partnership.
8.4 Covenants of the General Partner. The General Partner shall devote
such time, effort, and attention as may be reasonably necessary,
advisable, or appropriate to manage and direct the operations,
business and affairs of the Partnership.
8.5 Limitations on Authority. The authority of the General Partner over
the conduct of the operations, business, and affairs of the
Partnership shall be subject only to the Act and such further
limitations as are expressly stated in this Agreement.
8.6 No Withdrawal From Partnership. Except as contemplated by this
Agreement, no Partner may withdraw from the Partnership at any time.
8.7 Officers. The General Partner may, from time to time, designate one or
more individuals to be an officer of the Partnership. Any officer so
designated shall have such authority and perform such duties as the
General Partner may, from time to time, delegate to such officer. Each
officer shall hold office until the earlier to occur of his or her
death, disability, resignation, removal by the General Partner or
replacement by the General Partner. The salaries or other
compensation, if any, of any officer of the Partnership shall be fixed
from time to time by the General Partner. Subject to any contractual
requirements, any officer may resign as such as any time. Such
resignation shall be made in writing and shall take effect at the time
specified therein, or if no time be specified, 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 so provided in
the resignation. Any officer may be removed as such, either with or
without cause, by the General Partner whenever in its judgement the
best interests of the Partnership will be served thereby. Designation
of an officer shall not of itself create contract rights. Any vacancy
occurring in any officer position of the Partnership may be filled by
the General Partner.
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ARTICLE 9.
DISSOLUTION OF THE PARTNERSHIP
9.1 Dissolution. The Partnership shall be dissolved upon the happening of
any of the following events:
9.1.1 the expiration of the Partnership Term;
9.1.2 with the prior consent of the General Partner and the Limited
Partner;
9.1.3 an "Event of Withdrawal," as defined in the Act, of the General
Partner; and
9.1.4 the entry of a decree of judicial dissolution under Section 8.02
of the Act.
9.2 Continuation. Upon the occurrence of an event identified in Section
9.1.1 or 9.1.3, the business of the Partnership will be continued if
within 90 calendar days the Limited Partner elects by written action
to continue the business of the Partnership and designate one or more
Persons to be a General Partner of the Partnership. If the business of
the Partnership is continued, the interest of the General Partner will
be converted to that of a limited partner. If the Limited Partner
fails to continue the Partnership's business as provided in this
Section 9.2, the Partnership will be liquidated under Section 9.4.
9.3 Events Affecting a Limited Partner. The Bankruptcy, liquidation,
dissolution, reorganization, merger, sale of substantially all the
stock or assets of, or other change in the ownership or nature of the
Limited Partner shall not dissolve the Partnership.
9.4 Liquidation Procedures.
9.4.1 Upon dissolution of the Partnership the General Partner or, if
there is no General Partner, such Person or Persons as the
Limited Partner shall designate as liquidating trustees shall
commence immediately to wind up the affairs of the Partnership.
The General Partner or such liquidating trustees shall use their
best judgment as to when to dispose of the Partnership's assets
or to make distributions in-kind in order to maximize the return
to the Partners from such assets.
9.4.2 The assets of the Partnership remaining after payment of the
costs and expenses of winding up shall be applied in the
following priority:
(a) To payment of the costs and expenses of the winding up,
liquidation and termination of the Partnership;
20
(b) To the creditors of the Partnership, other than Partners,
all amounts due them from the Partnership in the order of
priority established by law;
(c) To the Partners, all amounts due them in repayment of any
loans to the Partnership pursuant to Section 3.3;
(d) To the establishment of any reserves deemed appropriate by
the General Partner or liquidating trustees for any
liabilities or obligations of the Partnership, which
reserves will be held for the purpose of paying liabilities
or obligations and, at the expiration of a period the
General Partner or liquidating trustees deems appropriate,
will be distributed in the manner provided in Section
9.4.2(e); and,
(e) To the payment to the Partners of the positive balances in
their respective Capital Accounts, pro rata, in proportion
to the positive balances in those Capital Accounts after
giving effect to all allocations and distributions under
Article 4 for all prior periods, including the period during
which the process of liquidation occurs.
If the General Partner or the liquidating trustees, in their sole
discretion, deem it not feasible or desirable to liquidate to
each Partner its allocable share of each asset to be distributed
in-kind, the General Partner or the liquidating trustees may
allocate and distribute specific assets to one or more Partners
as the General Partner or the liquidating trustees shall
reasonably determine to be fair and equitable, taking into
consideration, among other things, the value of the assets, the
indebtedness secured by the assets and the tax consequences of
the proposed distribution upon each of the Partners. Any
distributions in-kind shall be subject to such conditions
relating to the disposition and management thereof as the General
Partner or the liquidating trustees deem reasonable and
equitable.
9.5 Termination. The Partnership shall terminate when all property owned
by the Partnership has been disposed of, and any proceeds from the
sale or other disposition of all of the Partnership property, after
payment of or provision for all liabilities to creditors of the
Partnership, has been distributed to the Partners.
9.6 No Petition for Dissolution. The Partners agree that irreparable
damage would be done to the goodwill and reputation of the Partnership
if any Partner should bring an action in any court to dissolve the
Partnership and to have a liquidator or receiver for the Partnership
appointed. Care has been taken in this Agreement to provide what the
parties feel is fair and just payment in liquidation of the interest
of all Partners. Accordingly, each Partner hereby waives and renounces
its right to file or pursue any such petition for dissolution of the
Partnership or the partition
21
of any Partnership property, or to seek the appointment by any court
of a liquidator or receiver for the Partnership.
9.7 Compliance with Timing Requirements of Treasury Regulations.
Notwithstanding anything in this Article 9 to the contrary, in the
event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions will be made
to the Partners who have positive Capital Account balances pursuant to
Section 9.4 in a manner that complies with Regulations Section 1.704-
1(b)(2)(ii)(b)(2). However, a liquidation occurring as a result of a
Partnership termination, as defined in Section 708(b)(1)(B) of the
Code, will not require an actual distribution of Partnership assets,
but will instead be treated as a constructive liquidation and
reformation in the manner described in Regulations Section 1.708-1
(b)(1)(iv).
ARTICLE 10.
FINANCIAL ACCOUNTING AND REPORTS
10.1 Financial and Tax Accounting and Reports. The tax returns of the
Partnership shall be filed on an accrual basis. The General Partner
shall cause the Partnership's tax returns to be prepared and a
Schedule K-1 or any successor form to be prepared and delivered in a
timely manner to each of the Partners. In the event of an income tax
audit of the Partnership or any judicial or administrative proceeding
in connection with the income tax returns of the Partnership, the Tax
Matters Partner shall be authorized to act for and, to the extent
provided by the Code, its decision shall be binding upon the
Partnership and the Partners. The books and records of the Partnership
shall be kept in accordance with the accrual method of accounting.
10.2 Valuation. The valuation of the assets of the Partnership for the
purpose of valuing distributions in-kind made pursuant to Section 4.5
or Section 9.4 of this Agreement and for any other purpose shall be
the fair market value as determined by the General Partner in good
faith, and such determination will be binding on the Partners.
10.3 Supervision; Inspection of Books. Proper and complete books of account
of the business of the Partnership shall be kept under the supervision
of the General Partner at the principal place of business of the
Partnership. Such books shall be open to inspection by the Limited
Partner, or its accredited representatives, at any reasonable time
during normal business hours.
10.4 Consent in Lieu of Meeting. Any action which may be taken by the
Partners at a meeting may be effected through the execution of written
consents by the requisite Partnership Percentage of the Partners.
10.5 Withholding. Notwithstanding any provision in this Agreement to the
contrary, the General Partner may withhold from any distribution or
amount due to the Limited Partner any amounts required to be withheld
pursuant to any applicable
22
federal, state, or local tax requirements, with such withheld amount
treated as if it was distributed to the Limited Partner. The
determination of the General Partner as to the necessity of such
withholding shall be binding upon the Limited Partner.
ARTICLE 11.
OTHER PROVISIONS
11.1 Execution and Filing of Documents. The General Partner and the Limited
Partner (or the General Partner as the Limited Partner's
attorney-in-fact) shall execute and file such certificates and other
documents as may be required by the Act and other applicable laws. The
General Partner shall cause the Partnership to be qualified, formed,
reformed or registered under the limited partnership laws, assumed or
fictitious name statutes or similar laws in any jurisdiction in which
the Partnership owns property or transacts business if such
qualification, formation, reformation or registration is necessary in
order to protect the limited liability of the Limited Partner or to
permit the Partnership lawfully to own property or transact business
as a limited partnership. The General Partner shall execute, file and
publish all such certificates, notices, statements or other
instruments appropriate to conduct the business of the Partnership and
to maintain the limited liability of the Limited Partner.
11.2 Other Instruments and Acts. The Partners agree to execute any other
instruments or perform any other acts that are or may be necessary to
effectuate and carry on the Partnership created by this Agreement.
11.3 Binding Agreement. This Agreement shall be binding upon and inure to
the benefit of the permitted transferees, successors, assigns, and
legal representatives of the Partners.
11.4 Governing Law. This Agreement shall be governed by and construed under
the laws of the State of Texas, without giving effect to the
principles of conflict of laws.
11.5 Notices. Any notice or other communication that one Partner desires to
give to another Partner or the Partnership or that the Partnership
desires to give to a Partner shall be in writing, and shall be deemed
effectively given upon (i) personal delivery, (ii) transmission by
facsimile or (iii) the third business day following deposit in any
United States mail box, by registered or certified mail, postage
prepaid, addressed, in the case of a Partner, to the Partner at the
address shown on the books and records of the Partnership or at such
other address as a Partner may designate by fifteen (15) days' advance
notice to the other Partners and, in the case of the Partnership, to
its principal office designated in Section 2.4.
11.6 Power of Attorney. The Limited Partner appoints the General Partner
its attorney-in-fact, with full power of substitution and
re-substitution, to execute in the Limited Partner's name and deliver:
23
(a) A Partnership Certificate and any amendments to the Partnership
Certificate that the General Partner deems appropriate;
(b) Any instrument that the General Partner deems appropriate in
order to qualify the Partnership to do business in any
jurisdiction and any other instrument relating to the
qualification or registration of the Partnership or the use of an
assumed or fictitious name that the General Partner deems
appropriate;
(c) All certificates and other instruments that may be appropriate to
effect the dissolution and termination of the Partnership under
Article 9;
(d) All reports, forms and schedules that the General Partner
determines appropriate to file with any governmental body in
connection with any Partnership activity;
(e) Any amendment to this Agreement appropriate to reflect the
Transfer of a Partnership interest permitted by this Agreement,
or the admission to, or withdrawal from, the Partnership of a
Partner permitted by this Agreement, the conversion of a General
Partner interest into a Limited Partner interest as provided in
this Agreement or any Capital Contribution permitted by this
Agreement; and,
(f) Any amendment to this Agreement authorized under Section 11.7.
The power of attorney granted under this Section 11.6 is coupled with
an interest and is irrevocable and will survive the death,
dissolution, bankruptcy and withdrawal from the Partnership of any
Partner or the Transfer of its Partnership interest.
11.7 Amendment.
11.7.1 Except for such amendments as result from the operation of the
various provisions of this Agreement, this Agreement may be
amended only with the written consent of the Limited Partner and
the General Partner.
11.7.2 The General Partner, acting alone, may make ministerial changes
in the Partnership Agreement for the purpose of correcting errors
and inconsistencies and to comply with federal, state and local
rules, regulations and laws, provided that the liability of the
Limited Partner for Partnership debts shall not be increased by
such amendment nor shall the right of the Limited Partner to
Partnership allocations or distributions be adversely affected
thereby.
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11.8 Entire Agreement. This Agreement shall constitute the entire agreement
of the Partners and supersede all prior agreements between the
Partners with respect to the Partnership.
11.9 Titles; Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and shall not be considered in the
interpretation of this Agreement.
11.10 Exculpation. Neither the General Partner, nor any of its officers,
directors, employees, agents, or Affiliates, shall be liable to the
Limited Partner or the Partnership for any action taken or failure to
act on behalf of the Partnership within the scope of authority
conferred on the General Partner by this Agreement, or by law, or done
in reliance in good faith on the opinion of legal counsel, except in
the case of (i) its willful breach of a material provision of the Act
or this Agreement; (ii) the breach of its fiduciary responsibilities
to the Partnership or the Limited Partner; or, (iii) its gross
negligence in connection with the business and affairs of the
Partnership.
11.11 Indemnification of the General Partner. The Partnership, to the
extent of its assets legally available for that purpose, will
indemnify and hold harmless the General Partner and any partner,
shareholder, director, officer, agent, affiliate and professional or
other advisor of the General Partner (collectively, the "Indemnified
Persons"), from and against any and all loss, damage, expense
(including without limitation reasonable fees and expenses of
attorneys and other advisors and any court costs incurred by any
Indemnified Person) or liability by reason of anything any Indemnified
Person does or refrains from doing for, or in connection with the
business or affairs of, the Partnership, except to the extent that the
loss, damage, expense or liability results from (a) the Indemnified
Person's gross negligence, willful misconduct or knowing violation of
law, or (b) the Indemnified Person's breach of any fiduciary
responsibilities to the Partnership or the Limited Partner. These
indemnification rights are in addition to any rights the Indemnified
Persons may have against third parties.
Notwithstanding anything in this Agreement to the contrary, no Partner
shall be obligated to contribute any amount to the Partnership in
order to satisfy the Partnership's indemnification obligations under
this Section 11.11, such obligations being limited at all times to the
assets of the Partnership.
11.12 Limitation of Liability of the Limited Partners. No Limited Partner
shall be bound by, or be personally liable for, the expenses,
liabilities, or obligations of the Partnership in excess of its
Capital Contributions to the Partnership plus such additional amounts
determined pursuant to Section 5.5.
11.13 Ambiguities. The General Partner shall have full power and authority
to resolve questions of interpretation and construction arising under
this Agreement, and its resolution of such ambiguities or questions
shall be final and binding on the
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Partnership and all of its Partners and their permitted transferees,
successors, assigns and legal representatives.
11.14 No Right to Partition. Each Partner hereby irrevocably waives any and
all rights that it may have to maintain or institute an action for
partition of the Partnership assets.
[THE REMAINDER OF THE PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the Partners have executed this Agreement as of the
date first above written.
GENERAL PARTNER:
▇▇▇▇▇▇ ENTERPRISES MANAGEMENT, INC.,
a Texas corporation
By: /s/ ▇▇▇▇▇▇ ▇. Berkhold
------------------------------------
Name: ▇▇▇▇▇▇ ▇. Berkhold
Title: President
LIMITED PARTNER:
ATLAS INVESTMENTS INC.,
a Nevada corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
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