Exhibit 10.14
▇▇▇ ▇▇▇▇▇▇ GENERAL PPARTNERSHIP
(A Texas General Partnership)
GENERAL PARTNERSHIP AGREEMENT
_____________________
Dated as of April 8, 1998
____________________
TABLE OF CONTENTS
Page
ARTIC Definitions
1.1 Definitions 1
ARTICLE 2
Organization
2.1 Formation of General Partnership 7
2.2 Name 7
2.3 Character of Business 7
2.4 Registered Office and Agent 7
2.5 Fiscal Year 7
ARTICLE 3
Capital Contributions
3.1 Capital Contributions to the Partnership 7
3.2 Additional Capital Contributions 7
3.3 No Return of Capital Contributions 9
3.4 Interest 9
ARTICLE 4
Rights and Obligations of Partners
4.1 Management of Partnership 10
4.2 Management Committee 10
4.3 Major Decisions 11
4.4 Budgets and Reports 11
4.5 Powers of the Operating Partner 11
4.6 Liability of Partners 12
4.7 Other Activities of Partners 12
ARTICLE 5
Exculpation and Indemnity
5.1 Exculpation 12
5.2 Indemnity 12
ARTICLE 6
Distributions and Allocations
6.1 Distributions 13
6.2 Tax Allocations 13
ARTICLE 7
Admissions, Transfers and Withdrawals
7.1 Admission of New Partners 13
7.2 Transfer of Partnership Interests 14
7.3 Buy/Sell 14
7.4 No Substituted Partners 16
7.5 Withdrawal of Partners 16
ARTICLE 8
General Accounting Provisions and Books
8.1 Books of Account; Tax Returns 16
8.2 Place Kept; Inspection 16
8.3 Tax Matters Partner 16
ARTICLE 9
Amendments and Waivers
9.1 Amendments and Waivers 17
9.2 Certain Other Amendments 17
ARTICLE 10
Dissolution and Termination
10.1 Dissolution 17
10.2 Accounting on Dissolution 18
10.3 Termination 18
10.4 No Negative Capital Account Obligation 19
10.5 No Other Cause of Dissolution 19
10.6 Merger 19
ARTICLE 11
Miscellaneous
11.1 Waiver of Partition 19
11.2 Entire Agreement 19
11.3 Severability 19
11.4 Notices 19
11.5 Governing Laws 19
11.6 Successors and Assigns 20
11.7 Counterparts 20
11.8 Headings 20
11.9 Other Terms 20
11.10 Power of Attorney 20
11.11 Transfer and Other Restrictions 21
▇▇▇ ▇▇▇▇▇▇ GENERAL PARTNERSHIP
GENERAL PARTNERSHIP AGREEMENT
This General Partnership Agreement (this "Agreement") of ▇▇▇ ▇▇▇▇▇▇
General Partnership, a Texas general partnership (the "Partnership"), is
made effective as of April 8, 1998 (the "Effective Date"), by and between
Oly/Houston ▇▇▇▇▇▇, ▇.▇., a Texas limited partnership, as the financial
partner (the "Financial Partner") and Oly/▇▇ ▇▇▇▇▇▇, L.P., a Texas limited
partnership, as the operating partner (the "Operating Partner"). (The
Financial Partner and the Operating Partner are collectively referred to
herein as the "Partners" and individually referred to as a "Partner".) The
Operating Partner is additionally referred to as "FM." The Financial
Partner is additionally referred to as "Olympus."
R E C I T A L S:
A. The parties hereto desire to form a general partnership under the
Act (as defined below).
B. The Partnership is being formed for the purpose of acquiring,
owning, developing and reselling that certain property located in ▇▇▇▇▇▇
County, Texas and known as "▇▇▇▇▇▇ on Lake Houston" (the "Property")
pursuant to that certain Agreement of Purchase and Sale, as amended, by and
between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ III, Trustee, as purchaser and ▇▇ ▇▇▇▇▇▇ on Lake
Houston, Ltd. as seller dated January 26, 1998, and that certain Contract
for Sale of Unimproved Property, as amended, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
III, Trustee, as purchaser and Baruch Properties as seller dated March 4,
1998 (collectively, the "Purchase Agreements").
C. The initial Partners hereto desire to enter into this Agreement
to establish their respective rights and obligations with respect to the
Partnership and to provide for the orderly management of the affairs of the
Partnership.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the Partners hereby agree as follows:
ARTICLE 1
Definitions
1.1 Definitions. As used in this Agreement, the follow-ing
terms shall have the following meanings:
"Act" shall have the meaning set forth in Section 2.1.
"Affiliate" shall mean, when used with reference to a specified
Person, any other Person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common
control with, the specified Person. As used in this definition of
Affiliate, the term "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of
voting securities, by contract, or otherwise.
"Business" shall mean all tangible and intangible property of the
Partnership as of the date of the Buy/Sell offer and any proceeds
therefrom subject to all obligations or liabilities associated
therewith.
"Business Day" shall mean any day other than a Saturday, Sun-day, or
holiday on which national banking associations in the State of Texas
are authorized or required to be closed.
"Business Plan" shall mean the business plan attached hereto as
Exhibit A and incorporated herein, and as may be amended from time to
time in accordance with the provisions hereof.
"Buy-Sell" shall have the meaning set forth in Section 7.3 .
"Buy/Sell Closing Date" shall have the meaning set forth in Section
7.3.
"Buy/Sell Election Period" shall have the meaning set forth in
Section 7.3.
"Buy/Sell Offer" shall have the meaning set forth in Section 7.3.
"Buy/Sell Purchaser" shall have the meaning set forth in Section
7.3 .
"Buy/Sell Seller" shall have the meaning set forth in Section
7.3.
"Capital Account" shall mean a separate account maintained for each
Partner in accordance with the provisions of Regulation section 1.704-
1(b)(2)(iv). Each Partner shall have only one Capital Account,
regardless of the number of classes of units or other interests in the
Partnership owned by such Partner. Initially, the Capital Account of
each Partner shall have a positive balance equal to its initial
Capital Contribution. Such Capital Account shall thereafter be
adjusted in accordance with the following provisions:
(a) Additions. The Capital Account shall be increased by the
sum of (i) except as otherwise provided in paragraph (f) below in
the case of a contribution of a promissory note, the amount of
cash and the fair market value (determined as of the date of
contribution, without regard to section 7701(g) of the Code,
including a constructive contribution resulting from a
termination and reconstitution of the Partnership under section
708(b)(1)(B) of the Code) of property contributed, or deemed to
have been contributed, to the capital of the Partnership by the
Partner, net of any liabilities assumed by the Partnership in
connection with such contribution or to which the contributed
property is subject under section 752 of the Code; plus (ii) the
amount of any net income or other item of income or gain
allocated to the Partner pursuant to Article 6 hereof.
(b) Subtractions. The Capital Account shall be reduced by the
sum of (i) the amount of any net loss or other item of expense,
loss or deduction allocated to the Partner pursuant to Article 6
hereof; plus (ii) the Distribution Value (determined without
regard to section 7701(g) of the Code) of any cash or other
property distributed, or deemed to have been distributed, by the
Partnership to the Partner, net of any liabilities assumed by the
distributee in connection with the distribution or to which the
cash or other distributed property is subject under section 752
of the Code.
(c) Other Adjustments. The Capital Account shall otherwise be
adjusted by the Financial Partner in accordance with the other
capital account maintenance rules of Regulation section 1.704-
1(b)(2)(iv). In connection with the foregoing:
(d) Determination of Fair Market Value. In determining the
balance of each Partner's Capital Account, and for all other
purposes of this Agreement, the fair market value of an asset
contributed to or distributed by the Partnership shall be
determined in good faith by the Financial Partner (which shall
use its reasonable efforts not to overstate or understate the
fair market value of any such asset).
(e) Capital Account of Transferee. A transferee of all or part
of an interest in the capital and profits of the Partnership
shall succeed to the Capital Account of the transferor to the
extent that such Capital Account relates to the transferred
interest.
(f) Contribution of Note. Notwithstanding any other provision
of this definition of Capital Account, if a Partner has
contributed his promissory note to the capital of the Partnership
and such note is not readily traded on an established securities
market, then the principal of such note shall not be credited to
the Partner's Capital Account until and to the extent that either
(i) the Partnership makes a taxable disposition of the note or
(ii) principal payments are made on the note, all in accordance
with Regulation section 1.704-1(b)(2)(iv)(d)(2).
"Capital Contribution" shall mean the gross amount of cash or the
fair market value of other property contributed or caused to be
contributed to the capital of the Partnership by a Partner with
respect to such Partner's capital account.
"Cash Flow" of the Partnership for any period shall mean any and all
cash revenues generated from the ownership, sale of lots, sale of
undeveloped parcels, lease and other operation of the Partnership
assets and any and all capital transaction proceeds minus the sum of
(i) any operating and capital expenses incurred in the operation of
the business of the Partnership, including without limitation any
payments of interest and principal (other than payments of principal
that are refinanced by the Partnership) on Partnership indebtedness
(expressly excluding the Mezzanine Financing) required by the lender
of such indebtedness during the quarterly period in question, and
(ii) a reasonable reserve for necessary or desirable operating and
capital expenses of the Partnership that are anticipated to be
incurred or to become due and payable within six (6) months as the
Management Committee, in the exercise of its reasonable discretion and
as is consistent with the Operating Budget and the Business Plan,
shall determine.
"Code" shall mean the Internal Revenue Code of 1986 and any
successor statute, as amended from time to time.
"Contribution Percentage" of a Partner shall be based on the actual
equity capital contributions of such Partner in relation to the total
equity capital contributions of all Partners.
"Deadlock" shall mean the failure of the Partners to agree with
respect to any Major Decision or other issue with respect to the
Partnership which could have a material adverse effect or impact to
the Partnership if such issue remains unresolved between the Partners.
"Deemed Recipient" shall have the meaning set forth in Section 3.2.
"Default Amount" shall have the meaning set forth in Section 3.2.
"Defaulting Partner" shall have the meaning set forth in Section
3.2.
"Distribution Period" shall mean (i) the period beginning on the
Effective Date and ending on June 30, 1998 and (ii) each calendar
quarter thereafter.
"Distribution Value" shall mean the dollar amount of any cash
distribution and the fair market value, as jointly determined in good
faith by the Partners (each of which shall use its reasonable efforts
not to overstate or understate fair market value), of any non-cash
property distribution at the time of the distribution, net of the
distributee's share of any liabilities to which the distributed
property is subject and net of any liabilities assumed by the
distributee.
"Effective Date" shall have the meaning set forth in the preamble to
this Agreement.
"Escrow Agent" shall have the meaning set forth in Section 7.3.
"Financial Partner" shall mean Oly/Houston ▇▇▇▇▇▇, ▇.▇., together
with its successors and assigns.
"FM" shall have the meaning set forth in the preamble of this
Agreement.
"FM Representative" shall have the meaning set forth in Section 4.2.
"Indemnified Parties" shall have the meaning set forth in Section
7.3 .
"Loan" shall have the meaning set forth in Section 3.1.
"Lender" shall have the meaning set forth in Section 3.1.
"Major Decision" means any decision with respect to (1) approval of
the Business Plan; (2) approval of the annual Operating Budget; (3)
approval of the plans and specifications for the Property, and the
subsequent approval of all material change orders or amendments given
in substitution for such approved plans and specifications; (4)
approval of any third party financing or refinancing for the Property,
whether secured or unsecured, unless previously approved in the
Business Plan or annual Operating Budget; (5) approval of acquisition
of any additional property, (6) approval of incurring indebtedness
that has recourse for the Partners, (7) approval of any sale, exchange
or other disposition of the Property; (8) approval of any amendments
to the Agreement; (9) approval of any termination or dissolution of
the Partnership; and (10) appointment of a successor manager pursuant
to Section 4.1.
"Management Committee" shall have the meaning set forth in Section
4.2.
"Mandatory Additional Contribution" shall have the meaning set
forth in Section 3.2.
"Mezzanine Financing" shall mean, the unsecured loan obtained by the
Partnership in the original principal amount of $3,400,000.00 from Oly
Lender ▇▇▇▇▇▇, ▇.▇., a Texas limited partnership, or one or more of
its Affiliates, in connection with the capitalization of the
Partnership, together with any amendments, modifications,
substitutions, replacements or refinancings thereof.
"Mezzanine Financing Notes" shall mean those certain Promissory
Notes dated as of the date hereof, as governed by the Mezzanine Loan
Agreement evidencing the Mezzanine Financing, and executed by the
Partnership, as maker, and payable to the order of Oly Lender ▇▇▇▇▇▇,
▇.▇., a Texas limited partnership, together with any amendments,
modifications, substitutions, replacements or refinancings thereof.
"Non-Defaulting Partners" shall have the meaning set forth in
Section 3.2.
"Offer Amount" shall have the meaning set forth in Section 7.3.
"Offer Deposit" shall mean the sum of Five Hundred Thousand and
No/100 Dollars ($500,000.00) in cash.
"Offeree" shall have the meaning set forth in Section 7.3.
"Offeror" shall have the meaning set forth in Section 7.3.
"Olympus" shall have the meaning set forth in the preamble of
this Agreement.
"Olympus Representative" shall have the meaning set forth i
Section 4.2.
"Operating Budget" shall mean the budget attached hereto as Exhibit
B and incorporated herein, as may be amended from time to time in
accordance with the provisions hereof.
"Operating Partner" shall mean Oly/▇▇ ▇▇▇▇▇▇, L.P., together with
its successors or assigns.
"Partner" shall mean any Person executing this Agreement as of the
Effective Date as a partner or hereafter admitted to the Partnership
as a partner as provided in this Agreement, but does not include any
Person who has ceased to be a Partner of the Partnership.
"Partnership" shall have the meaning set forth in the preamble to
this Agreement.
"Partnership Interest" shall have the meaning set forth in
Section 7.3 .
"Person" shall mean an individual, partnership, joint venture,
limited part-nership, limited liability company, foreign limited
liability company, trust, business trust, estate, corporation,
custodian, trustee, exec-utor, administrator, nominee, association,
cooperative or entity in a representative capacity.
"Property" shall have the meaning set forth in the preamble of this
Agreement.
"Preferred Return" shall mean the following:
(a) With respect to the first Distribution Period, the
Preferred Return of a Partner shall be the product of (i) the
Unreturned Capital of such Partner from time to time during such
Distribution Period, times (ii) fifteen percent (15.0%), times
(iii) a fraction, the numerator of which is the number of days in
such Distribution Period and the denominator of which is three
hundred and sixty-five (365).
(b) With respect to each Distribution Period following the
first Distribution Period, the Preferred Return of a Partner
shall be the sum of (i) the excess (if any) of such Partner's
Preferred Return determined as of the last day of the
Distribution Period immediately preceding the Distribution Period
under consideration over any distribution made to such Partner
pursuant to Section 6.1 hereof with respect to such immediately
preceding Distribution Period, plus (ii) the product of (A) the
sum of (1) the excess (if any) of such Partner's Preferred Return
determined as of the last day of the Distribution Period
immediately preceding the Distribution Period under consideration
over any distribution made to such Partner pursuant to Section
6.1 hereof with respect to such immediately preceding
Distribution Period, plus (2) the Unreturned Capital (if any) of
such Partner from time to time during the Distribution Period
under consideration, ttimes (B(B) fifteen percent (15.0%), times
(C) a fraction, the numerator of which is the number of days in
the Distribution Period under consideration and the denominator
of which is three hundred and sixty-five (365).
"Receipt Amount" shall have the meaning set forth in Section 7.3.
"Regulation" shall mean Treasury Regulations promulgated under Title of
26 the United States Code.
"Replacement Loan" shall have the meaning set forth in Section
3.2.
"Representative" shall have the meaning set forth in Section 4.2.
"Required Capital Contributions" shall have the meaning set forth
in Section 3.1.
"Required Interest" shall mean both of the General Partners.
"Sharing Ratio" shall have the meaning set forth on Schedule I
attached hereto.
"Tax Matters Partner" shall have the meaning set forth in Section
8.3.
"Unreturned Capital" as of a date shall mean the following:
(a) In the case of each of the Partners, its Unreturned
Capital shall be the excess, if any, of the total Capital
Contributions made by such Partner over the total distributions
received by such Partner under Section 6.1(ii) hereof prior to the
date as of which such Partner's Unreturned Capital is determined.
(b) In the case of a transferee of an interest in the
Partnership, the transferee's Unreturned Capital shall be the
Unreturned Capital as of the date of the transfer of the transferor
times a fraction, the numerator of which is the Contribution
Percentage attributable to the interest in Partnership capital and
profits transferred by the transferor to the transferee, and the
denominator of which is the sum of the Contribution Percentages
attributable to both the interest in Partnership capital and profits
retained by the transferor (if any) and the interest in Partnership
capital and profits transferred by the transferor to the transferee.
Likewise, the Unreturned Capital of the transferor shall be reduced by
the Unreturned Capital of the transferee to whom all or part of the
transferor's interest in Partnership capital and profits has been
transferred.
ARTICLE 2
Organization
2.1 Formation of General Partnership. The Partners have
formed a general partnership pursuant to and in accordance with the
provisions of the Texas Revised Partnership Act, as from time to time
amended ("Act").
2.2 Name. The name of the Partnership is ▇▇▇ ▇▇▇▇▇▇ General
Partnership. The Financial Partner may, in its sole discretion, change the
name of the Partnership from time to time and shall give prompt written
notice thereof to the Operating Partner; provided, however, that such name
may not contain any portion of the name or ▇▇▇▇ of the Operating Partner
without the Operating Partner's consent.
2.3 Character of Business. The purpose of the Partnership
shall be (i) to acquire, hold, develop, sell, encumber, or otherwise act
with respect to investments, direct or indirect, in the Property, and
(ii) to engage in such other business as may be conducted by a general
partnership organized under the laws of the State of Texas.
2.4 Registered Office and Agent. The name and address of the
Partnership's initial registered agent are Olympus Real Estate Corporation,
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. The Partnership's
initial principal place of business shall be ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. The Financial Partner may change such
registered agent, registered office, or principal place of business from
time to time. The Financial Partner shall give prompt written notice of
any such change to the Operating Partner. The Partnership may from time to
time have such other place or places of business within or without the
State of Texas as may be determined by the Financial Partner.
2.5 Fiscal Year. The fiscal year of the Partnership shall end
on December 31 of each calendar year unless, for United States federal
income tax purposes, another fiscal year is required. The Partnership
shall have the same fiscal year for United States federal income tax
purposes and for accounting purposes.
ARTICLE 3
Capital Contributions
3.1 Capital Contributions to the Partnership. The Partners
shall contribute or be deemed to have contributed capital to the
Partnership in the amounts respectively set forth opposite their names on
Schedule I to this Agreement on the Effective Date (collectively, the
"Required Capital Contributions"). Additionally, the Financial Partner
shall obtain the Mezzanine Loan on behalf of the Partnership. Also, in
addition to the Required Capital Contributions, the Partners acknowledge
that in order to purchase and develop the Property, the Partnership will
need to secure from a third party lender (the "Lender") a term loan, which
shall be in the amount set forth in the Business Plan and on terms and
conditions satisfactory to the Partners and which shall be non-recourse to
the Partners (the "Loan").
3.2 Additional Capital Contributions.
(a) After the funding of the Required Capital Contribution set forth
above (including any amounts deemed to have been contributed), and to the
extent not available from proceeds of the Loan, either (i) the Partners may
agree to make additional Capital Contributions to the Partnership as are
deemed advisable by the Partners (each exercising their independent
discretion), or (ii) if either (A) there has been a default or an event of
default under the Loan or (B) additional capital is necessary to complete
any capital improvement program approved in the Business Plan, or (C) funds
are necessary for continued operation of the Property then the Financial
Partner may elect to call or not call for additional Capital Contributions
(in each case, the "Mandatory Additional Contribution") to be made to the
Partnership to cure any default or event of default under the Loan or to
complete such capital improvement program or fund operations. The
Mandatory Additional Contribution in question shall be made by the Partners
pro rata, based on the Contribution Percentages of the Partners. This
Section 3.2 is solely for the benefit of the Partners, and shall not, nor
shall it be deemed to, create any rights in, or provide any benefit to, any
other person or entity, and the decision to make additional contributions
to the Partnership shall be made in the sole and absolute discretion of the
Financial Partner.
(b) Each Partner shall be required to make its Mandatory Additional
Contribution to the Partnership on or before twenty-one (21) days after
written notice to such Partner. In the event any Partner fails to make a
Mandatory Additional Contribution as required by this Section 3. within
the time period set forth herein (such Partner(s), being herein referred to
as the "Defaulting Partner"), then, the "Non-Defaulting Partners" (herein
so called) shall be entitled, as their sole and exclusive remedy for such
failure, by giving written notice to the Defaulting Partner to make a loan
(the "Replacement Loan") to the Defaulting Partner in the amount of such
Mandatory Additional Contribution, which Replacement Loan (i) shall be
applied solely to fund the delinquent Mandatory Additional Contribution,
(ii) shall have a term of one hundred twenty (120) days from the date of
such loan and (iii) shall bear interest at the lesser of (A) eighteen
percent (18%) per annum, compounded quarterly and (B) the maximum rate of
interest which may be charged, collected or contracted for under applicable
law, with accrued interest due at the maturity of such loan (each such
Replacement Loan together with all accrued interest thereon from time to
time, the "Default Amount"). Anything contained in this Agreement to the
contrary notwithstanding, any Partner who becomes a Defaulting Partner
shall immediately and without any further demand, notice or cure period
(time being of the essence herein) automatically cease to have a right to
vote on all Partnership decisions for any purposes hereunder for the
remainder of the life of the Partnership; provided, however, if a
Defaulting Partner shall pay the Default Amount in full to the Non-
Defaulting Partner who elected to make such loan, on or before the
expiration of the 120-day term of the Replacement Loan to such Defaulting
Partner, such Defaulting Partner's voting rights hereunder shall be
automatically re-instated (effective as of the date such Default Amount is
paid in full) for all purposes. If the Default Amount is not paid in full
on or before the expiration of the 120-day period, the Defaulting Partner's
voting rights shall not be reinstated upon the subsequent payment of the
Default Amount.
(c) The Partners further agree that if the Default Amount is not
repaid to the Non-Defaulting Partner within the 120-day term, then, without
demand, notice or cure period (time being of the essence herein), such
Default Amount shall for all purposes hereunder be deemed to be a Capital
Contribution by the Non-Defaulting Partner to the Partnership effective as
of the expiration of such 120-day term of such Replacement Loan, which
deemed Capital Contribution shall be credited as an amount equal to the
product of 200% times the Default Amount, and the Capital Account of the
Defaulting Partner shall for all purposes be appropriately reduced to
reflect such treatment; provided, however, with respect to any Default
Amount attributable to a Replacement Loan made more than one hundred twenty
(120) days after the initial Replacement Loan (which is not repaid during
its 120-day term) is made by a Non-Defaulting Partner, the deemed Capital
Contribution shall be credited as an amount equal to the product of 300%
times the Default Amount, and in each case the distribution percentages of
the Defaulting Partner (i.e., the pro rata share of the particular
distribution which such Partner would otherwise receive under such
sections) shall be reduced by, and the distribution percentages of the Non-
Defaulting Partner who makes its pro rata share of such loan shall be
increased by an amount equal to the quotient of (i) 200% (or 300%, as the
case may be) times the Default Amount, divided by (ii) the aggregate
Capital Contributions made by the Partners to the Partnership prior to the
date of calculation (including the Mandatory Additional Contributions of
the Non-Defaulting Partner but excluding the Default Amount then in
question).
(d) The new distribution percentages computed in accordance with this
Section 3.2 shall remain in effect under this Agreement unless and until
there is a subsequent adjustment to the distribution percentages.
Notwithstanding the foregoing, no Partner's distribution percentage shall
be reduced under any circumstance to less than zero, nor shall any
Partner's distribution percentage be increased under any circumstance to
more than 100%. Mandatory Additional Contributions shall be made pro rata,
based on the relative Contribution Percentages of the Partners.
(e) Each Partner which becomes a Defaulting Partner hereby
irrevocably grants to the other Partner a continuing, first priority,
perfected security interest in the Partnership Interest of such Defaulting
Partner to secure the prompt payment of each Replacement Loan made to such
Defaulting Partner until such time, if ever, as the Default Amount with
respect to the Replacement Loan under consideration has been converted to a
deemed Capital Contribution pursuant to Section 3.2(c). On or before 15
days after any written request of the Non-Defaulting Partner, the
Defaulting Partner shall execute and deliver a UCC-1 financing statement in
form and substance acceptable to the Non-Defaulting Partner to evidence
such security interest, the failure of which shall constitute a default
under the Replacement Loan. Prior to a default or maturity of a
Replacement Loan, and without limiting the remedies of the Non-Defaulting
Partner, at the election of the Non-Defaulting Partner all distributions
payable to the Defaulting Partner under this Agreement shall be payable
directly to the Non-Defaulting Partner (pro rata based on the relative
amount of the Replacement Loan made by the Non-Defaulting Partner) until
the Replacement Loan(s) of the Defaulting Partner are paid in full (or
converted to a deemed Capital Contribution), shall be paid directly to the
Non-Defaulting Partner until the entire amount of the Replacement Loan is
paid in full. Any amounts paid directly to the Non-Defaulting Partner
pursuant to the terms of the preceding sentence shall be treated as paid to
the person (the "Deemed Recipient") entitled to receive the amount of the
distribution in the absence of the requirements of the preceding sentence
(thereby discharging the Partnership's obligation to make the payment in
question to the Deemed Recipient) and then as applied by the Deemed
Recipient on behalf of the Defaulting Partner to the repayment of the
Defaulting Partner's loan.
(f) EXCEPT AS SET FORTH IN SECTION 3.1 OR THIS SECTION 3.2, NO
ADDITIONAL CAPITAL CONTRIBUTIONS SHALL BE REQUIRED BY ANY PARTNER UNLESS AN
EXPRESS WRITTEN CALL FOR A CAPITAL CONTRIBUTION IS MADE BY THE FINANCIAL
PARTNER TO EACH OF THE PARTNERS.
3.3 No Return of Capital Contributions. No Partner is
entitled to a return of its Capital Contribution, but shall look solely to
distributions from the Partnership as provided for in Article 6 of this
Agreement.
3.4 Interest. No Partner shall be entitled to interest on its
Capital Contribution or its Capital Account, provided that each Partner's
Capital Contribution shall accrue the Preferred Return (which shall not be
deemed to be interest) as set forth herein. Any interest actually received
by reason of temporary investment of any part of the Partnership's funds
shall be included in the Partnership's funds.
ARTICLE 4
Rights and Obligations of Partners
4.1 Management of Partnership. The management, control, and
direction of the Partnership and its operations, business, and affairs
shall be vested exclusively in the Financial Partner, which shall have the
right, power, and authority, acting solely by itself and without the
necessity of approval by any Partner or any other person, to carry out any
and all of the purposes of the Partnership and to perform or refrain from
performing any and all acts that the Financial Partner may deem necessary,
desirable, appropriate, or incidental thereto, except as otherwise provided
in this Agreement; provided, however, that the Operating Partner shall
manage the Partnership and its operations, business, and affairs solely as
described in Section 4.5. The Management Committee may replace the
Operating Partner at any time in the event the Management Committee
determines in its good faith discretion that either (i) the Operating
Partner has acted negligently or with willful misconduct in performing its
duties or (ii) the monthly financial reports of the Partnership reveal a
material adverse deviation from the Business Plan more than three (3) times
within any twelve (12) month period.
4.2 Management Committee.
(a) The "Management Committee" (herein so called) shall consist of
three (3) representatives, one (1) of which shall be designated by FM
(collectively, the "FM Representative") and two (2) of which shall be
designated by Olympus (jointly, the "Olympus Representative")
(individually, a "Representative" and collectively, the "Representatives");
The initial Representatives designated by Olympus and FM are set forth
opposite such Partner's name below:
Partner Initial Representative
Olympus ▇▇▇ ▇▇▇▇
Olympus ▇▇▇▇ ▇▇▇▇▇
FM ▇▇▇ ▇▇▇▇▇
Olympus and FM may appoint alternates for the Representatives appointed by
it, which alternates shall have all the powers of the Representatives in
their absence or inability to serve. Olympus and FM may change its
designated Representatives effective upon written notice from Olympus or FM
designating such Representative to the other Partners. One of the Olympus
Representatives shall serve as Chairman of the Management Committee and
shall set the agenda for such meetings.
(b) The Representatives shall meet quarterly (or more often, as the
Financial Partner may reasonably determine) in the offices of the
Partnership or by telephone conference, unless the Representatives jointly
agree that the meeting is unnecessary or that a different schedule or
location for the meeting is appropriate, to discuss current material
management issues (but not day-to-day operations matters which are in
accordance with the operation parameters set forth in the Business Plan,
Operating Budget or otherwise set forth in writing) or Major Decisions. At
each meeting the Representatives shall each receive one (1) vote. All
action taken by the Management Committee shall require the approval or
consent of at least two (2) Representatives. Representatives may bring to
any meeting such employees, agents, professionals and advisors as they deem
necessary or appropriate to assist them at such meeting. A quorum shall
consist of at least one FM Representative and one Olympus Representative
unless the FM Representative has declined to attend two (2) consecutive
meetings which are scheduled with at least seventy-two (72) hours prior
notice for each meeting at the offices of the Partnership, in which event
the quorum may be two Olympus Representatives.
(c) The Financial Partner shall be authorized and empowered to (i)
make all day-to-day management decisions (provided that such decisions are
consistent with the operation parameters set forth in the Business Plan,
Operating Budget or otherwise in writing) except for Major Decisions on
behalf of the Management Committee, (ii) direct the Operating Partner,
(iii) perform all acts and enter into and perform all contracts and other
undertakings that the Financial Partner may, in the exercise of its
reasonable discretion, deem necessary, advisable, appropriate or incidental
thereto and (iv) terminate Stratus or a successor property manager in the
event of a default in the Management Standard (as that term is defined in
the Management Agreement), provided, if Stratus is terminated as property
manager, then the Partnership (as a Major Decision) shall designate a
successor manager.
4.3 Major Decisions. All Major Decisions shall be made by both the
Financial Partner and the Operating Partner. Accordingly, neither FM nor
Olympus, on behalf of the Management Committee, shall have the right or the
power to make any binding commitment on behalf of the Partnership in
respect of a Major Decision unless and until all of the Representatives
have authorized the same in writing.
4.4 Budgets and Reports.
(a) By January 31st of each calendar year hereafter during the term
hereof, the Operating Partner shall prepare a revised Operating Budget and
the Business Plan for the operation of the Partnership. The Management
Committee shall have thirty (30) days after receipt thereof to either
approve the submitted Business Plan and Operating Budget or respond with
required changes to same.
(b) The Operating Partner agrees to use diligence and to employ all
reasonable efforts to ensure that the actual costs of operating the
Partnership shall not exceed the Operating Budget, either in total or for
any one accounting category. The Operating Partner shall secure the
written approval of the Management Committee for any expenditure that
(i) exceeds fifteen percent (15%) of the annual budgeted amount for the
Partnership in any one line item on such Operating Budget or (ii) exceeds
ten percent (10%) of the annual budgeted amount for the Partnership in all
accounting categories of the Operating Budget. During each applicable
calendar year, the Operating Partner agrees to immediately inform the
Management Committee of any major increases in costs and expenses that were
not foreseen during the budget preparation period and thus were not
reflected in the Operating Budget.
(c) The Operating Partner shall also submit any additional financial
or operational reports as the Financial Partner may from time to time
reasonably request.
4.5 Powers of the Operating Partner. Subject to Section 4.3
the Operating Partner shall have the duties, rights and obligations to
implement the operations of the Partnership as described in the Business
Plan, Operating Budget or approved in writing by the Management Committee.
The Operating Partner may initially delegate its duties to manage the
Property to Stratus Management, L.L.C. ("Stratus") in accordance with the
terms and conditions of that certain Management Agreement dated of even
date herewith (the "Management Agreement") by and between Oly/▇▇ ▇▇▇▇▇▇,
L.P. and Stratus. The Management Agreement will terminate upon (among
other things) the exercise of Stratus' option rights (the "Option") under
that certain Option Agreement dated of even date herewith by and between
Oly/▇▇ ▇▇▇▇▇▇, L.P. and Stratus unless ratified by the Management Committee
as of the closing of the Option. Without limiting the generality of
Section 4.1 but subject to Section 4.3, the Operating Partner, acting on
behalf of the Partnership, shall oversee the activities of Stratus or, if
the Management Agreement is terminated, perform the duties, rights and
obligations of Stratus; provided, however, neither the Operating Partner
nor Stratus shall take any action that has a material economic affect on
the Partnership without the prior approval of the Management Committee,
including, without limitation, approving the form and substance of all
contracts, loan documents or other documents necessary to operate the
business of the Partnership.
4.6 Liability of Partners. The Partners shall be personally
liable for the debts and obligations of the Partnership if (but solely to
the extent) required by applicable law; provided, however, that all such
debts and obligations shall be paid or discharged first with the property
of the Partnership (including insurance proceeds) before the Partners shall
be obligated to pay or discharge any such debt or obligation with its
personal assets. Notwithstanding the preceding sentence, the Partners
shall not be personally liable for any debts or obligations which are
nonrecourse or which, under the terms thereof, do not create or impose such
liability.
4.7 Other Activities of Partners. Except as otherwise agreed
in writing, each Partner (i) may carry on and conduct in any way or in any
capacity, including, but not limited to, for such Partner's own right and
for such Partner's own personal account, as a partner in any other
partnership, as a venturer in any joint venture, as a member or manager in
any limited liability company, as an employee, officer, director or
stockbroker of any corporation, or as a participant in any syndicate, pool,
trust, association or other business organization, a business that
competes, directly or indirectly, with the business of the Partnership,
(ii) will be free in any capacity to conduct business activities the same
or similar as conducted by the Partnership and (iii) may make investments
in any kind of property. The Partnership will have absolutely no claim or
right to any such business or assets thereof. Further, the Partnership
will have claim to and will own only those assets contributed to the
Partnership or acquired with Partnership funds or credit. Neither this
Agreement nor any principle of law or equity shall preclude or limit, in
any respect, the right of any Partner or any affiliate thereof to engage in
or derive profit or compensation from any activities or investments, nor
give any other Partner any right to participate or share in such activities
or investments or any profit or compensation derived therefrom.
ARTICLE 5
Exculpation and Indemnity
5.1 Exculpation. Neither the Partners nor any affiliate of
the Partners, nor any officer, director, manager, member, employee, agent,
stockholder, or partner of the Partners or any of its affiliates, shall be
liable, responsible, or accountable in damages or otherwise to the
Partnership or any Partner by reason of, or arising from or relating to the
operations, business, or affairs of, or any action taken or failure to act
on behalf of, the Partnership, except to the extent that any of the
foregoing is determined, by a final, nonappealable order of a court of
competent jurisdiction, to have been primarily caused by the gross
negligence, willful misconduct, or bad faith of the person claiming
exculpation.
5.2 Indemnity. The Partnership shall indemnify the Partners,
each affiliate of the Partners, and each officer, director, stockholder,
manager, member, and partner of the Partners or any of its affiliates, and
if so determined by the Partners, each employee or agent of the Partners or
any of its affiliates, against any claim, loss, damage, liability, or
expense (including reasonable attorneys' fees, court costs, and costs of
investigation and appeal) suffered or incurred by any such indemnitee by
reason of, or arising from or relating to the operations, business, or
affairs of, or any action taken or failure to act on behalf of, the
Partnership, except to the extent any of the foregoing (i) is determined by
final, nonappealable order of a court of competent jurisdiction to have
been primarily caused by the gross negligence, willful misconduct, or bad
faith of the person claiming indemnification or (ii) is suffered or
incurred as a result of any claim (other than a claim for indemnification
under this Agreement) asserted by the indemnitee as plaintiff against the
Partnership. Unless a determination has been made (by final, nonappealable
order of a court of competent jurisdiction) that indemnification is not
required, the Partnership shall, upon the request of any indemnitee,
advance or promptly reimburse such indemnitee's reasonable costs of
investigation, litigation, or appeal, including reasonable attorneys' fees;
provided, however, that the affected indemnitee shall, as a condition of
such indemnitee's right to receive such advances and reimbursements,
undertake in writing to repay promptly the Partnership for all such
advancements or reimbursements if a court of competent jurisdiction
determines that such indemnitee is not then entitled to indemnification
under this Section 5.2. No Partner shall be required to contribute capital
in respect of any indemnification claim under this Section 5.2 unless
otherwise provided in any other written agreement to which such Partner is
a party.
ARTICLE 6
Distributions and Allocations
6.1 Distributions. No later than thirty (30) days after the
end of each Distribution Period during which the Partnership has Cash Flow,
such Cash Flow shall be distributed as set forth below and in the order of
priority as set forth below. The Partnership shall receive 78.4314% of all
Cash Flow until the special distribution interest to be paid to ▇▇▇▇▇▇▇ ▇.
▇▇▇▇, ▇▇. pursuant to that certain Profits Participation letter agreement
dated April 9, 1998 has been paid in full. The Partnership shall then
receive 98.0392% of all Cash Flow.
(i) First, to the payment of the Mezzanine Financing
pursuant to the terms of the Mezzanine Loan Agreement; then
(ii) Second, to the payment of the Preferred Return on the
Unreturned Capital of each Partner in proportion to each Partner's
Capital Contribution; then
(iii) Third, to the return, pari passu of Capital
Contributions to each Partner; then
(iv) Fourth, to each Partner in proportion to the Sharing
Ratios.
6.2 Tax Allocations. For United States federal income tax
purposes, allocations of items of income, gain, loss, deduction, expense,
and credit for each fiscal year of the Partnership shall be in accordance
with each Partner's economic interest in the respective item, as determined
by the Financial Partner pursuant to Section 704(b) of the Code, and the
regulations promulgated thereunder and subject to the requirements of
Section 704(c) of the Code and the regulations promulgated thereunder.
Unless the Financial determines otherwise, allocations shall be made to
each Partner in the same manner as such Partner (i) would be required to
contribute to the Partnership or (ii) would receive as distributions if the
Partnership were to liquidate the assets of the Partnership at their book
value and distribute the proceeds in accordance with Section 6.1; provided,
however, that if any such allocation is not permitted by applicable law,
the Partnership's subsequent income, gain, loss, deduction, expense and
credit shall be allocated among the Partners so as to reflect as nearly as
possible the allocation used in computing capital accounts.
ARTICLE 7
Admissions, Transfers and Withdrawals
7.1 Admission of New Partners. After the Effective Date, new
Partners may be admitted to the Partnership only with the written consent
of, and upon such terms and conditions as are approved by the Financial
Partner. No admission of any new Partner shall cause the Partner's
interest in Partnership allocations, distributions and capital to be less
than one percent (1%), and no Partner's Sharing Ratio in the Partnership
shall be reduced or diluted unless approved in writing by such Partner or
unless otherwise provided in any other written agreement to which such
Partner is a party.
7.2 Transfer of Partnership Interests. No Partner may
transfer or encumber all or any portion of such Partner's interest in the
Partnership without the prior written consent of the Partners; provided,
however, that Olympus may transfer all or any portion of its interest in
the Partnership to an Affiliate of Olympus Real Estate Corporation without
the consent of FM. Additionally, any interest in the Partnership held by
Olympus or its Affiliates may be transferred in the exercise of rights of
the limited partners of Olympus Real Estate Fund II, L.P. ("Fund II") to
remove the general partner under the limited partnership agreement of Fund
II.
7.3 Buy/Sell Option.
(a) In the event of a Deadlock at any time during the term of
the Partnership, either Partner may exercise a "buy-sell" right (the "Buy-
Sell") as follows: either Partner (the "Offeror") exercising such Buy-Sell
(A) shall deliver to the other Partner (the "Offeree") a written notice
(the "Buy/Sell Offer") stating the Offeror's exercise of such right and
setting forth the Buy/Sell Offer and a description of any negotiations or
discussions with third parties that Offeror may have had with respect to
the sale of the Partnership Interest and the Business, which Buy/Sell Offer
shall represent the dollar amount (without reduction for any deemed or
imputed expenses of sale) that the Offeror would be willing to pay to the
Partnership in cash for the Business (the "Offer Amount") and (B)
simultaneously with the delivery of the Buy/Sell Offer, shall deliver into
escrow with a title insurance company located in Dallas, Texas selected by
the Offeror (the "Escrow Agent"), a good faith deposit in the amount of the
Offer Deposit. The Offeror hereby instructs the Escrow Agent that the
Escrow Agent shall either (i) in the event the Offeree elects to sell its
interest in the Partnership (the "Partnership Interest") in accordance with
the terms hereof, apply such Offer Deposit to the purchase price as of the
Buy/Sell Closing Date (as hereinafter defined) or if the Offeror fails to
timely purchase the Offeree's Partnership Interest in accordance with the
terms hereof, disburse such Offer Deposit in accordance with Section
7.3(g), or (ii) in the event the Offeree elects to purchase the Offeror's
Partnership Interest, disburse such Offer Deposit in accordance with
Section 7.3(e).
(b) The notice transmitting the Buy/Sell Offer shall be deemed
to constitute an offer by the Offeror to purchase the Offeree's Partnership
Interest for a price equal to the Receipt Amount. "Receipt Amount" shall
mean the aggregate amount which the Partner whose Partnership Interest is
to be transferred, whether Offeror or Offeree, would receive as a
Partnership distribution if (i) the Business were sold for cash for the
Offer Amount, (ii) all debts and liabilities of the Partnership but without
taking into account any deemed or imputed expenses which would occur for
the sale to third parties (e.g. imputed brokerage fees, etc.) were paid in
full from such proceeds and (iii) prorations were made with respect to all
current assets and current liabilities of the Partnership.
(c) The Offeree shall have forty-five (45) days from the date
of the Buy/Sell Offer to elect, by written notice to the Offeror signed by
the Partner constituting the Offeree, whether to sell such Offeree's
Partnership Interest to the Offeror or whether to purchase (or cause its
designee to purchase) the Offeror's Partnership Interest in the Partnership
(the "Buy/Sell Election Period ").
(d) If the Offeree fails to make an election within such
forty-five (45) day period, or fails to comply with subsection (e) below,
such Offeree shall be conclusively deemed to have elected to sell its
Partnership Interest in the Partnership to the Offeror according to the
terms of this Section 7.3.
(e) If the Offeree makes an election to purchase within such
forty-five (45) day period by sending written notice to the Offeror as
required by subsection (c), and by delivering into escrow with the Escrow
Agent a good faith deposit in the amount of the Offer Deposit, then, the
original Offeror shall be conclusively deemed to have elected to sell its
Partnership Interest in the Partnership to the Offeree for a price equal to
the applicable Receipt Amount. In the event the Offeree timely makes an
election to purchase, the Offeree hereby instructs the Escrow Agent that
the Escrow Agent shall (i) return the Offeror's Offer Deposit to the
Offeror and (ii) hold the Offeree's Offer Deposit and shall either apply
such Offeree's Offer Deposit to the purchase price or disburse such
Offeree's Offer Deposit in accordance with Section 7.3(g).
(f) The Partner (the "Buy/Sell Purchaser") that is obligated
to purchase the Partnership Interest in the Partnership of the other
Partner (the "Buy/Sell Seller") pursuant to this Section 7.3 shall fix a
closing date (the " Buy/Sell Closing Date") for such purchase that is not a
Business Day that is not later than forty-five (45) days after the
expiration of the Buy/Sell Election Period, by written notice to the
Buy/Sell Seller at least fifteen (15) days in advance of Buy/Sell Closing
Date. The closing of such purchase shall take place on the Buy/Sell
Closing Date at the address of the Escrow Agent. At such closing, the
Partner constituting the Buy/Sell Seller shall execute and deliver to the
Buy/Sell Purchaser (or its designee) such instruments of assignment, bills
of sale, amendments to this Agreement and other instruments and documents
as the Buy/Sell Purchaser and the Buy/Sell Seller (or such designee) may
reasonably require for the conveyance to such Buy/Sell Purchaser (or such
designee) of all of the Buy/Sell Seller's right, title and interest in and
to the Buy/Sell Seller's Partnership Interest in the Partnership against
receipt by the Buy/Sell Seller of a wire transfer of immediately available
funds in an amount equal to the applicable Receipt Amount; and the Buy/Sell
Seller hereby irrevocably constitutes and appoints the Buy/Sell Purchaser
as its attorney-in-fact to execute, acknowledge and deliver any of such
instruments or documents. Each of the Buy/Sell Seller and Buy/Sell
Purchaser shall each bear their respective closing costs and expenses
(including, but not limited to, all attorney's fees and costs and all
applicable transfer and income taxes) incurred in the purchase or sale of
the Buy/Sell Seller's Partnership Interest in the Partnership hereunder.
Such sale of such Partnership Interest shall be made without
representation, warranty or recourse, except for representations and
warranties in form and substance reasonably acceptable to the Buy/Sell
Purchaser and the Buy/Sell Seller with respect to existence, good standing,
title, no encumbrance, authority, authorization, no conflicts, and such
other customary matters as may be reasonably requested by the Buy/Sell
Purchaser. If the Buy/Sell Offer or the closing of the purchase
contemplated thereby causes the maturity of any Partnership indebtedness to
be accelerated, the Buy/Sell Seller shall be released from liability
resulting from such accelerated indebtedness and the Buy/Sell Purchaser
shall pay such indebtedness in full (including without limitation, any
accrued but unpaid interest and any prepayment premiums or penalties) at
Buy/Sell Purchaser's sole cost and expense and shall indemnify and hold
Buy/Sell Seller harmless from and against any losses, damages, costs or
expenses (including attorneys' fees) incurred by Buy/Sell Seller, or the
Buy/Sell Seller's Affiliates, employees, agents, representatives,
consultants, attorneys, fiduciaries, servants, officers, directors,
partners, predecessors, successors and assigns and Affiliates of the
foregoing (the "Indemnified Parties"), as a direct or indirect result
thereof, other than any losses, damages, costs or expenses (including
attorneys' fees) incurred by any of the Indemnified Parties as a direct
result of such Indemnified Party's bad conduct. The Buy/Sell Seller shall
be released from liability from any indebtedness of the Partnership.
Anything contained in this Agreement to the contrary notwithstanding, in
the event the sale of the Partnership Interest is not consummated because
of a default on the part of Buy/Sell Seller or if a condition precedent
cannot be fulfilled because Buy/Sell Seller frustrated such fulfillment,
Buy/Sell Purchaser may, at its election, pursue an action for specific
performance and/or costs and expenses.
(g) In the event that the Buy/Sell Purchaser defaults in its
obligation to purchase the Partnership Interest of the Buy/Sell Seller in
the Partnership on the Buy/Sell Closing Date, the Buy/Sell Seller shall
have the right to (i) solicit third party offers on behalf of the
Partnership for the purchase of the Business, to accept the best such
offer, as determined by the Buy/Sell Seller in its sole and absolute
discretion, and to consummate the sale of the Business to such third party
pursuant to such offer, (ii) purchase the Partnership Interest of the
Buy/Sell Purchaser for a purchase price equal to ninety percent (90%) of
the aggregate Partnership distributions that the Buy/Sell Purchaser would
be entitled to receive under this Agreement if the Business were sold for
cash for the Offer Amount and all debts and liabilities of the Partnership
(excluding imputed sale expenses) were paid in full from such proceeds and
proration were made with respect to all current assets and current
liabilities of the Partnership, (iii) specifically enforce the Buy/Sell
Purchaser's obligation to purchase the Partnership interest of the Buy/Sell
Seller, and (iv) notify the Escrow Agent holding the Offer Deposit of the
Buy/Sell Purchaser immediately to deliver such Offer Deposit to the
Buy/Sell Seller as liquidated damages for the breach by such Buy/Sell
Purchaser (and the Buy/Sell Purchaser covenants and agrees to cause, and
hereby instructs, the Escrow Agent to deliver such Offer Deposit to the
Buy/Sell Seller). The delivery of the Offer Deposit to the Buy/Sell Seller
shall not constitute a return of capital. The Buy/Sell Purchaser hereby
constitutes and appoints the Buy/Sell Seller as its attorney-in-fact to
execute and deliver on behalf of the Buy/Sell Purchaser all documents as
may be reasonably required in connection with the delivery by the Escrow
Agent of the Offer Deposit to the Buy/Sell Seller.
7.4 No Substituted Partners. Except as permitted by Section
7.1, no transferee of any partnership interest in the Partnership may
become a substituted Partner. Rather, any transferee of any Partnership
interest of a Partner shall be entitled solely to rights as assignee of the
rights to receive all or part of the share of the income, gains, losses,
deductions, expenses, credits, distributions, or returns of capital to
which his or its transferor would otherwise be entitled with respect to the
Partnership interest so transferred.
7.5 Withdrawal of Partners. Except as permitted by Section
7.2 hereof, no Partner shall have any right to withdraw or resign from the
Partnership without the consent of the Financial Partner.
ARTICLE 8
General Accounting Provisions and Books
8.1 Books of Account; Tax Returns. The Financial Partner
shall prepare and file, or shall cause to be prepared and filed, all United
States federal, state, and local income and other tax returns required to
be filed by the Partnership and shall keep or cause to be kept complete and
appropriate records and books of account in which shall be entered all such
transactions and other matters relative to the Partnership's operations,
business and affairs as are usually entered into records and books of
account that are maintained by persons engaged in business of like
character or are required by the Act. Except as otherwise expressly
provided herein, such books and records shall be maintained in accordance
with the basis utilized in preparing the Partnership's United States
federal income tax returns, which returns, if allowed by applicable law,
may upon the approval of the Management Committee be prepared on an accrual
basis.
8.2 Place Kept; Inspection. The books and records shall be
maintained at the principal place of business of the Partnership, and all
such books and records shall be available for inspection and copying at the
reasonable request, and at the expense, of any Partner during the ordinary
business hours of the Partnership.
8.3 Tax Matters Partner. The Financial Partner shall be the
tax matters partner of the Partnership and, in such capacity, shall
exercise all rights conferred, and perform all duties imposed, upon a tax
matters partner under Sections 6221 through 6233 of the Code and the
regulations promulgated thereunder; provided, however, that the Operating
Partner shall have the right to review and approve any actions taken by the
Financial Partner in its capacity as the tax matters partner.
Notwithstanding the foregoing, the Financial Partner shall have the right
to select the methodology to be used pursuant to Section 704(c) of the Code
subject to the Operating Partner's consent, which consent shall not be
unreasonably withheld.
ARTICLE 9
Amendments and Waivers
9.1 Amendments and Waivers. Except as expressly provided in
Section 9.3 of this Agreement, the Financial Partner may amend or waive any
provision of this Agreement which merely (i) corrects an error or clarifies
an ambiguity in this Agreement, (ii) does not adversely affect the
Operating Partner in any material respect or (iii) changes Schedule I to
this Agreement to reflect the Sharing Ratios or Partnership Interests of
the Partners as from time to time amended in accordance with this
Agreement. The Financial Partner shall amend Schedule I to this Agreement
to reflect any additional Capital Contributions. The Partners agree to
look to the books and records of the Partnership for determination of the
actual amount of Capital Contributions made to the Partnership, as provided
in Section 3.1 of this Agreement.
9.2 Certain Other Amendments. Notwithstanding any provision
to the contrary contained herein, no amendment to or waiver of any
provision of this Agreement shall be effective against a given Partner
without the consent or vote of such Partner if such amendment or waiver
would (i) cause the Partnership to fail to be treated as a general
partnership under the Act, (ii) change Section 3.1 of this Agreement to
increase a Partner's obligation to contribute to the capital of the
Partnership, (iii) change Section 5.1 or 5.2 of this Agreement to affect
adversely any Partner's rights to exculpation or indemnification, (iv)
change Section 6.1 or 6.2 of this Agreement to affect adversely the
participation of such Partner in the income, gains, losses, deductions,
expenses, credits, capital or distributions of the Partnership (including
any amendments to admit one or more new Partners), (v) change Section 7.1
of this Agreement to affect adversely the anti-dilution rights of such
Partner, (vi) change the percentage of Partners necessary for any consent
or vote required hereunder to the taking of any action or (vii) amend
Section 9.2 of this Agreement.
ARTICLE 10
Dissolution and Termination
10.1 Dissolution. The Partnership shall be dissolved upon the
first to occur of the following events:
(i) the election of the both Partners to dissolve the
Partnership;
(ii) the election of the Financial Partner to dissolve the
Partnership if all or substantially all Partnership assets shall have
been sold or disposed of or shall consist of cash;
(iii) both the Partners shall have withdrawn from the
Partnership within the meaning of the Act, or any other dissolution
event specified in the Act shall have occurred;
(iv) the Financial Partner shall have (A) made a general
assignment for the benefit of creditors, (B) filed a voluntary
petition in bankruptcy, (C) filed a petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any bankruptcy or
debtor relief law, (D) filed an answer or other pleading admitting or
failing to contest the material allegations of a petition filed
against it in any bankruptcy or insolvency proceeding brought against
it or (E) sought, consented to, or acquiesced in the appointment of a
trustee, receiver or liquidator of the Financial Partner or of all or
any substantial part of its property;
(v) if within sixty (60) days after the commencement of any
proceeding against the Financial Partner seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any bankruptcy or debtor relief law, the
proceeding shall not have been dismissed; or
(vi) if within sixty (60) days after the appointment
(without the Financial Partner's consent or acquiescence) of a
trustee, receiver or liquidator of the Financial Partner or of all or
any substantial part of its property, the appointment shall not have
been vacated or stayed if within sixty (60) days after the expiration
of any such stay, the appointment shall not have been vacated.
Notwithstanding the foregoing, the Partnership shall not be dissolved upon
the occurrence of an event specified in (iii) through (vi) of this Section
10.1 if within ninety (90) days after such occurrence a majority in
interest (under applicable federal income tax principles) of the Partners
agree in writing to continue the business of the Partnership and to the
appointment, effective as of the date of withdrawal, of a successor
Financial Partner.
10.2 Accounting on Dissolution. Following the dissolution of
the Partnership pursuant to Section 10.1 of this Agreement, the books of
the Partnership shall be closed, and a proper accounting of the
Partnership's assets, liabilities and operations shall be made by the
Financial Partner, all as of the most recent practicable date. The
Financial Partner shall serve as the liquidator of the Partnership unless
it has been removed or unless it otherwise fails or refuses to serve. If
the Financial Partner does not serve as the liquidator, one or more other
persons or entities may be selected to serve by the Operating Partner. The
expenses incurred by the liquidator in connection with the dissolution,
liquidation and termination of the Partnership shall be borne by the
Partnership.
10.3 Termination. As expeditiously as practicable, but in no
event later than one year (except as may be necessary to realize upon any
material amount of property that may be illiquid), after the dissolution of
the Partnership pursuant to Section 10.1 of this Agreement, the liquidator
shall cause the Partnership to pay the current liabilities of the
Partnership and (i) establish a reserve fund (which may be in the form of
cash or other property, as the liquidator shall determine) for any and all
other liabilities, including contingent liabilities, of the Partnership in
a reasonable amount determined by the liquidator to be appropriate for such
purposes or (ii) otherwise make adequate provision for such other
liabilities. To the extent that cash required for the foregoing purposes
is not otherwise available, the liquidator may sell property, if any, of
the Partnership for cash. Thereafter, all remaining cash or other
property, if any, of the Partnership shall be distributed to the Partners
in accordance with the provisions of Section 6.1 of this Agreement. The
Partners must agree on the value and distributee for all in-kind
distributions or else all property must be sold and the proceeds
distributed in accordance herewith. At the time final distributions are
made in accordance with Section 6.1 of this Agreement, a certificate of
cancellation shall be filed in accordance with the Act, and the legal
existence of the Partnership shall terminate, but if at any time thereafter
any reserved cash or property is released because in the judgment of the
liquidator the need for such reserve has ended, then such cash or property
shall be distributed in accordance with Section 6.1 of this Agreement.
10.4 No Negative Capital Account Obligation. Notwithstanding
any other provision of this Agreement to the contrary, in no event shall
any Partner who has a negative capital account upon final distribution of
all cash and other property of the Partnership be required to restore such
negative account to zero.
10.5 No Other Cause of Dissolution. The Partnership shall not
be dissolved, or its legal existence terminated, for any reason whatsoever
except as expressly provided in this Article 10.
10.6 Merger. Subject to the rights of the Partners pursuant to
Section 9.2, the Partnership may, with the written consent of the Financial
Partner acting with the unanimous approval of the Management Committee,
adopt a plan of merger and engage in any merger permitted by applicable
law.
ARTICLE 11
Miscellaneous
11.1 Waiver of Partition. Each Partner hereby irrevocably
waives any and all rights that he or it may have to maintain an action for
partition of any of the Partnership's property.
11.2 Entire Agreement. This Agreement constitutes the entire
agreement among the Partners with respect to the subject matter hereof and
supersedes any prior agreement or understanding among them with respect to
such subject matter.
11.3 Severability. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid under the applicable law of any jurisdiction, the remainder of this
Agreement or the application of such provision to other persons or
circumstances or in other jurisdictions shall not be affected thereby.
Also, if any provision of this Agreement is invalid or unenforceable under
any applicable law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to
conform with such law. Any provision hereof that may prove invalid or
unenforceable under any law shall not affect the validity or enforceability
of any other provision hereof.
11.4 Notices. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have
been duly given if sent by overnight courier, hand delivered, mailed (first
class registered mail or certified mail, postage prepaid), or sent by telex
or telecopy if to the Partners, at the addresses or telex or facsimile
numbers set forth on Schedule I hereto, and if to the Partnership, at the
address of its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (fax 214/▇▇▇-▇▇▇▇), or to such other address as
the Partnership or any Partner shall have last designated by notice to the
Partnership and all other parties hereto in accordance with this Section
11.4. Notices sent by hand delivery shall be deemed to have been given
when received; notices mailed in accordance with the foregoing shall be
deemed to have been given three days following the date so mailed; notices
sent by telex or telecopy shall be deemed to have been given when
electronically confirmed; and notices sent by overnight courier shall be
deemed to have been given on the next business day following the date so
sent.
11.5 Governing Laws. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas
(without regard to principles of conflicts of laws).
11.6 Successors and Assigns. Except as otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of
the Partners and their respective successors and permitted assigns.
11.7 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall constitute one and the same
instrument.
11.8 Headings. The section and article headings in this
Agreement are for convenience of reference only and shall not be deemed to
alter or affect the meaning or interpretation of any provision hereof.
11.9 Other Terms. All references to "Articles" and "Sections"
contained in this Agreement are, unless specifically indicated otherwise,
references to articles, sections, subsections, and paragraphs of this
Agreement. Whenever in this Agreement the singular number is used, the
same shall include the plural where appropriate (and vice versa), and words
of any gender shall include each other gender where appropriate. As used
in this Agreement, the following words or phrases shall have the meanings
indicated: (i) "or" shall mean "and/or"; (ii) "day" shall mean a calendar
day; (iii) "including" or "include" shall mean "including without
limitation"; and (iv) "law" or "laws" shall mean statutes, regulations,
rules, judicial orders, and other legal pronouncements having the effect of
law. Whenever any provision of this Agreement requires or permits a
Partner to take or omit to take any action, or make or omit to make any
decision, unless the context clearly requires otherwise, such provision
shall be interpreted to authorize an action taken or omitted, or a decision
made or omitted, by the Partner acting alone and in good faith.
11.10 Power of Attorney. By execution of this Agreement, the
Operating Partner hereby makes, constitutes and appoints the Financial
Partner, with full power of substitution and re-substitution in the
Financial Partner (in its sole discretion), the Operating Partner's true
and lawful attorney-in-fact (the "Attorney") for and in the Operating
Partner's name, place and stead and for its use and benefit, to prepare,
execute, certify, acknowledge, swear to, file, deliver or record any or all
of the following, authorized pursuant to the terms of this Agreement:
(i) the Partnership's certificate of general partnership or
any other agreement, certificate, report, consent, instrument, filing
or writing made by or relating to the Partnership that the Attorney
deems necessary, desirable, or appropriate for any lawful purpose,
including (A) organizing the Partnership under the Act, (B) admitting
Partners with respect to the Partnership, (C) pursuing or effecting
any rights or remedies available under this Agreement or otherwise
with respect to a defaulting Partner, (D) qualifying the Partnership
to do business in any jurisdiction and (E) complying with any law,
agreement or obligation applicable to the Partnership;
(ii) any agreement, certificate, report, consent,
instrument, filing or writing made by or relating to the Partnership
that the Attorney deems necessary, desirable or appropriate to
effectuate the business purposes of, or the dissolution, termination
or liquidation of, the Partnership pursuant to applicable law or the
respective terms of this Agreement; and
(iii) any amendment to or modification or restatement of
this Agreement, the Partnership's certificate of general partnership,
or any other agreement, certificate, report, consent, instrument,
filing or writing of any type described in subsection (i) or (ii) of
this Section 11.10, provided that any amendment of or modification to
this Agreement shall first have been adopted in accordance with
Article 9 of this Agreement.
11.11 Transfer and Other Restrictions. INTERESTS IN THE
PARTNERSHIP HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE OFFERED OR SOLD UNLESS SUCH INTERESTS HAVE BEEN
REGISTERED UNDER SUCH ACT OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. INTERESTS IN THE PARTNERSHIP ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER, VOTING AND OTHER TERMS AND CONDITIONS SET FORTH
IN (1) ARTICLE 7 AND (2) VARIOUS INVESTMENT AGREEMENTS BETWEEN OR AMONG
CERTAIN PARTNERS. COPIES OF SUCH AGREEMENTS MAY BE OBTAINED FROM THE
PARTNERSHIP OR THE FINANCIAL PARTNER AT THEIR PRINCIPAL EXECUTIVE OFFICES.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK].
IN WITNESS WHEREOF, the undersigned have executed this instrument
effective as of the Effective Date.
FINANCIAL PARTNER:
Oly/Houston ▇▇▇▇▇▇, ▇.▇.,
a Texas limited partnership
By: Oly Fund II GP Investments, L.P.,
a Texas limited partnership,
its general partner
By: Oly Real Estate Partners II, L.P.,
a Texas limited partnership,
its general partner
By: Oly REP II, L.P.,
a Texas limited partnership,
its general partner
By: Oly Fund II, LLC,
a Texas limited liability company,
its general partner
By:/s/ ▇▇▇ ▇. ▇▇▇▇
------------------
Name: ▇▇▇ ▇. ▇▇▇▇
Title: Vice President
OPERATING PARTNER:
Oly/▇▇ ▇▇▇▇▇▇, L.P.,
a Texas limited partnership
By: Oly Fund II GP Investments, L.P.,
a Texas limited partnership,
its general partner
By: Oly Real Estate Partners II, L.P.,
a Texas limited partnership,
its general partner
By: Oly REP II, L.P.,
a Texas limited partnership,
its general partner
By: Oly Fund II, LLC,
a Texas limited liability company,
its general partner
By:/s/ ▇▇▇ ▇. ▇▇▇▇
---------------
Name:▇▇▇ ▇. ▇▇▇▇
Title:Vice President
EXHIBIT A
Business Plan
The Partners shall finalize the Business Plan on or before June 8,
1998 and upon completion shall attach it to this Agreement.
EXHIBIT B
Operating Budget
The Partners shall finalize the Operating Budget on or before June 8,
1998 and upon completion shall attach it to this Agreement.
SCHEDULE I
Partnership Capital Contributions and Sharing Ratios
Initial
Partner and Address Capital Sharing
Contributions Ratios
Financial Partner:
Oly/Houston ▇▇▇▇▇▇, ▇.▇. $300,600.00 50.10%
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Operating Partner:
Oly/▇▇ ▇▇▇▇▇▇, L.P. $299,400.00 49.90%
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
____________________________
Total All Partners $600,000.00 100.00%
