EXHIBIT 3.24
RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
NETCO-WATERBURY, LIMITED PARTNERSHIP
A DELAWARE LIMITED PARTNERSHIP
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS............................................................................................1
ARTICLE II THE PARTNERSHIP ORGANIZATION AND ITS BUSINESS.........................................................4
2.1 Formation and Continuation..............................................................................4
2.2 Name....................................................................................................4
2.3 Principal Place of Business.............................................................................4
2.4 Term....................................................................................................4
2.5 Business Purpose and Powers.............................................................................4
2.6 Methods.................................................................................................5
2.7 Agent for Service of Process............................................................................5
2.8 Name and Business Address of Each Partner...............................................................5
ARTICLE III MANAGEMENT OF PARTNERSHIP BUSINESS; POWERS OF THE GENERAL PARTNER...................................5
3.1 Management and Control..................................................................................5
3.2 Limited Partners Shall Not Manage or Control............................................................5
3.3 Acts of the Partnership.................................................................................6
3.4 Independent Activities of the General Partner...........................................................6
ARTICLE IV CAPITAL CONTRIBUTIONS AND LIABILITY OF PARTNERS.......................................................6
4.1 Capital Contributions...................................................................................6
4.2 Default by a Limited Partner............................................................................6
4.3 Liability of Partners...................................................................................7
4.4 Return of Distributions to Limited Partners.............................................................8
4.5 No Priority.............................................................................................8
ARTICLE V CAPITAL ACCOUNTS.......................................................................................8
5.1 Partner's Accounts. A separate Capital Account shall be maintained for each Partner in
accordance with Treasury Regulation 1.704-1(b)(2)(iv)........................................................8
5.2 Allocations.............................................................................................9
5.3 Credits and Charges to Capital Account..................................................................9
5.4 Tax Allocations: Code Section 704(c)....................................................................9
ARTICLE VI DISTRIBUTIONS; WITHDRAWALS OF CAPITAL................................................................10
6.1 Allocation of Distributions............................................................................10
6.2 Distributions Net of Expenses of the Partnership.......................................................10
6.3 Withdrawals of Capital.................................................................................10
ARTICLE VII TRANSFER OF PARTNERSHIP INTERESTS...................................................................10
7.1 Transfer by General Partner............................................................................10
7.2 Prohibition on Transfer by Limited Partner.............................................................11
7.3 Additional or Substitute Limited Partners..............................................................11
7.4 Election to Adjust Tax Basis...........................................................................11
-i-
7.5 Voluntary Withdrawal--by-Limited Partner...............................................................11
7.6 Death, Incompetence or Bankruptcy of Limited Partner...................................................11
7.7 Acquisition of Limited Partner's Interest by the General Partner.......................................12
ARTICLE VIII BANKRUPTCY, DISSOLUTION OR REMOVAL
OF GENERAL PARTNER.........................................................................12
8.1 Dissolution of Partnership.............................................................................12
8.2 Voluntary Resignation. Withdrawal or Dissolution of General Partner....................................12
8.3 Removal of General Partner for Cause...................................................................12
8.4 Continuation of Partnership............................................................................12
ARTICLE IX EXPENSES OF THE PARTNERSHIP..........................................................................13
ARTICLE X INDEMNIFICATION OF THE GENERAL PARTNER................................................................13
10.1 Liability.............................................................................................13
10.2 Indemnification.......................................................................................13
10.3 Survival..............................................................................................14
ARTICLE XI TERMINATION OF PARTNERSHIP; LIQUIDATION AND DISTRIBUTION OF ASSETS...................................14
11.1 Termination Events....................................................................................14
11.2 Liquidation and Distribution upon Termination.........................................................14
ARTICLE XII BOOKS OF ACCOUNT, ACCOUNTING AND REPORTS............................................................15
12.1 Books of Account......................................................................................15
12.2 Tax Returns and Elections.............................................................................15
12.3 Tax Matters Partner...................................................................................15
12.4 Fiscal Year...........................................................................................15
12.5 Banking...............................................................................................15
12.6 Accounting Method.....................................................................................15
12.7 Determination of Certain Matters......................................................................15
ARTICLE XIII POWER OF ATTORNEY..................................................................................16
13.1 Power of Attorney.....................................................................................16
13.2 Irrevocability........................................................................................16
ARTICLE XIV MISCELLANEOUS PROVISIONS............................................................................17
14.1 Notices...............................................................................................17
14.2 Severability..........................................................................................17
14.3 Execution in Several Counterparts.....................................................................17
14.4 Amendments to Agreement...............................................................................17
14.5 Governing Law.........................................................................................18
14.6 Captions..............................................................................................18
14.7 Further Assurances....................................................................................18
14.8 Persons Bound.........................................................................................18
14.9 Admission of Additional-Limited Partners..............................................................18
-ii-
RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
of
NETCO-WATERBURY, LIMITED PARTNERSHIP
A
Delaware Limited Partnership
AGREEMENT OF LIMITED PARTNERSHIP (such agreement, as the same may from
time to time be modified, supplemented or amended, being hereinafter referred to
as this "Agreement") dated as of April 6, 1994, made and entered into by and
among NETCO-WATERBURY SYSTEMS, INC., a corporation organized under the laws of
the State of
Delaware and having an address at ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as General Partner, and each person or entity
becoming a party to this Agreement as a Limited Partner.
RECITALS
WHEREAS, the General Partner and the Limited Partner desire to form a
limited partnership pursuant to the provisions of the
Delaware Revised Uniform
Limited Partnership Act.
NOW, THEREFORE, pursuant to the terms, covenants and conditions set
forth herein and in consideration of the mutual premises contained herein, the
parties, intending to be legally bound, do hereby agree as follows:
ARTICLE I
DEFINITIONS
"Act" shall mean the
Delaware Revised Uniform Limited Partnership Act.
"Adjusted Capital Contribution" shall mean, at any specified time, the
amount of Capital Contribution of each Partner that has been actually paid to
the Partnership pursuant to Section 4.1.
"Affiliate" shall mean any person directly or indirectly controlling,
controlled by or under common control with the specified person and the term
"control" shall mean the ownership of a majority of the combined voting power of
the outstanding voting securities of a corporation or the outstanding ownership
interests in a non-corporate entity.
"Basic Capital Contributions" shall have the meaning set forth in
Section 4.1.
"Capital Account" shall mean the account maintained each Partner
pursuant to Section 5.1.
"Capital Contributions" shall have the meaning set forth in Section
4.1.
"Certificate" shall mean the Certificate of Limited Partnership of the
Partnership prepared and filed in accordance with the Act, as the same may be
amended from time to time.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent revenue laws.
"Contract" shall mean that certain Sludge Disposal Agreement, as the
same may be amended from time to time, by and between the Partnership and the
City of Waterbury, Connecticut.
"Defaulting Partner" shall have the meaning set forth in Section 4.2.
"Depreciation" means, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable for
federal income tax purposes with respect to an asset for such year, except that
if the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year, Depreciation shall be an
amount which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis.
"Distribution" shall mean distributions to Partners pursuant to Article
VI.
"Fiscal Year" shall mean the fiscal year of the Partnership, which
shall be the calendar year; but, upon termination of the Partnership, "Fiscal
Year" shall mean the period from the end of the last preceding Fiscal Year to
the date of such termination.
"General Partner" shall mean NETCO-Waterbury Systems, Inc., a
Delaware
corporation, and any substitute General Partner admitted to the Partnership
pursuant to Article VIII hereof.
"Gross Asset Value" shall mean, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by
a Partner to the Partnership shall be the gross fair market value of that asset
as determined by the contributing Partner and the Partnership;
(b) The Gross Asset Value of all items of Partnership Property
shall be adjusted to equal their respective gross fair market values, as
determined by the General Partner, as of the following times: (i) the
acquisition of an additional Interest in the Partnership by any new or existing
Partner; (ii) the distribution by the Partnership to a Partner of more than, a
de minimis amount of Partnership Property, other than money, unless all Partners
receive simultaneous distributions of undivided interests in the distributed
Partnership Property in proportion to their Interests in the Partnership; and
(iii) the termination of the Partnership for federal income tax purposes
pursuant to Code Section 708(b)(1)(B); and
(c) If the Gross Asset Value of an asset has been determined
or adjusted pursuant to paragraph (a) or (b) above, such Gross Asset Value shall
thereafter be adjusted by the
-2-
Depreciation taken into account with respect to such asset for purposes of
computing Net Income and Net Loss.
"Indemnified Liabilities" shall have the meaning set forth in Section
10.2.
"Indemnitees" to shall have the meaning set forth in Section 10.2.
"Interest" shall mean a Partner's interest in the Net Income, Net Loss
and Distributions of the Partnership as specified in Article V and Article VI.
"Limited Partners" shall mean such persons or entities whose names are
set forth on the signature pages hereof and any other person or entity who is
(i) admitted to the Partnership as a substitute Limited Partner or (ii)
designated as a special limited partner by the General Partner and having such
rights and obligations as are agreed to between the General Partner and such
special limited partner.
"Majority In Interest of Limited Partners" shall mean those Limited
Partners whose combined Basic Capital Contributions constitute more than fifty
percent (50%) of the aggregate Basic Capital Contributions of all the Limited
Partners.
"Net Income" or "Net Loss" shall mean, for each fiscal year, an amount
equal to the Partnership's taxable income or loss for such 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 Income 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
pursuant to Treasury Regulation section 1.704-1(b)(2)(iv)(i), and not otherwise
taken into account in computing Net Income 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 Gross Asset Value of the property
disposed of, notwithstanding that the adjusted tax basis of such property
differs from its Gross Asset Value; and
(d) In lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year.
"Partners" shall mean, collectively, the General Partner and all
Limited Partners. Reference to a Partner shall mean any one of the Partners.
"Partnership" shall mean the limited partnership created pursuant to
this Agreement.
-3-
"Partnership Property" shall mean all of the Partnership's interest or
rights in all property, whether tangible or intangible, real or personal.
"Replacement Limited Partner" shall mean any person admitted to the
Partnership as a Limited Partner pursuant to the provisions of Section 4.2.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Supplemental Capital Contributions" shall have the meaning set forth
in Section 4.1.
"Termination Date" shall have the meaning set forth in Section 2.4.
"Treasury Regulations" shall mean the Income Tax Regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
ARTICLE II
THE PARTNERSHIP ORGANIZATION AND ITS BUSINESS
2.1 Formation and Continuation. The parties hereby agree to form a
limited partnership in accordance with and pursuant to the provisions of the
Act.
2.2 Name. The name of the Partnership shall be NETCO-Waterbury, Limited
Partnership.
2.3 Principal Place of Business. The principal place of business of the
Partnership shall be located at ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, or at such other place or places as the General Partner may hereafter
determine. The General Partner may register or qualify the Partnership to do
business in any jurisdiction where the General Partner deems such registration
or qualification necessary or advisable.
2.4 Term. The term of the Partnership shall commence upon the filing of
the Certificate in the Office of the Secretary of State of the State of
Delaware
and shall terminate upon the expiration (the "Termination Date") of ninety (90)
days after the termination of the Contract unless the Partnership term is
terminated sooner in accordance with the provisions of Article XI of this
Agreement or by operation of law.
2.5 Business Purpose and Powers.
(a) The business purpose of the Partnership shall be to administer
the Contract and to engage in all transactions necessary or incidental to the
foregoing and to do all things necessary or appropriate to accomplish any of the
foregoing, upon and subject to the terms and conditions of this Agreement and
the provisions of the Act.
(b) The Partnership shall have the power to engage in all
activities and transactions in connection with, or incidental to, the foregoing
purpose.
-4-
2.6 Methods. The Partnership's business purpose and the exercise of its
powers, as described in Section 2.6, may be accomplished through such actions as
the General Partner deems in its discretion to be necessary, advisable or
appropriate for the operation of the Partnership, which, by way of illustration
but not by way of limitation, shall include:
(a) the employment of such parties and personnel and such legal,
accounting, management, advisory or consultative services as the General Partner
in its discretion deems advisable
(b) the borrowing of money from, and the giving of guarantees to,
banks or other lenders for Partnership purposes and the pledging of Partnership
Property for the securing of such loans and guarantees; and
(c) the execution of all agreements, documents or instruments of
any kind, the engaging in such transactions and the taking of such other
actions, as the General Partner may, in its discretion, deem necessary,
advisable or appropriate for the carrying out of the foregoing purposes and
powers of the Partnership.
2.7 Agent for Service of Process. The name and address of the
registered agent for service of process is Corporation Service Company, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
2.8 Name and Business Address of Each Partner. The name and business
address of the General Partner are set forth in the heading of this Agreement.
The name and business address of each Limited Partner are set forth on the
signature pages of this Agreement.
ARTICLE III
MANAGEMENT OF PARTNERSHIP BUSINESS;
POWERS OF THE GENERAL PARTNER
3.1 Management and Control. The management and conduct of the
Partnership and its business shall be controlled exclusively by the General
Partner in accordance with the terms of this Agreement. The General Partner
shall have all the rights and powers which may be possessed by a general partner
pursuant to the Act, and such rights and powers as are otherwise conferred by
this Agreement or by law or which are necessary, advisable or appropriate to the
management of the business and affairs and accomplishment of the business
purpose of the Partnership. Neither the General Partner nor any of its
Affiliates shall be entitled to any compensation, other than reimbursement for
expenses, from the Partnership for services rendered to the Partnership other
than its Interest.
3.2 Limited Partners Shall Not Manage or Control. The Limited Partners
shall take no part in the management or control of the Partnership business, and
shall have no power to act for or to bind the Partnership. Without limiting the
generality of the foregoing, no Limited Partner and no director, officer,
partner or stockholder thereof (other than natural persons who are United States
citizens acting in their capacities as officers or directors of the General
Partner) shall (i) act as an employee of the Partnership; (ii) act as an
independent contractor or agent with respect to the Partnership; (iii)
communicate with the General Partner on matters pertaining to
-5-
the day-to-day operations of the Partnership; (iv) become actively involved in
the management or operation of the Partnership; (v) vote on any matter
pertaining to the day-to-day operations or investment decisions of the
Partnership; or (vi) vote on the admission of additional general partners to the
Partnership except as provided in Section 8.4 hereof.
3.3 Acts of the Partnership. Whenever in this Agreement or elsewhere it
is provided that consent is required of, or a demand shall be made by, or an act
or thing shall be done by or at the direction of, the Partnership, it shall be
deemed that all such consents, demands, acts and things are to be made, given or
done upon the consent of the General Partner or an employee acting under its
authority, unless a contrary intention is expressly indicated in this Agreement.
3.4 Independent Activities of the General Partner. Unless otherwise
expressly consented to in writing by all of the Limited Partners, the General
Partner may not engage in activities other than as may be required or permitted
under this Agreement, whether the same be competitive with the Partnership or
otherwise.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND LIABILITY OF PARTNERS
4.1 Capital Contributions.
(a) Each Partner shall contribute to the capital of the
Partnership an amount equal to the amount set forth opposite its name on the
signature page hereof (the "Basic Capital Contributions"). Each Partner may be
required by the General Partner to make further capital contributions to the
Partnership (the "Supplemental Capital Contributions"; together with the Basic
Capital Contributions, the "Capital Contributions") to enable the General
Partner (i) to conduct the business of the Partnership and (ii) to pay any
expenses of the Partnership contemplated by Article IX hereof; provided,
however, that the aggregate Capital Contributions required to be made pursuant
to this Section 4.1 by all Limited Partners shall not exceed $250,000.
(b) The Basic Capital Contribution of each Partner shall be paid
to the Partnership simultaneously with such Partner becoming a Partner of the
Partnership.
(c) Supplemental Capital Contributions shall be made by each
Partner within sixty (60) days after a call therefor by the General Partner. Any
such call shall be made only if, when and to the extent that the General Partner
reasonably anticipates that funds will be required by the Partnership to pay any
expenses of the Partnership contemplated by Article IX hereof. Calls for Capital
Contributions shall be made on all of the Partners pro rata according to their
respective Basic Capital Contributions.
4.2 Default by a Limited Partner.
(a) Upon the failure of any Limited Partner (a "Defaulting
Partner") to pay in full when due any portion of its Capital Contribution called
for by the General Partner pursuant to section 4.1 and continuation of such
failure for sixty (60) days after notice thereof by the General Partner acting
on behalf of the Partnership to the Defaulting Partner, the General Partner
-6-
acting on behalf of the Partnership shall have the right either (i) to take any
and all actions permitted under applicable law to collect the defaulted Capital
Contribution, or (ii) by notice to the Defaulting Partner, to terminate all of
the profits interest of the Defaulting Partner in the Partnership. Upon such
termination, the Defaulting Partner shall have no rights or interest in the
Partnership except that upon liquidation of the Partnership, the Defaulting
Partner shall participate in distributions pursuant to Article VI, but only in
an amount up to the lowest of (i) the positive balance, if any, of the
Defaulting Partner's Capital Account at the time of the default, or (ii) the
Defaulting Partner's Adjusted Capital Contributions, or (iii) the amount the
Defaulting Partner would have received if his profits interest in the
Partnership had not been terminated pursuant to this Section 4.2. Upon such
termination, the Defaulting Partner shall have no right to have its rights or
interest reinstated. Upon such termination, the Defaulting Partner shall be
excluded for all purposes from any vote or action of the Limited Partners,
including those requiring consent. The taking by the General Partner acting on
behalf of the Partnership of any action or the commencement of any proceeding to
collect a defaulted Capital Contribution shall not preclude the General Partner
acting on behalf of the Partnership prior to collection thereof from terminating
the profits interest of a Defaulting Partner in the Partnership pursuant to this
Section 4.2(a).
(b) In addition to the rights provided under Section 4.2(a), the
General Partner acting on behalf of the Partnership shall have the right to
substitute for any Defaulting Partner any other Person as a Replacement Limited
Partner who will acquire all the rights and assume all the obligations of the
Defaulting Partner (without giving effect to the limitations on such rights in
Section 4.2(a)), provided that such Replacement Limited Partner executes and
delivers to the General Partner acting on behalf of the Partnership any
documents or instruments necessary or appropriate to evidence the foregoing. If
the General Partner acting on behalf of the-Partnership elects to find a
Replacement Limited Partner for a Defaulting Partner, each Limited Partner other
than the Defaulting Partner shall be given the opportunity, for a period of five
(5) days after notice by the General Partner, to elect to be substituted as a
Replacement Limited Partner with respect to a proportionate share (based on the
Capital Contributions of the Limited Partners other than the Defaulting Partner)
of the Defaulting Partner's Interest. The Replacement Limited Partner shall have
no obligation to the Defaulting Partner, and the Defaulting Partner shall have
no rights or interest in the Partnership except that upon liquidation of the
Partnership the Defaulting Partner shall receive up to the amount specified in
section 4.2(a), and such amount shall reduce the distributions otherwise
required to be made to the Replacement Limited Partner upon liquidation.
(c) In the event the General Partner acting on behalf of the
Partnership elects to collect a defaulted Capital Contribution from a Defaulting
Partner rather than to rescind and terminate such Defaulting Partner's profits
interest in the Partnership, such Defaulting Partner shall remain liable for all
of its obligations under this Agreement, including the obligation to make
Capital Contributions.
4.3 Liability of Partners.
(a) General Partner. Subject to Subparagraph (b) of this Section
4.3, the General Partner shall have unlimited liability for the repayment and
discharge of all debts and obligations of the Partnership attributable to any
Fiscal Year or portion thereof during which it
-7-
was or is a general partner of the Partnership. A Former General Partner (as
defined below) shall not be liable for the repayment and discharge of debts and
obligations of the Partnership attributable to any fiscal year or portion
thereof during which it was not General Partner of the Partnership. As used in
this Agreement, the term "Former General Partner" refers to such persons as
hereafter from time to time cease to be General Partner pursuant to the terms
and provisions of this Agreement.
(b) Waiver of Right of Subrogation. The Limited Partners hereby
agree to waive any and all rights of subrogation to all of the Partnership's
rights arising under any agreement pursuant to which (i) the Partnership incurs
indebtedness and (ii) the performance of the Partnership's obligations is
guaranteed by the Limited Partners. It is the intent of the Partners, that, by
waiving all rights of subrogation pursuant to this Section 4.3(b), the Limited
Partners assume primary liability for the performance of the obligations of the
Partnership arising under any such agreement.
(c) Limited Partners. The Limited Partner shall be liable for the
repayment and discharge of all debts and obligations of the Partnership
attributable to any Fiscal Year or portion thereof during which they are or were
Limited Partners of the Partnership only to the extent of their respective
Capital Contributions in the Partnership as set forth on the signature pages,
but such limitation shall not relieve them of liability for any unpaid capital
Contribution they have covenanted in writing to contribute. In no event shall
the Limited Partners (or former Limited Partners) be obligated to make any
contribution whatsoever to the Partnership, except as provided in Section 4.1,
or have any liability for the repayment and discharge of the debts and
obligations of the Partnership (apart from their respective Capital Contribution
in the Partnership), except as required by applicable law.
4.4 Return of Distributions to Limited Partners. In accordance with
applicable law, a limited partner of a partnership may, under certain
circumstances, be required to return to the partnership for the benefit of
partnership creditors, amounts previously distributed to such limited partner as
a return of capital. It is the intent of the Partners that any Distributions to
any Limited Partners pursuant to Article VI hereof, to the extent possible,
shall not be deemed a return or withdrawal of capital, and that no Limited
Partner shall be obligated to pay any such amount to or for the account of the
Partnership or any creditor of the Partnership. However, if a court of competent
jurisdiction holds that, notwithstanding the provisions of this Agreement, any
Limited Partner is obligated to make such payment, that obligation shall be the
obligation of such Limited Partner and not of the General Partner.
4.5 No Priority. No Partner shall have priority over another Partner in
connection with the return of its Capital Contribution or as to Distributions by
the Partnership.
ARTICLE V
CAPITAL ACCOUNTS
5.1 Partner's Accounts. A separate Capital Account shall be maintained
for each Partner in accordance with Treasury Regulation 1.704-1(b)(2)(iv).
-8-
5.2 Allocations. Except as provided in Schedule A attached hereto, for
each Fiscal Year (or portion thereof) of the Partnership, all Net Income and Net
Loss shall be allocated ninety-nine percent (99%) to the Limited Partners and
one percent (1%) to the General Partner. Subject to the special allocations set
forth in Schedule A, the General Partner will be allocated at least one percent
(1%) of all items of Partnership income, gain, loss or deductions.
5.3 Credits and Charges to Capital Account. The Capital Account of each
Partner shall be credited and charged as follows:
(a) Such Capital Account shall be credited with (i) each such
Partner's Adjusted Capital Contribution, (ii) the amount of Net Income allocated
to such Partner pursuant to Paragraph 5.2, and (iii) the amount of any
Partnership liabilities assumed by such Partner or secured by any Partnership
Property distributed to such Partner.
(b) Such Capital Account shall be charged with (i) the amount of
money and the Gross Asset Value of any Partnership Property distributed to such
Partner, (ii) the amount of Net Loss allocated to such Partner pursuant to
Paragraph 5.2, (iii) the amount of any liabilities of such Partner that are
assumed by the Partnership or that are secured by any property contributed by
such Partner to the Partnership, and (iv) the amount of any expenses of the
Partnership contemplated by Article IX hereof, to the extent not taken into
account in determining Net Income or Net Loss.
(c) In the event that any Interest in the Partnership is
transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it relates to the
transferred Interest.
(d) In the event the Gross Asset Value of any Partnership Property
is adjusted pursuant to the terms of this Agreement, the Capital Accounts of all
Partners shall be adjusted simultaneously to reflect the aggregate net
adjustment as if the Partnership recognized gain or loss equal to the amount of
such aggregate net adjustment.
(e) Notwithstanding any provision herein to the contrary, Capital
Accounts shall at all times be maintained in conformance with the requirements
of the Code, and the regulations promulgated thereunder.
5.4 Tax Allocations: Code Section 704(c).
(a) In accordance with Code Section 704(c) and the Treasury
Regulations thereunder, income, gain, loss, and deductions with respect to any
property contributed to the Partnership shall, solely for tax purposes, be
allocated among the Partners so as to take into account any variation between
the adjusted basis of such property to the Partnership for federal income tax
purposes and that property's initial Gross Asset Value at the time of
contribution.
(b) In the event that the Gross Asset Value of any Partnership
Property is adjusted pursuant to this Agreement, subsequent allocations of
income, gain, loss and deduction with respect to such asset shall take account
of any variation between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value in the same manner as under Code Section
704(c) and the Treasury Regulations thereunder.
-9-
(c) Any elections or other decisions relating to such allocations
shall be made by the General Partner in any manner that reasonably reflects the
purpose and intention of this Agreement. Allocations pursuant to this Section
5.4 are solely for purposes of federal, state and local taxes and shall not
affect, or in any way be taken into account in computing, any person's Capital
Account or share of Net Income, Net Loss, other items, or distributions pursuant
to any provision of this Agreement.
ARTICLE VI
DISTRIBUTIONS; WITHDRAWALS OF CAPITAL
6.1 Allocation of Distributions. The Partnership may make distributions
from time to time in the discretion of the General Partner and in accordance
with the Provisions of the Act. Any such distributions shall be allocated
ninety-nine percent (99%) to the Limited Partners and one percent (1%) to the
General Partner. Nothing contained in this Section 6.1 shall prohibit any
distributions to a withdrawing Limited Partner pursuant to Section 7.5 hereof.
6.2 Distributions Net of Expenses of the Partnership. Notwithstanding
anything to the contrary contained herein, all distributions under Section 6.1
above shall be net of any expenses of the Partnership contemplated by Article IX
hereof, except to the extent that the Partnership has received Supplemental
Capital Contributions with respect thereto.
6.3 Withdrawals of Capital. Except as otherwise expressly provided in
this Agreement, a Partner shall not be entitled to withdraw any amount of such
Partner's Capital Contribution from the Partnership.
ARTICLE VII
TRANSFER OF PARTNERSHIP INTERESTS
7.1 Transfer by General Partner.
(a) The General Partner shall not sell, assign or otherwise
dispose of all or any part of its Interest in the Partnership (including any
beneficial interest therein) without the prior written consent of a Majority In
Interest of Limited Partners (other than Limited Partners who are also
Affiliates of the General Partner), and any attempt to do so shall be null and
void; provided, however, that the consent of the Limited Partners shall not be
withheld in the case of a transfer to an Affiliate of the General Partner so
long as such Affiliate, if an individual, is a citizen and resident of the
United States and, if a corporation, partnership, trust or other entity, is
formed and organized under the laws of and has its principal place of business
in one or more jurisdictions in the United States and a majority of the voting
control of such Affiliate is owned, of record or beneficially, by United States
persons. No person to whom the General Partner sells, assigns or otherwise
disposes of all or any part of its Interest (including any pledgee or assignee
of rights to receive Distributions) may be admitted as the General Partner
without the prior written consent of a Majority In Interest of Limited Partners
(other than Limited Partners who are also Affiliates of the General Partner);
provided, however, that the consent of Limited Partners shall not be withheld in
the case of a transfer to an Affiliate of the General Partner so
-10-
long as such Affiliate, if an individual, is a citizen and resident of the
United States and, if a corporation, partnership, trust or other entity, is
formed and organized under the laws of and has its principal place of business
in one or more jurisdictions in the United States and a majority of the voting
control of such Affiliate is owned, of record or beneficially, by United States
persons.
(b) Notwithstanding the restrictions in section 7.1(a), the
General Partner may sell, assign or otherwise dispose of all or any part of its
Interest in the Partnership (including any beneficial interest therein) without
the prior written consent of a Majority In Interest of Limited Partners, if such
sale, assignment or other disposition results by operation of law or is required
to effect compliance by the General Partner with the provisions of any law.
7.2 Prohibition on Transfer by Limited Partner.
No Limited Partner shall sell, assign, transfer, pledge or otherwise
encumber or dispose of all or any part of its Interest (including any beneficial
interest therein), without the consent of the General Partner.
7.3 Additional or Substitute Limited Partners.
(a) As a condition to the admission of any additional or
substitute Limited Partner, such new Limited Partner shall execute and
acknowledge such instruments, in form and substance reasonably satisfactory to
the General Partner, as the General Partner may deem necessary or desirable to
effectuate such admission and to confirm that the person to be admitted as a
Limited Partner has agreed to be bound by all the covenants, terms and
conditions of this Agreement, as the same may have been amended.
(b) In addition to the conditions to the admission of any
additional or substitute Limited Partner set forth in Subsection (a) above, such
additional or substitute Limited Partner shall pay all reasonable expenses in
connection with such admission as a Limited Partner, including, without
limitation, the cost (including reasonable attorneys' fees) of the preparation,
filing and publication of documents required by said Subsection (a).
7.4 Election to Adjust Tax Basis. The General Partner may, in its
discretion, cause the Partnership to make an election or to revoke any such
election previously made under Section 754 of the Code to adjust the basis of
Partnership Property under Sections 734 and 743 of the Code.
7.5 Voluntary Withdrawal--by-Limited Partner. Except as provided in
Article XI hereof, a Limited Partner may not withdraw prior to the Termination
Date without the prior written consent of the General Partner.
7.6 Death, Incompetence or Bankruptcy of Limited Partner. In the event
that a Limited Partner dies or is adjudicated incompetent or bankrupt, the
executor, administrator, trustee, committee or other legal representative or
successor in interest of such Limited Partner shall succeed to the rights of
such Limited Partner to receive allocations, distributions and reports
hereunder, and may, at the sole discretion of the General Partner, be admitted
into the Partnership as a Limited Partner in the place and stead of such Limited
Partner.
-11-
7.7 Acquisition of Limited Partner's Interest by the General Partner.
Except as expressly provided in this Agreement, if a General Partner acquires an
Interest of a Limited Partner, said General Partner shall, with respect to such
Interest, enjoy all of the rights and be subject to all of the obligations and
duties of a Limited Partner.
ARTICLE VIII
BANKRUPTCY, DISSOLUTION OR REMOVAL OF GENERAL PARTNER
8.1 Dissolution of Partnership. Subject to the provisions of Section
8.4, in the event of the filing of a petition in bankruptcy, insolvency or for
dissolution, or in the event of the removal or resignation of the General
Partner, the Partnership shall thereupon be dissolved and terminated pursuant to
Article XI. The date of the General Partner's filing of such petition for
bankruptcy, insolvency or for dissolution, or the date of such removal or
resignation, whichever is applicable, shall be deemed the last day of a Fiscal
Year, unless the Partnership is continued pursuant to Section 8.4. If the
Limited Partners fail to continue the business of the Partnership as provided in
Section 8.4, the Partnership shall forthwith be terminated and the Partnership
shall be dissolved as required by law.
8.2 Voluntary Resignation. Withdrawal or Dissolution of General
Partner. The General Partner shall not resign or withdraw as the General Partner
of the Partnership or voluntarily dissolve itself or voluntarily cause its own
dissolution unless it has received the prior written consent of a Majority In
Interest of Limited Partners (other than Limited Partners who are also
Affiliates of the General Partner).
8.3 Removal of General Partner for Cause.
(a) With Cause. A Majority In Interest of Limited Partners shall
have the right, exercisable by written notice to the General Partner, to remove
the General Partner for cause. "Cause" shall mean gross negligence, fraud or
willful misconduct or a knowing violation of law.
(b) No removal under Subsection (a) above may be made unless a
court of competent jurisdiction or another impartial arbitrator selected by the
General Partner and the respective Limited Partners shall have determined, in an
action for declaratory judgment or for similar relief brought by or on behalf of
the respective Limited Partners, that such cause for such removal exists.
8.4 Continuation of Partnership. Notwithstanding Section 8.1, the
business of the Partnership shall be continued after the adjudication of
bankruptcy, insolvency or dissolution, or the resignation or removal of the
General Partner if, within ninety (90) days of such adjudication of bankruptcy,
insolvency or dissolution, or such resignation or removal, one or more
additional general partners shall have been appointed by unanimous consent of
all the Limited Partners and such additional appointed general partner or
general partners shall have agreed in writing to be bound by all relevant terms
of this Agreement.
-12-
ARTICLE IX
EXPENSES OF THE PARTNERSHIP
The Partnership shall pay all of the costs and expenses which may be
incurred by the Partnership in connection with the operation of its business,
including, but not limited to, (a) legal and accounting services, (b) other
services rendered to the Partnership by consultants and advisors other than
NETCO-Waterbury Systems, Inc., if any, (c) such administrative services as the
General Partner may deem necessary or advisable, and (d) any taxes for which the
Partnership may be liable.
ARTICLE X
INDEMNIFICATION OF THE GENERAL PARTNER
10.1 Liability. The General Partner shall not be liable to the
Partnership or the Limited Partners for any act performed or omitted by it
pursuant to the authority granted to the General Partner by this Agreement,
unless such act or omission constitutes gross negligence, fraud or willful
misconduct or a knowing violation of law.
10.2 Indemnification.
(a) Subject to Section 10.1, the Partnership, its receiver or its
trustee shall, to the maximum extent permitted by law, indemnify and save
harmless the General Partner, its directors, officers and stockholders
(including the officers, directors and general partners of such stockholders),
and its or their employees and agents (individually, an "Indemnitee", and
collectively, the "Indemnitees") from any and all liabilities, damages,
judgments, interest on such judgments, fines, penalties, charges, costs, amounts
paid in settlement, expenses and attorneys' fees incurred in investigating,
preparing or defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or commission,
whether pending or threatened, whether or not an Indemnitee is or may be a party
thereto, including interest on the foregoing, which, in the good faith judgment
of the General Partner, arise out of, relate to or are in connection with the
management or conduct of the business or affairs of the Partnership, or are
incurred by reason of any act performed or omitted to be performed by the
General Partner or any other Indemnitee in connection therewith (all of the
foregoing being, collectively, "Indemnified Liabilities"). Any attorneys" fees
and expenses of the Indemnitees incurred in connection with the defense of any
action as to which such Indemnitee is indemnified hereunder shall be paid by the
Partnership as incurred.
(b) Subject to Section 10.1, in the event of any action by a
Limited Partner against the General Partner or any other Indemnitee, including a
Partnership derivative action, the Partnership shall indemnify, save harmless
and pay all expenses of the General Partner or any other Indemnitee and each of
its employees and agents, if any, including attorneys' fees incurred in the
defense of said action, which attorneys' fees shall be paid as incurred to the
extent that the Partnership has sufficient assets to pay such fees, and,
thereafter, shall be paid, jointly and severally, by the Limited Partners (other
than the Limited Partners who are also Indemnitees). If
-13-
the General Partner or any other Indemnitee is not successful in any action by
the Limited Partners or the Partnership against it, it will be obligated to
reimburse the Partnership and, where applicable, the Limited Partners for any
attorneys' fees so advanced. If the Limited Partner bringing the action for
which indemnification is sought pursuant to this Section 10.2(b) is not
successful, it will be obligated to reimburse any fees and expenses actually
incurred by the General Partner or any other Indemnitee, the Partnership and the
other Limited Partners, as the case may be. Neither the General Partner nor any
other Indemnitee shall have any liability for negligence.
(c) The right of any Indemnitee to the indemnification
provided herein shall be cumulative of, and in addition to, any and all rights
to which such Indemnitee may otherwise be entitled by contract or as a matter of
law or equity and shall extend to his heirs, successors, assigns and legal
representatives.
(d) All judgments against the Partnership and the General
Partner wherein the General Partner is entitled to indemnification must first be
satisfied from Partnership assets before the General Partner is responsible for
these obligations.
10.3 Survival. The rights of indemnification under this Article X shall
survive the removal or withdrawal of the General Partner from the Partnership.
ARTICLE XI
TERMINATION OF PARTNERSHIP;
LIQUIDATION AND DISTRIBUTION OF ASSETS
11.1 Termination Events. The Partnership shall be dissolved and
terminated upon the earliest to occur of the following: (a) pursuant to Article
VIII, the adjudication of bankruptcy, insolvency or dissolution, or the
resignation or removal of, the General Partner, unless the business of the
Partnership is continued pursuant to the provisions of Section 8.4; (b) the
written consent of 100% of the Limited Partners; (c) the expiration of the term
of the Partnership; or (d) the termination of the Partnership by operation of
law. Upon termination, the Partnership shall wind up its affairs and shall be
liquidated and a certificate of cancellation of the Partnership, as required by
law, shall be filed.
11.2 Liquidation and Distribution upon Termination. Upon a termination
of the Partnership for any reason, the General Partner shall liquidate the
property and assets of the Partnership as promptly as possible, in an orderly
and businesslike manner as is consistent with obtaining the fair value
therefrom. Thereafter, the General Partner shall pay first the expenses of the
liquidation and dissolution of the Partnership, and then apply and distribute
the assets of the Partnership in the following order:
(i) to the payment of creditors, including creditors of the
Partnership who are Partners, in order of priority as provided by law;
(ii) to the setting up of any reserves which the General
Partner may reasonably deem necessary for the payment of any contingent
or unforeseen liability of the Partnership;
-14-
(iii) to the Limited Partners and the General Partner in
accordance with the balances of their respective Capital Accounts.
ARTICLE XII
BOOKS OF ACCOUNT, ACCOUNTING AND REPORTS
12.1 Books of Account. The General Partner shall keep books of account
of the Partnership wherein shall be recorded and reflected all of the
contributions to the capital of the Partnership and all of the income, expenses
and transactions of the Partnership. The methods of accounting for the
Partnership shall be determined by the General Partner. Such books of account
shall be kept at the place of business of the Partnership and each Limited
Partner and his authorized representatives shall have at all times, during
reasonable business hours, free access to and the right to inspect such books of
account, provided that such inspection is made in good faith and without any
intent to damage the Partnership or any of the Partners.
12.2 Tax Returns and Elections. The General Partner shall cause income
tax returns for the Partnership to be prepared and filed with the appropriate
authorities and, within ninety (90) days after the close of each Fiscal Year of
the Partnership, shall furnish to each Limited Partner the appropriate
information derived from the Partnership's income tax returns for such Fiscal
Year as is necessary for the preparation of the Limited Partners' federal and
state income tax returns. The General Partner shall, in its sole discretion,
make all elections under applicable provisions of the Code as shall be necessary
or, when optional, in the interest of the Partnership, and shall timely file all
such elections as made.
12.3 Tax Matters Partner. The General Partner, shall be the "tax
matters partner" of the Partnership as described in Section 6231(a)(7) of the
Code. The tax matters partner shall provide all notices and perform all acts
required of a tax matters partner under Subchapter C of Chapter 63 of the Code
and the regulations thereunder.
12.4 Fiscal Year. The Partnership shall adopt a Fiscal Year which shall
be the calendar year.
12.5 Banking. All funds of the Partnership shall be deposited in a
separate bank account or accounts in the name of the Partnership as shall be
determined by the General Partner. All withdrawals therefrom shall be made upon
checks signed by any person or persons authorized to do so by the General
Partner.
12.6 Accounting Method. The Partnership shall adopt the accrual method
of accounting.
12.7 Determination of Certain Matters. All matters concerning the
valuation of investments and other assets and the allocation of income,
deductions, gains, losses, credits and liabilities among the Partners, including
taxes thereon and accounting procedures, not expressly provided for by the terms
of this Agreement, shall be equitably determined in good faith by the General
Partner.
-15-
ARTICLE XIII
POWER OF ATTORNEY
13.1 Power of Attorney. Each Limited Partner hereby constitutes and
appoints the General Partner as its agent and attorney-in-fact, with full power
of substitution, and with full power and authority to act in its name and on its
behalf in the execution, acknowledgment, swearing to and filing of documents as
follows:
(a) the Certificate, as well as any amendment thereto, in such
form as shall be necessary under the laws of the State of
Delaware and the law
of any other states in which any such certificate is required to be filed to
give effect to the provisions of this Agreement and to cause the admission of
each Limited Partner to the Partnership;
(b) any other instrument which may be required to be filed by
the Partnership under the law of any state or by any governmental agency, or
which the General Partner deems it advisable to file; and
(c) any documents which may be required to effect the
continuation of the Partnership, the admission of an additional or substitute
Limited Partner or the dissolution and termination of the Partnership, provided
such continuation, admission or dissolution and termination is in accordance
with the terms of this Agreement, or any other document which may be deemed
necessary or desirable to effectuate the provisions of this Agreement in
accordance with its terms.
13.2 Irrevocability. The Power of Attorney to be granted by each
Limited Partner to the General Partner as hereinabove provided:
(a) is a special power of attorney coupled with an interest
and is irrevocable and shall survive the disability or cessation of the
existence as a legal entity of a Limited Partner;
(b) may be exercised by the General Partner for each Limited
Partner by a facsimile signature of the General Partner or by listing each
Limited Partner executing any instrument with a facsimile signature of such
General Partner acting as attorney-in-fact for all of them; and
(c) shall survive the delivery of an assignment by a Limited
Partner of the whole or any portion of its Interest in the Partnership except
that, where that assignee thereof has been approved by the General Partner for
admission to the Partnership as a substitute Limited Partner, the power of
attorney shall survive the delivery of such assignment for the sole purpose of
enabling the General Partner to execute, acknowledge and file any instrument
necessary to effect such substitution.
-16-
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1 Notices. All notices required to be given by this Agreement to any
Partner shall be in writing and shall be hand delivered, telexed, sent by
facsimile transmission or nationally recognized overnight courier, addressed (a)
in the case of such a notice to the General Partner, to the address first set
forth above, and (b) in the case of such a notice to the Limited Partners,
addressed to the respective Limited Partners at their addresses set forth on the
signature pages hereof, unless notice in writing is given of a change of address
in the manner set forth herein, in which case notices shall be sent to the new
address so designated. Any notice given by a nationally recognized overnight
courier shall be deemed to have been given two (2) days after deposit thereof
with such courier, and any notice given by hand delivery, telex or by facsimile
transmission shall be deemed to have been given on the same day hand delivered,
telexed or sent by facsimile transmission, provided that such hand delivery,
telex or facsimile transmission shall have been confirmed.
14.2 Severability. The terms of this Agreement shall be deemed to be
severable. If any provision of this Agreement or the application thereof to any
person or. circumstance shall be determined to be invalid or unenforceable, the
remaining provisions of this Agreement or the application of such provision to
persons or circumstances other than those to which it is held invalid or
unenforceable shall not be affected thereby and shall be valid and enforceable
to the fullest extent permitted by law.
14.3 Execution in Several Counterparts. This Agreement may be executed
in several counterparts or by separate instruments, and all of such counterparts
and instruments shall constitute one agreement, binding on all of the parties
hereto, notwithstanding that all of the parties are not signatory to the
original or to the same counterpart or instrument.
14.4 Amendments to Agreement.
(a) This Agreement represents the entire agreement and
understanding of the parties with respect to the subject matter hereof and may
not be amended other than by agreement in writing as provided in Sections
14.4(b) and (c).
(b) Notwithstanding Section 14.4(c), no amendment to this
Agreement shall, without the prior written consent of all Partners, modify (i)
the business purpose of the Partnership as provided in Article II, (ii) the
allocation of profits or losses or the making of Distributions as provided in
Articles V and VI, (iii) the obligation of any Partner to make Capital
Contributions, or (iv) the authority of the General Partner to consent to the
substitution of Limited Partners as provided in Article VII.
(c) The General Partner may amend or modify any provision of
this Agreement (with the exception of those provisions specifically set forth in
Paragraph 14.4(b) above) by giving written notice of such amendment or
modification to the Limited Partners. Said modification or amendment shall be
effective unless a Majority In Interest of Limited Partners
-17-
(other than Limited Partners who are also Affiliates of the General Partner)
object to same, in writing, within ten (10) days.
14.5 Governing Law. All questions with respect to the construction of
this Agreement, and the rights and liabilities of the parties, shall be
determined in accordance with the provisions of the law of the State of
Delaware.
14.6 Captions. The captions in this Agreement are for convenience only
and shall not limit or define the text hereof.
14.7 Further Assurances. Each of the Limited Partners agrees hereafter
to execute, acknowledge, deliver, file, record and publish such further
certificates, instruments, agreements and other documents and to take all such
further action as may be required by law or deemed by the General Partner to be
necessary or useful in furtherance of the Partnership's purposes and the
objectives and intentions underlying this Agreement and not inconsistent with
the terms hereof.
14.8 Persons Bound. Except as herein provided to the contrary, this
Agreement shall be binding upon and inure to the benefit of the parties
signatory hereto,, their distributees, personal representatives and assigns.
14.9 Admission of Additional-Limited Partners. Each Limited Partner
agrees that the General Partner may, without the consent of the Limited
Partners, but subject to the requirements of Section 7.2(b), admit additional
Limited Partners to the Partnership at any time.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first hereinabove written.
GENERAL PARTNER
NETCO-WATERBURY SYSTEMS, INC.
$1,500 By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------- -------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
-18-
LIMITED PARTNER
SIGNATURE PAGE
TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
NETCO-WATERBURY, LIMITED PARTNERSHIP
Unless otherwise defined on this Signature Page, capitalized terms used
in the following paragraph have the meaning given to them by the Agreement of
Limited Partnership of NETCO-Waterbury, Limited Partnership (the "Agreement").
The undersigned acknowledges that is has received a copy of the
Agreement and that, subject only to the payment in full to the Partnership of
the Basic Capital Contribution stated below, the undersigned, from the date
hereof, shall have all of the rights and obligations of a Limited Partner as
that term is defined in the Agreement.
$15,000 SYNAGRO TECHNOLOGIES, INC.
--------------------------------
Basic Capital Contribution
By: /s/ Authorized Officer
------------------------------
Acknowledged and Agreed:
NETCO-WATERBURY SYSTEMS, INC.,
its General Partner
By: /s/ ▇▇▇▇ ▇. Totetta
----------------------------
▇▇▇▇ ▇. Totetta
President
SCHEDULE A
to the Agreement of Limited Partnership of
NETCO-Waterbury, Limited Partnership
SPECIAL ALLOCATION
(a) Limitation on Allocations of Losses. Notwithstanding anything
contained in Section 5.2, the Limited Partner shall not be allocated Net Loss to
the extent that such allocation would cause or increase a negative balance of
such Partner's Adjusted Capital Account as of the end of the taxable year to
which such allocation relates. All losses in excess of the limitations set forth
in this paragraph will be allocated to the General Partner.
(b) Qualified Income Offset. Notwithstanding any other provision of
this Agreement to the contrary (except paragraphs (c) and (d) hereof which will
be applied first), if in any Fiscal Year or other period any Partner
unexpectedly receives any adjustments, allocations, or distributions described
in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) which
result in a negative balance of such Partner's Adjusted Capital Account
(determined after the allocation of income, gain or loss under Section 5.2 and
this Schedule A), there will be allocated to each such Partner a pro rata share
of items of Profits, unreduced by any deduction, in proportion to such negative
balances until the Adjusted Capital Account for each such Partner is increased
to zero.
(c) 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 Partnership income and gain
for such year or period (and, if necessary, subsequent years or periods) in an
amount equal to that Partner's share of the net decrease in such Partnership
Minimum Gain during such year or period (as determined under Treasury
Regulations Section 1.7042(g)) (the "Partnership Minimum Gain Chargeback").
However, if there are not sufficient items of Partnership income and
gain in such year or period to make the allocation specified above for all
Partners for such year or period, the items of income and gain will be allocated
among the Partners in proportion to the respective amounts they would have been
allocated had there been an unlimited amount of items of income and gain for
such Fiscal Year or period.
A Partner is not subject to this Partnership Minimum Gain Chargeback,
however, to the extent that the Partner's share of the net decrease in the
Partnership Minimum Gain is caused by a guaranty, refinancing or other change in
the debt instrument causing such debt instrument to become partially or wholly
Partner Nonrecourse Debt, and the Partner bears the economic risk of loss for
the newly guaranteed, refinanced or otherwise changed liability.
(d) Partner Minimum Gain Chargeback. Notwithstanding any other
provision of the Agreement or this Schedule to the contrary other than paragraph
(c) of this Schedule, if in any Fiscal Year or other period there is a net
decrease in the amount of Partner Minimum Gain, then
each Partner will first be allocated items of Partnership income and gain for
such year or period (and, if necessary, subsequent years or periods) in an
amount equal to that Partner's share of the net decrease in such Partner Minimum
Gain during such year or period (as determined under Treasury Regulation Section
1.704-2(i)(4)) (the "Partner Minimum Gain Chargeback").
However, if there are not sufficient items of Partnership income and
gain in such year or period to make the allocation specified above for all
Partners for such year or period, the items of income and gains will be
allocated among the Partners in proportion to the respective amounts they would
have been allocated had there been an unlimited amount of items of income and
gain for such Fiscal Year or period.
A Partner is not subject to this Partner Minimum Gain Chargeback,
however, to the extent the net decrease in Partner Minimum Gain arises because
the liability ceases to be Partner Nonrecourse Debt due to a conversion,
refinancing or other change in a debt instrument that causes such debt
instrument to become partially or wholly a Nonrecourse Debt. The amount that
would otherwise be subject to this Partner Minimum Gain Chargeback is added to
the Partner's share of Partnership Minimum Gain (as determined under Treasury
Regulation Section 1.704-2(g)(3)).
(e) Partnership Nonrecourse Deductions. Nonrecourse Deductions for any
Fiscal Year or other period will be specially allocated among the Partners as
items of Net Loss as provided in Section 5.2 of the Agreement and in accordance
with Treasury Regulations Section 1.704-2(j)(1)(ii).
(f) Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions
for any Fiscal Year or other period will be specially allocated solely to the
Partner or Partners who bear(s) the economic risk of loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Treasury Regulation Section 1.704-2(1)(2).
(g) In accordance with Code Section 704(c) and the Regulations
thereunder, with respect to any property contributed to the capital of the
Partnership, there will first be specially allocated amounts of depreciation
(and with respect to the disposition of any such property, such items of Taxable
Income or Taxable Loss), solely for federal income tax purposes, as are
necessary to take account of any variation between the adjusted basis of such
property to the Partnership for federal income tax purposes and its initial
value allocated to the Capital Account of the contributing Partner.
(h) Curative Allocation. In the event that any items of Profit or Loss
are specially allocated pursuant to paragraphs (a) and (b) hereof, upon
reasonable notice to the Partners, the General Partner will allocate to the
Partners subsequent items of Profit and Loss in the minimum amount sufficient,
in the reasonable judgment of the General Partner with the advice of counsel, to
the extent permitted by law, to result as nearly as practicable in implementing
the Partners' intended business arrangement, by causing each Partner to have a
Capital Account balance equal to that which would have resulted had the original
special allocation not occurred.
A-2
(i) In accordance with Section 706 of the Code, the Partnership shall
use the closing of the books methodology for purposes of allocating Taxable
Income and Taxable Loss in connection with any transfer of an Interest or
admission of Partners subsequent to the execution of this Agreement.
(j) Capitalized terms used in this Schedule which are not defined in
the Agreement shall be defined as follows:
"Adjusted Capital Account" means with respect to any Partner
such Partner's Capital Account as of the end of the relevant Fiscal Year,
adjusted as follows:
(i) crediting to such Capital Account any amounts that such Partner is
obligated to restore to the Partnership pursuant to Treasury
Regulations Section 1.704-1(b)(2)(ii)(c) or is deemed to be obligated
to restore pursuant to the penultimate sentences of Treasury
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) debiting from such Capital Account the items described in Treasury
Regulations 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).
"Assets" means any personal or real property in which the
Partnership acquires an interest (whether as investor, owner or lessee), the
Partnership purchase agreements for any such personal or real property, any
leases with respect to such personal or real property and any and all other
rights relating to such personal or real property or the Partnership's interest
therein.
"Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time. A reference in this Agreement to a section of the
Code or to a Treasury Regulation shall be deemed to include a reference to any
provision or regulation amendatory or successor thereto.
"Gross Asset Value" means, with respect to any Asset, the
Asset's adjusted basis for federal income tax purposes, except as follows: (i)
the Gross Asset Values of all Partnership Assets will be adjusted to equal their
respective gross fair market values at the times specified in Treasury
Regulations under Section 704(b) of the Code if the General Partner so decides;
(ii) the Gross Asset Value of any Partnership Asset distributed to any Partner
will be the fair market value of such Asset (without reduction for any
liabilities to which such Asset may be subject)., as determined by the General
Partner as of the date of distribution; and (iii) the Gross Asset Value of
Partnership Assets will be increased (or decreased) to reflect any adjustments
to the adjusted basis of such Assets pursuant to Code Section 734(b) or Code
Section 743(b), but only to the extent that such adjustments are taken into
account in determining capital Accounts pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m) and Section 6.1 hereof.
"Nonrecourse Debt" means any indebtedness that is, or is
treated as, a nonrecourse debt of the partnership for which no Partner bears (or
is treated as bearing) the economic risk of loss, as determined pursuant to
Treasury Regulation Section 1.7522.
"Partner Minimum Gain" means a Partner's share of "partner
nonrecourse debt minimum gain" as determined pursuant to Treasury Regulation
Section 1.704-2(i)(5).
A-3
"Partner Nonrecourse Debt" means any indebtedness that is, or
is treated as, a nonrecourse debt of the Partnership for which any Partner bears
(or is treated as bearing) the economic risk of loss, as determined pursuant to
Treasury Regulation Sections 1.704-2(i)(1) and 1.752-2.
"Partner Nonrecourse Deductions" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
"Partnership Minimum Gain" has the meaning set forth in
Treasury Regulation Section 1.704-2(d).
"Partnership Nonrecourse Deductions" has the meaning set forth
in Treasury Regulation Section 1.704-2(b)(1).
"Profits" and "Losses" means, for each Fiscal Year or other
period, an amount equal to the Partnership's taxable income or loss for such
Fiscal Year or other 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)(i) will be included in
taxable income or loss), with the following adjustments: (i) any income of the
Partnership that is exempt from federal income tax or not otherwise taken into
account in computing Profits or Losses pursuant to this definition will be added
to such taxable income or loss; (ii) any expenditures of the Partnership
described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures under Treasury Regulations Section 1.7041(b)(2)(iv)(i), and not
otherwise taken into account in computing Profits or Losses, will be subtracted
from such taxable income or taxable loss; (iii) gain or loss resulting from any
disposition of Partnership property with respect to which gain or loss is
recognized for federal income tax purposes will be computed by reference to the
Gross Asset Value of such property, notwithstanding that the adjusted tax basis
of such property differs from its Gross Asset Value; (iv) in lieu of the
depreciation, amortization and other cost recovery deductions taken into account
in computing taxable income or taxable loss, there will be taken into account
depreciation on the Assets' respective Gross Asset Values for such Fiscal Year
or other period determined in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(g)(3); (v) in the event that the Gross Asset Value of any
Asset is adjusted pursuant to a revaluation of the Partnership Assets, Profits
and Losses will include the amount of such adjustment, as though the Asset in
question had been sold for its adjusted Gross Asset Value on the date of
redetermination; and (vi) notwithstanding any other provision in this
definition, any items which are specially allocated to the Partners pursuant to
this Schedule will not be taken into account in computing Profits or Losses.
"Taxable Income" or "Taxable Loss" means, for each Fiscal Year
or other period, an amount equal to the Partnership's taxable income or taxable
loss for such Fiscal Year or other period, determined for federal income
purposes in accordance with Code Section 703(a).
A-4
